Dubai's Formula of Tax Free Economic Zones and Mass Tourism Doesn't Work

Joshua Hammer describes his visit to the financially straitened emirate where he found "deserted highways, empty hotel rooms, miles of unsold residential and office space."
September 3, 2010, 11am PDT | George Haugh
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Although the Dubai still has considerable resources, companies engaged in international trade and an evolved tourism sector, the financial crisis still has a stultifying hold on the city. It is likely that the collapse of its real estate industry has cost Dubai in the region of "25 percent of its economic activity."

Hammer neatly explains how the real estate boom was kept going by a "Dickensian labor system that was bound at some point to self- destruct. At the height of the boom, tens of thousands of Southeast Asian laborers, banned by Dubai's labor laws from forming unions, were put to work for eighty hours a week to build the Dubai fantasy and obliged to live in squalid residential camps in the desert."

The outlook is no better. Most analysts "believe that it will take five years for building to begin anew in Dubai, and they question whether the city can retain its allure meanwhile."

If Dubai's "formula of tax-free economic zones and mass tourism doesn't work," a long-time resident explains, "people who have been emulating it throughout the Middle East will say, ‘What the hell do we do now?' There are a lot of angry young people out there, and the whole region will go up in smoke in ten years if they can't find employment for them."

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Published on Tuesday, July 20, 2010 in The New York Review of Books
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