This work argues that analyses of the contribution of foreign workers to economic diversification of the Gulf states should begin with a study of the structure of petroleum income and the social relations of each country. This hypothesis is in contrast to those which regard the labor market or the low activity rates of Gulf countries as the principle impetus for labor migrations in the Middle East. Although the labor importing countries differ in their degrees of development, size, existing infrastructure, agricultural development, and other key aspects, they have some important features in common. Recourse to foreign labor developed in all the countries during the early 1970s as a result of the increase in petroleum prices. Until the late 1960s, the petroleum producing countries had seen the bulk of the petroleum revenues go to the large oil companies and the consuming countries. The legitimacy of their governments rested on the support of the oil companies and on a system of internal alliances among clans in which the paramount clan redistributed the income receive from the petroleum companies. The redistributed value did not strictly speaking represent the profit but only a fraction of the world petroleum profit divided up by the oil companies. The structure of the state and the relations which attached it to the civil society continue to constitute an effective and durable block to mobilization of an internal labor force. The state, becaue of its relations to the oil companies, had no need of investments. The internal economies of gulf oil producing states were weakly diversified before the 1970s, the state was highly influential, capital as a particular aspect of wealth was poorly developed or undeveloped except in enclaves with foreign capital, internal consumption was largely imported, and no mechanism existed to break the ties of the individual clans or tribes with the state. After 1974 the large oil states undertook a sustained process of productive reallocation of surplus income whose forms depended on their possibilities of insertion in the world economy and their internal social structures. The goal was to transfer a significant fraction of income into capital. The network of alliances put into place by unproductive redistributions cannot be modified without compromising the stability of the state; recourse to foreign manpower in large part is an answer to the inability to disengage local labor. Immigration however appears to be limited by the fact that almost all tensions related to growth find expression in antagonism between nationals and foreign workers. Exportation of capital to the peripheral Arab states with large labor forces does not appear to be a satisfactory solution to the problems of massive labor importation and economic diversification.

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