Saudi NEOM City Faces Construction Difficulties Despite Already Securing Winter Asian Games Hosting [AK Radio]

Completion Target Delayed to 2080
Ski Resort Construction Costs Exceed 52 Trillion Won

The ambitious future city project "NEOM City," spearheaded by Saudi Arabia's Crown Prince Mohammed bin Salman, is facing serious difficulties. Originally slated for completion by 2030, this mega project has recently seen its completion date pushed back to 2039 and then drastically delayed again to 2080, encountering significant practical obstacles. Concerns are growing that the actual construction site has yet to properly establish its foundation.

The crisis of the NEOM City project began to surface in November last year. Nadmi Al Nasr, the CEO of NEOM Company and the project's chief executive, suddenly resigned, and most of the management team was replaced. Although the resignation was initially presented as a simple departure, subsequent audits by Saudi authorities revealed evidence of document manipulation, including accounting records, leading to the mass dismissal of executives.

The core issue lies in the gap between Crown Prince bin Salman's ambitions and reality. The originally planned NEOM City was to cover an area of 26,500 square kilometers?44 times the size of Seoul?and accommodate a population of 9 million. This scale is unimaginably vast for the average person. In particular, Crown Prince bin Salman insisted on a radical design featuring high-rise buildings enclosed within a massive linear glass greenhouse measuring 500 meters in height and 170 kilometers in length.

However, constructing the city according to this design proved nearly impossible in practical terms. When the management proposed lowering building heights and changing the city layout to a more conventional radial form, bin Salman strongly opposed these suggestions. He insisted that neither the height nor the scale should be reduced, demanding adherence to the original plan. Consequently, the management reportedly concealed construction costs and technical difficulties by manipulating documents instead of reporting them honestly.

The budget required for NEOM City's construction is astronomical. The total construction cost is estimated at $8.8 trillion (approximately 1,270 trillion KRW), equivalent to 25 years of Saudi Arabia's national budget. Moreover, this figure is deliberately understated, with actual costs expected to rise further. Due to these practical constraints, the Saudi government is gradually shifting its stance.

Reuters·Yonhap News

Currently, a compromise plan is underway: Crown Prince bin Salman's grand vision is being preserved as a long-term project spanning over 50 years and multiple generations, while a scaled-down city will be built first as a medium- to long-term project. This approach includes hosting the Winter Asian Games and gradually expanding the city. The Crown Prince aims to break ground and establish a recognizable form during his tenure, postponing full completion to the future.

The Trojena area, part of NEOM City, where a ski resort is planned, is also at the center of controversy. Selected as the host site for the 10th Winter Asian Games in 2029, this region features mountain ranges reaching 2,600 meters above sea level, with winter temperatures dropping below freezing. However, the fundamental problem is that it is a desert area with almost no precipitation, meaning it rarely snows. To create a ski resort, the entire area would need to be covered with artificial snow.

The Saudi government plans to build a massive reservoir in this area to pump water and produce artificial snow to operate the ski resort. However, the construction cost of the resort alone is estimated to have more than doubled from initial projections to over $38 billion (approximately 52 trillion KRW). Furthermore, with global warming causing more than 30% of ski resorts in the European Alps to close last year, doubts have been raised about the feasibility of operating a ski resort solely with artificial snow and successfully hosting the Winter Asian Games.

Saudi Arabia's recent active pursuit of hosting various international sports events such as the World Cup, golf, and soccer is analyzed to have two main reasons. First is "sports washing," an attempt to cleanse the country's negative image through sports events. Saudi Arabia is perceived as a kingdom with severe religious restrictions and limited freedoms compared to other Middle Eastern countries, making it difficult to attract foreign investment for national projects like NEOM City. Hosting international sports events aims to improve the country's image and be recognized as a nation closer to global standards.

Second is Crown Prince bin Salman's internal political objectives. By continuously promoting reform and opening policies and attracting external events, he aims to counterbalance Islamic Sunni leaders who oppose reforms within Saudi Arabia. Bin Salman, who consolidated power through a large-scale purge in 2017, still has an unstable ruling base. His crackdown on royal relatives and confiscation of assets have generated significant resentment.

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In particular, Saudi religious leaders strongly oppose the Crown Prince's reform and opening policies. Amid complex international situations such as the prolonged war with Yemen's Houthi rebels, regional conflicts with Iran, and turmoil in the Middle East following the Israel-Hamas clashes, conservative forces advocate strengthening traditional religious beliefs rather than reforms. They argue that pushing reforms amid the country's unstable surroundings could lead to Saudi Arabia's division, and that unifying the country and winning the war requires reinforcing traditional religious faith.

All of Saudi Arabia's mega projects are sustained by income from oil. Over 100,000 workers have been mobilized for the NEOM City project, which has been ongoing for seven years but is progressing slowly. Without oil money, such large-scale projects would be unsustainable. So far, the international oil price surge?more than tripling since the Ukraine war?has provided financial support. However, as the war moves toward resolution and international oil prices begin to decline, Saudi Arabia's finances are expected to suffer significant damage.

Most Middle Eastern countries have economic structures without direct taxes. National finances are funded through oil revenues, which are then redistributed to citizens via welfare policies. Therefore, a drop in oil prices directly leads to fiscal deterioration and inevitably disrupts the advancement of large-scale national projects. With ongoing Middle Eastern conflicts and the continued war against the Houthi rebels, Saudi Arabia is expected to soon face concerns over fiscal deficits.

Experts predict that considering these circumstances, the Saudi government will significantly downscale the NEOM City project. Realizing the futuristic advanced city envisioned in movies by 2030 appears unlikely. Whether Crown Prince bin Salman's grand dream will be grounded by reality or gradually realized over time will largely depend on future international affairs, internal Saudi political conditions, and, most importantly, the trajectory of international oil prices.