Authors: S. Hussain Zaidi
I
n 1984, few Westerners could have located the city-state on a map, let alone speak authoritatively about the place and its people. Arabs, Iranians, Baluchis, East Africans, Pakistanis, and West Coast Indians, by contrast, had a deep historical acquaintance with Dubai. At the end of World War II, it was not much more than a coastal village which had survived largely on its wits as its only indigenous industry, pearl fishing, had been wiped out by the war and the Japanese development of cultured pearls. But in these barren years after pearls and before petrodollars, Dubai quietly resurrected its trading links across the Straits of Hormuz with Iran and across the Arabian Sea with Bombay. As both Iran and India pursued policies of severe protectionism to build up their domestic industries, Dubai’s traders found they could exploit their own light taxation regime by importing all manner of material into Dubai and then exporting it to Iran and the subcontinent.
In terms of influence, Dubai’s ruling Al Maktoum family ranked second only to the Al-Nahyans of Abu Dhabi. The discovery of huge oil reserves in the latter emirate proved godsend to Dubai, which was struggling to establish a form of stability, and the other five emirates that formed the new state of the United Arab Emirates (UAE) in 1973 after the British decided to withdraw all its forces east of Suez. At present rates of extraction, Abu Dhabi’s oil will last for another 200 years. After less than half a century, the Al-Nahyan fortune (which is interchangeable with Abu Dhabi’s capital reserves) is estimated to stand at around $500 billion, making the fortunes of Abramovich and the other Russian oligarchs look paltry in comparison.
Abu Dhabi has been generous in its subsidies to the six other emirates of the UAE, which have no comparable oil fields. But it is a measure of the perceptiveness of the Al Maktoum leadership in Dubai which as early as the seventies began preparing for a future when Abu Dhabi would no longer be content to underwrite the federal budget. Dubai has modest oil reserves, which still account for 15 per cent of the city-state’s income, but these will dry up within the next decade. The Al Maktoums decided to diversify; probably spurred on by the traditionally competitive relationship with the Al-Nahyans. Thus they conceived the plan to build Jebel Ali port, with its sixty-six berths becoming the largest marine facility in the Middle East.
While critics scoffed at this grandiose project, the decision to create the new port and trading zone was quickly vindicated. In 1979, Dubai learned a valuable lesson from the Iranian Revolution and Soviet invasion of Afghanistan: frightened by the instability in their own countries, Iranian and Afghan traders moved to Dubai, bringing with them their business and bolstering Dubai’s economy. With neither income nor sales tax, Dubai steadily developed a reputation of being a safe place in the Middle East to stash your money. Since then, the emirate has always boomed during a regional crisis.
This quality has enabled Dubai to attract leading figures from many industries over the past decade. Viktor Bout, renowned as the Merchant of Death in Africa and Central Asia, used to park his planes in Sharjah, Dubai’s neighbouring emirate ten miles away, while he received his cheques for services rendered to warring factions through the Standard Chartered Bank branch there. Gangsters and their dark professions are therefore well represented in Dubai, in that they have always looked at and treated Dubai as a safe haven for their headquarters. But their individual stories are usually well-rehearsed elsewhere; the action takes place everywhere but Dubai. They also play cameo roles in a much bigger drama, which is the city itself.
Dubai is a microcosm of globalisation—85 per cent of its population are immigrants drawn from dozens of nations around the world. There are several
lingua francas
, each offering its own advantage—English for the Brave New World of Emirate futurism; Urdu/Hindi for those who trade in gold or drive taxis; Arabic for the Master Planners; Russian or Pushtu to buy or sell cars; and Chinese for the times ahead. The location is perfect, rendering it a haven of peace and stability in a notoriously unstable region where Asia, Europe, and Africa meet. Behind them, the immigrants leave Europe’s weather and taxes, India’s exhausting noise, or Africa’s pain in exchange for a life in Dubai where they buy, sell, and chase the dollar. With no tax to pay, this is the rawest form of commerce and for those who hit pay dirt, the rewards are immense; as a result, you cannot get off the treadmill of wealth creation for a single minute.
The city also witnessed a huge growth in investment by Western companies seeking to get a slice of the market. Dubai could not countenance the imposition of rigorous controls on the import and export of money, which the United States was demanding at the time, as this would have confounded the city’s unique selling point—‘Bring your money to Dubai: No questions asked!’—and undermined the entire strategy of turning the place into the trading and financial pivot between Africa, Europe, and Asia. It naturally started to develop the largest money market. And there was no control over this whatsoever—you could take as much money out and bring as much in as you liked, whether in suitcases full of cash, converted into gold bars or diamonds, through one of the many banks founded to take advantage of this ever-growing flow, or through the
hawaldar
s and
hundi
s, the unlicensed money changers who are the mainstay of the informal financial economy on which the migrant labourers depend.
The development of Dubai began in the late sixties, especially after independence from Britain and the 1973 oil crisis, which triggered an influx of petrodollars for infrastructural development of the city. Dubai’s own oil stocks were a small fraction of Abu Dhabi’s, leading to an initial dependency on the neighbouring emirate. As a result, the ruling Al Maktoum family strove to find alternative revenue sources as a means of lessening this dependence on the al-Nahayans. From the outset, this inspired Dubai’s historical role as a trading entrepôt on the Arabian Sea, linking the commerce of Iran with that of Karachi, Bombay, and the east coast of Africa. Dubai’s relationship with Bombay had powerful political roots because the city was earlier administered during the Raj from the Bombay presidency.
The expat Western community had begun to grow soon after the opening of a modern airport in the late sixties. Like the Indian, Pakistani, and Iranian communities, they kept to themselves. Yet all communities had much closer relations with local Emiratis although they did not mix with each other much, even if it was to simply maintain a good rapport with those who were sheltering them. One does not bite the hand that feeds one. Communities did not live in the informally segregated areas that exist now. There were very few villas and most people lived in relatively small apartments. Furthermore, access to the ruling family was relatively easy. Prominent members of
all
communities had no problem paying a visit to Sheikh Rashid and in particular his younger family members, including his successor, the current ruler Sheikh Mohammed, known as Sheikh Mo. If there was an issue affecting a particular economic sector or a particular community, the family was open to frank discussions on the issues. Any Indian, Pakistani, or Irani having some clout in their country of origin, affluence, and connections could easily set up a meeting with Sheikh Rashid or his relatives and discuss business.
Dawood Ibrahim was aware of this when he and Khalid Pehelwan had started gold smuggling from Gujarat and subsequently from Bombay sometime in 1981. It was this accessibility and the growing business interests of the royal family that Dawood and his men decided to exploit.
Although Dubai’s airport was modern by Middle Eastern standards, bureaucracy was slow, hopeless but in its own way endearing. There was no special treatment for any community — Indians, Westerners, Africans, Iranians were all treated the same way. Queuing for various permits and licences took hours and often met with frustration but the pace of life was extremely leisurely and nobody minded. Palestinians were in control of many aspects of the bureaucracy—the Emiratis were not yet interested in sinecure posts and this was convenient employment for the Palestinian diaspora. This also reinforced the lack of discrimination although it made for a very arbitrary process.
Till 1980, the number of Pakistani migrants to Dubai was very high, as their country was plagued by civil wars and their economy was in shambles. Also, being a Muslim helped with the already lenient authorities of Dubai. However, from the early eighties, the Indian community began to eclipse the Pakistani community in size and influence, although some of the older Pakistani families boasting greater commercial success were better able to integrate into Emirati society. Along with the Indians, the most important trading community were the Iranians who had migrated to Dubai in the first decade of the twentieth century to escape the high import tariffs imposed by the Persian government.
Then there was Mirdith, which lay about 6 to 7 km into the desert beyond the airport. The UAE government started to modernise the area in 1982 by erecting twenty-six houses and twenty-six condominiums in an area of some 20 square kilometres, and putting in a road network; clearly thinking ahead. Mirdith was the first upper-middle-class area shared by wealthy Westerners, Emiratis, and Indians, and it is now teeming with residents.
Dubai may be soulless, but a kind of honesty underpins its fantasy reality as a pleasure dome for the world’s super-rich. Only two things rule here: the dollar and Sheikh Mo. Dubai may be a huge, undemocratic, money laundering centre in the Middle East but the country embraces free trade and globalisation, it is stable in a region renowned for violence, it has not relied on oil for its wealth but invented itself as a novel force in the Arab world. Furthermore, as long as the United States and Europe permit the existence of offshore banking centres, they remain guilty of hypocrisy. For organised crime, these are equally important instruments, offering flags of convenience, shell companies to disguise illegal activities and freedom from prying tax authorities. The only credible reason for their growth and success is the fact that many corporations in the ‘illicit’ economy use them for exactly the same reasons they are used in Dubai, especially tax evasion. Once a house or apartment is registered under an individual’s name, he or she has successfully ‘washed’ the money and it can be reintroduced into the legitimate financial system anywhere in the world.
There was a new influx of south Asians in the seventies, fleeing persecution in various East African states, especially Uganda. There was at this time no significant Nepali or Sri Lankan population, which began to immigrate later, in the early nineties. The building boom required cheap (and often dispensable) labour and the rising living standards of Emirati families led to the growth of indentured servants from the dispossessed of South Asia and the Philippines.
The fall of communism and the deregulation of the international financial markets in the late eighties triggered a huge injection of cash into the global economy. Traders scanned the globe for the most profitable opportunities. The clients they represented sought out their services for a number of reasons: some were looking for maximum rates of return; a common motivation was tax avoidance; companies were also demonstrating their commitment to new markets; and then some investors wanted to launder their money to remove the stain of its criminal origins. The sums involved were vast.
An even greater change has been in the shopping culture. Dubai is now home to the largest shopping centres in the Middle East. One of its chief PR campaigns surrounds an annual shopping month which starts from mid January: a consumer orgy which attracts wealthy shoppers from all over the world. The most colourful and frenetic shopping area is the Old Gold
souk
(market). So successful was the trading in the eighties that they opened the New Gold
souk
as competition—both of them thrived, chiefly on the export market destined for Pakistan and India, and Pakistani and Indian traders built up huge empires during this period. The gold
souks
were close to the silk and spice
souks
, the former dominated by Indian and Pakistani traders, the latter by Iranians. The most fabulous wares could be purchased here for very little money, but by contrast any modern white goods, that is, anything purchased legally and legitimately, were difficult to get hold of and Westerners and Emiratis alike would travel as far as Singapore and Hong Kong to import their modern conveniences.
Sheikh Rashid was a moderniser from the outset. He was determined to encourage the rapid development of Dubai as a commercial centre. Even before the early eighties, he had overseen the construction of a modern road system straddling all of the Emirates. He introduced efficient roundabouts at an early stage and in the early eighties it was still possible to drive from one end of Dubai to the other in half an hour. This is extraordinary to conceive of if you have driven in Dubai today; the city flirts with permanent gridlock as hundreds of thousands of vehicles (among them countless Hummers and other SUVs, not to mention the occasional Bugatti Veyron) plough up and down the city’s two major arterial roads all day.
If you descend one level from the glittering high-rise world of new Dubai, you come upon the middle men clustered around the harbour and
souk
in Deira. Here, the traders shift commodities in and out of the boats all day long; stacks of boxes three metres high appear to move of their own accord (in fact, they are borne by tiny Bengali, Sri Lankan, or Nepali men with limbs like twigs); there are hustlers with fake Rolexes, pirated DVDs, and counterfeit computers; the jewellery and gold merchants exhibit their nausea-inducing displays.