There is a large element of Schadenfreude in the media coverage of Dubai’s financial mess. The Gulf emirate has suspended payment on the debt of its flagship holding company, Dubai World, causing financial jitters around the world and raising suspicions that its balance sheet is a lot worse than it has been letting on. For years Dubai has been on a spending binge, which includes building the world’s tallest building, an indoor ski slope, and a series of artificial islands in “an artificial archipelago that would reconfigure the Persian Gulf coast into a thicket of trees, a map of the world, a whirling galaxy, a scythe and a sun that looks like a spider.”
It is easy to look down one’s nose at the excesses of this global parvenu, which is trying to become the Hong Kong or Singapore of the Middle East, thereby usurping Beirut’s traditional position as the place where Arabs unwind. When I visited Dubai a couple of years ago with a group of foreign-policy analysts, we were all amazed by the frenetic pace of construction. A sizable proportion of the world’s building cranes had been arrayed in this city-state and they were putting up too many skyscrapers to count. It was pretty obvious that the good times wouldn’t last forever, and they haven’t. The result of a building boom, we all know, is a glut of new structures, a lack of tenants, and a crash. That’s what has happened in the U.S. with residential homes in the past few years and now it appears to be happening with commercial real estate in Dubai.
So much, so familiar. But still for all of Dubai’s excesses it is a wonder that it has gotten this far. It deserves not ill-disguised glee at its misfortunes but a degree of respect for its willingness to flout traditional Arab taboos. It is, for example, a place where Emiratis in white robes rub shoulders with Russian hookers in mini-skirts — a place where it’s perfectly possible to get a nice cocktail (and not a “mocktail,” as in Kuwait) in a public bar, and to do so in the middle of Ramadan if you’re feeling parched at that point. No doubt some of Dubai’s competitors, the likes of Doha and Kuwait City and its sister emirate Abu Dhabi, are licking their chops at the prospect of benefitting from Dubai’s downturn but they will be hard put to it to match its dynamism because they remain much more in thrall to traditional Arab/Muslim pieties: a combination of religious and tribal traditions that have made the Middle East a laggard in many dimensions of development. Dubai has been a leader in the Arab world with respect to embracing modernity — which has repercussions both good and bad but in general is a force for positive change. We should all hope that it will get on its feet again soon. The Middle East needs Dubai.