TLDR:
• Major financiers head to Saudi Arabia
• Riyadh’s investment event marred by conflict
• Vision 2030 faces financial pressure
RIYADH (The Thursday Times) — Global financiers are gathering in Saudi Arabia this week for the Future Investment Initiative (FII) conference amid growing tensions in the Middle East and internal economic challenges. With key players such as David Solomon of Goldman Sachs and Larry Fink of BlackRock in attendance, the event showcases Saudi Arabia’s intent to position itself as a global economic hub, promoting its ambitious Vision 2030 plan.
The FII, often referred to as “Davos in the Desert,” is set to host leaders from some of the world’s largest financial institutions. However, as Saudi Arabia works to diversify its economy away from oil, this year’s gathering takes place against the backdrop of an escalating conflict in Gaza and Lebanon, sparking concerns about the region’s geopolitical stability. In addition, the kingdom’s tightened fiscal policy and delayed projects due to falling oil revenues are putting extra pressure on foreign investors to commit to Saudi’s domestic projects.
Saudi Arabia’s evolving role on the world stage
Since its inception in 2017, the FII has been a platform for Saudi Arabia to demonstrate its evolving influence on the global stage. The event is closely linked to Crown Prince Mohammed bin Salman’s Vision 2030, a strategy aimed at reducing the kingdom’s reliance on oil by expanding its private sector and creating sustainable revenue streams. This year, foreign investment is seen as particularly crucial, with the government aiming to attract billions in funding.
With domestic growth slowing and fiscal tightening looming, Saudi officials have made it clear that international companies attending the FII are expected to not only seek investment but to demonstrate how they can contribute to Saudi Arabia’s future. This shift marks a change in tone from previous years when international firms primarily courted Saudi investments for projects outside the kingdom.
Geopolitical instability casts a shadow
The ongoing conflicts in Gaza and Lebanon have added a layer of complexity to the event. Many Western executives and policymakers attending the conference are closely monitoring the unfolding situation, which could have far-reaching consequences for the region’s stability. Saudi Arabia, while calling for ceasefires and voicing concerns about regional escalation, finds itself in a delicate position as it balances its role as a regional power with its ambitions of becoming a global economic force.
Last year, tensions were high following the attacks by Hamas on Israel, which saw the FII take place under the shadow of military conflicts. The kingdom’s stance on the Israeli-Palestinian conflict remains cautious, with calls for diplomacy and a halt to hostilities. This year’s summit comes amid an even more fragile regional environment, and many attendees are expected to weigh in on the potential risks this poses for the region’s investment landscape.
Vision 2030 and the challenges ahead
Central to the FII is Vision 2030, a project that requires billions in foreign direct investment to transform the Saudi economy. This year’s event features the launch of a “New Africa Summit,” aiming to strengthen ties between Saudi Arabia and African nations in sectors like mining and banking. As Saudi Arabia seeks to diversify away from hydrocarbons, its leadership is increasingly looking to global partners to help develop new industries.
Yet, the path to realising Vision 2030 is not without obstacles. Falling oil prices and production cuts have led to tighter budgets, resulting in delays and re-evaluation of some of the country’s mega-projects, including the high-profile NEOM city. International investors are now being asked to contribute more to these projects as Saudi Arabia’s domestic funds are stretched thin. Deals worth nearly $30 billion are expected to be announced at this year’s event, as Riyadh courts foreign capital to meet its lofty targets.
