Can the Dubai model be exported?

Can the Dubai model be exported?
Comment: The impediments to exporting Dubai's trademark glitz, glamour and service style economy to other monarchies and republics in the region, are geographic, demographic, financial and political, writes Robert Springborg.
6 min read
01 Jun, 2016
Dubai is the Arab world’s Singapore [AFP]

Dubai is the Arab world's success story. It has converted from an oil to a service based economy. Its "brand" earns global respect. It is the most preferred destination for potential Arab migrants and one of only two destinations in the Arab world that is steadily increasing its absolute number and share of global tourists.

Its airline is the world's most rapidly expanding. Its stevedoring company, DPW, is one of the top five handlers of freight in the world. Its international legal/judicial and financial systems have credible claims to being world class.

Its polity has been stable since the founding of the United Arab Emirates in 1971. In 2012 its economic growth rate was 167th among the world's cities, whereas by 2015 it had climbed to fifth place. Its dynamic economy is sucking in expatriate workers at region-leading levels, resulting in a sustained annual population growth rate in excess of five percent.

Yet over the last two decades the fertility rate of nationals of Dubai has dropped from some 5.7 children per woman, to less than two, paralleling the rate of decline in OECD countries. Dubai, in sum, is the Arab world's Singapore and, like its Asian twin, its influence is steadily expanding regionally and globally.

It is not surprising then that many countries in the region are seeking to emulate the Dubai model. The recently announced Vision 2030 reform plan in Saudi Arabia is a case in point, as is the New Cairo capital for Egypt. Both Abu Dhabi and Kuwait, which until a decade or so ago were relatively sleepy compared to Dubai, have been woken by their upstart neighbor, whose glitzy metropole they are busy copying.

As in China, citizen enrichment is intended to substitute for citizenship and the political and economic rights which that term implies

This raises the questions of what the Dubai model really is, whether it is transportable and, if so, whether that would be beneficial or harmful to those importing it. At its core the model is that of a family owned business, having few if any non-family member "shareholders", hence no mechanisms of accountability nor authoritative means to differentiate public from private, as became clear during debt restructuring proceedings in the wake of the 2008 financial meltdown.

As in China, citizen enrichment is intended to substitute for citizenship and the political and economic rights which that term implies. One might even analogise China's Communist Party leadership to Dubai's al Maktoum. Both are closed elites who believe their superior management of the economy legitimates their political rule.

The new assertiveness of Abu Dhabi and of Saudi Arabia is to some extent inspired by Dubai's perceived youthful vigor, even if that vigor is less militaristic than it is in the emulators.

That historic Cairo should be abandoned for a glitzy new city in the desert, modeled on Dubai and constructed by consortia linking the Egyptian military with Emirati interests, is also reflective of the hubris of a ruler - in this case President Sisi - unconstrained by a population because it is denied citizenship rights.

But while Abu Dhabi and Saudi Arabia are family dynasties like Dubai, so presumably reasonably good fits for its model, Egypt is not. Whether a monarchial model based on an entrepot, service economy can be imposed upon a republic with 90 million inhabitants and an economic history grounded in agriculture and manufacturing is a very open question.

But while Abu Dhabi and Saudi Arabia are family dynasties like Dubai, so presumably reasonably good fits for its model, Egypt is not

Impediments to Egypt emulating a Dubai or Singapore style service economy are geographic, demographic, financial, as well as political. Dubai's economy rests on foreign labor, whether highly skilled, managerial, or menial. Both chauvinism and a desperate need to employ citizens pose insurmountable barriers to Egypt hiring even small numbers of expatriates.

Highly skilled Egyptian expatriates resident in the West evince little interest in returning to the politically unstable, socially suffocating and economically stagnating country of their birth. Egypt's military dominated government enjoys neither the legitimacy nor the competence of that in Dubai.

So while Dubai's success has beguiled the Arab world, it will be difficult for other monarchies and impossible for Arab republics to emulate. For both there are dangers in even trying. Dubai itself has had difficulty in managing the culture clash between a cosmopolitan, global lifestyle and a traditional, local one, as occasional embarrassing arrests of tourists cavorting on beaches attests.

That clash poses infinitely greater challenges in the more conservative monarchies, key among which is Saudi Arabia, but also even in the republics such as Egypt where gender relations become ever more controversial. The Dubai trademark glitz and glamour is bound to be provocative in less wealthy settings.

So while Dubai's success has beguiled the Arab world, it will be difficult for other monarchies and impossible for Arab republics to emulate

Importing foreigners to manage leading sectors of the economy is simply not possible in any of the republics and increasingly is at odds with state policies and preferences of the other monarchies. The regional economy may not be able to support another major entrepot, as suggested by the demise of Beirut. No other entity in the Arab world has a bankroller equivalent to Abu Dhabi, the implicit guarantee from which underwrites local, regional and global confidence in Dubai.

Sustaining Dubai, Inc., poses challenges for Dubai itself. The Middle East is a pale imitation of the East Asia in which Singapore flourishes. Not only is it wracked by ever increasing violence, militarisation and state breakdown, but the terms of trade have shifted dramatically against it as oil and gas prices have fallen.

The United Arab Emirates, the cocoon in which Dubai has grown and prospered, is steadily becoming less benign as inequalities between northern and southern emirates intensify. As in China, since Dubai's rulers predicate their political legitimacy on economic growth, its potential faltering carries serious implications for the emirate's political stability.

Finally, seeking to export the Dubai model, which the al Maktoum seek to do in part to legitimate themselves, poses risks not just for the emulator, but also for the progenitor of the model. Becoming entangled in the political economy of say Egypt, has  potential for backlash when and if projects fail, become closely associated with a local actor, such as the military, whose role subsequently becomes controversial, or which become ensnared in allegations of corruption.

So Dubai, Inc., is essentially not for export and attempting to do so poses potentially serious problems for both buyer and seller.

Robert Springborg is Visiting Professor in the Department of War Studies, King's College London, and non-resident Research Fellow of the Italian Institute of International Affairs. Until October, 2013, he was Professor of National Security Affairs at the Naval Postgraduate School and Program Manager for the Middle East for the Center for Civil-Military Relations.

From 2002 until 2008 he held the MBI Al Jaber Chair in Middle East Studies at the School of Oriental and African Studies in London, where he also served as Director of the London Middle East Institute. Before taking up that Chair he was Director of the American Research Center in Egypt.

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.