Without much oil under its sands, Dubai is no petro powerhouse. But you can't beat it for being the most colorful sheikdom in the Middle East--or the most ambitious. What other desert land can claim one of the world's largest indoor ski slopes, featuring fresh powder year round? While flying in on the stylish, state-owned Emirates Airlines, you might notice the artificial islands in the shape of a palm tree or the 56-story Burj al-Arab hotel, as tall as the Eiffel Tower, built like a billowing sail. Westerners are welcome, along with their vices. Europeans in bikinis mingle on the beach with Muslim women in abayas; alcohol flows freely at Dubai's nightclubs and resorts. With events like the Dubai World Cup, a horse race with a record $6 million purse, Dubai draws 7 million visitors a year, along with big-name acts from Luciano Pavarotti to Tiger Woods. Its economy has nearly tripled in size, to $34.5 billion, in just a decade. "We have built a success story in a short span of time," says Mohammad al-Gergawi, executive chairman of Dubai Holding, the government-run conglomerate that oversees most of the emirate's big domestic and foreign investments. "In 10 to 15 years, we put Dubai on the map."
It took some members of the U.S. Congress about a day and a half to accomplish as much notoriety for the place, such was their outrage over the latest piece of Dubai's economic development. A state-controlled company, Dubai Ports World, which aims to be a major player in the global-shipping industry, last November agreed to pay $6.8 billion to buy a British firm, Peninsular & Oriental Steam Navigation Co. (P&O), which controls terminal operations under five U.S. port authorities, including those in New York City, Baltimore and Miami. Citing security issues and a lack of information from the Bush Administration, usually free-trade Republicans like Peter King, chairman of the House Homeland Security Committee, have all but vowed to show up at the docks to stop the deal. "A lot of Republicans feel they were hung out to dry," says King. The tussle has even offered the prospect of former President Bill Clinton, a Dubai adviser, squaring off with his spouse, New York Senator Hillary Clinton, who opposes the buyout. Geopolitics makes strange bedfellows. The deal is on hold pending a 45-day national-security review that DP World asked for in the hope of winning support and easing fears about its antiterrorism credentials.
The P&O acquisition is emblematic of a Middle Eastern merchant state on the rise, one that aspires to be much more than an amusement park for jet-setters. Run since 1995 by a press-shy crown prince, Mohammed bin Rashid al-Maktoum, who became emir this year (Sheik Mo, to finance types), Dubai has established a network of holding companies, funds and corporations with more than $15 billion in overseas investments and a domestic goal of turning Dubai into a hub for everything from financial services to biotechnology. Call it Dubai Inc., a conglomerate with Sheik Mo as CEO. "We are not that different [from] small states like Singapore," says Mohammed Alabbar, head of Dubai's Department of Economic Development and chairman of the real estate developer Emaar. "They realized their economy is too small, so they said, 'Let's go to a broader market.' That's what's happening."
By most metrics, the plan has worked brilliantly. Dubai's economy is the healthiest in the Middle East, growing at a 16% annual clip and diversifying well beyond oil (which accounts for just about 6% of GDP). Dubai's ports and free-trade zones bustle. The government has built high-tech centers, including Dubai Media City and Dubai Internet City, attracting companies from Microsoft to IBM. A research park called DuBiotech is luring drug companies. The Dubai International Financial Center, a "financial free zone," aims to lead the region's securities exchanges, although there will be plenty of competition for that honor.
Sheik Mo, known for his love of thoroughbred horses, has been on a shopping spree. In recent months his investment vehicles have acquired the Tussauds Group wax museums and a 2% stake in DaimlerChrysler. U.S. purchases include the landmark Essex House hotel and Helmsley Building in New York, and 69 apartment-rental properties in southern U.S. states. And he's clearly not done. Says Alabbar: "For any businessman, you need to operate in the American economy and understand it. That's where a lot of the stuff in the world starts. That's why I am in California." (And to visit his son, who attends college in San Diego.) Perhaps most impressively, the sheik has eschewed the opaque, connection-fueled style of business typical of the Middle East and insisted on Western standards of accounting and transparency.
Dubai's embrace of Western business principles was no match for Western politicians with security fears, either real or politically opportunistic. The Bush Administration, stung by a rebellion in its own party, announced last week that it would review a deal by another Dubai firm to buy a British company, Doncasters, which makes precision parts for U.S. military aircraft and tanks at plants in Georgia and Connecticut.
Senators whOWN to block the ports deal, such as New York Democrat Charles Schumer, point out that the 9/11 attackers laundered money through Dubai and that the sheikdom participates in a boycott of Israel by the United Arab Emirates, of which it is one sheikdom among several. (Despite the boycott, DP World does business with Israeli firms.) Congressman King, for one, told TIME he wants assurances that al-Qaeda supporters "will not be able to work their way into the company." That task might fall to the chief operating officer of DP World--a guy from New Jersey named Edward (Ted) Bilkey.
Dubai certainly isn't short on big names coming to its aid. Power brokers Bill Clinton and Bob Dole (whose spouse is a North Carolina Senator), along with Madeleine Albright's lobbying shop, have advised DP World. Clinton has described the U.A.E. as a model Middle East government and in 2002 gave two speeches in Dubai, pulling in $450,000. Nor is the Bush Administration unfamiliar with DP World. Critics grouse that Treasury Secretary John Snow's former company, transportation giant CSX, sold its international port operations to DP World in 2004, for $1.15 billion. Dubai also works with the Carlyle Group, the Washington-based investment firm stocked with former government insiders.
The congressional uproar leaves Dubai's bosses feeling burned by a double standard, one that promotes globalization only when it is within the U.S.'s comfort zone. "The media is saying 'The world is flat', but when it comes to Arabs there are a lot of barriers," says a Dubai official. "People are thinking about the clash of civilizations. It's important for the world to see us working together." Sheika Lubna al-Qasimi, Dubai's Minister of Economy and Planning, predicts that the bottom line will win out after the review. "At the end of the day, this is about business," she told TIME. Whatever the outcome, she adds, it won't halt military and intelligence cooperation between the U.S. and her country.
Yet if the U.S. is going to block deals for what Dubai sees as political reasons, there is less of an incentive to trade with American companies--and it could bolster Dubai's effort to attract Arab capital to its nascent financial center. More concretely, Dubai is committed to $200 billion in projects, including expanding the city of Dubai's airport, and tons more hotels and condos. Dubai recently unveiled a plan to create a "global aerospace manufacturing and services corporation" that will offer leasing and repair services, challenging firms like General Electric (start-up funds: $15 billion). Emaar is building an entire city in Saudi Arabia, a $23 billion project that will include an airport, seaport, schools and hospitals.
All this activity has fed speculation that Dubai Inc. is a bubble built on debt. Certainly, Dubai is a borrower. "The big secret is that Dubai doesn't have much money," says Harry Alverson, managing director of the Carlyle Group. "Most of what they do is very leveraged." Yet borrowing to finance growth is what hot companies--and countries--do. That's why Carlyle is a partner. And why Alabbar is confident the Dubai miracle is no mirage. "The whole region needs to be served," he says, "and there is nobody there except Dubai."
—With reporting by Eric Roston/Washington, Coco Masters/New York, Reported by Scott MacLeod/Cairo
Sunday Mar 12, 2006 maisonneuve.org/ PORT DEAL SUNK
CTV
News, the
Globe, the
Star, and La Presse (not available online) go inside with a
Dubai-based company’s decision to sell off its recently acquired
control of six US ports in New York, New Jersey, Baltimore, Philadelphia,
Miami and New Orleans. Dubai Ports World’s acquisition of a British
company that had been controlling the ports set off a firestorm of
controversy in the US over security concerns and prompted Republicans and
Democrats to unite in opposing George W. Bush who had endorsed the sale.
If Dubai Ports World’s decision to transfer the container operations
to a US outfit is significant, it is because it has three major
ramifications, writes the Star. It has “hastened [Bush’s]
lame-duck status,” it has “allowed Democrats to gain the upper
hand” on national security issues, and it could very well “be
seen as a slap in the face to the Arab world.” Noting that Dubai
Ports World runs the Port of Vancouver, CTV News wonders if it is
“racism or xenophobia” that led to the controversy, a question
to which the Post’s Sheldon
Alberts offers a possible answer: “Americans have been
conditioned by the 9/11 attacks, four years of war and domestic terror
alerts to be suspicious of anything Arab.”
Saturday Mar 11, 2006 nyt Under Pressure, Dubai Company Drops Port Deal By DAVID E. SANGER
Bowing to a bipartisan attack in Congress, DP World said it would "transfer" terminal leases to an unnamed American company.
ts Dubai firm ends bid to control ports
WASHINGTON—President George W. Bush suffered a bitter defeat in a showdown with his own Republican party yesterday when a company controlled by the United Arab Emirates surrendered its bid to take control of six U.S. ports
Friday Mar 3, 2006 nyt The Dubai Ports Deal The president can't get away with his usual "trust me" mantra when it comes to the deal that would put a Dubai state-owned company in control of operations at six American ports.
Sunday Feb 26, 2006 nyt Dubai Expected to Ask for Review of Port Deal By DAVID E. SANGER
Dubai Ports World will "voluntarily" ask the Bush administration to pursue the deeper investigation Congress has been demanding.
Friday Feb 24, 2006 nyt Dubai Company Delays New Role at Six U.S. Ports By DAVID S. CLOUD and DAVID E. SANGER
The delay may provide a little time and political breathing room for President Bush in his effort to calm opposition to the deal.
Thursday Feb 23, 2006 nyt Strangers at the Door By CLARK KENT ERVIN
Dubai should not be allowed to operate U.S. ports
nyt Big Problem, Dubai Deal or Not
WASHINGTON, Feb. 22 — In the political collision between the White House and Congress over the $6.8 billion deal that would give a Dubai company management of six American ports, most experts seem to agree on only one major point: The gaping holes in security at American ports have little to do with the nationality of who is running them.
ts Bush learned of port sale from papers
WASHINGTON—The White House has conceded U.S. President George W. Bush mounted an impassioned defence of the pending sale of shipping operations at major American ports to a United Arab Emirates company even though he didn't know about it until he read it in newspapers.
2005
Sunday Dec 25, 2005 rci A recording allegedly made by Al Qaeda deputy leader Ayman al-Zawahiri and broadcast by the Al-Arabiya television network praises the Taliban, saying the radical Islamic movement still controls large parts of Afghanistan. The tape recording is of very poor quality, but the speaker sounds like earlier recordings attributed to al-Zawahiri. Both Zawahiri and Al Qaeda leader Osama bin Laden have so far eluded capture and are believed to be hiding along the border between Pakistan and Afghanistan. Taliban fighters have recently stepped up attacks against the Kabul's US-backed regime.
September 16, 2005 rci Canada's trade minister, Jim Peterson, was scheduled to start a three-day visit on Saturday to Dubai, United Arab Emirates. He'll be accompanied by representatives of 21 Canadian agencies and companies. During his visit aimed at furthering his country's trade with an important financial centre in the Arab world, Mr. Peterson will tour the Emirates-CAE Flight Training Centre, a major investment by the world's biggest manufacturer of flight simulators. Canada exported $420 million of goods to the UAE in 2004, and the two countries did $510 million in bilateral trade.
Saturday Aug 28, 2004 ts
Italian journalist slain, network says
DUBAI—A video from militants in Iraq shows them killing Italian journalist Enzo Baldoni, whOWN missing after being ambushed on the road between Baghdad and Najaf, Al-Jazeera reported yesterday.
Monday May 10, 2004 The highest American political and military authorities on Wednesday continued to try to diminish the political harm done by the revelation a week ago of apparent abuses of captive Iraqis by Americans. The American CBS television network broadcast photos of Iraqis at Abu Graib prison west of Baghdad being beaten and sexually abused. U.S. President Bush discussed the scandal on Wednesday in interviews with the Dubai-based Arab language TV network al-Arabiya and another Arab-language station, Al Ahurra, which the Americans fund. Mr. Bush says that everything in a democracy isn't perfect and that mistakes are made. But he says the perpetrators of such abuses will be brought to justice. The new U.S. commander of the military prison system in Iraq, Geoffrey Miller, offered a personal apology to the Iraqi people and promised that such outrages won't happen again. His predecessor was fired last week. In other news, the U.S. military says it fought a severe battle with Shi'ite Muslim militia to recapture the governor's residence in the southern Iraqi city of Kerbala overnight Tuesday. The military says about 10 supporters of the militant cleric Moqtada al-Sadr were killed. But three American soldiers also were killed in fighting at the nearby town of Diwaniya.
2003
Tue, 23 Sep 2003 cbc
SAUDI ARABIA REFUSES TO INVESTIGATE TREATMENT OF SAMPSON
Saudi Arabia has rejected the Canadian government's request for an
investigation into the treatment of William Sampson. [see Wed1124]
Tuesday Sep 23, 2003 UNITED ARAB EMIRATES
Finance ministers and central bank governors from the Group of Seven
industrial nations Saturday committed themselves to a wide-ranging
plan to boost world economic growth. The G7 is made up of the
Britain, Canada, France, Germany, Italy, Japan and the United States.
The ministers are meeting in Dubai on the sidelines of the annual
meeting of the International Monetary Fund and World Bank
Wednesday Sep 24, 2003 OTTAWA:
SAUDI ARABIA WON'T INVESTIGATE TORTURE CHARGE BY CANADIAN
Saudi Arabia has rejected Canada's demands for an inquiry into
allegations that a Canadian prisoner was tortured while in Saudi
custody. Saudi officials insist that Bill Sampson was released even
though he was guilty of murder. The Saudi ambassador to Canada
angrily rejected claims by Mr. Sampson that he was tortured until he
made a false confession. Mohammed Al-Husseni says Canada's request to
conduct an open investigation into Mr. Sampson's allegations goes
against both Saudi and international law. Mr. Sampson spent
two-and-a-half years in detention before being freed by King Fahd
last month. He was held in connection with a several bomb blasts in
Riyadh in late 2000 that killed one Briton and injured three others.
A London-based human rights group reports that the Saudi authorities
have prevented the holding of what would have been the first public
meeting organized by political reformists. The Movement for Islamic
Reform in Arabia gave that information to the Associated Press news
agency. According to the group in London, Saudi police arrested Abdel
Aziz al-Tayyar after a nightlong standoff at his home in Riyadh. A
spokesman for the group said that the police finally raided the home
and confiscated documents and personal effects. Mr. al-Tayyar is a
commentator for the dissident group's radio station, which broadcasts
into the Arabian peninsula from Europe. The Saudi ruling family
refuses public criticism of its rule.
-
Go Back | Go Forward
Dubai: Sheikh Mohammed bin Rashid al Maktoum has led the transformation of his realm from a drowsy fishing village to a tax-free business haven and world capital of glittering excess. 
BBC
Stephen S. Poloz
Rivals are busy swapping stakes 
Dubai: Adventures in the Emirates September 10, 2006 
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