Foreign Policy and Soft Power
Soft Power in the Context of PIF
In the case of the Public Investment Fund of Saudi Arabia, soft power is exercised through economic presence. This means Saudi Arabia is not using cultural appeal as a means of exerting soft power. The country relies on PIF as a means of influencing perceptions of itself through incorporation into observable sectors of the global economy. This is achieved through investment as a means of influencing preferences.
In this sense, then, PIF's role in soft power is an institutional one and not merely symbolic. Its investment efforts represent enduring nodes of interaction between Saudi Arabia and global actors, at which influence can be accumulated through repeated economic engagement.
How PIF Expands Its Reach Through Capital
PIF grows its power by using capital in a way that creates economic interdependence. As PIF adopts equity investments, finances big projects, and creates portfolio investments in foreign countries, Saudi Arabian capital becomes linked to jobs, innovation, and growth in other countries. This process raises the stakes of disengagement, especially in critical areas like technology, energy, and infrastructure.
Whereas the time frames of financial investments are relatively short-term, the long-term nature of PIF investments helps to ensure that PIF remains a steady long-term partner. This tactic allows Saudi Arabia to exercise its power in the sense that it influences the region through the solidification of economic partnership agreements, thereby using investment as foreign policy through market mechanisms.
Strategic Motivations Behind PIF’s Investment Portfolio
The investment philosophy of PIF is shaped by specific political and economic imperatives that differ based on the type of investments made. Local investments are focused on enhancing the legitimacy of the state and proving the ability to transform the economy based on the vision of 2030. International investments are chosen based on their ability to attract attention and are linked to future-oriented industries so that Saudi Arabia is able to rebrand itself globally and become part of key industries in the future. Regional investments in the Middle East are focused on enhancing economic dependence among countries in the region and connecting Saudi Arabia’s capital to key financial and oil institutions in the world.
Reputation and Image Management Through PIF
A key aspect of the image that the Saudi state has attempted to project to the world through its foreign policy, and which has been promoted through its global investments, has to do with the role of the PIF. The key sectors that the Saudi state has sought to promote through its global investments have to do with the future and its associated activities, which have meant leaving behind its image as an oil-dependent state.
These investments are not impartial. Their prominence is a purpose of theirs. Such projects as those associated with PIF are expected to be recognizable on an international level, positioning Saudi Arabia on an international agenda of technology, entertainment, and development. Although reputation evolution is a slow and disputed process, PIF's portfolio increases the number of associated links of Saudi Arabia on an international level.
Limits, Risks, and Criticisms of PIF’s Soft Power Approach
PIF’s use of capital as soft power is not without criticism. For instance, it is indicated that while the role of the state in making investments raises concerns regarding the line between economic engagement and the wielding of political power, reputation building through investments may not be sufficient to counter controversies or worries about politics and governance.
There are also material risks, as the political credibility of PIF capital investments is frequently contingent on the success of ‘high-profile investments.’ Failures in the form of delays, cost overruns, or underperformance may jeopardize economic as well as reputational returns. This contingency illustrates that the soft power of investments is itself conditional.
Why PIF Is Relevant to Modern Foreign Policy
PIF demonstrates how sovereign investment funds can function as tools of foreign policy in the contemporary global economy. By using capital to influence relationships, perceptions, and dependencies, Saudi Arabia illustrates a form of statecraft that operates through markets rather than military or diplomatic channels. Understanding PIF’s role helps explain how economic institutions increasingly shape international power dynamics in the modern political economy.