Saudi Arabia’s $500B City In The Desert Is Facing A Grim Reality

Saudi Arabia spent more than $500 billion building a city in the desert, with the idea of turning it into an eco-friendly, futuristic city. Unfortunately, things are not going according to plan for Neom, and this might cause some severe issues with Saudi Arabia’s long-term goals. Let’s see what’s happened.

Work Slows Down on the Futuristic City

Saudi Arabia has seen a massive slowdown in work as it becomes more challenging to transport materials and labor to the new construction in the desert.

Investors in the project have been very anxious to see progress. This slowdown adds to existing delays, making investors angry about the government’s dragging its feet.

Extensive Development Project

The project was initially pitched and funded by the Crown Prince Bin Salman. He focused on offering people a futuristic design city and was confident that Saudi Arabia’s money could fund it.

The city was an ambitious project rumored to be centered on a central development called The Line, which would run for 105 miles. However, this development has been scaled back significantly.

Trying To Build The Future

Prince Mohammed, the son of Saudi Arabia’s King Salman, is the media face of the Neom project. This is a chance for Saudi Arabia to introduce change.

Neom aims to give more people opportunities to seek the life they want. The project is part of a wider Vision 2030 project, which focuses on restructuring the country.

Weaning the Country Off Oil

Vision 2030 is a push by the Saudi government to take the country off its dependence on oil revenue. The leaders are worried that the country’s success depends on a non-renewable resource.

As a result, Vision 2030 hopes to offer alternative avenues that the country can hopefully lean into to give them a broader base of expansion before their oil revenue runs out.

The Dangers of a Single-Product Economy

Saudi Arabia is one of the luckiest countries in the world to have such substantial oil reserves, but these reserves are not infinite. The country needs to have other sustainable industries to rely on.

Introducing diversification through education, and establishing more acceptable practices for companies looking for new locales to set up in helps Saudi Arabia face the future with more confidence.

Not Just The City

Neom is more than just the city, however. In addition to the massive construction project out in the desert, there are several linked projects that form the basis of Neom’s overall construction.

Some of these include ports, tourism centers, and an industrial sector that seeks to capitalize on the country’s cheap energy, hoping to attract downstream industry.

$500B Is Just Government Funding

Through its government, Saudi Arabia pledged to offer half a trillion dollars in funding. However, the project was a public-private partnership, with investors also providing stakes.

The total funding, including government and non-governmental funding, is over $1.5 trillion. This funding isn’t just from local entrepreneurs but also from overseas investors.

Saudi Arabia Has a Lot of Money to Spend

Most people know how wealthy Saudi princes are. The money coming into the country over the years because of its oil production has made the country one of the richest in the world.

However, the country has not developed its economy as it should if it wants to maintain its prosperity. This project is important because it tries to shift the country away from its traditionalist roots.

Megacity Construction Going For Seven Years

The construction on Neom started in 2017. Since then, construction has been sporadic because members of the Saudi government have been criticizing the project.

Saudi Arabia’s government is made up of members of the House of Saud, and they don’t like the idea of introducing change into their country. Younger members are trying to push the project forward.

Saudi Arabia Also Facing Significant Financial Strain

In recent years, Saudi Arabia has been put under considerable financial strain because of war raging along its borders and incursions from rebels into the country. Houthi rebels in Yemen, funded by Saudi Arabia’s regional rival Iran, have started incursion along the country’s southern border.

The Houthis are just the latest push by Iran to destabilize the ruling house of Saud. Several other operations, both domestically and internationally, have been geared towards isolating the kingdom from its allies and trying to topple it from within. Saudi Arabia’s rulers are not democratically elected.

The City Is Expected to Be Much Smaller Now

Initially, the city was expected to have millions of people living there. However, that number has been revised because of problematic construction circumstances and a lack of funding. Instead of the initial number of people slated to live in the residential district, there are expected to be far fewer.

The project is now expected to have only around 300,000 people living there by 2030. Even that date of completion is in question as delays push the project further back. The delays have been hitting all of the support infrastructure and the main city’s construction.

Hoped To Have More People and More Industry

When the project was initially pitched, it was supposed to house over 1.5 million people by 2030, with the hope that far more people would want to live there.

These hopes were unrealized, as many people have soured on the city in the desert. The pull-back in size and construction expects a 2.5 km stretch of the project to be finished by 2030.

Funding Cuts Lead to Job Losses

The Neom Project relies on contractors who are tasked with completing several sections of the project on time and handing priority over to their peers. Many of these companies have multi-year commitments.

The funding cut has meant that many of these contractors have had to lay off workers because they can no longer depend on those multi-year commitments to be met.

A Testbed For Convenience

Neom, built along the Red Sea coastline, is expected to be more than just a futuristic city but a testbed for products and services that would transform everyday life.

Saudi Arabia is trying its hardest to transform its public perception in the eyes of the world, aiming to host the Asian Winter Games in 2029 at a resort high in the mountains called Trojena.

This Year’s Budget Still Hangs in the Balance

The Saudia Arabia Sovereign Wealth Fund has not allocated funding for Neom’s construction for this year as yet, causing worry from contractors and a further slowdown in production.

Saudi Arabia’s government’s original vision for Neom is likely to be revised further as funding fluctuates, which could lead to even more problems for the regime.

Some Projects Will Be Delayed Beyond 2030

Initial projections saw Neom’s construction being completed in 2030, although these were ambitious from the get-go. Slowdowns and other issues with funding caused revisions.

Now, some of the core parts of the city will be finished in 2030, but the revisions in costing and funding will cause several other projects to be shunted past the 2030 end date. Final dates for some parts of the project are still uncertain.

Time Needed to Stabilize the Project

Some of the project officials noted that the slowdown would help the economy at the expense of the construction deadline. However, the deadline is not a hard one.

The increased time to construct the city will give the companies much-needed time to gather human resources and set up infrastructure like factories in preparation for its completion.

A Futuristic City In Many Ways

Saudi Arabia isn’t the only place interested in Neom. It is an ambitious project that has captured many people’s imaginations outside of the Middle Eastern country. Many people have been wondering what the final city will look like, leading to much speculation.

Some experts have shown that Neom, in its initial iteration, covered more than the distance between New York and Philadelphia. Some suggested that city buildings would rival the Empire State Building in height and majesty. At one point, some people thought the Line would have its first residents this year.

Solar and Wind Farms the Significant Successes

Unfortunately, the hopes that people would be living on The Line by 2024 faded. However, that isn’t to say that Neom hasn’t seen any success at all. There have been some advances.

Two of the most notable ones are the development of solar and wind farms, which are supposed to power the desert city and move it away from traditional fossil fuels.

Changing the Discussion on Energy

The solar and wind farms were developed to shift the discussion on energy production. Saudi Arabia intends to use these developments to create “Green Hydrogen” energy.

With most of the world embracing renewables, Saudi Arabia is positioning itself as a leader in the switch to renewables.

A Leader in Renewables

The kingdom hopes to be the world’s largest producer of such energy and reduce its reliance on fossil fuels and that of other countries that it supplies with oil and gas.

Saudi Arabia is not one of the most polluting countries in the world, but their offer of a clean alternative source could impact how other countries develop.

Saudi Government Fighting Bad Press

The funding woes that the Saudi government is facing aren’t the only thing that the government has had to contend with over the last few years. Bad press is a constant threat to the regime.

Recent news about Prince Mohammed’s involvement in the death of a Washington Post journalist investigating the Saudi regime has done little to increase the confidence of investors outside of the country.

Aiming Big But Not Supported

Most of the figures involved in promoting the project pushed for a grandiose, breathtaking spectacle, the kind the Royal House of Saud enjoys putting on. This is evident from the promotional videos they put together to advertise the project to prospective investors.

However, within the halls of government, there’s far less support for the project than most would think. Many of the traditional, older members of the ruling house believe that things are good the way they are and that nothing should change. Their stubbornness could doom the project.

Is This a Positive for Saudi Arabia?

Saudi Arabia is facing an uphill battle. It’s been stuck trying to create a futuristic development, and members of its government have been actively working against that dream coming to fruition, seeing it as a threat to their traditional lifestyles. However, some progress has been made.

Realizing Neom in its final state will still take much longer than initially hoped, but there’s a silver lining to this struggle. The longer the project takes to complete, the less opposition it will face as traditionalists leave the political sphere. Saudi Arabia needs to diversify its economy before it’s too late, and Neom is its best bet for doing so.