On April 25, the Saudi government will unveil its "Vision for the Kingdom of Saudi Arabia", a sweeping package of economic reforms that includes the widely-reported "National Transformation Programme" as well as the privatisation of oil giant Saudi Aramco and Riyadh's new Public Investment Fund.

While the media narrative surrounding the plan for a post-oil Saudi Arabia largely focuses on the Kingdom's potential for financial growth and investment, the social context surrounding these reforms demands a closer look.

To date, news of this privatisation and diversification drive has drawn understandable scepticism from many quarters. How can Riyadh, the world's largest oil producer, wean itself off the petrodollar in the midst of a crash in oil prices?

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In a region ravaged by economic, political and social strife, the G20 member and World Bank key player enjoys both the financial and human capital to make reforms other countries in the Arab world might not be able to undertake.

Reliance on petrodollars

If the Kingdom achieves its stated goals, the Saudi push to reduce reliance on petrodollars will be nothing less than a momentous transformation of a country most closely associated with oil fields.

However, the success or failure of this effort will come down to whether it can foresee and inhibit potentially adverse consequences that could follow policy changes of this scale.

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By building necessary infrastructure while divesting certain publicly administered services, the Kingdom can indeed kick-start non-oil growth while alleviating its financial burden.

US President Barack Obama and Saudi King Salman walk together following their meeting in Riyadh, Saudi Arabia [Reuters]

This potential, however, requires more than a mere "economic" transformation. It also requires acknowledgement and encouragement - by the state and foreign investors alike - of Saudi Arabia's profound and ongoing generational shifts.

Nevertheless, diversification, privatisation, and the opening of the Saudi market to outside investors (especially with recent reforms that facilitate foreign investment) could well make the Kingdom a global investment and trade destination, to the benefit of international markets and Saudi citizens alike.

In privatising public ventures (like airports), the Kingdom is seeking broad institutional changes it hopes will be spearheaded by public-private partnerships.

Sources of non-oil income

The idea of creating airport free zones in Riyadh and Jeddah would provide for additional sources of non-oil income but also create laboratories for local, regional and foreign companies and industries alike. The impact of such changes, however, will not be limited to Saudi finances. They have the potential to impact Saudi society as well. In fact, they already are.

With oil prices likely to stay low for the foreseeable future, the Kingdom is cognisant of its need for outside investment to make up for reduced revenues.


Since joining the SkyTeam airline alliance in May 2012, for example, Saudi airports have begun hosting transit passengers from across the world. This has prompted the hitherto unimaginable breakdown of social and cultural barriers between Saudis and the outside world.

While middle and upper-class Saudis have for decades travelled abroad, airport employees and domestic travellers in the Kingdom's international airports are coming into regular contact with transit passengers from abroad for the first time.

These fellow travellers represent previously impossible contact with the outside world at a time when Saudis face above-average scrutiny for visas to most Western nations.

With oil prices likely to stay low for the foreseeable future, the Kingdom is cognisant of its need for outside investment to make up for reduced revenues.

Just this week, Saudi Arabia took out a $10bn five-year loan from a consortium of global banks - its first sovereign loan since 1991. This effort to raise the Saudi borrowing profile will be an important part of the necessary shift from Aramco to the Public Investment Fund as the primary financial organ of the Kingdom.

Aside from opening Aramco, the new economic programme aims to attract foreign investment in an increasingly service-oriented local consumer culture by expanding Saudi's retail and healthcare sectors with foreign investment.

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Saudi officials indicate their plans for closer business ties with the United States, focusing on cooperation and investment from the US technology, healthcare, tourism and transport sectors.

This echoes Riyadh's previous (and continuing) pursuit of British investment in rail, healthcare and construction projects.

While these openings promise more jobs for Saudis, they also require a Saudi labour market capable of moving beyond the managerial, engineering and medical sectors to also handling technical jobs (an area Saudis still avoid).

Most press coverage of the National Transformation Programme has revolved around floating Aramco to foreign investors and the sovereign wealth fund, with job creation largely relegated to an afterthought.

Any vision of true transformation, however, must place an equal emphasis on encouraging generational change in the Saudi workforce and society. This means taking into account the changing social aspirations, habits and needs of Saudi youth.

Failings of the welfare state

Affluent young Saudis, frustrated with the failings of the welfare state, have thus far embraced the Thatcheresque models underpinning the National Transformation Programme. One cannot forget, however, the downside of Thatcherite economics: ignoring unemployment.

Thus far, Saudi higher education has (despite its best intentions) created an academic environment that prioritises producing employees over scholars, blurring the boundaries of academia. Liberating Saudi academics from this scholastic-industrial complex by creating and expanding technical colleges would give greater focus to both areas and produce Saudi workers better qualified to reduce reliance on foreign labour.

Winding down generous scholarship programmes to universities abroad and focusing on quality over quantity in domestic education should do much to improve this long-standing labour issue. The new economic platform must include even broader restructuring of education expenditures to earn better returns on those investments.

Comparing the support enjoyed by the soon-to-be-announced National Transformation Programme to past labour reforms, the failure of the oil-based welfare state's Saudisation policies helps explain the warm reception of the economic policies now being revealed.

This time around, the economic programme can and should emphasise a population capable and encouraged to explore all fields of work - including technical work. Otherwise, the issues that now plague the oil-based economy will remain.

Faisal Abualhassan is a researcher at the King Faisal Center for Research and Islamic Studies.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy. 

Source: Al Jazeera