Saudis and oil - a chapter closed?

Saudi Arabia, headed by Prince Mohammed bin Salman, aims to move from the world's second largest oil producer to the world's largest renewable energy producer. The fossil-fuel economy is moving towards technology and services in a country that starts giving more rights to women and allowing, if not even wanting, the access of tourists to the greatest possible number. 

Doors are closed, telephone lines are busy and all rooms are reserved for the next three months. Hotel Riyadh Ritz-Carlton suddenly became the most exclusive and luxurious prison in the world.

At the beginning of November 2017, Saudi Arabia began the process of corruption scavenging, targeting some of the richest and most influential people in the country. All reservations made at the Ritz Hotel were canceled and travel agencies were told that the building was taken for government use.

Among the "guests" of the hotel are the billionaire prince Alwaleed bin Talal, ten other princes, four ministers and dozens of officials and businessmen. The subject of the day in Saudi Arabia was "who will be the next to enter the list of VIPs at the Ritz Hotel," Bloomberg writes.

On a normal day, the hotel lobby takes the place of a conference room, where government officials, consultants and businesspeople are delighted with tea next to the bronze statuettes laid on the XIV century-style floor.

But in November, Ritz-Carlton became the prison used by the new Saudi leader, Prince Mohammed bin Salman, who took over the crown from his father, King Salman bin Abdulaziz of Saud.

The new leader, who has served as defense minister for 29 years, has been leading Saudi Arabia since the age of 31, and his ambitions can only be overcome by the dependence of the Saudi economy on "black gold", being a state with strong economic roots in the oil industry. Being the most developed Arab economy, which has the world's second largest oil reserve and is the world's leading exporter of fossil fuel, Saudi Arabia has earned its title of energy superpower.

However, the Saudi Arabian Public Investment Fund has raised $ 45 billion in the formation of Vision Fund's investment fund, initiated by SoftBank. The Vision Fund, which has raised over $ 100 billion, has set out to invest primarily in start-ups and large-scale renewable energy projects.

Virtually the world's largest oil exporter has decided to massively rely on renewable energies and new energy technologies. Why?

Firstly, the oil-based economic model is unattractive and less sustainable in the future, in the context that all developed countries, together with the largest carmakers, make various promises and declarations to move towards renewable energies to protect environment.

Secondly, this economic model was beginning to no longer promise equally enticing economic growth. If Saudi Arabia recorded a 10% economic growth in 2011, at a GDP of 671.2 billion dollars, this growth has been decreasing from year to year, reaching 20% ​​in just 1, 7%, respectively to a GDP of $ 644.9 billion. In 2017, GDP reached 683.8 billion dollars, and International Monetary Fund economists see massive growth in 2018 to $ 748 billion.

After the bet of 45 billion dollars, the heiress Prince has taken other large-scale initiatives. First, Saudis want to focus on tourism. Saudi Arabia intends to turn hundreds of miles off the Red Sea coast into a global tourist destination that targets international standards under the Red Sea project. The new tourist resort will be built as early as 2019 and would be a semi-autonomous region governed by independent laws and a sophisticated regulatory framework run by a private committee, according to Bloomberg. The project of 34,000 square kilometers (greater than the surface of Belgium - n.red.) Will be located between Umluj and Al Wajh and aims to include at least 50 islands, beaches and a series of latent volcanoes. As an economic impact, it will generate 35,000 jobs.

Another major project to fuel the post-war era was NEOM - a project that will be backed by over $ 500 billion, money from the Saudi government, the sovereign fund, and local and international investors, according to Bloomberg. "The NEOM city will be built from scratch on green fields and will have a unique opportunity to be distinguished from all the other places that have been built and developed over hundreds of years," says Mohammed bin Salman. Project proponents say it is a bold transformation initiative for the country, while others point to previous failed attempts to revise the Saudi economy, which also included the rise of industrial cities in the desert. Among the most powerful initiatives in the current project, there is an ambition to operate 100% based on renewable energies. According to Yahoo Finance, NEOM will be 33 times bigger than New York and aims to be the world's first independent zone that will stretch across three countries: it will occupy 25,900 square kilometers and will spread across the territory Jordan and Egypt. The city will be focused on the energy industry and biotechnology. "All services in the city will be fully automated, aiming to turn NEOM into the most efficient destination in the world," the Saudi Arabian Public Investment Fund announced.

Another mega-city that Saudi Arabia bases its new economic model is KAEC (King Abdullah Economic City - King's Abdullah Economic City), the world's first listed stock exchange. "We are now in the business of building cities," said Fahd Rasheed, managing director and executive of KAEC, at Davos World Economic Forum this year. "We are talking about moving towards a post-pervasive economy, and I think the next hot spot of the Saudi economy will be these mega-cities."

KAEC is part of the plan to reform Saudi Arabia's foreign trade relations, being one of the projects not initiated by the country's new leader, but by his father; King Abdullah bin Abdulaziz Al Saud founded this city in 2006. CNBC writes that the Saudi population is expected to double by 2050 and the economy to reach $ 1.5 billion. Thus, officials believe that the Red Sea region will become one of the most important regions of the world for the global economy.

Energy Minister Khalid al Falih told CNBC that the kingdom was "economically transformed," referring to the heir's ambitions to move away from oil. "Our message to investors is that the kingdom is transformed and we are serious about change," he says. "We must not only be prepared for the future but build the future through initiatives that are not built around just our traditional strengths - oil and gas - and also by building new industries, by factories with advanced production processes, by tourism and at the same time through social reforms. All this is coordinated. "

Regarding social reforms, Saudi Arabia promises to liberalize conservative society in the region, in addition to diversifying the economy. According to CNN, by the end of 2018, life in Saudi Arabia will be very different. First, the price of gas will increase. Aramco, the world's largest oil producer, raised pump prices by 127% on Jan. 1. Prices are up to $ 2 per gallon. "Although this initiative will reduce consumption, this is to be expected and reaffirms the government's move to move towards a non-petroleum economy," says Al Rajhi Capital investment fund in a report. Moreover, Saudis pay more for consumer goods and services after the government imposed a new 5% tax on them.

Among the steps to ideological liberalization are the fact that cinemas are coming back and open to the public. After 35 years of banning, the government began issuing licenses for commercial cinemas. Adam Aron, CEO of AMC (one of the largest US cinema chains - n.red.), Believes the industry in the kingdom can generate over $ 1 billion.

One of the social reforms that reflect the impact of global ideological trends in the region is that women have the right to drive cars. The announcement came after a royal decree signed last September. Several women campaigned and demonstrated to have the right to drive, and most were arrested for defying the ban. The move attempts to give women a much greater role in the country's economy, with only 22% of women active in the economy. The plan of the Saudi prince, called Vision 2030, aims to raise this percentage to 30%.

In addition, women will be allowed to participate in sports stadiums. Access will be allowed in three stadiums in major cities in the country. The General Authority for Sport, the governing body on sports, announced this change in October last year. Usually, Saudi men and women are segregated in public places, but the restriction fades that they were allowed to sit together at a series of concerts throughout 2017. "The most notable reforms will be related to women's rights," says Salman Al-Ansari, chairperson of the Saudi-American Public Relations Committee. "In fact, I would not be surprised at all if I saw a woman named as a minister."

Both socially and economically, the fact that tourists will receive visas for the first time in the history of the country can be an advantage. Prince Sultan bin Salman, who heads the Saudi Arabian Tourism Commission, has told CNN that the kingdom will issue the first visas for tourists this year. Until now, visas were granted only to those who arrived there for work or religious interest. The Kingdom proves that it relies on tourism, proposing both through the mega-towers and springs it builds, and by legislation to reach 30 million visitors annually by 2030, from 18 million visitors in 2016.

Last but not least, Saudi officials have repeatedly stated that they want to sell a stake in Aramco by the end of 2018. If it happens, the sale will be the largest stock market listing in history. Officials have announced they want to list Aramco at about $ 2 trillion, if the markets agree, and sell 5% of the company, which would amount to $ 100 billion.

In February, Ritz-Carlton returned to the hotel stadium. The most luxurious prison in the world no longer exists and the 160 Saudis who have been imprisoned here have either been transferred to normal prisons or have entered into agreements to pay hundreds of millions or even billions of dollars to the state in especially those who have been accused of tax evasion. The economic goal of eliminating corruption was to recover 100 billion dollars that came to the country's millionaires through fiscal frauds and money laundering. According to CNBC, the latest project announced by Saudi Arabia in conjunction with SoftBank is a 200 billion-dollar solar park with a capacity of 200 gigawatts. Thus, one of the world's largest oil and gas producers aims to become the largest renewable energy producer in the world.