Monday February 13, 2006

The Guardian

Boom town

The fastest-growing city on earth, Dubai is spending mind-boggling sums on construction

and is about to swallow up P&O in its bid to be a global maritime power. Given the scale

of its ambition, could it become the most important place on the planet? Adam Nicolson

reports from 'Mushroom City'

It looks like a hot Grozny. On the vast invented islands offshore and in the even vaster

building sites that stretch in a wide band the whole length of Dubai's now famous riviera,

acre on acre of grey-faced, concrete, hollow-eyed buildings, fenced in with scaffolding

and overhung by tower cranes, stare at each other across the sands. Tower blocks look

abandoned rather than half-made. It is said that a fifth of the world's cranes are now at

work here. An army of some 250,000 men, largely from India and Pakistan, are labouring

to create the new glimmer fantasy, earning on average £150 a month, and living in

camps, four to a room, 12ft by 12ft, hidden away in the industrial quarters of al Quoz.

One night in one of the luxury hotels would cost six months' wages of one of the men

who built it. Below and around their work sites, the new streets are chaotic with rubble

and piles of steel.

The traffic is already as bad as Los Angeles. The city authorities are now giving priority

to new roads, hundreds of millions of dollars are being spent on bridges across the Dubai

Creek, five lanes in each direction, but still a taxi ride that might take 10 minutes at

midday lasts an hour at either end of it. If you ask a driver to take you to some places, he

laughs. "Do you want to have a very long talk?" he says.

Dubai is growing faster than any city on earth. "Mushroom City", Ravi Piyush, a plumply

content dealer in the Gold Souk, said to me. "Nothing today, everything tomorrow." The

World Bank reckons that the reconstruction of Iraq is going to cost $53bn. Here, along

the strip of footballer-friendly sand that stretches 25 miles or so along the shores of the

Persian Gulf, there is, at a rough estimate, about $100bn worth of projects either

underway or planned for the near future. That is a numbing figure, ungraspable. It is the

equivalent of every single dollar invested in the United States from abroad last year;

almost twice the foreign investment in China.

There are the three famous offshore "palms", man-made peninsulas laden with more

hotels and more "signature villas" than the entire Premiership might ever dream of. The

7,000-man workforce on one of them is too large to get on to the palm each morning

without creating its own traffic jam: they are shipped in by sea from further along the

coast. There's to be a Giorgio Armani Hotel and a Palazzo Versace. There's the tallest

building in the world under construction, Burj Dubai, costing $800m and expected to be

800m tall when complete, but the precise figure is being kept secret in case New York's

new Freedom Tower tries to top it. A billboard the size of Piccadilly Circus stands out in

the desert showing the pencil-thin rocket of a tower alongside a simple rubric: "History

Rising." The biggest shopping mall in the world is already here. Another, bigger, the

world's largest retail development, is under construction.

There's to be an underwater hotel ($500m). One indoor ski resort, with real snow and its

own black run, exists already, a weird, looming presence on the city's southern skyline.

There is to be a second, with a revolving mountain. Plans are mooted for a Chess City,

with 32 tower blocks of 64 floors, each in the form of a chess piece. There's to be a 60-

floor apartment block in the shape of Big Ben. One company selling flats is giving away

a free Jag with each one. There will be a pyramid and a building called Atlantis that will

cost $600m and include a "swim-with-the-dolphins encounter programme". An Aviation

City and a Cargo Village, an Aid City and a Humanitarian Free Zone, an Exhibition City

and a Festival City, a Healthcare City and a Flower City, a $4bn extension to the airport

and another entirely new airport along the coast towards Abu Dhabi, for which no figures

are available but you can take a guess at a few billion: six runways, annual capacity 120

million passengers, 12 million tonnes of cargo.

Next to it, as the Dubai government's Department of Tourism and Commerce Marketing

puts it, "There will be several smaller cities that will cater to the financial, industrial,

service and tourism industries." To fill these airports, Emirates, the national airline, has

just placed the biggest order that Boeing has ever had: $9.7bn for 42 777s, each capable

of carrying 300 passengers non-stop more than 9,000 miles across the world. They have

also ordered a fleet of the biggest Airbuses on offer, each capable of carrying 555 people.

The Middle East's answer to Disneyland, called Dubailand, which is far larger than

Monaco, is costing $4.5bn. It will employ 300,000 people in the various joylands,

servicing 15 million visitors. A new urban railway, with 37 stops, begins construction

soon. Dubai is to have its own Silicon Oasis ($1.7bn) for computer companies. A mixed

development called Dubai Waterfront/Arabian Canal covers an area larger than Barbados

and will house, when completed ($6bn), more people than Paris.

There's another side to Dubai. Drive south along the Gulf, away from the glamour zone

of the great hotels, past the giant malls and the huge gas-fired power stations, almost to

the western border of Dubai, and you come to the largest man-made harbour in the world.

The unapproachably vast quays of the modern port at Jebel Ali were dredged out of the

desert sands in 1979 at a place where the present emir's father, Sheikh Rashid, used to

come for evenings camping with his friends. Abdulla bin Damithan, one of the port

managers, showed me around in his red Audi. (This was a replacement; the BMW was in

for service.) The 1.5 mile-long quays are so enormous that to look the length of them is to

stare into a desert haze. Halfway along, the metal bodies of the ships and cranes

disappear like mirages.

But it is no dreamy place: every minute, every towering gantry crane lifts another

container off the high-stacked decks of the bulbous ships alongside, lowers it to a waiting

truck that delivers it to another part of the site, or transfers it from the unimaginably huge

motherships, which travel the world oceans, to the slightly less huge feeder ships that

service the Gulf, the Indian trade and the Mediterranean. Nothing interrupts the

movements, day and night, 365 days a year, even in July at 90% humidity, an air

temperature usually over 49C and when even the seawater in the docks approaches 38C.

No one works outside. More than seven million containers are moved here in the course

of the year, a figure that grew 23% last year, and is set to triple within the next six years,

serving a market of two billion people. It's like looking at the guts of the world, the

usually hidden machinery by which things actually happen. Over on the other side of the

harbour, two diminutive destroyers are tied up, the stars and stripes hanging off their

sterns. This is where the American carrier battle groups patrolling the Gulf come for

service - and shopping. It's the port most visited by the US navy outside the United

States.

Like almost everything of any significance in Dubai, the port system belongs to the state,

or to the Maktoums, the ruling family. The two are indistinguishable, and in some ways,

Dubai is like Poundbury writ large - and rich: a princely vision of how the world might

be. The Maktoums came here as Bedouin chieftains in the 1820s, to a small, palm-fringed

trading creek, where political control was in the hands of the British. Only in 1971 did

Dubai gain independence as part of the United Arab Emirates. It was already known that

Abu Dhabi, by far the biggest and richest of the Emirates, was sitting on a vast mineral

reserve. At current rates of production, Abu Dhabi has more than 120 years' supply of oil

and gas still untapped. Dubai is nothing like so well endowed, and so from the 1960s

onwards, the Maktoums have been consciously shaping Dubai as the trading and

financial motor of the Emirates, and the Dubai ports system is central to their vision.

Dubai sits on the all-important strategic routeway of the modern world: China, India,

Middle East, Europe and the US. That is where the money is going to be. China has just

become the third biggest economy in the world and it is the fastest growing. India is set

for its own acceleration. The Maktoum plan is to make Dubai the centre of a global

strategic network of port facilities to rival Singapore and the huge Hong Kong-based

conglomerate of Hutchison-Whampoa. They have been acquiring hard and fast and now

control massive facilities in China, Hong Kong, Australia, South Korea, India, Yemen,

Djibouti, Saudi Arabia, Romania, Germany and Latin America. In a profoundly symbolic

move, Dubai Ports are now manoeuvring to make a bid for the great harbours in southern

Iraq.

They want more, and that desire for global control is what lies behind their bidding war

for P&O, the British ports and shipping combine, which has a powerful European

presence (including the giant London Gateway, planned to be Britain's biggest container

port at Thurrock on the Thames), exactly what Dubai wants. Singapore wanted it too and

the two commercial city states' rival bids drove up the price, adding 80% to the value of

P&O's shares and valuing the company at a reported $6.8bn (just short of £4bn), an

unprecedented 40 times P&O's profits last year. At the weekend, Singapore pulled out

and all the signs are that when P&O's shareholders vote today, they will accept Dubai's

offer. This bid alone is a measure of the hunger, the money and the drive of what is

happening in the emirate. And the Arab world has backed the bid. When Dubai Ports

issued a bond for $2.8bn last month to help it buy P&O, it found itself drowning in

$11.4bn of subscriptions.

Why is Dubai doing this? And why so fast? What can the hunger be traced to? I spent a

morning on The World, one of the big prestige projects, consisting of 300 artificial

islands made of sand dredged from the sea floor and either dumped or pumped into forms

that vaguely mimic the shape of the world's continents. Every week between five and

10m cubic metres of sand are delivered to the site. The islands will cost up to $30m each,

and that is for the sand alone. Making the lumps habitable for the world's island-hungry

rich will cost half as much again.

I was somewhere in Greenland with Hamza Mustafa, the man who is running it for

Nakheel, the state-owned developer. It was another invented moment: we were there for a

photo. Vijay Singh, the Fijian golfer, was going to fire some shots from Greenland over a

narrow channel to Iceland, still nothing but sand, on which one of Nakheel's PR men had

put a golf flag. There were helicopters, artificial grass, English marketing girls, Singh's

personal trainer in shorts, his agent in shades, two photographers, their assistants, cooks,

waiters and barmen, boatmen, people from a Nakheel golf development and Singh's

personal course designer, who told me in detail how sewage makes courses greener. It's a

perfect symbiosis: houses need golf courses and golf courses need the sewage the houses

produce. How happy is that? "As long as it's got the nutrients, grass loves sand," he said.

While Singh stood beneath the chopper firing his shots, I talked to Mustafa, in the sleek

Arab-modernist villa he's had built on Greenland. He has already sold 30% of the $3bn

project, mostly to "local money, from the region", the rest, he says, to British and

Americans. Australasia has been sold to a developer from Kuwait. Why are they buying?

"No tax, good weather, an easy life, a comfortable life, affordable. I don't have to push

the sales. I've got 10 islands left of the ones I want to sell at the moment. They are

clamouring for them. And then I'll stop for a while. We don't want a glut." He smiled,

complicit, knowing as well as I did what sales talk amounts to. "By 2015, there will be

250,000 people living here. It'll be like Venice."

I asked him why Dubai was going through this world-busting surge. One might have

expected the straightforward business answer, which goes something like this: Dubai,

unlike other parts of the Gulf, has little of its own oil or gas. A great deal of Arab money,

invested in the US, came back from there after 9/11 and needed an outlet. The fact that

oil is now pushing $70 a barrel means that the Gulf is awash with liquidity. There is

clearly a role for a strategic financial centre in the Middle East: Beirut played it once,

Dubai could do so now. Money has been draining out of Iran for years and Dubai, just

across the Gulf, has always been a traditional place for Iranians to put their money to

work. Mohammed Noor Taleb, a 75-year-old textile trader I spoke to in the souk, who

had lived with his mother as a child in a tent made of palm leaves and now owned a

business in Indian cottons turning over $5.2m a year, told me an old Dubai joke. A young

boy is asked by his father "What is two add two?" "Am I buying or am I selling?" the boy

says. Commerce is in the blood.

But Mustafa's reply came from another place entirely, evidence of the extraordinary

hybridisation of cultures that is going on here: traditionalist, modernist, Arabist,

internationalist, market-based, bowing to authority. For Mustafa, it all stems from the

Emir of Dubai himself, Sheikh Mohammed bin Rashid al-Maktoum. Mohammed only

became Emir on January 4, when his elder brother Sheikh Maktoum bin Rashid al-

Maktoum, died after a long illness. But Mohammed has had his hand on the tiller for

years. "Sheikh Mohammed has had a vision," Mustafa said, "which is that Dubai should

become a fully developed city, with the best life of any city that has ever been created.

The whole city is growing as a single organism. We have planned this, very carefully, he

is a leader who has bestowed a great vision on us, so that in time Dubai is going to

become the first ever Arab modern metropolis." Was this really about an Arabist dream

of perfection? "No, this is not Arab nationalism. But what Dubai is trying to do is set an

example of how Arabs should be represented. After 9/11, Arabs suffered from a lot of

bad publicity. Dubai is trying to come back with the right kind of publicity. It will be a

fully modern state. It will be setting the standards. It will be a place that people will look

up to."

You might have to take that with a few bucketloads of salt. There is no hint of democracy

in Dubai. There is a consultative council whose members are nominated by the ruling

family. A group of five old Arab families control the entire emirate. The working and

living conditions of the construction labourers and the domestic servants from south Asia

are notoriously bad. Thirty-nine building workers died on sites last year, 22 of them

simply by falling, as provision of slings and ropes is inadequate. The Dubai press is full

of stories criticising companies for late payment, no payment, the confiscation of

passports, imposition of penalties for minor infringements, the manoeuvrings of loan

sharks and all the other expectable abuses of a poorly regulated employment system. The

property laws are explicitly racist: no non-UAE national can own land outside the

designated free zones. No foreign company can operate in the country without paying a

UAE "sponsor" to be their local representative. No one except UAE nationals can get one

of the plum jobs in a government department. Education and healthcare are free for all

UAE nationals but no one else. The local press will never be seen to criticise the

government and when, for example, I tried to interview the director of strategic planning

in the offices of Dubai municipality, I was told I could only do so "if we have checked

you out first and seen that what you will write will be favourable". Not much

hybridisation there.

And yet it is not Saudi Arabia. Brokeback Mountain is soon to open in Dubai cinemas,

which it never could in Saudi Arabia. There is no problem with bikinis and sunbathing on

the beaches. And on a more substantial level, there is a determined effort to demonopolise

the economy, to make market competition the driver for this new model

world. Local customs must be respected: no loud music during Ramadan, no eating in

front of Muslims on fast days, no possibility of making a political claim on the direction

of the state. And in return for those limits, the state delivers a sense of wellbeing. That is

the trade-off on which Dubai is relying. A booming market, with a consciously courteous

social culture and a tight police system (panic buttons in the thousand gold shops in old

Dubai bring the police in two minutes) deliver a better wage than would be available at

home - all this in return for surrendering anything resembling a political right.

Eduardo Ferrari, an Argentinian cameraman who has lived in Dubai for the last eight

years, says he couldn't "give a damn for democracy. I live here in the most democratic

country in the world. Why? Because the economy is taking you by the tip of your head

and pulling you up. Every year I have more and more. In Argentina, every year I have

less and less." Vishal Khemani, a 26-year-old from Mumbai, who imports Indian and

Japanese textiles for Dubai wholesalers, says he loves Dubai simply because it is "very

disciplined, very neat, very clean. Everything is going to timetable. I have a good job,

good food. It is a cheap country." And extremely safe. There has been no hint, so far, of

any terrorist attack, although you would have thought it was due for one. A western

businessman, surveying the most luxurious of the Jumeirah beach hotels, said simply to

me: "Everything about this place smells of western women, right? It looks like an al-

Qaida target to me." There are rumours in Dubai that a terror plot was foiled last year but

the processes of government are so opaque that there is no confirming that. It may be that

the levels of government control in Dubai are high enough to make any terrorist

operations very difficult.

Bob Gogel, CEO of Liberata, an international company specialising in the outsourcing of

financial services, probably speaks for the business community as a whole. "Dubai is an

unpolished gem polishing itself very quickly. You could look at it as a CD compilation -

the best of London, Sydney, Miami, Las Vegas - and you have to give them the benefit of

the doubt. Where else in the Middle East is going to do it? Turkey? Saudi Arabia?

Lebanon? Egypt? Kuwait? You can't see it. Nowhere in the world do you get such good

service. Certainly not in London. And business people like that. They've got a good plan,

it's tightly controlled, they've managed to pull in some good people, they've got the oil

money, and that price is not going to drop very far. The property market in Dubai is

probably overheated and the Dubai stock market is due for a correction. But you try

poking holes and I have trouble poking that big a hole."

This is the Dubai sandwich: at the bottom, cheap and exploited Asian labour; in the

middle, white northern professional services, plus tourist hunger for glamour in the sun

and, increasingly, a de-monopolised western market system; at the top, enormous

quantities of invested oil money, combined with fearsome social and political control and

a drive to establish another model of what modern Arabia might mean in the post-9/11

world. That is the intriguing question: can Dubai do what Libya, Egypt, Palestine,

Lebanon, Syria, Iraq, Yemen, or almost anywhere else in the Arab world you might like

to mention, have failed to do? Is Dubai, in fact, the fulcrum of the future global trading

and financial system? Is it, in embryo, what London was to the 19th century and

Manhattan to the 20th? Not the modern centre of the Arab world but, more than that, the

Arab centre of the modern world.