Dependency on hydrocarbon revenues among the six Gulf Cooperation Council (GCC) states has been a consistent concern for decades. This is now prompting policy reform and new Visions or development plans aimed at ambitiously diversifying Gulf economies. Through the years, each Gulf country has elaborated and updated its own economic and social transformation plan, as epitomised by Qatar’s National Vision 2030, Saudi Arabia’s Vision 2030, Bahrain’s Vision 2030, Kuwait’s Vision 2035, Oman’s Vision 2040, and the UAE’s Vision 2021.
Differing horizons and divergent domestic economic conditions on the ground have seen each GCC state move at its own pace of reform. The United Arab Emirates (UAE), with Dubai as its commercial capital, is far ahead of the pack, while Qatar and Kuwait have taken fewer steps due to their smaller populations and higher wealth per capita. Saudi Arabia, Bahrain, and Oman are less wealthy and more fiscally constrained: this results in greater pressure to address these challenges through austerity measures that include the imposition of value added tax (VAT). However, each plan shares similarities in meeting diversification challenges through parallel pathways of infrastructure investment, privatization, localisation policies, upskilling of the workforce, and building a more attractive regulatory environment. In all cases, the magnitude of these changes cannot be met in the short timeframes they were allotted without simultaneously upending the political legitimacy of the ruling establishments. As such, these Visions ought to be seen as flexible reform roadmaps rather than stringent contracts.
Saudi Vision 2030: Towards a New Gulf Governance Model
Over the past years and throughout the pandemic, fluctuating energy prices and fiscal imbalances have brought renewed emphasis on the GCC’s economic development and energy diversification projects. While the Russian invasion of Ukraine has flooded the Gulf states with a windfall of revenue due to high energy prices, the diversification and development agenda — particularly in Saudi Arabia — is not losing momentum. This is because Saudi Vision 2030 is connected to the upcoming stewardship of Crown Prince Muhammed Bin Salman and the leadership is acutely aware that the long-term global decarbonization strategy, if left unaddressed, will leave them vulnerable. Since its 2016 launch, Vision 2030 has received considerable attention due to its sheer ambition coupled with a social liberalisation agenda. The three pillars of the Vision are directed at creating a “thriving economy, vibrant society and ambitious nation.” As the Vision has gained momentum, Saudi Arabia is reconfiguring its social contract away from a distributive rentier state centric model by gradually altering its traditional approaches to governance. The impact is tangible at both the elite and public levels: adjustments to education, employment, national identity, and socio-economic expectations are slowly broadening the levels of public participation in the functioning of the state and in the creation of a new social contract. This top-down effort and its bottom-up impact, will, if successful, shift the Gulf governance model over time.
For the diversification agenda to succeed, it has required parallel investments in both privatization and localisation. The transfer of state-owned assets like Aramco has been one such development alongside, for instance, the sale of desalination plants and sports clubs. Outsourcing the management of the state-owned industry to the private sector aims at reducing dependencies and the costs of public sector employment on the state while boosting revenues.
The creation of private sector jobs for young Saudis has been essential to this process. An estimated 60% of the population is under the age of 30 —a common demographic configuration across the GCC. Having long relied on expatriate labour, localisation policies are aimed at reducing unemployment and the state’s burden of providing public sector jobs. This process has required increased investments in education in order to upskill segments of the population to match employment requirements. Shifting employment preferences away from the expectation of a life-long government sector job has also been underway. As a result, aware of this socio-economic imperative, young Saudis are now more eagerly entering the private sector than previous generations. In Saudi Arabia, social liberalisation policies that have encouraged female labour force participation and the relaxation of male guardianship laws, as well as the creation of an entertainment industry in the Kingdom, have increased youth support for the Vision. As the principal longer-term stakeholders of this process, most young people welcome these shifts and see this reform process as necessary for the economic growth and viability of both the state and society.
Technocrats are Vision’s Enablers and Beneficiaries
At another layer, this process is strengthening the role and responsibility of a new technocratic middle class who is directly benefitting from their countries’ Visions. In this new dynamic, this cohort has been anointed by the government as trusted and capable foot soldiers supporting the Vision’s progress. Recruited into operational and management positions, a new generation of technocrats drawn from the national workforce is supporting and participating in the nascent social contract and its development process, which provides them a role and responsibility in the success — or failures — of these plans. A sense of purpose is clearly on display in the renewed commitment to deliver key performance indicators (KPIs) and meet objectives through transparent measures of accountability. A visible sense of pride in the changes underway is also creating an improved culture of work and responsibility. Taken together, the Vision has sought to revitalize bonds between the Saudi middle class and the political establishment.
Leaders and Legitimacy: The Challenges of Reform
At the top, through these processes and the creation of a new social contract, the Visions ultimately aim to reinforce the legitimacy of Gulf ruling families. In most cases, the Visions are tied to the personal leadership of the Gulf’s up-and-coming next generation of rulers, ranging from Mohammed bin Salman in Saudi Arabia to Sultan Haitham in Oman and Emir Tamim in Qatar; showcasing leaders’ personal commitment to internal reform. The Visions convey messages of leadership adaptability and are intended to reinforce the bonds between citizens and the state over time. By involving the population in building a new socio-economic model, the Visions are also forging new loyalties and national identities. This phenomenon can be identified in the celebration of National Days, increased patriotism triggered by national crises — such as the blockade of Qatar from June 2017 to January 2021 — and foreign policy challenges, and nationalist rhetoric seen on social media. Overall, this circular process has cultivated a stronger sense of nationalism that is directly tied to the leader, the Vision, and progress.
Due to the sheer ambition and magnitude of the changes underway, such reforms do not come without challenges. Laying aside the economic obstacles that are beyond the purview of this analysis,
the Visions promote greater inclusivity and the creation of entrepreneurial citizens. Yet, the Visions’ implementation still relies on a top-down approach with limited consultation and communication mechanisms. Opaque decision-making continues with little public interaction regarding the direction of policy shifts, often leaving stakeholders and beneficiaries unaware or uncertain about the course of change. As the pace of development ebbs and flows, clear and continuous communication channels are necessary to explain the progress and pitfalls of reforms. Above all, capacity building at all levels of society — but particularly at the technocratic level — is needed. The employment of technocrats and youth must go hand in hand with their decision-making empowerment.