War Is Boring’s youngest contributor, Kevin Knodell, is on a school trip to the UAE, where he’ll be exploring security topics while no doubt mulling lucrative real-estate deals and working on his tan. You can read about his classmates’ exploits at Pacific Lutheran University’s Sojourner blog.
by KEVIN KNODELL
Many people think of Dubai as a city built with oil revenue. There’s a kernel of truth to that, but the source of the city’s wealth is far more complicated than that. Dubai actually has relatively little oil, and must rely on neighboring Emirates (particularly Abu Dhabi) to obtain oil for consumption. Foreign trade and investment are what truly drove Dubai’s financial success, and its economy is centered more around its ports and financial center.
Ships are constantly coming to and from Dubai’s ports to pick up and deliver goods. Dubai’s port’s are known worldwide. Goods of every shape and size are brought through the ports. Piracy in the Gulf of Aden has complicated trade, and though shipping still thrives, the pirates have significantly decreased maritime traffic to the south. The Emirati have accordingly opened their waters to warships dispatched to fight the pirates.
Companies from all over the world do trading in board rooms and corporate offices in Dubai’s financial center, while small and medium sized businesses run by expats are all over the city. Though expats pay very little to the government and their income is not taxed, the Emirati are always sure to get their cut. However, Dubai has been hit by the global recession just like many other places, partly due to the recklessness of some companies here.
In order to deal with its debt, Dubai turned to neighboring Abu Dhabi for a bailout (which did come from oil revenue). The situation in Dubai seems to have stabilized, though it has had to curb some of its more ambitious projects and it appears many companies will not make it out unscathed.