The New York Times reports:

The visit by the crown prince of Saudi Arabia to Washington this week painted a familiar tableau: the head of an oil-rich nation cozying up to President Trump and titans of American industry.

That appearance of wealth is core to Saudi Arabia’s power and image in the United States and at home, where the Saudi government has vowed no less than an economic transformation for its young populace. In the Oval Office on Tuesday, Crown Prince Mohammed bin Salman told reporters, without providing details, that his nation would invest $1 trillion in America.

But a different reality is being whispered about in the power corridors of Riyadh and Wall Street: The kingdom’s vaunted Public Investment Fund, which Saudi Arabia has typically used to fulfill commitments like the one it made this week in Washington, is running low on cash for new investments.

That’s in large part because Prince Mohammed and his deputies have spent a vast portion of the nation’s bounty on projects that are in financial distress, and they are frantically trying to turn things around, according to 11 people briefed on its operations, including current employees, board members, investors and their representatives.

There is Neom, a vast would-be utopian region on the nation’s northern tip that was to feature robot workers, a ski resort and beaches of crushed marble but has instead confronted mountains of delays.

Then there are other, more conventional projects in the ever-expanding PIF portfolio that are nowhere near fruition, such as a coffee chain with one shop so far and dreams of exporting beans to Austria; a cruise line with one ship; and an electric vehicle start-up begun three years ago that has yet to deliver a car.

The kingdom still sits on deep oil wealth. Its ability to pump, however, is heavily constricted by geopolitical agreements to curtail supply and a low price for crude overall. The government is running a growing budget deficit and taking on debt to fulfill Prince Mohammed’s domestic promises.

While PIF says it holds nearly $1 trillion in assets, a huge portion of its portfolio is tied up in hard-to-sell assets for which no public valuations are available. Its representatives have begun telling international investors that it is all but unable to allocate any more money for the foreseeable future, six people with knowledge of those discussions said. [Continue reading…]