Indian Council of World Affairs

Abstract: As Riyadh inaugurates Sindalah Island, the first project under its futuristic megacity NEOM, it continues to face a number of challenges on the road to modernisation. 

Introduction 

On 27 October 2024, Saudi Arabia inaugurated Sindalah Island, a luxurious tourist destination that is an integral part of NEOM, [i] the centrepiece of Vision 2030. [ii] Interestingly, October 2024 also marked seven years of the NEOM Project. Riyadh has achieved a milestone by completing and inaugurating the first project, Sindalah, under NEOM in two years. It is located in the northwest of the Kingdom in the Tabuk province on the Red Sea, and was announced in 2022 by Crown Prince Mohammed Bin Salman (MBS).[iii] Referring to the project, MBS stated, “This is another significant moment for NEOM and a major step in the Kingdom realising its tourism ambitions under Vision 2030. It will be a destination where travellers can experience the true beauty of NEOM and Saudi Arabia, above and below the water, making Sindalah the future of luxury travel.”[iv]

Since the announcement of NEOM in October 2017, the creative class from around the world has been invited by the Kingdom to participate in its creation. The project will have its independent economic zone with its laws, taxes and regulations. The project would run completely on renewable energy, marking a shift from an oil-based economy, and would provide a unique lifestyle and infrastructure. Even though the project is very promising with greater prospects for a sustainable future for the Kingdom, it also faces a number of challenges, including geopolitical, structural, environmental and ideological, along with the shortages of funding and investments. These challenges are creating hurdles for the Kingdom and MBS in completing the project. For instance, the Kingdom had to scale down “The Line” project, part of NEOM, from a massive 170 kilometres to just 2.4 kilometres due to financial constraints. [v] Nevertheless, Riyadh has completed and inaugurated the Sindalah project. In this context, this issue brief assesses NEOM’s genesis and significance and identifies the challenges NEOM faces in its completion. 

Vision 2030 and NEOM: The Genesis 

Under the leadership of MBS, the kingdom is aiming to make the economy less reliant on oil and targeting to diversify it with investments in other sectors like tourism, sports and the arts. MBS was appointed crown prince in 2017 [vi] and later in 2022 appointed as the Prime Minister of the Kingdom.[vii] Holding key ministries of finance, petroleum and defence, as well as foreign affairs, makes him the most powerful authority in the kingdom after the king, which also resulted in people calling him the de facto ruler. From a country where women did not have voting rights until 2011 [viii], religious policing was strong and even the music concerts were not allowed, the Kingdom of Saudi Arabia has come a long way. Especially with the Crown Prince leading the way, the Kingdom has seen major shifts in its policies. Previously, the traditional, more consultative system of decision making resulted in more pragmatic, cautious and non-interventionist policies. These characteristics have changed now as decision making is more rapid and centralised but more concentrated in the hands of only a few. [ix]

The Kingdom was going through an economic crisis heavily dependent on oil; the oil was extracted and sold, and the revenue was used by the kingdom to import necessary goods. In addition, the growing dependency of the Kingdom on fossil fuels has also adversely impacted its capacity to implement policies adhering to sustainable economic development. Young Saudis were leaving, and foreigners showed little interest in remaining in the kingdom. Consequently, the Crown Prince, realising this, aimed to resolve this hardship and reshape the country into a modern nation, both domestically and globally, one that would not be disparaged for its antiquated laws and economic practices. [x] Thus, in 2016, he unveiled “Vision 2030,” a blueprint aimed at fostering a vibrant society, a prosperous economy and an ambitious nation, with NEOM serving as its focal point. [xi] It is a strategic initiative to reduce the kingdom’s dependency on oil and promote economic diversification, human capital development and environmental sustainability. The Kingdom of Saudi Arabia is looking at accelerating income from tourism as part of its ambitious plans for Vision 2030. The Sindalah Island project is an example of this, which aims at meeting the kingdom’s vision tangibly. The project promises to create a new way of living and working that is sustainable, innovative and harmonious with nature. It is expected that 11 per cent of travellers visiting NEOM will also visit this island. [xii] Sindalah will offer luxury tourism in a unique setting contributing to NEOM’s broader goals of stimulating economic growth, creating jobs, promoting social progress and protecting the environment. 

The Significance of the NEOM Project 

“NEOM” name is constructed from two parts: the first part has three letters from the Greek prefix “Neo,” meaning "New," and the second part is the letter “M,” which represents the word “Mostaqbal,” an Arabic word meaning “future,” [xiii] meaning “New Future,” signifying a shift in the aspirations of the Kingdom. Per the official website of the NEOM project, the letter “M” is also the first letter of the Crown Prince, Mohammed Bin Salman, [xiv] signifying the importance of his ideas behind the project. Project NEOM is a cornerstone of Saudi Arabia’s Vision 2030, aimed at diversifying the economy and reducing reliance on oil. Envisioned as a futuristic city powered by renewable energy, it symbolises innovation, sustainability and technological advancement. 

NEOM seeks to attract global investment, create job opportunities and position Saudi Arabia as a hub for innovation and tourism with key initiatives, such as The Line (a linear smart city), Oxagon (a floating industrial city), Trojena (a sustainable mountain tourism city) and NEOM, amongst others. Its development aligns with Vision 2030’s goals of fostering economic growth, improving quality of life and reshaping the Kingdom’s global image as a forward-thinking nation. This Vision is funded by The Public Investment Fund (PIF), one of the world’s largest sovereign wealth funds. It is the investment arm and sovereign wealth fund of the government of the Kingdom. The fund has allocated $500 billion to finance and support the project besides contributions from local and global investors. [xv] Focusing on high-tech industries like artificial intelligence, renewable energy and biotechnology, the project aims to attract global talent and foreign investment, creating thousands of jobs and new revenue streams beyond oil. The idea of a city like NEOM is not new, as there were previous projects that were not successful, and this project too is not without challenges. Nonetheless, it holds immense significance for the Kingdom’s modernisation. 

Challenges 

Seven years down the line, the futuristic megacity — NEOM continues to face various challenges, including economic, social, geopolitical, environmental and technical, in its completion. One of the most worrying challenges for the kingdom is the conflict in the Red Sea. Amidst the ongoing war in Gaza, to show support and solidarity for the Palestinian plight, the Houthis have been attacking several countries’ ships, including the US and the UK, passing through the Suez Canal in the Red Sea. During the Yemen War, when Saudi Arabia and the UAE led airstrikes against the Houthis after the Yemen government fled to Aden, the Houthis used missiles and drones against targets in Saudi Arabia. There has been a truce in place since 2022. [xvi] However, the growing conflict in the region due to the Gaza War, particularly the visibility of its flashpoint in the Red Sea, has a possible impact on the Kingdom’s political, economic and social stability and its Vision 2030.  

In January 2024, the Sovereign Wealth Fund Advisory, Global SWF, said that the Red Sea conflict between Western powers and Houthi rebels in Yemen could put Saudi Arabia’s mammoth economic development projects at risk. The situation poses a significant risk to the diverse range of projects, most of which lie along the Red Sea coast and are well within the range of Houthi drones and cruise missiles. Since most of these projects have a tourism dimension, their success could be undermined by any ongoing, lengthy conflict, even if there is no direct hit by Houthi strikes. [xvii] With the ongoing Houthi attacks in the Red Sea, the disruption and dangers for tourists as well as the supply chain could pose a significant threat to the security and popularity of the island and other projects of Vision 2030, including NEOM. 

Vision 2030 is based upon connectivity, and Riyadh needs regional stability, maritime security and a broad set of alliances to fulfil its economic targets, all of which are challenged as long as the Red Sea remains a military flashpoint. 

Furthermore, amidst declining oil prices that have put a significant dent in the kingdom’s economy, in April 2024, the kingdom announced budget cuts for the projects under NEOM, signalling financial troubles. By 2030, the government at one point hoped to have 1.5 million residents living in “The Line,” a sprawling, futuristic city it plans to contain within a pair of mirror-clad skyscrapers, running through the desert in a straight line. Now, officials expect the development will house fewer than 300,000 residents by that time. Authorities also reduced the area of the project from a massive 170 kilometres to a mere 2.4 kilometres by 2030. [xviii]

Even the kingdom’s finance minister, Mohammed Al Ajlaadan, stated in late November 2024 that “NEOM is a long-term plan, and no one should expect returns in the coming early years.” This statement signifies that the Saudi government had overestimated initial plans and is now becoming aware of the practical realities. [xix]

Adding to its troubles, on 12 November 2024, the long-time CEO of NEOM, Nadhmi al-Nasr, resigned without mentioning the reasons for his decision, and Aiman al-Mudaifer was named as NEOM’s acting CEO. [xx] In addition, the project is also facing environmental and feasibility concerns. NEOM is part of the crown prince’s vision of a greener Saudi Arabia. The project is said to run completely on renewable energy. However, it is yet to be seen how successful the project will be in the future because the kingdom relies heavily on desalination, which is predominantly powered by fossil fuel. This costly method negatively impacts marine ecosystems due to the disposal of toxic by-products. Climate experts warn that dependence on untested technologies may hinder urgent climate action. [xxi]

Furthermore, citing humanitarian concerns, human rights campaigners say that two towns have been cleared and 20,000 members of the nomadic Bedouin Huwaitat tribe have been forcibly removed from the desolate terrain between the Red Sea coast and the mountainous Jordanian border without adequate compensation to build the megacity. [xxii]

The projects that are part of the broader modernisation goal also face criticism and hurdles from the Kingdom’s long-time ally — the Wahhabi clerics. In 1744, the grandfather of the Al Saud, Mohammad Bin Saud, allied with Mohammad Wahab and built the modern Saudi state. Since then, the Wahhabi clergy and the Al-Saud royal family have ruled side by side. Wahhabis hold a significant amount of power in the kingdom. Since MBS gained power, he has promoted “moderate Islam.” As a result, Saudi authorities have intensified the projection of a progressive and moderate Saudi Arabia. They also arrested preachers accused of extremism. [xxiii] While some in the clergy circle support MBS’s approach to moderate Islam by extension of his policies of modernisation, others disagree, sparking debates in the Salafi tradition itself. [xxiv] On the other hand, Saudi Arabia’s 67 per cent population, is under the age of 30, with around 32 per cent of that figure below 15, reportedly supporting the blend of tradition and modernity, [xxv] which proves beneficial for the kingdom’s policies. 

Conclusion 

Project NEOM, including the recently inaugurated Sindalah Island project, holds considerable significance for Saudi Vision 2030. It gives a glimpse of the aspirations of Crown Prince Mohammed Bin Salman for a new Saudi Arabia to the world. However, the vision is not without its discrepancies and faces significant hurdles and criticism. NEOM has long been called an experiment, and it remains to be seen how the kingdom navigates through challenges, achieving the goals the leadership has outlined for itself.

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*Sugandhi, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal. 

Endnotes

[i] Project NEOM is a futuristic urban area that aspires to be a global hub for trade, innovation, and knowledge.

[ii] Vision 2030 is a strategic initiative to reduce the kingdom’s dependency on oil and promote economic diversification, human capital development, and environmental sustainability.

[iii] Middle East Monitor. 2024. “Saudi Arabia Opens Sindalah, the First Luxury Project Completed for Futuristic Megacity NEOM.” Middle East Monitor. October 28, 2024. https://www.middleeastmonitor.com/20241028-saudi-arabia-opens-sindalah-the-first-luxury-project-completed-for-futuristic-megacity-neom/.

[iv] “HRH Prince Mohammed Bin Salman Announces Sindalah, NEOM’s First Island Development.” 2022. Www.neom.com. December 5, 2022. https://www.neom.com/en-us/newsroom/hrh-announces-sindalah.

[v] Ahmed Zikrallah. 2024. “On the Stalling of Major Projects in Saudi Arabia.” Middle East Monitor. April 30, 2024. https://www.middleeastmonitor.com/20240430-on-the-stalling-of-major-projects-in-saudi-arabia/.

[vi] Nasa, Rahima. 2019. “Timeline: The Rise of Saudi Arabia's Prince Mohammed Bin Salman.” FRONTLINE. October 21, 2019. https://www.pbs.org/wgbh/frontline/article/timeline-the-rise-of-saudi-arabias-prince-mohammed-bin-salman/.

[vii] BBC News. 2020. ”Saudi Crown Prince Mohammed Bin Salman, Power behind the Throne,” bbc.com. October 6, 2020. https://www.bbc.com/news/world-middle-east-40354415.

[viii] MacFarquhar, Neil. 2011. “Saudi Monarch Grants Women Right to Vote.” The New York Times, September 25, 2011, sec. World. https://www.nytimes.com/2011/09/26/world/middleeast/women-to-vote-in-saudi-arabia-king-says.html.

[ix] Karim, Umer. “The evolution of Saudi foreign policy and the role of decision-making processes and actors.” In Foreign Relations of the GCC Countries, pp. 71-88. Routledge, 2018.

[x] Hope, Bradley, and Justin Scheck. 2020. Blood and Oil: Mohammed Bin Salman”s Ruthless Quest for Global Power. New York: Hachette Books.

[xi] “Sindalah, a Luxury Island in the Red Sea of Saudi Arabia.” 2023. Saudi Arabia. June 8, 2023. https://saoediarabie.nl/en/megaprojects/sindalah-a-luxury-island-in-the-red-sea-of-saudi-arabia/.

[xii] Farag, AlshimaaAboelmakarem. “The story of NEOM city: Opportunities and challenges.” New cities and community extensions in Egypt and the Middle East: Visions and challenges (2019): 35-49.

[xiii] NEOM. 2022. “About NEOM.” Neom.com. Neom. 2022. https://www.neom.com/en-us/about.

[xiv] SaudiPedia. 2024a. “NEOM Project.” Saudipedia. July 4, 2024. https://saudipedia.com/en/article/229/economy-and-business/projects/neom-project.

[xvi] Hammond, Andrew. 2024. “Red Sea Crisis a Threat to Saudi Giga-Project Investment.” AGBI. January 18, 2024. https://www.agbi.com/giga-projects/2024/01/red-sea-crisis-a-threat-to-saudi-giga-project-investment/.

[xvii] Ibid.

[xviii] Fattah, Zainab, and Matthew Martin. 2024. “Saudis Scale Back Ambition for $1.5 Trillion Desert Project Neom.” Bloomberg.com, April 5, 2024. https://www.bloomberg.com/news/articles/2024-04-05/saudis-scale-back-ambition-for-1-5-trillion-desert-project-neom.

[xix] Thompson, Polly. 2024. ”Neom Is a '50-Plus-Year Plan,' Says Saudi Arabia's Finance Minister.” Business Insider. November 28, 2024. https://www.businessinsider.com/neom-saudi-arabia-economy-budget-deficit-progress-2024-.

[xx] Abdallah, Nayera, and Pesha Magid. 2024. “Long-Time CEO of NEOM Goes as Saudi Arabia Scales Back Mega-Projects.” Reuters, November 12, 2024. https://www.reuters.com/world/middle-east/saudi-neoms-long-time-ceo-goes-kingdom-scales-back-mega-projects-2024-11-12/.

[xxi] Thomas, Merlyn, and Vibeke Venema. 2022. "Neom: What's the Green Truth behind a Planned Eco-City in the Saudi Desert?" BBC News, February 22, 2022, sec. BBC Trending. https://www.bbc.com/news/blogs-trending-59601335.

[xxii] Veeken, Roos. 2022. “Saudi Arabian Tribe Forcibly Evicted to Accommodate NEOM Project – Amman Center for Human Rights Studies.” Amman Center for Human Rights Studies. December 12, 2022. https://achrs.org/english/2022/12/12/saudi-arabian-tribe-forcibly-evicted-to-accommodate-neom-project/.

[xxiii] Ismail, R. A. I. H. A. N. “Saudi Salafi clerics under MBS: Reform and survival.” Crown Center for Middle East Studies (2023).

[xxiv] Ibid.

[xxv] Rahaimy, Dahlia. 2024. "Youth: The Biggest Stakeholder in Saudi Arabia's Future." Sauditimes.org. June 26, 2024. https://sauditimes.org/narratives/viewpoints/youth-is-biggest-stakeholder-in-saudi-arabias-future/.