The Persian Gulf's new bling kings
Even by the standards of the bling-obsessed United Arab Emirates, the Bugatti parked outside one of the federation’s many five-star hotels was exceptional and the Emiratis, leaving their evening meals after breaking fast on the first day of Ramadan last week, were eager to have their picture taken beside it.
The two-seater in deep burgundy with gleaming chrome engineering bore an Abu Dhabi registration plate in Arabic. Alongside, in English, the mark was translated as “I AM 17”.
This toy was not another bauble of a wealthy old sheikh; this was a birthday present for a teenager.
The youth who eventually got in and drove it from the hotel forecourt to a ripple of applause from admirers looked almost embarrassed at the attention.
I doubt he thought there was anything unusual in being given a gift worth several times more than the lifetime earnings of the Indian hotel employees whose job it is to valet-park the sports cars, limousines and top-of-the-range SUVs. The fact that an awkward adolescent could have such riches is commonplace in the Emirates, the Beverly Hills of the Middle East and the new financial powerhouse of the Persian Gulf and the world.
The Emirates’ capital, Abu Dhabi, which has had a couple of little flutters in the global marketplace recently with billon-dollar deals in Manchester and Hollywood, is at the centre of this explosion of wealth. Its new confidence and readiness to flash the oil cash is changing the dynamic of the Gulf economies.
One afternoon last week, the city lay snoozing quietly beneath a blanket of 42 degrees of heat, as is deemed appropriate for the holy month of fasting and charity, but it still oozed wealth. From the neck-aching ostentation of the Emirates Palace—built as a venue for an International Monetary Fund meeting but now perhaps the world’s most expensive hotel—to the shark-blue glass skyscraper that houses the Abu Dhabi Investment Authority (cash-in-bank estimated at $1 000-billion), the city was also perhaps a little embarrassed at the acres of newsprint and hours of newsreel that its latest shopping trips had sparked.
There was some muttering that the flood of publicity sparked by the Manchester City football club deal was unsettling for an emirate that preferred to do things in a quieter, more Islamic way than its brash young brother Dubai. But Abu Dhabi and its cautious power elite will have to get used to the attention, because when you have so much cash that you can buy virtually any iconic asset in the world, from the Chrysler Building in Manhattan to a $7-billion chunk of the United States’s biggest bank, Citigroup, the world will want to know about you.
All of a sudden, the shy, conservative Islamic capital seems to have caught “Dubai syndrome”—the urge to be bigger, higher, faster and just downright wealthier than the rest of the world. For the past 10 years, its mega-projects have been more low-key than the man-made islands and sunny pleasure domes of Dubai. Deals to bring the Louvre and the Guggenheim to the emirate were regarded as part of its role as guardian of the morality of the UAE. It was never openly said, but Dubai’s hedonistic lifestyle and Western orientation were always rather frowned on in Abu Dhabi.
Suleiman al-Fahim (31), the property executive behind the Manchester City deal, is an example of the new generation of entrepreneurs who are adding a touch of Dubai-style bling to Abu Dhabi’s huge financial resources. From comparatively humble origins, he made his name in property in Dubai before being spotted by the Abu Dhabi real-estate power brokers and brought under the wing of the ruling family as part of the royal conglomerate that operates the private business interests of the al-Nahyans, the family that runs the UAE under Sheikh Khalifa bin Zayed (60).
But al-Fahim was not part of one of the old trading families of the UAE. Its commercial life has been dominated by a string of business dynasties, many of them descendants of immigrants from the Arabian parts of southern Iran in the 1920s. Al-Futtaim, al-Ansari, al-Tayer and al-Sayegh—names as prominent in the UAE as Marks & Spencer or WH Smith in Britain—were allowed to dominate commercial life in the UAE, in exchange for profit-sharing arrangements with the ruling Emirati elite.
With the region’s long trading ties with business families from India and Pakistan, these groups combined to fuel the commercial life of the UAE after independence from Britain in 1972, importing the cars, engineering equipment, electronic and other consumer goods.
Indolence and inertia
The Emirati owners had long been used to a system of rentier income, first from pearl fishing concessions, then from aircraft landing rights under the British on the long flight from Europe to South Asia and then from oil. The result was a culture of indolence and inertia. The ruling Maktoums and Nahyans in effect handed over the running of the economy to expatriates and immigrants, and to foreign energy companies, in return for the cash generated by those businesses.
For an Emirati, this arrangement funded a cocooned lifestyle where all needs were met from cradle to grave. Education, healthcare and basic welfare are provided free for Emirati nationals; marriage (to other Emiratis only) was encouraged by financial assistance for house-building and children; work was provided in government institutions and the banking industry.
The Economist recently said such a system encouraged a society of “licensed layabouts”, and it is true that the work-life balance of many Emiratis seems heavily oriented towards “quality time”. A well-paid job in one of the government departments, short hours and a government-subsidised private life does not gel well with the idea of a thrusting entrepreneurial society.
That is changing and Abu Dhabi’s new high profile is proof of the transformation. The governments—first in Dubai, but increasingly in Abu Dhabi—began to fast-track young men and women who showed signs of business talent, putting them through Western universities and business schools and then letting them loose on underperforming UAE businesses. Al-Fahim is a product of this process.
With this comes a change in lifestyle. Dubai has catered for Western tastes for decades, with five-star hotels and restaurants allowed to serve alcohol and run nightclubs where anything goes, as long as it stays off the streets and beaches. But Abu Dhabi is catching up. It is not uncommon now to see young Emiratis—sometimes in long, flowing robes but with back-to-front baseball cap—propping up hotel bars and chatting to vivacious young women. Weekends consist of beach excursions where Islamic conventions are largely ignored. Many young Emirati women, usually seen in the full-length black abaya during the week, will be in bikinis at weekends.
This trend has been reinforced by the influx of young, fun-loving Lebanese. The Lebanese and their Emirati hosts now strut the luxury shopping malls with equal assurance—but it is the Emiratis who carry the Vuitton or Cartier bags and get into the chauffeured limos afterwards.
But beneath all that outward modernity and extravagance, the UAE remains a fundamentally, if not fundamentalist, Islamic society. The Emirates were always more liberal than their Wahhabi-dominated neighbours in Saudi Arabia, but its rulers have always remained profoundly Islamic.
Abu Dhabi bows to Mecca in more than the physical sense. When plans for the Sheikh Zayed mosque were unveiled, showing it to be the biggest in the world, Abu Dhabi scaled back the design after Mecca pointed out that the honour should remain with the city of the Prophet. Mosques are built with government funds and imams are licensed and monitored by the government.
This tug between religion and Westernisation is evidence that the UAE is the most successful experiment in the world of the co-existence of Islam with other beliefs, but there are downsides. Many Emiratis—who number perhaps less than 10% of the expat-dominated population—feel under siege.
One Emirati friend told me how he did not worry about Europeans or Americans living in the UAE, because they were there to help the country grow, but, he added ominously, “the Asians, they want to take over and we will not have that”. The government has recently initiated a debate on Emirati national identity in an effort to halt what it sees as a corrosion of traditional cultural values, and there is a danger this could become a new Emirati chauvinism.
At the crux of the matter is oil and the corrupting effect the commodity has on countries blessed with it but cursed to suffer the destabilising consequences. Abu Dhabi sits on 9% of the world’s oil reserves and 15% of the gas supplies—and with oil still above $100 a barrel there is no sign the financial engine will lose momentum. Recent estimates indicate that the UAE’s energy supplies will last another 100 years.
Dubai, meanwhile, has more or less run out of oil. The seven-star hotels, artificial palm islands, cavernous malls and mega-airports are all intended to diversify it away from oil dependence. Judging by the evidence all round the booming city, it is working, though whether Dubai will substitute property dependence for oil addiction is still hotly debated.
Al-Fahim said after the Manchester City deal that it was designed to bring “glory” to Abu Dhabi, and this is perhaps the best way to see it. The investment is unlikely to show a real return in financial terms, but if City knock their neighbours United off the perch to become the biggest football club in the world, the reflected glory for Abu Dhabi will be well worth it.
If it also demonstrates a serious sporting commitment and helps the UAE win the right to stage the Olympics or the World Cup in the next 20 years, even a billion-dollar investment will seem money well spent. And for the foreseeable future the UAE has money to burn.
Abu Dhabi’s big deals
Abu Dhabi’s royal family made a £210-million takeover—headed by Sulaiman al-Fahim—of Premier League team Manchester City last week. The next day Brazilian star Robinho was purchased from Real Madrid for £32-million. The new owners claim they will make the team “bigger than Manchester United”.
The Abu Dhabi Media Company has announced a £500-million-plus partnership with Hollywood. The company plans to make eight films a year over the next five years.
Mubadala Development Company, owned by the Abu Dhabi government, bought 5% of Ferrari for £65-million in 2005. It is in the process of building the world’s first Ferrari theme park, which will include a motor circuit that will host the first Emirates F1 Grand Prix next year.
Abu Dhabi wants its visitors to see it as a destination of culture, and will open an outpost of Paris’s Louvre museum in 2012.
Frank Kane is an executive at the Arab Media Group