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DUBAI: Not a time for ridicule

Its financial markets shaken, its confidence dented, Dubai, which once offered the promise of an Arab renaissance, is less inspiring these days. The emirate and its state-owned companies are $80 billion in debt, and investors speak less of Dubai’s glamour than of its woes.

There have been jokes too. Dubai boasts the tallest building in the world. But with the real estate market battered, while jobs disappear and expat workers fly home, some are wondering if the tallest building will now be fitted with the dubious distinction of the being the world’s emptiest building.

Emad Fawzi Shoeibi senses something unseemly in this rush to ridicule. Writing in Egypt’s Al-Ahram Weekly, the director for the Center of Strategic Information and Studies in Damascus, urges the Arab world not to disparage an emirate that turned tribal lands and a desert into a glittering metropolis by the sea.

Dubai he says “tried to speak the language of the capitalist world, without having staged a bourgeois revolution, without engaging in sectarian or religion wars, and without following the usual pattern.”

He continues: 

“One has to respect the Dubai mindset. One has to respect Dubai for surging ahead with no thought for the conventional constraints of development everyone talked about. While the rest of the Arab world dithered, Dubai acted. ... Arabs with dreams of full-scale development mustn't ridicule Dubai. To mock Dubai is to approve of the restrictions placed upon us. Dubai belongs to all the Arabs. It is a model that deserves support, not indifference.”

Lenders and investors may think so too. Dubai's stock market rose by 7% on Thursday, the highest jump since the financial crisis began last month. The surge was fueled by the cancellation of a proposed risky corporate real-estate merger. But there's a lot of ground yet to make up: The market has dropped nearly 25% in recent weeks.   

-- Jeffrey Fleishman in Cairo. 

Photo: Burj Dubai, the world's tallest building, goes up in April 2008. Credit: AFP / Getty Images

Comments () | Archives (3)

slave labor.

Although criticism of Dubai's debt-fueled economic model is warranted at a certain level, western bankers complicit in support of and supply to Dubai's growth should not escape the same negative examination. News articles in recent days speak strictly of the potential losses in European and American banks while underlying the dubious and speculative nature of Dubai's golden decade. The repetitious nature of these messages engrains the same trite caricatures: the sophisticated western banker and the incompetent wasteful Middle Easterner. Both parties were at the table when deals were made. The decision to invest cannot be labeled egregious for one and not the other.

Dubai may or may not have had solid fundamentals, but the investments made certainly weren't committed out of a need for self-homage. A viable business case was evident, and although it proved excessively risky in hindsight, the same can be said of the monopoly homes developed in suburban America or European retail developments sold by investment banks to equally crazed investors. It was a decade of hope abetted by a debt bubble. To use Dubai as a scapegoat is unfortunate. Equivalent debt driven, growth driven business models were being pumped out by American and European banks. Casting western bankers as overly-aggressive but Dubai as "foolish" has less to do with economic principles then underlying prejudices of the region.

These Sheiks should have learned by now, they'll be fleeced every time they come to windfall of money, forced to buy useless armaments during normal times and having their oversees investments evaporate during good times.
Petrodollar is like boomerang, it always goes back to its owner, otherwise it would have been called petrodinar!


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