Saudi Arabia wants to diversify its economy beyond its giant oil industry and therefore seeks to exert more financial clout with a view to taking an active – and lucrative – part in what Riyadh sees as the Fourth Industrial Revolution.
Earlier this month, Abdulkareem Al-Ghamdi, Saudi Aramco Vice President for Power Systems, underlined the “clear connection” between robotics, artificial intelligence (AI), nanotechnology apps, computing and the internet of things (IoT). Citing the construction of the smart digital control center (iPower) in Dhahran, Al-Ghamdi emphasized the company’s commitment to Vision 2030 by “leading digital transformation in the energy industry.”
Along with several “strategic partnerships” with institutions and colleges focused on digital developments and innovations, Saudi Aramco deepened its business ties with US-based Raytheon Company (RTN) by establishing a joint venture company with its Saudi Arabia-based subsidiary.
“Demand for cybersecurity services is expected to grow as companies move further into the digital space and embrace technologies such as IoT and big data. The partnership with Raytheon will help strengthen cybersecurity and enhance its infrastructure in Saudi Arabia and the broader region,” said Saudi Aramco Senior Vice President of Finance, Strategy & Development Khalid H. Al-Dabbagh on December 14, 2018.
While the “Davos of the desert” is receiving many cancellations at this very hour, Saudi Arabia is at the center of international controversy following the alleged assassination of Saudi journalist and US resident Jamal Khashoggi in the office of the Saudi consul in Istanbul, Turkey.
The rise in power of Crown Prince Mohammed Ben Salman (MBS) has revived the hope of social modernization and economic transformation of the Saudi Kingdom but this episode may have spoiled it, at least for a while.
Indeed, and considering the diplomatic and financial importance of Saudi Arabia in the foreign and trade policies of its Western counterparts, primarily the United States, one can assess that the international impact of the Khashoggi case will probably be limited in the long run and will have effects inside the country instead.
For two reasons, first of all, the support openly expressed by US President Donald Trump to the Saudi government since the beginning of the crisis, then the message probably received “loud and clear” by Saudi expatriate citizens who might have been tempted to express some disagreement with the new political order in Riyadh.
Finally, given the strategic importance given to Iran’s isolation in US foreign policy, it is unlikely that Washington will profoundly alter its relations with Riyadh regardless of the outcome of the mid-term elections.
According to sources from inside Saudi Arabia and others quoted by Reuters news agency, Saudi Aramco, the world’s biggest oil company and the kingdom’s largest company, has cancelled its very awaited IPO.
The Saudi authority suddenly halted the listing plan and disbanded advisors, said various sources and one stressed an economist named Barjas al-Barjas, a former adviser, has been arrested in the meantime. “Investors were always skeptical of Saudi Aramco’s USD 2 trillion price tag,” wrote Bloomberg which was still talking quite positively just a few days ago about the planned listing, like its main competitor CNBC.
However, in July 2018, Bloomberg reporters Javier Blas and Will Kennedy did point out that “likely investors doubt the value of the proposed public offering” and asked “how will Saudi Crown Prince Mohammed bin Salman (MBS) save face?” While many analysts emphasized the potential economic reasons behind this cancellation, Cyceon thinks political reasons shouldn’t be ruled out as well.
Indeed, Saudi Arabia is undergoing significant changes mostly decided by MBS and which seem to fuel some frictions inside the Saudi power circles. Although it’s too early for these reasons to be clearly identified and assessed, the sudden move after so much publicity may prove a negative development for Saudi Arabia’s Vision 2030 and standing across the financial world.