at our expense.
Oil barons play at lavish hot spots as consumers sweat at the pump
By CRAIG NELSON
For the Journal-Constitution
Published on: 03/27/05
DUBAI, United Arab Emirates — Snow skiing in the desert? Sure. The world's tallest building and largest shopping mall? Build them. An undersea luxury hotel? Why not?
Seemingly nothing is impossible these days in this desert kingdom on the northern coast of Arabia.
New York Times
(ENLARGE)
A worker caulks the entrance arch at the Emirates Palace in Abu Dhabi, United Arab Emirates. The vast new complex is for the rich, offering extraordinary amenities at spectacular prices.
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The biggest oil price boom of a generation is under way, proving wildly wrong predictions by the U.S. Department of Energy last year that oil prices would decline to $23.57 a barrel.
Instead, prices hit all-time highs last week, with light crude topping $56.46 a barrel in New York — a whopping 50 percent increase from a year earlier — and some analysts are saying the days of $80-a-barrel may not be far off.
Every time motorists fill up at $2.15 a gallon in the United States, the swishing sound you hear in this desert kingdom is billions of fresh petrodollars pouring in. Oil profits are being spent with such abandon that Dubai's economy grew last year at a rate of 16.7 percent, compared with U.S. growth of 4.4 percent and China's 9 percent.
It is not just Dubai that's being transformed by the world's — particularly China's and India's — thirst for oil.
Petrodollars are helping repair Russia's tattered economy, and giving President Vladimir Putin an excuse to avoid needed reform and a weapon with which to revive Moscow's influence on the global stage.
In Venezuela, President Hugo Chavez is using the oil bonanza to beef up his military, thumb his nose at Washington and polish his populist credentials with give-aways to a restive population.
But it is Dubai's freewheeling economic vision that has proved a magnet for investments by the newly oil-wealthy.
"We don't bother ourselves with politics, and you don't hear people talking about politics here. In the coffee shops and restaurants and shopping malls, all they're talking about is making money," said Ali Ibrahim Mohamed, a top official in Dubai's department of economic development.
Little wonder that in this nominally Muslim kingdom, the unofficial national drink is a cocktail of vodka and Red Bull, and a Dubai restaurant called Gad advertises Viagra sandwiches made with shrimp and calamari.
U.S. no longer magnet
During the last oil boom of the 1970s and '80s, oil barons of the Middle East invested much of their burgeoning wealth in the United States. But that was before the Sept. 11, 2001, terrorist attacks, and their fears of an American backlash toward the Arab Middle East and their resentment of what they perceive as anti-Arab racism.
This time around, they're keeping their money closer to home, sinking much of it into the construction frenzy that has transformed Dubai, once a quaint port of pearl divers and gold traders, into a high-tech capitalist dynamo that combines Singapore, Disney World and Oz.
In its drive to become an international business center and deluxe tourist destination, Dubai already boasts the iconic 5-year-old Burj al Arab, the world's tallest hotel at 1,053 feet, only 197 feet shorter than the Empire State Building. Not to be outdone in the battle for prestige between autocratic dynasties, the neighboring sheikdom of Abu Dhabi has just opened the 1.18 million-square-foot Emirates Palace hotel at an estimated cost of $2.8 billion. It took 20,000 workers laboring day and night three years to complete it.
The interior of the Burj is covered with 86,114 feet of 22-karat gold leaf, and the marble walls of the Palace are said to have used up a year's supply of gold from South Africa.
The Burj offers a "pillow menu" and specializes in camel milk rice pudding. "We make sure we surpass expectations with all these little things," said Nicki Allitt, a spokeswoman for the Burj.
The Palace features "bath caviar," $15,000 cognacs and 50-inch plasma screen TVs in each room with a touch-screen pad that controls everything from air conditioning to wake-up calls. Rooms are priced accordingly — at the Burj from $1,361 to $10,073 a night, and at the Palace from $5,989 to $12,251 a night.
The Palace's rates were apparently no issue for guests from the Persian Gulf, Europe and Russia, who strode through the hotel's gleaming corridors last week. Nor apparently were they a problem for the president of the oil- and gas-rich Central Asian nation of Kazakhstan, Nursultan Nazarbayev, who was occupying one of the hotel's presidential suites.
"They have the money and want to spend it on this," explained Rumyanka Tzolova, a spokeswoman for the Palace.
Audacious projects
The edifice complex sweeping Dubai and to a lesser extent, Abu Dhabi, does not end there.
Companies closely linked to Dubai's royal family, whose approval is necessary for any local project, are constructing the world's first underwater luxury hotel, built three miles offshore. Guests will be whisked to the complex by train through a Plexiglas tunnel.
Then there are the three massive man-made archipelagos under construction in the Gulf that will house hotels, shopping centers and private residences. One is shaped like a date palm; another is made up of 250 man-made islands arranged to represent a map of the world. A Texas millionaire is rumored to be trying to buy the island that represents Iraq.
The Mall of the Emirates, the largest mall outside North America, is due to open in September and will include the Middle East's first indoor ski slope. It will be surpassed in 2008, when Sunny Mountain Ski Dome opens at the massive Dubailand entertainment complex. It will be the world's biggest indoor ski resort, covering 15 million square feet, and will have 6,000 tons of artificial snow.
To speed tourists to these playgrounds, Dubai's airport is being expanded even as ground for a new airport has been broken, with the aim of accommodating a total of 60 million passengers a year. A new light-rail system is under construction.
Dubai's build-it-and-they-will-come vision is best illustrated by what transpired at a meeting two years ago between the emir, Sheikh Maktoum bin Rashid Al Maktoum, and his consultants.
According to Ali Ibrahim Mohamed, a Dubai development official, when the consultants proposed building the world's largest mall, the sheik replied: "As long as you're doing that, why don't you just build the tallest building in the world?"
The result?
Ground has been broken for the half-mile-high Burj Dubai, which is to be completed along with the mall and its 1,200 stores in 2008. The glass-and-aluminum tower is being designed so extra floors can be added, just in case someone else tries to top it.
Cheap labor from Asia
The oil-fueled Dubai "miracle" would not be possible without the vast reservoir of cheap labor from India, Pakistan and elsewhere, workers who make up four-fifths of Dubai's 1.1 million population. They work under two-year renewable visas that authorities and company officials can revoke at any time.
Indians and Pakistanis drive taxis and construct buildings. Filipinos check guests in and clean their rooms. Kenyans open doors. And for upward of $300 a night, Chinese and Russian women share the beds of tourists and locals.
Mohammed Zaheer works 10 hours a day and earns $330 a month. Of that, the 36-year-old electrician sends $250 home to his wife and three children in India. He spends $55 on food and most of the remaining $25 on phone cards so he can call his family on his mobile phone. Along with six other workers, he lives in a 15-by-20-foot room in the labor camp of Sanabur, 15 miles north of Dubai.
"There was no work in India. For two years and six months, I had no job," Zaher said. He has been in Dubai two years and plans to stay indefinitely.
Luxury goods go fast
In Dubai and neighboring Abu Dhabi, where daytime summer temperatures regularly hover around 104 degrees and the swimming pools are actually cooled, shopping malls are air-conditioned social hubs, and the mall safari is the most popular form of recreation.
Hussma Mosli, a sales clerk at a cosmetics boutique in Dubai, says it is not unusual these days for his Arab and Russian customers to spend $2,000 to $2,500 on Chanel and Gucci perfume and other skin care products on a single visit. "They just pay. It's like a hobby to spend money," said Mosli, 26.
Western fashion design houses are sharing in the boom, too, as Saks Fifth Avenue, Giorgio Armani and Ralph Lauren rush to open new stores that rival any of those found on Fifth Avenue or Rodeo Drive. Many wealthy Arabs have refused to travel to the West since 9/11, but drop by Dubai to find a cure for their luxury fever.
"When we aren't at school, we shop, we do our hair and we share stock portfolios," said Nada Khelini, a 24-year-old visiting Saudi.
For Arab women, many of whom go out in public with only hands and feet visible, accessories are crucial components of style.
"Shoes and purses are critical," said Khelini, sitting with two girlfriends outside a Häagen-Dazs ice cream parlor in Dubai. All were dressed in traditional floor-length black abayas, with head scarves poised around their necks.
Shady past forgotten
Mohammed al-Fahim, a BMW dealer in Dubai, is confident that the towers climbing into the sky will not become a target for hijacked airplanes or bombs designed to disrupt pro-Western playgrounds. Nor are the troubles 600 miles to the northwest in Iraq or 100 miles to the north in Iran a cause for concern.
The economic success of the emirates is partly based on a relatively transparent financial system and tightened laws, which are likely to burnish the area's credentials as an oasis for investment.
That success has banished the emirates' image of shady dealings and loose financial laws that allowed al-Qaida to launder its funds through those channels previously.
Openness is the way forward, insists al-Fahim, both for the emirates and the outside world.
"We want the opportunity to show the world we can tolerate and welcome other investors in our region. We want recognition for our achievement, and what we have achieved in our generation no other has ever done," he said.
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Oil Barons play as we pay!!
A tri-axle dump truck(36,000 lbs) is around $2000 a year for just the tag. :rolltide: They are paying their fair share.
