City of Gold: Dubai and the Dream of Capitalism (22 page)

Internet City was a government project, but Sheikh Mohammed refused to commit state resources. It got even less help than Emirates airline. The crown prince handed over the land and—other than his sales pitch—that was it. Gergawi bankrolled the project with a loan from HSBC.

To the developers in Dubai, the concept seemed like a good deal: modern offices, no tax. But no one signed up. Gergawi’s bulldozers had cleared the land, dug the lake, and filled in the low spots, but construction was on hold. “They needed to build to suit. So they didn’t move forward,” Larson says. “They were waiting for people to sign up.”

The site sat in eyeshot of Sheikh Mohammed’s beach palace. He could see that crews were just pushing dirt around. One day, the crown prince drove onto the site and told construction managers to get moving. “He lit a fire under their butts,” Larson says.

Tenants finally signed up when Dubai cajoled Microsoft to become Internet City’s anchor tenant by offering fifty years’ free rent in exchange for “the biggest Microsoft sign in the world,” says government adviser Yasar Jarrar.

When construction kicked into action, it was like sprinting a marathon. Sheikh Mohammed refused to budge on his one-year deadline. It was Dubai’s version of the Alaska Highway in 1942: Speed was the concern, the deadline paramount. “It was chaos. Plans were changing on the fly. Specs were changing from one day to the next,” Larson says. “If there was a cost overrun, something got chopped out. Things got cut to get buildings done on time.”

Funny thing: It worked. With Sheikh Mohammed riding herd, four blue glass buildings rose from the sand. Internet City held its grand opening in October 2000, just 364 days after launch, a day ahead of schedule. It was an early demonstration of the can-do Dubai work ethic that would emerge over and over. “You wonder how anything gets built. But you know what? It gets done,” Larson says. “That’s Dubai for you.”

Larson got a card inviting him to the opening ceremony at Internet City, to be followed by dinner at Sheikh Mohammed’s beach palace across the road. It was to be a gala bash with a thousand guests—contractors, the press, diplomats, and local bigshots. Larson knew Inter
net City wasn’t ready for tenants, but that didn’t stop the party. Laborers erected bleachers and draped a giant video screen from one of the buildings.

Larson arrived in a suit and tie, watching workers painting walls and heaving rolls of sod from trucks. Foremen barked at them: Get the grass down so guests wouldn’t dirty their shoes. “They were literally unrolling sod in front of us as we walked. It was a red-carpet welcome,” Larson says. Women in high heels and cocktail dresses tripped on the uneven turf. So laborers laid a walkway of plywood. “I said, ‘Hey, they’re trying like hell. Let’s give them credit,’” Larson says.

Sheikh Mohammed toured one of the lobbies, with a TV cameraman following. Live video played on the giant screen, allowing guests to watch his inspection. It was a minefield. If the sheikh barged into an unfinished room, the crowd would witness it. At one point, the crown prince reached for a door handle. A spectator in the bleachers yelled, “No, don’t go in there! The stairs aren’t built yet!” The sheikh’s guide must have whispered something similar, and led him away.

Afterward, buses whisked the guests to a night of Arab hospitality in the safer confines of Sheikh Mohammed’s summer home. It was a magical experience just entering the walled grounds. Linen-covered tables spilled across the vast lawn and around the swimming pool. A breeze rustled the palms and carried the smoke of grilling kebabs. White-garbed attendants stood behind an enormous buffet table, carving roasts and serving Lebanese delicacies. Arab musicians with a stringed
oud
and hand drums played under the stars. A beaming Sheikh Mohammed mingled with guests, asking whether they enjoyed the food. Diners stayed as long as they could, hobnobbing in groups over espresso and glasses of juice.

The party marked a Dubai milestone. Sheikh Mohammed had opened another new development avenue, and it pointed to the direction the city would take under his leadership. Dubai would become the base for any company prospecting markets in the Middle East and South Asia. Sheikh Maktoum was still Dubai’s titular leader, but Sheikh Mohammed was the ambitious one who, it was evident to all, pulled the strings. It was plain that the Dubai crown prince had inherited his father’s drive and obsession with speed—and then some. Internet City forged a new development path, more durable than tourism and luxury real estate.

If Sheikh Mohammed had been the driver, Gergawi was the manager who pulled it off. He built an office park in a year. He brought Microsoft,
Oracle, and Hewlett-Packard to Dubai. From nothing, the city soon had three thousand knowledge workers and nearly two hundred new foreign companies. Dubai gained decades’ worth of foreign investment in a year, simply by bundling offices with clever incentives. And it wasn’t just any sort of foreign investor. These were clean companies that would inject productivity and skills into the economy. It was a coup.

Gergawi’s profile and responsibilities skyrocketed. The rest of the Middle East would scramble to copy Dubai’s free zone model. Even Iran aped the idea, opening three similar zones on its coast.

As in the housing boom, demand for Dubai offices was hotter than anyone predicted. The two expansions fed on each other, sucking in immigrants from around the world. International companies, it seemed, were desperate for a tax-free base, if only to book their global profits. Internet City’s four modest buildings filled immediately. More companies wanted the same deal, but there was no room. The zone expanded. Sheikh Mohammed wanted technology to be given space in Dubai at all costs, to keep valuable firms from finding homes in a competing city. Builders struggled to keep abreast of demand for the next eight years. By 2007, Internet City had expanded to twenty-five buildings with twelve thousand workers and nearly nine hundred companies.

The hurtling success hides a crucial weakness. Internet City was supposed to bring research and development to Dubai. It did not. Companies like Microsoft and IBM do their regional software development in India and Israel, where schools produce smart engineers. Microsoft CEO Steve Ballmer hammered that point in May 2008 at the opening of Microsoft’s expanded Israel Research Center. There, six hundred coders write the company’s software. “If you do the math, Microsoft is almost as much an Israeli company as it is an American company,” Ballmer crowed in front of the Israeli press. In Dubai, a few hundred Microsoft employees operate a government consultancy and service center, and they market software written elsewhere.

A month after the gala, Sheikh Mohammed announced that another free zone was in the works next door. This was Dubai Media City. Companies would get the same deal as those in Internet City: unlimited visas, no restrictions on capital, no tax. With Gergawi in charge again, building
went smoother, but there was an oversight. Dubai invited television and film producers, but built only offices. There were no soundstages or production facilities. The omission would be rectified later by another free zone, the International Media Production Zone.

Media companies ran to Dubai. My company, the Associated Press, rented an office, as did Reuters, Agence France-Presse, BBC, Dow Jones, and lots of others. Saudi-owned news channel Al Arabiya put its headquarters in Dubai. Media City lured Arabic newspapers that faced censorship in their home countries. Besides the news outlets, comers included public relations firms, modeling agencies, book and magazine publishers, ad agencies, and Web developers.

It was a smart move. Journalists need to travel to war zones, and Dubai sits in the middle of most of them, with great flight connections. Afghanistan is a three-hour flight. Baghdad is two hours. Pakistan is three hours. Lebanon is three hours. There are direct flights to Sudan, Congo, even lawless Somalia, on a carrier called Jubba Airways, launched in Dubai by Somali exiles.

Media City also made marketing sense. With so many reporters in town, Dubai reaped international coverage of its big projects. Announcements like the Palm Islands, the Burj Dubai, and the international stock market got heavy play in the West. The world also learned about the city’s ugly side, its exploitation of laborers and boys brought in to race camels. But the exposure did more to clean up the cruelty than anything else.

Sheikh Mohammed launched the zone with a speech telling reporters they were free to write and say what they wanted, but it had better be accurate. “I guarantee freedom of expression to all of you in the media. I give you the right to speak your minds, to be completely objective in your views and reporting,” he said. “But I will hold the media accountable for its use of this freedom. You must thoroughly research and gather facts and make no accusations without evidence and cast no slurs without proof.”

Sheikh Mohammed’s pledge hasn’t been ironclad. In 2007, the UAE government halted broadcasts by two Pakistani TV stations after Pakistan declared emergency rule and asked the UAE to muzzle the Media City-based broadcasters. One station vowed to move its operations to a freer market.
²⁸

Like Internet City, Dubai Media City started with humble office buildings
beside an artificial lake. By 2008, the zone held a thousand companies in two dozen buildings, including two fifty-three-story copies of New York’s Chrysler Building. The two free zones have become such hives of activity that they have helped reverse Dubai’s rush hour traffic flow. Sheikh Mohammed would reuse the free zone model more often than Bo Diddley recycled his beat. A dozen times and more, Dubai demarcated vacant land for tax-free business zones—anything that might be a remote fit.

It now hosts Studio City, Silicon Oasis, Investment Park, and Sports City. There is DuBiotech, for the biotechnology sector. And there is Motor City, Golf City, Maritime City, Logistics City, Academic City, Humanitarian City, and many more. But none has repeated the rollicking success of Internet and Media cities.

Historically, rich Arabs who got sick fled to the West for treatment. The hospital in which I was born, the Cleveland Clinic, was a favorite. Perennial visitors included Jordan’s King Hussein and Sheikh Zayed, who, upon his death, left behind a whole floor in one hospital building stuffed with his belongings.

Dubai saw the exodus as a business opportunity. If it could build a decent health care system, it could siphon off some of the trade. The city’s outdated health infrastructure was overdue for an overhaul anyway.

In 2004, Harvard Medical School received an invitation to explore options in Dubai. Specifically, Dubai wanted it to anchor a cluster zone to be called Dubai Healthcare City.

Harvard was intrigued. The medical school hadn’t had an overseas venture since the late 1930s, when its fledgling campus in Shanghai closed ahead of the Japanese invasion. The school was ready to try again, but it didn’t like Dubai’s concept. It looked like the city was building a health care mall and wanted Harvard Medical School as the anchor tenant. “That was a pretty lousy model for quality health care,” says Dr. Robert Thurer, a surgeon who came to Dubai to head the Harvard Medical School Dubai Center. “Dubai wants to be a world-class city. Well, it can’t do that without world-class health care.” And that takes decades of institution building.

Thurer, sixty-three, a Long Islander, held meetings with Sheikh Mohammed, who eventually bought into Harvard’s vision. The university
would be allowed to restructure Healthcare City. Harvard agreed to operate a research hospital to teach doctors the latest advancements. At the same time, the school would help regulate the cluster zone. Instead of turning Dubai into a destination for sick tourists, Harvard aims to improve health care in the Middle East. Dubai is investing over $1 billion to build Harvard’s hospital, which is supposed to admit its first patients by 2012.

“This is by far the biggest thing we’ve ever done,” Thurer says. “No place in the world is doing anything like it.”

“This is by far the biggest thing we’ve ever done,” Thurer says. “No place in the world is doing anything like it.”

ALMOST FAMOUS