RIYADH, Saudi Arabia — Saudi Arabia on Monday approved a long-awaited plan laying out reform priorities for the next decade and a half, setting in motion what is likely to be a period of significant economic change in the oil-rich kingdom.

The project, which includes plans to float a stake in the world's largest oil company and set up one of the world's largest government investment funds, is meant to provide a blueprint for sweeping reforms to steer the OPEC kingpin sharply away from its decades-long reliance on cheap-to-produce oil.

King Salman said in a short televised announcement that the Cabinet approved the "Vision 2030" plan on Monday, and he called on Saudis to work together ensure its success.

But it was left up to the king's powerful son, Deputy Crown Prince Mohammed bin Salman, to spell out some details of the program in a pre-recorded interview aired shortly after the announcement on Saudi-owned broadcaster Al-Arabiya.

The prince is second in line to the throne, serves as the country's defense minister and chairs a committee formed soon after his father's ascension last year overseeing economic policymaking. That committee, the Council on Economic and Development Affairs, has been focused on reorienting the kingdom away from its heavy reliance on fossil fuels, creating jobs and boosting foreign investment.

In the wide-ranging interview, Mohammed bin Salman described the country as having become addicted to oil and said a planned partial initial public offering of the state-owned oil giant Saudi Aramco was part of the reform program.

He said that while there's been no final assessment on the value of Aramco, estimates have placed it at more than $2 trillion, and that less than 5 percent of Aramco would be offered to public shareholders. Subsidiaries of the company would also be part of the share sale, he said.

The Aramco shares would be listed on the Saudi stock exchange, known as the Tadawul, and on an international exchange, possibly in the United States.

"The vision is a road map of our development and economic goals," he said. "Without a doubt, Aramco is one of the main keys of this vision and the kingdom's economic renaissance."

Aramco boasts the world's largest oil reserves and produces some 10 million barrels of crude a day, giving it outsized influence over world energy markets.

It traces its history to a 1933 agreement between the kingdom and the Standard Oil Company of California to develop the country's oil reserves, and has been known as Aramco — an acronym for the Arabian American Oil Company —since 1944. The Saudi government took full control of the company in a series of buyouts that ended in 1980.

The prince discussed plans to set up a $2 trillion sovereign wealth fund that would be managed by an outside board of directors. It will include cash generated from the Aramco IPO, an existing $600 billion in reserves, and state-owned real estate and industrial areas estimated to be worth $1 trillion. The fund's revenues would go into developing the kingdom's cities, he said.

He said the economic goals of the reforms are intended to eliminate housing and unemployment problems and ensure that water and energy subsidies go to those most in need.

Another way to drive up non-oil revenue, the prince said, is by investing more in mineral mining and boosting the kingdom's own military production capacity. Saudi Arabia was the world's third-largest arms buyer last year, with purchases of more than $87 billion last year.

The prince also said the kingdom, which annually welcomes millions of Muslim pilgrims to the holy cities of Mecca and Medina, would become more welcoming to other types of tourists — in line with Saudi Arabia's values. A new residency visa program could generate additional revenue and would allow Muslims and Arabs to live for extended periods in the country, he said.

Lower oil prices have exposed Saudi Arabia to urgent domestic challenges, including a projected budget deficit this year of nearly $90 billion.

Despite past efforts to move the economy away from its reliance on oil, the kingdom's main export still accounted for 72 percent of total revenue last year.

In addition, 70 percent of Saudis work in the public sector, where the government is spending heavily on wages. The government is looking for ways to support the private sector to help create jobs for the millions of young people who will be entering the workforce in the coming years and will also be looking for affordable housing as they approach milestones such as marriage.

The reform plans were announced just days after U.S. President Barack Obama paid his fourth official visit to Saudi Arabia to press the kingdom and other Gulf states for more help fighting the Islamic State group and in tackling other regional challenges, such as providing financial and political support to Iraq.

___

Batrawy reported from Dubai, United Arab Emirates. Associated Press writer Adam Schreck in Dubai contributed to this report.

http://www.msn.com/en-us/money/markets/saudi-arabia-outlines-sweeping-economic-reform-plans/ar-BBse1X3?ocid=ansmsnmoney11

My Saudi experts or anyone, chime in.

I read this earlier but it reminds me a bit of the 2005 film Syriana. I think it's the logical path and will only benefit this nation for the long term. Frankly, this gives the Saudis more options given the oil market fluctuations which this article clearly illustrates. Economically one might speculate that this will increase the price of oil futures in years to come, but this is the eventual scenario regardless.

I don't think it'll be enough. They will need a lot of outside money to fill the hole that the oil left. But they won't get it unless they loosen their "values" a bit, at least for tourists, immigrants and businesses. I could see them becoming a great tourist destination if they would just drop some of their "values".

While I actually despise SA for their culture/values, this is a good thing. The middel east is an extremely volatile region, there's no need for a bankrupt SA.

This isn't the first time they announced such things though. We'll have to see how far it goes this time.

UAE has succeeded in making a swift transition to a much less oil-dependent economy. I don't see why the Saudis can't.

Their plans can't change the cold hard facts though, oil is on its way out and the world will not need to tolerate their backwardness anymore.

It's already happening, the USA doesn't feel the need to be angry at Iran to please them for now, which is just another country that's infested with backwardness

I hope they become less backwards and stop exporting extremism (not sure what they think they stand to gain from that).

Screw that, what they need is an immediate social liberalisation.

As oil revenue declines I think there will be a move towards extremism. Muslims have an unfair tendency to blame non-muslims for their problems so any economic plan that prevents a lowering of living standards can only be a good thing. However rich extremist Saudi Arabian's have contributed to terrorist groups financially so its hard to know which way it will go. If they are poorer they become more extreme but have less money to pay for terrorism. If they are richer they aren't as extreme but it is easier to fund terrorism. It's probably a no-win scenario for the west.

The western countries will tolerate SA's extremism far less if they don't need them for oil. Especially the US.

   No one contributed more to the rise of extremists than the Western countries. It was a way for them to keep Arabics from nationalizing their natural resources and blocking Western corporations from taking over. 

  ARAMCO (Arab American Oil Company) was founded by American oil prospectors, after initially reaping most of the profits to themselves; the Saudi king at the time threatned to cease cooperation with them, consequently they shared the revenue 50/50. The movement was growing worldwide, an anti Western corporate sentiment and the backing of Saudi kingdom was the key to meddle in Middle Eastern business since early 1900's.

The influence that the Saudi kingdom exerted/exert over the neighboring and other Arabic countries were/are great, especially when it comes to religion. West wanted Salafis to help them crush the nationalist sentiments in the region. Enter the Wahhabism...