Orange Juice Won't Be Enough For Dubai

A seven star hotel, a set of man-made islands visible from the moon, the world's first underwater hotel, future home of a building three times as tall as the Empire State, an amusement park twice the size of the world's current largest, Walt Disney Orlando. This was the Dubai that was the talk of the world and the topic of numerous newspaper headlines. Dubai is known to be the most futuristic, sophisticated, and cosmopolitan city in the region. The surprising aspect might be that it's in the Middle East. But then again maybe not. It is an oil rich region. Because of it's greatest resource, it should be safe from the current economic crisis and will continue to become the glamorous city everyone speculates it will be. Right?

Dubai's immunity to the current global economic crisis is failing. Many predicted that this glittering boomtown with some of the most elite hotels and residences in the world would be able to pull through but it seems as though no one is safe from the free-fall-like pace of this crisis.

The glorious city that is currently almost completely under construction with approximately 20 percent of the world's cranes and the promise of the best of everything. Politically, Dubai is known as the "peace-land in the Middle East" and has not ceased to amaze those around the world; the boom happened so quickly. But will it crash just as quickly?

With banks in panic and freeze mode in terms of lending and nervous global investors, many of the current projects in Dubai will be in trouble. If the flow of cash comes to a standstill from the borrowing end investors will have to try even harder to sell the promise of a 3 bedroom 2 bath apartment overlooking the sea with a gorgeous view of the city on the other side. But along with nervous banks there is also the utterly panicked consumer. With no one willing to buy and no one willing to lend, will pending projects collapse? They will definitely have to be scaled down and Dubai will not be the architectural city which can carry the slogan, "Build beyond your dreams." Additionally, tense lenders are calling in their loans to keep their own finances afloat, causing a greater strain on investors. Furthermore, what if some Dubai banks failed? Impossible, you say? Well, Lehman Brothers failed after more than 150 years in the business, Goldman Sachs' closed in double digits last week, Merrill Lynch merged with Bank of America, need I list more? I believe at this point, anything is possible and all precautionary measures should be taken. Of course risky loans were made in Dubai as well! This is what is most frightening since the city was growing at such a pace that the pressure to get money into the system was getting increasingly tough to handle. There were so many investors. Were all of them vetted carefully?

Dubai needs to control it's debt and lower the escalation in infrastructure projects. If there are not enough people planning to live in this city in these economic times, the housing that is being planned for will not be necessary and will thus lead to a crash in the housing market. What was speculated five years ago will probably not be met and there will be an excess supply of housing and other resources. Dubai is also dependent on the revenue from tourism but needless to say that travel will decrease as this economic crisis (or slump, depending on how you want to see it) continues.

What sort of implications does this have for the politics of region? Will this peaceland, that strived to assert itself in the world and set an example for the rest of the hemisphere convince the people to stop believing? Dubai is the pride and jewel of the Middle East. If the failure of Dubai before it's big debut is inevitable, it's possible that the region would resort to defense build-up as a way to preserve power in the world. Because of Dubai's economy and the relation with American investors, the United States never brought it in the middle of any belligerent talks. There was no reason to. The UAE is a small country. How will it assert itself to the global community if simple economics doesn't work? Will it resort to acquiring nuclear weapons, like nearby Iran?

Dubai's immunity is failing. What will be it's vitamin C?

A jaw-dropping link to check out: http://www.dubai-architecture.info/DUB-GAL1.htm