Tag: Dubai

A Middle East Aflame Needs Economic Freedom

By
Doug Bandow

The small Persian Gulf kingdom of Dubai is an oasis in a region aflame. Even NATO member Turkey has been inundated with protests. 

The region’s best hope for the future is greater economic opportunity. It’s an issue that I recently discussed with businessman Waleed Moubarak of Alghanim Industries.

The Emirate of Dubai is one of seven kingdoms which make up the United Arab Emirates. The latter is a kingdom, not a democracy, which is reflected in its human rights record. However, the country is doing better on economics. Overall the UAE comes in at number 11 on the Economic Freedom of the World Index.

Dubai’s oil has run low, which may be the key to its recent success. Moubarak argued that Dubai was “forced to develop” because it “doesn’t have the oil resources that its neighbors do.” 

As I explain in my latest Forbes online column:

One of Dubai’s most important steps has been to set up more than a score of free zones, covering financial, auto, internet, media, gold, and other services.  Additional zones for auto parts, carpets, flowers, maritime, and textiles are planned.  The areas offer tax exemptions, full foreign ownership, and free capital repatriation. 

Among the most important innovations within the Dubai International Financial Center are independent commercial laws and common law courts.  The DIFC attracts judges from common law jurisdictions elsewhere, such as Great Britain, Hong Kong, and Singapore.  The system offers legal predictability and stability, essential to attract substantial foreign investment.  Two years ago Dubai allowed businessmen outside of the zone to rely on DIFC courts.  Apparently Abu Dhabi intends to create a competing financial free zone.

Moubarak and Alghanim also are involved in Injaz, an international charity which, Moubarak explained, seeks to train Arab youth to “give them a skill set to go out and succeed” so they don’t have to settle for “the traditional goal to get in government and get a sinecure.”   It is a wonderful objective.  He added:  “Injaz, in a small way, tries to change that mindset and to give the Arab youth a sense of the possibilities that the private sector has to offer.” 

The Middle East is filled with human potential that is being squandered.  The region needs democracy and human rights.  It also needs economic freedom and entrepreneurship.   We all have a stake in the Mideast finding the way to peace and prosperity.

Topics: 
Foreign Policy and National Security, International Economics and Development

From Abu Dhabi to Dubai

By
Christopher A. Preble

After another fascinating day in Abu Dhabi, which included a visit to the Sheikh Zayed Grand Mosque (the picture can’t do it justice) and the more-than-5-star Emirates Palace Hotel, we rose early this morning and traveled the short distance (about 90 minutes on the highway) to the second largest emirate, Dubai.

The visit began with a visit to the enormous DP World facility at the Jebel Ali port, one of the most active in the world. Millions of tons, chiefly goods in 20-foot container boxes, move through this facility every year. DP World remains one of the stronger subsidiaries in the troubled Dubai World’s portfolio, and the company and that first visit became a metaphor for the day: Dubai has had its difficulties, but the fundamentals that drove its spectacular growth over the past few decades remain strong. Dubai is located at a crossroads – both strategically and economically. It is leveraging this geographic advantage through investments in infrastructure – from the port expansion, to the just opened metro, to a massive new airport that is still under construction – in the hope of attracting and retaining entrepeneurs and capital. And it continues to celebrate its tolerance and openness, which it hopes can be a model for the region.

Senior officials spoke frankly about their slow response, particularly their inadequate communications, surrounding Dubai World’s debt payments. They understand the value in greater transparency and oversight, but are reluctant to institute sweeping new regulations that might impede their recovery.

But they also sought to correct the record about the actual state of Dubai’s economy. Judging from some news stories, I was expecting to see hundreds of abandoned skyscrapers, cars left unattended on the highway, and tumbleweeds rolling through the city streets. The reality was considerably less dire. There are some building projects that appear to be on hold (cranes not moving, no workers milling about), and traffic on the wide highways is not particularly heavy, but there is still considerable activity both at the port and in the downtown area. Meanwhile, during a visit to the Mall of the Emirates this evening (the one with an indoor ski slope) I found relatively few vacant storefronts (no worse, for example, than what I’ve seen in Northern Virginia).

Anecdotes are one thing; key questions remain. It is difficult to get a read on the actual statistics. And it appears that senior officials in Dubai still don’t know the true gap between the value of Dubai World’s assets and its liabilities.

Meanwhile, just as in Abu Dhabi, there are anxieties associated with Iran’s rising power. This was the other key theme of today’s meetings. Senior officials pointed to their compliance with existing UN sanctions that prohibit the sale of certain materials that might be useful in Iran’s nuclear program. They stressed that they would support additional UN sanctions. But while they are want desperately to prevent Iran from acquiring nuclear weapons, the repercussions of military action against Iran would hit Dubai the hardest. The very attributes that make the emirate so attractive to enterpreneurs and tourists would evaporate in the event of war. Beyond the lives lost in retaliatory actions throughout the region, capital would seek out other safer investments. Tourists can choose many other places to visit. Or they can just stay home.

I certainly hope it doesn’t come to that. No one does. There is great potential for Dubai (and Abu Dhabi) to serve as a model for the region. The international character of this place is almost impossible to describe, but I’ll close with one more anecdote. When I flipped on the television, I could watch cricket, two soccer games, handball, or ultimate fighting. I could also watch a movie about tennis in English. Or “Meet the Fockers” with Arabic subtitles. World news in Farsi. Financial news in German or Italian. Movies in Chinese, Korean or French. I could go on.

Tomorrow we’re hoping to visit the Burj Khalifa, the world’s tallest building, and then off to Riyadh in the evening.

Topics: 
Foreign Policy and National Security

First Impressions from Abu Dhabi

By
Christopher A. Preble

Abu Dhabi, United Arab Emirates—I arrived in Abu Dhabi late last night, and have spent the day in a series of meetings (with one more scheduled for this evening).  The 9-day trip, organized and led by Jon Alterman of the Center for Strategic and International Studies, will also take us to Dubai and Riyadh. If the accommodations are even half as nice as our current digs (on a 5-star scale, I’d rate the hotel an “8”) then we’re in for a real treat. (Sorry Doug and Malou).

My first impressions of Abu Dhabi generally conform to what I expected based on my very limited knowledge of the place. I last visited here onboard USS Ticonderoga in 1992, but frankly remember very little. A few buildings looked vaguely familiar, but that is about it. I have had to rely on a packet of materials that Jon assembled for our group in order to get up to speed.

This is a wealthy country; oil wealth, to be sure, which can be as much a curse as a blessing. But there are signs of diversification. Cranes abound, and unlike in Dubai, where the financial crisis has put a chill on a once-booming real estate market, Abu Dhabi continues to do well. Indeed, much of the traffic flowing into the city, I was told, is made up of cars from Dubai. I’m anxious to see the contrast when we visit there later this week.

This is a nervous country. Emiratis (at least the ones we met today) are nervous about Iran, a traditional adversary, and a rising power in the region made more powerful by the overthrow of Saddam Hussein. They worry about Iran’s nuclear ambitions. They worry about how Iran’s behavior might change if they were to acquire nuclear weapons. But they also worry about the ramifications of military action against Iran’s nuclear facilities, given that the retaliation is likely to be directed at numerous targets in the region. They don’t hold out much hope that sanctions will be particularly effective in convincing the Iranians to reverse course, but they support the effort nonetheless.

Looking past Iran, Emiratis are nervous about a future that depends far too much on proceeds from the sale of oil, and on the contributions of expatriates who make up more than 80 percent of the UAE’s total population of nearly 5 million. These expats operate the hotels and the restaurants. They can be seen building the roads and skyscrapers. They are instrumental in Abu Dhabi’s nascent homeland security unit, the Critical National Infrastructure Authority. They help manage the UAE’s nuclear power program. And they serve as advisers at the highest levels of the national security apparatus.

This is a country that values its good relations with the United States, but that understands that this relationship will always have its limits. In our last meeting of the day, a senior government official reminded us of how far the UAE had come in a relatively short time. Fifty years ago, according to this official, 1 in 4 women died during childbirth, and infant mortality was nearly 50 percent. Now the UAE is among the healthier countries in the world.

They do not take their good fortune for granted, however. They are striving to develop the skills necessary to operate their critical infrastructure, and to be able to better defend their country without having to rely so heavily on foreign assistance.

I’m off to another meeting, but I’ll write more later.

Topics: 
Foreign Policy and National Security