Blood and Oil, page 14
Saudi Arabia, Mohammed realized, had been stuck in the same old habits for a half century. It pumped oil, sold it, and spent the money buying things from elsewhere. Only now the kingdom’s population was growing rapidly, while the oil—or at least the international demand for it—was running out.
One evening, while mulling those challenges, Mohammed opened a Google Earth map of the kingdom on his computer screen. Staring at an image of his country from space, he scanned the Arabian Peninsula, from Jeddah and Mecca in the west, across the Empty Quarter, to the eastern oil fields of Dhahran, and wondered what he was missing. What opportunities for progress might be hidden in the desert?
And it struck him: The region north of Jeddah, where the mountains along the Jordanian border slope down to the Red Sea, was a blank slate. There was just one small city in the area, and it was surrounded by sparsely populated desert. Mohammed summoned a helicopter to bring him and some friends to the site.
What he saw from the air was inspiring. He had been there before, but he was seeing it with the fresh eyes of a first-time visitor to the kingdom. He flew over mountains so high that snow fell in winter and deserted white beaches lining a placid bay. Offshore coral reefs rivaled those of Egypt’s nearby diving resort, Sharm El Sheikh, but with virtually no development.
And while the area had obvious challenges, including a near-total absence of freshwater, it had a great advantage: As it had few people and little significance to Saudi Arabia’s religious or economic establishment, Mohammed could make massive changes with little resistance. The area’s locals were largely seminomadic Bedouins who had been roaming that stretch of desert for generations. They could be cast out with financial enticement and minimal threats of force.
Perhaps most importantly, the region was largely free of the decrepit infrastructure, ossified bureaucracy, corrupt government officialdom, and rigid religious courts that held back social change—and turned off foreign investors—in established Saudi cities.
Remaking Riyadh and Jeddah, reforming ineffective governance, and getting rid of Islamic judges who ordered lashings and harsh prison sentences that Western allies complained about was a huge task, with entrenched resistance. There would be no pushback in a model city built from scratch in his newly declared frontier. And if it succeeded, if NEOM was as innovative and livable and prosperous as he envisioned, it could pull the rest of the kingdom into a more optimistic future. This was similar to creating the MiSK foundation early in his career—his own company, custom built from scratch with help from foreign advisors—but on a gargantuan scale.
Mohammed decided to build not just a city but a mini kingdom. It would have cutting-edge technology and medical care, all powered by solar energy rather than oil. Nearby would be prime spots for beachgoers and yachts and mountains for hang gliding, rock climbing, and even skiing once engineers started producing snow to supplement the dusting the mountaintops received in winter. Its courts would be Islamic but not Wahhabist. Women wouldn’t have to hide their hair or bodies, and alcohol might even be allowed. And everyone—the judges, the bureaucrats, the financial authorities—would report to Mohammed.
He pulled together a board of directors that included the Saudi housing minister, a former Riyadh mayor, a Royal Court advisor, and Mohammed Al Shaikh, the onetime securities regulator who became a trusted ally of the prince. Also on the board was Yasir al-Rumayyan, the banker in charge of Saudi Arabia’s sovereign wealth fund.
Mohammed served as board chairman and brought on foreign consultants to assist in the planning. Early on they settled on the name NEOM, a portmanteau of “new” in Greek and “future” in Arabic “because the project represents a civilizational leap for humanity. So the name shouldn’t be from a specific civilization,” Mohammed would later tell a Bloomberg interviewer, though he told another contact that NEOM was actually meant to signify “neuron city,” since one of its aims would be to harness the power of the human brain.
When he convened NEOM’s first board meeting in August 2016, Mohammed made clear to the consultants that their job was to turn his outlandish instructions into plans that could be implemented in the immediate future. While the board included capable Saudi bureaucrats, none had experience in technology or large-scale planning. It was the consultants’ job to figure out what was feasible, then to come up with a plan for how to get those things done.
But the instructions to the consultants for how to plot out the futuristic city-state were fuzzy. Sitting in a gray thobe, his head uncovered, at the end of a long boardroom table, Mohammed offered aphorisms too abstruse to be of much use to the consultants.
“NEOM will represent a new generation of cities, combining all innovative ideas in one city,” he declared.
How would the consultants deliver this?
“Consultants should check media, cultural content, books and literature to look for ideas” about imagined futures, the board resolved at one meeting, essentially ordering the experts to base the futuristic city on what people in the past thought the future should be.
“Leverage Tomorrowland as inspiration to what future cities might be,” it suggested at another, ordering consultants to study the Disney theme park attraction that has included a 3D Michael Jackson video, a monorail, and a film titled Honey, I Shrunk the Audience.
Mohammed did identify some ambitious priorities, including the prevention of economic leakage. NEOM could provide the resorts, medical care, and even automobiles on which Saudis spent billions of dollars abroad, Mohammed reasoned, keeping that money within the Saudi economy.
Another fixation of the prince was the difficulty foreign businesses had operating in Saudi Arabia. The kingdom invested billions of dollars in foreign companies. Now Mohammed wanted those companies to invest in the kingdom. The world’s biggest tech firms, automakers, and aerospace companies would come to NEOM and build offices and factories, Mohammed said. This would require new legal structures circumventing Saudi Arabia’s Islamic courts, where there was no functional bankruptcy law, and even simple business disputes could turn into a Middle Eastern Bleak House.
And Mohammed was deeply aware of the kingdom’s other big challenge: No one from the West wanted to move to Saudi Arabia. Its climate was too harsh and its restrictions on entertainment and women’s rights too uninviting. That, too, would have to change in NEOM.
And lastly, it had to be better than regional rival Dubai.
Turning those edicts into a credible plan seemed impossible for the consultants. But with Mohammed promising to spend $500 billion on it, they knew it could be the commission of a lifetime, potentially bringing tens of millions of dollars to whoever got the lead role.
In those initial NEOM meetings, McKinsey consultants and their rivals from BCG and Oliver Wyman sat opposite their Saudi counterparts at the long boardroom table and presented ideas for what NEOM’s focus should be. They identified nine areas (“clusters,” in consultant jargon) that NEOM’s board agreed would form the foundation of the city. These were unsurprising, including things like energy, technology, manufacturing, and entertainment. Then, at a meeting the consultants called an “ideation session,” Mohammed announced there would be a new cluster, “Cluster 0,” which concerned the notion of “livability.” NEOM had to be the world’s most pleasant place to live.
Through board meetings over the course of months, Mohammed threw seemingly endless ideas at the consultants. NEOM needed flying cars and a multi-billion-dollar bridge to Egypt. Was it possible to create an artificial full moon that would rise each night? And about that beach in the resort area: “I want the sand to glow,” Mohammed told one of the planners. Commercial space travel would be a good industry to bring to the city. Also farmers’ markets.
NEOM had to “pioneer and lead all sectors of the future,” Mohammed told the Saudis and Westerners around his boardroom table. It would have the world’s highest per-capita GDP and an unrivaled work-life balance.
Some of his requests were seemingly contradictory. The Saudi government was going to spend $500 billion on NEOM, but the project would not be “built on subsidy,” the board declared. “NEOM will ensure equality and fairness for all,” said Rumayyan, the sovereign wealth fund chief, at one meeting before discussing how NEOM would have full-time surveillance of everyone within its borders so criminals could be caught instantaneously and, later, how only Saudis with certain qualifications would be allowed in.
Latham & Watkins, a US law firm that agreed to be NEOM’s “legal partner,” identified problems in the existing Saudi legal system and suggested fixing them by implementing a new structure in which every judge was appointed by, and reported to, Mohammed. The firm declined to comment on its work when the Wall Street Journal reported on it.
In more than two thousand pages of planning documents, the consultants came up with an answer for everything. NEOM, BCG declared, could stop up to $100 billion in annual economic leakage. The prince’s notion of “livability,” formerly a matter of personal preference, could now be quantified through a groundbreaking new system that McKinsey invented specifically for NEOM. It was “based on empirical evidence and leveraging big data to measure citizen satisfaction, happiness, and engagement,” the consultants wrote in explanation of how they had devised a way to objectively measure a city’s pleasantness. NEOM, they promised in presentations to their Saudi clients, would be the most pleasant of them all.
The consultants turned NEOM’s apparent weaknesses into strengths. The region might not have any freshwater, but it had “unlimited access to saltwater” and could become a “global water champion” by developing desalination plants. And perhaps, BCG suggested, NASA would partner in developing the prince’s artificial moon, which would be the biggest in the world.
After four workshops over a series of months, the board and its consultants arrived at a vision statement for the project: “The land of the future, where the greatest minds and best talents are empowered to embody pioneering ideas and exceed boundaries in a world inspired by imagination.” It was a masterclass by the consultants in telling an ambitious prince exactly what he wanted to hear.
After visiting the cruise ship full of consultants off NEOM’s coast, Masayoshi told Mohammed that he was a visionary and agreed to have SoftBank partner on one of NEOM’s most ambitious projects: “A new way of life from birth to death reaching genetic mutations to increase human strength and IQ,” as the consultants later described it.
Speaking later, Masayoshi referred to Mohammed bin Salman as the “Bedouin Steve Jobs.”
Rajeev, the SoftBank executive, had his own enormous task at hand. The Saudi and Abu Dhabi money made him change his mind about leaving SoftBank. Now he had more financial firepower than just about anyone on earth and a fly-by-the-seat-of-his-pants boss who was happy to make multi-billion-dollar investments with a quick meeting and a “gut instinct.” The only problem was that the Vision Fund had about twenty employees and no investment procedures or compliance apparatus. Even worse, though it had already started investing money, it had to temporarily hold money on SoftBank’s balance sheet while the fund’s team was getting built up.
The team members at PIF were skeptical of the Vision Fund their boss had signed on to, but they were in no position to oppose it. Instead, they started pushing for details and proof the firm was ready to accept so much cash.
The official closing for the Vision Fund was still months away, but on another visit by Masayoshi, Nizar, and Rajeev to Riyadh, the prince appeared concerned. There was a dinner on the beach full of excited discussion about NEOM and Masayoshi’s utopian vision of including one million robots in the city to handle all the domestic tasks, leaving humans to free to do more important things. It was typical Masayoshi: a nice round number and flashy concept without much substance.
Afterward, Mohammed pulled aside Masayoshi for a walk along the water to ask him to consider looking at investing in Uber. The company was in the news for all the wrong reasons, including governance and safety issues and a scandal involving senior executives spying on rivals. Uber was the Public Investment Fund’s first big deal, and he didn’t want it to go belly up—such bad public relations could harm the public view of his fledgling investment record.
“I’m very worried,” Mohammed said. Masayoshi had wanted to avoid ridesharing but agreed to take a closer look.
* * *
Mohammed bin Salman’s worries didn’t stop there. He had deftly taken power, set the country off on the biggest transformation project since the discovery of oil almost eighty years earlier, and started spending billions of dollars on foreign investments. But war was still raging in Yemen, and the long-entrenched elites he’d knocked out of orbit were plotting behind his back. To survive, like his uncles and grandfather before him, he’d need support from the United States, where an upcoming election could be a huge boon to the kingdom.
Neither Donald Trump nor Hillary Clinton seemed like a natural ally. Saudi leaders had long found Clinton an irksome counterparty when she was secretary of state, with her insistence on pressing the king and his deputies on human rights issues and demanding more freedom for women in the kingdom when they met. Donald Trump seemed even more problematic, with his naked Islamophobia and criticism of President Barack Obama for attempting to block a law that would let people sue Saudi Arabia in US courts for the 9/11 attacks.
But Mohammed, with the help of allies in the United Arab Emirates, came to believe that Trump was the better choice. He seemed inclined to scrap the Iran nuclear deal, which the Saudi leadership loathed, and appeared to care little about the human rights issues that preoccupied Clinton.
So Mohammed was furious when, three weeks before the presidential election, a distant cousin of his showed up in Los Angeles with a prominent Democratic donor and posed for photos with Representative Adam Schiff, a powerful congressional Democrat. It looked to the world like a member of the Saudi royal family was supporting the Democrats.
The cousin, Salman bin Abdulaziz bin Salman Al Saud, was technically a prince. But he wasn’t a descendant of the kingdom’s founder, Ibn Saud, as Mohammed was. Salman was descended from a relative of Ibn Saud, so he wasn’t in line for the throne.
Salman was handsome and fantastically wealthy, largely because his father, a former advisor to King Fahd, had built a huge family fortune. He and Mohammed had known each other since they were young. When they were in their teens, Salman used to tease Mohammed, who was overweight and spent his time playing video games while Salman was becoming fluent in French and traveling abroad. When they were in their twenties, Salman dismissed Mohammed as uncultured and unpleasant, telling friends he was the cousin whom other young Al Saud tried to avoid.
Now they were in their thirties. Mohammed was the most powerful man in the kingdom next to the king himself, and his cousin Salman was, in Mohammed’s eyes, a self-aggrandizing clown. Attracted to wealth and power, Salman started the grandiosely named “Visionary Movers Club,” an attempt to unite world leaders behind charitable initiatives that betrayed his claim to be fluent in English.
Appearing in posed photographs with neatly trimmed stubble and finely tailored Italian suits with lapels so wide they bordered on the preposterous, Prince Salman chased political leaders and press coverage, trumpeting his education at the Sorbonne and promises to fix global problems like access to clean water.
A Dubai businessman had introduced Salman to a Democratic donor, California executive Andy Khawaja. He in turn had Salman meet Schiff, who later told CNN that all he recalled of the meeting were general discussions of Middle East politics. Salman told a member of his entourage afterward that his talks with Khawaja and Schiff focused on his charitable efforts. (Separately Khawaja has since been indicted in the United States on charges of funneling illegal campaign contributions to Clinton in a scheme connected to Mohammed bin Zayed; Khawaja said he “never took money from any foreign leaders. It’s all lies.”)
But Mohammed was furious. Why was this no-name prince making it look like the royal family was backing Clinton? He called Salman, who assured him the meetings weren’t political. That night, an official with the Royal Court called Salman’s father. “Why is he in the US?” the official asked. Cowed, Salman decided to lay low, at least for a while, and he wrote a letter to the Royal Court saying he was just in the United States for business and social engagements, not politics. But for Mohammed the upcoming election was a crucial moment, and his cousin’s appearance had been inopportune.
Chapter 8
Little Sparta
December 2016
Discarding his white robes for a buttoned-up dress shirt and aviator sunglasses, the muscled crown prince of Abu Dhabi, Mohammed bin Zayed, arrived for a secret meeting at Manhattan’s Trump Tower looking like an Arab James Bond.
The group receiving him was unlike anything he’d seen in his years of diplomacy with the United States, his closest Western ally and protector. On one side was Steve Bannon, the former banker and right-wing media executive whose fraying fleeces over two or three layers of collared shirts, reddened cheeks, shaggy gray hair, and tendency to pontificate on the ancient past gave him the air of a rumpled, though deeply reactionary, professor. Then there was Jared Kushner, the trim real estate heir married to Ivanka Trump, who once told Bannon on a flight that he didn’t think experts with a deep understanding of the past were necessarily the best people to plot out the geopolitical future.
“I don’t believe in that,” Kushner said.
“You don’t believe in what?” Bannon responded.
“In history,” Kushner said. “I don’t read history. It bogs you down.”
And between them was Michael Flynn, a decorated former lieutenant general who was just coming out of a private-sector career as a consultant and lobbyist for foreign governments. They all worked for real estate tycoon Donald Trump, who had just, against all the odds, won the presidency of the United States in part by rallying nearly half the voting populace around a doctrine of “America First.” At times, his policies were outright hostile to the Muslim world.
