By S. Nihal Singh
December 3rd, 2009
First it was Dubai, with its glittering path-breaking facade, and now it is the capital of the United Arab Emirates (UAE), Abu Dhabi. At 38, as the federation of seven emirates preened itself to celebrate the National Day, Dubai sprang a bombshell by seeking a six-month freeze on billions of dollars of debts plunging regional and world markets, the capital with the world’s biggest sovereign wealth fund was going about its business to become the new magnet for the region.
It was ironical that days before Dubai shocked the markets, Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and the federation’s Prime Minister, met the international press, including myself, to show the stiff upper lip. Sheikh Mohammed is a hands-on ruler in managing Dubai’s ascent to the region’s trading hub and the aggressive, if extravagant, development of hotels, malls, marvels of tourist attractions and the world’s highest building at 800 metres, still under construction, piercing the sky like a missile. Dubai recently opened a spanking new metro.
The world economic crisis was particularly unkind to Dubai because it prospered on tourists and a diversifying economy and borrowed to build brash new attractions, including a ski slope in a mall. When tourist levels and hotel occupancy fell and property prices halved, Dubai was in trouble, to be bailed out by Abu Dhabi to the extent of $10 billion, with two Abu Dhabi banks more recently buying Dubai paper for $5 billion. Dubai can still call upon the remaining $5 billion tranche Abu Dhabi had agreed upon.
Dubai will rise again because it has the fighting spirit and the painful process of reorganisation and pruning has begun. The rising star today is Abu Dhabi, which possesses ample supplies of oil and gas and is the place where serious money is. A round of meetings with high foreign affairs, economic and banking officials in the capital last week provided an overview of how it is aspiring to reach the stars. If there is an element of rivalry between Dubai and Abu Dhabi, it adds zest to new development projects.
For years, Dubai had left its more serious, if not staid, sister far behind with its glitzy developments and more liberal mores. Only in recent time has Abu Dhabi picked up the gauntlet of becoming a modern metropolis with the accoutrements that go with it in the form of art, entertainment, music and other cultural assets. It built the immense Palace Hotel, more a palace than a hotel, launched its own international airline Etihad to compete with the older and better known brand of Dubai-owned Emirates, is setting aside an entire island for museums and art events in the form of opening branches of America’s Guggenheim and France’s Louvre. An exhibition of European masters in the original was given a run in Abu Dhabi followed by the French Radio Orchestra performing in the Palace Hotel.
Only recently did Abu Dhabi hold the first Formula 1 race on a brand new track built on the island of Yas, with the racetrack partly going under a specially built hotel. There are a string of other brand hotels that have been built and the authorities hope to make the island a new residential settlement attracting visitors through high-profile entertainment and sporting events, with a wing for foreign buyers in designated zones. Non-nationals cannot buy property in the UAE except in special areas, a move pioneered by Dubai. A stadium with a retractable roof to seat 65,000 is on the drawing board.
The UAE is very conscious of its small population of 864,000 citizens against 3.62 million expatriates. A vigorous effort is, therefore, on to place the accent on equipping young Emiratis with higher education, with generous scholarships being offered in a number of fields, including nuclear engineering. Some 2,300 students are studying in the United Kingdom and 1,218 are in the Unites States after the effects of the terrorist attacks of 2001 having waned among Americans.
The minister for higher education, Sheikh Nahyan bin Mubarak Al Nahyan, admitted that Abu Dhabi was seeking nuclear energy for peaceful purposes although it was not interested in enriching uranium on its soil with a view to diversifying its energy resources. Abu Dhabi has 100 years of oil reserves, but its officials emphasise that oil is a finite commodity and is going ahead in seeking renewable energy with a city to be built on that basis. To a visitor, it comes as a surprise that so much attention is being devoted to renewable energy while the use of conventional energy would seem to be profligate. The UAE’s per capita energy consumption is the highest in the world.
An entire city of Masdar is being planned to house around 1,500 clean technology companies with 40,000 residents and 50,000 commuters providing a research and test base for renewable energy technologies. The aim is to rely on 100 per cent renewable energy to make it carbon neutral. Masdar was established in 2006 with seed money of $15 billion. It is the largest such venture in the world.
Although the UAE is acquiring modern arms and is home to Western, including French, bases underlining the fact that it lives in a dangerous neighbourhood, its accent is on seeking regional stability. It is a constituent of the Gulf Cooperation Council (GCC) whose progress is at best patchy. The GCC, which includes Saudi Arabia, is promoting a common currency but Abu Dhabi says it will stay out of it and progress towards a common customs union, the initial backbone of the European Union, is slow because of the member countries’ divergent trade interests. For instance, Dubai being the centre for entrepot trade it is, would look askance at imposition of common duties.
Despite the buffeting Dubai has suffered, the weather is fair for the UAE.
Abu Dhabi is now demonstrating that it can show the way to a happier region and world. Dubai traded on its superb infrastructure, sinking much money to make it an efficient regional hub. Abu Dhabi hopes to make a bigger splash because it has deeper pockets and is speeding ahead with new infrastructure and construction projects. It has plans to beat Dubai and will build an even higher tower.
Source: Deccan Chronicle