Long-stewing problems in one region don’t go away just because another region is at center stage. While Brexit has raged, 3,000 miles away in Riyadh the Saudi royal family, beset by the long-term plunge in petroleum prices, is racing to transform the kingdom’s oil-centered economy. If it ultimately fails to realize its grand plan in an already convulsive Middle East, the impact would be incalculable.
Saudi Arabia, the largest economy in the region and an important strategic ally of the U.S., can’t subsist on oil money indefinitely. Its plan includes a landmark sale of up to 5 percent of the national oil company, possibly the world’s biggest IPO, to help build a sovereign wealth fund that could top $2 trillion.
But the kingdom faces enormous challenges in broadening its economic base. Its budget is straining under spending to support public sector wages, even as Riyadh cuts subsidies on electricity and other basic needs. Those sweeteners have underpinned the family’s cash-for-loyalty contract with Saudis and kept order among a population half of which is under 25, with unemployment of about 30 percent among the young.
Now, a nation that bans women from driving and carries out beheadings in the public square must figure out how to tap its full work force and act like a modern, diversified economy. That’s the situation Saudi Arabia finds itself in as chaos erupts elsewhere in the world. If it can’t remake itself in the end, its turn at the top of the news may come.