[LINK] "Dubai, Money, Smuggling and Organized Crime"

[rfmcdonald]

Not to join in the general Dubai-bashing, but General Sociology has a post up examining Dubai's somewhat shady origins, quoting from Misha Glenny's excellent 2008 overview of global organized crime, McMafia.

When Dawood [Mumbai organized crime hotshot] skipped India for Dubai in 1984, few Westerners could have located the city-state on a map, let alone talk authoritatively about the place and its people. Arabs, Iranians, Baluchis, East Africans, Pakistanis and West Coast Indians, by contrast, had a deep historical acquaintance with Dubai. At the end of World War II, it was barely more than a coastal village that had survived largely on its wits, since its only indigenous industry, pearl fishing, had been wiped out by the war and by the Japanese development of cultured pearls.

In the barren years between pearls and petrodollars, Dubai quietly resurrected its trading links across the Strait of Hormuz with Iran and across the Arabian Sea to Bombay. Because of both Iran and India pursued policies of severe protectionism to build up their domestic industries, Dubai’s traders found they could exploit their own light taxation regime by importing all manners of material into Dubai and then exporting it to Iran and the subcontinent. “The bottomless pit that is Indian demand for gold funded many, many people here in those years,” explained Francis Matthew, an ex-pat for decades and editor of Dubai’s largest publishing company. “Almost every Indian woman needs it for her trousseau and her dowry; different kinds of gold, different kinds of plate for the various areas of India.”

[. . .]

In terms of influence, Dubai’s ruling Al-Maktoum family ranked second only to the Al-Nahyans of Abu Dhabi. The discovery of huge oil reserves on Abu Dhabi territory proved a godsend to Dubai and the other five emirates that formed the new state of the United Arab Emirates (UAE) in 1973 after the British decided to withdraw all its forces east of Suez. (…) Dubai itself has modest oil reserves, which even so account for 15% of the city-state’s income. But thse will dry up within the next decade. In the 1980s, the al-Maktoums decided to diversify (…). Thus they did conceive the plan to build the Jebel Ali port, its sixty-six berths making it the largest marine facility in the Middle East.

While critics scoffed at the grandiose project, the decision to create the new port was quickly vindicated. In 1979, Dubai had learned a valuable lesson from the Iranian Revolution and the Soviet Invasion of Afghanistan: trouble has its bright side. Frightened by the instability of their own countries, Iranian and Afghan traders moved to Dubai, bringing with them their businesses, thereby bolstering the local economy. With neither income nor sales tax, Dubai steadily developed a reputation for being a safe place in the Middle East to stash your money. Since then Dubai has always boomed during a regional crisis.

Long-standing economic links with India, including the historical use of the Indian rupee as currency in the British-protected states of the Persian Gulf and links with Bombay, furthered the city's economic growth.