A bit less than a month ago, a rather special man sat on a flight back from London. He was more than a bit dejected. The European leaders that had flocked to his side had just wagged their fingers at him for the billions his little city owed their nations. He was to them no longer the wunderkid that had raised a metropolis in the middle of a desert.
And then he picked up a copy of the Times that nearly made his royal blood boil right out of his skin onto his gold-threaded kandura.
Upon arriving back home in Dubai, the man, who was Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, ordered the Ministry of Information and police to confiscate all copies of the Sunday Times from news stands.
Alright, so the above scenario might be a little too convenient. Most likely one of the lackeys at the Information Ministry came across the article and showed it to his higher-ups who in turn sent out the censors. Sheikh Mo, seen in this video testing the Dubai Metro service, might not have even seen the paper in question. There’s an army of people in Dubai that does all it can to make sure the emperor’s groove is never questioned in public.
The issue is one of how Dubai deals with the truth. Certainly, the Times got everything precisely right, down to the picture I’ve used in this post.
Take a close look at that picture: Sheikh Mo’s face super-imposed on the body of a white-collar worker, his hand up as he floats on a buoy as a building sinks behind him.
This is exactly what is going on.
The city said “whatever” when labourers got laid off in their thousands as construction companies tanked with the deflating housing market. People barely looked up from their morning lattes with extra cinnamon (that Arabian twist) when those extras at the office (clerks, tea-boys, etc.) were laid off.
Right now though, even the white upper middle class is being affected. Reports are in of Americans, Canadians and West Europeans that went to Dubai with nothing but their low levels of melanin and were pulling in seven-figure salaries, that have now been let go by companies that can no longer afford them. Skill suddenly means something.
Of course, in Dubai you don’t just get laid off. See, your employer has a line going directly to your bank(s), who gets notified on the same day that you are sans job. The banks, who have till then been really nice about that huge loan you took to buy that property on the Deira Palm Islands and that other one to buy the new Jag, are suddenly asking you exactly when you might have the money back or find another job. You know what would be really great in this situation? A holiday. However, you can’t leave the country because the banks have frozen your passport because they’ve seen this movie far too many times where the hero gets a six-figure loan and takes off back to his/her native country.
So you go to debtor’s prison, where you fulfil a cyclical prophesy of never being released because you can’t pay your debt because you can’t leave jail to find work to pay your debt.
Dubai owes a whopping $80 billion to various banks around the world. The city, proving itself time and again of being the worst example of how to operate, owes $56 billion of that via Dubai World.
Dubai World was the parent company behind Nakheel and other real estate developers that built big things like the world’s tallest building and biggest underwater hotel and biggest mall. It’s all a rather terrific way for Sheikh Mo to tell people that he owns these things when tourists around the world want to vacation in Dubai, and then tell everyone that Dubai owns all of it when nasty economic downturns delay said tourists.
And it gets even more interesting because the totality of building projects in Dubai is around $320-400 billion. But who owns it all?
Well, in here comes the immigration issue. No one in Dubai is allowed to own any property unless they belong to one of the original seven tribes that make up the UAE i.e. be a citizen of the country. 10% of Dubai are actual Emiratis (citizens).
This is leaves a massive chunk of immigrants. Who are they?
A huge proportion are labourers that are in the city to build the big towers and things. There is also a massive service class – everything from bus drivers and plumbers to store salespeople and of course prostitutes (Dubai is a short plane-trip away from the most sexually depraved country on earth).
Then there’s the class of middle to upper middle class that do fairly well. The sort of people that can afford to bring their families with them to Dubai and have servants and maybe even investment properties.
If we are to subtract those businesses based in Dubai and those with branches in the city that are just using the place to launder money (take money from drug trade, buy houses in Sports City, sell houses, and tadaa), we get a whole bunch of rather honest people who thought they could make a quick buck on the properties market. Yes, like 1929 but with something worse than stocks.
A fairly new law allows non-citizens to own property for 99 years and then give it back (so rent it for 99 years, if we take the spin out of the words).
None of these people had any money to spend on shiny new houses, but really wanted in on a market that promised you that you could buy property and make a profit before the damn thing was even zoned.
Scams aside, this means that like in many parts of the world but in a much bigger way (everything’s bigger in Dubai; eat your heart out, Texas), a bunch of banks own Dubai. And this is what happens when you play with money you don’t have.
A source tells me that Dubai has responded to the crisis by creating an organization/campaign called In Dubai We Trust. Nice. Keep your eyes peeled for this bit of damage control, which is coming up with its themes and colours as I write this.
Take a closer look at that picture I’ve used. Look at Sheikh Mo’s face. I think the picture tells a lot more than the obvious. Yes, he looks distressed. He just does not look as distressed as a guy who owes someone $80 billion, or who has Abu Dhabi telling him what to do if it throws in $10 billion worth of bailout money.
That’s because Sheikh Mo doesn’t owe $80 billion. It’s every poor soul trapped in that mirage of a city called Dubai that does. Once again the ruling class has gotten away with its deeds, with those below paying the price.
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