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I think these projects mostly exist to funnel away / launder money, no one really thinks they will become reality. A multi-decade mega project is just a great w

I think these projects mostly exist to funnel away / launder money, no one really thinks they will become reality. A multi-decade mega project is just a great way to divert large amounts of money without raising too much suspicion as there’s very little oversight of what’s really happening there.

alephnerd 3y ago
Pretty much this. The companies subcontracted on Neom all had some amount of investment or ownership from either the royal family's fund or the sovereign fund.
- usrusr 3y ago
  But is the money spent coming from different pockets? Doesn't necessarily counter your argument though, could be sovereign fund -> family, with those contractors owned by the source pocket effectively being noops in terms of that funneling. And even that could still very much be worthwhile, as in generate business for the company, sell off the company to external investors based on those numbers and later phase out the artificially generated demand.
  - alephnerd 3y ago
    Authoritarian regimes aren't as unitary as people think they are - in reality you have multiple power bases and factions to keep happy (and they have their own family offices). Furthermore, we live in a globalized world. In 2024, almost every country is dependent on international investors bringing in liquidity. Graft is fine, so long as execution happens. This means you have multiple different firms joining in these kinds of infra investments. Some are international investors (eg. Citigroup, HSBC, Jardins), some are regional investors (eg. SNB, SAB), some are family offices, and some are the government itself. The international investors are used to maintain international credibility, the regional investors are used as fixers by the international investors, the family offices are those regionally prominent members who can make or break procurement, and the government investment funds that act as the lubricant to manage all these different factions. Basically, these investments are used to not only show off regional power, but also pay off regionally prominent factions via Family Offices or minority ownership. This happens from Saudi Arabia (eg. Neom) to Japan [0] to South Korea [1] to Poland [2]. This is very common in newly developed countries as well as developing countries (eg. CCDI's crackdown on land corruption in China, the Odenbrecht scandal in Brazil, the various Adani linked scandals in India). > as in generate business for the company, sell off the company to external investors There's no reason to. Once a connected company executes successfully on large regional projects, they can become international players. This is what happened to Reliance in the 2000s, Adani in the 2010s, Odenbrecht in Brazil in the 1990s-2000s, Polimeks in Turkiye in the 2000s, Wanda Group in China in the 2000s, etc. [0] - https://www.bloomberg.com/news/articles/2024-01-19/japan-s-kishida-may-dissolve-his-faction-over-slush-fund-scandal https://www.bloomberg.com/news/articles/2024-01-19/japan-s-k... [1] - https://www.reuters.com/world/asia-pacific/south-korea-indicts-opposition-leader-lee-over-property-graft-2023-03-22/ https://www.reuters.com/world/asia-pacific/south-korea-indic... [2] - https://www.oecd.org/corruption/poland-s-fight-against-foreign-bribery-has-stalled-and-needs-urgent-action-says-the-oecd-working-group-on-bribery.htm https://www.oecd.org/corruption/poland-s-fight-against-forei...
atonse 3y ago
What money would they need to launder? Isn’t most oil money just regular revenue in Aramco? Just curious, it wouldn’t surprise me but wasn’t sure.
- red-iron-pine 3y ago
  my boss' guess was that it was to fund a nuclear weapons program but keep it hidden. or a climate change / fallout bunker for 1/3 of the kingdom. like it's big, elaborate build outs, nothing delivered, and some sort of under the table deal nuclear with Trump's brother in law that got him a Billion. the Iranians have, or can rapidly enrich, and Israel is popping off again (and may have ~100 nukes), so Saudi has means, motive, opportunity. infrastructure required to build silos, and infrastructure required to build the City Of The Future are going to look more or less the same for 3-4 years -- lots of big holes, running trenches, piping and power, etc. -- and after a few years they can call it a failure and quietly sweep it under the rug with the rationalization that it's been a failure and they're ashamed of it.
  - q1w2 3y ago
    Building a large building does not look anything like building a nuclear silo. This comment is 100% ridiculous speculation. That's not to say they don't have a nuclear weapons program - they probably do - but needing a mega-project to cover it up is just silly.
yongjik 2y ago
Oh, I can totally believe that Saudi's crown prince does believe in the project. After all, if you're a Saudi government officer, what are you going to do? Say no to the Crown Prince? I'm sure a lot of underlings are making a fortune out of the budget, but I don't believe that was the initial motivation for the project. Consider yourself in the shoes of bin Salman. Why would you need to funnel money away, when you are the absolute monarch and the whole country is yours? It makes about as much difference as taking coins out of your left pocket and shoving it back to the right pocket.

alephnerd 3y ago

Pretty much this. The companies subcontracted on Neom all had some amount of investment or ownership from either the royal family's fund or the sovereign fund.

usrusr 3y ago
But is the money spent coming from different pockets? Doesn't necessarily counter your argument though, could be sovereign fund -> family, with those contractors owned by the source pocket effectively being noops in terms of that funneling. And even that could still very much be worthwhile, as in generate business for the company, sell off the company to external investors based on those numbers and later phase out the artificially generated demand.
- alephnerd 3y ago
  Authoritarian regimes aren't as unitary as people think they are - in reality you have multiple power bases and factions to keep happy (and they have their own family offices). Furthermore, we live in a globalized world. In 2024, almost every country is dependent on international investors bringing in liquidity. Graft is fine, so long as execution happens. This means you have multiple different firms joining in these kinds of infra investments. Some are international investors (eg. Citigroup, HSBC, Jardins), some are regional investors (eg. SNB, SAB), some are family offices, and some are the government itself. The international investors are used to maintain international credibility, the regional investors are used as fixers by the international investors, the family offices are those regionally prominent members who can make or break procurement, and the government investment funds that act as the lubricant to manage all these different factions. Basically, these investments are used to not only show off regional power, but also pay off regionally prominent factions via Family Offices or minority ownership. This happens from Saudi Arabia (eg. Neom) to Japan [0] to South Korea [1] to Poland [2]. This is very common in newly developed countries as well as developing countries (eg. CCDI's crackdown on land corruption in China, the Odenbrecht scandal in Brazil, the various Adani linked scandals in India). > as in generate business for the company, sell off the company to external investors There's no reason to. Once a connected company executes successfully on large regional projects, they can become international players. This is what happened to Reliance in the 2000s, Adani in the 2010s, Odenbrecht in Brazil in the 1990s-2000s, Polimeks in Turkiye in the 2000s, Wanda Group in China in the 2000s, etc. [0] - https://www.bloomberg.com/news/articles/2024-01-19/japan-s-kishida-may-dissolve-his-faction-over-slush-fund-scandal https://www.bloomberg.com/news/articles/2024-01-19/japan-s-k... [1] - https://www.reuters.com/world/asia-pacific/south-korea-indicts-opposition-leader-lee-over-property-graft-2023-03-22/ https://www.reuters.com/world/asia-pacific/south-korea-indic... [2] - https://www.oecd.org/corruption/poland-s-fight-against-foreign-bribery-has-stalled-and-needs-urgent-action-says-the-oecd-working-group-on-bribery.htm https://www.oecd.org/corruption/poland-s-fight-against-forei...

atonse 3y ago

What money would they need to launder? Isn’t most oil money just regular revenue in Aramco? Just curious, it wouldn’t surprise me but wasn’t sure.

red-iron-pine 3y ago
my boss' guess was that it was to fund a nuclear weapons program but keep it hidden. or a climate change / fallout bunker for 1/3 of the kingdom. like it's big, elaborate build outs, nothing delivered, and some sort of under the table deal nuclear with Trump's brother in law that got him a Billion. the Iranians have, or can rapidly enrich, and Israel is popping off again (and may have ~100 nukes), so Saudi has means, motive, opportunity. infrastructure required to build silos, and infrastructure required to build the City Of The Future are going to look more or less the same for 3-4 years -- lots of big holes, running trenches, piping and power, etc. -- and after a few years they can call it a failure and quietly sweep it under the rug with the rationalization that it's been a failure and they're ashamed of it.
- q1w2 3y ago
  Building a large building does not look anything like building a nuclear silo. This comment is 100% ridiculous speculation. That's not to say they don't have a nuclear weapons program - they probably do - but needing a mega-project to cover it up is just silly.

yongjik 2y ago

Oh, I can totally believe that Saudi's crown prince does believe in the project. After all, if you're a Saudi government officer, what are you going to do? Say no to the Crown Prince? I'm sure a lot of underlings are making a fortune out of the budget, but I don't believe that was the initial motivation for the project. Consider yourself in the shoes of bin Salman. Why would you need to funnel money away, when you are the absolute monarch and the whole country is yours? It makes about as much difference as taking coins out of your left pocket and shoving it back to the right pocket.