I’ve been wanting to write this blog for several months, but I needed a few key events and proofs to come to light. I’ll break this into two articles, as I believe it to be a bit much to digest in one sitting.
Do you know what a City State is? It’s a sovereign location that operates by its own rules, though it may be surrounded by a geography (State) that has different or contrarian laws. There have been many through history, but the most notable today are The Vatican, London and Washington DC. You’ll get lots of arguments about the definition/designation, but for the sake of this article (which is primarily financial), these three stand alone. However, there’s about to be a 4th.
It’s called Neom and it’s located in Saudi Arabia. ‘Neom’ is a combination of Ancient Greek and Arabic, forming the word “New Future”. Here are two maps to assist in your orientation:
So, several things should jump out at you. Neom is located in the North-West part of Saudi Arabia, in the province Tabuk. Notice the neighbors? We’ll get back to that in a moment. What’s highlighted in the second map to the right? That’s right, the Suez Canal. Why is that so important? Well, take a look at this map:
Did you know that China was rebuilding/reestablishing the original Silk Road? If that doesn’t impress you, maybe this brief video will: Datong-Zhangjiakou high-speed railway under construction in N China
This is no joke, nor is this a passive investment. Nor is the building of Neom. Official construction began last month, and it’s scheduled to be completed by 2025. Here’s a direct quote from Wikipedia:
The city was announced by Saudi Crown Prince Mohammad bin Salman at the Future Investment Initiative conference in Riyadh, Saudi Arabia on October 24, 2017. He said it will operate independently from the “existing governmental framework” with its own tax and labor laws and an "autonomous judicial system…The initiative emerged from Saudi Vision 2030, a plan that seeks to reduce Saudi Arabia's dependence on oil, diversify its economy, and develop public service sectors.
Now you see the ‘oil’ connection, but you’ll have to wait for Part 2 to dive into that. You should also see the Salman reference to the title of this blog. I know, I know, I spelled it like the fish in the title. I did that on purpose, so people wouldn’t dismiss the blog because they didn’t think I knew how to spel.
NEOM will be the first city built with a base platform of 5G (https://neom-saudi-arabia-future-megacity/). I find this of interest, because Salman won’t have to worry about the capital risk of making sure old technologies have been maximized, before new technologies are introduced. This is important. For instance, have you ever thought about why Europe was so far ahead of the United States when it came to cellular phone technology and adaptation? Remember all the early, dominant cell phone manufactures were companies Nokia (Finland) and Ericsson (Sweden)? Why? I recall in 1999 while in Stockholm, sitting at an outdoor café, watching a guy walk up to a vending machine, point his cell phone at it and out popped a pack of cigarettes. Wow. We can’t even do that today.
The reason Europe adopted cell phone technology ahead of us, is because they didn’t have corporate mammoths like AT&T who had invested Billions in laying wire for a standard communication system. Our big phone companies weren’t going to pivot to cell towers until they were paid back for the in-ground system. That’s just how business works.
Neom is a blank slate and 5G (also 6G for you techno nerds) is the future. This new City State will create its own economic base, but because of its location, it will harness massive flows of commodities and commerce. Its port will deposit and receive from both the rail and water China Silk Roads. Notice in the map above that one of the major China rail points is Urumqi, which was the beginning of the original Silk Road. It’s in western China and nearly 2,000 miles from the Port of Tianjin, the largest in China and main maritime gateway to Beijing. It doesn’t make a lot of sense to transport goods all that way east, to load a ship that’s going to sail south then west.
To make this even more dynamic, it’s not just a physical Silk Road, but also a digital one. You can do some further reading with this article: ArabNews.com
Neom is going to be in the center of a massive global economic boom and the United States is playing an integral role. We’ll cover more in the next blog, but just know that Trump will get a trade deal done with China. It’s taking time, but there are a lot of moving parts and what we’re discussing today is a piece of it. Speaking of ‘peace’, let’s pivot to what I mentioned earlier about Neom’s neighbors, because Trump is again front and center.
As you look at the map of Neom, the state that should jump out is Israel. We can certainly establish financial links between Saudi Arabia and Israel concerning Neom (see this article: Oriental Review.org), but I’d rather focus on something else – A Peace Deal.
We are weeks away from two significant events in the Middle East. Israel’s election of their next Prime Minister and shortly thereafter the anticipated announcement of President Trump and Jared Kushner’s Peace Agreement. I don’t know if Netanyahu and his Likud Party will prevail or if Israel will shift to the new Blue and White Party lead by Benny Gantz. I do have a conviction about when the Bible says that God establishes governing authorities, it is He that will choose the next leader during this extraordinary time (no different than Trump’s surprise win here in the U.S….).
So, if you’ll grant me that position, I hope you’ll allow me to explain why I believe President Trump will be the leader who brokers a Peace Deal. The main reason is he’s coming at it from a business perspective rather than political. Instead of only focusing on fixing or addressing all the reasons deals of the past haven’t worked (because those issues are not going to change anyway), he’s also added a positive, motivating factor – economics.
All the players in this Middle East drama primarily rely on Oil as their financial engine. That’s changing and will be the focus of the next blog. Suffice it to say, many of Israel’s enemies are watching their economic base dry up right under their feet. Literally. Notice in the Wikipedia link I showed you above that Neom, as a component of the Saudi Vision 2030, is part of the plan that “seeks to reduce Saudi Arabia's dependence on oil”. Why the heck would you want to diversify from the core of your economic existence? That’s like American Express diversifying from their founding business of delivering express mail in Buffalo, NY. Oh wait, I think they did….
I want you to watch this video and notice Trump’s intro, the words Netanyahu uses and Trump’s reaction:
Since words mean things, let’s dive in and pull out some links to our overall context today.
“We have to look for new ways; new ideas and how to reinstate them. And how to move peace forward. I believe that the great opportunity for peace comes from a regional approach, I think that if we work together, from involving our new-found Arab partner, in the pursuit of a broader peace and peace with the Palestinians. And I greatly look forward to discussing this in detail with you, Mr. President.”
Saudi Arabia has never been as vicious with their stance against Israel as say, Iran. But we certainly can’t make the leap and call them a partner, like Netanyahu does. So, maybe he’s not speaking about a country, but rather a person. Reasonable? I believe so. And that person is none other than Saudi Crown Prince Mohammad bin Salman.
What do you suppose BB means by “Regional Approach”? He can’t be talking about topics like the Jerusalem Embassy or the 3rd Temple on the Temple Mount. Region means outside of your central location. I believe that’s why in the opening of the video Trump says, “…it might be a bigger and better deal than people in this room understand.”
Now let’s look at President Trump’s reaction:
“I didn’t know you were going to be mentioning that, but now that you did, I think it’s a terrific thing.”
This is a formal, staged press conference. Trump is a cool customer and I believe pretty quick on his feet; however, he clearly articulates a level of surprise at the Prime Minister’s forwardness. I don’t believe it’s a stretch that there have been some very advanced, high-level planning meetings amongst these 3 Musketeers.
Trump’s Art of the Deal will be fully evident when Kushner roles out the plan. Peace will be the heart, but economics will be the skeletal structure. However, issues of faith can’t be ignored and there’s an interesting twist that Neom offers. Some time this calendar year you’ll start hearing more and more about the mountain Jabal el Lawz. Many (I included) believe that this mountain range is the original Mount Sinai, where Moses met with God. Take a wild guess where Jabal el Lawz is located?
The reason this is important to the Peace Deal, is that the event of Moses interacting with God is found in the Bible (for Jewish context the Torah, the first 5 books of the Bible), as well as the Koran, the sacred book of Muslims. I find it interesting that amid generations of disagreement and religious contrast, that a ‘new regional approach’ will bring about a common bond. What if we were to find some undeniable artifacts and physical evidence that supports texts that have been read for thousands of years? What if there was a road or even a park that allowed the public to see these things for themselves?
I find this stuff fascinating, from both the financial/economic/investing perspective, but life in general and historic specifically.
Next time we’ll cover the first half of our title “Oil, Vegas, 5G and Salmon”. Fair warning, you’ll want to buckle up.