City of Gold: Dubai and the Dream of Capitalism (45 page)

Yet another theory says Dubai doesn’t get attacked because it’s too useful to terrorists and smugglers. An attack would tighten security and stop the party of lightly regulated banking and freewheeling ports. “I don’t think any terrorist organization will conduct any huge operation in Dubai or in the UAE, because it’s like shooting yourself in the foot,” says Rabih Fayad, Middle East intelligence manager for security firm International SOS.
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After the revelations of pre-September 11 al-Qaida money transfers, the U.S. Treasury Department and the UAE set up a joint unit that watches for terrorist funds and those connected to Iran’s nuclear program.
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Terrorists use UAE services at their own risk.

The UAE may not welcome terrorists, but it certainly hosted smugglers. After independence in 1971, Dubai and Sharjah emerged as supply bases for mercenaries and bloody regimes like Charles Taylor’s Liberia and others blocked from the international weapons market. The arms trader Victor Bout, a former KGB man, operated Sharjah’s biggest air cargo company, arming African rebels and dictators as well as the Taliban.
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The UAE finally deported him in 2001 under pressure from Washington.
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UAE-based smugglers weren’t operating just one way to Afghanistan. Dubai acted as a conduit for Taliban and al-Qaida gold smuggled
out of Afghanistan and into Sudan. Bout’s planes handled some of those shipments.
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A U.S. counter-narcotics official in Afghanistan told me in 2006 that Dubai was the chief destination for the profits of Afghani and Iranian opium traffickers. He said drug gangs laundered profits by buying Dubai apartments and earning legitimate rental income.

Dubai was also a center of the nuclear black market, a key base for a smuggling network led by Pakistani scientist A. Q. Khan. Until his group was wrapped up in 2004, Khan and Pakistan exported millions of centrifuge parts via Dubai to secret nuclear programs in Iran, Libya, and elsewhere. Shipments that passed through Dubai’s free port include high-strength aluminum, high-tech lathes, aluminum tubes, and finished centrifuges. Khan’s network was able to thrive in the city’s no-questions-asked business and trade environment, which allowed him to set up shell companies—some of which were little more than letter drops—and meet with potential buyers. At one point, Pakistan shipped twenty used centrifuges to Libya’s nuclear program through Dubai, along with a container of spare parts for two hundred more. Khan made dozens of visits to Dubai, hosted meetings and dinners, even getting a vasectomy in the city. Eventually the operation became such a well-known target for Western and Israeli intelligence that Pakistan’s military told Khan to move elsewhere. UAE authorities caught and imprisoned some of his accomplices and closed down his businesses. In 2009, Khan was released from five years’ house arrest in Pakistan.
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Dubai’s wealthy and trusting environment is also attracting organized crime, especially East European syndicates, which have committed gory murders and audacious robberies in the city’s tourist spots. In 2007, a gang of Serbian jewel thieves raided the Egyptian-themed Wafi City mall, roaring into an outdoor café pavilion in a pair of Audi A8 sports cars. They robbed the ultra-expensive Graff jewelry shop of $4 million in stones and then raced off. “It was the wildest thing I had ever seen in my life,” says Rick Carraway, an American architect who witnessed the crime. “There was a deafening crash and these cars sped into the mall. Shoppers were screaming, panicking and running away.”
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Onlookers filmed the heist with camera phones and then uploaded clips to YouTube.

Even the sail-shaped Burj Al Arab has hosted a bloody crime scene. In 2006, suspected Russian mobsters murdered a Syrian diamond dealer
and stole his wares in one of the Burj’s suites. And in 2008, Lebanese pop singer Suzan Tamim was stabbed to death in her Dubai apartment, victim of an apparent hit by an Egyptian tycoon.

These days, the crime headlines tend toward the financial variety. In 2008, the government placed under investigation more than a dozen bankers and corporate leaders, and two former federal ministers
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in a broad-ranging crackdown on corruption. Suspects have been arrested and held for months, usually on allegations of bribery or embezzlement, while the crackdown continues. Sheikh Mohammed’s
diwan
, leading the investigation, warned that “there will be no tolerance shown to anybody who tries to exploit his position to make illegal profits.” None of those arrested had been charged at the time of writing, including executives at Dubai’s biggest state corporations, nor Zack Shahin, a U.S. citizen and former chief executive of the developer Deyaar, whose arrest in March 2008 kicked off the probe.

Dubai’s outlaw legacy is a spin-off of its openness and laissez-faire capitalist ways. But nowadays the stain on its reputation causes problems. Western banks aren’t eager to plow investments into a shady locale. So Dubai regulators say their cleanups have gone further than otherwise necessary to reassure investors. Still, as long as Dubai remains a duty-free port and travel hub, it’ll be useful to smugglers.

Dubai is strict when it comes to security because the stakes are so high. Stability is the keystone of the economy and a chief reason Dubai diversified away from oil. But Dubai’s new ventures depend on volatile foreign investment, which tends to die when the chips are down. More than ever, the economy requires foreigners to vacation, invest, and live in Dubai. If they take the money and run, the Dubai model implodes. This was starting to happen in 2009 as the credit crunch swept in. An attack would only worsen matters.

“It’s skating on ice. You get a bomb in the Burj Al Arab or a major terrorism attack and everybody starts to lose money. Less people coming to the hotels, less people buying into the Dubai property market,” says Peter Hellyer of the National Media Council in Abu Dhabi. “Anything that tarnishes the image can affect the flow of investment.”

Tourism, responsible for nearly a quarter of Dubai’s economy, remained vulnerable, as did the already foundering real estate market. And the city’s financial sector is run by foreign bankers and fund managers, many of whom were among the UAE’s two hundred thousand European, North American, and other “first-world” nationals.
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Some were already leaving after losing jobs as the economy slowed in 2009. An attack would hasten the exodus. In this case, Dubai’s stinginess with citizenship works against it. Skilled professionals who underpin the private sector would be less likely to leave if they had a sense of belonging.

Al-Yousuf disagrees. “We’ve been through this. It’s not as if investments will evaporate if there’s an attack. Even if Iran gets attacked, we might get hurt in the short and medium term, but not in the long run,” he says. “Companies are more rooted now. When Dubai was still developing, people had liquid investments that they could easily take out. Now people own houses and investment properties.”

It doesn’t pay to worry in Dubai. Warfare has dogged the neighborhood for decades. Old-timers are jaded about the danger. The city has watched the raging of three wars since the 1980s and wound up turning a profit when it came time to rebuild. Saddam Hussein’s misadventures made millionaires in Dubai. In 1980, the Iraqi president’s invasion of Iran triggered an exodus of educated Iranians and their businesses to Dubai. In 1990, when he attacked Kuwait, the same thing happened.

“We’ve never had sustainable periods of peace and tranquility in the region. But Dubai’s still here and we’re growing. So what’s the worst that can happen?” asks Essa Kazim, the stock exchange chairman. “I agree, certain sectors are vulnerable. They might be affected for a short time. But every time we’ve had a problem in the past we came out of it much stronger.”

STUCK BETWEEN AMERICA AND IRAN

THE FIVE THOUSAND
Iranians had waited for hours on May 13, 2007. They’d finished the last crumbs of their picnics and hung their homemade banners. They killed time by practicing their chants: “Down, down USA!” and “Nuclear energy is our right!” And they sat through a speech by a Shiite imam who promised: “You’re in for an unforgettable night!”

The hardships melted away when their man finally strode onstage: the bearded leader with his infectiously humble charisma and trademark workingman’s jacket. They rose cheering to greet him. They frantically waved their tiny green, white, and red flags. The camera flashes and klieg lights danced on him, as he raised both arms and waved, graciously reflecting back their adulation.

President Mahmoud Ahmadinejad was the first Iranian president since the 1979 revolution to visit the UAE, and this would be his first public speech. For the Emiratis present in the soccer stadium at Dubai’s Iranian Club, it was a rare spectacle: a political rally in a country where politics are illegal.

Ahmadinejad’s speech was a masterstroke of timing. The high-octane Iranian blew into the UAE just hours after the departure of U.S. Vice President Dick Cheney. The contrast between the two visits could not
have been deeper. The dour Cheney, with his characteristic disdain for the public eye, hunkered out of view in the Emirates Palace Hotel in Abu Dhabi. His entreaties to his hosts to back the aggressive U.S. line on Iran got no play in the media.

Ahmadinejad was another matter. The UAE pulled out all the stops for the Iranian president, giving him a red-carpet welcome at the Abu Dhabi airport from the president, Sheikh Khalifa, and Dubai leader Sheikh Mohammed. It seemed as if the UAE let him issue its response to Cheney. Ahmadinejad made three public speeches during his visit, taking questions from the press, touting his country’s controversial nuclear development, and glad-handing the crowds.

By the time he arrived at the Dubai soccer stadium, the place had been gussied up with huge posters of his grinning face. Ahmadinejad spoke to the crowd in the style of an American evangelical preacher, dividing the world into beauty and ugliness. He linked beauty with God and his believers, and the ugly things with the unbelievers.

“A man who believes in God respects everyone. Look at history,” he said, when the crowd had finally settled. “The wars, the suffering, the racism; it’s the product of selfish people who don’t believe in God, people with Satanic beliefs.”

A few energetic men at the back waved a black banner demanding nuclear rights. In an ominous parallel to suspicions about Iran’s ambitions, their banner carried the yellow nuclear fallout symbol, rather than the usual three orbiting atoms of atomic energy.

“Look at Iraq. These people destroyed Iraq,” Ahmadinejad continued. “They sent millions fleeing their homes. They said they came to save Iraq. That’s a big lie. They came to control the region, to control the oil!”

He soon honed in on the U.S. embargo that stifles his nation. “They have industrial and medical improvements, but they keep them for themselves,” Ahmadinejad railed. “They want to control other nations, to keep others dependent on them. They’re not against nuclear weapons, they’re against Iran’s growth. The nation of Iran, a young nation with faith in God, will have this energy!”

At this point the restless crowd erupted and Ahmadinejad stood back to listen. “Nuclear energy is our right!” they shouted. He stooped to receive an admirer’s gift of a bouquet of roses.

When he stepped back to the microphone, Ahmadinejad spoke of the mighty bond between Iran and the Arab countries across the Gulf. He
said the unbelievers wanted to force these natural allies apart. The aim? To start a war that allows them to control the wealth. He turned and addressed the unbelievers directly.

“We’re telling you to leave the region!” Ahmadinejad yelled, pointing into the air. The crowd stirred into applause. “The nations of this region can no longer take your forcing yourself on them. We know better how to bring peace and security to our region. What is it that you’ve done in this world, that every time your names are mentioned, hatred swells up? This is Iran’s advice to you: Leave the region!”