“The first capitalist city in the world. NEOM will be floated in the markets. It’s as if you float the city of New York.”
This is how Saudi Crown Prince Mohammed bin Salman described NEOM, a new $500 billion megacity that will straddle ten thousand square miles of the desert landscape between Egypt and Jordan. Covering an area the size of Massachusetts in one of the most beautiful but sparsely populated corners of the world, the solar-powered megacity aims to rely on self-driving cars and talking robots for much of its workings.
The announcement was made during the Future Investment Initiative,” a meeting in the Kingdom’s capital Riyadh that’s been dubbed “Davos In the Desert.” It brought together a “Who’s Who” of capital, with over 3,000 leaders of the business world that between them control more than $20 trillion. US Treasury Secretary Steven Mnuchin and his predecessor Larry Summers, BlackRock’s founder Larry Fink, Blackstone’s cofounder Stephen Schwarzman, and IMF president Christine Lagarde were but a few of the attendees.
NEOM is just one of many headline-grabbing projects announced as part of Saudi’s “Vision 2030.” This high-profile plan, in part designed and implemented by consultancy firms McKinsey and BCG, aims to reduce Saudi Arabia’s dependency on oil, transforming it into a tourist, logistical, and financial hub. Other headline-grabbing 2030 projects include a twenty-thousand square mile luxury resort on the Red Sea and, most notably, the privatization of Aramco, the world’s largest oil producer that funds the Saudi government and pretty much everything else in the kingdom.
The chances of NEOM actually materializing are slim, although not completely impossible. Gulf-based companies do not have a reputation for cutting-edge innovation in the production process. Indeed, no private company in the region can mass produce cars on its own, let alone produce and reproduce a city built on robots and self-driving vehicles. Hence, for such a high-tech city to materialize, it would need to import all the necessary technology for its construction and running. This sounds like a costly venture that would eat up a significant chunk of the country’s oil export revenues, in exchange for unclear returns. One wonders if this is the optimal strategy for a government that supposedly wants to decrease its reliance on imports, and the oil revenues that nearly exclusively pay for them.
Despite its long odds, the idea of a completely capitalist city using the latest robotic technology, has enchanted many of the conference’s attendees. It was music to Richard Branson’s ears, who, shortly after raving about the kingdom’s latest projects, announced that the Saudi state was investing $1 billion in Virgin, his company.
Megacities conceived and built from scratch have a long history in the Gulf. First were the outposts built by American- and British-owned oil companies to house their expat labor force in gated communities away from the existing local urban areas. However, as petrodollars began pouring into governmental coffers, local states embarked on their own ambitious urban projects.
Initially, most of the revenues went to the ruler and his family. In the extreme case of Qatar’s 1949 budget, the ruler was allocated 84 percent of the state expenditure. The rest was supposed to cover public-sector programs, with 0.3 percent allocated for public health care.
Sheikh Abdullah Al Salim, Kuwait’s leader from 1950 to 1965, was the first to alter this formula. Instead of giving most of the oil revenues to family members, a significant chunk was now distributed to citizens via wages and the provision of universal and free social services such as education and health. Finally, a large portion was spent on the built environment. Billions poured into constructing modern megacities that housed millions of residents. These new urban centers took the place of the historical cities that previously supported no more than fifty thousand inhabitants within their walls.
Kuwait launched its development plan in the early 1950s. It knocked down the entire historic city, and in its place the British town planners Minoprio and Spencely designed what would become one of the most famous examples of a “high modernist” city, not only in the Gulf, but in the world.
These “high modernist cities” were distinguished by the fact that their growth was not organic, but planned entirely by architects. In the aftermath of World War II, governments all over the world turned to planners, engineers, and scientists to solve social and developmental problems, believing that a technocrat’s bird’s-eye view could better design society. This rule of experts extended to all aspects of life: the economy, the school, the home, and, of course, the urban landscape.
Other Gulf countries soon followed Kuwait’s model. In the 1960s, Egyptian architect Abdulrahman Hussein Makhlouf developed master plans for the Saudi cities of Jeddah, Madinah, and Makkah, as well as the United Arab Emirates’ (UAE) capital, Abu Dhabi. The famous Greek architect Constantinos Apostolou Doxiadis, who also designed the city of Islamabad in Pakistan, created Riyadh’s master plan in 1969. These cities differed in their details, but they all relied on high modernist principles.
On the ground, this urban expansion was shaped by a pattern of high Fordist consumption that even exceeded the Sun Belt cities in the United States, most notably Houston and Los Angeles. The main unit around which the cities were built was the suburban home — locally called “villas,” with the automobile becoming the main mode of transportation.
Government housing programs helped families build large private residences, with house size in Kuwait averaging seven times that in the United States. Cars per household reached the highest levels worldwide. The “freedom of movement” provided by these privately owned cars allowed residents to complete in a few minutes journeys that would have taken several days on foot, driving the horizontal expansion of the city. In contrast, public transportation became almost nonexistent. Highways, car parks, villas, and skyscrapers dominated the urban landscape, ensuring high levels of consumption in which petrodollars could circulate locally.
The Gulf cities became the world’s highest per-capita consumers of water, electricity, gasoline, and even cosmetics. Kuwait’s total water consumption increased a dizzying twelve thousand times between 1939 and 1985, with per-capita usage more than three times that of the United Kingdom.
Thus, the urban Gulf landscape came to embody petro-modernist cities par excellence. Modern technology became necessary to meet even the most basic needs, such as water, food, energy, and movement. Technocrats from around the world brought the latest offerings of science and technology at the time, busily constructing dozens of water desalination and power plants, as well as the ports and airports needed to sustain these cities.
This modernity depended crucially on oil as its basic building block. At the most obvious level, oil export revenues paid for all technologies and imports. The oil industry also provided many Gulf citizens with their first industrialized jobs. Most crucially, however, oil literally fueled daily life in these cities, powering everything from the most basic necessities to the most expensive luxuries. Petroleum kept electricity plants and water desalination facilities running; it provided energy for air conditioning, fuel for cars, asphalt for roads, and pesticides for food production. An abundance of oil meant an abundance of water, food, and energy in the Gulf’s harsh and once-sparsely populated environment.
It seemed as though oil could tame nature. Hence its production, consumption, and export shaped these cities in their most minute details. Petroleum seeped into the streams of all daily activities, becoming these urban centers’ lifeblood in a manner unrivalled elsewhere in the world.
Construction reached its height during the oil boom of the 1970s (usually referred to in the West as the oil crisis). Henceforth, the urban landscape came to be built mainly by the labor of millions of migrant workers, particularly from the Indian subcontinent. The scarcity of jobs back home, coupled with the promise of earning significantly higher wages, drove millions to migrate across the Indian Ocean. The majority worked in construction jobs.
The first version of these petro-modernist cities provided housing and a robust welfare state for citizens, while driving capital accumulation through construction and infrastructure investments. The Gulf nations built houses, schools, hospitals, airports, ports, and universities on an expanding scale, but, as oil prices declined during the 1980s and 1990s, much of this construction ground to a halt.
The dawn of the new century, however, delivered a new boom in oil prices. More than two trillion petrodollars poured into the coffers of the Gulf States between 2000 and 2015. The time was ripe for another construction boom.
But neither the state nor the private sector found the previous model of a welfare-developmentalist city attractive. Instead of focusing on housing and social infrastructure for locals, they moved towards building “global” megacities that would cater to a transnational middle class. Laws were passed that allowed for investors from anywhere in the world to buy real estate in exchange for long-term residency visas. The vision was now to build “international cities” for affluent investors and consumers across the globe.
At the height of this boom in 2008, 57 percent of the value of all announced projects in the Gulf States— $1.2 trillion out of a total of $2.1 trillion — was directed to these mega real estate projects. The ten biggest projects, worth $393 billion, were of the mega real estate variety. The infrastructure needed to make these plans a reality included energy projects worth $134 billion and water and sewage spending worth another $40 billion. The scale of these projects was so immense that one-third of global project finance flowed into the region in 2006.
Dubai led the way, building hundreds of thousands of new housing units destined for international sales. In 2008, extremely conservative estimates showed plans to build more than 1.3 million units destined for international ownership in the UAE, Bahrain, Qatar, and Oman alone. With a capacity to house more than 4.3 million individuals, such ventures promised to house more expats than the combined total number of citizens of these countries.
These real estate ventures were coupled with ambitious projects aiming to broadcast the “global brand” of the Gulf in culture and sports across the world, including museums such as the Louvre in Abu Dhabi and, most famously, the stadiums and infrastructure for the 2022 World Cup in Qatar.
All of these projects promised to make their respective countries global financial, tourist and logistical hubs, following in the footsteps of Dubai. This in many ways reflected the jargon of the management consultancy firms that were brought in to pen these countries’ economic visions, recycling similar ideas across all of the Gulf States.
Even this dizzying array of construction activity did not suffice, and Gulf capital began expanding beyond its borders. It financed grandiose construction projects all across the Arab world, including building a new capital in Egypt, an energy city in Libya, and megaprojects in Lebanon, Jordan, Palestine, and even India.
Which brings us back full circle to NEOM, the latest promise of Blade Runner-esque metropolis in Saudi Arabia. As the first “capitalist city,” it is supposed to be designed and built by a holding company, which then lists it for sale on stock markets. Investors will be able to buy pieces of NEOM, just as they would stocks in any other company.
The Financialized City
Much has been said about the commodification of the city, a process by which urban space becomes a commodity and is thus systematically exploited for the primary purpose of profitmaking. Residents and tourists alike are reduced to “mere ‘extras’ in the great urban spectacle,” which is geared toward maximizing income.
Projects like NEOM take this logic one step further. Here, financial institutions conceive, design, and execute a completely new city as a private venture, then list it on the stock exchange. This represents the ultimate vision of the financialization of the city, a process by which the city itself is specifically and systematically engineered and designed by finance with the sole and explicit aim of generating profits.
The idea of such “fully privatized” cities engineered by finance have become a feature of the Gulf ever since the advent of these “international megacities” in the new millennia. Such projects usually follow what some have called the “GFH model” named after the bank that pioneered this process.
Under this model, a financial outlet leverages its ties to influential political figures — usually members of the ruling family — to get land at incredibly cheap rates. In exchange, the financier raises the funds necessary for the project’s execution, usually creating a spinoff “developer” corporation tasked with overseeing the city from its conception through its completion and subsequent management.
Based on this outline, plans for dozens of private megacities mushroomed across the Gulf in the mid-2000s, with concepts ranging from “media cities” to “luxury beach islands” to “financial harbors.” The content and concept of such “cities” often was not the primary concern, and indeed they can change overnight depending on the dictates of profitmaking. Thus, in 2012, a small news piece curtly announced that GFH “redesigned . . . its flagship Moroccan project Royal Ranches Marrakech from luxury large-scale villas to mixed-use commercial and affordable housing amid changing market conditions.”
So, while the previous petro-modernized cities had a use value of providing social housing and a welfare state to Gulf citizens, the use value of these new cities was simply to generate profit. The grander, more expensive, and more ambitious these projects are, the bigger the financial gain: The city is for profit, everything else is secondary: a pure “capitalist city.”
But in the wake of the latest financial crisis, many of these megaprojects have become ghost towns. The Gulf’s skyline is now littered with half-completed buildings gathering dust. The King Abdullah Financial District in Riyadh joins a long list of unfinished or abandoned projectsmega-cities dotted across the gulf, including the now-suspended Waterfront project in Dubai — a development three times the size of Washington, D.C., intended to house up to 1.3 million residents.
Other notable failures include the Blue City in Oman, designed for two hundred thousand residents, and, most infamously, Dubai’s “the World,” a collection of manmade islands designed to look like every country in the world. It is now sinking back into the sea.
The gargantuan scale of these projects has had a disastrous impact on the environment, multiplying the effects of the so-called Anthropocene on the ecology of the Gulf. Developers have appropriated thousands of miles of desert land for construction. Not even the sea was spared, as builders reclaimed vast swathes of shoreline in order to create ever expanding “beachfront” properties.
The delicate desert and maritime ecosystem, which has sustained life for millions of years, fell out of favor as builders transformed large segments of it into grassy golf ranges and even ski resorts, since that is what the spectacle and consumption lifestyle of an “international city” demanded. Hundreds of desalination plants continue to pump from the Gulf to satisfy the ever-increasing demand for water in a region that does not have a single river. Oil superficially allowed the taming of the environment, and the expanding construction and consumption of the urban landscape continues unabated without much consideration of ecological sustainability.
Pushed too hard, however, and the environment has a way of biting back. Five cities in the Gulf now rank among the top twenty most polluted cities in the world. Scientists are concerned that the region has become the frontline in global warming, warning that temperatures could soon reach levels that make human life impossible. The Gulf’s waters became some of the most polluted, and the meager sweet water aquifers, which took millions of years to form, have nearly been emptied in a few decades.
One wonders if even the pre-oil mode of life would be possible should petroleum run out, given the irreversible damage the petroeconomy has done to the environment. At the current rate, it seems the key question is not whether the cities of the Gulf will lead the way in futurist city planning, but whether future urban life will remain viable in the region at all in a post-oil age.
None of this seems to have put a damper on the unceasing drive for construction. Why would Gulf governments constantly re-embark on plans to build cities in the middle of the desert, even after these colossal financial and environmental disasters? Why does this construction take the form of megacities built completely from scratch, each time with a new wacky theme, instead of focusing on developing and upgrading already existing cities, where most of their citizens live and which suffer from recurrent power outages, congested roads, and perennial floods? This is not to mention that they continue to be blighted by being car-based cities ill-suited for pedestrian life, and which cause thousands of traffic deaths per year, the highest rate in the world.
The answer, in short, is capital. More specifically, it is the form that capitalist enterprise has manifested as in the Gulf. Ever since the discovery of oil, most of the surplus petrodollars have poured into the so-called secondary circuit of infrastructure and real estate. Aside from oil, the region lacks primary productive circuits. As a result, much of the money the state gathered from selling oil abroad was poured directly into the built environment.
Construction, import trade, and associated services have been particularly concentrated in the hands of private family-owned conglomerates, whose experience in business has essentially been limited to these sectors ever since the first oil booms in the 1950s. These companies engage in very little high-tech manufacturing and exporting, leaving state-owned enterprises to undertake these more advanced productive roles. Basically, the private sector only knows how to build, and so it must keep building no matter what.
The Gulf States continue to announce and embark on these ill-conceived megaprojects because landowners, property developers, and construction firms — along with a host of financiers and management consultancy firms — are their biggest beneficiaries. This bloc is also the most politically and economically influential group in the region, including many members of the ruling family within it. Since most of their experience in economic production has been confined to city-building and its associated activities, it is no wonder that they continue to prioritize these projects in every state-led economic plan, even when they have proven costly and disastrous time and again.
The people who must deal with the consequences of such unmitigated urban expansion — those who actually inhabit the land — have no say in the matter. Neither do those who live in the current urban cities nor the tribes that are forcibly displaced and resettled by projects like NEOM have much chance of influencing their governments’ decisions. Indeed, many are even prohibited from entering the new cities, which tend to be gated communities catering to affluent expats and locals. Decision-making belongs to an elite economic and political group, and it seems like international capital now wants a piece of the pie, too.
Unsurprisingly, the only Gulf State that hasn’t fully embraced this trend is semidemocratic Kuwait. To the chagrin of big business, its elected parliament has continually blocked such projects, seeing little benefit in them for the vast majority of citizens.
For the rest of the Gulf States, it is of secondary concern if these cities end up as failures that destroy the environment and cost the government billions of dollars. By that point, most of the power-bloc has made its money and moved on to conceive another grand, Blade Runner-eaque fantasy to build. Well, at least until the oil money runs out and these cities can no longer afford to import the technology to produce their own water, let alone the robots needed to run them.
When the celebrated Saudi-Jordanian novelist Abdel-Rahman Munif was asked why he named his literary masterpiece on the rise of the petro-modernist cities of the Gulf Cities of Salt, he replied:
By Cities of Salt, I meant cities that grew suddenly in an unnatural and extraordinary way, not as a result of a long historical accumulation that led to their expansion, but more as a kind of explosion due to sudden wealth. This wealth (oil) has led to inflated cities that have become like balloons that can explode and end once they touch something sharp. The same applies to salt. Although it is necessary for life, humans, and all creatures, any increase in its quantity . . . life becomes unsustainable. This is what is expected of the cities of salt. . . . When floods come to them, when electricity is cut off, or when you experience real difficulties of one kind or another, we will discover that these cities are fragile places ill fit to be modern cradles for human life and betterment.
If the people living in these cities want to prove Munif wrong, they face monumental challenges of facing up to authoritarian power and construction-hungry capital, a two-headed hydra that currently shapes the urban fate of the region.