Dubai: World’s Trade Center?

These images tell a story.

ch9_4 300px-Burj_Dubai

The Twin Towers, a symbol of US capitalistic superpower, have collapsed. The US is busy fighting the war against terror.

In the meanwhile, Burj Dubai, the tallest free standing structure in the world, just reached a soaring 574.5m (1,885 ft) with 154 completed stories. It is predicted to be the tallest man-made structure in the world, as well as the tallest building by any measure. It’s official web site is here. Note the ‘.com’ address of its URL, it’s not a cryptic ‘.ae’ address.

Here are some of the amazing developments in Dubai:

  • Dubai’s revenues from oil and natural gas currently account for less than 3% of the emirate’s revenues.
  • Dubai Mall aims to be the largest mall in the world when completed.
  • Its port, Jebel Ali, constructed in the 1970s, has the largest man-made harbor in the world.
  • The Burj al-Arab, a luxury hotel in Dubai, at 321 meters (1,053 ft), is the tallest building used exclusively as a hotel.
  • Dubai World Central will have the Dubai World Central International Airport, the world’s largest passenger and cargo hub.
  • It is a hub for service industries such as IT and finance. Dubai Internet City, combined with Dubai Media City includes IT firms such as EMC Corporation, Oracle Corporation, Microsoft, and IBM, and media organizations such as MBC, CNN, Reuters and AP.
  • The World is a man-made archipelago of 300 islands in the shape of a world map currently being built off the coast of Dubai.
  • Dubai Financial Market’s trading volume stood at about 400 billion shares worth US$ 95 billion. The DFM had a market capitalization of about US$ 87 billion.
  • The Palm Islands in Dubai are the three largest artificial islands in the world.
  • Dubai Healthcare City is scheduled to open by 2010 to promote medical tourism.
  • Dubailand is an entertainment complex under development, to include mega-tracts of various kinds of attractions.
  • The Dubai Waterfront is proposed to become the largest waterfront and largest man-made development in the world.

Is anyone observing the contrast? While the US is struggling to fight a war against terror, a country right in the middle east is stealthily rising economically – without relying on oil – in the global economy. The contrast is stark. The US has to realize and focus on its core strengths, if it wants to remain an economic superpower, and not be swayed to distraction with the war against terror.

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40 thoughts on “Dubai: World’s Trade Center?

  1. Dubai doesn’t have to face as many external threats as the United States does, so they do not have to worry about any war on terror. You can’t really compare the actions of the two governments, can you?

  2. Mahendra: Very interesting!

    On my flight back from Bangalore to London last year, I took aerial photos of Dubai’s two man-made islands, in the shape of palm trees.

    FWIW, I think I would anyday prefer the relative (to Europe) cultural desert of New York or even backwaters of Kansas than the real and absolute desert that Dubai is. I have some friends and family there, in cushy jobs who – but for the money – cannot wait to leave Dubai.

    Since you like PF:
    Money, get away.
    Get a good job with good pay and you’re okay!
    Money, it’s a gas.
    Grab that cash with both hands and make a stash..

    That is what the world is all about.

  3. Mahendra,

    //Dubai’s revenues from oil and natural gas currently account for less than 3% of the emirate’s revenues.//

    Now THAT is impressive! The rest is all a matter of priorities.

  4. Dijo: Thanks. No, I’m not simply comparing actions of the two governments, but rather juxtaposing the state of these two countries and observing the sad irony of the situation.

    Would the US be content in stagnating while fighting the war on terror? Why, in the first place, does it face as many external threats as it does?

  5. Shefaly: Thanks. I tend to fully agree with you but request you not to make assumptions about a place based on your aerial view from a plane. 🙂

    I have lived in Dubai for a short while, and my sister & her family has been staying there for years. It is not as bad as you might think. If it was, it wouldn’t have flourished as a tourist destination at all.

    However, coming back to the topic of the post: look what they’ve made of this desert! Look how their economy is flourishing not from oil but from trade! Look how a barren desert is one of the top tourist destinations in the world today!

    They deserve full credit for doing it via entirely peaceful means. And the US is busy fighting so many battles…some of its own creation.

  6. Vivek: Thanks! Yes, isn’t that amazing!

    Also, having priorities and achieving them are two different things. Dubai is achieving its priorities. Democracies like US and India seem to have no inkling of what their priorities are, forget achieving them.

  7. Mahendra:

    “I tend to fully agree with you but request you not to make assumptions about a place based on your aerial view from a plane”.

    The first sentence in my comment had nothing to do with the rest of the comment (Mea culpa, I should have made that clearer). It was only a drop towards saying “look what they also made”!

  8. Nita: Yes, that is why I said ‘stealthily’.

    It is almost as if some clever Arabs have played a Queens Gambit on the US, so that they’re distracted by fighting the war against terror by invading foreign nations, while Dubai continues to forge ahead economically, unseen by most world observers (except the tourists)!

  9. Mahendra,

    //Democracies like US and India seem to have no inkling of what their priorities are, forget achieving them.//

    Don’t you think that the diversity of opinion which leads to such lack of claritiy on priorities, is in fact a precious dimension of democracy?

  10. Vivek: //Don’t you think that the diversity of opinion which leads to such lack of claritiy on priorities, is in fact a precious dimension of democracy?//
    This question is increasingly being asked in the context of China and India, where the Chinese dictatorship is forging ahead with reforms and infrastructural funding, in a unilateral way, while India as a democracy is floundering. In this debate, I’ve always stood by India, as I value democracy more.

    So yes, a very interesting question and my response is yes, I do think that diversity of opinion is a precious dimension of democracy. However, Indians do not seem to either understand or value what democracy means. It is increasingly being used as a justification of mob violence and social censorship. Indian democracy is flawed at the very level of its Constitution. Paraphrasing Ergo, Democracy can be a very dangerous thing if let loose in the hands of the majority. That is what is happening in India today.

    //Do your interests also include chess?//
    Those who’ve been following my newborn blog of six months no longer seem to be surprised at my varied interests. 🙂 Yes, apart from sketching, having an IT job, running a restaurant, studying music, philosophy, astronomy, and many other things, one of the things I was good at when I was young, was chess. Today, it’s mostly a hobby and my interests lie in the AI vs. human aspect of it. I still enjoy replaying Deep Blue vs. Kasparov with the commentary, and still am shaken from the ground up by Deep Blue’s Re1-c1 move in the 2nd match.

    I’m surprised you caught that piece in my comment! 🙂

  11. Good post Mahendra! It’s heart warming to see man’s ingenuity in action – wherever it may be. Dubai has been very smart about the way it has developed itself to overcome reliance on oil money – not quite what the rest of the Middle East is doing!

    I agree with you that Indian democracy is flawed. However, I don’t think that (classical) liberal democracies can and should have priorities other than national defense and maintenance of law and order along the associated functions like preserving individual rights. The US or the Indian governments shouldn’t even be thinking of building the worlds -est !

  12. FastDots: Thanks! Yes, it is indeed heartwarming – you stole the words out my mouth. Isn’t the Burj Dubai amazing!

    I do not understand your “However”, because what you’re saying is exactly what I mean or hope a democracy should be. No democracy should have any other priorities than national defense, maintenance of law and order, and preservation of individual rights. Exactly what I think! Now, see what India has come to…

  13. //Ergo, Democracy can be a very dangerous thing if let loose in the hands of the majority.//

    Without paraphrasing, I find that a very chilling sentiment. Even while paraphrasing, I would suggest that Indian democracy is flawed because it increasingly constricts the space for discourse and debate for divergent opinions. And the guilty include not only the ideological brutes (whether economic, cultural, philosophical) but also those of us who acquiesce.

    Your versatility of Interest suggests to me a kindred soul. What kind of music do you study? My own interest in chess is not very deep. I played the game a bit when I was in my teens. Now, if I find two people engaged in it, I play along vicariously. My involvement certainly does not extend to recreating a particular game of Kasparov vs. Deep Blue and thrilling to a particular move. That kind of delight, for me, comes from music, especially Hindustani Classical.

  14. It’s so interesting for me to read an honest, international perspective on the US and world affairs.

    It’s very ironic about Dubai’s wealth versus the US wars, but at the same time, it makes sense. If Michael Moore’s film, Farenheit 911 has any truth to it, the Bush family and the Saudis go way back.

    If the profits in Dubai and other similar cities find their way into the pockets of US oil companies, it would be in the best interest of US corporations (a reference to our Monroe doctrine) to protect Iraqi oil fields, and to stay quiet about not receiving more Middle Eastern support for the war.

    I totally agree with your viewpoint, which is practical and objective. I hope to keep reading more posts like this one. It’s an education for me.

  15. Vivek: I am guilty of picking out one statement from Ergo’s post. Without the context of the whole post, it does seem chilling, and indeed it is.

    There were two post I’d linked to, and it is clear that we differ in our viewpoints. My thoughts on this have not yet crystallized – it is a very big and complex topic for me, and I have not yet gained complete clarity on it.

    Regarding versatility of interests, as I said, I’m just a jack of it all, master of none. My interests in music are varied – you can check out my Music category of posts to get a glimpse.

    I’ve been thinking of posting more about music in general, and your comment may have just provided the impetus for me…thanks!

  16. Cristine: Thank you. I did watch 9/11 when I was in the US, and it provoked and disturbed me.

    The irony is too stark.

    Thank you again. I do keep writing about America from a political viewpoint, but am not always too sure of what I opine, as I’m after all a third party observer. It is comments like yours and Paul’s that continue to reaffirm that I’m not very much astray in my perspective.

  17. I suggest you read Noam Chomsky’s “What Uncle Sam Really Wants”. Chomsky argues in it that the USA must fight a war at all time to slow down the inescapable march towards fall from a “Worlds’ sole super-power” to a “powerful State in the World position”. This is what he suggests is behind USA’s foreign policy ever since the end of the Cold War. What do you think about that?

  18. THis is not related to the post, but I thought ill share it anyway. It’s always interesting to see how the “Tallest building” record is analogous to our historical masculine tendencies of comparing sizes all the time 😉

    Joseph Campbell points out that the tallest building at any given point of time in history reveals something very important about the era.
    For instance, till the eiffel tower was built, the church steeple was always the highest building in any city/town. The eiffel tower was the first symbol of the industrial revolution’s takeover of power from religion. Later into the 20th century of course, the tall buildings of industrial era giants fade in comparison to the financial giants of lower manhattan. And that’s where we are now. Financial firms are the most powerful entities in the world today.

    Perhaps Dubai signals yet another shift – from pure financial power to a broader globalization trend. The diversity of companies settling down in Dubai is in stark comparison to NY which has always been the seat of American business, and not truly a home for businesses from every part of the world.

  19. Bruno: Thank you for your comments. I have not read Chomsky’s book. I would love to know more about the “inescapable” march towards a fall.

    What is the difference between “World’s sole superpower” and “powerful State in the World position”? Is the USA content in letting this fall come about? If that is so, then its foreign policy is not surprising at all.

    Even if that is true, what is the “powerful State in the World position” coming to? If that is the objective of America’s foreign policy, is it achieving it?

  20. Ashok: Yes, the tallest building seems to epitomize the male tendency of comparing sizes!

    When the capitalistic towers rose above the religious churches, it was symbolic indeed.

    Dubai definitely shows a globalization trend. By doing what it is, it is showing the world what globalization is all about.

  21. There are many other reasons for my liking Dubai.It is one place outside India where you can talk in Hindi and you are understood(I have seen Arabs speaking in Hindi). Indian food is available everywhere not only the vegetarian stuff, even food without onion and garlic.The South Asian immigrants outnumber the locals.It seems like we are in a neat and clean India.Law and order is no problem.Hindi films release there a day before India and tickets are available.
    Well written as usual Mahendra.

  22. Mahendra,

    I may have taken the national priorities concept a little out of context – I apologize for that! I was just assuming that you meant India and the US should have priorities like building grand things, forgetting for a moment who the statement is coming from!

    (Also, my earlier post was just a teeny bit garbled – It seems like I cant use xml-esque tags in comments!!!)

  23. wow! Of all the points this one is the most surprising: “Dubai’s revenues from oil and natural gas currently account for less than 3% of the emirate’s revenues.” I did not expect that. Do you know what their biggest sources of revenue are?

  24. Echo Fast Dots on his first comment. Dubai was smart to diversify (and yes the building looks stunning), but to compare (or juxtapose) the two countries has little meaning. They are two very disparate political-economies.

    And to fastdots: man’s ingenuity in action ??? maybe humankind’s ingenuity is better, no? 😀

  25. Mahendra, my understanding is that the fact that USA was the only super-power at the outcome of the cold war was conjectural, geopolitical, and economical by nature: No other country came near at that time. As time passes by, some nations benefit from WTO agreements and rise as economically strong nations.

    Also, the superiority of the USA armed forces is wakened relatively because some countries have raised armies of many men. I don’t feel anyhow like the USA (the State) wishes to take such a fall.

    My feeling is rather that democracy has been overridden by corporations, by their large and influential shareholders, and the foreign policy is elaborated in a way that serves their interests best only, not those of the USA citizens in general. The economic situation of the USA, at this time of war, is a strong suggestion that the policy is not good for its people. (Fed reserve as been keeping the rates very low for some time now — clear evidence of recession.) Meanwhile, petroleum industries, banks, etc. have recorded profits that are “out of charts”, sort of speak.

    BTW, I invite strongly USA readers to further comment on this topic. I am not a USA citizen myself. I come from Montreal (Quebec) – Canada 😉

  26. Ashok: I missed this important observation in your comment: //The diversity of companies settling down in Dubai is in stark comparison to NY which has always been the seat of American business, and not truly a home for businesses from every part of the world.//

    Very nicely said!

    Prerna: Thank you. Yes, when I was in Dubai back in 1996, a Tamil friend of mine took me to eat authentic South Indian food. He told me that nowhere in India will you get authentic South Indian food in restaurants the way they actually prepare it at home. He took me to a restaurant in Dubai that he said prepared dishes exactly the way they made them at home! 🙂 Thanks again.

    Arun: Yes, surprising indeed. Dubai’s oil reserves are expected to be exhausted in 20 years. Major revenue sources are trade – gold, IT and Finance industries, financial trading markets, and tourism. See here for more information.

  27. Fast Dots: Thanks for clarifying. No I didn’t mean India or US should start building grand things, but I did mean that they need to focus on their economies and growth! And no, WordPress doesn’t support xml-esque tags, only basic HTMLesque ones! 🙂

    DotMom: Juxtaposing economies of these two countries may have little meaning. My perspective in this juxtaposition is that the political superpower democracy is busy fighting Islamist-motivated terrorism, while an Islamist non-democratic autocracy is booming economically.

  28. Bheroux: Thanks a lot for elaborating. The only country which seems poised to challenge USA’s economic superiority in the future is China. I do not see any other country benefiting from WTO to any significant extent so as to challenge the US. So I am not sure if I agree with Chomsky.

    The US navy, air force, and army are still the strongest in the world (as far as I know), and yes, they definitely wouldn’t want that superiority to be challenged. However, having a force and engaging it are two different things. The latter is where I think the US is faltering!

    Your feelings of US democracy being overridden by corporations is gaining more and more acceptance. Some Americans have also commented likewise on earlier posts in this blog, so there does seem to be at least a semblance of truth to it. For example, the Iraq war being motivated not by rational decision-making regarding security, but motivated by capitalist objectives of oil.

    //BTW, I invite strongly USA readers to further comment on this topic. I am not a USA citizen myself. I come from Montreal (Quebec) – Canada //
    I would too. But sometimes, an outsiders perspective has more value…I myself am not from the US, but still have written this post! 🙂

  29. The tower/building going up in Dubai is actually overtaking Canada’s CN Tower as the tallest structure on the planet, something the CN Tower has been for around thirty years.

    I think there’s a common misunderstanding about the actual size of the American economy, and about the economy of the Middle East in general. First, the Middle East doesn’t actually produce anything other than oil. There are no industries of note.

    Second is the sheer size of the American economy. The Japanese have the second largest economy (by GDP) at $4.8 Trillion. In the Middle East Saudi Arabia has a GDP of $282 Billion; the United Arab Emirates $129.5B; Egypt $334.4B; Israel $170.3B. Canada, by comparison, is the world’s eighth largest economy at $1.18 Trillion. Meanwhile the United States of America has the largest economy in the world at $13.06 Trillion. A little more perspective, the American state of California has an economy equal to or greater than France. In terms of purchasing power the United States could buy the next eight economies and still have enough change to pick up the Middle East as an impulse buy.

    When we talk about growth in terms of percentage it’s very important to know the base numbers. I’d mjuch rather have 1% of America’s annual growth than 20% of anyone else’s.

    I also don’t see Dubai becoming the centre of world capital, or much more than a tourist destination. There’s just too much money in New York City, Tokyo and London… keep in mind, in terms of real estate, the World Trade Center was empty for most of its lifespan. As a financially relevent building it was mostly a failure. After 9/11 the architects wanted to build a series of much smaller buildings, and the only reason the American architects are going so big with the main replacement building is because there was so much public pressure to rebuild “bigger and better” as a ‘fuck you’ to the anti-Americanists. It has nothing to do with making the building financially successful. What Dubai is doing architectually — and my step-father is a VP in the firm doing most of the work, his office is actually designing 40 or 50 buildings in Dubai — is an amazing feat of purchasing power but it’s the equivalent of watching someone build a 700,000sq ft mansion for a single family. There’s no reason for the size except the size itself.

  30. Gabriel: This is the first time you’re commenting on my blog, so I’m extremely happy to welcome you, and offer my gratitude!

    Thanks for putting things into perspective. What I find missing in your comment talking about the size of the economies is:

    1. Trade deficit

    2. Relative size of the countries

    3. Focus of the post

    I am not comparing sizes of the economies of the US and UAE. Given the small size of Dubai and the UAE, look at what it is achieving in economic (not just architectural) terms. And looking at the size of the US, see where it is going.

    The US trade deficit is alarming whatever the size of its economy. See what it is preoccupied with, and what the UAE is preoccupied with. Dubai/UAE are no longer dependent on its oil. That is the contrast that I wanted to put forward in this post.

    Of course, Dubai will never become center of world capital as things stand today. But if you look at how it has become the center for bullion exchange, it is mind-boggling.

    If UAE and other middle east countries were to unite, reduce their dependence on oil, and follow Dubai’s path, how good will it be for all the rest of the world?!

  31. Dubai is not a country, it’s an Emirate — or Province / State such as New Brunswick, Maharashtra, Wales or Virginia. Together with six other Emirates, Dubai forms the federal system called the United Arab Emirates. The UAE does not follow Dubai, policy for Dubai – including the budget for the construction — is decided by the federation.

    Thirty percent of the UAE’s GDP relies on oil, which is why the UAE province/emirate of Dubai is becoming an economic centre for that oil wealth. There is no other reason for Dubai’s wealth. Dubai may have little of the UAE’s oil, but the province is entirely dependent on oil money. No oil, or if oil prices were to revert back to pre-9/11 prices, Dubai would revert back as well. As a result the UAE, along with OPEC, are extremely preoccupied with exactly the same issues the American’s are.

    The massive construction projects will only work if there are people and reasons for the buildings to be filled. As of right now, there aren’t. This is why I brought up the WTC being a failure, it was never even close to full occupancy despite being in the financial capital of the world. There is just no demand for that much office space, especially as their main client pool would be Middle Eastern firms, also because there’s just no reason for European or American firms to move to such a remote location.

    Politically and economically the Middle East is already thoroughly joined/united through OPEC. As oil is the Middle East’s only real industry, OPEC is the only organization the Middle East needs. If there were other industries of any size there would be a need for other organizations like the European Union or NAFTA.

    Reducing the Middle East’s reliance on oil revenue is a generational challenge, it means creating actual industries. Even now the Middle East Oil Workforce is made up mostly of people from “other countries”, as is a large part of the service industry.

    There’s an argument to be made for the Dubai construction being a diversification into tourism, but those man-made islands are actually sinking and tourism to the Middle East from Europe, Canada and America is insignificant.

    Dubai has been relevant for as long as the construction projects have continued, but once they’re done focus on the Province will die off.

    Dubai has been a place for gold / silver bullion trading for a few generations, it’s not something which has just popped up. What is new is the technology introduced a few years ago to bring the DGCX up to the tech level of the NYSE, TSX and FTSE. It’s the only exchange in the Middle East (outside of Israel) to do so — or even have a need to do so. But, still, the DGCX is tiny in comparison as it does so very little except bullion.

    The American trade numbers are huge from every angle — positives and negatives — but the negatives are entirely manageable. Trade deficits and debt can be fixed when and even before they become a problem… which they aren’t.

    I’m pretty sure I’ve left a few comments before… at least one. But you’re right, I don’t very often and it’s something I’ve been meaning to fix…

  32. one of my friend said “All the cranes of the world are in Dubai now….”

    I think their is never a danger of Tsunami…so the Palm will survive..The king is fasinated by the WEST..and his trying to prove a point..

  33. Gabriel: Thanks for the extremely enlightening comment. This sheds much more light into the situation than my post did, and I am very grateful.

    I was not aware of all these facets of Dubai’s situation and again thank you for the knowledge.

    Fast Dots: I am not an economist so I don’t know how important it is, but I thought it was a problem from whatever I’d read so far. If it isn’t, I would stand corrected!

    Nitin: Yes, you’re probably right. It may be just a matter of eye-catching construction and nothing else!

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