Sunday, November 29, 2009

India must think big, stand by Dubai (November 29, 2009)

Swapan Dasgupta

It’s always amusing to hear those who acquire wisdom in hindsight. “When you start building a third island shaped like a palm tree, intending it to be as big and crowded as Manhattan,” wrote Jim Krane, the author of the evocatively titled “Dubai: The Story of the World’s Fastest City” in Saturday’s Financial Times, “you are crying out for a sober voice to bark: Stop!”

Like the Emperor’s new clothes, there were remarkably few “sober” voices that were sceptical of the prolonged celebration of bling in the Arabian desert. From clever bankers in London and New York who have a slightly disdainful attitude to those who don’t earn million dollar bonuses to the peddlers of exorbitantly-priced “luxury goods”, Dubai was always a shorthand for quick bucks. Unlike Singapore, where opportunity mingles with hard realism, Dubai had transformed into a fantasy land.

When an English friend with an impish sense of humour once hosted me for a drink at a top-floor bar in the dhow-sail shaped hotel that was being flaunted as a monument to opulent living, I recall repeating John McEnroe’s immortal outburst: “You can’t be serious!” In the gilt-plated lift, we encountered a short, podgy Russian with an unlit cigar in his mouth, with his arm firmly clutching the posterior of a giggling, well-endowed blonde — a caricature of the gangster’s moll from a B-grade film. Predictably, the Russian was also accompanied by a fearful looking bodyguard.

The bar itself was something straight out of a 1960s film centred on some Dr No or Goldfinger out to take over the world. It was embellished with strobe lights, featuring multi-coloured stars and objects that defy coherent definition. Like Andy Warhol, it seemed that the interior designer had had a great laugh at someone’s expense, and profited handsomely from it.

To me, that seemed the central problem with Dubai: The belief that capitalism worked best in a gigantic amusement park. Of course, it was not very funny for the thousands of construction labour who lived dreary lives and sent home every last coin they saved through self-deprivation; nor was it very funny for the sad-looking maids who silently endured the travails of restricted employment. But for European bankers whose bonuses depended on underwriting fantasies, Indian and Pakistani dons who frolicked beyond the long arm of the law, spoilt Arab kids who imagined that life was one big fast car ride down a new motorway and Western businessmen who sold rich Arabs the modern equivalents of beads and trinkets, Dubai was the Xanadu of capitalism.

The tragedy of Dubai was that its whacko priorities subsumed its other achievements. For a place that wasn’t even in a position to issue its own postage stamps till the early-1950s — it used Indian stamps and even the Indian currency — Sheikh Mohammed bin Rashid al-Maktoum used the oil revenues to make Dubai a worthwhile offshore hub for both South Asia and the troubled West Asia. Dubai, unlike Saudi Arabia, wasn’t an enclave of medievalism. Leaving aside politics which was always a big No-No, Dubai was socially liberal — almost permissive — and financially unregulated. The Sheikh’s thrust towards making Dubai a hub for the electronic media, education, tourism and finance was worthwhile and remains as valid today as when it was initially conceived.

What isn’t valid is the assumption that these goals would be enhanced by pouring money into projects such as the Snowdome and purchasing casinos in the US. “Don’t sell things you will buy” is a principle that many prudent shopkeepers follow. Dubai erred in pouring money into projects that tickled the skewed aesthetics of an aristocracy that lived off rentier income. Dubai had a lot of indigenous money but precious little indigenous entrepreneurship. It mortgaged decision-making to carpetbaggers who have made quick bucks and won’t be around to commiserate with the Sheikh.
For India, the misfortunes of Dubai present unconventional opportunities. Going by present indications, Indian companies are not going to be hugely affected by Dubai’s inability to honour its debts. However, the slowdown and the end of the construction boom are likely to lessen the quantum of remittances from Indian workers located there. There may be at best adverse short-term consequences for States such as Kerala which export labour to the Emirates. Does this mean that India should breathe a sigh of relief and look down disdainfully on those who lacked the wisdom to manage prosperity with a cool head?

Such a response would be myopic. For all its profligacy, Dubai remains a place with world-class infrastructure and world-class facilities at knock-down prices. Should these be left to others to mop up and use as a base for a more enlightened approach in future? India has an old, historical relationship with the Gulf and we cannot forget that till 1947 the region was more or less regarded as an extension of India, both politically and economically. We may have frittered away those advantages by narrowing our vision but there is no earthly reason why that short-sightedness should persist in this century. India should use its political and economic clout to, first, be supportive of Dubai and, subsequently, to try and fill the void left by the West’s loss of confidence in the Emirates.

How this should be done and what should be the nature of Government assistance to businesses willing to repose their confidence in Dubai is something that has to be worked out, fast. The Dubai crisis presents a golden chance for India to re-establish its role in the region. We shouldn’t let the opportunity slip away by refusing to think big.

Sunday Pioneer, November 29, 2009

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