Houthi attacks undermine Saudi's economic ambitions

RIYADH, Oct 20: With airports closed and the capital brought to an effective standstill, attacks by Yemen's Houthis on Saudi Arabia have thrown a wrench in the kingdom's ambitious plans to overhaul the economy and draw foreign investment.

A decade ago, de facto ruler Crown Prince Mohammed bin Salman launched his bold Vision 2030, aiming to diversify the economy away from oil and turn the powerful monarchy into a hub for tourism, international events and multinational enterprises.

Already dealt a blow by Iran's attacks on US allies in the Gulf during the wider Middle East war, the plan now faces an existential hurdle with unprecedented Houthi attacks, in particular targeting oil infrastructure and airports.

"I can't think of another time when the challenge facing MBS was more," said H.A. Hellyer, an analyst at the Royal United Services Institute (RUSI)."He's dealing with the Iranians on one side of the country which is very difficult and problematic and then he's dealing with the Houthis who aligned with the Iranians on the other."

A number of major events have been cancelled, most notably the Future Investment Initiative (FII), nicknamed "Davos on the desert" -- a bulwark of the kingdom's diversification drive.

The world's largest crude oil exporter is moreover expected to see its economy contract by 3.3 percent, according to the IMF's latest projections, revised from a projected growth of 1.7 percent in July.

The kingdom is grappling with a new reality wherein US protection is no longer guaranteed, as President Donald Trump has appeared reluctant to offer support in Yemen as he gears up for mid-term elections.

Following an uneasy four-year truce in the war, fighting kicked off again in July when the airport in Sanaa was struck after Iran sent a plane in defiance of Saudi control -- an attack the Houthis blamed on Saudi Arabia.

The Yemeni group has a large number of longer-range missiles and drones at its disposal, and has seized control of the Bab al-Mandab Strait, which leads up to the Suez Canal.

But Soltvedt suggested the risks predate the latest conflict, saying: "Allaying investor concerns over geopolitical risk has been a longstanding challenge for Riyadh, from the attacks on the heart of Saudi Arabia's energy sector just before the Aramco IPO in 2019, to the outbreak of regional conflict this year.
"With no solution to the conflict in sight, the drone and missile threat from multiple directions and actors will continue to weigh on the minds of investors."�" AFP