"Dubai model" was the vision of one man

DUBAI Fri Nov 27, 2009 3:00pm EST

Sheikh Mohammed bin Rashid al-Maktoum (C), Ruler of Dubai and United Arab Emirates' Vice President, attends the opening ceremony of Metro Dubai September 9, 2009. REUTERS/Dubai Ruler Media Office/Handout

Sheikh Mohammed bin Rashid al-Maktoum (C), Ruler of Dubai and United Arab Emirates' Vice President, attends the opening ceremony of Metro Dubai September 9, 2009.

Credit: Reuters/Dubai Ruler Media Office/Handout

DUBAI (Reuters) - The "Dubai vision," which has suffered a crushing blow from the freewheeling Gulf emirate's sudden debt crisis, is the creation of one man who failed to apply the rules of open governance.

The city state's rapid growth revolved around the ruler Sheikh Mohammed bin Rashid al-Maktoum, who outlined his ideas in a book, "My Vision," where he suggested other Arab countries could replicate Dubai's success. Now the model -- always controversial among Gulf Arabs since it involved building shining cities in the desert at breakneck speed through the import of foreign residents, finance and labor -- is on the ropes.

Questions will surface over what went wrong.

This week Dubai said it wanted to delay payment on billions of dollars of its total $80 billion debt, sending global markets plummeting as investors feared defaults could hit the global economy just as it was recovering from the financial crisis.

"Where next for the ruling family in Dubai?" said British historian Christopher Davidson. "The massive loss of legitimacy that the ruler is now facing, the massive loss of legitimacy that his son and crown prince face after lying to the World Economic Forum last week -- where do these guys go from here?"

Sheikh Mohammed, whose face and words grace posters all over town, told the forum this month that the worst had passed for Dubai which was well-placed to pursue its development plans.

The news that investment vehicle Dubai World could not pay a $3.5 billion bond was released just before the Muslim Eid al-Adha holiday and UAE national day on December 2. Local media have almost entirely avoided comment on the debacle.

"Dubai could not be more transparent and open about the challenges it is facing due to the global economic downturn as it has been," the English-language Gulf News said. The Arabic daily al-Khaleej praised the UAE's investment climate.

There is uncertainty about what assets are owned personally by the ruling family, directly by the government or simply sponsored either by the ruler or the government.

ENVY OF THE REGION

Dubai was the envy of other Gulf states such as Saudi Arabia and Qatar, who sought to ape some of Dubai's ideas, such as business free zones, financial centers, advanced infrastructure and welcoming Western capital and expertise.

Aside from its more eye-catching projects seen by many as white elephants, such as palm-shaped man-made islands and the world's tallest tower, Dubai developed health services, universities, sports facilities and model urban communities.

Ayman Ali, a London-based Arabic press commentator, said the Dubai model, based on Hong Kong and Singapore, forgot it was dealing with a country and not a corporation in becoming a place where many in the Arab world dreamed of living.

"In the beginning it was aimed at getting rid of bureaucracy and red tape. It worked fine but if you are building a country you shouldn't go on running it like a company," he said.

Dubai ran to catch up with business transparency practices in Singapore and Hong Kong, and never even pretended to expand political participation beyond a small group around the ruler.

In an online interview this year that epitomized the progressive image Dubai has tried to present, Sheikh Mohammed rejected the suggestion he was a "Superman" who ran the freewheeling emirate alone.

"The 'Superman' phenomenon you are talking about does not exist in our organizations and institutions," he told the questioner -- before going on to discuss how his poetry and horse-racing fit into his 24-hour-a-day schedule.

Despite its financial troubles, many still regard Dubai as a pioneer among its neighbors.

"There was a lack of transparency, yes, but Dubai did something whose model was full liberalism. They made mistakes and lacked a lot of things but they are in transition," said Dubai-based Ibrahim Khayat, a Lebanese strategic business analyst. "Singapore has corruption too."

Martin Hvidt, a Danish Middle East Studies professor who focuses on Gulf economies, said the concentration of power in the hands of Sheikh Mohammed and a few advisors meant Dubai could take quick action to rectify mistakes.

"It's too early to write Dubai's obituary," he said.

(Additional reporting by Raissa Kasolowsky; Editing by Samia Nakhoul)

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