Announced by Prince Salman Ibn project of radical reorganization of the Saudi economy implies the aspiration to cope with the dependence on oil and to turn the country into a true economic power. However, the current crisis could put the project at risk. When it runs out…
Atlantico: the Prince Muhammad bin Salman recently presented a draft reform of the country’s economy: scheduled for 2018 sales Aramco, the state expects to hold investments in 2 trillion euros. But the optimal is such a departure from mono in the current situation in the market of hydrocarbons?
Thierry Cove: Reform to reduce dependence on exports of raw materials — is always a good idea for the government of the country with an oil economy. However, the launch of reforms at such low oil prices now mean that support for the program weakened in their recovery…
— In Saudi Arabia say that in two years will be able to buy Google, Apple, Microsoft and Berkshire Hattaway. Whether such a radical “Zapadnaya” the Saudi economy? Wahhabism is compatible with this economic metamorphosis? Can a new generation of specialists in the Quran to finish this reform?
— Saudi universities prepare young people in various social and scientific disciplines. I think the problem is not only that. In the oil and gas economies there is a classic policy on formation of public funds from export revenues. So far, Saudi Arabia has invested this money in U.S. financial market and bonds. Now the goal is to forge shares in various multinational companies for the preparation of the economic diversification. This is reminiscent of the strategy of Qatar. The problem is that this approach requires transparency of Saudi Arabia in relation to international financial markets. But while the Saudi economy is not transparent.
Anyway, the main problem of this strategy is that not sufficient to reduce oil dependence. The acquisition of foreign companies will not allow you to create the whole Saudi youth jobs. In addition, you will need to build an effective tax system, because while the bulk of fiscal revenue is oil. But the creation of such a system is known, requires political balance between the authorities and the population. People pay taxes more willingly, when trust in the state institutions that control the money. To buy a foreign enterprise is not enough. We need to develop our own production to export other products besides oil. This implies the development of this private sector that would receive a certain independence from political power. Again, the appearance of this the private sector should lead to changes in policy.
— If it works, will take the place of Saudi Arabia? Is there any reason to believe in an economic revolution despite the fact that all previous attempts to break that dependency did not give specific results, as noted the IMF report for 2014? And isn’t the current economy relies on foreign workers?
— As I said, while it is only a statement. This diversification of the Saudi economy involves a lot of deep reforms with political consequences. One of the first challenges of the Saudi economy — training of young specialists needed to implement the diversification of skills. And its solution is still far away, because the educational system does not give enough managers, and many positions in the leadership of enterprises are foreigners. Besides, we must not forget that the formation of a competitive and independent from the power of the private sector is a long — term venture with obvious political consequences. Are the Saudi authorities to take such a risk? Famous Chinese model of coexistence of the market economy and the dictatorial rule is hardly applicable worldwide. It is not so simple even in China…
