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When Fake Countries Go to War

The Persian Gulf is full of expats, foreign workers, and fat cats.
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DOHA, QATAR—Until recently, life in Qatar was quite pleasant. But then Saudi Arabia, backed by President Donald Trump, who has gone from critic to fan of the ruling royals there, led an effort to isolate its smaller neighbor. With supreme irony, Riyadh, whose people have done more to fund and man terrorist attacks on Americans than any other nation, accused Doha of backing terrorists.

It’s impossible to predict the outcome of Saudi Arabia’s hypocritical jihad. More moderate Kuwait has not joined Saudi Arabia, whose leaders, among the most licentious in the Muslim world, run a government that may also be the least tolerant. Despite President Trump’s Saudi swoon, the Defense and State Departments have taken more measured positions. Turkey rushed to Qatar’s defense, Iran airlifted food, and Russia, ever more active in the Mideast, called for a diplomatic resolution of the conflict.

The Gulf countries really cannot afford to be at odds. The half-dozen Gulf states share a critical characteristic: all are essentially fake countries. To be sure, they have governments, diplomats, and military. But they are monarchies, some of recent vintage, in a world that long ago abandoned primogeniture.

And all contract out the hardest work, from manual to professional, to foreigners. Instead of being countries, they resemble country clubs, in which a dominant few paying customers effectively make the rules and hire others to implement them. A large share of their populations are foreign and live in the shadows, with few rights and no opportunity to participate politically in the societies in which they live.

That Qatar could not operate without its foreign workers is evident when landing in Doha. Almost any practical job of importance is performed by a foreigner. It’s the same in the other Gulf States.

It’s not unusual for governments to contract out work. Western governments do so, though usually to their own citizens, and in order to save money. What makes the Gulf States unique is the scale of reliance on foreign labor and the reason for doing so: to ensure that their own citizens need not be bothered having to work, or at least work unduly hard.

The increased role of expatriates reflects oil wealth. In the early 1970s the number of foreigners in the Gulf was modest. But as oil prices rose, starting in 1973 the disposable income of these states rose dramatically—as did demand for expatriate labor. The number trebled within a decade. And the numbers have continued to rise. At the same time the proportion of non-Arabs (and non-Muslims) rose.

Estimates of the share of expatriates are rough but striking. Up to 90 percent (some estimates are a bit lower) of the residents of the United Arab Emirates are foreigners. Roughly 85 percent of Qatar’s population is foreign. Kuwait comes in at 70 percent. Bahrain’s expat share is 55 percent. Both Oman, the least visible of the Gulf nations, and Saudi Arabia, the most populous of the six, fall in at 30 percent. In the latter even the smaller percentage means there are upwards of eight million foreigners in the Desert Kingdom. In sharp contrast are Iran, Iraq, and Yemen, which have followed a different path.

Money obviously can buy comfort, if not happiness. It seems to have worked for the Gulf States. But the fall in oil prices has put the Gulf model under severe stress. Once addicted to free spending, the countries are facing deficits and being forced to borrow to maintain current outlays. Yet even the latter is no longer easy. Bahrain and Oman have seen their credit ratings downgraded to junk status.

Kuwait, with a democratically elected National Assembly, has faced popular resistance to retrenchment, particularly reductions in social benefits and economic subsidies. Roughly half of the Assembly members elected last November formed an unofficial opposition. Even the most dictatorial of the Gulf States, Saudi Arabia, feels the pressure. The deputy crown prince led efforts to trim expensive social benefits and subsidies as well as government salaries last fall, but the monarchy recently reversed those cuts. This will exacerbate the underlying economic problems.

Another austerity target is expat labor. For years governments have officially committed to labor force nationalization, without great effect. Some recently launched new efforts to reduce reliance on expats: taxes on hiring foreigners, requirements for domestic hiring for particular occupations, and employment quotas in some industries. A few have even rounded up and deported some expats. But an increased cash crunch may provide the most powerful incentive of all to change.

Nevertheless, moving toward a more normal balance in the labor force won’t be easy. First is the sheer magnitude of expatriate hiring. A nation that brings in nine times as many foreigners as it has citizens cannot easily replace the former’s labor. Although many of the jobs are nonessential, such as domestic servants, they remain popular.

Lack of adequate skills is another issue. Some jobs require specialized training or professional education, which takes time and commitment. Local interest in such occupations doesn’t match demand. Even worse, many locals exhibit a minimal work ethic.

Equally problematic, the sense of entitlement runs deep. The number of nationals employed in private business has been increasing. But government remains the preferred type of employment. Even locals joke at the difference: Kuwaiti officials privately talk dismissively of the willingness of their fellow citizens to work. Many Gulf residents believe their national oil wealth entitles them to easy but remunerative employment.

More fundamentally, citizenship has a feeling of being transactional. Monarchs of dubious legitimacy get to rule so long as they share enough revenue with their citizens to provide lives of relative ease. In effect, foreign labor becomes part of the deal, essentially an entitlement of citizenship available only to a privileged few. Although the regimes usually retain control of security agencies, there are creative exceptions, such as Bahrain importing Sunni Muslims from Bangladesh and Pakistan as emergency service workers and policemen.

Plenty of Americans and Europeans like their welfare states and clamor for more benefits. Yet in all those nations the same people pay taxes and sometimes are required to perform military or other national service. Most see their political community as a larger whole and perceive citizenship as something beyond mutual transactions. The Gulf States feel differently.

While the Saudi-led attack on Qatar is dominating today’s headlines, a more fundamental challenge faces the Gulf. Can artificial states dependent on buying the loyalty of their own citizens while farming out the toughest work to others survive forever?

Iran scares Riyadh and its neighbors because the former poses a moral rather than military threat. Islamist rule in Tehran is odious, but offers meaning to people who believe in more than money. Transactional rule is tenuous even in the best of times. It becomes more dubious as the cash flow slows.

To survive, the Gulf governments need to look beyond simple questions of labor-force nationalization and economic austerity. They must adopt political reforms that give their peoples a greater stake in their own societies. Ultimately the best way to defeat Iran is to offer a more convincing governing philosophy and a genuine sense of community—characteristics now absent from the monarchies that are America’s closest Arab allies in the region.

Doug Bandow is a Senior Fellow at the Cato Institute and a former Special Assistant to President Ronald Reagan. He is the author of Foreign Follies: America’s New Global Empire.