Turned Nightmare: How MBS's Dreams of Building the Fantastical City of NEOM Evaporated?

Years after Saudi Crown Prince Mohammed bin Salman promised to build an unparalleled city in NEOM, the dream, more akin to fantasy, has begun to evaporate amid difficulties in funding and convincing foreign experts of its feasibility.

On October 24, 2022, bin Salman announced the construction of NEOM in the heart of the desert, declaring it to be "a monumental leap for human civilization." He provided details, including plans for the city's food to be grown on vertical walls or floating structures.

Among the details presented was that it would harness electricity from the world's largest eco-friendly generator, and an artificial mountain of ice would be created using snow blowers. He continued to paint a picture of his grand visions, foreseeing a day when the city would have driverless cars and unmanned aircraft.

Bin Salman allocated nearly $500 billion from the Saudi investment fund to support the city's launch and lay its initial foundations.

NEOM project is situated in the far northwest of Saudi Arabia, amidst barren deserts and harsh villages with few inhabitants, bordered by the Red Sea to the west over a stretch of 460 kilometers.

The word "NEOM" is inspired by the Greek word "neo," for "new," while the letter "M" in Arabic is for "mustakbal," meaning "future," thus signifying "the new future city."

Dream Shrinks

Instead of realizing those promises, international reports have cast doubts on NEOM's future, depicting it as a dark vortex devouring the country's economy and funds.

On April 6, 2024, Bloomberg reported on the latest developments regarding the NEOM project, stating that Saudi Arabia had downscaled its ambitions for it by approximately 75 percent.

It added that the kingdom's medium-term aspirations for developing the desert in NEOM have already diminished.

The Saudi government once hoped that there would be 1.5 million inhabitants living in The Line, a sprawling futuristic city planned to be contained within a pair of mirror-clad skyscrapers by 2030, it said.

However, Saudi officials now expect the project to accommodate less than 300,000 residents by that time.

The agency reported that the latest efforts to scale back the project come as the Public Investment Fund evaluates a range of options for raising funds, including speeding up debt sales and organizing stock offerings in its portfolio companies.

It noted that the cash reserves of the sovereign wealth fund dropped to $15 billion as of September 2023, the lowest level since 2020.

Burning Cash

The most alarming revelation in Bloomberg's report pertained to Saudi Arabia's request for over $16 billion from its smaller neighbor Kuwait to finance recent projects, including NEOM, earlier this year.

The justification was that the Saudi government was burning cash in these ventures, then intensifying efforts to attract more foreign funds.

It clarified that for Mohammed bin Salman, aspirations resembling Vision 2030 are at stake.

While companies like Air Products, based in the United States, have signed joint ventures in NEOM, Riyadh remains in a predicament, bearing nearly the entire cost of these projects, which amounts to approximately half of the current Saudi GDP.

It pointed out that expansion to reach 2030 now seems out of reach, as foreign investors remain cautious.

Discussions with bankers and lawyers advising investors and individuals familiar with fundraising efforts in Saudi Arabia have led the government to reassess its options.

Today, the government is considering the possibility of self-financing a larger portion of its economic restructuring process within a tight timeframe.

Bloomberg continued that the Riyadh government has already begun scaling back giant projects designed to overhaul its economy, valued at $1.1 trillion.

It issues bonds worth billions of dollars to help bridge the financial gap, which it did not expect until late 2023.

Desert Dictator

On July 28, 2022, The Economist published an extensive report on NEOM, criticizing bin Salman and describing him as the dictator of the desert.

It stated that the Crown Prince does not allow a genuine assessment of his giant projects and their feasibility.

It mentioned that if bin Salman had a mission other than expanding his power, you would find it in NEOM, the city he promised to build in the desert.

The journalist Nicholas Pelham, who visited NEOM, said that finding this city is the first problem, there are no roads or signs for it. After 3 hours of driving, the car stopped at a point indicated on the map.

There was nothing there, just an old fig tree and camels walking on an empty highway and a pile of rubble on the road, the remnants of a town demolished to make way for the great city, he added.

According to the journalist, the area designated for building the city is the size of Belgium, and from his observations, he saw that there were two completed projects, Mohammed bin Salman's palace, and something called Google Earth's map (NEOM's Experiment Center). When the car drove to see it, it was covered by a temporary shack.

He explained that bin Salman spared no expense for those working in the city, noting a short-term obsession among these foreigners, many of whom received salaries estimated at $40,000 per month, in addition to beautiful houses.

One of NEOM's advisors told the journalist that it's like riding a bull, you know you're going to fall, and no one stays on the bull for more than a minute and a half or two, so enjoy it.

However, despite the high salaries, there are reports of foreigners leaving the NEOM project because they feel the pressure arising from the gap between expectations and reality.

Many international newspapers have raised escalating doubts over the past years regarding the nature of the project and the feasibility of the prince's dreams.

On May 4, 2021, Le Monde published that engineers found difficulties in responding to bin Salman's request to excavate the mountainside to a height of 800 meters, equivalent to the height of 30 floors, in order to build a series of hotels and residences.

It stated that among bin Salman's other demands is the construction of dozens of palaces, each larger than a football stadium, with 50 different models proposed.

However, the work teams began to leave the adventure, wondering if some were willing to buy these buildings, each of which could cost up to $400 million, it concluded.