Metaphor for neoliberalism

Dubai collapse points to continuing crisis, writes James Turley

It is the playground of the world’s billionaires, where income tax is zero. Part tax haven, part retirement resort for ageing bourgeois, Dubai - of all the fiefdoms gathered in the United Arab Emirates - has carved a niche in the state system all its own. It has become renowned for its decadent, cash-fuelled culture, enormous ex-pat communities and undoubtedly the most sublimely masturbatory of recent architectural projects.

Or, one should say, had carved such a niche - because now, the shock waves of the global financial crisis have begun to exact their toll. The UAE are principally oil-exporting statelets - Dubai is running out of crude, however, and is, in the parlance of the bank manager, “asset-poor and cash-rich”. It was the pessimistic projections for future oil production which principally inspired the financial and tourist economy accounting for most of Dubai’s headline GDP figure.

Unsurprisingly, much of this activity has been financed by enormous debts. The almost camp phallic construction projects are both a very visible symbol of the sums sloshing into the country from foreign investors, and also - as in other countries - the flashpoint in the current difficulties. The construction industry has dried up and the indirectly state-owned construction company, Nakheel, appeared about to collapse last week. The parlous state of Nakheel reinforced concerns that have been growing for some time among British contractors that the emirate will be unable to pay its bills - it was partly in response to this that Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s autocratic ruler, formally visited Britain on November 22. He sought to reassure Gordon Brown and Alastair Darling that all contracts would be honoured.

As he landed back home, however, Maktoum found himself with even bigger problems. Dubai World, the state investment company which owns Nakheel, was itself on the brink of collapse. On November 25, the Dubai government announced that its flagship investment vehicle could no longer pay its bills, and intended to suspend all repayments until next May. The next day was the Muslim holiday, Eid; scarce information and plentiful rumours sent the stock markets spiralling, the FTSE 100 losing 3% in one day.

For Brown and Darling this collapse, and the Dubai crash of which it is the epicentre, represents an acute headache. British banks have lent “50 billion to the UAE as a whole - worse still, among those banks worst exposed to the crisis is the nationalised Royal Bank of Scotland. On top of that, Dubai’s investments over here are manifold. One enterprise owns 22% of the London Stock Exchange, while an enormous container port currently under construction near London, eventually to employ 12,000 workers, is a Dubai state asset as well, owned by DP World - yet another Dubai World subsidiary.

Incidentally, DP World caused a storm of chauvinist agitation in the US in 2006 after it attempted to buy up six major ports - Hillary Clinton called it a national security issue, and amid fierce controversy DP World quietly sold off its American operation to the ill-starred insurance giant, AIG. It turns out that, instead of fulminating about hordes of malignant and turbaned al-Qa’eda operatives flooding through Arab-owned container ports, American legislators would have done better to take a closer look at the DP World balance sheet - but then they were incapable of looking at their own banks” balance sheets either in the glory days of 2006.

All this was documented in quite exhaustive detail in The Sunday Times (November 29) - a fact that led the Dubai government to spike that edition’s distribution, ostensibly on the basis that it featured an insulting photomontage of Maktoum “floundering in a sea of debt”. This brings us to the more sinister side of the story. Maktoum is the absolute ruler of Dubai - he holds all political authority. As usual in such situations, the wealthy ex-pats are not those who bear the brunt of autocracy, and the Dubai nightlife is the stuff of legend. Yet the truth is that all this is sustained through a hidden economy of oppression and exploitation.

In an extensive article for The Independent, noted reporter Johann Hari explored “the dark side of Dubai” (April 7). He covered the (then) gathering storm in the construction industry - buildings half completed and near-empty apartment complexes. He also talked to people who have fallen through the cracks, whose stories are unsettling. He found a Canadian, Karen Andrews, sleeping rough in her car. She had moved to Dubai when her husband got a job there, and indulged in the party life in this “adult Disneyland”. After her husband got into some debt, the couple found themselves unable to make payments. There is no going bankrupt in Dubai, however - the husband was sentenced to a year in prison, at a trial conducted in Arabic with no interpreter.

The fate of the ex-pats is one thing. That of the legions of workers who have built this gaudy honey pot is quite another. The vast majority of construction workers in Dubai, needless to say, are migrant labourers from outside the country. They are lured to Dubai with promises of a good wage, and thereupon exploited with an appalling intensity. They are expected to work 14-hour days in temperatures that reach up to 55”C; they are bussed from their building sites to enormous compounds, housing hundreds of thousands, sleeping up to 11 in a single squalid cell. Hari interviewed one of them, a young man from Bangladesh. The construction company seized his passport, and told him he had to work for a pittance in such conditions, or go home. ““But how can I go home? You have my passport, and I have no money for the ticket,” he said. “Well, then you”d better get to work,” they replied.”

This is the odious reality - the luminescent hotels and shopping malls are built with what amounts to Gulag labour, a slave economy remarkable for its size and omnipresence. Hari finds almost no ex-pat concerned by this. The last line he quotes from Karen Andrews could have come out of any JG Ballard novel in the last 20 years, as indeed could his account of the whole country: “The thing you have to understand about Dubai is - nothing is what it seems ... Nothing. This isn’t a city: it’s a con-job. They lure you in telling you it’s one thing - a modern kind of place - but beneath the surface it’s a medieval dictatorship.”

The dateline on Hari’s article - April 7 - indicates that the present economic crash has been evidently in the offing for some time. In reality it has been brewing for years - The Sunday Times notes that dubious business practices and government wheeler-dealings have been thrown into sharp relief by the changed economic conditions, just like in America, Iceland and elsewhere. There is always more revealed than the financial dimension, however. Inevitably, the rest of the dirt comes out. The BBC’s news website actually carried its own expos” of Dubai’s labour conditions a day before Hari’s appeared in The Independent.

A few years ago, nobody seemed that concerned at all. George W Bush, at the height of the DP World ports controversy, urged Congress to give the deal the nod. “It would send a terrible signal to friends and allies not to let this transaction go through,” he argued. Then, of course, Dubai was an important cog in the great apparatus of finance capital, making American companies billions. Now it is a point of extreme weakness, and possibly a “new Lehmans” according to Independent columnist Sean O’Grady (November 26).

Despite very real signs of recovery (albeit of a halting, partial kind), the world economy remains in some difficulty. Economists, bourgeois and Marxian alike, fret about the possibility of a “double-dip” recession, entailing a further crash after a short stabilisation. With Dubai on the precipice - and other prominent tax havens, notably Jersey, feeling the credit freeze - a second financial collapse is considerably more likely.

We should not follow the economistic left’s conventional “wisdom” and welcome such an eventuality. Economic crises have a tremendous effect on society, and send thousands and millions into poverty and starvation. This reduces the fighting power of our class, and even deproletarianises it to an extent (as people are forced into petty crime and so on to sustain themselves physically). The principal effect of the Dubai crash on those hundreds of thousands of migrant labourers is to deny them even the meagre wages they are nominally allowed, and press ever more heavily down on working conditions. Many are leaving their passports and simply fleeing for home.

We are faced with another iteration of the insane logic of the neoliberal order. Hari considers Dubai “a living metal metaphor for the neoliberal globalised world that may be crashing - at last - into history”. He is correct - but it is more than a metaphor. Dubai is a city which, to all intents and purposes, should not exist. It is a patch of desert too blisteringly hot for anything to grow that is not watered at all hours of the day; a land, also, with no major freshwater supplies, where desalinised seawater quenches thirst and costs more than petrol. Its economy is simply a node on the global financial networks and luxury tourist itinerary. The notion that this should form a discrete political entity is absurd - but the capitalist division of labour demands such aberrations.

In order to overthrow the petty tyrannies of the Arab world, it is necessary to reject the borders bequeathed to us, in the last instance, by British and French imperialism, and whose logic is realised equally in smoking war zones like Iraq and corrupt petty tyrannies of the UAE type. In order to escape the oppressive rule of strong arms and theocrats, to say nothing of imperialist domination, the Arab masses must be prepared to redraw the map entirely, to reflect the genuine needs of self-determination throughout the region.