Irregular Expression

TODAY is the national day of the United Arab Emirates. But I guess the sheikhs in Dubai won’t be breaking out the champagne or even having a feast. There’s a big shadow hanging over that emirate.

But much as Dubai is painted as the bad boy of the seven emirates that make up the country, there is no great virtue in any of the others.

Each and every emirate has been built on the back of cheap labour from the Indian subcontinent, workers who pay hefty bribes to agents in Bombay and Karachi to get jobs that promise much in terms of pay and deliver very little.

These workers are treated like indentured slaves – anyone who works in the UAE (and indeed anywhere in the Persian Gulf) has to give his passport to his employer; if a worker goes missing, the employer is held responsible and this is used as logic to retain the passport.

But in reality, this is a way of ensuring that employees cannot flee if they feel that conditions are getting too much for them to bear. During the decade I spent in Dubai, I have seen building site labourers stagger into air-conditioned supermarkets, their eyes bloodshot after a day of working outdoors in 36-degree heat, so that they could pick up a cool can of Pepsi (which at that time cost one dirham; 3.65 dirhams buys one US dollar) and a plastic pack of cheap unleavened bread (quboos) for their dinner.

These are the same people who try to spot a literate person on the plane home in order to get their immigration forms filled. I have spent the entire 2½ hours from Dubai to Bombay filling in forms more than once.

Abu Dhabi may have more stately buildings than Dubai but they were built in the same way as those in Dubai. And the same goes for Sharjah, Ras Al Khaimah, Umm Al Quwain and Ajman.

The last-named emirate, incidentally, has a thriving business importing liquor and bottling it there. I once visited a man who is a major importer of rum which he then bottles and passes off as Old Monk rum, a well-known brand from India. Being a regular rum drinker, I was able to spot the difference, but my host smiled and said that only one in a thousand was a devoted rum drinker to the extent that I was at the time. Most people in Ajman buy liquor just to get drunk and forget the drudgery of their existence – they are not bothered about the brand, merely that it should be fermented enough to enable them to forget their misery.

My host told me that he had no visa to stay there and did not need one – he merely presented a new model Mercedes to the director of the municipality every year. At that time, he had been there for 28 years.

But it’s not only fake liquor that you can buy in Ajman. You can buy the real thing too and openly on the beach. One Friday, back in April 1995, during a picnic on the beach in Ajman, I remember putting down a few cans of Foster’s beer, an Australian brand. Not far from me and my friends and family on the beach, there were citizens of many different countries, all paying homage to the same brand. There were plenty of good Muslims among them as evidenced by their attire.

Sharjah, for all its cultural preenings (the ruler, Shaikh Sultan, has allegedly obtained a doctorate by writing a thesis claiming that there was never any piracy in the Gulf!), is also driven by the one god to whom all of us pay homage – money. If liquor is not served in Sharjah hotels, it is only because of the donations made to the emirate by the Saudi rulers, money that has enabled Sharjah to build a very nice old-style souk.

(But then Saudi Arabia’s ban on liquor has nothing to do with religion. Back in the 1950s, one of the royal family members shot and killed the British ambassador after getting intoxicated. King Ibn Saud offered blood money and the prince’s head to the envoy’s widow. After that, liquor was banned in the country – but every good Saudi has a decent bar, with the liquor mostly coming into the country in crates of furniture. Plenty of Saudis are summoned to the airport to be told that their furniture is leaking.)

For quite a few years after the break-up of the Soviet Union in 1991, most of the flights coming into Sharjah from the central Asian republics were full of beautiful women – who then promptly headed to Dubai for a spot of “work”. I had a glimpse of the fashion parade when my family returned to the UAE via Sharjah in 1996.

Dubai is more open about things like liquor and makes money off it too – every bottle or can or cask sold at either Maritime Mercantile Inc or African & Eastern, the two liquor agents, had a 30 percent mark-up during my time there. This tax goes to the government.

Those who are castigating Dubai, get a grip on the facts. The tales told about Dubai may be more lurid and licentious, but the rest of the UAE is in the game too. It is done in quieter fashion, though. Perhaps that is more acceptable to the Western eye.

INDICATIONS are emerging that the Dubai financial crisis will lead to a significant change in the emirate’s make-up. The Dubai government has let it be known that the debts of Dubai World, which sought a deferment of loan payments last week, is not guaranteed by the emirate’s government.

The Dubai government’s distancing itself from what was once thought to be a state-owned company indicates that it will let the company go to the wall as long as the government’s backside is saved.

Not that there has been no inkling of this – in October, the government issued a prospectus to interest investors in a $2.5 billion Islamic bond. Few who read the prospectus noticed this: “The Dubai government is under no obligation to extend support to any government-related entity”.

That little bit of prose now assumes great significance after the announcement last Wednesday by Dubai World, which is carrying around $60 billion of debt, that it would be seeking a six-month break in repayments. This came hours after the government of Sheikh Mohammed bin Rashid Al Maktoum had raised something like $5 billion from two banks to cover its own debts.

Abu Dhabi, which has 92 percent of the UAE’s oil reserves, and is the capital of the United Arab Emirates, can easily bail out Dubai. But, given the tribal nature of society in the UAE, it is unlikely that any money will change hands unless Abu Dhabi can extract a price – possibly control of Emirates airline, the Dubai Ports Corporation or the Jebel Ali Free Trade Zone.

Sheikh Mohammed visited Abu Dhabi on November 27, the customary trip to greet the president of the UAE, Sheikh Khalifa bin Zayed, on the occasion of Eid Al Adha (the Muslim feast of sacrifice). It is unlikely that their exchanges were limited to Eid greetings.

Dubai has always been the upstart of the federation, having sufficient finances to thumb its nose at Abu Dhabi and having a much higher profile than any of the other emirates. The other five emirates have all been dependent on Abu Dhabu for handouts; the capital provides 90 percent of the country’s budget.

The other sheikhs – Al Qasimis of Sharjah and Ras Al Khaimah, Al Sharqis of Fujairah and Al Muallas of Umm Al Quwain – would be extremely happy to see Dubai taken down a peg or two. Despite much talk of Islamic unity and Muslim brotherhood, at heart they all still remain feuding desert tribes who delight in the art of one-upmanship.

Sheikh Mohammed is the third ruler of Dubai since 1958; his father, Sheikh Rashid ruled from 1958 till his death in 1990, and his elder brother, Maktoum, ruled from 1990 until he died in 2006. But Mohammed has always been the leader since his father died, and all the grandiose ideas come from him. Maktoum was a simple man; another elder brother, Hamdan, is a canny one with money and is the country’s finance minister. The youngest of the brothers, Ahmed, is something of a playboy.

It is not only in Dubai that things seem to be unravelling for Sheikh Mohammed. In London in October, Istithmar World, the investment arm of Dubai World, sold two properties, which it had bought for £90 million, at the knockdown price of £10 million. Marcol House in Regent Street and an office building in Newman Street were sold when Istithmar was unable to pay interest on a loan.

Additionally, Dubai World’s ports branch has been reviewing its £1.5 billion London Gateway Port project. A loan of £300 million was taken in November from the European Investment Bank to rescue the project.

Perhaps people should have sat up and taken notice three years ago when it became known that several of the projects proposed for Dubailand, a $5 billion project announced by Sheikh Mohammed in 2003, had been scaled down or knocked back altogether.

The arrogance evident in the announcement can be gauged from this bit of his speech: “I would like to tell capitalists that Dubai does not need investors, investors need Dubai and I tell you that the risk lies not in using your money but in letting it pile up.”

Probably that is why Dubai finds itself in the spot it is in right now.

FOR years, Dubai has been regarded as a marvel. It has had the most grandiose projects, the most outrageous projects, the most fancy buildings. Everything there has been a celebration of one god – money.

Now it looks like the party is coming to an end.

It is difficult to imagine the Maktoum family, which rules Dubai, going, begging bowl in hand, to the Nahyan clan, the rulers of Abu Dhabi, but that is exactly what the former will have to do if they do not want a sudden collapse to take place.

Dubai has overstretched itself to the extent of around $80 billion; something in the region of $3.5 billion will fall due for repayment in the next few weeks and the emirate has sought an extension of six months. In other words, the cupboard is bare.

Ten years ago, the fantasy projects were not underway, the emirate was doing well financially and serving as a trading post for every kind of deal under the sun. It has always had a laissez-faire attitude towards money and a man who walked into Dubai carrying $1 million in his briefcase never caused any eyebrows to be raised.

But after the grandiose projects began – the world’s tallest building, the creation of an island in the shape of the globe in the ocean and so on – the level of finance that was borrowed reached astronomical proportions. Nobody dared to suggest that Dubai could not pay back the money, everyone was eager to jump on the merry-go-round and grab a piece of the action.

Nobody ever thought it pertinent to point out that Dubai has little oil and that most of its money comes from trade. Nobody thought it relevant to point out that the entire United Arab Emirates is violating one fundamental principle of any country – it spends without a thought but the residents pay no tax.

Given that the whole country was once desert, the entire infrastructure is built on sand. Desalination plants supply water at a big price – but residents pay very little. Electricity is generated at a massive price – but again subsidised. Roads have to be built and rebuilt as they sink into the soft desert sand. In the end where does the money come from?

Ninety-two percent of the oil in the UAE is in Abu Dhabi, the capital, which subsidises the smaller emirates – Ras Al Khaimah, Fujairah, Sharjah, Ajman and Umm Al Quwain – that, together with Dubai, make up the country. The extent of waste can be gauged by one simple fact – there are six, fully functional, international airports in this little dagger-shaped nation – two in Abu Dhabi, and one each in Dubai, Sharjah, Ras Al Khaimah and Fujairah. And a seventh is being planned, in Dubai!

Why does one need that number of international airports in a country which can be navigated by car in a few hours? One can understand if Dubai and Abu Dhabi have an airport apiece; they are not needed anywhere else. Sharjah is just 20 minutes drive from Dubai.

But this is only the first symbol of the gross over-consumption. For years, Dubai has been living beyond its means and the day of reckoning is coming. Unless, of course, the Nahyan clan is willing to come to the rescue and bail out Sheikh Mohammed.