Young Saudis saw a future; then came a pandemic and an oil crash

Last Update
15-Jun-2020
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Taylor Luck, The Christian Science Monitor

For Mohammed, like many Saudis, the “good old days” were only just beginning.

The nation’s de facto ruler, Crown Prince Mohammed bin Salman, was promising – and delivering – almost anything a young Saudi could ask for: social freedoms, cultural events, tech hubs, women’s advancement, art galleries, free university, jobs.

Like many young Saudis, Mohammed – he requested that his full name not be used so that he may speak freely – was lured back home from abroad by the crown prince’s government to achieve a shared vision: transform Saudi Arabia from a kingdom reliant on oil to an open, modern, tech-savvy state.

The 28-year-old IT specialist left his job at a London firm to work as a consultant in Riyadh, and soon started living a life not too dissimilar to the one he had abroad.

“This was a chance for us to build the society and lives we wanted at home rather than pursue it elsewhere,” Mohammed says.

But after the triple crises of the pandemic, the collapse of crude oil prices, and falling financial markets, young Saudis are awakening to yet another reality; one of austerity, rising taxes, slashed subsidies, and delayed and canceled projects.

It’s causing economic, and identity, whiplash. Will the crown prince’s promises, and a Saudi identity built on perks and privileges, stand up when the perks are no longer there and their jobs are more demanding?

“I don’t know which Saudi I live in anymore,” Mohammed says.

Austerity

Before the COVID-19 crisis, Crown Prince Mohammed (MBS) was just beginning to realize his ambitious Vision 2030 economic transformation plan, which entails using oil revenues to invest in projects and initiatives, from tourism to artificial intelligence, to create a post-oil economy.

Thousands of young Saudis were trained in tourism, hospitality, and IT; tech start-ups were encouraged; innovation hubs were launched. Brand-new airports and gleaming financial districts were built.

But for now, hotels sit empty, financial districts have been deserted, and tourism development and promotions shelved.

With the Vision in doubt, some young Saudis are suddenly questioning their place in society.

“We were told that if we worked hard and depended on ourselves, we would become Saudi Arabia’s new oil,” says Ali, a 24-year-old from Asir province who after two years as an unemployed engineer – the field suffers from a chronic oversupply of graduates – received free hospitality training by the government.

He was then employed at a Riyadh hotel before the COVID crisis in April put him on furlough.

“If the engines of the economy are being sold or turned off, what use is the oil?” he says.

Adding to the shock are the waves of austerity measures and tax hikes for a population accustomed to cradle-to-grave welfare and still reeling from the COVID-19 pandemic.

Even as many countries introduced bailout packages, Saudi Arabia moved in May to cut a $260 monthly stipend paid to government workers and tripled its value added tax on all goods from 5% to 15%.

Meanwhile, major projects have been frozen, “reprioritized,” or delayed indefinitely.

Finance Minister Mohammed al-Jadaan has billed the steps as a “reallocating” of spending, saying that cutting subsidies, raising taxes, and freezing projects will free up some $26 billion in funds to reinvest elsewhere to support citizens and keep the crown prince’s vision alive.

Officials are touting the new economic plan to weather a COVID-fueled collapse in oil prices. Prices that fell to the single digits have only inched up to $38 a barrel this week, below the $50 per barrel experts say Saudi Arabia needs to avoid running a larger deficit.

The Gulf power is on track for a $50 billion budget deficit; state-owned oil giant ARAMCO is posting a 25% drop in revenues; and the kingdom’s $470 billion in currency reserves have been dwindling at a rate of $20-25 billion a month since February.

Nationalism

Yet questions remain about how citizens will accept the austerity pivot when a key pillar of the Saudi social contract has been the state’s role as a provider.

Underpinning Crown Prince Mohammed’s post-oil vision was a Saudi transformation from a deliberate, slow-moving state that based its legitimacy on religion, tribal relations, and broad regional consensus with its allies across the Arab world.

Instead, MBS has pushed a “Saudi first” campaign, urging citizens to pledge allegiance to a nation that staked out its own path in diplomacy and the economy, inviting them to take part in shaping its future.

MBS’s offer was attractive to many Saudis, 60% of whom are under the age of 30, and hundreds of thousands of whom had studied abroad in the West and wished to see changes at their stuck-in-the-past homeland.

“When many of us began working on the Vision, we felt like we were helping Saudi Arabia to join and lead in the 21st century, we felt like we were making our home a better place,” says Amira, 32, a Riyadh entrepreneur who did not wish to use her full name.

“Suddenly our nationality meant allegiance to something bigger than ourselves.”

Before the pandemic, the palace pushed through minor economic changes, such as cutting fuel and energy subsidies, and reducing government bonuses, while introducing broad social reforms and opening up thousands of job opportunities in emerging fields and more remote parts of the kingdom.

If this new Saudi nationalism has been a two-way street, will Saudis still buy in to this national civic duty when there are no longer any perks to go around?

“We need to have jobs and reasonable prices first in order to be a strong Saudi,” says Amira. “And for some of us we suddenly have neither.”

More expected from citizens

Already, many have been grumbling over changes in a culture that expected more of citizens.

Employed Saudis have chafed at a recent ‘private sector’ approach in state ministries and agencies – the top employers in the kingdom – as CEOS and managers have been imported from the business world to shake up a Saudi work culture that put personal comfort over productivity.

“They want us to work overtime, to log extra hours. ... Our jobs are completely based on our performance every single day, and there is no room to make a mistake,” says Abdulrahman, who works for a government agency.

“They want us to work until we are tired, and these cinemas, concerts, and women in dresses aren’t putting food on the table.”

Even before the COVID-19 crisis, economic experts voiced skepticism over whether many of the crown prince’s Vision 2030 plans – such as a Saudi tech sector – would ever materialize.

Experts agree that the high expectations will be increasingly difficult to meet now that the oil revenues meant to cushion Saudis as the country made its radical transformation are no longer there.

“Many Saudis are poor, it is a young population to whom MBS has given a lot of hopes, and at some point they will want to cash in these checks the crown prince has given them in expectations,” says David Jalilvand, foreign policy analyst and director of Berlin-based Orient Matters.

“There will be a point where Saudi society grows increasingly frustrated with increased taxation, which complicates the ability of [the government] to make needed long-term structural reforms.”

The crisis appears to have cemented the crown prince’s conviction of the need for an economic transformation, but tough questions, and choices, lie ahead.

“When there is taxation without representation, there is a problem. This is political science 101,” says Oraib al-Rantawi, director of the Amman-based Al-Quds Centre for Political Studies.

“In time, citizens in Saudi Arabia will demand either a return back to subsidies, or greater say in political matters, but recent history shows that Saudi Arabia’s rulers will resist either.”

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