Corporate over-speculation and government mismanagement has resulted in debt crises totaling an estimated $80 billion in Dubai, United Arab Emirates. The previously booming market, home to RIT Dubai, is surrounded in doubt after the monarchy announced a moratorium on debts for Dubai World, an investment company that oversees businesses and projects in Dubai. As linked economies reel from unpaid debts to pay for vacant shopping malls and unused housing developments, institutions like RIT Dubai becomes more critical for the prosperity of the region.
“Construction sites were popping up like weeds until recently. The pace of construction has slowed since the start of the credit crunch in Dubai,” says Chris Tan, a resident of the Dubai Silicon Oasis and administrator of the online forum http://siliconoasis.org. According to the “master plan” on the DSO’s website, http://dso.ae, the final city will be more than 4.5 square miles, and was projected to include more housing, “several junior and high schools, supermarkets, hospital, clinics, restaurants and cafes.”
The economy of the Dubai emirate has become notorious for this kind of unprecedented expansion. (An emirate is political territory that is ruled by a dynastic Muslim monarch styled emir. While Dubai grew wealthy from oil money, the royal family’s emphasis on trading established the coastal region as a Middle Eastern hub. The land soon became a prime vacation spot for Westerners and Easterners alike, encouraging development in recreational and real estate properties.
RIT Dubai is a center point of the expectations of Sheikh Mohammed bin Rashid Al Maktoum, whose emphasis on real estate has led to the growth of the tallest free-standing hotel, which is also expected to be the tallest building in the world. He is also responsible for the artificial islands known as “The Palms,” which have sprouted along the waters in the Gulf of Iran. The head of the royal family has also put aside $10 billion for “human development.”
Mohammed’s uncle, Sheikh Ahmed bin Saeed Al Maktoum, is a patron of RIT Dubai. A graduate of the University of Denver, Ahmed sees RIT Dubai “facilitating the creation of a competent resource pool of technologically talented professionals.” With programs growing in business, electronic engineering and mechanical engineering, those who graduate are expected to grow the economy of Dubai further.
But growth at such a breakneck pace left the real-estate business vulnerable. As oil prices dipped, vacationers and traders stopped becoming as frequent. As fewer people decided to make their home in and around Dubai, the government-controlled industries have had to put a halt on numerous construction projects. An oversupply of middle to up-market apartments caused government companies to go belly-up — directing more of the blame at extravagant productions in the coastal region rather than the buildup occurring inland in the DSO.
Like much of the UAE, Dubai authorities are downplaying the significance of their credit crunch, saying they are being unfairly criticized by the west. President William Destler describes RIT Dubai’s program plans as “ambitious,” as they are to continue to add graduate, and soon undergraduate programs to their campus.
Ambitious is a fitting description for the United Arab Emirates, who will most likely shoulder the debt burden until Dubai becomes a viable housing market once more. Dubai is one of seven emirates of the UAE, and has been characterized by rapid economic growth since the creation of the largest man-made harbor of Jebel Ali, established in the late 1970s. Since 1979, the Jebel Ali Free Zone has encouraged world trade and has become a hub for worldwide markets. Used cars, textiles, metals, machinery, ball bearings, vegetables and electronics can all be found within the 1,500 square miles of sand. With an arid desert climate, a veritable Las Vegas has its eyes set on becoming Los Angeles in the near future.
But the dreams of royalty have been halted by the realities of living in a global village. Amid accusations of human rights abuses from Southeast Asian laborers used to build the city, and clashes between the values of western businessmen and Islamic police, Dubai will remain in the news for many years to come. As long as the region remains a nexus for the world’s consumer interests, especially fossil fuels, there will be tension as Dubai attempts to modernize on a scale fit for the 21st century.