In an indication of the passing dominance of the age of hydrocarbons, the world's top oil exporter has announced plans to end its dependence on oil as the basis of its economic existence. The reform plans drawn up by Saudi Arabia's youthful policy architects reveal a welcome ability to grasp the long-term volatility of oil prices and the fragility of a future built entirely on oil. Saudi Arabia faced fiscal and economic challenges even before the oil price slide, but the drop has lent urgency to the kingdom's plans to reinvent itself as a global investment power. No less essential is the need for Riyadh to modernise its educational and social systems to face up to new realities.
Key to the reforms would be the sale of less than 5 per cent of the state oil company Saudi Aramco, which is valued at more than US$2 trillion (S$2.7 trillion), through an initial public offering. The international implications of the move are dramatised by the scale of the divestment. So big is the company, because of its rights to the kingdom's crude reserves, that selling even 1 per cent of its value would create the biggest IPO on earth. Aramco exemplifies the resources that Riyadh possesses as it charts a road map to raise the private-sector share in its economy to 60 per cent from 40 per cent; reduce the unemployment rate which is above a worrisome 11 per cent; and increase non-oil income substantially. Saudi Arabia can afford to do no less.
However, it can afford to do more. The question for its education system is not whether it should be Islamic: In Saudi Arabia, the answer is clear. The real question is what kind of Islamic education system the country needs. While allowing them to remain anchored in the tenets of their faith, young Saudi minds require exposure to knowledge which equips them for survival in a competitive world of many religions or none. Here, Egypt's great Al-Azhar University provides a resilient template for contemporary Islamic education. Likewise, Saudi women deserve to take their place in the mainstream of society if the country is to tap the full extent of its demographic potential.
Reactionary attitudes will pose an obstacle to reform, but Riyadh must return to the progressive heritage of Islam to push back self-serving obscurantists. The Wahhabi underpinnings of the Saudi state, which have fed into virulent radicalism outside its borders, need to reconcile with its people's need to thrive in a modern, diverse world. Saudi Arabia must live up to its role as an indispensable Middle Eastern state. Its economic prowess, its military power, and its potential as a stabilising force in Sunni Islam give other countries a permanent stake in it.The reform blueprint for its economy should enhance its value as a stakeholder in global affairs. Implementation of this vision will call for undaunted political will.