Saudi Arabia to Overhaul Military in Plan for Life After Oil

Saudi Arabia’s plans to overhaul every corner of its economy won’t spare the military.

The kingdom will put its armaments industry under a holding company as it prepares for a post-oil era. Part of that reboot will seek to meet more of its military needs domestically and diversify its economy, Deputy Crown Prince Mohammed bin Salman said.

Prince Mohammed, second in line to be king and the power behind the throne, is leading the biggest economic shakeup since the founding of Saudi Arabia in 1932, with steps that include selling less than 5 percent of Saudi Arabian Oil Co., cutting subsidies and bringing more Saudis into the labor market. His goal: end eight decades of the dependency on oil.

“When I enter a Saudi military base, the floor is tiled with marble, the walls are decorated and the finishing is five stars. I enter a base in the U.S., you can see the pipes in the ceiling, the floor is bare, no marble and no carpets. It’s made of cement. Practical,” Prince Mohammed said in an interview with Saudi-owned Arabiya television before details of the "Vision 2030" plan were announced. “We have a problem with military spending.”

Saudi Arabian stocks surged the most in seven weeks led by a real-estate firm as the prince outlined plans that included pressing ahead with infrastructure projects, boosting home ownership and opening the real-estate sector to foreign buyers. For a related story on Saudi stocks, with charts on volume and RSI, click here.

Saudi Arabia has one of the biggest military budgets in the world, and was the leading Middle East spender on arms in 2015 at $46 billion, according to IHS Jane’s. It allocated 213 billion riyals ($57 billion) in its 2016 budget for defense spending. “We are the third- or fourth-largest in terms of military spending in the world, yet our army is ranked in the twenties. There is a problem," the prince said.

more...

http://www.bloomberg.com/news/articles/2016-04-25/saudi-prince-seeks-to-bolster-military-industry-to-meet-demand