Challenges Mount for Saudi Arabia's Ambitious LINE Project

Saudi Arabia's Futuristic Neom: Ambitions Meet Harsh Realities

by Faruk Imamovic
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Challenges Mount for Saudi Arabia's Ambitious LINE Project
© Getty Images/Joern Pollex

Saudi Arabia's vision for Neom, a futuristic megacity set in the desert, has captivated the world with its ambitious scope and sci-fi elements. Yet, the kingdom faces significant hurdles in bringing this vision to life, mainly due to financial constraints and geopolitical challenges. Experts assert that the project's high costs and reliance on foreign investment make its grandiose goals increasingly unlikely to be achieved.

A Fantasy Struggling to Become Reality

When Crown Prince Mohammed bin Salman unveiled Neom in 2017, it seemed like a dream plucked straight from a science fiction novel. The plans included a high-tech linear city intended to house more robots than people, a year-round ski resort with artificial snow, and theme parks blending virtual and physical worlds.

Initial skepticism about the project has since grown into concerns about feasibility. Kristian Coates Ulrichsen, a fellow for the Middle East at Rice University's Baker Institute for Public Policy, highlighted the difficulties of transforming Neom from an imaginary concept into a tangible reality. The primary challenge is the enormous cost, estimated at up to $1.5 trillion, with Saudi Arabia struggling to attract the necessary foreign investment.

The scale and scope of Neom are unprecedented, and the financial implications are daunting. The megacity is not just a single development but a collection of ambitious projects that require substantial capital. As such, the kingdom's reliance on foreign investment has proven to be a significant stumbling block.

The Foreign Investment Dilemma

From the outset, Neom's planners anticipated that foreign investment would fund a significant portion of the project. However, this expectation has yet to be realized. Shortly after the megacity's announcement, the Saudi government conducted a high-profile purge, detaining 400 of the nation's most influential figures at Riyadh's Ritz-Carlton hotel. This event, intended to consolidate power and combat corruption, had the unintended consequence of deterring potential investors.

"Saudi foreign investment levels — they had been declining anyway — collapsed after this, and it's been very difficult for them to build back up," Ulrichsen explained. The situation worsened in 2018 with the murder of journalist Jamal Khashoggi, which led to global condemnation and further isolation of the kingdom from Western investors.

Crown Prince Mohammed bin Salman of Saudi Arabia
Crown Prince Mohammed bin Salman of Saudi Arabia© Getty Images/Leon Neal
 

Spiraling Costs and Public Spending Concerns

The Saudi Public Investment Fund has shouldered most of Neom's financial burden, but officials are increasingly anxious about the project's escalating costs. While the official estimate for Neom stands at $500 billion, many insiders believe this figure to be grossly underestimated.

Bloomberg reported in April that the financial strain of Vision 2030, with Neom as its centerpiece, was causing concern within the government. Saudi Arabia has even started borrowing to fund some of its ambitious projects, raising questions about the sustainability of its public spending.

Andreas Krieg, a Gulf specialist at King’s College London, noted the inefficiencies in Saudi spending, particularly regarding expensive Western consultancy firms. "Vision 2030 consumes a lot of money, and there's a lot of inefficiencies," he said.

The financial pressures are compounded by competition from regional rivals such as Dubai and Abu Dhabi, which continue to attract more foreign investment due to their established infrastructure and business-friendly environments. Saudi Arabia's public spending bill is extremely high, leading to scrutiny over whether the expenditures on megaprojects like Neom are justifiable.

Human Rights Scrutiny and Project Viability

Adding to Neom's challenges are renewed accusations of human rights abuses. A BBC News report claimed that Saudi Arabia authorized the use of lethal force to clear the way for Neom, targeting the Huwaitat tribe, who traditionally inhabited the area. Human rights organizations have since urged businesses and governments to reconsider their involvement with the project.

Lina al-Hathloul, a human rights activist, emphasized that Neom's construction symbolizes the current state of the country, where opposition is met with severe penalties. "This project symbolizes the current state of the country: it was decided without the people's consent, and when they oppose it, they are sanctioned in courts that lack independence," she said.

Despite these controversies, construction on Neom continues, particularly on its most prominent feature, The Line. The number of workers on the project has doubled over the past year, and satellite images reveal significant progress. Yet, doubts remain about the project's long-term viability and whether it can meet its revised population targets by 2030.

The Future of Neom

As Saudi Arabia pushes forward with Neom, it faces an uphill battle to secure the foreign investment needed to fund the project fully. The kingdom's public spending is under scrutiny, and competition from regional rivals such as Dubai and Abu Dhabi adds pressure.

Neom's future remains uncertain. While the project symbolizes Saudi Arabia's drive to modernize and diversify its economy away from oil, the practicalities of achieving such an ambitious vision are daunting. For now, the megacity stands as a testament to both the kingdom's aspirations and the formidable obstacles it must overcome.

Saudi Arabia
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