This is basically the longtime practice of countries like UAE, and historically it is categorized under camp 2; no need to create a third camp here. It’s not as if no foreigners ever in such countries become citizens – while most immigrants are meant to be guestworkers who eventually return to their own countries, there are still laws to confer citizenship on exemplary foreigners.
The UAE and the US (as of the last year and a half) don't (just) have strict immigration laws. Instead, they have corrupt and abusive immigration systems which operate outside of national and international laws.
Again, the local laws allow for conferring citizenship on exemplary foreigners, which does happen, and so such countries fit easily into camp 2 by which a country has the right to choose who and who not it wishes to make citizens.