A rare revolt by a Saudi tribe has spelt fresh trouble for a planned Red Sea megacity, a linchpin of the crown prince's economic vision already beset by low oil prices.

The $500 billion Neom project, set to be built from scratch along the kingdom's picturesque western coast, is billed as a futuristic cityscape evocative of a sci-fi blockbuster — with everything from flying taxis to robot-maids.

Economic analysts have long questioned its viability in the era of cheap oil.

But Crown Prince Mohammed bin Salman's dream project hit a new roadblock last month when a member of the local Huwaitat tribe was gunned down after he refused to give up his land for the project.

Before the shootout, Abdulraheem al-Huwaiti posted a series of scathing videos in which he likened the forced displacement of his sprawling tribe, based in the northwestern Tabuk province for generations, to "state terrorism".

He presciently claimed his opposition would get him killed.

Saudi Arabia's state security agency said the "wanted" man died in an exchange of fire with state forces after he resisted arrest, adding that a cache of weapons had been recovered from his house.

Many other members of the Bedouin tribe, who commonly own guns, were detained for spreading anti-displacement slogans and refusing to sign relocation documents, multiple activists said.

It exposes a rare domestic clash with the government that has a reputation for crushing dissent, while it grapples with the twin economic blow of historic low crude prices and a coronavirus-led shutdown.

Neom has said 20,000 people would need to be relocated to clear room for construction as it presses ahead with its target to complete its first sites by 2023.

'Deep cuts'

The government is preparing emergency plans to slash spending as crude prices drop, with Finance Minister Mohammed al-Jadaan warning of "painful" measures and an "extremely long" list of affected budget items.

He did not specify whether Neom will be among them. Even before the crisis, the project — first announced in 2017 — has struggled to attract investment.

"I will be surprised if cuts are not made — deep cuts in capital expenditure for Neom," a Saudi source associated with the project told AFP. "Given the sums required, it cannot but be delayed in many aspects."

The source added that the government is offering "generous compensation in cash" to those displaced by the project in addition to "new properties" within the kingdom.

In a bid to placate the community, Neom has also launched "social responsibility programmes" including university scholarships and vocational training programmes, the source said.

Several Huwaitat tribesmen have rejected what they call "vague" compensation offers, activists told AFP, even as state-run media have published a pledge of loyalty by the tribe to Saudi rulers.

The campaigners say Neom is designed to be a liberal expat enclave in a conservative nation that is unlikely to benefit local residents.

'Crown jewel'

"What happened in Neom was the tragic death of a resident of a village that is being relocated," Ali Shihabi, a member of the Neom advisory board, said on Twitter.

"Similar to the concept of 'eminent domain' used in Western law, the government is taking ownership of private land to use for the project... This happens all the time, all over the world when roads, train tracks or dams are built."

But forced evictions could backfire as economic pressures grow, observers warn.

"The combination of record-low oil prices and mounting demographic pressures poses significant challenges to Prince Mohammed's (MBS) future plans in Saudi Arabia," said the Soufan Centre, a think tank.

"The high-tech city in Neom is the crown jewel of MBS' future vision for Saudi Arabia, but it remains unclear how a prince's pet project will help the kingdom deal with its youth bulge.

"The government will have less cash to dispense as patronage to assuage Saudi citizens. The erosion of the social contract between the rulers and the ruled will lead to serious problems, especially in a tribal society."

But as part of his grand ambition to pivot the economy away from oil, Prince Mohammed looks set to press ahead with Neom, billed as a regional Silicon Valley whose marketing slogan is a "bold and audacious dream".

"The economic fundamentals have turned further against this fantastical project, but I don't expect MBS to give it up," said Kristin Diwan of the Arab Gulf States Institute in Washington.

"It's the touchstone for everything he wants to achieve."