Challenges and Opportunities: Saudi Arabia’s Soft Power Surge

Before 2016 Saudi made it easy by isolating themselves. We didn’t have to deal with the moral dilemmas because we weren’t welcome.
But things have been changing. Rapidly.

Not everything has changed and there’s further to go. But as Thomas Friedman wrote recently, “if you want to engage with only countries without moral quandaries, you’ve come to the wrong neighbourhood.”
Over the summer Saudi Arabia’s ‘soft power project’ has been the subject of intense debate amongst Western commentators.
For centuries, the Western world has taken for granted its ability to wield soft-power. Think of the Apple iPhone, the British Royal Family, Ryanair, Mercedes Benz, the New York Times. A few examples of the West’s ability to project power and influence others’ opinions via non-forceful means.

And the West does not have a monopoly on soft-power.
Saudi Arabia is a young country, founded 91 years ago. Between 1979 to 2016 it was one of the most isolated countries in the world. Not many opportunities to spread its brand beyond Saudi Aramco, its oil company. Vision 2030 opened the Kingdom. The $600 billion sovereign wealth fund – the PIF – is the financial engine implementing the vision. The PIF helped fuel Saudi Arabia’s achievement as the world’s fastest growing country last year and is driving the country towards becoming a global force beyond oil, while investing in its people and private businesses.
What’s recently caught the eye of the press outside the Middle East are the international moves of the PIF. An influx of football players, the merging of the PGA Tour with LIV Golf, the purchasing of football teams. It feels uncomfortable perhaps because it feels like the west is losing something it once had – a near-monopoly on who exercised global influence.
But look at the changes within the country now expanding its brand. Each time I visit I’m struck by the breathtaking pace of transformation. During my initial visit in 2018, I was required by law to wear an abaya. Today, no one has to wear one. (They are useful for warmth in the air conditioned conference halls though). Women’s participation in the labour force grew from 20% in 2018 to 37% in 2022. Women sit on the board of the central bank, the chair of the stock exchange is a woman, and the head of compliance and governance at the PIF is a woman. There’s a Saudi women’s football premier league – now in its second year, and a Girls’ School football league with almost 5000 teams across 2000 schools.

Isn’t this change worth supporting?
One recent engagement was with the UK Saudi Business,
Trade and Partnership Forum at Mansion House, pictured here. Among other conversations I spoke with the PIF’s Jerry Todd about how the sovereign wealth fund is growing whole industries in Saudi Arabia – from green hydrogen to electric cars to vertical farms to advanced aerospace and automotive. They invest in business to catalyze demand and support growth of a native supply chain. Sometimes there’s lots of local demand, and virtually no local supply. Waste management was an example where there was some regulatory risk of who was allowed to operate. The PIF could take that risk and helped create an ecosystem to encourage others to enter. The PIF also looks forward – to there’s some local demand, some local supply that are also areas of high present and future growth – gaming, technology, healthcare are examples.
“Where there is a headwind, the PIF can turn it into a tailwind.”
Since the PIF owns stakes in six local publicly listed banks, it can help those banks send credit where it is needed – into businesses to help innovate, grow and build the economy.

For its critics, Saudi Arabia exists and will play an integral role in shaping the next 91 years. We can approach in the spirit of cooperation or hostility. I prefer the former.