Wednesday, November 16, 2011

Travels in foreign lands-XXXI (Dubai, the failed Eldorado-I)

According to Wikipedia, Eldorado is the name of a legendary "Lost City of Gold" that has fascinated – and so far eluded – explorers since the days of the Spanish Conquistadors. Though many have searched for years on end to find this city of gold, no evidence of such a place has been found. Dubai had started becoming an Eldorado in the deserts of Arabia for the people from all over the world but unfortunately, the bubble burst few years back! For the sub-continent, Dubai held out a promise of riches and prosperity. Mueen Akhtar's skit "Dubai Chalo" was very popular on Pak TV. Some years back I had the opportunity of meeting Ram Buxani, the Chairman of Cosmos Group, and the head of Indian Association in Dubai. He described to me Dubai more than 35 years back when he had landed there. It was a fishing village where they used lanterns and mosquito nets and lived in mud huts and tents! The Indians worked very hard to transform it into the modern hub of tourism and commerce. The present ruler Sheikh Mohammad has been the most enterprising head of the emirate. He has British Advisors who helped him in realising the dream of modern Dubai which could be termed as the Hong Kong of the Middle East!
The main reason for the failure of the "Eldorado" is the illusory economy on which it was based. Dubai has no basic resource like other Arab lands such as the oil. There are seven Emirates in the United Arab Emirates. The richest and the most dependable is Abu Dhabi which has oil. It is also the capital of UAE. There are economy based on oil is quite strong. In fact, it was Abu Dhabi which tried to bail out Dubai from its over $ 80 billion debt! Sheikh Mohammad tried to base his economy on outside investments in a construction boom. There was a mad rush for construction of real estate. In addition, he had a fancy for Golf Courses and all the big things in the world. The biggest shopping mall, the mall of emirates; the highest tower, the Burj Dubai and so on. He constructed islands like Palm Jumeira visible from outer space. The real estate became a money minting machine where the properties even before completion changed hands dozens of times. People made good money before the crash which came due to over all recession and in fact due to problems with American and European economies. There were massive lay offs. People ran away leaving thousands of vehicles at the airports! The real estate crash left dozens of incomplete sky scrappers.
Dubai has now lost that initial attraction and the economy here is trying to find a foot-hold. Apart from investors, Dubai had become a safe haven for politicians, fugitives and so on. Somehow the local authorities seemed to give out signals that if all these people did not use Dubai for their activities, they could stay there! There seemed to be some tacit understanding between the local authorities and the asylum seekers. In fact, Dubai also acted as a conduit for goods from USA to Iran and even between India and Pakistan. Hawala networks also function unscathed in Dubai, probably with local (invisible) approval.
One interesting fact about Dubai is the composition of its population. The local inhabitants must be around three hundred thousand or so. However, the expatriates, the Indians, the Pakistanis, Filipinos, Bangladeshis, and Europeans number more than a million and a half! It is not easy to maintain control over such a large expatriate population. This is being done by a strict regime of visa and immigration rules. Violations are dealt with severely with fines and even deportation. For controlling the expatriate population almost all Arab Kingdoms or Sheikhdoms function like Police States!
The phenomenal growth of Dubai is attributed to its rulers and among them the present ruler Sheikh Mohammad is supposed to be a modern visionary. No doubt he has ushered in an era of massive expansion and development, yet he seems to have been rather too fast and ambitious. Probably, he did not have some good advisors regarding his economic development or he did not listen to their advice? It was very appropriate to make Dubai a Tourism hub especially during the winter when entire north is shivering. On an average 6 to 8 million tourists especially from Europe and Central Asia have been visiting every year. Dubai is one of the rare sunny spots in winter with its beaches and deserts. Plane loads of Russians and Uzbeks have been coming every week to enjoy warm sun and cheap hospitality compared to Spain or other such spots. Moreover, Dubai is quite short haul for these countries. There also have been plane loads of Indians coming for shopping. While as development was needed but basing it entirely on outside investment was not a right decision. Instead of real estate, there could have been many other economic activities apart from tourism which could have given some solid base to the oil-less economy. If they had taken a cue from Israelis who turned vast deserts into fertile land, Dubai may have been much better off! Somehow, the glamour of Golf, Car and Motor Boat racing and Horse Racing seem to have fancied the ruler more than anything else.
Over last couple of years, Dubai seems to have gone out of fashion. However, the situation appears to be stabilising. Real estate is nose diving. There are umpteen half-complete buildings all over. The race to have the best of the world seems to have lost steam! Compared to Dubai, Abu Dhabi appears more stable. One wonders what Sheikh Mohammad is thinking? Has the debt crash humbled him or he is still the same glamour loving person? Only someone closely associated with him can tell. In the meantime, flocks of "western birds" that had come to make a fast buck and enjoy best of everything have migrated back to their homelands! In next episodes, I will describe my own experiences in Dubai!

(To be continued….)

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