City of Gold

The Book of the Week is “City of Gold, Dubai and the Dream of Capitalism” by Jim Krane, published in 2009.
Location and entrepreneurial opportunists played a big role in making the city of Dubai the westernized hub of modernity it is today. It is located across the Persian Gulf from Iran.
Beginning in 1894, Dubai’s ruling family paved the way for it to become a trading hub, providing financial incentives to Arab, Persian, Indian and Baluchi merchants to use Dubai’s port rather than Iran’s ports. However, a side effect of prosperous trade invited smuggling of black-market goods including firearms, gold, slaves, diamonds and drugs.
The mid-twentieth century finally saw the game- changing discovery of oil in Dubai. In September 1958, the city got a new ruling sheikh who began to introduce better living to his people through infrastructure and utilities. In December 1971, Dubai and other territories in the region shed their British-protectorate status. At the last minute, Iran made a land-grab, but the remaining areas of the seven sheikhdoms became the United Arab Emirates.

Abu Dhabi held 88% of the land and 90% of the oil. So, through the 1970’s, Dubai’s ruling family further reduced Dubai’s financial dependence on oil by branching out into trade, construction and services– importing cheap labor to do it. The city built an aluminum smelter, a seaport and a dry dock– which in the 1980’s, repaired vessels from Iran that were damaged in its war with Iraq. The gentrification trend inevitably involved a little eminent-domain abuse, Arab-style, but Dubai citizens and capitalist expatriates needed luxurious places to live in the desert.

From the late 1990’s into the 2000’s, with the introduction of the Internet, Dubai lured the world’s biggest technology and media companies with generous financial incentives, building corporate villages for them. In 2000, Dubai allowed foreigners to buy real estate. The following year, the city had a stock market.

After 9/11, Arab investors transferred their money from the United States to Dubai. In February 2006, New York State Senator Charles Schumer and the media whipped up a frenzy of anti-Arab hysteria by telling the public that Dubai owned some of America’s most important Eastern-Seaboard ports. Hillary Clinton and hate-spewing pundits piled on. “Yet Dubai and the UAE remained among America’s closest Arab counter-terror Allies, even though the United States government has problems with Dubai’s freewheeling trade with Iran.”

Fast forward to 2007. Dubai’s small population of about a million citizens (mostly royal family members) allowed the government to adopt a socialist policy of generous entitlements, including an average annual $55,000 in stimulus money, and low-cost or no-cost: cooling of their lavish homes, car-fuel, food, education, healthcare, and water.

One last factoid: Dubai keeps its population safe because “The government is on the lookout for any form of radical expression, whether it’s Saudi Wahhabism, Salafism, or radical Shiite theology from Iraq and Iran. The Muslim Brotherhood cannot operate openly.”

Read the book to learn about: how the British stifled Dubai’s growth, and many more details on the city’s political, economic and cultural history, beginning with ancient times.