Hotelling’s Clustering Theory and the New Cartography of MENA Politics

“Why do rivals always seem to crowd the same space?”

This old question—often asked of coffee shops, gas stations, and political parties—has found new relevance far from the world of retail. On the shorelines of the South China Sea, in the deserts of Saudi Arabia, and even in the shifting sands of Tunisian democracy, a century-old economic theory is quietly at work: Hotelling’s Law.

Named after Harold Hotelling, the theory explains why competitors in a linear market gravitate toward the center—where the majority of demand lies. At first glance, this may seem a curious lens for foreign policy. But reimagine the “market” as global political influence, the “firms” as states and non-state actors, and the “consumers” as populations, investors, or ideological allies—and Hotelling’s logic becomes surprisingly illuminating.

In the Middle East and North Africa (MENA), a region often marked by fragmentation, Hotelling’s clustering helps us understand not just where states invest and deploy, but how they position themselves ideologically and diplomatically. It offers a spatial framework for interpreting everything from Gulf diplomacy to oil extraction to bloc politics.

Chokepoints and Strategic Clustering

The Strait of Hormuz. Bab el-Mandeb. The Eastern Mediterranean. These are not merely vital arteries of trade; they are magnets of geopolitical competition. The U.S., China, Iran, Turkey, France, and the UAE are all establishing or reinforcing footholds in and around these chokepoints—not unlike rival ice cream vendors converging on the busiest part of a beach.

This clustering isn’t accidental. In global politics, as in commerce, proximity equals access—to influence, deterrence, and markets. Consider Djibouti, home to military bases from at least five countries, transforming it into a geopolitical multiplex. This phenomenon echoes the classic prediction of Hotelling’s model: convergent positioning in high-stakes zones.

The Median State Strategy

Hotelling’s theory also helps explain the diplomatic balancing acts of Qatar and Oman, two states that have strategically placed themselves at the center of Gulf polarity. Neither fully aligned with Saudi Arabia’s assertiveness nor openly hostile to Iran, they occupy a “median power” posture—hedging their bets, mediating conflicts, and carving out indispensable niches in regional diplomacy.

This centrism mirrors the behavior of political parties in democratic systems, which often converge toward the ideological center to capture the median voter. In the MENA context, this is not just a vote-maximizing strategy—it’s geopolitical survival.

Egypt and Iran: Clustering with Contradictions

Egypt offers a fascinating case. Anchored by the Suez Canal and historically positioned as a pan-Arab leader, Cairo has oscillated between ideological centrism and nationalist retrenchment. Under Sisi, Egypt now projects stability through a carefully managed ideological convergence—economic liberalization coupled with firm authoritarianism. It’s a form of political clustering designed to reassure international partners while containing domestic unrest.

Iran, by contrast, exemplifies the opposite trend. It has rejected geographic clustering in favor of an ideological one, forging alliances across a transnational Shi’a network stretching from Baghdad to Beirut to Sana’a. Iran’s “axis of resistance” represents an outlier strategy—flourishing on the margins, yet profoundly reshaping the regional map. It’s a reminder that clustering in Hotelling’s sense can be territorial or doctrinal—and sometimes both.

Economic Clusters: NEOM, Dubai, and Tunisia’s Industrial Zones

Saudi Arabia’s Vision 2030 and the UAE’s federal model have translated Hotelling’s logic into infrastructure. The Kingdom’s futuristic cities like NEOM and KAEC function as deliberate economic clusters—concentrating finance, tourism, and logistics to attract agglomeration effects. Similarly, the UAE’s emirates have differentiated their economic offerings—Dubai as the financial and tourism hub, Abu Dhabi as the energy giant, Sharjah as the cultural and academic center.

Tunisia, despite its smaller scale, has adopted a similar strategy. Industrial zones in Bizerte, Sfax, and Gafsa aim to decentralize employment and reduce rural disparities. These spatial-economic policies reflect a regional attempt to apply Hotelling’s clustering logic to development—converging economic activity where returns can be maximized.

When Clustering Turns Violent

But clustering isn’t always benign. In MENA’s oil economies, political instability often triggers what might be called “violent Hotelling pressure”—a race to extract resources as quickly as possible to prop up fragile regimes. Iraq, Libya, and Algeria, at different times, have flooded markets with oil not as a growth strategy, but as a survival reflex. This mirrors desperate firms undercutting each other just to stay open—only the stakes here are sovereign.

The Bloc Paradox: Multilateralism without Convergence

Zooming out, the region’s multilateral institutions—the Arab League, OIC, and GCC—present a paradox. In theory, they should enable strategic coordination and regional clustering. In practice, they often reflect discordant logics: sectarian divides, dynastic rivalries, economic asymmetries.

Rather than clustering toward policy consensus, these blocs often splinter under stress. The 2017 Qatar crisis within the GCC revealed just how fragile these alignments are. Hotelling’s logic would predict centripetal convergence, but in MENA’s multilateralism, centrifugal forces still dominate.

When the Model Breaks

Hotelling’s framework is elegant, but it relies on rational actors with linear preferences. MENA’s politics are messier—shaped by historical trauma, tribal affiliations, and asymmetrical power. Extremist groups like ISIS or the Houthis flourish by rejecting the center, claiming legitimacy through ideological purity, not convergence.

Even in more open systems like Tunisia, the median voter logic has faltered. Initially celebrated for centrist coalition-building, post-revolution Tunisia quickly fragmented. Parties polarized, institutions weakened, and the political center collapsed—a stark departure from Hotelling’s predicted equilibrium.

Beyond the Beach: Rethinking the Map

To truly apply Hotelling to global politics, we need to move beyond the metaphorical beach and embrace a multi-dimensional map. Imagine axes for hard power, soft influence, economic connectivity, and ideological projection. In such a space, clustering is no longer just about physical location—it’s about narrative alignment, technological leverage, and cultural reach.

Spatial economists like Salop and sociologists like Schelling have long expanded beyond Hotelling’s linear model. In global politics, we must do the same. Power is now projected through fiber-optic cables, climate pacts, fintech corridors, and memes—none of which follow linear geography.

Policy Takeaway: Managing the Clusters

Understanding the logic of clustering can help policymakers avoid dangerous overlaps—military congestion, ideological escalation, or economic cannibalization. Multilateral institutions must be redesigned to foster differentiated cooperation, not forced uniformity. Economic clusters should emphasize inclusivity and resilience, not just visibility. And global actors should recognize that not all clustering leads to equilibrium—sometimes it leads to entropy.

Conclusion: A Model Worth Retuning

Hotelling’s Law doesn’t explain everything. But in an era of strategic congestion and ideological overreach, it gives us a powerful metaphor for understanding how states position themselves—sometimes to compete, sometimes to converge, and sometimes to survive.

In the MENA region, where history, ambition, and geography collide, that competition often looks less like a chessboard and more like a crowded beach at high noon.

And everyone’s scrambling for the same patch of sand.