Before Dubai exploded onto the economic scene in the 1990s, the Middle East had a similar city. It was Beirut, in Lebanon. Dubai had exploded precisely because Beirut had fallen as the economic capital of the region.
From the 1930s to the mid-1970s, Beirut was the glamorous, elegant, French-influenced Middle Eastern city where anyone who was anyone would hang out, including tourists and A-list celebrities from the West, like Brigitte Bardot, Marlon Brando, Peter O’Toole and Omar Sharif.
Beirut became this pivotal city because in the 1920s and 1930s, the French colonial authorities in charge at the time allowed Lebanese businessmen to set up banks. These became so well-known for their secrecy and other offerings that wealthy people from all over the Middle East would park their riches in Beirut banks. That then led Beirut to become the luxury capital of the Middle East, as all these rich people would flock there to hang out on their yachts, in chic bars and restaurants, in elegant, French-style resorts and hotels, and in ski chalets in the hills outside Beirut, where it snows heavily during the winter. The stylish refinement of Beirut was further strengthened by the fact that French was the language of the city, not Arabic. By the late 1960s Beirut, and Lebanon in general, became known as “the Switzerland of the Middle East.”
The good times, however, didn’t last. The political situation in Lebanon got more and more polarized among the various religious sects—the Druzes, the Maronite Christians, the Sunni Muslims, the Shia Muslims—throughout the late 1960s and early 1970s. This situation neared boiling point.
Then the pot tipped over when an extremely violent civil war exploded in Lebanon, and in Beirut, in 1975. It lasted almost 20 years. This brutal war totally gutted Beirut’s infrastructure and reputation as the glamorous “it” city of the Middle East. Today’s Beirut is but a tiny shadow of its former glittering self.
It was this vacuum left behind by the fall of Beirut that Dubai took advantage of. The rulers of Dubai realized that the Middle East required a beautiful, glamorous city where the rich of the region, especially the Arab rich, could let it all hang out.
Dubai was never independently wealthy. It never had the oil wealth of its neighboring emirates, like Abu Dhabi. So it sought to make wealth some other way. It thus took some pointers from Beirut.
First, the rulers of Dubai loosened financial and banking laws significantly starting in the mid-1980s, allowing Western banks to set up branches in the Middle East for the first time since 1975, when Beirut had slid into an orgy of violence. The rich who had banked in Beirut and took their money from the war-torn city now started to park their money in Dubai banks. Dubai stole the capitalistic and financial thunder of Beirut.
Then they loosened other laws, to allow the branches of major Western investment banks, accountancies and law offices to set up shop in Dubai, a first for the Middle East, where nations jealously guard their domestic professional services. That quickly attracted the rich of the region, who wanted these tertiary professional services in their backyard. They no longer had to fly to London, Paris and Zurich to hire a top-notch Western accountant or lawyer.
Quickly after the incredible success of these policies, the Dubai rulers expanded their international airport by leaps and bounds. That diverted traffic from the likes of Istanbul’s and Cairo’s international airports, which made Dubai the region’s most important air entrepot. Dubai’s airport also became the air hub for all of Sub-Saharan Africa, aggressively poaching the Africa-layover market from the London and Paris international airports. It helped that Dubai set up a fast-growing, competitive airline company that could attract even more passengers to its airport hub. More air passengers thus meant more tourists, who would spend their dollars, euros and yen in the new sumptuous malls of Dubai.
Finally, starting in the mid-1990s, the Dubai rulers began to invest heavily in real estate, following the rule “if you build it, they will come.” Then they aggressively marketed this real estate to the professional and wealthy classes in the West, South Asia and Sub-Saharan Africa, as well as the Middle East. To get the real estate market going, the Dubai rulers set up huge investment vehicles where the rich of the region, including the royal families of the other emirates and of the Arab kingdoms, could invest massively in real estate. Thus a huge new industry got going—construction and real estate development—as skyscrapers quickly blossomed across the Dubai desert from the mid-1990s to the 2008 crisis. (Even the huge islands shaped like palm trees were the result of the frothy real estate market that Dubai enjoyed before the 2008 crisis.)
These are the reasons why Dubai is so wealthy—it stole Beirut’s business, planting itself as the new economic and glamor capital of the Middle East.
A glamorous hotel in Beirut in the 1950s.
The Saint-George, the premier glitzy hotel along the beautiful Beirut coastline in the 1960s.
The Sporting Club, the elite swimming club along Beirut’s coast in the 1960s.
Credit :- Pablo Djankowicz Ruizinowitz
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