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Saudi Megaproject Is Big on Hubris and Low on Practicality

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Saudi Arabia’s ruler announces a megaproject to build a city, from scratch, in the desert by the Red Sea. It is touted as an ultra-modern urban setting, in which many of the kingdom’s restrictive social rules will be waived — for instance, women won’t need to cloak themselves in the ‘abaya’ in public places. It is to be a hub for investment, local and foreign, in new industries. And, as if to underscore how different it is from other Saudi cities, it has been given an unconventional name. 

If that description fits Neom, the city Crown Prince Mohammed bin Salman is building in the northeastern corner of his country, it also describes another giant project, launched nearly two decades ago. Dubbed KAEC (pronounced “cake”), it was announced to great fanfare in 2005 by Abdullah bin Abdulaziz, Prince Mohammed’s uncle and then-Saudi monarch.

What came of KAEC — or, to give it its full but rarely used name, King Abdullah Economic City —  should serve as a warning for the kingdom and foreign investors who are being wooed to pump money into Neom. The Saudis may be talking up the prince’s pet project — it will, they say, have the world’s largest buildings, be served by the Middle East’s biggest port and provide the “the safest, most efficient, most future-oriented, and best place to live and work” — but even the grandest exercises in royal vanity have a tendency to wilt in the face of economic reality.

When I visited KAEC in the fall of 2008, it had moved well past the groundbreaking stage. Construction of the port was proceeding apace, dozens of businesses had signed up to set up shop there and more than 1,500 housing units had already been sold. Amr al-Dabbagh, governor of the Saudi Arabian General Investment Authority, which was running the project, was confident that, in 20 years, KAEC would be the size of Washington, D.C., with a population of 1.5 million.

Dabbagh and his planners were adamant that KAEC would be a serious manufacturing and logistics hub and not a tourist destination for expatriates living in the more conservative enclaves of Riyadh and Jeddah. Most of its population would be young Saudis fleeing the congestion of other cities and attracted as much by the tens of thousands of new jobs as the liberal atmosphere.

A decade after my visit, the population was still short of 10,000. The king who gave the city his name died in 2015, and his nephew, pursuing his own grand projects, had little interest in furthering Abdullah’s ambition. For his part, Dabbagh was a target of the prince’s controversial 2017 anti-corruption drive that led to dozens of princes and billionaires being detained at the Ritz-Carlton hotel in Riyadh. Dabbagh was released more than a year later, having reportedly suffered physical abuse. Once the face of the kingdom’s economic dreams, he now keeps a low profile.

As for KAEC, although officials periodically announce new plans to revive old ambitions — the latest involves electric vehicle maker Lucid — there is little prospect of the late king’s vision for the city being realized. Perhaps most tellingly, it is now being promoted as a “booming tourist destination,” complete with opportunities for go-karting and cruises on the Red Sea. Ozymandias, and just possibly Abdullah, would have sighed.

Is this the fate of Neom? On the face of it, the project backed by Prince Mohammed, the country’s de facto ruler, is riskier than the one planned by his uncle. Its location runs against the argument of Saudi officials that it is meant to reduce overpopulation in the kingdom’s older urban centers. Neom is hundreds of miles from the nearest major city, which means any Saudis seeking to move there would have to leave their extended family and friends far behind — a big ask in a society that places great value in traditional social networks.

KAEC, in contrast, is ringed by Jeddah, Mecca and Medina, three of the kingdom’s four most-populated cities, and connected to all three by high-speed rail. At its founding, the proximity to Jeddah was thought to be especially advantageous: It is not only a major economic center, but boasts the country’s busiest international airport — a gateway for tens of millions of Muslims who come to Saudi Arabia for pilgrimage to Mecca and Medina.

If Prince Mohammed, who is better known as MBS, wanted to relieve overpopulation and create a new economic hub, logic suggests he should have doubled down on KAEC rather than try to reinvent the wheel in Neom. But that would add luster to the name of the late king, and not the crown prince — which would run contrary to the goals of royal vanity projects.

What Neom has going for it is the scale of MBS’s ego, and a budget to match: $500 billion. (KAEC’s initial outlay was a more modest $27 billion, although some reports put itat  $100 billion.) Another potential advantage is the prince’s youth: KAEC lost steam when its elderly patron passed on, but Neom’s patron is just 36, and can expect to rule for several decades.

But if MBS builds it, will they come? Recent history allows for no optimism about his shining city in the dunes.

More From Other Writers at Bloomberg Opinion:

Saudi Arabia’s Chief Oil Whisperer Spills Some of His Secrets: Javier Blas

How Did Jared Kushner Get $2 Billion From the Saudis?: Timothy L. O’Brien

Saudi Ruler Rewrites History to Shrink Islamic Past: Hussein Ibish

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Bobby Ghosh is a Bloomberg Opinion columnist covering foreign affairs. Previously, he was editor in chief at Hindustan Times, managing editor at Quartz and international editor at Time.

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