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Dubai’s fundamental problem 30, November 2009

Posted by thegulfblog.com in The Emirates.
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5 comments

Dubai is in a mess. One of the many reasons that it finds itself in such a predicament is because of a rather profound lack of transparency. Markets hate not knowing. It inevitably leads them to a pessimistic spiral. Statements that people should “shut up” speculating and worrying about the state of Dubai’s economy and that things are going “along nicely” are not worth the paper they are written on if they are not backed up by a transparent paper trail. Indeed, these ridiculous statements were ignored by the international markets much to Sheikh Mohammed bin Rashid al-Maktoum’s annoyance.

There is a truly fundamental problem here. Sheikh Mohammed bin Rashid al-Maktoum is used to people doing what they are told: he is the ruler, they are the ruled. Yet, in situations like this, he is not dealing with a few sycophantic Emirati bankers, fearful of a loss of patronage, but savvy international bankers, journalists and the like. They will need more than his ‘mighty word’ that things are alright. Indeed, their mistrust has been proven 100% correct: his word clearly means nothing, having being proven to be 100% incorrect and wrong.

This is the kind of thing that happens when someone is so rarely told ‘no’. At this point I am reminded of two leaders. The first is King Canute, who is said to have believed that he could stop the tide coming is as he was some kind of divine King: alas he couldn’t. The second is Gaddafi and his ridiculous speech at the UN a few months ago, a clear a demonstration as there has ever been of an idiot that no one has dared to say no to in 40 years.

The reaction to ban the Sunday Times in Dubai for an unflattering cartoon is typical and not a little pathetic.

And, just for good measures, here’s a (far better) cartoon from The Times’s excellent Peter Brookes.

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It has been interesting to note the overbearing tone of near-gleeful Schadenfreude in the British and American press at Dubai’s embarrassing and ignominious default. The tone varies from superior to rude.

…the sea will wash away those hideous palm-shaped islands where our cheaper celebs spend spring weekends, the expat apartment blocks will crumble into dust, the scorpions will return and Dubai will be what it was in the 1960s, a frowsy fishing port in a scorched and very backward Third World country, with a moral code for the indigenous population drawn from AD 1335.