Dubai Goes Legit

Nowhere does compromise quite like Dubai. It is a city-state in one of the most conservative regions of the world that manages to attract millions of Western tourists every year. It is a place that has avoided the religious and tribal conflicts of its neighbors while pursuing a single-minded foreign policy. Before the crash, it was feted in Western capitals as an example of a progressive Arab model of development. And when the global economy faltered, it was ridiculed as an example of the worst excesses of laissez-faire capitalism.

But the downturn has highlighted other, more complex compromises than the obvious ones — and the consequences go further than the clichéd headlines about seven-star hotels and indoor ski slopes would suggest. Dubai, an emirate with seven times more expatriates than locals, is going through a major identity crisis. And the resolution of its crisis could have a serious impact on its relationships with the six other emirates in the United Arab Emirates (UAE) and its regional neighbors, including, crucially, Iran.

It’s easy to forget that Dubai is a conservative Islamic emirate, with a set of rules to match. Public displays of affection are not allowed, men and women aren’t supposed to stay in the same room unless they’re married, and public drunkenness is illegal. But these rules go almost entirely unenforced because if they were, Dubai’s tourism industry would collapse.

So instead, Dubai has operated under a "don’t ask, don’t tell" policy, which covers everything from its attitudes toward alcohol and sex to its often murky trading partners. And unsurprisingly, a massive influx of Westerners over the last decade — in 1996, 1.9 million visitors came to the emirate, a figure that rose to around 7 million in 2009 — has brought consistent cultural clashes between tourists and local authorities. Even long-term expatriates (only 4 percent of whom are Western) often have no idea what is allowed and what isn’t.

This system has functioned, more or less, for years. But as Dubai’s economy faltered and the UAE’s local population grew more frustrated at the country’s changing demographics, ruptures started to show. Locals are getting frustrated with Dubai’s cultural ambiguities and the vagueness of Emirati laws that leave Westerners confused about social mores. As Sultan Sooud Al Qassemi, an Emirati commentator, wrote in the Abu Dhabi-based National newspaper last month, "It is time that the UAE has a serious conversation with itself about what is and isn’t acceptable in public. It is no longer possible to expect that these issues will sort themselves through a policy of ambiguity."

The ambiguity was illustrated last month when the Dubai city government issued a circular banning the use of alcohol in all food served in restaurants and hotels. Barely 48 hours later, it claimed there was no ban and that the whole thing was a "misunderstanding."

Dubai’s police, too, have become increasingly active: In recent weeks, expatriates have made news for kissing in public and sending allegedly explicit text messages.

According to Christopher Davidson, author of Dubai: The Vulnerability of Success, the crackdown is a threat to the mainstay of Dubai’s economy: the 7 million tourists who bring in an estimated $1.5 billion each year. "The latest string of incidents is pushing Dubai precariously close to the point of no return when it comes to tourism potential," Davidson says.

If the crackdowns are a signal that Dubai’s government, spooked by the financial crisis, is planning to pass broader Islamic laws — or at least enforce the ones it already has — Dubai’s pre-eminence as a regional business and tourism hub could be seriously in jeopardy. As one Irish businessman told me, "I don’t want to bring my family up in Kuwait or Abu Dhabi as Dubai is far more open, but if Dubai were to become stricter, I would take a job somewhere else in the Gulf where the pay is better."

And yet such crackdowns are nothing new, as Jim Krane, a nonresident fellow at the Dubai School of Government, points out. In his book, City of Gold, he writes, "Vice cleanups have been a Dubai staple for generations. There was a crackdown on hookers in Deira in 1936 when Sheikh Saeed’s wali forced them to get married or leave town."

What is new is the increasing lack of identity many Emiratis feel in their own country. At a conference on national identity last year, Abdulkhaleq Abdulla, professor of political science at United Arab Emirates University, said the UAE’s 800,000 citizens "are lost" among millions of expats. "My anxiety is for the younger generation, that they don’t know a lot about their culture and history and we fail to tell them about our history and traditions," he told the conference, titled "Who Am I? Who Are You? A Dialogue on National Identity." This belief was reiterated last month during a session of the Federal National Council, a 40-member quasi-parliamentary body, in which some members criticized the lack of "Emirati values" in the country’s media. This week, the National reported that many Emiratis are moving back to the deserts, alienated by the large foreign populations in urban areas.

It’s because of these conflicts and cultural misunderstandings that both long-term expats and Emiratis felt a certain sense of relief during the downturn as the flow of visitors slowed. As Al Qassemi told me, "The real estate crash is seen by many as a blessing in disguise since the various governments in the UAE were building projects that would potentially double the number of expats in the country and reduce the local national population to single percentage digits from 15 percent today."

Other changes are still in store for Dubai’s locals, however. The economic crash also subtly affected Dubai’s power structure. Dubai’s traditional merchant families, who had been dominated over the last decade by the Western-educated Emiratis in the governmental and semigovernmental bodies, are now returning to power: poorer, perhaps, but stronger politically as the monarchy reverts to its traditional base. The Western-educated Emiratis who dominated Dubai’s semigovernmental bodies before the crash have been replaced or have disappeared from view. For example, Nakheel, the quasi-governmental developer behind the Palm and the World developments, recently replaced its chairman, a U.S.-educated Emirati, with Ali Rashid Ahmed Lootah, a member of the Lootah merchant family.

When it comes to Dubai’s relationship with its neighbors, many of whom were also affected by the crash, some wonder if Dubai will follow in the footsteps of the northern emirate of Sharjah. The emirate was once a freewheeling smaller version of Dubai; then its economy collapsed in the mid-1980s, and it turned to Saudi Arabia for help. Now alcohol is banned, and Sharjah has lived under sharia law since 2001 — and unlike Dubai’s "sharia lite" version, Sharjah actually enforces its laws.

Such a shift is not likely to happen in Dubai, which relies far more on tourism revenue than Sharjah ever has. But Abu Dhabi, which bailed out Dubai to the tune of $10 billion last year, is likely to have more of a say in Dubai’s affairs. So far, apart from the renaming of the world’s tallest building, originally the Burj Dubai, to the Burj Khalifa (Sheikh Khalifa bin Zayed al-Nahayan is the ruler of Abu Dhabi and the president of the UAE), there has been no overt interference.

But Dubai could feel significant pressure from Abu Dhabi, a close U.S. ally, when it comes to foreign policy, and the newly dependent relationship could create interesting effects in the region. Dubai has always been the most pro-Iranian of the Gulf states, and Dubai and Iran have longstanding commercial and cultural ties. Trade between Dubai and Iran amounted to $12 billion last year, a figure that has tripled since 2005. And Dubai has benefited from Iran’s increasing isolation from the rest of the world, acting as a backdoor to the Iranian economy. In Dubai’s ports, where many Iranian merchants have lived for decades, Farsi is as commonly spoken as Arabic.

Abu Dhabi, on the other hand, is more wary when it comes to dealing with Iran, and it might press Dubai to rein in the smuggling. Closing off the Dubai avenue could be a big step for the United States as it looks to further cut off Iran, and in fact U.S. presidents have addressed the issue before: George W. Bush brought it up on his 2008 visit to the region.

According to a recent report by Al Jazeera, in fact, the pressure is already on. Dubai’s compromises may be finally catching up to it, and the emirate’s future is likely to be a far less shady one.