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Travel Freedom Blossoms in the Desert by Doug Casey Custom-built islands
and a seven-star hotel: Dubai defies conventional wisdom about democracy and the
Middle East.
I'm not easily impressed. And it's not really my style to
indulge in hyperbole, so I'm a bit taken aback by what I'm going to tell you. But
what's happening in the United Arab Emirates (U.A.E.) simply beggars the
imagination. I've written a lot about the boom in China, especially Shanghai,
where the new national bird is the Construction Crane; Dubai exceeds it, and
redefines the meaning of a boom. Words like "unbelievable" and "breathtaking" are
warranted. The place is like Las Vegas multiplied by ten.
| | Doug
Casey is a contributing editor of Liberty. |
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I've been to about 170 countries, but until last month, never to the U.A.E.
That's not exactly true. A few times in the '80s, I went through the airports in
Dubai and Abu Dhabi for refueling, on my way from Europe to the Orient, but never
took a walkabout. Based on the shabby facilities and the few shops peddling
knickknacks, there seemed no reason to bother getting a visa to take a closer
look. Big mistake. The fact that Dubai isn't a recurring feature in most
magazines is testimony to how provincial the world still is. What's happening in
this part of the Persian Gulf, abutting Saudi Arabia, just about 60 miles across
the water from Iran, and about 800 miles from Iraq, is far different — and
ultimately far more significant — than anything going on in the rest of the
Middle East. Let me first give you a bit of background, then tell you what
is happening, and whether it will continue. Then why. Then what I think it means,
and why it's important. Dubai The U.A.E. was formed from British
protectorates known as the Trucial States. After the Empire went home in 1971,
seven of them joined together in a federation that became the U.A.E. Abu Dhabi,
with gigantic oil revenues, was and is the biggest. Dubai is next in size. Then
comes Sharjah. Then four others that are still very much off the beaten track
(for the benefit of trivia buffs: Ajman, Ras al-Khaima, Umm al-Qaywan, and
Fujairah). Two other emirates, Qatar and Bahrain, were invited to join but stayed
independent. Dubai started pumping oil in 1969, but while the reserves
were gigantic for a country of 100,000 citizens, they were small by Gulf
standards, and it was clear they would virtually disappear over the next 40
years. Better than oil — usually a curse to those who have it — Dubai
was blessed with a particularly prescient leader, and a long history of making
its living as a trading port. It's funny how provincial and prone to
hysteria Americans are. When I mentioned I was going to spend a few weeks in the
Middle East, I was confronted by looks of awe, fear, shock, and disgust. It
reminded me that most Americans still think they're tempting fate by ordering
something other than chop suey in a Chinese restaurant. Dubai, I can assure you,
is far safer and more interesting than 99% of the United States. And much
more prosperous and developed. Perhaps even more amazing than the development
itself is its trajectory. It's not that 100 years ago there were only a couple
thousand locals living on the creek that acts as the centerpiece for the old
city, or that, as late as the '30s, pearl diving was the major industry. It's
that the place opened its first hotel only in 1959, and its first airport in
1960. What's Happening Now It's impossible to describe a place
like this adequately in a short article. So I'll touch on a few highlights and
give you some Web references. Let's start with property. The current
signature building in Dubai is Burj Al Arab, a fantastic, sail-shaped building
and that is the world's only seven-star hotel. I tried to get a room but, even at
$1,100+ per night for the least expensive, they were completely booked. But then,
every one of the city's roughly 250 hotels seemed to be booked. I was lucky,
mainly because I patronize the chain a lot, that the Grand Hyatt deigned to make
a room available for $500+. Not that Dubai gets many rubber-necking tourists yet,
but the Burj ("building," in Arabic) charges a $20 entrance fee to those who
aren't guests, or haven't reserved at a restaurant. Good idea, actually. At those
prices, I wouldn't want a bunch of riffraff wandering around either. I'll plan
ahead and spend at least a night there next time.
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| A benevolent dictatorship
that's run like a profitable business, not a dictatorship, actually can work.
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In addition to the most spectacular hotel in the world, Dubai will shortly
have the Burj Dubai, now starting construction, which will be, at over 500
meters, the world's tallest building, abutting what will be the world's largest
shopping center. The entire project is billed as "the most prestigious square
kilometer on the planet." I believe it. Whatever happened to 5th Avenue, Rodeo
Drive, and the Champs Elysˇes? They're part of the Old World. Nice, but
relatively quaint. When was the last time something of that stature was erected
in the United States — or Europe, for that matter? Thirty years ago, with
the World Trade Center, or the Sears Tower. And the Burj Dubai isn't topping
something in the U.S.; it's running with the big dogs, like Kuala Lumpur's
Petronas Towers and Shanghai's World Financial Center. You might think
that a country that's 100% desert wouldn't need more land. But you can always use
more beachfront. Dubai has already constructed The Palm, a development that has
been built out into the Gulf and adds 120 km of shoreline, plus thousands of
homes, and about 40 new luxury hotels. It's one of the world's greatest
engineering projects. A second Palm is under construction, and a third —
which will be about the size of Paris — is planned. The scale of all this is
mind-boggling. Most spectacular of all is The World, a complex of 300 artificial
islands to be built 5 km out in the gulf, resembling a map of the world. The
islands range from about two to ten acres apiece, and they're all pre-sold, the
cheapest at $23 million. You buy your island, and you can do whatever you wish on
it or with it. The dozens of hotels that can compete with those in Bangkok
are starting to draw not just businessmen, but tourists. They like the beaches,
and love shopping in a tax- and regulation-free environment. The selection and
prices are probably the best in the world, especially for unique items like
Oriental rugs. And while Dubai can't compete with Bangkok or Las Vegas in their
particular areas of strength, it's as close as you get for this whole part of the
world. And it's going to be on par with Disney World in the theme park department
in a few years. People from around the world like American university
degrees and American medical care, but they don't like American prices nor, any
longer, going to America. Recognizing this, Dubai has set up the Dubai Knowledge
Center that, through a combination of e-learning and physical facilities, offers
degrees in conjunction with a number of globally recognized academic
instit-utions. There is also a Medical Center, a Media Hub, a technological hub
and even an outsourcing zone to compete with India, all of which use the Dubai's
streamlined regulation and pro-business bias as a very sharp competitive
edge. Almost all the labor is from India, Pakistan, Sri Lanka, or
Bangladesh. The workers typically get a few hundred tax-free dollars a month plus
room and board in exchange for twelve-hour days, but with no possibility of
immigrating, marrying, or overstaying their contract. They may resent being
treated like serfs, but it's a better deal than they get at home. And when they
go home, they spread tales of how the streets of a free-market economy are paved
with gold. Although the Emirates share a long border with Saudi Arabia's
Empty Quarter and Islam is obviously the favored religion, it comes in nearly as
many flavors as Christianity. A Muslim is considered observant as long as he
adheres to the Five Pillars. This allows for substantial freedom (not that
fundamentalists, like Saudi's Wahhabis, acknowledge it). Dubai's women, for
instance, are Westernized, but in a quirky way. In one large shopping center
(which, like the village well it supplanted, functions as a place to see and be
seen), I recall seeing a striking young Bedouin woman in a sheer, see-through
chador, a cross between the Arabian Nights and Victoria's Secret. The
national airline, Emirates, is probably the best in the world as far as I'm
concerned. I don't know any others that, as a complimentary service, pick you up
for your ride to the airport in a 7-series BMW. Unlike U.S. carriers today, all
its stewardesses are like those on U.S. carriers circa 1960. (Whenever I fly
United, I'm reminded of the fact that, when my mother was a stewardess, they all
had to be young, pretty, single RN's. Regrettably, nowadays they're all roughly
my mother's age and members of the Teamsters Union. They stupidly thought it was
a career, when it was just a good way to see the world for a few years while
meeting up-market guys. But that's another story.) Emirates has been highly
profitable since its second year, and made about $300 million last year, even
though it started with only $10 million in capital in 1985. And they did it with
no subsidies. Naturally, I stopped by the stock exchange. For the last
couple of years, all the markets in the Mideast have been howling; Dubai was up
5% on the day I stopped by. Will I open an account? No. It's simply too hard to
watch companies on the other side of the world. And I hate to get into anything
that's been so strong for so long. But I will certainly watch it out of the
corner of my eye. Why the Boom Will Continue As a longtime
anarchist, I'm of the opinion that the best government is no government at all.
The fact that Hong Kong has been, until recently, just a "night watchman" state
is responsible for its spectacular success; it was as close to a political ideal
as existed in today's world.
| Dubai is, and will
remain, the most successful city in world history because it is, in most ways,
the freest. |
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But, perhaps because of some atavistic genetic coding, humans usually seem to
want somebody in charge — a father figure who can give them the illusion of
security and somehow guarantee that they live in the best of all possible worlds.
It's often been said that a benevolent dictatorship is the best practical form of
government, and that may be true as long as the dictator stays benevolent;
generally, however, only the most flawed type of person actually gets to be a
dictator. There are exceptions, of course, like Lee Kwan Yu of Singapore who,
despite his somewhat laughable and idiosyncratic attempts at social engineering,
not only did an excellent job, but found an able and noncorrupt successor. I do
know that "democracy," a vastly overrated, currently quite fashionable but widely
misunderstood system, is not the answer. Dubai's Sheikh Rashid, who ruled
from 1958–1990, said "What's good for business is good for Dubai." He not
only talked the talk, but walked the walk. His son, Sheikh Mohammed, is
apparently at least as friendly to business. They intelligently directed revenues
from their oil, when it still flowed, to prime the pump, and then let the market
do its thing. Can things change? Of course. This is a hereditary monarchy, and
the next sheikh (like the next U.S. president, for that matter) could be a
psycho. But I rather doubt it will happen in Dubai. This country is literally run
like a corporation, with the sheikh acting as the chairman. The aristocracy are
the other directors, and the 100,000 citizens the shareholders. Any serious
deviation from a proven corporate culture simply wouldn't be tolerated. A
benevolent dictatorship that's run like a profitable business, not a
dictatorship, actually can work. Why This Is Important People
are, in most ways, very conservative. Sometimes I want to say stupid. One
definition of stupidity is doing the same thing — like socialism — over
and over again, and expecting different results. Another definition of stupidity
is the ability to learn something — like "capitalism works" — only
very, very slowly. You'd think that after enough people had been to the U.S. in
its halcyon days, all the world would have wanted to model itself after America.
But no, they stupidly kept buying into every cockamamie socialist scheme that
came down the pike from Europe. It was argued that, somehow, America was
anomalous, or that its success was due to something other than its free-market
practices. So America acted as an example to individuals, but not to other
states. Hong Kong — basically a barren rock, devoid of any resources other
than poor opportunity seekers and the free market — wasn't planned as a
free-market entrepot, but anyone could see how successful it was. Singapore,
watching Hong Kong, was probably the first country in the modern world to
consciously adopt capitalism (albeit in a rather paternalistic and adulterated
form) to achieve success. Then, in the early '80s, China started copying
Singapore: a socially and politically circumscribed free market. Far from ideal,
but an outstanding success nonetheless. Dubai is, and will remain, the
most successful city in world history because it is, in most ways, the freest.
But what's more important is that as leaders of other countries — especially
small, poor ones — visit the place, they will increasingly see that they
have no alternative but to emulate it. Dubai has truly let the cat out of the
bag. There's no doubt in my mind that in the next ten years, Dubai look-a-likes
will spring up around the world like variations on a theme. For most countries,
it's either imitate Dubai, or become a petting zoo for those who do.
What's happening in the Emirates makes me think that even when things go bad in
the U.S. — and if they go bad in China — the world economy will still
continue apace. The reason is that any leader of a backwater country who sees
what's happening here will understand that if a boom can be created in an
absolute desert in the world's most notoriously unstable region, then one can be
created anywhere. For all anyone knows, the leader of some flyblown place in
Africa, Asia, the South Pacific, the Caribbean, or Latin America is even now
planning on replicating the success of Dubai. But Dubai is important in
another way. It's an example to the Arab world that they can do something as
spectacular as has ever been done — and do it without the deus ex machina
device of oil. Arabs that see Dubai can view themselves and their culture on a
level with the Europeans, Americans, and Asians, not just as some "camel jockeys"
who got lucky by sitting on a pool of oil somebody else discovered and
developed. The success of Dubai is due — partly as a result of this
ongoing change in self-perception by Arabs — to the withdrawal of their
money from America. Because of the absurd War on Terror, anyone from the Middle
East who keeps substantial capital in the U.S. has to be an imbecile. But where,
then, should people from the Middle East put their money? Before Dubai, there was
no place within Arab culture that was safe. Now there is. It's safer than
America, and much more profitable. Dubai shows the West in general, and
America in particular, that Islam in general, and Arabs in particular, are not
necessarily their enemies. Of course, the Bush regime will disregard the lesson.
But in doing so, they will make themselves irrelevant, and find themselves locked
out of Dubai's desert oasis. Don't make the same mistake.
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