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It will be the oddest housewarming party. David Beckham will compare floor tiles with his new neighbours Simon Cowell and Michael Owen. Victoria Beckham will sip Evian and talk soft furnishings with Liz Hurley. Frankie Dettori and Colin Montgomerie will be trying out the nearby golf course.
People sniggered when Dubai announced it was building the Palm Jumeirah, an island in the shape of a giant palm tree. “Arabs selling sand,” the critics scoffed. Last week the first £4m hacienda-style villas on the Palm were completed and the Beckhams, the first of 70,000 residents, will move in this summer.
The Palm Jumeirah is the centrepiece of the tiny emirate’s attempt to put itself on the map. It will be followed by two other palm islands, 300 artificial islands arranged in the shape of a map of the world, and the world’s tallest building, the 2,300ft Burj Dubai, a hotel, apartment and office complex. And that’s just the beginning.
In recent months Dubai’s movers and sheikhers have announced plans for 40 tax and duty-free micro-cities, a Wall Street-style financial centre, 1m new homes and the world’s biggest airport. Emirates, the national airline, is doubling the size of its fleet, and Dubai-based firms are snapping up ports, land, hotels, and billions of pounds of commercial property.
The bill for this spending spree is £140 billion more than every single foreign dollar invested in America and China last year combined.
It begs one simple question: Why? What makes a city state where gambling is illegal take the biggest punt in history: that it can use its entire current and projected oil revenue to become a modern global power. No state, no dictator, no megalomaniac Bond villain has ever tried to pull off anything so epically extravagant.
Dubai guards its secrets but The Sunday Times spoke to key politicians and business leaders who are working to shape the emirate’s future under its leader, Sheikh Mohammed bin Rashid al-Maktoum. They set out a bold vision that could transform not just Dubai but an entire region better known for its poverty and conflict.
Dubai is racing to become the Middle East’s business and leisure hub a Switzerland of the Gulf to secure its future when its oil reserves run out in about 10 years, but Sheikh Mohammed wants to pull off a far bigger trick. He wants to establish a unique East-meets-West economic, social and religious model that will act as a catalyst for change in other Arab countries.
Behind the tourist razzmatazz, the office blocks, the glittering seven-star hotels, shopping malls and six-lane motorways, lies a steely resolve to create a pro-capitalist, moderate Muslim success story that will drag Dubai and its neighours into the modern world.
If that were not ambitious enough, Sheikh Mohammed wants to do it all without swallowing any of the inconveniences that usually go along with western-style development notably democracy, human rights and a free press.
“We don’t want simply to change Dubai. We want to promote the model of Dubai in the Middle East,” said Sultan Ahmed bin Sulayem, Sheikh Mohammed’s right-hand man. He is a cabinet minister, who also runs Nakheel, the developer behind the Palm (Nakheel means palms in Arabic).
Arab nations, he argues, have squandered an historic opportunity to use their vast oil riches to spread wealth and create peace. They must change and follow Dubai’s free-wheeling western model. “The people in the Middle East need to be given the freedom to do business,” he said. “The economic solution is the solution to every problem. We will strive to help the neighbours to be like us.”
It sounds like a propaganda script. An oil-rich Arab nation imports the American dream into the Middle East and spreads western values from Beirut to Oman. Economic growth helps to stamp out the poverty that breeds terrorism and it’s all done without so much as a squeak of protest from religious leaders.
Critics fear Dubai’s leaders have spent too much time smoking the hubble-bubble, and even the most credulous observer has to wonder, are they for real?
DUBAI doesn’t seem real to the 6m visitors a year who have made it the fastest-growing holiday destination in the history of the travel business but that’s just the way they like it. The temperature is 35C but Liz Deakin, a 27-year-old IT consultant from Enfield, north London, stands shivering in the snow. Dubai’s latest attraction is a giant Alpine snow dome in the desert. Watching locals pull ankle-length anoraks over their dishdashas and head off to spend a morning on the piste, she said: “You can’t take this place seriously. It’s got mosques, dunes, skiing, an underwater hotel and Versace. It’s Blingland.”
Racing across the mint-green waters of the Gulf in a speed boat from the real world to “The World”, as the islands in the shape of a map of the world are modestly known, Dubai does look like Disneyland for grown-ups.
But even the man who runs The World and is selling every country except Israel left diplomatically off insists that it is one of the most calculatedly realistic places on earth.
Hamza Mustafa, 32, said: “We Arabs, Muslims are the bad guys of the world. The whole point of the Dubai project is to change that. It’s not about being bigger and better for the sake of it. We want to create a success story that will make outsiders look at us with respect, not fear.”
It is a breathless ambition. How did a place the size of Kent one of the seven sheikhdoms that make up the loose federation of the United Arab Emirates get so big?
DUBAI was a trading enclave on the western shore of the Gulf when it first appeared on maps in the early 1800s. At that time, it had only a few brackish wells, two date plantations and a sheikh’s house to its name. Britain controlled the region but did not think much of it.
In 1833 the Maktoum clan of the Baniyas tribe moved into the desert state with 800 Bedouin tribesmen to establish the first sheikhdom. The Maktoums were natural-born traders. They began to use tax exemptions to lure dhows and powerful merchants away from neighbouring states, notably Iran. Soon the little seaport fiefdom had become the chief entrepot of the region.
But Dubai remained poor. As recently as 50 years ago, it was still a one-camel town with no medical care, few roads and little clean drinking water. The only decent living to be made was selling pearls, harvested from the sea bed by free divers. Most of Dubai’s native inhabitants were illiterate nomads.
That changed when oil was discovered a few years before independence from Britain in 1971. Sheikh Rashid bin Saeed al-Maktoum, Dubai’s ruler at the time, was determined he would not follow his neighbours and squander the pennies from heaven. He set about making Dubai the first Arab nation to use oil to create a fast-growing, diversified economy that would endure after the black gold ran out.
He built the Middle East’s biggest airport and man-made harbour and began attracting western firms with the promise of tax-free status. In the last few years of his rule, Emirates airline was founded, with its first aircraft leased from the Pakistani carrier PIA.
When Sheikh Maktoum bin Rashid al-Maktoum took over from Sheikh Rashid in 1990, his brother Sheikh Mohammed, the crown prince, took over as effective ruler. Mohammed, now 57 and the absolute ruler since the death of Sheikh Maktoum earlier this year, exploited record oil prices to increase the economic diversification.
He encouraged the foundation of state-run property firms, established a financial-services sector, set up free-trade “cities” to encourage foreign investment in key sectors such as media and the internet, and approved vast overseas investments.
Every step of the way, he marketed “brand Dubai”. He created over-the-top tourist attractions, such as the world’s first seven-star hotel, the Burj al-Arab, where guests receive a 12-page pillow menu in their suites and French oysters are flown in daily in sea water and kept alive until the moment they are shucked and eaten by diners in the underwater al- Mahara restaurant.
He established premier sporting events with record prize money, notably the £4m Dubai World Cup horserace meeting and the £1m Dubai golf Desert Classic, and made sure Dubai firms sponsored leading sports, notably cricket and football. Emirates sponsors Test Match cricket umpires, and the airline has sunk £90m into Arsenal football club’s new stadium, which opens this summer.
Over the next three years Dubai will spend £40 billion building the free-trade micro-cities. There’s Aviation City, Cargo Village, Aid City, Exhibition City, Silicon Oasis, Festival City and Healthcare City. The new Sports City will be the centrepiece for a bid for the 2020 Olympics.
The world’s first tax-free, business park devoted to the fastest-growing new global business sector, outsourcing, is rising from the dust.
Dubailand, an enclave of theme parks, villages, and shopping malls four-and-a-half times the size of Manhattan, is the Middle East’s answer to Disneyworld. It will feature larger versions of the seven wonders of the world, including the Pyramids, the Taj Mahal and the Hanging Gardens of Babylon. There will even be an authentic Dubai “Old Town” but that isn’t finished yet.
Emirates airline is spending £20 billion doubling its fleet of Boeing and Airbus jets, setting it on a flight path to overtake British Airways as the world’s biggest long-haul carrier by 2012. Dubai’s airport is doubling in size in a £3 billion extension and another new £5 billion, six-runway airport the biggest in the world is being constructed. The hub, already dubbed “World Central”, will be able to handle 150m passengers a year three times the number of foreign tourists who visit America each year.
Almost 1m homes are being built to house the 3m new workers who are expected to move to Dubai by 2015, increasing its population fourfold to 4m.
It’s hard to comprehend the scale of all this development, but if you imagine two airports twice the size of Heathrow 25 miles apart on a dusty desert strip, with 100 Canary Wharfs lined up between them and another dozen Canary Wharfs plonked offshore, you will get the picture. Small wonder the economy is expanding at a giddy 15% a year, generating a $26 billion (£13.2 billion) trade surplus, while the stock market, in spite of recent wobbles, has soared more than 500% over the past two years.
Dubai is forecast to enjoy the fastest population and economic growth in the world over the next 10 years. “This is the most optimistic, creative place on the planet,” said Donal Kilalea, 49, an Irish businessman who runs a fast-expanding sports-marketing company. “It’s not like living in a modern city state. It’s like stepping into an imagined future.”
Oil money and the vast sums of cash repatriated to the Middle East after September 11, 2001 by Arab investors fearful that their assets would be frozen in the event of a second Al-Qaeda attack on America, are fuelling the boom.
It is all helped along by light regulation in the free-trade zones a company can be set up in only two hours coupled with the blissful absence of income tax, corporation tax and sales tax.
BUT cash and a business-friendly environment only partly explain Dubai’s runaway growth. The “killer application” is its unique combination of history and geography.
As a historic trading nation, Dubai has always embraced outsiders, notably westerners. Christians can build their own churches and worship freely, alcohol is available, women can dress how they wish and do any job, a newly passed law allows foreigners to own freehold property, prostitution is tolerated and, while homosexuality is not, Brokeback Mountain is showing in cinemas.
“We are halfway between East and West,” said Sheikh Ahmed bin Saeed al-Maktoum, Sheikh Mohammed’s uncle, who is chairman of Emirates Airlines. The result is that, unlike far wealthier but more repressive states, notably Saudi Arabia, Dubai has found it easy to attract hundreds of young European, American and South African executives to run most of its big companies.
At the same time, Dubai’s location only two hours’ flight from the Asian subcontinent means that there is an endless supply of job-hungry, dirt-cheap labourers to do the hard work.
A 250,000-strong army of Indians, Pakistanis, Bangladeshis and Sri Lankans toil like flies caught in the cobweb of cranes. Day and night shifts ensure 24-hour working. Wages are as low as 50 pence an hour. Most labourers live in squalid barracks in the desert, with up to 20 men sharing a single room without any air conditioning.
But as it grows and flexes its international muscles, what many Dubaians and western politicians and business leaders are now asking is, will the desert dream endure or is Dubai building sandcastles that will eventually crumble? Beneath the glittering veneer there are snags that could spell trouble ahead and make neighbouring states think twice about following Dubai’s glitzy model. However much it tries to import the American dream and create a moderate Muslim model for the Middle East, Dubai remains an uneasy mix of East and West.
The economy may be textbook laissez-faire and the bustling bars, beaches and brothels where women sell themselves in twosomes and threesomes for less than £100 a night may create an impression of social liberalism but, scratch the surface and you uncover strict political and social control.
There is no parliament, no political parties, no elections, no free press, no free trade unions, no minimum wage, no charter of human rights, no right to trial by jury and little consumer protection. Only the most exalted foreigners can start their own companies outside the free-trade zones without a local Emirati sponsor, and labourers cannot get a job without agreeing to surrender their passports to their employer, which means firms can force them to work for as long as and as hard as they like because, without their papers, the workers literally can’t go anywhere else.
Foreigners rich or poor can get a job in the land of opportunity but they are all “guest workers” and, as such, enjoy few freedoms and little protection. As The Sunday Times reports in today’s Home section, foreigners living in Dubai, and overseas investors hoping to move there, face losing millions of pounds in the first major property scandal to hit the country. Buyers caught up in what has become known as “the Light House affair” complain that the Dubai authorities are doing little to help them.
The sense of insecurity and unease is palpable wherever Dubai’s expatriates gather. Each week, four friends a journalist, a hotelier, a property developer and the founder of a large advertising firm meet at the fashionable Montgomerie golf course. They don’t want to give their names because, they claim, those who question the regime can find their residence permit revoked. They say that, for all its professed openness and tolerance, Dubai is a deeply divided, repressive place.
“Press freedom is an illusion,” said the journalist. “A number of times we have run negative stories only to see government-owned companies and their friends withdraw advertising, while articles begin to appear in the Arabic press questioning whether we are ‘in tune’ with Arab and Muslim values.”
The hotelier complained that he had made Dubai his home and was building its future but will never get a UAE passport or a say in the emirate’s future. “Passports are strictly for locals and nobody will ever have a vote here.”
The property man bemoaned the treatment of workers from the Indian subcontinent. “There are protests and riots every day because some UAE firms think it’s enough to provide food and accommodation but no pay. When workers complain, they are deported. It’s feudal.”
The ad man complains about Dubai’s laws. “The courts always favour the locals, over the expats. It’s racist.”
The more that educated, articulate westerners move to Dubai to run the economy foreigners already outnumber Emiratis eight to one the more demands for political and social reform will grow. Pressure for social change could derail the Dubai economic express.
As Werner Burger, a 37-year-old South African who runs a local hotel and property firm, said: “Dubai has been able to achieve so much so fast because it is not a state, it is a corporation, Dubai Inc, which practises pure capitalism. People living here are employees, not citizens whether they are a chief executive or a brickie. Everything here takes a back seat to profits. Demands for workers’ rights could upset the entire nation-building process.”
Dubai gets away with mixing the medieval and the modern by playing its trump card: cash. By paying westerners fat tax-free salaries, it knows that however much they might whinge in private, they will not rock the boat.
For now, Dubai Inc is working well so well, in fact, that, as Dubai’s leaders hope, other countries in the region are beginning to follow its western-friendly lead, notably Qatar, Abu Dhabi, Oman, and even ultra-conservative Saudi Arabia.
DUBAI feels like it is changing the world. It’s an impression you get when you look down from the top of a half-built skyscraper being put up by the Binladin Contracting Group and watch bikini-clad tourists swimming in the sea next to local women sealing business deals on their mobile phones before heeding the call to prayer that wails out above the constant whup-whup of the pile-drivers.
High up above the dust and din of the biggest building site the world has ever seen, you can sense the money flows and feel the optimism. You feel that history is being made here.
Will this Middle East tiger achieve what Libya, Egypt, Palestine, Lebanon, Syria or almost anywhere else in the Arab world has failed to do? Will it use vast oil wealth, cheap Asian labour, northern professionals and a sprinkling of celebrity glamour to create a western-friendly economic system that will, in the end, establish the model of what modern Arabia can be? These are not questions that the Beckhams and their shiny happy friends will ponder when they celebrate the opening of the Palm Jumeirah this summer. As they cool their brows with Evian spray and hand their sunglasses to the beach butlers to clean, the talk will be of their new flashy lifestyle on the “eighth wonder of the world”. Yet, in their own way, this odd crowd, in this odd country, will be playing their part in an epic £140 billion experiment to cast the principality anew and create a beacon of hope in a region where shining examples are rare.
It’s autocratic but decisive
IMAGINE that Britain was known as Windsor plc and that it was ruled by the company’s chief executive, who gave orders to a board of hand-picked loyal subordinates, who implemented policy without the need for approval from any elected body. Imagine that most of the board members were either related to the chief executive or to each other and that decisions were settled by a single mobile-phone call. That’s how Dubai works.
Sheikh Mohammed bin Rashid al-Maktoum is the country’s chief executive and he either owns or controls the companies that run almost everything of any significance. He takes the decisions and they are implemented by members of the executive council an informal board of directors or cabinet.
Council members include his uncle, Sheikh Ahmed bin Saeed al-Maktoum, who runs Emirates airlines, and Sultan Ahmed and Khalid bin Sulayem, brothers from an aristocratic local family who between them run the Palm developer Nakheel and Dubai’s marketing effort.
Mohammed al Gergawi, who runs Dubai Holding, the firm behind the soaring, sail-shaped Burj al-Arab hotel, is married to the sister of Mohammed Alabbar, another council member, who runs Emaar, Dubai’s biggest property firm.
It may seem feudal to western eyes but the Dubai government insists that the rapid-fire decision-making that comes with autocratic rule is the only way it can achieve its aim of building a nation from scratch in a generation.
By and large, Dubaians seem happy with the arrangement. ‘Sheikh Mohammed is our Maggie Thatcher,’ said one local businessman. ‘We may not like the way he does everything, but we know he is going to transform the country and make us rich.’
Nov. 18 (Bloomberg) — Dubai home prices may take at least a decade to recover and increasing supply and a shrinking population will leave 25 percent of the sheikdom’s houses empty next year, according to UBS.
