Land for dollars: The Gulf’s quiet conquest of the region’s economies
At the beginning of this year, Prime Minister Mostafa Madbouly announced Egypt’s plan to offer four to five new zones along the Red Sea coast “for investment.” The announcement came on the heels of the Ras Banas deal, which was promoted last September, and followed in the footsteps of the much-publicized Ras El-Hekma agreement from the year before.
Around the same time, officials from Syria’s new government repeatedly declared their intention to privatize public enterprises, lay off state employees, and unleash the forces of the free market. These declarations coincided with transitional president Ahmad Al-Sharaa’s diplomatic push to attract Gulf investment, marked by a visit to Saudi Arabia and his reception of the Emir of Qatar.
When asked about the development models Syria might emulate, Syrian Foreign Minister Asaad Al-Shaibani said the new administration considers Saudi Arabia’s Vision 2030 “a source of inspiration,” adding, “The Gulf states are extremely important to Damascus, and we look forward to their support.” In a previous interview with Asharq Al-Awsat, Al-Sharaa himself expressed admiration for “the advanced development achieved by the Gulf countries, which we aspire to replicate in our own nation.”
This article seeks to interpret such deals through the lens of comparative advantage theory and the international division of labor (IDL), particularly as they apply to oil-importing countries in the Middle East
Division of labor in the Middle East
One of the defining features of neoliberalism has been the deepening of the IDL and the emphasis on comparative advantage—far removed from the textbook definitions tied to the state or private sector. These conventional definitions were the focus of the previous article in this series.
At its core, the concept of the international division of labor refers to a global economic system in which countries allocate their resources to production based on their comparative advantage. Within this framework, the primary goal of participating economies becomes servicing the system itself, namely, fulfilling their export role to secure the hard currency needed to import basic domestic necessities. The need for imports only intensifies as local resources such as land, labor, and water are redirected toward export-oriented sectors rather than meeting internal needs.
This system typically produces unequal exchanges: lower-income countries tend to export low-value, labor-intensive goods, capitalizing on their abundance of cheap labor. In contrast, wealthier nations dominate the export of capital-intensive, low-labor goods, leveraging their financial assets.
The rise of neoliberalism and the expansion of this labor division, particularly through global supply and value chains, has played a major role in boosting global trade. The share of global trade in the world’s gross output rose dramatically, from 26% in 1970 to nearly 60% today.
Although the global division of labor is usually framed as a phenomenon between the wealthier Global North and the poorer Global South, its deep manifestations within the Middle East itself often go unnoticed. A useful way to map the region is by dividing it into oil-exporting and oil-importing countries—and tracing the widening gap between the two groups since the 1970s.
This divergence echoes what economists term the Great Divergence—the widening economic and technological gulf that began in the 19th century between industrialized nations in Europe and North America and other parts of the world, including Asia, Africa, and Latin America.
In the Middle East, the oil crises of the 1970s—sparked first by the 1973 Arab-Israeli War and later by the 1979 Iranian Revolution—drove oil prices to unprecedented highs. These shocks fractured the region into surplus and deficit economies. Gulf states, as the main oil exporters, amassed massive financial surpluses, while non-oil economies faced growing burdens from rising energy import costs.
This shift marked a “great divergence” of its own within the region. Oil-exporting countries experienced accelerated economic growth and capital accumulation, while the oil importers saw only sluggish development. The consequences reshaped the region’s internal economic architecture: the Gulf became a central source of finance, partially displacing the traditional financial centers of the Global North.
Deficit economies, meanwhile, were compelled to align their policies with Gulf capital—offering investment incentives, selling public assets, opening markets to capital flows, and developing export sectors tailored to Gulf demand.
Since then, a significant share of the human and natural resources in non-oil countries has flowed toward the Gulf. Labor has become one of the most crucial export commodities for these economies, with entire national budgets increasingly reliant on the hard currency generated through worker remittances from the Gulf.
These countries have also grown more dependent on Gulf capital—whether through loans or through the sale of strategic assets—to compensate for their chronic shortfalls in foreign reserves.
The result is stark: if the Middle East and North Africa were considered a single country, it would rank as the most unequal region in the world.
Exporting land, water and labor
With limited freshwater resources and heavy reliance on food imports, Gulf states have increasingly turned to countries like Egypt and Jordan to secure their agricultural needs. Despite their own growing water scarcity, these countries have become key suppliers of food products to the Gulf
For instance, nearly half of Saudi Arabia’s citrus fruit imports come from Egypt, around half of its tomatoes from Jordan, and approximately half of its sheep imports as well.
Although food imports from the region still account for a relatively small portion of overall Gulf consumption, and remain lower than imports from more distant sources like India, Brazil or the United States, Gulf investment in regional agricultural land has been growing rapidly.
A 2019 article by researchers Saker El Nour and Nada Arafat, published in Mada Masr, highlights how Gulf countries—especially Saudi Arabia and the United Arab Emirates—have adopted foreign agricultural investment policies as part of their national food security strategies. Egypt emerged as a major target for such investments due to its proximity and availability of arable land.
These efforts are part of King Abdullah’s overseas agricultural investment initiative, designed to secure Saudi food supplies at stable prices.
According to the article, much of the production in these projects focuses on water-intensive crops such as alfalfa, despite contractual clauses limiting alfalfa cultivation to just 5% of reclaimed land in areas like Toshka. These restrictions were intended to conserve Egypt’s limited water supply.
The UAE, for its part, has also pushed forward with wheat cultivation in both Toshka and East Oweinat.
As a result of water scarcity and the lack of fertile land, the Gulf Cooperation Council/GCC countries now indirectly import the equivalent of 70,000 hectares of land annually from the rest of the world through trade. In contrast, non-oil economies in the Middle East are net exporters of about 25,000 hectares of their agricultural land every year.
Egypt doesn’t just export agricultural land along with its embedded resources—water and labor—it also exports real estate land. This sector has become a conduit for absorbing Gulf capital surpluses, as seen in the Ras El-Hekma and Ras Banas deals, among many other real estate investments in Egypt, across the region, and even further afield.
Real estate is often the ideal outlet for surplus capital, particularly in rapidly growing regions like the Middle East. Unlike export-oriented industrial sectors—where competition is governed by strict international divisions of labor and where many regional economies struggle to compete—real estate offers a more accessible and less regulated alternative for capital deployment.
The sector also has distinctive features that make it a natural meeting point between Gulf capital and oil-importing governments. Property, by nature, cannot be exported or imported in the conventional sense, placing it outside the global trade regime dominated by wealthier countries.
At the same time, real estate development requires sovereign decisions about land allocation, giving host governments significant leverage in determining who gets to invest.
This leads us to the second major form of labor export. Earlier, we examined labor embedded in export-oriented goods destined for Gulf markets. But there is also a more direct form: labor migration. The Gulf economies, known for their small populations and limited domestic labor forces, are heavily dependent on migrant workers.
Labor is exported either through migration or through goods that carry the value of labor—usually low-paid. It is in the interest of capital owners to keep the value of this labor as low as possible, especially in foreign currency terms. This is often facilitated by economic policies that devalue local currencies, thereby reducing the real cost of all locally priced goods—including labor.
The GCC countries are, without question, the primary source of remittances from Egyptians working abroad. In the fiscal year 2021–22, Saudi Arabia alone accounted for 34% of all remittances to Egypt, followed by Kuwait (14%), the UAE (11%), Qatar (4%), and Oman (0.5%), according to Egypt’s Central Agency for Public Mobilization and Statistics.
The total remittances from these five countries amounted to $20.25 billion in that fiscal year, representing roughly 63.5% of Egypt’s overall remittance inflow of $31.9 billion.
Gulf states—particularly the UAE and Saudi Arabia—also provided the bulk of Egypt’s foreign direct investment, according to data from the Central Bank of Egypt.
Gulf capital and the redefinition of neoliberalism
The Global North preserves its ecological capital by outsourcing environmentally degrading activities to the Global South. This is achieved through processes like deindustrialization and the phasing-out of polluting extractive industries such as coal mining. A study by Jason Hickel et al. in Nature reveals that over 90% of all waged labor globally takes place in the Global South, yet this vast labor force receives only 44% of the world’s income.
In another study from the same research team, they found that in 2015 alone, the Global South transferred a net total of 12 billion tons of raw materials, 822 million hectares of land, energy equivalent to 3.4 billion barrels of oil, and 392 billion hours of human labor to the Global North.
Gulf countries replicate this same logic of resource extraction within their own regional periphery. Drawing on the labor surplus and natural endowments of neighboring states, they perform a role typically reserved for high-income nations. What allows the Gulf to play this part is its immense financial surplus generated by oil exports, combined with a lack of domestic labor and natural resources.
The key difference, however, lies in the technological dynamic. Unlike the Global North, which re-exports advanced technologies and intangible capital in return for raw materials and labor, the Gulf primarily recycles its financial surpluses through investment and lending, without the same technological leverage.
Beyond the commodification processes discussed in the previous article, neoliberalism’s other defining feature is the division of labor between national economies—deepening specialization based on comparative advantage.
But the classical Ricardian* notion of comparative advantage is, in many ways, an idealist fiction. The theory assumes advantages stem from positive conditions, such as favorable climates or unique human skills that lend themselves to efficient production.
In reality, however, comparative advantage often stems from structural vulnerabilities: cheap labor arising from surplus populations, lax environmental regulations that allow for polluting industries, or even the presence of forced labor—as was historically the case in the 19th-century United States.
In short, the post–oil crisis era, which coincides with the neoliberal age, has entrenched a system in which non-oil countries across the region increasingly depend on Gulf financial flows.
This reality demands a broader redefinition of neoliberalism—one that goes beyond traditional dichotomies of state versus private sector. It reveals how “central” forces, even those outside the traditional core powers, can engineer a new regional division of labor built on “comparative advantage.”
This architecture pulls us further away from concepts like economic and food sovereignty. Instead, larger portions of economic activity and natural resources are redirected toward export, simply to secure the credit needed to import life’s basic necessities—keeping economies under constant pressure to devalue and commodify.
(*)“Ricardian” refers to economist David Ricardo.
A version of this article first appeared in Arabic on April 6, 2024