My National Post column this weekend focuses not on Dubai’s default, but on the illusions spawned by Dubai’s rise.
Dubai’s banking sector could exist only because it was backed by an implicit security guarantee from the United States. The credibility of that guarantee was spectacularly enhanced by the first Gulf War of 1990-91, and not so coincidentally Dubai took off soon afterward.
As with Dubai, so with so many other emerging economic powers, from South Korea to Chile. Their wealth depends on security provided to them by the United States.
Far from indicating a “post-American world,” the skyscrapers of Dubai are symbols of that American world as much as the monuments of American cities. Arguably even more so: Every rich country has skyscrapers, but there is only one that can be counted on to defend the skyscrapers of others.
3 responses so far
1 forgetn // Nov 29, 2009 at 3:38 pm
Dubai could exist because of the USA? Sure at a certain level, when you consider that $600 billion stream into the region every year. The UAE has long been jealous of Bahrain, this tiny island off the coast of Saudi Arabia. The creation of Dubai was a direct results of the rulers of UAE ( all based in Abu Dhabi) wanting the “money center” within their shores — but not too close.
There was never any logic to Dubai, it actively went after Bahrain’s crown as the financial center of the Middle East. I don’t think America cares a great deal between Dubai and Bahrain, so on that level you are right, America had a view of the region, but its view of each kingdom was one of benign neglect. As for the crazy of Dubai World I don’t think anybody outside that Kingdom ever thought these were rationale decisions that were made.
Commentators seem to forget that the wealth of the Middle East is not in Dubai, but in Abu Dhabi, Saudi Arabia, Qatar and Kuwait. All these countries remained outside the “Westernization” of the Dubai. Will the rest of the UAE payoff Dubai’s debt, I don’t know. What I do know is that the global financial community is about to get another lesson in Finance. When you lend make sure that productive assets are being constructed, otherwise it could end in tears.
2 Carney // Nov 30, 2009 at 10:56 pm
This obscene wealth flaunted by Dubai and other Gulf States comes from us. Last year we spent $600 billion on foreign oil, more than our defense budget. Half of that went directly to OPEC – more than we spent on Iraq and Afghanistan combined. Imagine if Obama proposed a tax of hundreds of billions to go to health care or universal college – we’d hit the roof. But we sit by passively as the most retrograde tyrants, thugs, fanatics, and kleptocrats “tax” us and take that money out of our country.
And what do they spend it on? First, the most egregious wallowing in luxury in the history of humanity – palaces, yachts, full-size passenger jets, racehorses, concubines, slaves, drugs, and every imaginable depravity. That’s money extracted from blue-collar Americans, And second, they spend it on the justification for their rule – Islam, of the most primitive, intolerant, and tyrannical variety. The Saudis are by far the worst but even the hangers-on fund genocidally anti-Semitic terrorism and finance the spread of terrorist propaganda world wide. Think of the most backward, insane form of Christianity striking oil or uranium, cornering the market , and suddenly being catapulted to prominence – like the Christian Identity cult (a tiny neo Nazi fringe) replacing the Vatican.
Since the Mideast has 70% of the word’s oil reserves, OPEC’s hammerlock on oil is permanent and unfixable. And since oil is fungible, even “domestic” oil funds our enemies by taking that oil off the world market and letting them charge more for theirs.
The only solution is to switch to alternative fuel for transportation (electricity generation is almost oil-free). The most affordable and practical alternative fuel is alcohol, which cannot be “cornered” by anyone. For more information read former NASA rocket scientist and nuclear engineer Robert Zubrin’s book “Energy Victory” or visit his website at EnergyVictory.net.
3 oldgal // Dec 1, 2009 at 9:14 am
Dubai, capital of the global economy, financed with sub-prime loans…who knew?
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