Dubai Continues Impressive Building Spree, Undaunted by Domestic Financial Crisis

Sources:
BBC Online: First Gulf Metro System to Open
Asharq Alawsat: New Dubai Driverless Metro Makes Room for VIPs
NPR: Dubai's Debt Troubles Ripple Worldwide
Aljareera.net: Abu Dhabi gives $10bn to Dubai
NPR: World's Tallest Building Opens In Dubai
The Independent: Dubai Reaches for the Skies Despite Crisis


While financial markets are faltering, Dubai has completed two major new engineering projects. The ambitious emirate that previously attracted headlines with projects such as man-made palm shaped islands and the world’s second largest marina, expanded this reputation by opening the Middle East’s first Metro station and recently cutting the ribbon on the world’s tallest building, the Burj Khalifa. However, despite these new jewels, many have pointed out that they only serve to draw attention to the shaky financial ground that Dubai clings to.

Dubai was not been immune to the financial malaise that gripped the world in 2008. In December 2009, Dubai World, a massive government controlled holding company, reported that it was having difficulty paying off some $60 billion in debt. The company comprises 60 percent of the GDP of the country. Much like the financial sector in the United States, there is concern that if Dubai World defaults, the contagion will spread throughout the region. It may be so strong as to weaken the traditionally oil rich countries in the area. In response, Abu Dhabi has loaned the country $10 billion, but many investors continue to be concerned about the financial health of the country. They point to these massive construction projects as being both a cause and symptom of Dubai’s instability.

The weak economy in the world and at home has not completely stopped work on Dubai’s massive infrastructure projects. The 32 mile-long first segment of the Dubai Metro opened this autumn. It is estimated that the Metro will have a completed length of 43 miles. This will make it the longest driverless train in the world. In an effort to win riders, this Metro features many accommodations not found in many other cities. These include wireless internet, optional luxury leather seats for riders willing to pay a premium, and in a nod to the conservative mores in this majority Muslim country, women only carriages. Planners hope to have 200 million riders annually. It will be a great aid for many of the city's guest workers who currently face long commutes in dangerously unsafe vehicles. But planners are concerned that they will have difficulty getting the city’s wealthy to give up their luxury brand vehicles. Unfortunately, the financial crisis has reduced the number of cars on the road, and many guest workers have returned home.

The most recent addition to the already glittering Dubai skyline is the opening of the Burj Khalifa. Simultaneously drawing praise and scorn, this tower boasts an impressive 4 swimming pools, a private library, and a hotel designed by luxury fashion icon Giorgio Armani. In a gesture of gratitude towards its benefactor neighbor Abu Dhabi, the tower was named after its ruler Sheik Khalifa bin Zayed Al Nahyan. It rises to a reported height of 2,720 feet. This is 1,053 feet higher than its next highest competition, the Taipai 101 in Taiwan. It also holds the record for most stories and highest occupied floor of any building. However, much like the experience of the Metro, the financial crisis has sapped the Dubai real estate market, plunging prices down by half. Many buildings stand empty, and it is unclear if the Burj Khalifa will be able to attract all the tenants needed.

As Dubai, like the rest of the world, looks forward to coming though the global economic crisis, it seems to be continuing business as usual. Impressive new office space meant to lure financial companies to the region and state of the art Metro to whisk them around follow the same general principles that transformed the sheikdom from a small fishing village into a glitzy metropolis. But, it is unclear if this course will result in long-term growth or only short-term gains.

Discussion:

1) Are major infrastructure projects good for an economy that is in recession? How are the projects down in Dubai like the American Works Progress Administration (WPA) during the Great Depression? How are they like projects suggested by President Obama during the current recession?

2) What value is there for a country to claim records such as tallest building? Is national pride linked to economic strength or the perception of it?