Something WEIRD is happening in Saudi Arabia...
Beyond Economics
224,877 views
A city a hundred and seventy kilometres long, two parallel mirrored walls five hundred metres high, nine million people inside. That was the promise. Four years later the published targets have been cut to a fraction of the original plan, contractors report unpaid invoices, and the fund building it is running a budget that assumes an oil price the market has not delivered. Meanwhile the same country is buying football clubs, hosting a World Cup, and signing AI infrastructure deals worth tens of billions. Both of these things are true at once — an enormous project quietly shrinking, and an enormous spending programme quietly accelerating. If you only watch one of them, you will get Saudi Arabia completely wrong.
Not a hidden collapse. Not a kingdom running out of money. A quiet, deliberate reallocation of a finite pool of capital, away from a mirrored city almost nobody outside Saudi Arabia will ever set foot in, and toward whatever the state has decided will actually buy it time. And that reallocation runs through a mechanism boring enough that almost nobody has read it properly: a single assumed oil price, typed into a government budget document, that the market spent most of this year refusing to honour. The cancelled dams, the halted tunnel, the football clubs, the nine-figure AI contracts, the mandate quietly emptying office towers in Dubai — all of it sits downstream of that one number.
To understand how a hundred-and-seventy-kilometre mirror became a rounding error, you have to start somewhere that has nothing to do with architecture. In 2016, with oil trading near thirty dollars a barrel after a two-year price collapse, the Saudi government published a plan called Vision 2030. The idea was blunt: the country could no longer run its economy, or its budget, on the assumption that oil would keep paying for everything. So the state built a new fund structure around its sovereign wealth vehicle, the Public Investment Fund, and started looking for something spectacular enough to prove the diversification was real. In October 2017, at an investment conference in Riyadh, the government announced NEOM — a five-hundred-billion-dollar new region in the country's northwest, eventually priced past a trillion. In 2022, the flagship inside NEOM got a name and a shape: The Line. A hundred and seventy kilometres of continuous city, two mirrored walls five hundred metres high, designed to eventually hold nine million residents with no cars and no streets. It was sold, from the beginning, as evidence that the oil hedge was working.
20 Comments
However, I'm surprised that the regime there has survived this long.
The ruling family is noted for its corruption, and exploited the country's oil wealth, at the expense of the ordinary people.
Saudi Arabia as the world knows it was, and is, unsustainable.
Something WEIRD is happening in Saudi Arabia...
Beyond Economics
224,877 views
A city a hundred and seventy kilometres long, two parallel mirrored walls five hundred metres high, nine million people inside. That was the promise. Four years later the published targets have been cut to a fraction of the original plan, contractors report unpaid invoices, and the fund building it is running a budget that assumes an oil price the market has not delivered. Meanwhile the same country is buying football clubs, hosting a World Cup, and signing AI infrastructure deals worth tens of billions. Both of these things are true at once — an enormous project quietly shrinking, and an enormous spending programme quietly accelerating. If you only watch one of them, you will get Saudi Arabia completely wrong.
Not a hidden collapse. Not a kingdom running out of money. A quiet, deliberate reallocation of a finite pool of capital, away from a mirrored city almost nobody outside Saudi Arabia will ever set foot in, and toward whatever the state has decided will actually buy it time. And that reallocation runs through a mechanism boring enough that almost nobody has read it properly: a single assumed oil price, typed into a government budget document, that the market spent most of this year refusing to honour. The cancelled dams, the halted tunnel, the football clubs, the nine-figure AI contracts, the mandate quietly emptying office towers in Dubai — all of it sits downstream of that one number.
To understand how a hundred-and-seventy-kilometre mirror became a rounding error, you have to start somewhere that has nothing to do with architecture. In 2016, with oil trading near thirty dollars a barrel after a two-year price collapse, the Saudi government published a plan called Vision 2030. The idea was blunt: the country could no longer run its economy, or its budget, on the assumption that oil would keep paying for everything. So the state built a new fund structure around its sovereign wealth vehicle, the Public Investment Fund, and started looking for something spectacular enough to prove the diversification was real. In October 2017, at an investment conference in Riyadh, the government announced NEOM — a five-hundred-billion-dollar new region in the country's northwest, eventually priced past a trillion. In 2022, the flagship inside NEOM got a name and a shape: The Line. A hundred and seventy kilometres of continuous city, two mirrored walls five hundred metres high, designed to eventually hold nine million residents with no cars and no streets. It was sold, from the beginning, as evidence that the oil hedge was working.