The Uncertain Future of Saudi Arabia's NEOM Project
Saudi Arabia's ambitious NEOM project, envisioned as a futuristic city in the desert, faces significant challenges despite initial grand aspirations and massive investment. King Ben Salman's 2017 announcement promised a 170-kilometer-long, zero-carbon emission city with cutting-edge technology. The reality on the ground, however, paints a different picture, raising questions about the project's viability and the kingdom's broader economic transformation.
The Vision of NEOM: A Desert Utopia
The initial concept for NEOM was breathtaking. It featured:
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A linear city completely connected by high-speed rail.
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Autonomous vehicles and advanced AI systems.
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Complete reliance on clean energy sources and even attempts at weather modification.
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Futuristic elements drawing inspiration from science fiction and entertainment.
The design showcased mirror-clad buildings stretching across the desert landscape, aiming to redefine the very concept of a city. The project's estimated cost was $500 billion, with a target of housing 1.5 million people by 2023.
Reality Bites: Challenges and Setbacks
As of 2025, NEOM is far from realizing its initial vision. Construction has been plagued by numerous obstacles:
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High Costs: Building skyscrapers in the desert is incredibly expensive, especially when factoring in the cost of transporting water, electricity, and construction materials.
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Technological Hurdles: Promises of air taxis and advanced AI remain largely unrealized, with basic infrastructure like power lines and water supply still inadequate.
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Renewable Energy Shortfall: Despite plans for 100% renewable energy, Saudi Arabia's renewable energy percentage remains significantly low.
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Construction Delays and Scale Reduction: Poor land quality, funding difficulties, and slow construction have led to significant downsizing. The initially planned 170-kilometer line has been reduced to a mere 2.4 kilometers.
The population target has also been drastically reduced, from 1.5 million to just 300,000. Critics now view the project as an incomplete and abandoned site, a far cry from the futuristic city envisioned.
Financial Constraints: The Impact of Falling Oil Prices
NEOM's struggles are closely linked to Saudi Arabia's economic reliance on oil revenue. High oil prices in 2022 boosted government income. However, since late 2023, falling international oil prices have significantly impacted the kingdom's finances:
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Decreased Revenue: Oil revenue has declined, leading to a widening financial deficit.
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Profit Decline: Saudi Arabia's first-quarter profits in 2025 have decreased, marking the third consecutive quarterly decline.
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Unsustainable Spending: NEOM is a long-term investment requiring substantial upfront capital. The project is burning through money without generating immediate returns.
The kingdom's financial situation is further strained by the fact that maintaining the current standard of living requires oil prices to be at least $85 per barrel, while prices have consistently hovered around $60.
The Need for Economic Diversification
King Salman's vision for NEOM is part of a broader strategy to diversify the Saudi economy away from oil dependence. The plan involves promoting technology, tourism, finance, entertainment, and new energy sectors. However, the project's operational shortcomings are hindering its success.
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Loss of International Investment: Initial interest from international companies has waned due to delays and doubts about the project's commercial viability.
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Limited Job Creation for Locals: The project's reliance on foreign workers has failed to address the high unemployment rate among Saudi youth.
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Skills Gap: The Saudi education system focuses on fields that don't necessarily align with the practical skills needed for high-tech industries.
Human Rights Concerns
Forced demolitions and resistance from local tribes, such as the Huwei Tat, have drawn international condemnation. Allegations of arrests and killings have prompted intervention from the United Nations Human Rights Council. These human rights concerns further damage the project's image and deter potential investors.
The Future of NEOM and Saudi Arabia's Transformation
NEOM is not just a standalone project; it's a cornerstone of Saudi Arabia's Vision 2030 plan. Its failure would have far-reaching consequences:
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Damaged Investor Confidence: A NEOM collapse could erode investor confidence in the Saudi economy and hinder future financing efforts.
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Economic Instability: Saudi Arabia relies on debt and investment to sustain NEOM, and a loss of market confidence could lead to financial instability.
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Unfulfilled Expectations: The failure of NEOM would dash the hopes of many young Saudis who see it as a pathway to a diversified and prosperous future.
The project's success hinges on the kingdom's ability to navigate its financial constraints, address human rights concerns, and create a more sustainable and diversified economic model. The line in the desert represents not just a city, but the future trajectory of a nation.