Dubai: Trouble in Paradise. By Kieran Allen

Via: Socialist Workers Party.

On Wednesday 25th November, Dubai World made an announcement that shocked the global financial markets: they would not pay interest to international bondholders for at least six months. By a happy co-incidence, the announcement was made on a day when the Muslim festival of Eid co-incided with the traditional US holiday of Thanksgiving. It helped to bridge a supposed ‘clash of civilisations’ and united all who worshiped at the altar of Mammon.

Dubai’s debts amounted to €80 billion – not the same scale of Lehman’s Brothers $613 billion crash – but serious enough to scare the markets.
Bondholders are very rich people who control huge reserves of cash that have been created by the work of millions of people.

They scour the world looking for investment opportunities that will give a ‘good return’. For two decades, they poured money into Dubai, even though it was only a tiny strip of land adjacent to a magnificent natural harbour. Then, suddenly, the spooked investors started to shuffle around their cash in a desperate effort to find a new haven of security. Worried news presenters spoke once again of sharps falls on the FTSE and Nikkei indexes.

These events turned a spotlight on to the tiny Emirate of Dubai which has become a fitting symbol of hyper-capitalism – a sort of beach party dreamt up by Milton Friedman and the Chicago School of Economics.

Until the late fifties, Dubai was a tiny port for pearl fishermen and smugglers, where the population lived in traditional houses made from palms leaves and drew water from communal wells. After the British withdrew, the local sheik joined with other Gulf states to found the United Arab Emirates, a grouping of Arab principalities that remained friendly to the US and Britain during the Cold War.

In 1969, a small amount of oil was discovered and this enabled Dubai’s rulers to take the first steps in developing its economy into a hub of finance and property speculation. From then on, it became both a fantasy location for the wealthy and a real space where capital could move quickly without any regulation or traces.

Located at the junction between India and the Arab and Persian worlds, it attracted money which was looking for easy profit. After the Shah of Iran was thrown out of power in 1979 many of his rich backers fled to Dubai, turning it into the Miami of the Middle East.

Later as economic de-regulation accelerated in Africa and in the former states of the USSR, greater amounts of capital was ‘freed up’ to join the circuits of global speculation. Dubai became the chosen the destination, the new Mecca of money.

Despite its harsh physical setting, Dubai offered a number of advantages to those who aspired to a rich, cosmopolitan life-style.

First, it is ruled by an absolute monarch, Sheikh Mohammed al-Maktoun, who is not constrained by any elected representatives and who has re-branded himself as a leading businessman.

‘People refer to our crown prince as the chief executive of Dubai. It’s because, genuinely, he runs the government as a private business for the sake of the private sector, not for the state,’ explains Saeed al Muntafiq, head of Dubai’s Development and Investment Authority.[i]

Second, the monarch has drawn up a regulatory structure which gives global businesses suitable cover while facilitating their every need. It is a form of ‘modular’ regulation where each module is tailor made for the different sections of capital.

Dubai contains a number of specialised ‘cities’ for each type of economic activity, for example, a science city, an internet city, and an international financial services centre.

In the Internet City, there is no censorship unlike the rest of Dubai. The stock exchange has imported its regulations from the City of London and brought in British regulators to help it set up.

As Mike Davis explained:

This is a new stage in the custom design of utopian capitalism that provides freedom that’s supposedly needed for entrepreneurship and technological innovation and high-end consumption, without conceding one iota of real political freedom or the slightest semblance of democracy or even parliamentary monarchy. [ii]

Third, in the Jebel Ali Free Zone, there are no corporate taxes for 15 years, renewable for a further fifteen; there is 100 percent repatriation of capital and profits, no personal income tax, no currency restrictions and no import or export duties. Instead the Dubai state functions primarily as landlord and real estate agent that collects rents on its properties.

Fourth, no trade unions are allowed and, as 90 percent of Dubai’s workforce  are migrant workers, anyone who threatens to organise a union can be deported.

Up to 1963, slavery was still legal in Dubai but since then it has been replaced by a peculiarly repressive form of wage slavery.

Given these conditions, it is easy to see how Dubai became a rich person’s paradise – a new Venice which showed the world a future model of how hyper capitalism might work.

In the early Middle Ages, the geographical location of Venice on a lagoon off the north east coast of Italy allowed it to escape the control of local feudal political structures and open a space for merchants to trade with the Arab world.

In the twenty-first century, Dubai appeared to foretell a regime of globalised capitalism where the state itself becomes a giant company to facilitate the movement of speculative money.

Yet this swashbuckling brand of cosmopolitan capitalism was just what the ‘backward’ Islamic countries of the Middle East needed – at least according to America’s finest. Thomas Friedman, the populist ideologue for the neoliberal way, called it ‘a bridge of decency that leads away from the failing civilization…to a much more optimistic, open and self-confident society. Dubai is about nurturing Arab dignity through success not suicide.’[iii]

Bill Clinton called it ‘a role model of what could be achieved despite the other negative developments in the region.’[iv]

But what did this role model actually produce?

Dubai became one of the largest construction sites in the world, reputedly second only to Shanghai. The tiny emirate marketed itself as an escape zone for the upper classes, luring them with an image of hot property deals and spiritualistic banalities.

In one huge project, an enormous development was undertaken in the shape of a Palm Island, which was to be visible from the moon. Vast resources and human effort were expended on dredging up material from the ocean bed to create artificial islands, whose overall shape created a Palm Tree. Described as a means to ‘solve the beach shortage’, these islands contained two thousand villas, forty luxury hotels and shopping malls.

Even while this was underway, Sheikh Mo – as the US investors liked to call him – embarked on an even more absurd project of building an island colony that resembled the World.

Property developers from around the world were encouraged to buy their own country – or more precisely an island which resembled the shape of their county – in the midst of an artificially created concrete map of the world.

10,000 property speculators from Ireland jumped at the bait after getting loans from Bank of Ireland and Anglo-Irish Bank.

No expense was spared in moulding the harsh desert to fit the fantasies of the rich. Vast sums were spent on an indoor ski resort with real snow made from desalinated water. A special Tiger Woods Golf Course was built even though it consumed four million gallons of water each day.

A special underwater hotel was constructed so that rich people could experience a frisson of safely engineered excitement as they watched sharks swim past their bedrooms. Plans were made to build an air conditioned beach with cooling pipes running below so that the super rich didn’t singe their toes on the hot sand.[v]

The water supply for all these fantasies came from huge de-salination plants which extracted salt from the waters off the coast of Dubai. These were powered by burning gas but demand was so high that Dubai’s electricity grid – which also relied on gas – began to falter.

Just before the crash, many of the shopping malls and apartments lay empty because there was a shortage of electricity. To deal with the problem, Dubai turned to its US ally to ask for help in constructing a nuclear power station. At 145 gallons of water a day, the rich of Dubai were so opulent that they needed a nuclear power plant just to meet their needs!

But not by golf and concrete alone doth man live! The rich also needed spiritual solace and the advertisers provided it. The World project was founded on Seven Principles which promised to give ‘our inner child a wake up call’ to ‘captivate the soul’.

Real spiritual uplifts, however, came with celebrity visitations from such modern icons as Robert De Niro, David Beckham, Rod Stewart and Richard Branson who paid homage at the openings of a villa or shopping mall. Strollers through these malls found solace in the ubiquitous presence of their familiar consumer outlets – Pizza Hut, Virgin Megastore, Dunkin Donuts and all the rest. In this cosmopolitan world, Arab culture receded to the slightly exotic backdrop of traditional dresses worn by natives on ceremonial occasions or as a backdrop music in the pick up joints populated by Armenian, Chinese or Russian prostitutes. As a liberal Muslim leader, Sheikh Mo knew that sex tourism was a necessary adjunct for his fantasy islands.

The opulence and consumer demands of the rich were met by a vast army of impoverished migrants. Almost all the homes of the expatriate British and US residents, contained a ‘tea boy’ or ‘maid’ who ministered to their every need. The maids were normally educated Filipino women or, when the recession began to bite and they became a little too expensive, a nice Ethiopian servant girl. John Hari, an Independent journalist described the conditions under which they worked.

‘It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does, you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.[vi]

The construction work was undertaken by about 600,000 workers who were recruited from India, Pakistan, Sri Lanka or Bangladesh. In a world where capital demands its freedom it keeps labour in chains. A luxury lifestyle for the rich is more easily supported by a world built on passports and labour controls.

A report conducted by Human Right Watch found that most construction workers had paid over €2,000 to a recruiting agency to migrate to Dubai.[vii] They were promised a chance to escape poverty but soon found that paying off this debt consumed many months of their labour. To make utterly sure that they complied with their employers’ wishes, their passports were removed and their pay was often withheld so that they would not abscond. The workers were housed in massive labour camps on the outskirts of Dubai, invisible to its residents.

They were crammed seven to a room, often in facilities beside open sewage. Despite a semblance of labour laws, they were forced to work in a blistering heat of over 100 degree Fahrenheit. The appalling conditions eventually led them to band together and to march in a large demonstration down Dubai’s main highway and to riot outside the Burgh Dubai tower site. Their punishment was mass deportation.

Prostitutes were also recruited on a vast scale to turn Dubai into a major hub of the Middle Eastern sex trade. The women came from the war torn and poverty stricken regions of global capitalism. In one shocking YouTube documentary, an Armenian television crew interviewed a women from Tanzania who told how she cried every day in her heart because she had to work in Dubai to feed her children, her sisters’ children and to pay the school fees demanded by the IMF as the price of its loans.[viii] The same money that flowed so freely from Tanzania to Dubai for investment in property speculation could have created a different life for the women who were forced to flee.

And that is the real scandal behind capitalism’s fantasy islands that became such magnets of greed. Vast sums of the world resources, extracted from the labour and sweat of millions in an interconnected world, were channelled through a tiny entrepôt that became a speculators paradise. In a different economic system, this wealth might have provided tractors for subsistence farmers to release them from backbreaking toil. Or it might have been used to rectify the terrible damage done to Bangladesh by de-forestation through creating new structures to hold back the growing threat of floods.

But while Dubai served as a great sump which sucked in the world’s wealth, it could not escape the insane logic of its own system. The phenomenal profits that were made from the housing boom in Dubai led to a fanatical desire to hype it up through ever more loans… so that eventually that the bubble burst. Today, the great concrete artificial World has come to a shuddering halt and is now threatened by the ravages of nature. A terrible waste of human ingenuity and resources will probably sink below the coastline of Arab sub-continent. The only legacy left is a shocking monument to a wealthy elite who outdid the sumptuous, arrogant luxury of Marie Antoinnette and the feudal aristocrats. Like the figure so poignantly commemorated in Shelly’s poem, Ozymandias, they only left behind a faint trace of their ‘sneer of cold command’.


[i] M. Davis, Fear and Money in Dubai’ New Left Review No 47 September-October 2006

[ii] Interview with Mike Davis on Dubai at Ink by the Barrell 14 August 2007

[iii] T. Friedman, ‘Dubai and Dunces’ New York Times 15 March 2006

[iv] A. Bhoyrud, Clinto Leads Dubai praise’ Arabian Business 4 December 2005

[v] J. Hari, ‘The Dark Side of Dubai’ Independent 7 April 2009

[vi] ibid

[vii] Human Rights Watch, Building Towers, Cheating Workers (HRW Washington 2006)

[viii] http://www.youtube.com/watch?v=3fC7KDY4sqE&feature=player_embedded

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