MUCH HAS been made of the massive transformations taking place in the Gulf Arab states. Over the last two decades, vast oil profits have led to the construction of the world’s tallest buildings, an artificial island, and malls so large that they sport a dinosaur theme park and an indoor ski slope. Yet study of the political economies of these states and how they are situated within a regional and international context has been sparse. Nevertheless, such an analysis is critical to understanding the revolutionary process unfolding in the Middle East, as well as the internationalization and financialization of the current economic crisis.

Adam Hanieh’s Capitalism and Class in the Gulf Arab States is an insightful, timely, and welcome contribution to developing such an analysis. In it, Hanieh explores the class formations, economic developments, and regional links of the six Arab states that make up the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

Applying a Marxist understanding of class to the region, Hanieh argues that the Gulf States are “capitalist—not simply monarchies that sit atop an oil spigot.” As opposed to the commonly espoused theory that the GCC is made up of “rentier states”—resource-rich states that gain enough external revenue to be autonomous from their own societies and classes—Hanieh asserts that ruling institutions in the Gulf reflect regional class formations and have evolved accordingly over time. “Gulf capitalism,” he writes, “has developed in a ‘hot house’ fashion with the critical assistance of the state.”

In analyzing this sub-region of the Middle East, Hanieh points to the development of a pan-GCC capitalist class, which he terms “Khaleeji [“gulf” in Arabic] Capital.” While individual Gulf States maintain separate national identities and interests, circuits of accumulation (in production, sales, and finance) are increasingly dominated by large conglomerates that operate on a regional scale. This process is further facilitated by a regional integration project that is moving toward integrated capital markets and a unified stock exchange.

Using exhaustive research and empirical data, the book follows the development of productive, circulating, and finance capital in the Gulf. Beginning in the early 1970s, as Gulf states increasingly took control over oil production away from foreign corporations, these revenues were redirected to build up state apparatuses and to grant contracts to a burgeoning local capitalist class. Upstream oil production was largely kept in state hands, but private companies took over emerging markets around services and construction—in both cases, primarily those that supported oil production.

As oil revenues grew, so too did imports into the region. Parallel to this development, a layer of agents emerged to act as intermediaries between international exporters and local sales—fittingly dubbed “lumpen capitalists” by Egyptian-American sociologist Saad Ibrahim. Massive profits have been reaped this way, including through the sale of military hardware. “Commission harvesting” has allowed intermediaries to receive up to 30 percent of the value of military contracts in Saudi Arabia, for instance.

As local revenues and sales grew, so too did local banks “under the ownership of large merchant families who were backed by the growing state structures.” Much as colonial and foreign banks had done in years past, Gulf banks and sovereign wealth funds (quasi-government agencies that manage natural resource revenues) invested local deposits in foreign centers of finance. In the past decade, revenues from oil production—often referred to as “petrodollars”—flowed overwhelmingly into US financial markets and helped to fuel growing speculative bubbles and prop up US debt.

Thus, several factors contributed to propelling Khaleeji Capital and the Gulf states into a central location within the world market: One, oil and gas exports are critical to consumption and industrial production in the West and, increasingly, in the East. Two, petrodollars helped to sustain the explosion of financial transactions and underpin the hegemony of the US dollar. Three, rapid industrial development in the Gulf region created a growing market for exports and services from abroad.

Situating Gulf capital within international relationships and hierarchies, Hanieh then turns his attention toward the position that Khaleeji Capital maintains regionally in the Middle East. The reactionary role that Gulf monarchies played as revolutionary struggles broke out throughout the Middle East was apparent to anyone who followed the unfolding events of the Arab Spring. But Hanieh’s research shows the deeper political and economic roots of the GCC’s role in the Middle East.

The Middle East garners around 10 to 15 percent of GCC capital flows—dominated by a handful of companies linked to Khaleeji Capital. A telling example of this economic penetration is Egypt, where GCC capital’s share of Egypt’s foreign direct investment rose from 4.5 percent in 2005 to more than 25 percent in 2007. Little wonder, then, that during the 2011 revolution in Egypt the Gulf states shared with the United States an interest in maintaining “stability” above all else.

A similar pattern plays out in the Palestinian West Bank, where virtually every major company is controlled by or tied to Gulf states and investors. Hanieh predicts that the growing influence of Gulf capital throughout the Middle East will lead to increasing demands to open up economies through restructuring, privatization, and liberalization—a process that will only sharpen the class divides and increase the potential for struggle in the region.

Lastly, Hanieh offers an incredibly useful analysis of the region’s working class and the “spatial fix,” as he dubs it, which enabled the ruling elites of the Gulf to “construct a powerful system of control over the vast majority of the resident population.” Brutal repression has been one obvious aspect of maintaining this control. But another is a reliance on a temporary, migrant workforce—made up largely of Arabs from other Middle Eastern countries, but, increasingly, also of workers drawn from countries such as Bangladesh, Pakistan, Sri Lanka, India, and the Philippines.

Migrants make up the vast majority of workers in the Gulf but are afforded no citizenship rights. The “class itself is constantly being remade anew,” and this transience hinders the development of class consciousness and organization. At the same time, large oil revenues are used to draw layers of native-born citizens into state apparatuses, with guaranteed job security and added benefits.

When times are “good,” the temporary workers face substandard conditions and greater rates of exploitation—greasing the wheels of increased profit rates for Gulf capitalists. When the economy hits troubled waters, they’re easily deported and become the “problem” of their countries of origin, thereby displacing the crisis. As one analyst for the Saudi National Commercial Bank euphemistically put it, this approach is “a positive externality of labor market flexibility.”

Indeed, when the financial crisis broke out in 2008, thousands of workers in the Gulf states were deported. Those who remained faced desperate conditions. Thousands were stranded in the UAE as companies fled the country without paying workers or returning confiscated passports. Suicides among migrant workers increased dramatically. In Kuwait in 2010, migrant workers were committing suicide at a rate of one every two days. But, as one social worker commented, “They think if they kill themselves the loan sharks will leave their families at home alone. But they don’t. They still go after them.”

As much as this “spatial fix” forestalls the development of class organization for the time being, it only deepens the contradictions in the long run. Some of these contradictions, along with American and Chinese capital jockeying for influence in the region and the GCC’s growing role in the international financial markets, are sketched out briefly in some interesting concluding observations.

While Hanieh makes no grand predictions, the analytical framework and substantial data he puts forward in the book will help readers map out the current and future processes of regional integration, class formations, and contradictions, and to situate these processes within the wider global political economy.