Dubai: Mirage of the Land of Plenty

Dubai is interesting, both because this tiny emirate, with hardly any natural resources, demonstrates all the arrogance of the world bourgeoisie, and because it was very recently hit by the financial bubble, which was already affecting the precarious balance of the global economy. We’ll take a brief look at the economic history of the Emirate, to explain the causes of the bubble, then try to make a first assessment of the effects of the bubble in the global economy. Then we will try - despite the shortage of articles and documents about it - to analyse the conditions and struggles of workers in the Emirate.

The Fishing Village

During the Second World War Dubai still only had 20,000 inhabitants and an economy based on fishing and the pearl market. Thanks to loans granted by the Emir of Kuwait (then the richest emir) in the 1950s, it began to develop, with the opening of an airport, and a canal. In the late sixties, the city had 150,000 inhabitants.

The 1970s and the First Monumental Works

The first leap forward was in the 1970s, years of high earnings from soaring oil prices (1). In this decade, the Emir Sheikh Rashid was able to accumulate substantial capital and repay debt. In this way he arrived at the basic premises for the realisation of capitalist accumulation, consisting of initial capital to invest and a great mass of "free" labor at low cost (2). This latter condiitons was already guaranteed by the presence of large labour resources which were (and are ...) from Iran, Pakistan and India. So in short, towards the end of the 1970,s and during the early 1980s, work on the first monumental projects that would make this city famous began. One of these works is the famous industrial port of Jebel Ali, the initial phase of which was completed in 1983 with the creation of 66 deep cargo berths. It is important to highlight the cost of this work, which, as mentioned earlier was supported by the abundance of labour and rising oil prices, because it is 3 billion dollars, the equivalent of which is now estimated at 9 billion U.S. dollars (3).

Dubai’s First Financial Crisis

In an economic scenario, characterised by more than thirty years of falling rates of profit worldwide (4) the Dubai bourgeoisie’s traditional "vocation" for speculation on oil prices increased, but the limits to speculation have been seen more than once. For example, with the decline in crude oil prices in the 1980s (5), Dubai witnessed a period of severe economic crisis, a crisis that ended up in a situation similar to the one we are living through today: bankruptcy. This shows us that capitalist conditions today are not sufficient to ensure that development is "happy" in any one local niche, since it is strongly conditioned by the general movement of capital.

Sheikh Rashid, along with his fellow emirs, initially exploited the international political situation in the 1970s to increase oil prices. But the rise in oil prices weighed deeply on global production costs and in terms of an increase of constant capital compared to variable. Thus it accelerated the downward trend in the average rate of profit (6) If this has given a remarkable boost to the financialisation of the economy, leading at first to huge speculative profits, in the long run it has led straight into bankruptcy, as speculation is unable to replace the production of real surplus value.

The Fortunes of War

But how did Dubai get out of this crisis ? Let’s quote Marx

How did the bourgeoisie succeed in overcoming the crisis? First, by forcibly destroying a large amount of productive forces, in another way, conquering new markets and exploiting existing markets more intensely (7).

So which of the two factors came to the rescue of the faltering Dubai economy? In fact, both of them. In 1990, Sheikh Rashid was succeeded by his son, Bin Rashid Al Maktoum. The same year the First Gulf War broke out, which again meant high prices for the black gold. Plus it provided a purpose for the mammoth port of Jebel Ali, with the liberal aid of the Emirate’s "friend" of Kuwait, the means for reconstruction of pipelines and refining facilities sabotaged by the "enemy" (8) Saddam could pass through that port. This happy combination of factors linked to the war, revived the economy of Dubai, and also enabled a modernization of government offices and services.

Importantly, all this was done during and after the fall of the Soviet imperialist bloc which, in fact, produced similar results to a world war, in reviving profit rates. It was therefore, a favorable moment, though certainly shorter than at the beginning of the cycle of accumulation (the one that started after the Second World War), a time, one can say, when there was a significantly increased velocity of the valorisation of capital.

Bin Rashid and Financialisation

The economic policy pursued by Bin Rashid, is certainly more modern than that of his father and suits the times we live in. Bin Rashid was aware that he could not all the economy of this tiny emirate to depend on its oil, since Dubai’s oil resources were already on the verge of collapse and of very poor quality. Moreover, if he wanted to remain economically independent of the Emir of Abu Dhabi (where the bulk of the oil deposits of the United Arab Emirates are concentrated), he knew he would have to be creative.

The son understood that we must look to what had allowed the "virtual" development of the 1980s, financial capital. He invested much of the capital accumulated in the Gulf War boom in making Dubai a pole of attraction for the financial world, and to do this he had to "get around". This is how the early marriages between Dubai’s financial sector and the most foolhardy American and British banks came about.

Within a few years Bin Rashid was riding the crest of the wave of the internet bubble, building Dubai Internet City in 1999, quickly demonstrating an ability to manouevre in the world of financial alchemy.

The city of Dubai became one the capitals of the financial world. Bin Rashid is committed to transforming the city into a mega luxury lounge for shareholders packed with money, a city with a thousand and one nights, rich in pageantry, a monument to the hustle and parasitism of the bourgeois of the year 2000, in short, the city we all can picture.

The Housing Bubble

After his free ride in the digital-information world, our alchemist rebounded into brick. He decided to get involved in real estate, if only to take advantage of the oil price increases as a aresult of the American bombing of Baghdad in 1999, and the instability of the Israeli-Palestinian conflict.

Rashid founded the state company Nakheel, as well as Emaar, at the very end of 1990. However, he soon realised that between him and concrete there was a legal problem, which was not easily overcome. The Arab countries following the "Israeli real estate problem, i.e the fact that Israeli settlers bought Palestine, with all the problems that followed, decided to sign a deal in which a non-Arab citizen could not own property in an Arab country. This pact of “absolute" loyalty to one’s own land, signed in bloody memory of their Palestinian "brothers" by all the Arab bosses, seemed unchallengeable. Yet Bin Rashid, as a good modern capitalist, understood that he could not let familly matters get between him and his business, so to get around the problem he reintroduce nothing short of feudal contracts, creating the 99-year leasing concessions for foreign buyers. This has increased the market value of new residential neighborhoods like Jumeirah and New Dubai, accelerating significantly the valorisation of the capital invested. This quickly intoxicated the fantasies of Bin Rashid, who prepared a plan for gradual liberalisation of real estate ownership the following year.

Financial capital turned up, and Dubai opened its doors.

The opening of the auction for the residential complex of luxury villas The Meadows held in the ballroom of the hotel Emirates Towers, saw thousands from all over the world come, pushing to get to the head of the queue, and 700 houses were sold within a few hours (9).

The euphoria of other complex business followed later, and thus the Emaar complexes Arabian Ranches and The Springs were created. Meanwhile Nakheel built its artificial islands in The Palm. Financial capital devoured the sea to make room for cement. But to complete the miracle, it also decided to eat up the desert by the sea ... In fact, 3.5Km of coastline was artificially created in the desert by the twin Emaar to build luxury high-rises of 44 floors, Dubai Marina. The competition between the Emaar and Nakheel did not stop there: it also performed the miracle of turning the desert into a big green garden, so Emaar constructed The Greens and Nakheel The Gardens... Not to mention other areas like International City, Old City etc. But financial capital is not content to attack just the earth, it seems to want to stab the sky as when it is built Burj Dubai (now Burj Khalifa in honour of the Abu Dhabi emir’s bali-out of Dubai - translators note) the tallest skyscraper in the world (170 floors!).

What the productive forces of capital in its imperialist phase are capable of generating! It could be just as productive in the service of the toiling masses! Serving real needs, instead of serving the financial follies of a few "greedy" capitalists!

However, the first contradiction in this great celebration of cement that has involved Dubai, soon began to show itself. In 2004-2005 the first delivery delays were already apparent, delays that extended to 6 months (for Dubai a lot). In short, the works started to take longer, because they were deliberately slowed down (capitalists don’t find it expedient to continue building when many of the structures already built are still on sale). General euphoria had produced far more goods than the market could absorb.

How does the modern capitalist solve this problem? Once again, Marx replied:

On the other hand, the use of a given commodity, of a house, for instance, is sold (in common parlance, let) for a definite period. Here, it is only at the end of the term that the buyer has actually received the use-value of the commodity. He therefore buys it before he pays for it. The vendor sells an existing commodity, the purchaser buys as the mere representative of money, or rather of future money. The vendor becomes a creditor, the purchaser becomes a debtor (10).

In the same year, 2005, in order to avoid an economic crash HSBC began to offer the first mortgages to speed up sales, and the valorisation of capital. Other local banks, including the Commercial Bank of Abu Dhabi itself, soon followed Dubai’s pioneering lead, In short, they tried to keep the housing bubble alive by selling virtual structures in order to encourage new building, knowing that sooner or later the chickens would come home to roost.

The Crisis, an Earthquake in the Financial World

The strong upward swings in house prices and the hesitation of the banks to grant loans, especially on projects of average value, were a sign of imminent market saturation, a sign that the golden goose had already stopped laying. Finally, the Golden Mile luxury complex at Palm Jumeirah (the artificial island) had neither buyers nor creditors.

The sharp decline in crude oil prices in Abu Dhabi also rendered the Dubai economy unstable.

In 2006, Rashid removed any remaining obstacle to the sale of private property in the Emirate of Dubai in an attempt to revive and attract capital to the bubble, which otherwise would have burst immediately. The results in financial terms are obvious: the flow of foreign capital rose by 59% in 2006-2007, and 123% in 2008! (11)

Dubai in this way became a pole of attraction for all the toxic _assets of the_ subprime _mortgages_ of English and Scottish banks.

But at the same time, at the very peak of the inflow of financial capital in 2008, we began to see the first signs of crisis. The significant slowdown in buying a property discouraged the market, leading not only to a sudden end to many works (by now delays in delivery have become veritable paralysis for 80% of sites!) (12). The results were not only in mass layoffs (the population decreased by 17%) (13) but also in a significant decline (an estimated 50%) of the average price of real estate.

In short, by the end of November, the Dubai treasury was forced to announce a deficit of 59 billion dollars, a figure that according to UBS (Swiss bank), could even reach $90-100 billion (14). This is such a large figure that it approximates to the value of the annual GDP of the entire Emirate.

The Emirate of Abu Dhabi, whose investments are about 30% of the capital drawn into the bubble, has said that it will use its petrodollars in an attempt to save the Emir's brother Rashid, but ultimately we have to remember that the Emir of Abu Dhabi himself was making dangerous financial decisions (the natural resources in the Emirate, moreover, are not infinite, and they are trying to frantically accumulate as much as possible).

How has the earthquake that hit Dubai played in the world? Considering that, as mentioned above, Rashid has invested a lot of capital around the world, but especially taking into account the fact that Dubai has attracted an abnormal amount of financial capital, it is clear that the crisis in Dubai can only aggravate the present problems of capitalism.

It is well known, moreover, that Dubai owns 2% of Sony, 3% of EADS (heavy industry, aeronautics), 6% of HSBC (the largest European bank, and the first to expose itself as mentioned above), 20% of the Nasdaq, 20% of the London Stock Exchange, is the majority shareholder of P & O (shipping monopoly), and has 44 commercial and industrial ports as well.

The banks that have invested most in Dubai are HSBC (17 billion dollars), followed by Standard Chartered (7.8 billion), Barclays (3.6 billion), Royal Bank of Scotland (2.2 billion), Citibank (1.9 billion), BNP Paribas (1.7 billion), and Lloyds (1.6 billion) (15).

These figures confirm a fact: that Dubai’s financial follies are not the result of the zeal of Bin Rashid alone, or of the ambitions of a single fat fantasist. If all the speculators in the world have gone along with the schemes of an emirate which has a population about the size of Liverpool or Salt Lake City, and is largely devoid of natural resources, we can not say that this financial madness is only due to the individual irresponsibility of the speculators themselves. Indeed, as we have already stated, the worldwide speculative frenzy, has its roots in a specific phase of the capitalist mode of production. The world economy has now been in crisis for thirty years, and is unable to carry out the general transformation of capital [M-C-M] in a reasonable time, due to the fall in the average rate of profit, which is intrinsic to the capitalist mode of production. As an inevitable consequence, capitalism is hopelessly looking for alternative, “imaginative” ways to make profits but these alternatives sooner or later are found to be false. Thus we end up with the widespread cries of indignation and surprise, which hypocritically conceal the inescapable truth: the economy is forced to look for such routes, and sooner or later, unable to resolve its contradictions, it will be forced to play its trump card, which is destruction for reconstruction, and the beginning of a new cycle, in a word, generalised war.

The City without People?

So the captains of the global economy who were praising Bin Rashid and portraying him in a good light only yesterday, as the lord of miracles, today are making fun of people that believed in investing in a city with a capacity of more than one million people, but which is essentially empty. They built luxury hotels, but seem unable to understand that you cannot just live in a hotel, and that diversified industries and services are needed. Tourism can not be created on paper, and that the reasons that may induce people to visit Toytown, won’t convince them to live there.

The Other Dubai: Sonapur


Yet someone lives in Dubai and really lives there, but not in the residential wonders exhibited in the city-showcase. Who built all this? Who did the digging? Who raised the great buildings hundreds of metres high?

It wasn’t financial capital which moved the sea and the earth, or reached for the sky! It was the inhabitants of Dubai. The ones they try to hide from the eyes of the spoiled bourgeois who came to do their shopping, but they really exist. What about them? What will become of them?

We have already said that 17% of the population of Dubai were immediately repatriated, 80% of them employees of construction firms.

We are talking here about the real Dubai. We are kept well away from this inhabited Dubai. For example what do you know about, the city of Sonapur? A few kilometres from the well-known Dubai, in a wilderness, there live at least 300 thousand workers, mostly Indians, in a large field of sheet metal and cement where they are packed in like sardines, dipped in putrefaction, and dominated by rats and lice.

Sahinal Monir, a resident of Sonapur told his story to a reporter in the Independent (16).

To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell,

he says. Four years ago, an employment agent arrived in Sahinal's village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa - a fee they'd pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.

As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat - where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees - for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don't like it, the company told him, go home. "But how can I go home? You have my passport, and I have no money for the ticket," he said. "Well, then you'd better get to work," they replied.

Monir was in a panic. He was unable to send money to his family, since he would have had to work two years just to repay the money for the visa, and his family were proud of their boy who had finally made it. Now landless and jobless ... he had less than he had before, and lived in servile conditions away from his loved ones.

Sahinal lives in a concrete cell with 11 other men. There is an awful smell since there is no toilet other than a hole in the floor, surrounded by excrement and a black cloud of flies. There is no air conditioning or fans. Sahinal possesses - inserted in the mattress - two shirts, trousers and a phone. The water that they provide for workers is badly treated seawater, but have nothing else to drink, although many of them regularly feel ill because of this.

The work is "the worst in the world," he says.

You have to carry 50kg bricks and blocks of cement in the worst heat imaginable ... This heat - it is like nothing else. You sweat so much you can't pee, not for days or weeks. It's like all the liquid comes out through your skin and you stink. You become dizzy and sick but you aren't allowed to stop, except for an hour in the afternoon. You know if you drop anything or slip, you could die. If you take time off sick, your wages are docked, and you are trapped here even longer.

But, he explains:

We have been robbed of everything. Even if somehow we get back to Bangladesh, the loan sharks will demand we repay our loans immediately, and when we can't, we'll be sent to prison.

This is why many commit suicide in the camps. These facts are not reported in any way, often the same contractors make them disappear before anyone even notices. The alienation is total. Sahinal says he does not know yet either the name or the utility of the structure of over 50 floors being built, and has never visited showpiece Dubai.

Two Western ladies in their sixties reported:

It's the Emiratis at the top, then I'd say the British and other Westerners. Then I suppose it's the Filipinos, because they've got a bit more brains than the Indians. Then at the bottom you've got the Indians and all them lot (17).

If you have an accident here it's a nightmare. There was a British woman we knew who ran over an Indian guy, and she was locked up for four days! If you have a tiny bit of alcohol on your breath they're all over you. These Indians throw themselves in front of cars, because then their family has to be given blood money - you know, compensation. But the police just blame us. That poor woman (18).

The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory (19).

It is an open secret that once you hire a maid, you have absolute power over her. You take her passport - everyone does; you decide when to pay her, and when - if ever - she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape (20).

An Ethiopian girl of 25 years said she was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future.

But they paid me half what they promised. I was put with an Australian family - four children - and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: 'You came here to work, not sleep!' Then one day I just couldn't go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn't give me my wages: they said they'd pay me at the end of the two years. What could I do? I didn't know anybody here. I was terrified (21).

False Beliefs, Bourgeois Illusions

The motto of the Dubai bourgeoisie is:

You do nothing, they'll do anything!

But how true is this belief? How much longer are “they” willing to do everything?

The working conditions of the Dubai proletarians has deteriorated significantly since the economic crisis arrived.

In the summer of 2006 in Dubai, there were several protests which started in building firms and related fields (22). The strikes were, however, still isolated, and of an entirely spontaneous nature. The Dubai police arrested many workers who have distinguished themselves as proletarian protagonists, and forced them to return home. Please note that any form of protest or economic struggle is illegal in Dubai. The only thing allowed is the individual complaint for non-payment of wages at the Department of Labor in Dubai, but the same complaint different costs money, often workers are not able to spend. Even the most legalistic and reformist struggles are not allowed

However, the demonstration of Saturday 27 October 2007 was more massive and interesting. It is said that 4000 construction workers marched in the street blocking the highway to the port of Jebel Ali. It is reported that there were direct clashes with the police as well as the throwing of stones at the police. The workers were simply demanding more buses to get them to work, less crowded housing and punctual payment of wages. It seems that thousands of workers bravely and astonishingly joined in the protest in solidarity with others (23).

The response was as swift as it was repressive. The workers were inviteded to desist and to return to their jobs, under threat of expulsion and a suspension of wages. They were repeatedly and rapidly charged and dispersed with water cannons(24).

But the fight did not stop. It is said that up to 400 thousand workers spontaneously sided with the November 5 event by striking. (25).

With the advance of the crisis, little spontaneous strikes have broken out throughout 2008. So much so that Bin Rashid himself has hinted in a speech that there would be openings for the creation of a legal trades union institution. Somehow "our" Rashid understands that the risk of a class revolt is high, and that he must give himself a means to corrupt and sterilise the class movement. It shows him once again as a modern capitalist who is aware of the situation and that makes him a more difficult capitalist to fight.

But the economic crisis is setting the stage for violent confrontations, and Dubai, with all its blatant contradictions, is bidding to be a theatre. The Dubai proletarians must undertake the difficult task of organising a political party, taking up the communist programme and the banner of proletarian internationalism.


(1) Read the article by David Casartelli which appeared in Prometeo 01 (Series VII) Oil as a commodity - black gold, a still vital sustenance for capitalism pp.30. July 2009.

(2) We must dispel the vulgar neo-Physiocratic idea that would put down the unbridled wealth of the emirs of the Gulf to just luck related to deposits of black gold. We have to remember that nature alone cannot ensure wealth, but the work force is an important component of the economic potential of a country. The sweat and sacrifice of the working class immigrants has fueled the capital of the sultans, as much as oil.

(3) The data is from the article that appeared in, A Short History of Dubai Property (part two), 22/07/2004.

(4) The issue is treated in greater depth in the article by Fabio Damen which appeared in Prometeo 01 (series VII) The law of average rate of profit, the crisis and its consequences, July 2009. This is also on our webiste in English at

(5) See the article by D. Casartelli above.

(6) Cf Capital, Volume III, Part III. Chapter XIV _Law of the Tendential Fall in the Rate of Profit, 3. Cheapening of the Elements of Constant Capital,
K. Marx.

(7) Communist Manifesto, Bourgeois and Proletarian, Marx and Engels 1848.

(8) Let’s not forget the political hypocrisy of the emirs of the Gulf: Saddam was initially showered with praise when waging war against the Shiite enemy, Iran, but when, after the war, Saddam himself called for economic aid to rebuild and support the imperialism of which Sunni Iraq was to be the lynchpin, they drew back thus offending the Iraqi boss who then waged war against the Emir of Kuwait (who seemed the same to him as he was another crude oil thief!). In short, these bosses’ disputes always try to justify themselves to the proletariat by playing on cultural, if not religious, motivations, but in essence, they are only telling lies. The Iraqi proletariat of the industrialized cities like Basra, had fully understood this, declaring war to the bitter end with strikes, boycotts of the war itself, and creating nothing less than workers' councils: it is a pity that similar forms of struggle would not be repeated in Iraq after the second Gulf War. This shows that to pass on the memory of the experience of revolutionary struggle an organisation that goes beyond councilism and spontaneity is needed, in short an internationalist organisation like a party.

(9) A Short History of Dubai Property (part three),, 12/08/2004.

(10) Capital, Volume I, Part 1, Chap. III -- Chapter Three: Money, Or the Circulation of Commodities, 3B. Money as means of payment, K. Marx

(11) From the official document entitled Economic History of Dubai Published by Dubai Department of Economic Development.

(12) Data taken from Il Manifesto of 27.11.2009, in particular the article by Maurizio Galvani, Dubai is no longer a dream burns 160 billion dollars.

(13) As reported in the article of 02/12/2009 Halevi which appeared Il Manifesto, Dubai ci avverte: anche gli stati falliscono

(14) Data taken from Il Manifesto 29/11/2009.

(15) The article by Maurizio Galvani above.

(16) Reference to interesting article by Johann Hari The Dark Side of Dubai, which appeared in the Independent [07/04/2009]

(17) Op Cit

(18) Op Cit

(19) Op Cit

(20) Op Cit

(21) Op Cit

(22) Cf. an article of the ICC, Workers' Struggle in Dubai, an example of courage and solidarity of 10/12/2007.

(23) Courrier International 02/11/2007.

(24) .

(25) Associated Press, 5/11/2007.