What the West is getting it wrong about Saudi Arabia’s Neom ambitions

One of the favorite subjects for Western media has been of the GCC’s rising economic influence outside its traditional OPEC domain.

Traditionally, the template here has been what one would call ‘a decadent American puritanism’, to quote the Economist. An odd combination of ducking responsibility for its own policies and telling everyone else what to do and how things get bungled up.

The decadence lies in too readily blaming others for their mistakes and not enough of self-reflection. This was most recently reflected in a WSJ ‘exclusive’ on the failings of NEOM (a favourite bashing subject for Western media, who egg each other on in a continuous diatribe).

While there is value in pointing out any shortcomings of giga-projects - to be sure, there is much to learn from the best practices of the West - an underlying theme has emerged in the business relations between America and the GCC.

That America suddenly has something to learn from the success of the GCC economies, both in the sheer number of giga-projects and how they are financed, and the audacity of the reforms that have been achieved in such a breathtakingly short period of time.

This is something that America once knew well enough but has since forgotten. GCC executives never weary of telling you that one of their most cherished ideas about quality control came from an American expert named Edwards Deming, who famously predicted that within 5 years American manufacturing would be begging for protection (It took only 4 years).

This cycle first perpetuated itself with the rise of Japan, then China, and now has engulfed itself throughout the world. That even as America has taken centerstage in the world of software, its hardware is malfunctioning and is in need of help.

Executives, meanwhile, have been flocking to the Gulf, putting their expertise to use in areas where flexibility, audacity and the ability to pivot when mistakes are made is shockingly fast.

When things move fast, mistakes will be made and things will break. the solution is to highlight the mistake, fix it and move on. (For those unversed with this language, have a look at DOGE that has essentially doing the same. Its ambitions, whilst far more modest, have already suffered from embarrassing misstatements).

But this is how the private sector works. In point of fact, this is the essence of capitalism and by implication the GCC is now the normal capitalist bloc.

The success of the UAE has meant that there has been an influx of talent in all professions. UAE companies are now creating joint ventures — OMV, Grupo Nutresa, etc. — and taking over Western organizations.

At home, the scale of the giga-projects has continued to scale ever higher.

Likewise, Saudi Arabia has astonished with its speed of reforms. That there would be some speed bumps (pun intended) along the way is reminiscent of how American capitalism worked in the immediate aftermath of the Second World War.

Somewhere along the way, the world got enamored with the Western system, and with ever rising valuations and increasing financial fragility (along with higher taxes), there has been a realisation that the opportunity side of the ledger has tilted towards the Middle East. (Both in terms of valuations and hard infrastructure across industries.)

Corporations, developers, financiers, and individuals vie to have the most modern equipment and skillsets. It is no accident that giant clusters of unrelated businesses have grown at stellar rates under the umbrellas of IHC, Mubadala and Aramco.

So, while the continuing tirade of Western business media will spew vitriol about what went wrong in the latest endeavour, the real question that perhaps needs to be asked in light of everything else that is going on is "How can American capitalism beat the GCC model?".

The answer unsurprisingly will be a difficult one to posit.