Saudi Arabia's "desert dream" shattered: How the grand Vision 2030 teeters on the brink of collapse amid fiscal austerity and war.
2026-04-06 15:04:45
In the area surrounding Riyadh, the capital of Saudi Arabia, vast construction sites stretch as far as the eye can see, with workers toiling day and night, seemingly sketching a vibrant and futuristic picture for this once oil-dependent kingdom. These construction scenes are a core manifestation of Saudi Crown Prince Mohammed bin Salman's "Vision 2030" plan. This vision aims to transform Saudi Arabia from a traditional oil exporter into a global hub integrating international trade, high-tech innovation, and multicultural exchange through large-scale transformation.
Throughout Riyadh and its surrounding areas, towering construction fences are a common sight, plastered with promotional slogans urging global investors to participate. These slogans, often written in English, emphasize concepts such as "redefining livability" and "an extraordinary new normal," attempting to showcase a modern, open, and vibrant new Saudi Arabia to the world. Crown Prince Mohammed's ambitious plans extend beyond domestic development to the international arena. Last November, he made a landmark visit to the White House, during which he pledged up to $1 trillion in investment to the United States. This move earned high praise from US President Trump and marked a significant restoration of reputation and influence for the Saudi de facto leader, who had once faced a cold reception in Western public opinion.
Through these efforts, Saudi Arabia appears to be actively integrating into the international community, attracting foreign investment, talent, and technology, and accelerating economic diversification.
However, these seemingly extraordinary and ambitious plans are now facing a heavy blow from reality. Over the past year, due to persistent budget shortfalls and some unrealistic design proposals, the world's largest oil exporter has been forced to gradually scale back or even cancel many large-scale projects and investment plans that were previously publicly committed to. The originally ambitious construction pace has been forced to slow, and many initiatives once considered landmark projects are now facing reassessment.
More worryingly, the current conflict between the United States and Israel against Iran has further jeopardized Crown Prince Mohammed bin Salman's vision. Iran's blockade of the Strait of Hormuz has directly led to a sharp drop in Saudi oil exports to about half of normal levels. In response to this crisis, Saudi Arabia has shut down most of its offshore oil fields and suspended operations at one of the world's largest petrochemical plants last week. These measures have not only severely impacted the country's revenue streams but also exposed the vulnerability of the Saudi economy to external shocks.
The direct consequences of the conflict extend far beyond the disruption of oil exports. Iran launched hundreds of drones and ballistic missiles into Saudi Arabia; while most were successfully intercepted, these attacks have severely damaged Saudi Arabia's security image among international investors and tourists. Numerous major international events were forced to cancel, including an Formula One race, a key capital markets forum, and a sporting event featuring renowned rugby player Tom Brady. Even Virgin Atlantic's daily flights to and from Riyadh, which had only commenced a year prior, have been suspended.
Last Thursday, following Iran's threats against American companies, several large U.S. businesses in Riyadh quickly notified their employees to work from home for the next few days. Some large office buildings and business parks, including the King Abdullah financial district, were also temporarily closed for security reasons. According to sources, the conflict has already caused Saudi Arabia more than $10 billion in direct revenue losses and additional expenses. While the Saudi government has not yet responded to requests for comment, these figures clearly reflect the heavy pressure the conflict is placing on the national economy.
Under the "Vision 2030" framework, almost all announced mega-projects are currently undergoing a comprehensive reassessment, a process that actually began quietly before the war. Sources indicate that Saudi officials are also reviewing their massive investment commitments to the United States from last year, with the scale potentially facing adjustments.
The Neom project, centered on a futuristic urban vision, was once its most iconic representation. Its initial plans included two 1,600-foot-tall skyscrapers stretching 106 miles. However, officials have quietly scaled back the project in practice, leaving only a massive 75-mile-long trench in the desert. Recently, the Neom project cancelled a $38 billion luxury mountain development contract, originally intended to create the Gulf region's first outdoor ski resort. The abrupt termination of the contract after years of construction raises questions about whether the partially completed, massive structures—including a $5 billion dam that was 30% complete—will ultimately be abandoned. Neom has not yet responded to inquiries regarding these developments.
In downtown Riyadh, a massive pit a quarter mile wide has been silently filled with excavators for the past few months. This site was originally planned to house the world's largest building: a colossal cube capable of housing 20 Empire State Buildings as the heart of the new city center.
Saudi Arabia's $1 trillion sovereign wealth fund, the Public Investment Fund (PIF), had already significantly reduced spending across multiple sectors, frozen hiring, and sold off a large portion of its U.S. stock portfolio even before the conflict with Iran erupted. According to sources, in December of last year, the fund appealed to wealthy families, fund managers, and local businesses to inject more capital into Saudi projects. Simultaneously, government departments were instructed to strictly control spending, including reducing travel expenses and choosing more economical hotel accommodations abroad.
Despite these challenges, Saudi Arabia's Public Investment Fund (PIF) Managing Director Yasser al-Rumayan stated at a conference in Miami at the end of March that Saudi Arabia's macroeconomic situation remains strong, stable, and resilient. The fund's portfolio is highly diversified and possesses strong structural resilience. They will continue to act as patient investors with a long-term perspective.
Saudi officials are most concerned that even if a ceasefire is eventually reached, Iran may remain as a weakened but hardline regime, continuing to control the crucial Strait of Hormuz. This would cast Saudi Arabia under a cloud of uncertainty for years to come, severely deterring foreign investors who are increasingly important in the country's economic transformation.
Furthermore, Riyadh may need to invest billions of dollars to strengthen its defense capabilities and provide additional bailout funds for projects already in trouble, which will undoubtedly further exacerbate the already widening budget deficit pressure. Chris Johnson, an American lawyer who advises foreign companies in Riyadh, remarked four weeks after the outbreak of war, "Everything is still up in the air."
According to the Wall Street Journal, Crown Prince Mohammed bin Salman privately urged Washington to continue pressure until Iran's power projection capabilities are significantly weakened. However, he also does not want the war to further impact energy infrastructure. The Saudi government's official position has consistently emphasized its support for resolving the dispute peacefully.
The implications of this event are significant. As the largest economy in the Arab world and a major source of global capital and investment, Saudi Arabia's stability and transformation process are crucial to the regional and even international landscape.
Despite facing numerous challenges, Saudi officials remain steadfast in their commitment to building a larger and more comprehensive economic system that transcends the oil industry. Even if Vision 2030 achieves only some of its goals, it will be considered a significant success. Over the past decade, Saudi Arabia has undergone profound social and economic transformations, reforms that have fostered a thriving private sector, significantly relaxed extremely conservative social norms, and effectively combated long-standing corruption.
Saudi Finance Minister Mohammed al-Jadan stated clearly at the end of last year that Saudi Arabia would not hesitate to cancel projects if they proved impractical. He emphasized, "If we announce a plan and later need to adjust, accelerate its priority, postpone, or cancel it, we will not hesitate to take action."
Veteran Saudi columnist Abdul-Rahman Rashid also pointed out that the Crown Prince is quick to cut his losses when plans fall short of expectations or better options emerge. He commented, "He is not in a hurry to achieve quick results, nor is he particularly concerned about his political legacy, nor does he care about the opinions of the outside media, which is quite different from many other leaders who are subject to public opinion. So what if 2030 becomes 2040?"
The recent surge in international oil prices may, to some extent, offset some of Saudi Arabia's revenue losses. Saudi Arabia can still export large quantities of crude oil through a pipeline that bypasses the Strait of Hormuz and transports oil directly to the Red Sea.
However, in the long run, high oil prices could also prompt global consumers to gradually reduce their oil consumption, and even trigger an economic recession affecting demand. Furthermore, Saudi Arabia faces another potential threat: the Houthi rebels in Yemen, who have repeatedly disrupted the Red Sea shipping lanes during the Gaza conflict, may once again target this crucial passage. Although the Houthis attacked Israel last week, they have so far not taken direct action against Saudi Arabia or the Red Sea shipping lanes.
At its core, "Vision 2030" aims to rapidly establish multiple emerging economic sectors in Saudi Arabia, encompassing tourism, mining, and data centers, by fully leveraging oil wealth and foreign investment before the global energy transition is complete. However, the reality is that available funds have consistently fallen short of fully supporting all these ambitious plans.
These plans encompass building a new airline from scratch (with approximately $20 billion worth of aircraft already ordered), investing up to $38 billion in esports and gaming, constructing a new theme park city with the world's tallest roller coaster (total cost $32 billion), creating 30 Maldives-style resorts along the Red Sea coast (with $10 billion already invested), and a $100 billion artificial intelligence development plan.
The major expansion project at Riyadh Airport aims to increase passenger throughput from 37 million in 2024 to 120 million by 2030. The infrastructure commitments made to host the 2030 World Expo and the 2034 World Cup are projected to cost $26 billion, including uniquely designed new stadiums.
The Crown Prince himself devoted considerable personal attention to many projects, particularly the Neom project. According to former staff, he had a particular fondness for architectural designs that seemed to defy gravity, so the project team spent millions of dollars each year building multiple architectural models in tents for the Crown Prince and other officials to choose from.
Overall, these Saudi projects have cost trillions of dollars in total, far exceeding the long-term capacity of a government with an annual budget of approximately $300 billion.
This challenge was particularly pronounced in Neom's Line project, conceived by the Crown Prince himself as a horizontally extending mirrored skyscraper city. In early 2025, workers indicated they were ready to begin vertical construction of the first phase by the end of the year, having already invested billions of dollars in the world's largest excavation project, digging a massive trench 1.5 miles wide and 150 feet deep. However, by last fall, with the public investment fund seemingly shelving the project, Line's construction had almost completely stalled. A former employee described how sand was slowly blowing into the 75-mile-long trench originally planned to accommodate high-speed trains, and the once bustling workers' camp had become eerily silent, like a ghost town.
A similar scenario unfolded at the Sindalah project, Neom's $4 billion ultra-luxury island resort. Its October 2024 launch party featured celebrities like Will Smith and Alicia Keys, but rushed construction resulted in numerous architectural problems, preventing the hotel from opening without hundreds of millions of dollars in repairs. Last spring, Neom decided to shut down the island, with many upscale restaurant staff packing away expensive Baccarat crystal glasses and blue crocodile leather chairs. Reportedly, the restaurants even discarded over 50 pounds of beluga whale caviar, potentially worth tens of thousands of dollars. The golf course's grass withered in the wind, while officials awaited a final decision on the project's future.
In Riyadh, the huge square pit that workers dug, as wide as four rugby fields, was supposed to become the core of a new city center called New Murabba—a giant cube building about 70 stories high with a total cost of over $50 billion.
Saudi Arabia's "desert dream" once embodied countless people's aspirations for the future, but the constraints of fiscal reality and the impact of geopolitical conflicts are forcing the kingdom to find a new balance between ambition and pragmatism. Regardless of the final outcome, this transformation has become the most profound attempt at reform in Saudi history, and its success or failure will profoundly affect the economic landscape of the Middle East and even the world.
A vision of ambition and a return to the international stage
Throughout Riyadh and its surrounding areas, towering construction fences are a common sight, plastered with promotional slogans urging global investors to participate. These slogans, often written in English, emphasize concepts such as "redefining livability" and "an extraordinary new normal," attempting to showcase a modern, open, and vibrant new Saudi Arabia to the world. Crown Prince Mohammed's ambitious plans extend beyond domestic development to the international arena. Last November, he made a landmark visit to the White House, during which he pledged up to $1 trillion in investment to the United States. This move earned high praise from US President Trump and marked a significant restoration of reputation and influence for the Saudi de facto leader, who had once faced a cold reception in Western public opinion.
Through these efforts, Saudi Arabia appears to be actively integrating into the international community, attracting foreign investment, talent, and technology, and accelerating economic diversification.
The harsh reality: budget shortages and project scaling back
However, these seemingly extraordinary and ambitious plans are now facing a heavy blow from reality. Over the past year, due to persistent budget shortfalls and some unrealistic design proposals, the world's largest oil exporter has been forced to gradually scale back or even cancel many large-scale projects and investment plans that were previously publicly committed to. The originally ambitious construction pace has been forced to slow, and many initiatives once considered landmark projects are now facing reassessment.
More worryingly, the current conflict between the United States and Israel against Iran has further jeopardized Crown Prince Mohammed bin Salman's vision. Iran's blockade of the Strait of Hormuz has directly led to a sharp drop in Saudi oil exports to about half of normal levels. In response to this crisis, Saudi Arabia has shut down most of its offshore oil fields and suspended operations at one of the world's largest petrochemical plants last week. These measures have not only severely impacted the country's revenue streams but also exposed the vulnerability of the Saudi economy to external shocks.
Security crisis and economic losses under the shadow of war
The direct consequences of the conflict extend far beyond the disruption of oil exports. Iran launched hundreds of drones and ballistic missiles into Saudi Arabia; while most were successfully intercepted, these attacks have severely damaged Saudi Arabia's security image among international investors and tourists. Numerous major international events were forced to cancel, including an Formula One race, a key capital markets forum, and a sporting event featuring renowned rugby player Tom Brady. Even Virgin Atlantic's daily flights to and from Riyadh, which had only commenced a year prior, have been suspended.
Last Thursday, following Iran's threats against American companies, several large U.S. businesses in Riyadh quickly notified their employees to work from home for the next few days. Some large office buildings and business parks, including the King Abdullah financial district, were also temporarily closed for security reasons. According to sources, the conflict has already caused Saudi Arabia more than $10 billion in direct revenue losses and additional expenses. While the Saudi government has not yet responded to requests for comment, these figures clearly reflect the heavy pressure the conflict is placing on the national economy.
Mega-project reassessment: Neom and the scaled-down Riyadh mega-project
Under the "Vision 2030" framework, almost all announced mega-projects are currently undergoing a comprehensive reassessment, a process that actually began quietly before the war. Sources indicate that Saudi officials are also reviewing their massive investment commitments to the United States from last year, with the scale potentially facing adjustments.
The Neom project, centered on a futuristic urban vision, was once its most iconic representation. Its initial plans included two 1,600-foot-tall skyscrapers stretching 106 miles. However, officials have quietly scaled back the project in practice, leaving only a massive 75-mile-long trench in the desert. Recently, the Neom project cancelled a $38 billion luxury mountain development contract, originally intended to create the Gulf region's first outdoor ski resort. The abrupt termination of the contract after years of construction raises questions about whether the partially completed, massive structures—including a $5 billion dam that was 30% complete—will ultimately be abandoned. Neom has not yet responded to inquiries regarding these developments.
In downtown Riyadh, a massive pit a quarter mile wide has been silently filled with excavators for the past few months. This site was originally planned to house the world's largest building: a colossal cube capable of housing 20 Empire State Buildings as the heart of the new city center.
Tightening of Public Investment Funds and Official Response
Saudi Arabia's $1 trillion sovereign wealth fund, the Public Investment Fund (PIF), had already significantly reduced spending across multiple sectors, frozen hiring, and sold off a large portion of its U.S. stock portfolio even before the conflict with Iran erupted. According to sources, in December of last year, the fund appealed to wealthy families, fund managers, and local businesses to inject more capital into Saudi projects. Simultaneously, government departments were instructed to strictly control spending, including reducing travel expenses and choosing more economical hotel accommodations abroad.
Despite these challenges, Saudi Arabia's Public Investment Fund (PIF) Managing Director Yasser al-Rumayan stated at a conference in Miami at the end of March that Saudi Arabia's macroeconomic situation remains strong, stable, and resilient. The fund's portfolio is highly diversified and possesses strong structural resilience. They will continue to act as patient investors with a long-term perspective.
The long-term shadow of uncertainty and defensive pressure
Saudi officials are most concerned that even if a ceasefire is eventually reached, Iran may remain as a weakened but hardline regime, continuing to control the crucial Strait of Hormuz. This would cast Saudi Arabia under a cloud of uncertainty for years to come, severely deterring foreign investors who are increasingly important in the country's economic transformation.
Furthermore, Riyadh may need to invest billions of dollars to strengthen its defense capabilities and provide additional bailout funds for projects already in trouble, which will undoubtedly further exacerbate the already widening budget deficit pressure. Chris Johnson, an American lawyer who advises foreign companies in Riyadh, remarked four weeks after the outbreak of war, "Everything is still up in the air."
The Crown Prince's Difficult Balance and the Resilience of Saudi Change
According to the Wall Street Journal, Crown Prince Mohammed bin Salman privately urged Washington to continue pressure until Iran's power projection capabilities are significantly weakened. However, he also does not want the war to further impact energy infrastructure. The Saudi government's official position has consistently emphasized its support for resolving the dispute peacefully.
The implications of this event are significant. As the largest economy in the Arab world and a major source of global capital and investment, Saudi Arabia's stability and transformation process are crucial to the regional and even international landscape.
Despite facing numerous challenges, Saudi officials remain steadfast in their commitment to building a larger and more comprehensive economic system that transcends the oil industry. Even if Vision 2030 achieves only some of its goals, it will be considered a significant success. Over the past decade, Saudi Arabia has undergone profound social and economic transformations, reforms that have fostered a thriving private sector, significantly relaxed extremely conservative social norms, and effectively combated long-standing corruption.
Saudi Finance Minister Mohammed al-Jadan stated clearly at the end of last year that Saudi Arabia would not hesitate to cancel projects if they proved impractical. He emphasized, "If we announce a plan and later need to adjust, accelerate its priority, postpone, or cancel it, we will not hesitate to take action."
Veteran Saudi columnist Abdul-Rahman Rashid also pointed out that the Crown Prince is quick to cut his losses when plans fall short of expectations or better options emerge. He commented, "He is not in a hurry to achieve quick results, nor is he particularly concerned about his political legacy, nor does he care about the opinions of the outside media, which is quite different from many other leaders who are subject to public opinion. So what if 2030 becomes 2040?"
Potential opportunities and long-term risks
The recent surge in international oil prices may, to some extent, offset some of Saudi Arabia's revenue losses. Saudi Arabia can still export large quantities of crude oil through a pipeline that bypasses the Strait of Hormuz and transports oil directly to the Red Sea.
However, in the long run, high oil prices could also prompt global consumers to gradually reduce their oil consumption, and even trigger an economic recession affecting demand. Furthermore, Saudi Arabia faces another potential threat: the Houthi rebels in Yemen, who have repeatedly disrupted the Red Sea shipping lanes during the Gaza conflict, may once again target this crucial passage. Although the Houthis attacked Israel last week, they have so far not taken direct action against Saudi Arabia or the Red Sea shipping lanes.
Wasted Ambition and Lessons from the Desert
At its core, "Vision 2030" aims to rapidly establish multiple emerging economic sectors in Saudi Arabia, encompassing tourism, mining, and data centers, by fully leveraging oil wealth and foreign investment before the global energy transition is complete. However, the reality is that available funds have consistently fallen short of fully supporting all these ambitious plans.
These plans encompass building a new airline from scratch (with approximately $20 billion worth of aircraft already ordered), investing up to $38 billion in esports and gaming, constructing a new theme park city with the world's tallest roller coaster (total cost $32 billion), creating 30 Maldives-style resorts along the Red Sea coast (with $10 billion already invested), and a $100 billion artificial intelligence development plan.
The major expansion project at Riyadh Airport aims to increase passenger throughput from 37 million in 2024 to 120 million by 2030. The infrastructure commitments made to host the 2030 World Expo and the 2034 World Cup are projected to cost $26 billion, including uniquely designed new stadiums.
The Crown Prince himself devoted considerable personal attention to many projects, particularly the Neom project. According to former staff, he had a particular fondness for architectural designs that seemed to defy gravity, so the project team spent millions of dollars each year building multiple architectural models in tents for the Crown Prince and other officials to choose from.
Overall, these Saudi projects have cost trillions of dollars in total, far exceeding the long-term capacity of a government with an annual budget of approximately $300 billion.
This challenge was particularly pronounced in Neom's Line project, conceived by the Crown Prince himself as a horizontally extending mirrored skyscraper city. In early 2025, workers indicated they were ready to begin vertical construction of the first phase by the end of the year, having already invested billions of dollars in the world's largest excavation project, digging a massive trench 1.5 miles wide and 150 feet deep. However, by last fall, with the public investment fund seemingly shelving the project, Line's construction had almost completely stalled. A former employee described how sand was slowly blowing into the 75-mile-long trench originally planned to accommodate high-speed trains, and the once bustling workers' camp had become eerily silent, like a ghost town.
A similar scenario unfolded at the Sindalah project, Neom's $4 billion ultra-luxury island resort. Its October 2024 launch party featured celebrities like Will Smith and Alicia Keys, but rushed construction resulted in numerous architectural problems, preventing the hotel from opening without hundreds of millions of dollars in repairs. Last spring, Neom decided to shut down the island, with many upscale restaurant staff packing away expensive Baccarat crystal glasses and blue crocodile leather chairs. Reportedly, the restaurants even discarded over 50 pounds of beluga whale caviar, potentially worth tens of thousands of dollars. The golf course's grass withered in the wind, while officials awaited a final decision on the project's future.
In Riyadh, the huge square pit that workers dug, as wide as four rugby fields, was supposed to become the core of a new city center called New Murabba—a giant cube building about 70 stories high with a total cost of over $50 billion.
Saudi Arabia's "desert dream" once embodied countless people's aspirations for the future, but the constraints of fiscal reality and the impact of geopolitical conflicts are forcing the kingdom to find a new balance between ambition and pragmatism. Regardless of the final outcome, this transformation has become the most profound attempt at reform in Saudi history, and its success or failure will profoundly affect the economic landscape of the Middle East and even the world.
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