In a recent Foreign Policy article, Sarah Kaiser-Cross, former Senior Research Manager for ACLED Asia, and Ellen Scholl, former Strauss Center Senior Student Associate, analyze recent changes to Saudi Arabia’s economic policies. On April 25, the country released its “Vision 2030,” laying out a plan to diversify the Saudi economy in the next 15 years. In “Saudi Arabia begins to imagine life withour oil,” Kaiser-Cross and Scholl explain that if the reforms outlined in the plan are implemented, Saudi Arabia may smoothly transition away from a repression and a rentier economy, towards transparency and accountability instead.

According to the authors, one of the most anticipated policy changes is the opening of Saudi Aramco–the world’s largest oil-producing company–to outside investment. This move could help modernize the company and increase transparency; Saudi Arabia has never publicized Aramco’s records. Only five percent of the company is expected to be open for bidding, but any bidding process will necessitate accountability to shareholders, an unprecedented move for the company. Saudi Arabia is opening other sectors to international investment as well, seeking to diversify the economy by restructuring part of its public investment fund.

The blueprints for international investment are paired with plans for domestic reform, including a five-year plan to raise the price of energy fuels, recent court action that limits the power of the morality police, and, by 2018, imposition of a call added tax on luxury goods. The government will issue cash transfers to low- and middle-income families accustomed to subsidized energy. However, Kaiser-Cross and Scholl explain that Saudi Arabia currently levies no taxes except for the Islamic charity tax, and these changes could either “spark public demands for greater accountability, or ire.”

After acknowledging that the changes could be cosmetic or diluted, Kaiser-Cross and Scholl say that these policies could just as well signal a fundamental change to the social contract in Saudi Arabia. Removing a layer of separation between the rulers and the ruled, and liberalizing the economy and energy policy, would be the first steps towards a transparent and accountable Saudi Arabia.

The full article is available here.