Dubai: Rand’s Roark Writ Right (i.e., Wrong)

10 12 2009

(a roundtable discussion here at The Placemaking Institute)

Howard Roark: “The egotist in the absolute sense is not the man who sacrifices others. He is the man who stands above the need of using others in any manner. He does not function through them. He is not concerned with them in any primary matter. Not in his aim, not in his motive, not in his thinking, not in his desires, not in the source of his energy. He does not exist for any other man — and he asks no other man to exist for him. This is the only form of brotherhood and mutual respect possible between men.”

Christopher Corbett: “With about 1.6 million residents, Dubai is the largest city in the United Arab Emirates (UAE), a confederation of seven emirates that extend along the coast at the southern end of the Arabian Gulf. Ninety miles down the coast from Dubai is Abu Dhabi, the federal capital and second-largest city in the country, with a population of about one million. It is also the largest city in Abu Dhabi Emirate, a West Virginia-sized expanse of sand that accounts for 86% of the total land area of the UAE. Along with reputedly the world’s largest sand dunes, it is also where most of the oil, both off-shore and on-shore, is found. The six remaining emirates, including Dubai itself, are essentially city states.”

Mike Davis: “As your jet starts its descent, you are glued to your window. The scene below is astonishing: a 24-square-mile archipelago of coral-coloured islands in the shape of an almost-finished puzzle of the world. In the shallow green waters between continents, the sunken shapes of the Pyramids of Giza and the Roman Colosseum are clearly visible. In the distance, three other large island groups are configured as palms within crescents and planted with high-rise resorts, amusement parks and a thousand mansions built on stilts over the water. The ‘Palms’ are connected by causeways to a Miami-like beachfront crammed with mega-hotels, apartment skyscrapers and yachting marinas. As the plane slowly banks toward the desert mainland, you gasp at the even more improbable vision ahead. Out of a chrome forest of skyscrapers soars a new Tower of Babel. It is an impossible half-mile high: taller than the Empire State Building stacked on top of itself.”

Dubai’s Age of Excess

Davis: “The lodestone of Dubai, of course, is ‘peak oil’ and each time you spend $50 to fill your tank, you are helping to irrigate al-Maktoum’s oasis. Fuel prices are currently inflated by industrial China’s soaring demand as well as growing fears of war and terrorism in the global oil patch. According to the Wall Street Journal, ‘consumers will [have paid] $1.2 trillion more in 2004 and 2005 together for oil products than they did in 2003’. As in the 1970s, a huge and disruptive transfer of wealth is taking place between oil-consuming and oil-producing nations. Already visible on the horizon, moreover, is Hubbert’s Peak, the tipping point when new petroleum reserves will no longer offset global demand, and thereafter oil prices will become truly stratospheric. In some utopian economic model, perhaps, this windfall would become an investment fund for shifting the global economy to renewable energy while reducing greenhouse gas output and raising the environmental efficiency of urban systems. In the real world of capitalism, however, it has become a subsidy for the apocalyptic luxuries that Dubai is coming to epitomize.”

Eric Ellis: “Dubai’s economy expanded by 35 percent in 2006, and about 20 percent last year. It’s not oil ‑ that ran out decades ago. Dubai’s rags-to-riches miracle relies on an age-old business plan: slave labor in the form of millions of poor Sri Lankans, Indians, Pakistanis, Filipinos and Africans working up to 80 hour-plus weeks. They have built this gleaming oasis. With their passports seized as insurance, these bonded workers toil in near year-round 45-50 degree heat for about $US8 a day.”

Dubai’s Dirty Little Secret

Roark: “The creator lives for his work. He needs no other men. His primary goal is within himself. The parasite lives second-hand. He needs others. Others become his prime motive…To a creator, all relations with men are secondary…The man who attempts to live for others is a dependent. He is a parasite in motive and makes parasites of those he serves.”

Davis: “If the current mega-project blitzkrieg, exemplified by Dubailand, succeeds as planned, Dubai will derive all of its gdp from non-oil activities like tourism and finance by 2010…Will Dubai someday fall from the sky when this real-estate balloon bursts, or will peak oil keep this desert Laputa floating above the contradictions of the world economy?”

Al-Maktoum: “I would like to tell capitalists that Dubai does not need investors; investors need Dubai. And I tell you that the risk lies not in using your money, but in letting it pile up.”

Corbett: “I’m a senior planner at the Dubai office of a large international consultant. When I arrived early last year, things were jumping. My company couldn’t hire enough staff for all the active projects we had. Hundred-story skyscrapers and mega malls seemed to sprouting from the sand all around us. But I knew that I was late to the party and already by early Fall 2008 there were signs that the boom was coming to an end. Then the layoffs started. The first “unpaid leave” notices were passed out in our office on December 31st. I’m one of the lucky ones, still here after what had become a monthly ritual of ever more staff cuts. There’s a hopeful feeling now that the worst may be over. Meantime, some say that it was good for the boom came to an end, at least so Dubai’s infrastructure development could catch up.”

Barbara Surk: “Just a year after the global downturn derailed Dubai’s explosive growth, the city is now so swamped in debt that it’s asking for a six-month reprieve on paying its bills – causing a drop on world markets Thursday and raising questions about Dubai’s reputation as a magnet for international investment…In total, the state-backed networks nicknamed Dubai Inc. are $80 billion in the red and the emirate needed a bailout earlier this year from its oil-rich neighbor Abu Dhabi, the capital of the United Arab Emirates.”

Eurasia Group: “Dubai’s standstill announcement…was vague and it remains difficult to discern whether the call for a standstill will be voluntary…If it is not, Dubai World will be going into default and that will have more serious negative repercussions for Dubai’s sovereign debt, Dubai World and market confidence in the UAE in general.”

Edward L. Glaeser: “Dubai World has more in common with ambitious American real estate developers than with the sovereign wealth fund of neighboring Abu Dhabi, which takes that emirate’s vast oil earnings and invests them worldwide. Dubai has few petrodollars and Dubai World is borrowing billions to build a glittering commercial metropolis on the edge of sand and sea. The glint of hubris has long shone off the glass walls of Dubai’s soaring skyscrapers, but overreaching ambition always lies behind the creation of great cities…While Dubai’s good infrastructure, pro-business government and consumer amenities may enable the city to eventually succeed as a connector between the West, the Middle East and India, Dubai has now massively overbuilt relative to the level of current demand. Dubai now has the tallest building in the world, and 11 skyscrapers that are taller than any European building. Fifty-story buildings are an efficient way to deliver plenty of space, but extreme height is far more expensive and a bellwether of irrational exuberance.”

Corbett: “Since this was written, Dubai’s financial situation has become front-page news around the world. For those us working in Dubai, especially in the development sector (that would include planners), we have known about this for some time. Difficulties related to the payment of impending installments on debt by several large property developers in Dubai (notably US $3.5 billion Islamic bond coming due on December 14th owed by developer Nakheel) have been openly reported in the local press over the last several months, which makes me surprised that the financial markets around the word reacted as if they didn’t know.”

Glaeser: “Even if Dubai’s real estate prices continue to drop, which is certainly quite possible, there will remain a strong incentive to fill its buildings. If the structures remain occupied, then Dubai, and its sheik’s dream of a great metropolis, will survive.”

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