Dubai’s debt crisis – a ‘new paradigm’ built on sand

DUBAI – At Dubai’s soaring, spurious peak, one factoid the emirate’s bling-burdened battalion of ‘corporate communications consultants’ liked to slip to junketing media was that Dubai had the world’s densest concentration of cranes. Impossible to verify but too good to ignore, the glib observation almost always made it into media reports. It compelled people to want to go where the action was: subliminally, it suggested an economy where the fast buck came easy.

And it certainly seemed true from the spas of Dubai’s ‘seven-star’ hotels, rising over a city-state-as-building-site which was also constructing that contrived archipelago for Premier League millionaires and their ilk.

One towering temple to the Al-Maktoum clan’s ‘vision’ was so tall – or so it was often said, over flutes of Cristal at the China Moon champagne bar – that its Pakistani crane operator slept in the cabin nearly a kilometre up because to descend to ground level took so long and ate into his overtime earnings.

Cosmopolitan Dubai was a ‘world city’, a ‘free zone’ where anyone of any creed from anywhere could get rich quick. And that yarn was devoured by chavvy main-chancers wanting to remake themselves some place where no one much knew or cared who they were.

But a more apposite factoid was the one that said Dubai had the world’s densest concentration of those overtanned, overpaid ‘corporate communications consultants’ – all selling a ‘new paradigm’: these sultans of sophistry conjured images of wise men in dishdashas having somehow conceived a uniquely Dubaian, highly developed reinvention of capitalism and commerce.

It was the sort of bogus twaddle I imagine Bernie Madoff spouted to eager ears in Floridian country clubs, Icelandic bankers to Middle England’s local authority treasurers, and Enron to everyone. I used to hear it in late-1990s Silicon Valley and most anywhere in Asia circa 1996, just as I suppose 17th-century Dutch tulip vendors employed boosters to say they were the smartest guys in the hothouse too. People want it to be true, and in Dubai it was especially easy to believe your own twaddle because there were so few checks on it.

Conflicts? A foreign banker I know didn’t care that the same bureaucrats who regulated him were also connected to competing banks. Dubai’s new paradigm meant ‘everyone is on the same page, that’s the beauty of this place’. It didn’t fuss him that dozens of foreign businessmen have been locked up without trial and refused exit visas after falling foul of a grumpy sheikh.

Due process wasn’t an issue because ‘they must have done something wrong’.

In truth, Dubai’s ‘new paradigm’ was one of the world’s oldest – slave labour.

It was as if Dubai’s planners had scanned IMF surveys and dispatched recruiters to the world’s poorest 20 nations. Droves of hopeful Sri Lankans, Indians, Pakistanis, Nepalis, Filipinos and Africans arrived to work 18 hours a day in jobs that paid nowhere near the promises made by the sleazy employment agencies that sent them.

The workers’ passports were seized – and sometimes their first year’s wages too, to pay their agents’ expenses.

They often lived at Sonapur, a squalid ghetto between Dubai and Sharjah where as many as 300,000 ‘guest workers’ were billeted in a wretched sprawl of utilitarian dormitories, gravel roads and open sewers, hidden in the dunes. It’s one of the Gulf’s biggest communities but it’s not on any hotel map or road sign. Un-airconditioned bunkrooms for four slept 12 men in three shifts. There was no privacy, no quiet and little dignity.

But to mention Sonapur among Dubai’s plutocrats was like farting in a lift, or like telling your wife that yes, her ‘bum did look big in that. Lips curled at this inconvenient truth. When asked about labour conditions, flaks would scramble to say things like ‘our HR policies are heavily guided on international best practice and we undertake considerable international benchmarking’. That’s from Emirates Airlines, which claims to be one of Dubai’s more enlightened employers and told me in high dudgeon last year that they paid their baggage handlers 2,000 dirhams a month, ‘comparable to other international carriers’. That’s about £3,900 a year, the cost of a first-class London-Dubai return.

But of course, Dubai adhered to best practice in corporate governance and transparency, and we know that because the PR men said so. By overwhelming us with hype they did their damnedest to shield the property developer Nakheel (‘where vision meets humanity’), its state-owned parent company Dubai World and the conflicted regulators overseeing this unchecked freefor-all. When the former Lloyd’s of London rescuer Ian Hay Davison actually tried to do his job as chairman of the Dubai Financial Services Authority in 2004, hidden hands pushed him out.

The corporate undertakers now picking over the emirate’s commercial carcass might discover that even in distress, little has changed. The Al-Maktoum clan don’t make mistakes and they pay people a lot to say so.

The last thing they’ll admit is that Dubai was built on sand.