SOMETHINGels Tow­ers of Ba­bel

Con­fus­ing mes­sages out of Dubai

Finweek English Edition - - Letters -

I FIRST WROTE about Dubai back in 2001 un­der the head­line “Al­most 1 001 Ara­bian shop­ping nights” and ended the piece with the fol­low­ing: “Even if Dubai isn’t re­ally ‘to buy for’ you might just be coaxed back when they fin­ish the in­door ski­ing slope, the trop­i­cal jun­gle, the palm tree-shaped ar­ti­fi­cial is­land, add an­other dozen sky-scrap­ing five-star ho­tels, wa­ter­worlds and of course shop­ping malls. Af­ter all, you can’t stand in the way of progress or a bril­liant real-es­tate scam.”

The rulers of Dubai made good on their prom­ises. The in­door ski­ing slope is fin­ished; so is one of the palm is­land de­vel­op­ments, as well as the ho­tels and shop­ping malls and then some. A re­frig­er­ated beach is com­ing; so is a theme park to put Dis­ney World to shame. And the world’s tallest build­ing by some stretch – Burj Dubai is near­ing com­ple­tion.

Yet on this visit I de­tected some ev­i­dence I may have been half-right with my real es­tate com­ment. Scam may be too strong a word, un­less you con­sider the whole sub-prime mort­gage cri­sis to be a scam and not just a sham. As Dubai ex­perts never tire of telling you, the town wasn’t built with oil money but im­ports and ex­ports ac­count for its me­te­oric (for once the ad­jec­tive is apt) rise. That’s only half true.

Yes, in­ter­na­tional trade – es­pe­cially with the re­gion’s pariah states (in the eyes of the West) such as Syria, Iran and Iraq – makes up the big­gest chunk of its GDP, but with most of the world’s cranes as our very own for­mer Deputy Pres­i­dent has con­firmed the big money has been poured into construction and real es­tate (and con­comi­tant tourism). And that money comes from petrodol­lars that have been ac­cu­mu­lat­ing in their tril­lions in the Mid­dle-East when oil was hov­er­ing at around $100/bar­rel.

Be­sides, if Dubai were built solely on im­port/ex­port then by now it would have been suf­fer­ing the same fate as Sin­ga­pore, where the econ­omy shrank an eye-pop­ping 5% over last quar­ter 2008. Yet, the United Arab Emi­rates’ cen­tral bank says there won’t be a re­ces­sion.

The most trans­par­ent part of the Arab world’s econ­omy dom­i­nated by state-owned cor­po­ra­tions and fam­ily busi­nesses, the stock ex­changes, may pro­vide some real in­sight. An un­char­ac­ter­is­ti­cally sen­sa­tional head­line in one busi­ness daily read “Black Wed­nes­day” af­ter the re­gion’s mar­kets dropped to four-and five-year lows. A marked change from the usual front page fare dom­i­nated by rib­bon cut­ting for a store sale and scale mod­els of the lat­est mega-projects.

Tourism au­thor­i­ties point to a slight in­crease in vis­i­tors to 1,5m/month dur­ing the cur­rent peak win­ter sea­son and the Dubai Shop­ping Fes­ti­val. That’s hard to be­lieve. As is much of the in­for­ma­tion com­ing out of the city-state. You can’t but no­tice how empty the con­courses of Fes­ti­val City were or how few peo­ple walked along the creek to in­spect stalls, de­spite the glo­ri­ous weather.

Chat­ting to the lo­cals to get a real pic­ture doesn’t help much, be­cause there aren’t any. Ex­pats make up more than 90% of the pop­u­la­tion and it’s in their best in­ter­ests to keep sus­pend­ing dis­be­lief: as one long-time res­i­dent told me: “This place was built on PR.” The emi­rate is now mak­ing it eas­ier for peo­ple to stay on even if they lose their jobs. Pre­vi­ously, once you were laid off you had to get back to your home coun­try straight away.

Af­ter decades of cre­at­ing fan­ta­sy­lands it seems Dubai is now be­com­ing part of the real world. Or maybe not. Not when you look at the sky­line in the morn­ing mist and see the al­most kilo­me­tre high Burj Dubai pierce the clouds.

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