With its glittering seven-star hotels, gravity-defying architecture and shopping malls complete with indoor ski slopes, Dubai has fast become the byword for resplendent consumerism in recent years. A country built upon excess and world records – tallest building, biggest shopping mall, largest man-made port – it is staggering to think that this buzzing metropolis has transformed from a small port town to economic world-player in less than a century.
Pearls and Pirates
Dhows in Dubai creek. Source: Phil MagorAlthough its ascent to one of the world’s key business centers is a relatively recent one, Dubai’s location both at the mouth of the Dubai Creek and close to the trading hubs of Iran and Bombay has always made it an attractive location to settlers and traders alike. For centuries the area’s main income came largely from the pearl industry, attracting a considerable volume of cargo ships in the early 18th century. This in turn attracted an altogether less welcome band of sailors – pirates.
Between the seventeenth and nineteenth centuries, the Gulf coast became so targeted by marauding gangs that it was known as the Pirate Coast, with Arab and European pirates jostling for the lucrative cargos of the many ships passing through the Gulf. The piracy problem was further compounded when the Napoleonic Wars broke out in the early part of the nineteenth century and the British Navy, which had held a strong presence in the Gulf, were gradually deployed closer to home, leaving the Persian Gulf a veritable pirate playground.
In 1820, after several brutal attacks on their ships, including one so vicious that all crew were massacred and the ship commandeered by the pirates, the British felt something had to be done. After an aggressive response from the British Navy, which succeeded in quashing the majority of the pirate crews in the area, the ‘General Maritime Peace Treaty’ was drawn up, pledging British support to assist Dubai and its neighboring sheikhdoms in combating piracy, in return for enhanced trade and shipping benefits. The treaty also included clauses prohibiting slavery, thought to be the first references to the denunciation of slavery written into a British treaty.
Tax Breaks and Oil
One factor believed to have greatly contributed to Dubai’s development into the country it is today was the arrival of the Bani Yas tribe in Dubai in 1833. The Bani Yas had been the ruling tribe in Abu Dhabi for centuries, but following a family disagreement some 800 members of the Al Maktoum clan moved away from Abu Dhabi to invade and conquer the port of Dubai, with little resistance from the incumbents. Capitalizing on Dubai’s profitable location and lucrative pearling resources, they quickly started to develop the town. The dynasty continues all the way through to the present-day Sheik of Dubai, and it was an Al Maktoum who introduced one of the most attractive and lucrative features of Dubai life to this day – tax breaks.
After assuming power in 1894, in a bid to attract foreign merchants and money, Sheikh Maktoum bin Hasher Al Maktoum granted full tax exemption for all foreign traders, attracting those from far and wide to the emirate town. He established the re-export industry that would contribute to the economy on a permanent basis, and struck a deal to make Dubai a key port of call for an important British shipping company. By the end of his short reign in 1906 Dubai was beginning to boom.
Sadly, the boom was short-lived. The demise of the pearling industry, which had underpinned Dubai’s economy for centuries, coupled with the Great Depression, took their toll. World War II and renewed disputes with Abu Dhabi impacted further and the boom days at the turn of the century soon seemed an unlikely fairy story. It was not until the 1960s that Dubai began to regain its sparkle. A sparkle that was lent a particular sheen by the discovery in the region of a very precious commodity – oil.
Oil certainly was a catalyst in the development of Dubai’s fortunes, but many also consider the sound leadership of the ruler during the oil rush, Sheikh Rashid bin Saeed Al Maktoum, as a greatly contributing factor. After the discovery of oil in Abu Dhabi in 1958 but before it was found in Dubai, Sheikh Rashid had decided to capitalize on the commodity. With no port in Abu Dhabi, in 1963 he began a project to dredge Dubai Creek, allowing the larger vessels needed to transport oil to dock in Dubai and also enabling the gold re-export business to explode. Finally, in 1966, oil was also discovered offshore Dubai, cementing the country’s fortunes – at least for the time being.
Luxury Tourist Destination
The 1960s were a decade of great change for Dubai. The British announced their intention of terminating the 1820 treaty relationship with the Coastal states, who were given a three-year window to develop their own security plan before the British left in 1971. As a result, the United Arab Emirates (or UAE) were formed, consisting of seven sheikhdoms with Abu Dhabi and Dubai at the helm. In fact, the UAE was initially created when Dubai and Abu Dhabi put aside their centuries of differences and formed their own union, later asking the remaining sheikhdoms to join them as the United Arab Emirates in 1971; the 40th anniversary of this momentous event will be celebrated in the UAE on December 2, 2011.
Oil, as we all know, will eventually run out. However, with canny foresight Sheikh Rashid’s successor, Sheikh Maktoum, was keen to maximize revenue for the country beyond the oil industry. His answer was to establish Dubai as a travel and tourist destination unlike any other, and Dubai began to develop into the extravaganza it is today. The national airline was established, some of the most ambitious building projects ever thought of were undertaken, including the world’s tallest free-standing hotel, the Burj Al-Arab, and the city fast became a real estate goldmine. Even more ambitious projects were started, included the much maligned sea reclamation project to create a set of the world’s most exclusive habitable islands.
But as happened before during Dubai’s stellar ascent, the good days lasted for only so long. The credit crunch did not just hit the country hard, it decimated it, spearheaded by the economy’s reliance on real-estate income and foreign investment. Now with sky-rocketing debts, Dubai’s future as the shining star of the Middle East looks less certain. But if the last few centuries have taught us anything, it is that surprising things happen to this little country. It is unlikely to be down for long.
