Devika Dutt holds a PhD in Economics from the University of Massachusetts Amherst. She is a research fellow at the Global Development Policy Center at Boston University, one of the founders of Diversifying and Decolonising Economics, and a 2021-22 Berggruen Institute Fellow.
Alden Young is an assistant professor of African American studies and a member of the International Institute at UCLA. He is a 2021-22 Berggruen Institute Fellow.
Millions of workers from developing countries have left their homes to work in the Gulf states, sending back money to support their families and communities. And every major decline in the price of oil comes with massive disruptions to those workers’ lives and the economies of their home countries.
In the months after the COVID-19 pandemic began, nearly 400,000 workers from the Indian state of Kerala returned home, The Washington Post reported. Some families had been sustained by remittances for multiple generations, and the ripple effects from the loss of that money have dealt a blow to the local economy.
Disruptions to the economies of the Gulf and their neighbors have become more frequent, with three major declines in the price of petroleum since the global financial crisis of 2008. And the brunt of the pain has fallen on the most vulnerable: the migrant workers who form the backbone of these economies, from places ranging from Cairo to Manila.
Decarbonizing the global economy is the only way forward for the survival of the human race. But decarbonization also poses great risks: a long-term, steady decline in the price of fossil fuels could turn the thriving cities of the Arab Gulf into ghost towns, triggering social unrest and economic depression in these states and the countries that depend on remittances.
To prevent that future, the conversation about climate change mitigation needs to shift from simply reducing carbon emissions to ensuring that developing nations can take part in a diversified green economy. We cannot expect decarbonization to take place at the pace that is needed by eliminating the livelihoods and incomes of the majority of the global economy without having a plan of action in place.
But even the most progressive comprehensive policy agendas on the table show little consideration for how to achieve rapid decarbonization in the Global South without destabilizing its economy. Most are overwhelmingly focused on a green reindustrialization of the economies of the Global North. The Green New Deal resolution in the United States, for instance, would offset the economic impact of decarbonization with a green industrial policy to create good manufacturing jobs, as well as a jobs guarantee with the federal government as the employer of last resort. A similar deal has been proposed for the European Union, and the Paris agreement and the consequent COP summits have focused primarily on national commitments to reduce carbon emissions, with voluntary development of national strategies to achieve this.
While all these efforts and national commitments are a big improvement over conversations around addressing climate change a decade ago, the continued (mostly) national focus is not sufficient for generating decarbonization at the speed required to limit the rise in global temperatures to 2 degrees Celsius.
Many national growth strategies, especially in countries of the Global South, are likely to have a hard time suddenly pivoting to a carbon-neutral approach without slamming the brakes on development, poverty reduction and improvements in welfare, unless there is a massive coordinated investment program to prevent it. Decarbonization in developing countries is also important since much of recent decarbonization achieved in the Global North has depended on “exporting” the dirtiest jobs to developing countries, then simply importing the finished products.
And crucially, the success of global decarbonization hinges on at the very least a regional, if not global, program of green reindustrialization of fossil fuel economies — and the economic ecosystems they support.
Many of the largest economies in the Middle East and North Africa have historically been dependent on the extraction and sale of fossil fuels for their government revenue. Saudi Arabia, the United Arab Emirates, Bahrain, Qatar and Kuwait are important sources of remittance income for migrants from Africa, South Asia and Southeast Asia.
These oil rich economies continue to be an important engine of economic growth for many countries of the Global South, despite being known for their poor working conditions and violations of human rights. Therefore, any structural shift in the business model of these countries due to the energy transition has deep and significant ramifications for growth and development in many economies.
What Green Industrialization In the Greater Middle East Could Look Like
Arguments can be made that the hydrocarbon producers based on the Arabian Peninsula are the most efficient and low-cost in the world, and those industries are so central to their domestic and regional economy that they should be allowed to continue as legacy producers for longer than others. Still, as renewables and other energy-efficient solutions are gradually adapted, these economies will inevitably decline.
One solution to offset this decline is to foster increased economic, financial and social integration from Dakar to Dhaka. In many ways, the Arab Gulf states already serve as the regional transportation and financial hub for Africa, South Asia, Central Asia and the Middle East. Decades of wars and political turmoil have led business from across these regions to relocate in the Persian Gulf city states. This in combination with massive investments by countries like the UAE, Qatar and, lately, Saudi Arabia in infrastructure and transportation links have made these cities natural hubs.
The natural next step is to use these advantages to construct a green regional economy. Several proposals have been made in recent years that promise to unite the Greater Middle East, including East Africa and South Asia. The following three solutions are just first steps, building off ideas from these earlier proposals, even if their feasibility remains in question.
Hydrogen Cities
The idea of creating a green city called Neom in northwest Arabia was proposed by the Saudi government in 2017 as part of an ambitious slate of reforms announced by the Crown Prince Mohammed bin Salman. The plans expressed in the Kingdom’s Vision 2030 plan call for this region to become a free-trade zone focused on tourism and industrial production. Where things get truly futuristic is the energy source that the city’s planners hope will power this development.
The core of Neom is something that the Saudis have named the Line, which is to be a city powered by hydrogen. It is supposed to be the first development within Neom, a smart city without cars, which the Saudi government says will add at least $48 billion to its annual GDP. The project is also expected to include what they say will be the world’s largest green hydrogen project, positioned above the Red Sea. Building on the theme of global reach, Neom’s website states that at least 40% of the world population should be able to reach the city within a four hour flight.
Saudi Arabia has long expressed its developmental ambitions through the creation of new cities. Neom also fits into long-term Saudi sustainability efforts, shifting a large part of the country’s economic activity and population from the eastern portion of the country to its western coast above the Hijaz, where it may be less vulnerable to climate change. This effort builds on earlier, largely failed, efforts to increase agricultural production along the Western shore of the peninsula. A novel feature of this latest site in the northwest corner of the country is that it is also designed to span across the Gulf of Aqaba, which is shared by Saudi Arabia, Jordan, Israel and Egypt.
Right now one of the major challenges in imagining new economic regions like Neom as future regional and international hubs are the restrictive citizenship laws throughout the Arab Gulf states. These laws have rendered huge parts of these countries’ labor forces permanent migrants, though in many cases, multiple generations have lived and raised families there.
High-Speed Rail From Dakar To Dhaka
In 2017, two Chinese railroad companies made the seemingly simple proposal to connect Nyala, a city in Sudan’s Darfur region, by rail to N’Djamena, the capital of Chad. Such a move would have overcome one of the longest-lasting legacies of European colonialism in Africa: the sealing off of rival colonial spheres of influence from one another, in this case the lack of formal ground transportation links between the former British-Egyptian colony and the former French colony. Rail lines were occasionally proposed to connect the former French colonies in the interior of the continent, like Chad and the Central African Republic, with the coast. But at the time the Chinese expressed interest in the railway connecting Sudan and Chad, both countries had practically no fully-functioning rail infrastructure.
The impact of these rail lines would allow for the efficient import-export of goods from Chad and the Central African Republic through Port Sudan on the Red Sea. From N’Djamena, it is possible to connect to freight infrastructure traveling to the Atlantic coast in either Cameroon or Dakar, Senegal. The expansion and development of these freight lines actualize plans developed in the 1950s but never put into practice. They also will allow for the strengthening of intra-African trade.
For decades, a major economic problem facing African countries has been that they are most likely to trade with partners outside of the continent, in particular Europe, North America and East Asian countries, rather than with one another. This trend has begun to show significant signs of reversal with the commencement of the African Continental Free Trade Area in 2021. This agreement covers 54 of the 55 African countries, all except Eritrea. A hallmark of this agreement is the necessity to expand high-speed rail service between African capitals, which will allow for much more cost-effective travel of goods and people than high-cost air travel and which will be much more carbon friendly.
In addition, the expansion of transportation links through Port Sudan on the Red Sea allows for a potential integration of landlocked African countries like Ethiopia, Chad, South Sudan and the Central African Republic with Saudi ports like Jeddah and Neom. From there, it would be easy to distribute goods through the rest of West Asia and to connect to transportation resources in the UAE like the global Jebel Ali Port.
If regional integration with Iran were to take place, it would be possible to connect to existing transportation networks spanning South Asia and going all the way to Bangladesh. Making transportation across this region much easier would not only expand its economic potential and create a huge market for manufactured goods and services, it would also make immigration and emigration into and out of the Gulf cities much easier. Workers from Africa across the Sahel and from throughout South Asia could come and go conveniently and at low costs.
Water Trading
While it is common to think of climate change as creating uniformly drier weather across the Middle East and northeast Africa, the reverse is expected to take place in the Ethiopian highlands, according to Civil and Environmental Engineering Professor Mekonnen Gebremichael. This creates an opportunity to capture the excess water falling in places like the Ethiopian highlands or the swamps of South Sudan and to transfer that water physically through pipelines to the increasingly arid Arabian Peninsula — or, more cost-effectively, to transfer water-intensive activities to northeast Africa, like agriculture and the growing of livestock feeds.
This process has already begun with the large scale purchase of land in Africa, as well as in South Asia by private Gulf investors and sovereign wealth funds. This has led to rapid disagreements about land use as well as ownership and tenancy. It has also led over the last few years to increasing alarm over Gulf State influence in the internal politics of northeast African countries like Sudan and Ethiopia, where pro-democracy activists believe that the Gulf states financially support authoritarianism in exchange for political stability.
One of the major challenges in further developing these schemes is to ensure that the benefits are spread evenly across the divergent stakeholders: local land tenants and poorer states in East Africa, South Asia and the Gulf States. In order to do so, new forms of partial ownership agreements need to be developed, alongside a strengthening of intra-regional organizations like the Red Sea Council, which includes Saudi Arabia, Egypt, Jordan, Eritrea, Yemen, Sudan, Djibouti and Somalia.
Yet, from the very beginning, geopolitics has hampered the Red Sea Council. At the insistence of Saudi Arabia and Egypt, the council pointedly excluded rivals like Ethiopia, Turkey, Qatar and the UAE — all regional states with important interests in regional governance. Overcoming these types of geopolitical tensions as well as creating more flexible ownership structures are two overarching concerns plaguing the development of a water-transfer system around the Red Sea as an integrated region.
Toward An Equitable Global Decarbonization
While these plans might appear fantastic, we believe that they embody the kind of regional multi-country cooperation across the Global South that is necessary to address the challenges presented to us by the climate emergency. In addition to what governments in the Global South should do, it is imperative that the barriers put in their way to implement a viable and equitable developmental decarbonization strategy be removed. The creation of policy space and sources of finance should be tackled at two levels: the international and regional levels.
At the international level, it is imperative that all discussions of climate change center the discussion of a developmental decarbonization strategy. To negotiate commitments to reduce emissions is incomplete without a viable global strategy to replace dirty industries and jobs. In addition, global negotiations must focus on creating national and regional policy space. Policy space refers to the “freedom and ability of a government to identify and pursue the most appropriate mix of economic and social policies to achieve equitable and sustainable development that is best suited to its particular national context,” according to the United Nations Conference on Trade and Development. For instance, the existing multilateral trading system under the World Trade Organization makes active industrial policy through state-owned enterprises, tax incentives and subsidies next to impossible. In addition, active industrial policy is also nearly impossible with the fiscal consolidation being pushed by international financial organizations such as the International Monetary Fund and the World Bank.
We also need a regime of private and public debt forgiveness, so that governments are not under unsustainable debt burdens as they emerge from dealing with the pandemic. Governments also need to actively stamp out tax avoidance and evasion by high-net-worth individuals and multinational corporations to generate higher tax revenues. There is a need for a new multilateralism that can create investment in the green reindustrialization of the Global South.
At the regional level, we need cooperation among national and subnational governments to create green industrial corridors. In addition, greater cooperation among the governments of the Global South can help create South-South political coalitions that could actually facilitate the creation of a desirable and progressive global policy consensus. After all, the waiver to the intellectual property provisions in the World Trade Organization was a result of a proposal put forth jointly by the trade representatives of India and South Africa.
A just and equitable decarbonization is the only viable way to fight climate change. This must necessarily entail a plan for a green reindustrialization of the developing world, in economies that are largely dependent on the production of fossil fuels. Such a plan will also require reparations from those societies that have benefited the most from the exploitation of hydrocarbons. The Global North and the Arab Gulf states must take the lead in repurposing the hydrocarbon infrastructure of the Arabian Peninsula for a new green economy marked by connectivity and economic diversification.
One way to help make carbon-reparations a reality is to use the infrastructure developed to fight the United States’ post-Cold War battles as hubs for green reindustrialization. This existing infrastructure dotted across the region is already being repurposed for industrial opportunities in places like Afghanistan.
Provisioning for this investment at a global level is especially important because a process of decarbonization would annihilate the existing sources of revenue for the governments of fossil-fuel dependent economies. It would also suddenly create a substantial pressure to create good jobs in the entire regional economy. This calls for massive proactive government-led investment supported by the global community.
