On my return to California from Afghanistan, I had a layover in Dubai. So, I decided to extend that layover to a week and explore the U.A.E. And I can tell you exactly why. Not long after graduating from high school, I was in a used book store and came across a 1970s novel about gold smugglers in Dubai written by the French Connection author, Robin Moore. The back jacket copy read as follows: “Dubai, where adventurers play the world’s most dangerous games…gold, sex, oil and war. Cold- blooded adventurers in a blistering Mideast empire where life is cheap and no price too high for pleasure.” That was enough for me. Count me in. Incidentally, the novel is still banned in the U.A.E. because the sheiks don’t like the image it portrays.
It felt rather odd to go from Afghanistan to this in just several hours:
In other words, it takes embracing a fair amount of ambiguity to be shopping for expensive clothing and hanging out in an ice bar only hours after leaving a war zone where fighting was literally raging in the streets as I made my way to the airport. But, I’ve never been one to fret over such contradictions.
My mind took it in somewhat like this:
Airport pandemonium. No lines. Just a crushing mob shouting and waving tickets in the air. On the plane. Wheels up. Ground receding. “Jack on the rocks, thank you very much.”
Week in Dubai. Taxi ride to hotel. Puzzlement. Something peculiar. Realization: no holes in buildings, no destruction of combat, no machine guns. Sit back and relax. Home soon.
My apartment was near the old city center and so I had ready access to the various souks…
And to this – the former palace and center of government for all of Dubai (below). Dubai used to be nothing but a backwater of the British Empire, a port full of smugglers, nomads and thieves. At the end of World War II, the strife caused by the war left the ragtag group of 7,000 residents on the edge of starvation. You see, back then, the primary (legitimate) economic activity in the area was diving for pearls in Dubai Creek.
And below is Dubai Creek today. Sheik Rashid, the father of modern Dubai, dredged the Creek in the 1950s establishing Dubai as the trading center for goods coming into the Middle East. If you go down by the creek today there are Iranian Dhows – the Middle East’s answer to the Chinese Junk – bringing rice, rugs and refrigerators back and forth across the Persian Gulf. Iran’s ports are about a two-day drift away for these wooden ships. Kuwait and Iraq a day or two more. Bahrain, Qtar, Oman much closer.
“We’ll take anything as long as you pay us,” a 24-year-old Iranian deck hand in an oil-stained T-shirt named Ali tells me, as he pulls down a blue tarp covering air conditioners, tires and tea bags headed for the port of Bandar Abbas, 100 miles across the Gulf. “We’ve taken American stuff — printers, computers, everything.”
The wooden dhows docked along the Dubai Creek sail trade routes that are centuries old. But the boats have always served a double purpose in Dubai’s history. A symbol of Dubai’s vibrant shipping industry, the dhows have also been used by generations of smugglers exploiting Dubai’s strategic position between East and West to move contraband back and forth across the Arabian Sea. Now, despite Dubai’s recent rebranding as an international hub for finance and education, it remains a hub for the darker side of the global economy as well, with modern-day smugglers using Dubai as a base for everything from property-based money laundering and illegal banking to the Afghan opium trade. Dubai’s new smugglers may be Indian mobsters or Chechen strongmen instead of dhow sailors, but the old dual structure of legitimate and illegitimate business remains robust.
Take Iran for instance… The U.S. Treasury Department has designated 119 Iranian companies, banks and officials as supporters of Iran’s nuclear or terrorist activities.
However, some of the companies the U.S. is targeting set up shop in plain view of Dubai’s bustling docks. For example: Less than 200 meters from Dubai Creek wharf, the grimy, five-story Bani Yas Center office complex serves as headquarters for Iranian front companies. On the ground floor, clothing stores with signs in English and Russian sell off-brand shirts, ties and shoes. In the lobby, the names of 30 trading and transport companies are written in white plastic letters on a black board.
A single office here houses four Iranian firms with names such as Majidco Micro Electronics and Mayrow General Trading that ordered microchips, computer parts and global-positioning-system devices from U.S. providers. The companies had the electronics shipped to Dubai and from there, it was easy to forward the gear to Iran aboard an Iran Air flight, according to the United States.
The U.S. Justice Department alleges in an indictment in Miami that the microchips found their way into roadside bombs in Iraq that were used against U.S. troops.
Hundreds of such front companies operate in Dubai.
Things quiet down on the water in the evening (see below) and that is when the smugglers that loaded their dhows up during the day (see above), quietly head out for Iran and other neighboring countries…
In the evening, the many Indian and Filipino workers that live and work in the U.A.E. (but are emphatically not citizens) line the waterfront and watch the smugglers depart. It is easy to strike up a conversation and it is fun to speculate as to where the smugglers are headed and what cargos they have on board…
In other areas of the U.A.E… You sure as hell wouldn’t see this in Afghanistan.
Off in the distance (below) is the world’s first seven star hotel – The Burj Al Arab. There are only two hotels in the world that claim to hold a self-rated “seven star” ranking; the Burj Al Arab in Dubai, United Arab Emirates was the first, followed by Town House Galleria in Milan, Italy. There are a few other seven star hotels under construction. These include the Laucala Island in Fiji, Morgan Plaza in Beijing, China, the Flower of the East under construction as well as Solar Powered Hotel in Kish Island, Iran, The Centaurus Complex under construction in Islamabad, Pakistan and the Pentominium, the Grand Chola in Chennai (India), a complex planned for Metro Manila and The Royalties Castle for Davao City in the Philippines.
Dubai and Abu Dhabi, the two leading Emirates of the U.A.E., are relatively new to global finance and trade… but they want you to know they have arrived in high style. Last weekend, Formula One racing made its debut in Abu Dhabi. The government had to pull workers from several of its five star seaside resort projects to complete the track and facilities on time. Ferrari World, a massive theme park dedicated to the sport sits nearby. The day before, at the Emirates Palace Hotel – Demi Moore, Hilary Swank, and last year’s Oscar winner, Freida Pinto (Slumdog Millionaire) graced the opening ceremonies of the Middle East Film Festival. The Abu Dhabi sovereign wealth fund has famously (or infamously depending on one’s perspective) leveraged their way into both of the leading football franchises in the world – FC Barcelona and Manchester United.
Many of the citizens of Dubai have “cottages” along the better beach areas:
A “kick-around” Bentley for the beach house…
The home below is for poor people. No, seriously… This is public housing for citizens of Dubai. You see, if a citizen earns less than the equivalent of $10,000 U.S. a month, the citizen is eligible for a free villa. They are not allowed to sell the villa, but they are allowed to rent them out. The average annual rent for these villas is $200,000 U.S. So, you can see that it is somewhat difficult to remain poor in this area.
Bear in mind as well that citizens pay no taxes (No income, property or corporate taxes. Zero.), pay only 1/3 of the cost for electricity and pay nothing for water consumption. Perhaps that is why Dubai is the leading consumer of water per capita in the world? It is virtually impossible to become a citizen though. Approximately just 10% of the people residing in Dubai are actually citizens. Most are just there on a work visa or have a residency permit (which you obtain automatically if you purchase property – a potentially useful thing to have in this world).
Now this is a home of a wealthy citizen:
These businessmen are hanging out in front of the world’s only indoor ski resort. Imagine the carbon footprint of this monstrosity.
This is what the building looks like from the outside:
Driving through the U.A.E feels like one big construction project:
And there is a reason for that actually… Please allow me to explain:
The necessary ingredients for a thriving underground economy were present in Dubai from the start. Unlike the oil-rich Gulf sheikhdoms of Saudi Arabia and Kuwait, Dubai — one of the seven self-governing entities that constitute the United Arab Emirates — was not built with petrodollars, or at least not directly; oil accounts for around 5 percent of the emirate’s economy. Instead, Dubai’s development strategy was property-driven, fueled by a tsunami of cheap credit and excess liquidity. Semipublic corporations with close links to the ruling Maktoum family borrowed an estimated $80 billion on global capital markets to fund iconic developments such as Burj Dubai and Palm Jumeirah.
Laundering money through the city’s booming property market was relatively simple. Property paid for in cash could be quickly resold, often before the development broke ground. The vendor would then receive a check redeemable anywhere in the world.
Dubai’s unregulated economic markets have also offered a safe home for dubious financiers and shadowy entrepreneurs. Just this month, a local group of Iranian businessmen was named in a U.S. indictment relating to the illegal export of U.S. military aircraft parts to Iran. And Dubai might soon be forced to make some tough decisions about how much to police its resident white-collar criminals. At the recent G-20 meeting in London, world leaders called for a crackdown on tax havens like the Cayman Islands and Liechtenstein — and Dubai. But this puts Dubai in a bind: If the new Dubai International Financial Centre adopts stricter regulations than its neighbors, Bahrain and Qatar, it could lose much-needed business. Dubai must either continue with its laissez-faire attitude toward international financial regulations and risk pariah status, or adopt more stringent monitoring practices for its banking system and risk financial collapse. If the past is any hint, however, Dubai is not likely to accept regulatory measures that trim back growth, no matter how sublegal that growth may be.
Of all the black arts practiced in Dubai though, none is more dangerous for the current U.S. administration than the “Afghan Connection.” Since 2003, poppy cultivation in Afghanistan has more than doubled, and a U.N. report valued the opium trade at $4 billion in 2007. A good deal of this money is coming to Dubai. Afghan drug lords swap opium for luxury European vehicles, and drug shipments are paid for not in cash but with commercial goods such as building materials, electronics, and foodstuffs that are bought in Dubai and shipped to Afghanistan.
Thanks to its financial laxity, plus the lack of extradition agreements and the luxurious lifestyle, international underworld figures have flocked to Dubai. Dislodging them may prove difficult, as many operate under the protection of their respective governments. This is especially true when dealing with states from the former Soviet Union, East Africa, and South Asia. Except for those rare high-profile criminals like Mumbai underworld chief Dawood Ibrahim or alleged arms dealer and “merchant of death” Viktor Bout, who simply became embarrassments, fugitives from justice are only rarely forced out of Dubai. And their presence has brought a new level of violence to the normally very safe emirate. Recently, a former Chechen rebel commander was gunned down in the parking lot of a luxury apartment block — the result of an ongoing power struggle between groups involved in Chechnya’s wars with the Russian Federation.
By embracing the deregulation and openness so fervently preached by Western governments, Dubai is now a nexus for both money and people from across Asia and Africa seeking to connect with the global economy. Because this global economy works underground as well as in the sun, it’s inevitable that Dubai should keep a hand in both. In recent days, reports have emerged in the London Independent that ransoms paid to pirates hijacking ships off the Somali coast may have been partially laundered through Somali businessmen based in Dubai, among other places. Sound familiar? It’s been part of Dubai for as long as the dhow has.
This is the Burj Dubai, and although it is still under construction, it is presently the tallest building in the world. And because they want it to stay that way, it is designed to make it easy to add on additional floors to keep up with any competitors.
And in this corner of the U.A.E., a new city is being built in the desert…
Fortunately, I didn’t have to experience the U.A.E. entirely from the outside. You see, I made friends with some actual U.A.E. citizens while hanging out on the beach toward the end of my stay. They thought it was cool that I was American, and especially cool that I had just returned from Pakistan and Afghanistan as a tourist. After chatting for a while, they indicated that they were headed to a camp they had out in the desert and invited me to join them. Not really sure what to expect, but not one to turn down an adventure, I accepted their offer and we all clambered into three identical Toyota Land Cruisers they had (brand new, of course).
Heading out of the city, this is the entrance to one of the sultan’s summer homes that we passed… Not the best picture, I’m afraid, but one is not encouraged to hang around and take photos.
Far out in the desert now – around some of the smaller city states…
We pulled off of the road to play in the sand for a while:
And I have no idea how they knew where they were going, but we started heading deeper and deeper into the desert:
You know you’ve left Dubai and Abu Dhabi far behind when you come across this scene:
We stopped for a break and to admire the view… You can see why they call it the “Empty Quarter”.
The guy on the left is my U.A.E. buddy that first started talking to me and the chick on the right is his German girlfriend.
I was gobsmacked when we got to their “camp”. As I said, I wasn’t sure what to expect, but the level of conspicuous consumption and wealth on display was beyond what my normal circle of friends produce (and I have some wealthy friends, but they can’t compete with Middle Eastern oil money).
A huge swath of tented carpets lay in the center of the camp. A silent generator powered the basics for the camp as well as an advanced communications system that provided broadband internet access and satellite television through a large plasma screen TV. A variety of hookahs surrounded by comfortable cushions rested in one corner, while another corner featured hammocks and large pillows in case one cared for a nap. The opposite corner contained a food area (staffed with a cook, of course) that had a stunning variety of food out on display (especially remarkable given that we were in the middle of nowhere).
I asked my new friends if we had been expected as it seemed the staff were waiting for us. They responded that they always have staff here so that they can just drop in whenever they want.
“Oh, I see… Makes sense.”
Around the edges of the camp, they had ATVs to play with…
And even a guy looking after some racing camels just in case anyone felt like racing.
I think the belly dancer was the one that took things over the top though. Yeah, they had a belly dancer on the staff…
You just can’t beat the hospitality of a Muslim country.
This post is awesome. Very clear and detailed. I really would like to visit such places. They seem so interesting and fascinating. I wasn’t aware of all the obscure stories behind Dubai.
I wish I was a “poor” citizen of Dubai. :P
I am currently working in Dubai, and what you described is accurate.
When coming to Dubai, bring a lot of money.
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