Saudi Arabia’s $500 Billion Futuristic City State

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Sharma is a seaside corner of northwest Saudi Arabia. It is so barren that the only abundant resources a group of consultants could identify were sunlight and “unlimited access to saltwater.”

But Saudi Crown Prince Mohammed bin Salman didn’t see a wasteland. He saw the future— and hatched a plan for a $500 billion city-state to cover 10,000 square miles of rocky desert and empty coastline to attract the “world’s greatest minds and best talents” to the world’s best-paying jobs in the world’s most livable city.

They’ll fly drone taxis to work while robots clean their homes. Their city will supplant Silicon Valley in technology, Hollywood in entertainment and the French Riviera as a place to vacation.

It will host a genetic-modification project to make people stronger – these ideas are laid out in 2,300 pages of documents by Boston Consulting Group, McKinsey & Co. and Oliver Wyman.

The project is called Neom – a portmanteau of the Greek word for “new” and the Arabic word for “future.” The documents offer the most detailed look inside Neom and its planning since the project was unveiled in 2017. Former Neom employees and people familiar with the project say they don’t know how much of the plan will become reality due to potential funding issues and technological limitations.

“Neom is all about things that are necessarily future-oriented and visionary,” Neom Chief Executive

Nadhmi al Nasr said. “So we are talking about technology that is cutting edge and beyond—and in some cases still in development and may be theoretical.” He said that construction is underway. The first projects include an airport and a resort. The government has also built a palace at the site.

Neom is the centerpiece of the Crown Prince’s (MBS’s) effort to transform an insular, oil-dependent kingdom into a country with an outward-looking, diversified economy. Rather than relying on petroleum revenue to fund purchases from foreign countries, MBS has said he wants Saudi Arabia to produce goods and services that Saudis currently buy abroad. He has proposed Neom as an area with car factories, hospitals, tech companies, and resorts to keep Saudis spending domestically.

But the plan to spend $500 billion building Neom from scratch, rather than investing in existing Saudi cities, reflects the kingdom’s long-standing problems in attracting foreign investment. Many foreign companies have long avoided investing in Saudi Arabia due to an opaque legal system, corruption, and social strictures banning alcohol and requiring women to get a male relative’s permission to travel. MBS found those structures so entrenched that it was easier to develop a new city than to change existing ones. “Starting Neom from scratch, with independent systems and regulations, will ensure the availability of best services without social limitations,” he is recorded to have said at Neom’s first board meeting.

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The project is so ambitious that it incorporates some technologies that don’t even exist yet.

  1. Flying Taxis: Scientists might take a flying taxi to work. “Driving is just for fun, no longer for transportation (e.g. driving Ferrari next to the coast with a nice view),” planning documents show.
  2. Cloud Seeding: The desert won’t always feel like the desert. “Cloud seeding” could make it rain.
  3. Robot Maids: While scientists are at work, their homes would be cleaned by robot maids.
  4. State-of-the-Art Medical Facilities: Scientists would work on a project to modify the human genome to make people stronger.
  5. World-Class Restaurants: There would be fine dining galore in a city with the “highest rate of Michelin-starred restaurants per inhabitant.”
  6. Dinosaur Robots: Residents could visit a Jurassic Park-style island of robot reptiles.
  7. Glow-in-the-Dark Sand: The crown prince wants a beach that glows in the dark, like the face of a watch.
  8. Alcohol: Alcohol is banned in the rest of Saudi Arabia. But it likely won’t be here, say people familiar with the plan.
  9. Robot Martial Arts: Robots would do more than just clean your house. They also could spar head to head in a “robo- cage fight,” one of many sports on offer.
  10. Security: Cameras, drones and facial-recognition technology are planned to track everyone at all times.
  11. Moon: A giant artificial moon would light up each night. One proposal suggests it could live-stream images from outer space, acting as an iconic landmark.

Neom’s reliance on foreign consultants reveals another deeply entrenched challenge. As a young nation without a single university until 1957, Saudi Arabia historically lacked expertise in planning, engineering, and management. So it turned to foreign experts like McKinsey, which has worked in Saudi Arabia for more than 40 years. McKinsey increased its Saudi staffing by acquiring a local consultancy called Elixir in 2017.

In addition to recommendations on urban planning, economic, legal and regulatory systems, McKinsey details using “big data” – the use of computers to sift through volumes of information and a “13-pillar liveability framework” to quantify how much people would like living in Neom and objectively prove it’s the world’s most livable place.

Neom aims to have “zero work/ stress-related diseases,” with residents working at startups or companies like Inc., which Saudi officials are trying to lure with incentives like free energy and subsidized labor, according to the planning documents. Residents’ children would be schooled in the “leading education system on the planet,” with innovations like “hologram faculty.”

Though Neom is surrounded by desert, it will have many farmers markets. Temperatures will be cooler than Dubai, the documents say and moderated by “cloud seeding” to make it rain. Because they live in the city with the “highest GDP per capita,” the documents say, a resident could indulge in a fancy dinner; Neom aims to have the “highest rate of Michelin-starred restaurants per inhabitant.”

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To keep Neom safe, cameras, drones and facial-recognition technology will let Saudi intelligence services track everyone. “Everything can be recorded,” the founding board declared.

Neom in a statement said the project is about “technology in all sectors such as mobility, livability, health and medical, all of which will ensure we are providing the most attractive living environment on the planet.”

A major goal is to attract large Western companies. Neom’s board in 2017 suggested guaranteeing Tesla Inc. billions in annual government purchases in exchange for Tesla moving automotive production to Neom —and giving the kingdom a stake. Saudi Arabia’s sovereign wealth fund last year spent $2 billion to buy 5% of Tesla. CEO Elon Musk later said he was taking Tesla private with the help of Saudi Arabia, but subsequently reversed himself and said he didn’t plan to do that.

MBS also wants Neom to host innovations like the “Apollo” project with Softbank, which will create “a new way of life from birth to death reaching genetic mutations to increase human strength and IQ.” Softbank declined to comment.

One potential reward for foreign companies is an investment fund that will commit money to businesses “that can contribute to Neom’s vision and future,” the Neom spokesman said, “either by locating their headquarters there or selling goods and services in Neom.”

One surprising element is a proposal to allow alcohol, say people familiar with the plan. With borders encompassing land acquired from Jordan and Egypt, Neom would function largely as a separate country. Hoping to build a bridge across the Red Sea, MBS arranged with Egypt’s president to acquire two uninhabited islands, sparking protests from thousands of Egyptians.

In a January 2017 Neom board meeting, MBS made his ambitions clear: The prince “envisions Neom the largest city globally by GDP, according to the planning documents.

Another challenge is what the legal system of this new city should look like. Saudi Arabia’s opaque, unpredictable and religious-based justice system presented “red flags” to foreign investors, according to the planning documents. It suggested a new structure in which all judges will be appointed by—and report to—the king. They, like the regular Saudi judges, will comply with Sharia law, planning documents show.

“Neom law will be based on best practices in the areas of economic and business law, as well as feedback from potential investors and residents,” Neom said in a statement to The Wall Street Journal.

Whether Neom becomes a reality, and if it does how closely it resembles these plans, remains to be seen. Meanwhile, construction on Neom is currently underway using thousands of foreign workers.

Sources: The Wall Street Journal, Zero Hedge


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