Martina Devlin: Dubai built its castles on sand, we did it in the air
Thursday December 03 2009
Let's talk today about a small state which thirsted to put itself on the global map, became a monument to hubris, materialism and epic silliness, and had its day of reckoning. No, not Ireland, for a change -- although the shoe fits.
While we built castles in the air, Dubai built them in the sand, on foundations just as insecure as ours. The Arab state is now in the news, not for recreating the Parthenon on a sand dune or some such bombastic folly, but for suddenly admitting it cannot pay its debts.
With Dubai exposed as just another sham economic miracle, its fate is of particular interest to the estimated 6,000 Irish investors in this megatropolis -- who stand to lose money.
Perhaps they believed Dubai, one of the least sustainable places on the planet, could give that other desert playground a run for its money. But Las Vegas grew up gradually, whereas Dubai sprouted like a mushroom.
This tiny, cocky member of the United Arab Emirates proved there was no limit to man's ingenuity. But it also emphasised our propensity to use that ingenuity for pointless ends: Dubai refrigerated its beaches and built an indoor ski slope. Energy efficiency is no priority there -- although as a sheikhdom, rather than a Fianna Fail-dom, it's under no obligation to nod to Green concerns.
Excess became the city-state's international brand. A classic example was 'The World' project -- an archipelago of artificial islands shaped to replicate a map of the Earth. The initiative was conceived by the state's ruler, Sheikh Maktoum, and makes Charlie McCreevy's deranged decentralisation appear almost sane. As with McCreevy's grand vision, 'The World' scheme is unlikely to be completed.
'Ireland' -- featuring the Giant's Causeway, recreations of Georgian Dublin and the inevitable Oirish pub -- was snapped up by an Irish property developer who later went bust. He also bought 'the UK' -- when they had the borrowing capacity, our developers had a weakness for planting the tricolour on British soil. Meanwhile, the islands are slowly sinking back under the waves. If only our own disasters could be eradicated so conveniently.
Incongruously, Dubai managed to market itself as a luxury tourism hub. This was more than we ever managed, although we doled out tax breaks for hotel building to beat the band. Expect to see an increasing number of white elephant hotels lying empty round the country doing nothing to enhance tourism.
During the boom, with our critical faculties in hibernation in this regard as in so many others, we fell for the myth of Dubai as a holiday mecca. A direct Aer Lingus flight (now discontinued) whisked planeloads of us to the desert-state where summer temperatures hit 45C.
Swimming pools have to be cooled before people can take a dip in them, but it was still regarded as an upmarket tourist destination. Men and women are obliged to swim separately in these pools, but it was still regarded as an upmarket tourist destination. The city is being built on slave labour, with employers holding their foreign workers' passports, but it was still regarded as an upmarket tourist destination.
The power of hype is a sight to behold. Wherever two or three Irish people gathered with some borrowed euro to invest, they spurred each other on to check out Dubai. What better way to top up your tan while you speculated?
We Irish weren't the only saps. Vanity, ego and avarice persuaded international investors to underwrite Dubai, described this week by the 'Financial Times' as "built with grandiose long-term plans financed by piles of short-term debt". Now where have we heard that before?
No doubt about it, we saw a soulmate in Dubai, or maybe that should be a soukmate: Dubai's shopping centres were legendary, and we had discovered a talent for shopping. Dubai was a new kid on the block, flush with (other people's) money, and we sensed something familiar in that. We both liked to swagger about, looking rich and showy, busy following Bertie Ahern's breezy maxim of 'when I have it I'll spend it'. Still, at least it never occurred to us to supply the gardai with BMWs and Porsches, as they did in Dubai. Be thankful for small mercies, I say.
Bank of Ireland, which sank around €50m into the emirate, is among investors who will take a hit. I wouldn't be surprised if some other Irish financial institution isn't an investor, too, and hasn't 'fessed up yet. Royal Bank of Scotland, owner of Ulster Bank, is one of four international banks heavily exposed by the Dubai saga.
It's an expensive education for some, but we can learn from Dubai -- our near neighbour, not in geography but in self-delusion and a propensity for debt. We can learn that obscene displays of wealth are unacceptable. Apart from highlighting a taste deficit, they can be built on shifting sands.
Dubai also reminds us of Herbert Stein's famous law: "If something cannot go on forever, it will stop." Stratospheric property prices spring to mind, with greed blinding logic. The Irish parallels are striking.
What happened there, as here, was a suspension of critical faculties, and the results would be farcical if they were not so devastating for small investors. After all, not every cent that allowed Dubai to grandstand ("Let's buy Madame Tussaud's. Let's buy the QE2.") came from faceless corporates.
Here in Ireland, we don't need another lesson in the dangers of losing the run of yourself. But we've just got one anyway.
- Martina Devlin
Irish Independent
