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Oil has added trillions of dollars to Saudi Arabia’s coffers over the decades, but it’s a resource that will someday run out or lose value as the world turns to alternative energy.
Despite current high oil prices, the kingdom knows this, and it has embarked on an ambitious project to diversify its sources of revenue for a post-oil future. One of those sources is the pilgrimage, an eternal monopoly that has a potential market of almost two billion Muslims.
Soon after King Salman bin Abdulaziz took power in 2015, Saudi Arabia launched a $21 billion project to expand the Grand Mosque in Mecca to accommodate 300,000 additional worshippers. A year later, then Deputy Crown Prince Mohammed bin Salman identified the pilgrimage as a key component of a plan to diversify the Saudi economy by 2030.
“Unlike [the energy sector], where Saudi Arabia always has to worry about future competitors, in the area of Hajj and Umrah, they are guaranteed to have zero competition in perpetuity,” said Omar Al-Ubaydli, director of research at the Bahrain-based Derasat think tank.
Muslims from the world over return to Saudi Arabia this week to perform the annual Hajj pilgrimage after a two-year hiatus caused by Covid-19 restrictions. It’s an opportunity for Muslims to fulfill a once-in-a-lifetime religious obligation, but also a chance for the economy of Saudi Arabia’s holy cities to get a jump start.
The pandemic caused the number of Hajj pilgrims to dwindle to 1,000 in 2020, but it rose to about 60,000 in 2021, when the Hajj was opened only to residents of Saudi Arabia. This year, the kingdom authorized one million Muslims to perform the rites.
Experts say that with crude oil prices hovering around $100 a barrel, generating billions of dollars a day, the pilgrimage’s economic benefit is marginal by comparison. But its great, untapped potential could bring significant riches to the kingdom in the long term.
“Religious tourism in Saudi Arabia may not have the current revenue-generating capacity of the oil and gas sector, but the religious significance of Mecca and Medina will never run dry,” said Robert Mogielnicki, a senior scholar at the Arab Gulf States Institute in Washington. “It serves as a crucial foundation to build out the broader Saudi tourism sector and market it to local, regional, and international audiences.”
The potential for expansion is significant, says Steffen Hertog, an associate professor at the London School of Economics. Pilgrims could, for example, be incentivized to extend their trips in the country to visit other religious sites or engage in recreation, particularly during the year-round minor pilgrimage, the Umrah, where Hajj-related bottlenecks can be avoided, he said.
According to Mastercard’s latest Global Destination Cities Index, Mecca attracted $20 billion in tourist dollars in 2018, second only to Dubai.
Before the pandemic, pilgrimage revenues were forecast to average about $30 billion a year and create 100,000 jobs for Saudis by 2022. That was when the kingdom attracted around 21 million worshippers annually during the 10-day Hajj and Umrah pilgrimages, according to official data cited by Reuters.
The number of pilgrims has shrunk significantly during the pandemic but the government is targeting 30 million pilgrims by 2030, which some analysts have said is an ambitious figure.
The pilgrimage has been a drain on the government’s finances due to the cost of infrastructure, maintenance, and security, according to Hertog, but it has made big money for the private sector.
Mecca’s skyline around the millennia-old pilgrimage site is crowded with swanky skyscrapers housing Western hotel chains overlooking the Kaaba, the cube-shaped structure Muslims turn to in prayer five times a day. A night at the iconic Fairmont Makkah Clock Royal Tower, which overlooks the Kaaba, costs up to $4,000 for its most opulent suites for this year’s Hajj season.
But the government has been trying to get a slice of that cake. In two years, the state-owned Public Investment Fund plans to open the Rou’a Al Haram Al Makki project just under a mile from the Kaaba, with 70,000 new hotel rooms and 9,000 residential units. It is expected to contribute 8 billion riyals ($2.1 billion) to the Saudi economy.
In a blow to private travel agencies abroad that organize pilgrimages for Muslims in the West, the Saudi government this year announced a new booking platform that obliges foreign pilgrims to register and pay for the process directly through the new government-run system called “Motawif.”
The system is designed to streamline the application process, but it has put travel agencies abroad out of business. In the United Kingdom alone, the sector is worth approximately $240 million, and many Hajj operators there are now facing liquidation, according to the Independent newspaper.
Saudi authorities did not respond to CNN’s request for a comment.
The only threat to Saudi Arabia’s ambitions to capitalize on the pilgrimage “is decreasing religiosity across the world,” said Al-Ubaydli. “But as long as Muslims continue to want to visit these sites, they will represent massive economic opportunities to Saudi Arabia.”
CNN’s Nadeen Ebrahim contributed to this report
The digest
Iran is adding demands to nuclear talks, US says
Iran added “unrelated” demands to the discussion table during the last round of talks on its nuclear program, US Special Envoy for Iran Robert Malley said on Tuesday in an interview with National Public Radio, adding that and it has made “alarming” progress in its uranium enrichment field that would allow it to make a nuclear weapon “in a matter of weeks.”
- Background: The last round of indirect negotiations between Iran and the US took place in Doha, Qatar last week, and were mediated by the European Union. The talks were the latest hope at getting both sides to an agreement that would revive a 2015 nuclear deal aimed at curbing Tehran’s nuclear weapon abilities. The two-day talks came to a standstill, however, with Malley describing them as “a wasted occasion.”
- Why it matters: Iran is inching closer to the amount of enrichment necessary to make a nuclear bomb, with Malley saying it would only take them “a matter of weeks” to reach one. “They are going to have to decide sooner or later,” said Malley, “Because at some point the deal will be a thing of the past.”
Ben & Jerry’s sues Unilever to block sale of Israeli business
Ben & Jerry’s is suing its parent company in an attempt to cancel the sale of its business in Israel to a local partner that would continue to distribute its products in the West Bank.
- Background: The Vermont-based ice cream maker filed a complaint Tuesday in the US District Court in New York, where it sought an injunction against Unilever “to protect the brand and social integrity Ben & Jerry’s has spent decades building.” Last week, Unilever announced that it had sold Ben & Jerry’s Israeli business for an undisclosed amount to American Quality Products (AQP), which distributes the ice cream in Israel.
- Why it matters: Since 2021, Ben & Jerry’s has been fiercely opposed to the sale of its products in the West Bank, saying that it would be “inconsistent with” the brand. Ben & Jerry’s has been doing business in Israel since 1987, but in recent years it had come under pressure for selling in West Bank settlements, considered illegal under international law.
Nazi war criminal Eichmann heard boasting of role in Holocaust in audio recordings
Audio recordings have emerged of Nazi war criminal Adolf Eichmann boasting about his role in the Holocaust. The recordings, carried out in 1957, have Eichmann hailing his part in the Nazi attempt to exterminate the Jewish people.
- Background: Eichmann was captured by Israeli secret agents in Argentina in 1960 and brought to Israel where he was put on trial for crimes against humanity. In his defense he argued that he was only following orders, and that the key decisions were taken by other, more senior, Nazi leaders. Eichmann was convicted at his trial and put to death in 1962.
- Why it matters: The recordings, which have been lying in a German archive for decades, have been aired for the first time as part of a new documentary about Eichmann called “The Devil’s Confession.” He can be heard saying that it would defy his innermost beliefs to deny that the Nazis did something wrong. “If we had killed 10.3 million Jews, I would say with satisfaction, ‘Good, we destroyed an enemy.’ Then we would have fulfilled our mission,” he said.
Around the region
Tunisian tennis player Ons Jabeur made history on the grass courts of Wimbledon Tuesday as she became the first Arab woman to reach the semifinals of a grand slam.
The world No. 3 overcame a nervy start to rally from a set down and beat Marie Bouzková 3-6 6-1 6-1 on Centre Court.
After reaching the final four, she said it had been a long time coming for her personally.
“I was hoping that I could get to this stage for a long time already. I struggled a few times in the quarterfinal,” Jabeur told the media afterwards.
“I was talking a little bit to (former world No. 22) Hicham Arazi, and he told me: ‘Arabs always lose in the quarterfinals and we are sick of it. Please break this,’” she added.
The 27-year-old will face fellow first-time semifinalist Tatjana Maria for a spot in the final.
By Ben Morse
Time capsule
Algeria this week marked 60 years since its independence from France following a bloody war of independence whose wounds are yet to heal.
France began its rule of Algeria in 1830. The city of Algiers was originally taken by the French as a military measure, but as more settlers began arriving with French protection, France’s boundaries continued to advance.
In 1954, the Algerian National Liberation Front (FLN) was formed as a guerilla group to liberate the country from its colonizer. It started an uprising that took the next seven years, known as the Algerian War, which led to Tunisia and Morocco being granted independence by France in return for militarizing their borders with Algeria.
On March 16, 1962, an agreement was signed in France promising Algeria independence pending a national referendum and on July 5, Algeria celebrated its independence from France.
Following its independence, most of the one million Europeans returned to their countries. More than 100,000 Muslims were killed in the seven-year Algerian war. Algeria says that over 5.6 million were killed over 130 years of colonization. French President Emanuel Macron last year accused Algeria of “rewriting history,” prompting the North African nation to recall its ambassador in Paris. To this day, France has not apologized for its role in Algeria’s colonization. There will be “no repentance nor apologies,” Macron’s office said last year.
By Mohammed Abdelbary
