The Modern City in a Modern World - Essay Example

May 27, Dubai: The Modern in a Modern World Introduction It is correct to say that Dubai has arisen from its humble beginnings to become one of the world’s most modern and international cities in an area that is not known for such outreach to the world. Although not well documented, archaeological discoveries give evidence that as long as 4,000 years ago, small fishing communities existed along the lower Arabian coast, on the site of what is now called Dubai. What began as a center for fishing, pearls, and seat trading in 1833, would slowly grow and prosper into a successful port by 1900, with a population of nearly 20,000 by the 1930s with a successful trading and export hub. With the discovery of oil in 1966, coupled with the vision on leadership of His Highness Sheikh Rashid bin Saeed Al Maktoum, Dubai quickly expanded in the latter half of the 20th and early part of the 21st centuries to become one of the world’s foremost tourist destinations with world class hotels, entertainment, shopping, and sporting events. Dubai stands out today as a model in the Middle East for a modern, sophisticated Muslim society, steeped in tradition, but always striding forward with an eye to the future and leading the Middle East and the world in attracting businesses with a world-class cultural and economic base. It has thus become in international city with economic and cultural impact far beyond its borders. Beginnings of Business. Prior to 1833, there was little that existed on the Saudi Arabian peninsula but a finger of desert separating the Gulf of Oman and the Persian Gulf. All that existed in this small peninsular area was a creek, which was settled by some 800 members of the Bani Yas tribe, led by the Maktoum Family (Government of Dubai). As a natural harbor, the creek allowed the Maktoum Family to utilize its resources for fishing, pearling, and trade. In 1835, Dubai and the rest of the small states in the region signed a “Perpetual Maritime Truce” with Great Britain, allowing it to come under the protection of the UK. (Dubai City Guide). Unlike its neighbors, Dubai stood out with its welcoming attitude and fostering of trade and commerce, led by the rulers from the founding Maktoum Family. With the vision and leadership of Shaikh Saeed Maktoum, Daubai was encouraged to expand and look forward, toward the future, in an area which had traditionally looked toward the past. In 1892 he signed an exclusive business deal with the British and in 1894 permitted a full tax exemption for foreign traders (SkiDubai). Traders from all over the world descended on Dubai to take advantage of the tarriff-free goods being sold at that port. In 1903, the Sheikh convinced a major British steamship line to make Dubai a port of call. (SkiDubai). Dubai was beginning to realize its potential for huge economic growth and expansion.. By 1900, with the aid of the vision of Sheikh Saeed and agreements with Great Britain, Dubai had been developed into a thriving and successful port with a growing international market. Within 30 years, Dubai’s population had exploded to over 20,000 people who came to take advantage of its location as a center for fishing and trade, as ships from around the world came to and from the Middle East to India, Europe, and the Far East. Dubai’s reputation as a trading hub was further augmented in the 1950s when Sheikh Rahid bin Saeed Al Maktoum increased the profitability of the trading center with widened water ways and greater accessibility to the creek. Although expensive and time-consuming, Sheikh Rahid’s vision strengthened Dubai’s position as a major trading center and export center in the lower Peninsula region. In the 1930s. With a great depression looming over much of the world, and a decrease in the pearling industry, Sheikh Saeed created a legendary “re-export” business in trade-free Dubai. (Some called it smuggling, but those are semantics.) What Dubai did was import tarriff-free goods from international wholesalers, and re-sell them to other parts of the world at a profit (SkiDubai). It would turn over legally imported goods and sell them at a profit overseas. All totally legal, but not exactly a standard business practice. Dubai and Sheikh Saeed took advantage of her status as a duty-free port to stay afloat and actually thrive in a Depression-era world economy by being a centralized trading hub of the Middle East, South Asia, and Africa. Oil and Expansion Dubai’s future was once again given a great lift when in 1966, when oil was discovered underneath its thick desert sands. As a result of this discovery its economy was kicked into high gear, and things began to accelerate. The income generated from oil sales and refining would bankroll many of the aggressive endeavors that the royal family envisioned for the country. For example, Sheikh Saeed’s son, Sheikh Rahid, agreed to a weighted governing system which gave Dubai and Abu Dhabi the most power in the newly formed UAE (SkiDubai), allowing Dubai to keep her status as a free-trade region, while the other UAE states could not gain such a disposition. As a result, Sheik Rashid utilized those large oil revenues to inject Dubai with much needed infrastructure changes. The focal point of this construction was the Port of Dubai. In his 2006 article in the Milkien Review, Robert Looney wrote that “The Port of Dubai’s economic strategy was built on: (a) open trade and unrestricted capital outflows, (b) a lightly regulated economy with low taxes, ( c) the best infrastructure that government money could buy, and (d) unregulated labor markets” (7). Sheik Rahid used as much of the oil money he could to invest in and expand Dubai’s port. He also used oil money to invest in desalination plants and aluminum industry that could take advantage of natural gas output that might otherwise go to waste (Looney, 7). It is clear that the industrialization and expansionist views of his father had worn off on Sheikh Rashid. He worked hard to diversify the economy of Dubai, continually diversifying its portfolio of businesses. He included the industry of tourism in the 1980s and promoted Emirates Airlines as a luxurious alternative to the other airlines flying death traps. A large airport was constructed, allowing Dubai to welcome its high class Emirates air planes along with any size jet in the world, including the Concorde. With all of these changes to Dubai, one common thread ran through them: Shiekh Rashim. Sheikh Rashim All of the elements of a purely explosive growth system were in place, and Dubai was positioned for some of the greatest expansion the world has ever known. Dubai’s formula for success? The vision, business acumen, and proactive leadership of Sheikh Rashid was the main reason for this unprecedented expansion and growth. Considered the “Father of Dubai” (Wilson, 20), Sheikh Rashid incorporated new and innovative infrastructures ready to accommodate large construction projects, a welcoming environment for people from around the world to emigrate to, and favorable corporation and sales taxes. All of these elements created a business climate that encouraged huge amounts of investment and capital into the country, creating almost a city-state with tremendous economical and business clout. Sheikh Rashid recognized that Dubai had the potential to become a great city. He ruled Dubai from 1958-1990, the most important years in its growth and expansion. He skillfully met the needs of his people while carefully planning for the future. With the dredging of the port came its preeminence as the main port in the Gulf (Wilson, 22). The mastermind of numerous projects, Sheikh Rashid was steadfast in his belief that anything is possible. Dubai’s transformation is the result of massive effort, driven by the vision of its rulers, led by Sheikh Rashid (Sheikh Mohammed). Although Sheikh Rashid had an economic and industrial vision for his country, he also had a political vision for his country and the greater geographical area. He knew that combining the re sources of the many small countries around the Gulf Peninsula, would allow them to give greater appeal to international businesses and trade that passed throughout the Gulf every day. Of course, he knew of the economic advantages that would allow Dubai to come out on top, but what leader would not do the same? Out of this vision came the UAE. Politically, Sheikh Rashid’s dream of creating a a federation of Emirates came true in 1971 when Dubai, Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Fujairah, and Ras Al Khaimah joined together to create the United Arab Emirates, the UAE (Government of Dubai). This allowed the countries in the UAE to pool their resources. In the 1980s and 1990s, Dubai led the UAE with unprecedented growth in business and economics, but also a new area: tourism. It emerged as a major international world-class tourist destination, with first-class hotels, shopping, modern accessories, and tourism infrastructure (Government of Dubai). In 2011, Dubai is a city that boasts unmatchable hotels, remarkable architecture and world-class entertainment and sporting events. It boasts the world’ only hotel with a seven-star rating: The Burj Al Arab. It also boasts the tallest office tower in the Middle East and Europe, the Emirates Tower, standing over 350 meters tall (Government of Dubai). Adaptaion to Change: 1990-2003 With the death of Sheikh Rahid in 1990, Dubai was at yet another crossroads in its history. With the father of the country now gone, his son, Sheikh Mohammed continued his father’s aggressive development strategies (Looney, 8). With the country firmly entrenched in its thriving trade, re-export, and pro international business climate, Sheikh Mohammed looked to a new form of revenue to put Dubai on the map: sporting events. These were not to be any run-of-the-mill sporting events, but world-class sporting events, befitting a city of Dubai’s stature. Sheikh Mohammed established such sporting events as the Dubai Desert Classic Golf Tournament (winners have included Tiger Woods), and world-class tennis tournaments, boat and horse races, desert rallies, and one of the largest air shows in the world (SkiDubai). With declining oil revenues in the last 20 years, Dubai focused early on in replacing those revenues with other sources of income. In addition to the growth of sporting events in Dubai during this period, Sheikh Mohammed has led an effort to allow Dubai to expand its role in finance and regional banking (Looney, 8). The modern 21st century Dubai is led from a governmental capitalistic view, leading its citizens into new areas. Although its workforce is less-skilled than some other areas of the world, Dubai has continued to lead the world in growth and expansion due to its strong leaders in the Maktoum Family. For Dubai to continue to be successful in the early 21st century and beyond, it has allowed its varied industries to cluster in mutually reinforcing ways, both vertically (suppliers and final goods producers) and horizontally (common customers, shared technology, infrastructure). This framework lends itself to strategies that strive to create “virtuous circles, “ or environments in which activity in one ares stimulates investment and production in others (Looney, 10). Financial Crisis Dubai has not been immune to the recent financial crises around the world. As an economy reliant on business capital and investments, it was hit hard by the recent world events that dried up incoming investments and real estate construction. In 2008, as everywhere else in the world, the property bubble in Dubai finally collapsed, and with falling real estate prices and the inability of banks to collect on loans, resulting in massive foreclosures and associated private and government debt, and leaving buildings unfinished, debts unpaid, and paper fortunes erased (Sunday Times). Its six-year building boom cam to a crashing halt, hit by massive debt resulting from real estate fallout. Additionally, with a high volume of borrowing in the early 2000s to finance governmental investments in its infrastructure and Dubai Port, the world was shocked to learn that debt-laden Dubai was unable to meet its interest bill on its debt (Hosking). Although Dubai’s crisis was regarded as “modest and manageable,”there were fears that Dubai’s partner, Abu Dhabi would fail to rescue Dubai and leave it to its own fate (Hosking). In addition, in early 2011, Dubai World, the financial backer of Dubai’s famous artificial island constructions, collapsed and withdrew financial support for the islands, which are now literally falling back into the ocean due to lack of maintenance. The long-touted project is now officially dead, as those islands will be reclaimed by the sea (Daily Mail). With all of its recent hardships of debt, failing business ventures, and bailouts by neighboring UAE states, Dubai has weathered the recent financial storms and has begun the slow march back to financial stability. Its real estate market has begun to show stability, it has a debt payment plan, and its international tourism has begun to rebound. The Dubai economy is poised to leap in 2011, as the Washington-based Institute of International Finance (IIF) puts UAE growth at 3.8 per cent this year (Nadim). As usual, Dubai is well positioned to capitalize on that growth with its favorable tax and investments positions. Societal Norms. Although thoroughly modern, Dubai is also a Middle Eastern Arab country, whose dominant religion is Islam. There are almost 2 million people in Dubai today, with 1.5 million of them male. The traditions of Islam permeate the society, but it is much mroe open than, say, its neighbor, Saudi Arabia. All of the UAE countries are noted for their moderate brand of Islam, their embracing of capitalistic monarchical governments, and wealthy standards of living for their people. Of course, the dominant religion is Islam, but minority religions are allowed to exist and the people are not persecuted as in other Islamic countries.The people are traditional, yet inviting and welcoming. People from all over the world come to live and visit Dubai, giving it a remarkably international feel and tolerant appeal to the western visitor. Dubai is home to the shopping mall, as there are estimated to be 250 shopping malls in Dubai alone. Dubai is also capable of benefitting from the new Arab Spring. As countries transition from top-down monarchies to people-led democracies, Dubai can help them with capital, as a model for business support and investment, and as a testament to what the Arab mind can do when given the freedom to create, invest, and work with its government for the true benefit of all of its citizens. The relative happiness and tranquility of its citizens shows the success of the Dubai model. Conclusion As Dubai recovers from global economic crises, it is well positioned to regain its stature as one of the fasted-growing port cities in the world. Its strategic location along the Gulf coast, along with its history of innovation, government-led investments in its people and infrastructure, along with its moderate brand of Islam and relatively tolerant society, make it a potential model for what can happen in a Muslim country with pro-business and pro-western leaders. Dubai’s nod to its history, and with it eyes firmly affixed towards its future, allows this international and important city-state to flourish and thrive when many other Arab countries flounder in their political and economic issues. Dubai is also poised to benefit from the recent Arab Spring, as new democracies and opportunities to trade open up across the landscape of the Middle East and northern Africa. Once again, Dubai is well situated to capitalize on new opportunities, just as it has done in the past. It is this futuristic bend that has made Dubai an important player in Middle Eastern, and thus, the world’s, economy. As the Middle East changes and adapts, Dubai will continue to be a leader in economic and international change. Works Cited Al Maktoum, Sheikh Mohammed bin Rashid. “Dubai Under Sheikh Rashid.” 19 May 2011 . “Brief History of Dubai.” 2009. Dubai City Online Guide. 19 May 2011. . “Dubai History.” 3 June 2010. Government of Dubai Official Portal. 19 May 2011. < www.dubai.ae >. “History of Dubai.” 2011. SkiDubai .19 May 1022. < www.skidubai.com>. Hosking, Patrick and Robertson, David. “Dubai in Deep Water as Ripples from Debt Crisis Spread.” Sunday Times Online 27 November 2009: < www.business.timesonline.uk>. Kawach, Nadim. “Dubai Economy Poised to Leap in 2011.” Emirates 24/7. 5 May 2011: . Looney, Robert. “Trends: Dubai.” The Milken Institute Review (2006): 1-15. “The End of The World: Dubai Island Development Sinks Back into Sea After Being Scuppered by Financial Crisis.” Daily Mail Online 23 January 2011: . Wilson, Graeme, Father of Dubai, Dubai: Media Prima, 1999. Read More