After being unceremoniously ejected from the Iran - Iraqi Kurdistan border, I had to enact Plan B, which was to fly out of Tehran and into Dubai. Now, I haven’t had the slightest compunction to visit the emirate in the past. Why would I want to go and see a collection of ego-fuelled, debt-laden monuments which have the historical and cultural significance of practically zero? My car at home has a more storied past than this place.
I did, however, try to make the best of it. Often, preconceptions and misconceptions go hand in hand right? But after spending time here, it turns out that it's worse, much worse than I thought. The first thing that hits you is the heat. Every time you go outside, you feel like you’ve stepped into the blast radius of a small atomic bomb. I spent the entire first day cowering, like a terrified child, in my hotel room. On the second day, I manned-up, determined to get some face time with the city. I took a 15km walk from the Deira suburb to the city centre, you know, to get the street-level perspective.
What a complete waste of time. My only accomplishment was to drastically increase my chances of getting skin cancer. All I saw were endless swathes of characterless tarmac lined with citadels of capitalism and sycophantic shrines to the whims of the city’s aristocracy. As AA Gill put it in his Vanity Fair article on Dubai, the city’s architect was money. The designer was money and the builder was money. A bit harsh, perhaps, but it’s not far from the truth.
What intrigues me more is where all this money was coming from. Yes, I’ve put the banker hat back on, briefly. The obvious answer would be oil right? Nope. Dubai’s economy is hardly reliant on oil revenues – less than 5% of total GDP, actually. Taxes? Nope. This place, and the whole UAE, has made it their mission to redefine one-half of the death and taxes maxim. Dubai’s people do not pay taxes, and nor do the corporations (except for banks and oil companies).
Let’s start again. Tourism? Well, yes. But not as much as you’d think. The emirate recently boasted that it had unseated Heathrow as the world’s busiest international airport. But how many of the 70 million arrivals actually make it into the city? Only one fifth unfortunately. The rest are here because of the cheap flights – about two third of all arrivals are on either Emirates, Qatar or Etihad planes – Gulf airlines which have been long accused of keeping fares artificially low either through loss-leading strategies or heavy government subsidies.
So again, the Dubai government trumpets triumphantly that these 70 million people spend over a billion USD in duty free shopping. Sounds like a lot but it’s actually only USD20 per person. You see, that’s what happens when you attract cheapskates with cheap tickets. They go for chocolates, not Chanel. And remember, no duty and no corporate tax on these sales means no revenue for the government.
Why am I so obsessed about the government’s coffers? Well, it’s really no secret that almost everything in Dubai, from the ports to the airlines to the property developers to the banks is linked to the government and/or sovereign wealth funds. Which is why the government is funding the megalomaniacal expansion of the city, one way or another.
We still haven’t really answered the question have we? How does Dubai pay for all of this? The answer is debt. Mountains of it. Remember the 2008 Dubai crash where property prices fell by half and everyone got a proper buggering? Well, the debt to GDP levels in the year preceding the crash was about 15%. Guess what it is today. They must have learnt their lesson right? Wrong. Dubai's present government debt to GDP ratio is 56%. That’s four times higher than what it was pre-crash!
At USD55 billion of national debt, every man, woman and child in Dubai holding a UAE passport owes about USD200,000 on behalf of the government. That’s twice as much as the next highest in the world, Japan, who owe twice as much, per capita, as the USA. And we were worried about THEM! These are crazy numbers to be sure, but wait a sec, isn’t Dubai’s population two million, not 300,000? Yes, but 85% of that two million are non-citizens – mostly labourers – meaning they’ll be on the first (cheap) flight out (on Emirates Airlines) when things go tits-up.
It gets worse. Remember The World? It was marketed globally as the most exclusive place to live – where Brad Pitt, Michael Schumacher and other glitterati bought islands shaped like their own countries. Well, The World is doomed. The project was never completed and today they look like shapeless blobs of sand slowly sinking back into the ocean. Many other projects of the pre-crash era still lie abandoned, tombs of towering ambitions, and titanic stupidity. Some have been revived, but will confidence return? Things aren’t looking so good actually. Property prices have fallen by 15-20% in most areas in Dubai over the past 18 months.
And Dubai World, a major government-owned property player recently announced that it would reschedule (again) USD15 billion of corporate debt. This is the same Dubai World that was bailed out by neighbouring emirate Abu Dhabi post-crash with a USD10 billion loan. Ever wonder why the Burj Dubai was re-named the Burj Khalifa, after Abu Dhabi’s ruler? That must have really really hurt huh?
I just don’t get why Dubai needs to have the world’s tallest building, the world’s first underwater hotel, the world’s only ski-run in a desert, the world’s largest mall, the world’s richest horse race and a variety of other vulgarities so emblematic of the excess which got the world into so much trouble. Dubai hasn’t just shown everyone how to spend money; they’ve shown us how to waste it.
Has Dubai done anything significant in the areas of education and environmental conservation, arguably the two most future-proof investments a young nation could make? Unfortunately no. Its best university is ranked 600th in the world – below the University of Baghdad (though maybe I should credit Iraq instead of bashing Dubai).
And I don’t think the term “environmental conservation” exists in the Dubai-an lexicon. Come to think of it, I don’t think they exist as separate words either. Dubai has far surpassed the US, the previous poster boy for overindulgence, in terms of per capita carbon-emission and water consumption levels. Incredibly, Dubai’s five-point solution centres on how to acquire more energy for lower cost, rather than simply to use less. A whopping 50% of Dubai’s CO2 emissions come from water desalination plants. But I suppose touching those is a big no no. Golf courses still have to be watered and Ferraris still have to be washed.
To be fair, as a town-planning experiment Dubai has beaten all the odds and exceeded all expectations. Who could imagine that it would only take half a lifetime for the gleaming metropolis we see today to emerge from the barren sands of yesterday? The city has had a great start, a few hiccups notwithstanding. But it needs to know when to stop. Otherwise I fear that Dubai could just as soon be bankrupt – financially, environmentally and ethically.