Shattering the Façade: The Burgeoning Oil Cities of the Middle East

BY ARI MOSES

To the casual onlooker, the new, ex­ploding cities of the Middle East, such as Dubai, are 21st century marvels that defy the growth patterns of traditional Western cities. The sleek architecture cou­pled with the finest contemporary construc­tion materials leave the impression that these new cities will eclipse New York and London as the financial hubs of the world within the next few years.

Spending billions of dollars a year on real estate projects, Dubai has created land­marks, from the Palm and World Islands to the most expensive horseracing complex in the world. These structures instill awe across the four corners of the earth. But at what cost?

Financial Instability

As the world entered into a global eco­nomic crisis beginning in 2007, massive fi­nancial institutions in New York went bank­rupt. Today, however, the city has largely recovered. The US government’s ability to secure hundreds of billions of dollars to aid businesses suffering from financial losses has allowed New York to regain large portions of the jobs it lost just five years ago and to re-stabilize the financial sector.

But, what if the government and the massive corporations were one and the same? In Dubai, the state owns or controls various multi-billion dollar companies in fields rang­ing from real estate to energy. In 2009, Dubai World, a state owned entity, announced it would need to restructure its debt, spreading fear across the financial markets that it is li­able to default on its debt of approximately $60 billion. Stock prices plummeted globally and the dream of the rapid growth city was destroyed.

Despite the massive luxury real estate projects, the emirate has failed to maintain other aspects of its economy. Massive areas of undeveloped and vacant properties pro­vide evidence of the need for infrastructure improvements. In June 2013, the Emirate was actively sell­ing off its assets in order to repay the $30 billion in loans, due by the end of the year.

Labor Force Disparity

While Dubai allows its companies to develop new projects because of its large annual growth, the migrant laborers building these proj­ects face strict and abusive working conditions. Over one million migrant laborers make up 95 percent of the Emirate’s entire labor force. 45 percent of these migrant workers are employed in manufacturing and construction, with other significant portions in transportation and the real estate trade. Only 3.5 percent of the citizen emirate labor force of 52,783 (2011) work in the manufacturing and construction industries, while 61 percent are in public ad­ministration, and 9 percent are in the finan­cial information sector.

The income gap between the two groups in Dubai is shocking. In Dubai, 64.5 percent of migrant workers earn less than $816 a month and 86 percent earn less than $2724 a month. Comparatively, 9 percent of emir­ate workers make less than $2724, 60 per­cent earn between $2725 and $5994, and 20 percent of workers earn more than $7084 a month. This massive disparity in wages and wealth are a growing trend in the Gulf region in the mega cities of the Middle East.

Abusive Working Conditions

The wage gap can also be seen in the areas where the laborers live, as the poorer workers live in hastily-constructed hous­ing projects of poor quality. Human Rights Watch, an international rights charity, has discovered deplorable working conditions in the region, repeatedly finding abusive and unsafe work environments. In addition, the companies owned by the government of Dubai, have been known to refuse to pay wages and withhold the travel documents of workers. Employees are often forced to stay and work for the company, no matter how abhorrent the conditions.

Unions, other collective bargaining groups, and strikes are forbidden in Dubai and can be punishable with jail time or de­portation. Although migrant workers out­number the emirate workers in Dubai by 24 to 1, they have no political power; as a re­sult, the working conditions of the common worker have not improved.

So, as the world continues to marvel at cities like Dubai, will the international com­munity, in the near future, see it emerge as a powerhouse similar to New York or as a playhouse for the wealthy like Monte Carlo, where there is a migrant labor force of 98 percent who face similar wage disparities? If the Emirate of Dubai continues its exponen­tial growth in population and in the real es­tate sector, what type of city will appear? New York or Monte Carlo? The economic hub or the party city?

Perhaps it will be a new type of city. A city that has a strong business sector, yet re­mains inaccessible to the vast majority of population that derives its livelihood from the city. Dubai, perhaps in the future, is poised to fill the role of this new hybrid city, but presently, it contains many more similar­ities to Monte Carlo than New York.