As Saudis sell city of the future, investors and critics see a desert mirage

It looks like something out of a science fiction movie. A gleaming, pristine city rising up out of the barren desert, a shimmering white and silver sea of sustainable buildings housing high-tech businesses and high-tech homes for high-tech people fully embracing the 21st century.

At least that is how its Saudi Arabian promoters envision Neom, a massive development the size of Belgium in the country’s northwestern corner, the crown jewel of Saudi Crown Prince Mohammed bin Salman’s Vision 2030 program, which aims to reduce the country’s dependence on oil.

To the Saudis, who plan to pump $550 billion into the development, Neom is the future. (Literally. Neom combines the ancient Greek for “new” and the first letter of the Arabic word for “future.”) It will be sustainable, managed by an artificial intelligence system to maximize efficiency, and undergirded by an ultra-fast public transportation system, with the less glamorous parts of city life helpfully hidden away underground. The hub will span 26,500 square kilometers (10,230 square miles), with housing for one million.

But the vision may be more a desert mirage than reality. Constrained by the kingdom’s conservative mores and relatively late entrance into the global business sandbox, its main booster tainted by his own Machiavellian machinations, and the country’s economy still hopelessly tied to fossil fuels, some wonder whether the high-tech city will ever truly get off the ground. More, will it be able to attract enough international investment to turn it into the utopian hub its marketing material sees as just around the corner?

“Here in Israel, it’s hard enough to bring agrotech and foodtech companies to Kiryat Shmona,” said Israeli urban planner Rafi Rich, “and it’s not in the middle of nowhere.”

Neom won’t be in the middle of nowhere exactly, and it won’t be Kiryat Shmona, a sleepy development town on Israel’s northern border.

With miles of Red Sea coastline, Neom will sit on the edge of one of the world’s most important shipping lanes, and may be linked by causeway to Egypt’s Sharm el-Sheikh. At its northernmost point, it will be just 50 kilometers (30 miles) from the Jordanian port of Aqaba, and to Eilat.

Aimed at a cosmopolitan elite, Neom will have its own tax system and operate according to “progressive laws that are compatible with international norms and conducive to economic growth,” according to marketing materials. In other words, it will be largely independent of the stifling laws of Wahabi Islam that control life in the rest of the kingdom.

The southern part of desert marked out for Neom already has palaces and villas for the royal family, as well as hotels, some apartments, and an airport completed in 2019 in an area called Neom Bay, the first phase of the project.

It was there that Prime Minister Benjamin Netanyahu reportedly met in November with then US secretary of state Mike Pompeo and bin Salman (better known by the acronym MBS) for what was said to be the first known high-level meeting between an Israeli and Saudi leader.

Saudi sources subsequently denied that the meeting with Netanyahu — which was not photographed — had taken place.

The centerpiece of the development is “The Line,” a long, ruler-straight urban corridor running 170 kilometers (105 miles) through the southern part of Neom. According to bin Salman, the hyper-developed stripe will be 100 percent based on renewable energy, preserve 95% of nature, and have neither roads nor cars.

What it will have is airports, a seaport, tourist facilities and industry, with hopes of attracting businesses in the biotech, advanced manufacturing, mobility, and construction sectors. In the words of MBS, the project will kickstart “a civilizational revolution which puts humans first.”

While humans, homes, offices, clinics, schools, parks and more will occupy the top level of The Line, where walkability will be emphasized, below will be an underground warren of stores, commercial spaces and other services needed to keep the city humming along. Below that will be the so-called Spine, a transportation line that will whisk residents and goods up and down the 170-kilometer corridor. Most trips will take 20 minutes or less, its boosters boast.

Contracts have already been signed with large companies. Bechtel is to create the subterranean transportation system. The UK-based Solar Water Plc has been hired to build a “solar dome” desalination plant. And a $5 billion deal has been signed to create a massive renewable energy driven ammonia production facility for the supply and export of green hydrogen for the transportation industry.

The city will reportedly harness drinking water from the air  and use robots for repetitive tasks. There have even been reports about plans for drones serving as flying taxis, glow in the dark beaches, robotic butlers and an artificial moon.

In recent months, construction work has begun on housing for workers who will build The Line’s infrastructure.

The Saudis, who are hoping that the project will create 380,000 jobs and channel $180 billion into the kingdom’s coffers by 2030, intend to use their sovereign wealth fund to foot the bills, while putting the hard sell to potential investors via a slew of glitzy videoclips.

But while the city may look like its taking off on paper, it has yet to prove that it will be more than another of the kingdom’s much hyped but little realized white elephants.

“There are many projects that were announced by MBS and previous leaders that didn’t materialize,” said Yoel Guzanksy, a Saudi expert at the Institute for National Security Studies in Tel Aviv.

“I’m happy to play the skeptic. Neom was announced more than three years ago. I don’t see any substantial foreign money coming in. I also don’t see how much money the government has to spend on it after the drop in oil prices. They still have a huge deficit,” he added.

That deficit reached around $79 billion in 2020, according to SP Global Platts, in a country where oil revenues from the state-owned Aramco oil company supports around 40 percent of the country’s GDP.

The kingdom’s checkered history with overhyped projects includes King Abdullah Economic City, a massive project of six new cities launched by Saudi Arabia’s former monarch, Abdullah bin Abdulaziz Al Saud, in 2005, that was aimed at turning the kingdom into one of the globe’s top investment destinations by 2010.

By 2018, only one of the cities had been developed, with 7,000 residents, far short of the 2.5 million population goal, according to the Financial Times.

A Western diplomat who has lived in Saudi Arabia said that the kingdom lacked the skilled workforce to run such mega-projects.

Many analysts noted that it is also in competition with the United Arab Emirates and other Gulf petrostates struggling with falling oil prices and attempting to diversify by luring large companies to establish headquarters within their borders.

Rich, who is also a senior lecturer in urban strategy and smart cities at the Technion — Israel Institute of Technology, in Haifa, questioned the sense of building a city from scratch in a “hot place far from the ecosystem.”

Rich pointed to Masdar, a planned city in Abu Dhabi that also has automatic transportation and was started 15 years ago with hype not unlike that surrounding Neom. But even though Abu Dhabi has already marked itself out as a hub of regional innovation, Masdar has failed to attract any sizeable residential population and is made up mainly of offices and academic institutions, Rich said.

“It’s rare to take an empty space and build a city from scratch,” said Rich, who was quietly approached some years ago to get involved with Neom, but thought it too unrealistic at that stage. “Maybe it’ll get to the size of Masdar, around six square kilometers. On paper you can do anything, and The Line is pure genius — it can be done in segments — but you need to get clever people to leave places like New York, Hamburg, and Dubai and move to nowhere. It’ll take decades, if at all.”

Another Western diplomat who has lived in Saudi Arabia also said most Western companies would be more likely to be drawn to the UAE, which is more cosmopolitan.

“Where are the HQs for the banking industry in the Middle East? Not in Riyadh, but in Abu Dhabi and Dubai. The UAE has been ahead for some time,” said the diplomat, who spoke on condition of anonymity.

The World Bank’s latest annual Ease of Doing Business rankings for the Middle East and North Africa put the UAE in first place, with Saudi Arabia in fifth.

As foreign investment in Neom has failed to materialize with 2030 looming, MBS has started pressuring Saudi companies to pour money into the country and take up some of the slack.

“Their track record on attracting big business so far has been very bad,” said a lawyer who worked in Saudi Arabia for 20 years and only left recently. “Part of it has been red tape. You need lots of licenses that you need to renew and pay for.”

“Saudi Arabia’s growth is led by the government. There isn’t really any from the private sector. The government puts money on the table so that things get built. When the oil price was high, things were fine,” the lawyer said. “But when the economy turned sour after 2016 because of lower oil prices, all foreign companies suffered. The overheads were high because you had to hire a number of Saudi nationals in lots of jobs that were not really needed and pay them big salaries.”

Compounding the issues is the kingdom’s spotty human rights record, made worse by MBS himself, which could easily scare off potential investors who would rather not deal with the public relations fallout of associating with the prince and his landmark project.

Most famously, MBS has been directly linked to the grisly assassination and dismemberment of the Saudi journalist, Washington Post columnist and regime critic, Jamal Khashoggi, at the Saudi consulate in Istanbul in 2018. Khashoggi himself warned in March 2018 that Neom’s failure could “bankrupt the country” but that nobody was allowed to say this.

The Khashoggi affair was enough to prompt the British architect Lord Norman Foster to pull out of NEOM’s advisory board, although he subsequently signed a contract to build an airport elsewhere in the kingdom.

Another black eye for Neom has come with the news that at least 20,000 members of the Bedouin Huwaitat tribe are facimng eviction to make way for the project.

One particularly outspoken tribal member was shot dead last year.

There are also concerns about privacy for the denizens of the project, which is being sold as a “cognitive” city which will harvest massive amounts of data about its residents to feed into computer systems that will predict and provide for their every need.

The idea is to connect people and things as much as possible and take the hassle out of daily life, saving valuable time and energy and ensuring a high level of service maintenance and accessibility. Neom, says Joseph Bradley, sector head of technology and digital, will leverage over 90 percent of the data to “change how people work, live and play.”

But massive data harvesting projects tend to make people skittish, even when they are not being managed by an autocratic regime not known for tolerating dissent.

In Toronto, for instance, an experiment by Google sister company Sidewalk Labs to design a brownfield redevelopment project built around data collection raised near-constant criticism and concerns over what would be done with the information.

“While this can improve aspects of urban living, it also seriously risks amplifying current, problematic practices of personal information handling online, and extending them much more deeply into the physical environment that we inhabit,” University of Toronto privacy and surveillance expert Andrew Clemons wrote in 2018. 

When The Times of Israel tried to reach out to Neom’s media office, it managed to get only an autoreply reading “While we are unable to fulfil your request at this time, we have added you to our media list to keep you up to date on the exciting new developments at NEOM.” In other words, there was nobody home.

“I’m very skeptical about anything that MBS signs and about this futuristic city,” said Guzansky. “But if it succeeds, I’m willing to go buy a hat, and eat it.”