Neom and coronavirus
The most obvious concern is that of money. Welfare payments to Saudi citizens were slashed as a result of falling oil prices, as consumers shunned fossil fuels while lockdowns spread across the world along with the virus. In the first quarter of 2020, Saudi GDP fell by 1% – and the International Monetary Fund are warning this figure to grow to 6.8% by the end of the year.
Despite this, Saudi Arabia’s sovereign wealth fund is still committed to funding the $500bn Neom project.`
But there are other issues brought on by the coronavirus as well. Around the world, the tourism, sports and entertainment sectors are either failing or desperate to stay afloat as a result of both the restricted movement and limited incomes brought on by the pandemic. These sectors are also key elements of Neom’s promises – with the kingdom predicting, before the crisis, more than 100 million tourists this year.
Construction is another area of concern for Neom’s development. Migrant workers from Africa, southeast Asia and beyond are relied upon to build the skyscrapers, hotels, stadiums and infrastructure needed to make Neom a success – but they have also borne the brunt of coronavirus in Saudi Arabia. The cramped and squalid conditions in which they are often forced to live proved the perfect environment for the virus to spread, and migrant workers were disproportionally affected by it. Travel restrictions across the world have also added to the problem of attracting foreign labour.
These factors can be added to the enduring problems faced by the Saudi regime of nervousness from potential international investors concerned about being associated with a state that has such an appalling human rights record. Most notably, the 2018 murder of dissident journalist Jamal Khashoggi by Saudi security services, its ongoing war in Yemen, which has killed hundreds of thousands, and the Neom-specific controversy of the displacement of tens of thousands of members of the Huwaitat community from their land.
Saudi Arabia is a vastly wealthy country, and while oil revenues may be slowing – perhaps in the longterm, due to moves away from fossil fuels – it still has hundreds of billions of dollars with which to fund its pet projects.
But the coronavirus outbreak, and its uncertain future, makes projects like Neom even more of a gamble for already nervous investors.
Read more: Neom offices move to project site
