Tectonic plates are shifting in the Persian Gulf. The world's energy market is being transformed as the global economy slows. Iran's rehabilitation in the wake of the nuclear deal struck last year is altering regional strategic dynamics. Saudi Arabia, long accustomed to being the dominant player in the region, must adapt to these changes. This is the logic behind Saudi Vision 2030, a long-term economic blueprint unveiled Monday that seeks to end the kingdom's dependence on oil. It is a bold program, spurred by economic reality — low oil prices — and strategic calculations. Vision 2030 is necessary, but necessity alone will not ensure its implementation or its success.
Saudi Arabia, the world's largest exporter of crude oil — it ships about 10 million barrels a day — depends on oil for more than 70 percent of its revenue. Its massive oil reserves have provided an ample cushion for the Riyadh government, permitting about 70 percent of the country's citizens to work in the public sector, and producing about $61 billion in energy subsidies annually, which provide essential threads for the social safety net and secure political patronage for the country's rulers.
Plummeting oil prices have badly hurt the Saudi economy. The budget deficit was just under $100 billion in 2015 and is projected to reach $87 billion this year. Foreign exchange reserves reportedly fell 16 percent in 2015, and the country has borrowed money — $10 billion — from international lenders, the first such move in a quarter of a century. One of the most important jobs for the government is lowering unemployment, currently at 11.7 percent. With more than half of Saudis under the age of 25, expanding the number of employment opportunities is critical.