The Decibel - Saudi Arabia’s vision for its future is crumbling

Episode Date: May 7, 2026

Saudi Arabia has spent a decade pouring billions into investments to modernize their finance, entertainment, sports, technology and tourism industries, to help shift their economy away from oil. Now these efforts, called Vision 2030, are being challenged, in part, by the war in Iran, the missile and drone strikes against Saudi and the closure of the Strait of Hormuz. Doug Saunders is the Globe’s International affairs columnist. He’s on the show today to explain how Saudi’s vision for its future and relationships with other countries are now changing. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Saudi Arabia has spent the last decade pouring billions of dollars into positioning itself as a hub for finance, entertainment, sports, technology, tourism, and glitzy megaconstruction projects. Those efforts have been seriously challenged, in part by the war in Iran. Saudi Arabia has been hit several times by missiles and drones from Iran, and its hugely important oil revenues have been impacted by the closure of the strength. of Hormuz. And a concern is that the war could further erode Saudi's incentive to align itself with the democratic world.

The Globe's International Affairs columnist Doug Saunders was recently in Riyadh, Saudi Arabia. Today, he explains how Saudi's vision for its future is crumbling. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Doug, great to have you back in studio. Hi, Cheryl. very good to be here. So, Doug, you recently went to Saudi Arabia to the capital city and larger city, Riyadh. For those of us who haven't been there before, what's it like?

Riyadh is a changing place. The last time I was there, it was sort of this super highway of glass towers in the middle of the desert with sort of beige residential and retail neighborhoods sort of cascading away from it. It's a big city, but it has that classic sort of Arab Gulf city look where the main street is basically a highway, right? Strip development. Now it's changing fast. If you look across the city from a tall building, as you often find yourself doing there, you see this world of absolutely enormous construction sites. I mean, by enormous, I mean each site has like a hundred giant cranes at it.

And you see many of those. There are eight giant stadiums being built in Riyadh for the 2034 World Cup, holding as many as 92,000 people. There are huge sites like Manhattan-sized pavilions and complexes and theme parks for the coming Expo 2030. there was a building that at least until recently was well under construction that was meant to be the most voluminous building in the world, which was almost half a kilometer on a side, a perfect cube. Oh my goodness. Okay.

I was going to say, what does that even mean, voluminous? So just very large. So 400 meters, 400 meters, 400 meters, 400 meters, perfect cube. So the pit for it is absolutely huge. And then, for example, a major historic site that was the like origins of Riyadh is being turned into this tourism, shopping, dining complex, and it has more than 100 cranes building this right now, too. So the scale of stuff that erupted over the last 10 years just in Riyadh, never mind further beyond,

it's a trillion dollar project at least, just that stuff. That's incredible. Yeah. So what you're describing here sounds like there's a lot that has changed in the past 10 years. And a lot of these changes are part of this government initiative that began in 2016. It's called Vision 2030, which was a project spearheaded by Mohamed bin Salman. How significant has this initiative been? And what was the overall purpose?

So when Mohamed bin Salman, MBS, as he's widely known, the crown prince of Saudi Arabia, when he was rising to power 10 years ago, he formally assumed de facto absolute power over the kingdom in 2017, he had big ambitions. He wanted to execute a post-petroleum transition, much like what the United Arab Emirates did in Dubai and Abu Dhabi, starting in the 80s. And he was willing to invest pretty much unlimited amounts of money in this transformation project. The giant construction sites are only sort of the most visible part of Vision 2030.

but it also included some degree of a social transformation. About five years ago, women started being allowed to drive cars in Saudi Arabia and to attend sporting events and some other things, which by the standards of any other country, including any other Arab country, seem like things that should have happened hundreds of years ago, but were big developments for the very conservative society of Saudi Arabia. foreigners can buy alcohols under very limited circumstances if they're not Muslim and they go to an unmarked building on the edge of town. And perhaps most importantly, Saudi Arabia officially stopped having Wahhabi Islam, the very ascetic version of Islam as a de facto state religion.

It stopped being an enforcer of that faith and trying to shift its role in the region away from being a backer of movement. and into being a mediator. So it was a change role for Saudi Arabia with the idea that it would stop just being a country that people came to or put their money into because of oil and gas and because of the Islamic holy sites, including Mecca, and instead would become sort of a global hub linking Asia and Europe and Africa through information technology, tourism, sporting events. corporate headquarters and investment, a little like what Dubai did, but at a much greater expense. Right. Cost of trillions. Right, right.

So what you're describing here is a huge transition for Saudi Arabia, both culturally and economically. So this kind of shift away from this petro state. And there have been attempts in the past to shift away, but this is kind of the most serious attempt to do so in Saudi Arabia. And this is, like you said, a very costly vision. So what kind of financial situation was Saudi Arabia in before the war started? The Vision 2030 idea was already running into trouble.

That might be surprising because Saudi Arabia does appear to have a lot of money, right, because of the oil incomes coming in. The image of Saudi Arabia, certainly since it seized control of its oil industry from the United States in the 1970s, has been a place with pretty much unlimited wealth flowing from the ground. ground. And previously, they'd invested that money in, well, it squandered it, really. I mean, they'd invested in it in a lot of things internationally, few of which were really great lasting investments and so on. Vision 2030, which remember is in large part also designed simply to cement the Saudi royal family's legitimacy, its hold on power in Saudi Arabia. So to create a better life for the people there, it was at first almost unlimitedly expensive. The most famous of the mega projects, the gigaprojects behind it was something in northern Saudi Arabia near the Jordan border known as the line, which was meant to be a linear city as it was known.

It was basically like a one street wide city. The images are incredibly. It was supposed to be 170 kilometers long. And by a year ago, the cost estimate for completing that project had risen to more than $8 trillion U.S. dollars, which is many times more than the entire economy of Saudi Arabia. Okay, I'm seeing the problem then. There's a problem. And right next to it was going to be a giant ski resort. But by 2025, it was apparent that this unlimited spending did have limits because Saudi Arabia was in fiscal trouble.

It was running into debt. That was partly because oil prices had gotten fairly low in 2025. There's a figure that economists like to use for Saudi Arabia, which is known as the fiscal break-even point of oil, which is the price per barrel of oil, above which Saudi Arabia can govern itself, below which it goes into debt and it's fiscally untenable. And Saudi Arabia needs oil to be about somewhere. between $90 and $98 a barrel to hit that fiscal break-even point. Most of last year, it was under $70. Yeah, last year, before the war, the price of oil was much lower than that. Yeah.

So that's very interesting to hear that. And so Saudi Arabia, it was not the war that caused Vision 2030 to fall apart or for the Saudis to start noticing that it had cracks in it. It was that fiscal crisis happening. A lot of the big projects got canceled before the war, in some cases just weeks before the war. They canceled the line city. They canceled the ski resort. They canceled the giant cube and a number of other things. And it was quite apparent that also the idea of Vision 20, 30, causing corporations to locate headquarters or data centers or big investments in Saudi Arabia

was not working out. They were not doing that. It was not turning into the next Dubai. Most of the money coming in was Saudi money. Saudi Arabia had a, expected to receive $100 billion U.S. dollars per year in foreign investments in Vision 20, 30 type stuff. And at best, it got about a third that much. So when you say these projects have been canceled, I mean, I'm assuming they were started at least. Does that mean there's just these big holes in the ground? Yeah, the site of the cube, when I saw it, still had a whole bunch of big cranes at it.

And it had a gigantic hole in the ground. And apparently the Line City has, they spent $50 billion U.S. dollars just. sort of digging a series of canyons through the bedrock under the sand in the desert. To spend $50 billion just to do preliminary work is extraordinary. So there's sort of the ghostly ruins of gigaprojects lying all over Saudi Arabia right now and including things that were canceled because of the war. The 2026 Saudi Formula One, which was a major sporting event, was canceled because it was supposed to take place during the war.

We'll be right back. So we talked about how, of course, oil is a huge part of Saudi Arabia's economy, even if they're trying to move away from that. It's still a big part of their economy. What has the closure of the Strait of Hormuz meant for Saudi then? Because, of course, we hear a lot about the Strait of Hormuz being closed and its impact on the global oil economy. So how does that impact at Saudi Arabia? Well, it's both devastating for Saudi Arabia and also not as bad for Saudi Arabia as for other countries. And if you look at the immediate effect of the U.S. Israeli war on Iran upon the movement of oil and gas out of the Persian Gulf region, Saudi Arabia was hit less than other places, such as the Emirates or Kuwait, because it does have a pipeline that carries oil, well, crude oil, from its eastern oil fields,

to the Red Sea, which is on the western coast of Saudi Arabia. And that east-west pipeline can carry something between a third and a half of Saudi Arabia's oil output. So it didn't have its exports completely cut off the way other Gulf states did. Now, Iran, in its reprisal strikes using drones and missiles, did strike that pipeline in its facilities. So Iran was not just hitting giant U.S. military bases in countries like Saudi Arabia. It was also trying to hit the economic bases of the countries in the Gulf region that hosted U.S. military bases. But the knock-on effects of the war have created worse problems for Saudi Arabia. The biggest one being that a rivalry between Saudi Arabia and the United Arab Emirates next door erupted into,

full-blown economic and political conflict. And it culminated in recent days during May when the Emirates, the UAE, pulled out of OPEC, the oil cartel. Yeah, let's talk a little bit about that because there has been this fraying relationship between Saudi and the UAE. There have been tensions for a while now. But the fact that the UAE has pulled out of OPEC, which is the organization of petroleum exporting countries, is a really big deal.

Can you explain why this is so significant? I mean, the immediate problem for the Saudis is that without solidarity among the Gulf states through OPEC, they can't control the price of Gulf oil. And just to say that Saudi Arabia is kind of the de facto leader of OPEC. Yes, it has been really since the 70s when OPEC was created, technically created by Venezuelans initially, but the Saudis were the dominant voice in it. Now, OPEC is not quite what it used to be. You know, I mean, the United States is now a larger exporter of oil. And Canada is big export and so on there. They're outside of OPEC.

So it's no longer a complete global cartel. But nevertheless, if UAE wants to, once the strait of Hormuz is reopened to export just an absolute glut of crude oil, it can just do that. And it won't help Saudi Arabia recover fiscally if the UAE decides to keep the price. lower than the Saudis would really like it. Because UAE will then, if they have oil going out into the market, then therefore they're driving the price of oil down. Yeah, exactly, exactly. And that might be desirable to them because UAE is less dependent on petroleum revenues than

Saudi Arabia. UAE is predominantly now a service economy based on these global linkages and all this stuff. Then that gets tied up into a lot of other rivalries between UAE and Saudi Arabia. UAE is very close to Israel, relied on Israel to provide some of its anti-missile defenses to protect it against Iran, as a formally peaceful relationship with Israel. Its people are more tolerant of that. Saudi Arabia could never do that. Its population would never stand that.

It had an informal intelligence and security relationship with Israel that was very much quiet, hush, hush. And now, you know, in the wake of both the Gaza war and the attack on Iran and the repercussions that hit Saudi Arabia, the issue of Israel and the issue of OPEC are both pretty ugly dividing points between these two Gulf countries. So that's one relationship. Another important relationship that seems to be strained right now is Saudi's relationship with the U.S. So let's focus on that part. So these two countries have had a cooperative relationship for decades. So what has happened with that relationship when the war broke out? Well, if you ask them, the Saudi rulers will say that things are still fine with the United States.

Okay. That we maintain our strategic relationship, we maintain our economic relationship, and our political relationship with the United States. Which goes back a long, long way, right? I mean, it's been a 90-year relationship when Iran went from B. being a monarchy that was supportive of the United States to being an Islamic theocracy that was opposed to the United States in 1979, the United States shifted to Saudi Arabia. Under the Carter doctrine, under President Jimmy Carter, the Gulf states and especially Saudi Arabia, agreed to host enormous U.S. military bases in exchange for guarantees of security from the United States.

So that maintained for a long time. And starting on March 1st, the day after the first U.S. and Israeli attacks on Iran, all of that fell apart. It became apparent to the people of Saudi Arabia and the other Gulf states and to their rulers that those giant U.S. military bases located in their countries had shifted from being a security umbrella. to being something more like a bullseye, to being a target, possibly even being a direct threat to their security. Suddenly, it was not a peaceful region, and it was not a peaceful region because of those U.S. bases. They were used to attack Iran. It felt like a betrayal. Yeah, I was going to say, what was the feeling from Saudi Arabia when this war broke out when these attacks started happening?

It was a betrayal, you know? They were not told in advance. all these ideas about security cooperation and so on, not even an hour's notice for the Arab Gulf countries, especially Saudi Arabia, and suddenly they were getting attacked by Iran. A lot of the psychology around it was that we're alone now. All our attempts to build goodwill and to try to get in with the United States and its Western Democratic allies have proved. of little utility to us in the long run.

So on that, then, where is Saudi Arabia turning to then? Like, where are they going to for allies? This was the big change during the war. The Saudis, over a series of days in April, conducted a series of agreements designed to move their security guarantee away from the United States. They would say diversifying or hedging away from the United States. They're not abandoning the United States, but they're adding these security partners. a definite shift into more autocratic fellow authoritarian states as their security guarantors.

So, first, they activated a security agreement they had with Pakistan, which is effectively a military government nowadays, which is a NATO-type agreement with Pakistan. And they activated in April the equivalent of Article 5. NATO's Article 5 says an attack on one member should be treated as an attack. on all members and that they all have to come to the defense. Saudi Arabia triggered that. And Pakistan sent 13,000 troops and a bunch of fighter jets to eastern Saudi Arabia to officially to protect the oil fields against Iranian attack. And then a couple days later, Saudi Arabia activated a new thing it calls the quad, which is a security alliance between Saudi Arabia,

Egypt, Turkey, and once again, Pakistan. And then finally, a very prominent and well-publicized phone call between the Crown Prince Muhammad bin Salman and Xi Jinping, the president of China, in which they agreed to some kind of a security cooperation, which appears to involve further Saudi purchases of advanced Chinese fighter jets and things like that. It's a shift of relying on U.S. defense technology and networks to Chinese, possibly Russian, possibly Pakistani stuff as well. Again, not a replacement of the United States, but a very public acknowledgement that they need people defending them other than the United States that maybe are politically more like them that will help the royal family of Saudi Arabia stay in power rather than simply treating them as a daughter. format as an instrument of, you know, the United States' own interests or its leader's own

personal interests. Yeah, what you're laying out here is really interesting, this kind of diversification away from the U.S. and turning to new allies, kind of the shift in the world order. And I wanted to know what you thought about that. Like, what does this current moment mean for Saudi Arabia's vision 2030? And then this also happening at the same time. Like, what direction do you see Saudi heading in right now? Well, once again, the royal family and the people close to it will say nothing's changed.

We've recalibrated Vision 2030. But privately, people close to the rulers say it's basically over. I mean, they'll keep on spending money on it. It'll keep on being a thing nominally. But the problem is that the entire raison d'etra, the entire private, the entire practical premise behind Vision 20, 30 is not completely destroyed, but it has a lot of question marks above it. It's full of fissures and fractures, right?

A lot of this transformation only made sense if it was a peaceful region that people would trust locating companies and businesses and bringing tourism in. I mean, is anybody going to plan, you know, a seniors package vacation to Jeddah or Riyadh during the next year or two years? or you could say maybe if it's pretty certain that there aren't going to be further attacks from Iran or military actions by the United States and Israel in the region. But, you know, just in the last few days, there were more Iranian missile strikes on Gulf countries. So that premise is difficult.

The other premise, of course, is that Saudi Arabia needed to change and become less conservative, less authoritarian, less repressive of dissent and so on in order to be a people. to Western democracies. And now there may well be people there saying, what's the point of that, right? Is this really the economic and political audience that we want? And you can see signs of it. There seem to be shifts away from this sort of neutral mediator role, possibly into backing more malign actors in the region, you know, backing what we would call the bad guys in places

like Libya, there are signs that this idea of being the neutral good guys in the region doesn't carry much water anymore, so why bother? Doug, always great to have you on the show. Thank you so much. Thanks, Cheryl. That was Doug Saunders, the Globe's International Affairs columnist. That's it for today. I'm Cheryl Sutherland. Our associate producer and intern is Cynthia Jimenez. Our producers are Madeline White, Rachel Levy McLaughlin.

and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.