One surprising element in conservative Saudi Arabia is a proposal to allow alcohol, say people familiar with the plan. With borders encompassing land acquired from Jordan and Egypt, Neom would function largely as a separate country. That allows MBS to argue that Western norms like drinking and bare female heads won’t be introduced to the land of the Muslim holy cities of Mecca and Medina.
To develop Neom, the Saudi government plans to forcibly relocate more than 20,000 people, many whose families have inhabited the area for generations. One Boston Consulting Group relocation plan said that would take until 2025. Urged by MBS to move quickly, the date was moved up to 2022.
Residents here say they’ve heard only rumors. Some say relocation would be devastating. “You are dismembering an entire society. For us, it’s like death,” said one.
The beach at Sharma, a small village that is part of the kingdom’s plan to create a new city-state in a seaside corner of Saudi Arabia.
PHOTO: RORY JONES/THE WALL STREET JOURNAL
Weeks after Neom was announced in 2017, residents visited regional governor Prince Fahd bin Sultan to ask whether they would be moved. He said he couldn’t help, according to the residents. Prince Fahd’s spokesman didn’t respond to questions.
Boston Consulting Group consultants advised following World Bank standards for forcible relocations. The board decided that perhaps some residents could stay if they’re retrained to have Neom-appropriate skills. “Relocating residents in the interest of public works projects is not uncommon in the Kingdom,” the Neom statement said. People will receive compensation and benefits including a scholarship program to “gain the skills necessary to be part of the Neom vision,” it added.
Neom began about four years ago, says a person familiar with the matter, shortly after MBS’s father became king. Mulling how to overhaul the economy, the prince pulled up a map of his country on Google Earth and saw its northwest quadrant was a blank slate, according to this person.
Mediterranean
Sea
SYRIA
LEB.
IRAQ
ISR.
JORDAN
Cairo
Site of planned
city Neom
EGYPT
Riyadh
300 miles
SAUDI
ARABIA
Red
Sea
300 km
He flew there and found a place where summer temperatures top 100 degrees, but nearby mountains get snow in the winter. In a January 2017 Neom board meeting, MBS made his ambitions clear: The prince “envisions Neom the largest city globally by GDP, and wanted to understand what he can get with up to 500 billion USD investment,” according to the planning documents.
Hoping to build a bridge across the Red Sea, MBS arranged with Egypt’s president to acquire two uninhabited islands, sparking protests from thousands of Egyptians. And he got a message to Israeli leaders feeling out their reaction to Neom. They said Israeli companies could sell technology to Saudi Arabia for the project, says a person familiar with the matter.
The government of Israel didn’t respond to a request for comment. The Egyptian government couldn’t be reached for comment.
To deliver his vision, MBS in 2017 hired Klaus Kleinfeld, who had been fired as CEO of Arconic Inc., a spinoff of aluminum maker
Alcoa Corp. And costs rose. Since the bridge to Egypt couldn’t follow MBS’s route due to a seismic fault, reengineering brought the bridge’s estimate to $125 billion, according to a person familiar with the matter.
A Kleinfeld deputy’s recommendation to develop a master plan for Neom’s streets frustrated MBS. “I don’t want any roads or pavements. We are going to have flying cars in 2030!,’” the prince said, according to a person who reviewed meeting minutes. Mr. Kleinfeld and the deputy left Neom last year.
Mr. Kleinfeld, the Saudi government and Neom declined comment.
Saudi Crown Prince Mohammed bin Salman, right, shakes hands with Klaus Kleinfeld in Riyadh, Saudi Arabia, after Kleinfeld was appointed as Neom's CEO in 2017. Kleinfeld left Neom last year.
PHOTO: SAUDI PRESS AGENCY/REUTERS
Another challenge is what the legal system of this new city should look like. Latham found Saudi Arabia’s opaque, unpredictable and religious-based justice system presented “red flags” to foreign investors, according to the planning documents. It suggested a new structure in which all judges will be appointed by—and report to—the king. They, like the regular Saudi judges, will comply with Sharia law, planning documents show.
“Neom law will be based on best practices in the areas of economic and business law, as well as feedback from potential investors and residents,” Neom said in the statement to The Wall Street Journal.
Construction on Neom is under way using thousands of foreign workers that in one section of the development were housed six to a tiny room as of June 17. Earlier this year, MBS issued a decree about an area called Silver Beach. “I want the sand to glow,” he said, according to two people familiar with the project. Engineers haven’t figured out a safe way to do it.
Each night, he told underlings, a fleet of drones should create the illusion of a rising moon—crescent, half, full. “That’s what he wants this future to be,” a former executive said.
To make that happen, Boston Consulting Group suggested partnering with NASA to make the fake moon “the biggest in the world.”