Crack up capitalism, p.18

  Crack-Up Capitalism, p.18

Crack-Up Capitalism
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  1.

  In February 1979, as pigeons foraged in half-frozen mountains of garbage left by striking sanitation workers in London, Queen Elizabeth went off to a place where the workers never struck. Accompanied by her husband and the foreign secretary, she took the brand-new British Airways Concorde to Kuwait, then switched to the royal yacht Britannia for her three-week tour, the first British monarch to visit the Arabian Peninsula. In the boom that followed the quadrupling of oil prices, British connections to the Gulf were a bright spot amid the doldrums of the 1970s. At the time of the royal visit, Britain exported more to the Gulf than to the Commonwealth countries Canada, Australia, and New Zealand combined.24 One British company alone was engaged in works valued at £1.8 billion, and British firms were taking the “lion’s share” of new construction in the Gulf.25

  The tastes of the Gulf elite had made them familiar fixtures of the British tabloid press. Just as a common royal culture had bound European sovereigns together in the nineteenth century, so a jet-setting circuit of horse races, luxury ski resorts, and prestigious real estate enclaves bound the British monarchy to their Middle Eastern counterparts. The Gulf sovereigns did not scrimp on hospitality. Every journalist got their own limousine and the monarch received extravagant gifts at every stop. Dubai’s Sheikh Rashid presented her with a three-hundred-diamond necklace, plus a sculpture of solid gold camels standing under solid gold palm trees with rubies for dates.26 Crowds lined the roads along her route, including many of the ten thousand British citizens resident in the Gulf and thousands of Pakistanis and Indians.

  Some of the older members of the latter group were former British subjects, but were the Emiratis themselves? Not quite. Although the Persian Gulf had been treated like a “British lake” since the early nineteenth century, England never claimed suzerainty over the coast of the Arabian Peninsula where the emirates lay. In 1820, the British had deployed a thirty-thousand-strong force to defeat the “Qawassim pirates” of the territory, but the upshot was a truce that transformed the pirates into rightful rulers. Among them were the Al Makhtoum family, who remain the hereditary leaders of Dubai.

  A new word was coined to describe the legal relationship of the British to the littoral region on the south of the Persian Gulf, which fell short of direct administration. Because of the truce, the sheikhdoms were dubbed the Trucial States or the Trucial Coast.27 This form of semi-sovereignty meant Dubai was both inside and outside the British Empire. For the most part, it reflected the fact that the area was little noticed by the Great Powers, beyond the products of its waters labeled on maps as Great Pearl Bank.

  Britain began to take more notice of Dubai in the 1960s, when London banks found a new source of profit by selling wafer-sized gold bars in bulk quantities to buyers in the sheikhdom. The buyers would then strap these to their bodies, or stash them under fish, and smuggle them in souped-up skiffs over a thousand miles to Mumbai to dodge Indian trade restrictions.28 The sheikh turned a blind eye to the tariff wall jumping, claiming the gold was legal when it entered his territory. “So far as we are concerned,” one customs official said, “trade out of Dubai is not smuggling but free enterprise.”29 Smuggling networks were complex, linking sites across the Indian Ocean and into the South China Sea. One, called the “Ring,” worked out of import–export businesses in the free port of Hong Kong, which served as a convenient base, with no tariffs or duties. The merchandise was sourced specifically for smuggling purposes: the gold biscuits forged in Switzerland or London weighed ten tolas, a measurement used only in India; Japanese textiles were manufactured in six-yard lengths specifically for saris. The smugglers’ management of long supply chains impressed journalists. The Ring’s “efficiency would put to shame the operations of some of the best-managed multinational corporations,” one wrote.30 Until Indira Gandhi cracked down, the “smuggler kings” of Mumbai who controlled contraband trade from Dubai were described as running a “state within a state.”31

  Britain’s relationship with Dubai was hands-off but steady until 1968, when Prime Minister Harold Wilson declared the accelerated withdrawal of the British military from outposts “east of Suez.” The leaders of the Trucial States watched the British go with regret. Sheikh Rashid said that “the whole coast, people and rulers, would all support retaining British forces in the Gulf.”32 For over a century, as one historian put it, the sheikhs were able to “outsource their military and external affairs to Britain.”33 Now they were required to not only oversee those affairs themselves but also fashion a terrain marked by familial ties, overlapping jurisdictions, and long-simmering border disputes into something that conformed to the Westphalian model of firm borders and exclusive sovereignty. With the concept of the nation-state as much of an ill fit with local reality as the idea of government by popular consent, the sheikhs opted for something other than the standard model of Wilsonian national self-determination.34 In 1971, they formed the federation of the United Arab Emirates, with Abu Dhabi as the capital.

  Economically, the UAE was born under a lucky star. The quadrupling of oil prices after the 1973–74 oil embargo made it rich. The Gulf’s oil money was recycled through financial centers like the City of London, leaving a huge pool of cash available to be loaned out. While most of the oil was in Abu Dhabi, Dubai confirmed the presence of a commercially viable amount of oil in 1967, and sent off its first tankerful to a refinery in Britain two years later.35 By the end of 1975, Dubai’s oil revenue was $600 million a year.36 During her 1979 visit, Queen Elizabeth unveiled some of the emirate’s signature new projects financed by oil wealth. She pushed a button to bring water rushing into a dry dock built for oil tankers of up to one million tons and longer than the height of the Empire State Building. She cut the ribbon on the Dubai World Trade Centre, the Middle East’s first skyscraper. Most important, she opened the port at Jebel Ali, which would become a vast free trade zone and, at sixty-six berths, the world’s largest man-made port.37

  Advertisements for Jebel Ali in British newspapers included aerial photographs with the port in the foreground and an empty expanse of desert stretching behind it to the horizon, a blank slate about which investors in the cramped space of East London could only fantasize. Even more important than its vast scale was its legal status. To dodge complications with the UAE authorities in Abu Dhabi, Dubai had unilaterally carved out the Jebel Ali Free Zone as a formally extraterritorial space, five thousand acres of land paved, wired, and ready for construction.38 Perks included the possibility of 100 percent foreign ownership, no corporate taxes for fifteen years, no personal income taxes, full repatriation of profits and capital, and, of course, the guarantee of no labor unrest, thanks to the policy of importing labor constantly threatened by deportation.39 Dubai worked by accessing a steady stream of labor from South Asia drawn by wages higher than in their own country even though they had no right of residence, guaranteeing hire-and-fire-and-deport in perpetuity. An added risk braved by workers was that thin legal protection left them vulnerable to often not being paid at all.40 While foreign residents from richer countries (known as expats rather than migrants) enjoyed all-you-can-drink brunches and the creature comforts of the West, manual workers were kept in barbed-wire encampments in the desert to minimize flight risk and costs of upkeep.41

  Jebel Ali ended up being Dubai’s most important innovation. It followed the model of special economic zones the world over but became more than just another industrial park. In time, it became the template for Dubai’s signature model of patchwork urbanization as the emirate built zone after zone within its borders, each with its own distinct sets of laws united by a common goal—to draw in foreign investors.

  2.

  We are used to thinking of a nation as a unified legal space: one territory inhabited by citizens under one set of rules. But this is never really the case. States and provinces have their own laws, municipalities have their own laws, and we often live in smaller units (such as public housing projects, condo associations, or university campuses) that have their own regulations and sometimes private security forces. What was special about Dubai is that it took this reality of legal diversity and turned it into an organizing principle for the whole emirate. As observers have noted, walking between neighborhoods in Dubai is effectively like walking from one country to another. The journalist Daniel Brook compares the situation to the nineteenth-century treaty ports in China. There, the rule of extraterritoriality meant that different laws applied to different citizens; in Dubai, different laws applied to different patches of land.42 In Mike Davis’s memorable metaphor, zones were placed under “regulatory and legal bubble-domes,” each with its own set of rules.43

  New jurisdictions proliferated. They were clustered by function—the Silicon Oasis for tech manufacturing, Dubai Healthcare City for medical companies, and Dubai Knowledge Village (now called Knowledge Park) for branches of universities.44 There were gated zones called Media City and Internet City, where web access was unfiltered.45 In 2006, $100 billion in projects were underway, including “an Aviation City and a Cargo Village, an Aid City and a Humanitarian Free Zone, an Exhibition City and a Festival City, a Healthcare City and a Flower City.”46 Perhaps the most striking experiment in zone making was the Dubai International Financial Centre (DIFC), opened in 2004. It was overseen by the Australian finance regulator Errol Hoopmann, who said his goal was to cordon off 110 acres of land, empty it of existing laws, and then “write our own laws to fill up that vacuum.” He compared the DIFC to the Vatican. It was “a state within a state,” he said.47

  Until 2002, land ownership by foreigners was permitted only in Jebel Ali. After that year, it became legal for foreigners to own property anywhere in the emirate. The result was a land rush. The housing that sprang up to accommodate newcomers and absentee investors followed the familiar format of gated communities, such as the master-planned communities of the southwestern United States. These had a regional forerunner in the faux-suburban towns like the American Camp built near the Aramco oil refinery in Saudi Arabia in the 1930s—a fenced compound of ranch-style houses for white families, complete with swimming pool and movie theater and surrounded by far more numerous migrant workers and Saudis, who lived in low-quality segregated quarters.48 The Dubai suburbs of the 2000s offered a range of styles from Spanish villa to traditional Arabic, from Santa Fe to Bauhaus cubes.49 Their car-centric model of air-conditioned suburbanization echoed the Sunbelt model of Houston and Los Angeles, but amplified it. In even more extreme weather conditions, Gulf populations consumed more water, electricity, and gasoline per capita than anyone else on earth.50

  “Buy land,” goes the apocryphal quote from Mark Twain, “they’re not making it anymore.” But this was not even true when he was supposed to have said it. Boston built half its downtown from reclaimed sand flats in the nineteenth century. Lower Manhattan, Singapore, and Hong Kong followed suit. Running out of waterfront property in the early 2000s, Dubai similarly created more, piling sand into the shape of a giant palm tree extending out into the sea, its slender fronds designed to maximize beach access. The Palm Jumeirah, built with 385 million tons of sand, was followed by the Palm Jebel Ali and, finally, the artificial islands of the World, whose pseudo-countries of sand sold for up to $30 million each.51 Dubai real estate became a bolt-hole for globally mobile cash, especially for “the magnates and kleptocrats of the Middle East, North Africa, South Asia and the former Soviet Union.” In a particularly eyebrow-raising case, the Azerbaijani head of state bought nine Dubai mansions in two weeks “in the name of his eleven-year-old son.”52

  Dubai captured the three qualities of the millennium’s global city: verticality, novelty, and exclusivity.53 Its developers, especially the state-owned colossus Nakheel Properties, internalized the injunction of global urbanism to be a recognizable brand: distinctive but not strange, exotic but not upsetting, diverting but not too unfamiliar, able to catch the eye of investors but not representing too much of a risk. Like money, a contemporary city needed to be both a store of value and a unit of exchange. As with superluxury apartments in London and New York, many of the flats in Dubai high-rises were bought but never occupied, part of what critics have called the zombie architecture of the twenty-first century.54

  To someone arriving by air across the vast tan plain of the desert interrupted by islands of desalination plants, grand estates, and industrial bunkers, Dubai’s zones appear like “computer motherboards.”55 This is how the emirate presented itself to investors, too, a flat space where “multinationals can plug in their regional operations.”56 Yet at ground level, Dubai loses the appearance of a unified design. Decentralized laws translate into visual chaos, a streetscape of “squarish ovals, rounded squares, curvaceous pyramids … globes atop boxes, teardrops mounted on pillars, bent slabs fastened to concrete goal posts.”57 The effect is less the clean lines of high modernism and more like a supersized version of the jumble of American highway neon. This is what the logic of capital looks like.

  When the Emiratis broke ground on Jebel Ali in 1968, the plan was for it to be the future capital of the UAE.58 Four decades later, it had become, instead of a part of the tool kit for assembling legal modules inside nations, a piece of patchwork that could be lifted up and set down anywhere. No longer bound to being merely a political capital for a federation or a nation-state, it was a flexible container for new arrangements of labor, capital, and technology.

  Just add territory.

  3.

  If one injunction for the twenty-first century was to be inoffensively iconic, another was to be connected, smoothly linked to all other nodes in the global economy. In the language of logistics, you needed to be both a gateway and a corridor. At the turn of the millennium, Dubai set about replicating itself overseas, building franchise zones, portable Jebel Alis. This happened through a tangle of new state-owned subsidiaries.

  One of these so-called parastatal organizations was DP World (Dubai Ports World), which united transportation, real estate, logistics, and light industry under one roof—an agency governing a city within a city, charged with the task of cloning itself overseas and bringing the “legal-regulatory bubble-dome” with it.59 DP World got its start in 1999, when it took over from Dubai the comanagement of the Jeddah Islamic Port on the Red Sea. The following year, Jafza International (Jebel Ali Free Zone Authority International) was created to advise foreign governments on setting up their own special economic zones—globalizing the patchwork model.60 Jafza International described its job as providing “Dubai expertise.”61 In 2004, it began managing Port Klang in Malaysia.62 By the end of 2005, it had signed contracts with five African countries to oversee the development of their ports.63 That same year, Dubai bought the US company CSX World Terminals, becoming the world’s sixth-largest container terminal operator.64

  Dubai was expanding at a furious pace. It signed a joint venture partnership with the Indian conglomerate Tata Group to create seven logistics parks in India.65 It advertised its entry into Russia, where it would advise on the construction of special economic zones, and signed a memorandum of understanding with Libya.66 It announced the construction of an $800 million tax-free port in Senegal.67 Romanian officials visited Dubai to look into creating “a Jafza-like platform,” presumably on their short stretch of coast on the Black Sea.68 In 2006, DP World won a bidding war with Singapore for the UK company P&O, the shipping line that had serviced the British Empire. Coaling stations, naval bases, and free ports had once strung together the empire from Colombo to Gibraltar—shipping lanes were what the political scientist Laleh Khalili calls the “sinews of war and trade.”69 Now the biggest port operators were the empire’s former possessions and protectorates: Singapore, Hong Kong, and Dubai.

  Dubai did not hesitate before the metropole itself. It bought 20 percent of the London Stock Exchange, as well as a stake in the London Eye. The name of the Dubai flag carrier, Emirates, appeared on the shirts of a London football team, Arsenal, and their new pitch opened as Emirates Stadium. In 2013, DP World also opened London Gateway port. Thirty miles downstream from the Isle of Dogs, London Gateway was everything that the Docklands was not: a logistics park, a business park, and a deepwater harbor for the world’s largest container ships.70 Much of the construction was done by robots and automated cranes and trucks.71 A semicolony just a few decades earlier, Dubai now managed the entryway to the metropole’s most important waterway.

  Another point of focus was the coast along the Bab el-Mandeb Strait between Yemen and Djibouti, where twenty thousand ships a year passed through on their way to the Suez Canal, carrying 30 percent of Europe’s oil.72 DP World took over management of the Port of Djibouti in 2000. Two years later, it assumed management of Djibouti–Ambouli International Airport.73 Dubai also built the country’s first five-star hotel and took over the management of Djibouti customs.74 A Dubai World subsidiary bought Djibouti’s airline.75 As mentioned in the previous chapter, a few years later, DP World expanded the port in Berbera, the de facto state of Somaliland.

  It was difficult not to compare the hyperactive, dynamic, and successful Dubai with Iraq, its distorted double farther up the Gulf. There was Iraq, democracy being enforced by a foreign occupier at the barrel of a Tomahawk missile. Here was Dubai, without democracy, hosting pool parties and brunches, ribbon cuttings and new acquisitions every month. Curtis Yarvin, the blogger yearning for a patchwork of mini-states, was among those who posed them as opposites. In Iraq you had democracy without law, and in Dubai you had law without democracy. Which was preferable?

 
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