Dubai, with its modest oil resources, long ago realised it had to become a post-oil economy.
The sharp drop in oil prices from the middle of last year highlights the wisdom of this decision. But how insulated is the emirate’s economy from oil? And what, if anything, can its Arabian Gulf neighbours learn from it?
Speakers at a Bloomberg conference, who gathered recently to discuss the impact of falling oil prices on Dubai, were quite sanguine. With falling output since the early 1990s and rapid expansion of other sectors such as tourism, trade, aviation and finance, oil now makes up less than 2 per cent of the emirate’s GDP. Dubai has the busiest international airport, the largest artificial port, and what will probably soon be the biggest airline in the world.
Oddly enough, Dubai has perhaps not made as much of its energy sector as it might have done. It has, for example, not become a major hub for oil trade and equity listings in the same way as Singapore or London, nor a centre for refining and petrochemicals such as Singapore.
But part of Dubai’s genius has been to attract business and capital from the rest of the region, just as Singapore and Hong Kong previously played the role of windows into China. Visitors from oil-exporting areas such as Saudi Arabia, Abu Dhabi, Iran and, farther afield, Russia and Nigeria, have flocked to the city to do business and spend, enjoy or invest their money.
Apart from Russia, where recession, sanctions and currency collapse had already led to a sharp drop in visitors to Dubai, the oil price fall has not yet sharply curtailed spending in other major trade partners.
But some impact is inevitable. Confidence in the wider Middle East economy has already suffered, probably contributing to Dubai’s property market slowdown. And if oil prices stay low for an extended period, budget cuts in major Gulf neighbours will translate to fewer visitors spending their oil-funded bonuses in The Dubai Mall or Downtown real estate brokerages.
However, this test of lower oil prices may come at a good time for Dubai — when national banks are in better shape, the emirate’s debt restructuring is largely complete, and when regulatory action has already cooled off a nascent real estate boom in 2013.
Dubai’s recent trajectory has aligned perfectly with dominant global trends that will give it a measure of protection against oil prices. World transport and trade benefit from lower fuel bills — bringing down the cost of airline tickets. Major energy-importing trade and tourism partners — China, India, Pakistan, Turkey and Egypt — will benefit from reduced oil costs. And close trade links with Iran should revive if United States-led sanctions on Tehran are lifted.
The city also benefits directly from lower energy bills. It will save about $1.2 billion annually on cheaper liquefied natural gas imports. Government-owned Enoc said it spent $735 million on subsidising petrol sales in 2011, a figure that should also fall. Dubai has since 2013 moved faster than any of its neighbours to embrace solar power.
In general, the Emirate is one of a few — almost the only — of the Mena constituents to use its favourable geography to ride the wave of globalisation and the rise of Asia. In turn, that lifts the whole UAE and gives the country greater resilience. But the Middle East’s major oil exporters are less favourably placed. They cannot all be finance and tourism hubs. High-tech manufacturing, reduced subsidies and greater regional integration are all parts of the answer.
Ultimately, perhaps the question should not be whether Dubai’s model can cope with lower oil prices. Oil will always be a volatile commodity, and its future is uncertain. Instead, the key task is to make the bold and sometimes difficult choices to ensure continuing success, regardless of the vagaries of energy markets.
Robin Mills is head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis
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The specs: 2018 Maxus T60
Price, base / as tested: Dh48,000
Engine: 2.4-litre four-cylinder
Power: 136hp @ 1,600rpm
Torque: 360Nm @ 1,600 rpm
Transmission: Five-speed manual
Fuel consumption, combined: 9.1L / 100km
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Racecard
2pm Handicap Dh 90,000 1,800m
2.30pm Handicap Dh120,000 1,950m
3pm Handicap Dh105,000 1,600m
3.30pm Jebel Ali Classic Conditions Dh300,000 1,400m
4pm Maiden Dh75,000 1,600m
4.30pm Conditions Dh250,000 1,400m
5pm Maiden Dh75,000 1,600m
5.30pm Handicap Dh85,000 1,000m
The National selections:
2pm Arch Gold
2.30pm Conclusion
3pm Al Battar
3.30pm Golden Jaguar
4pm Al Motayar
4.30pm Tapi Sioux
5pm Leadership
5.30pm Dahawi
The specs: Macan Turbo
Engine: Dual synchronous electric motors
Power: 639hp
Torque: 1,130Nm
Transmission: Single-speed automatic
Touring range: 591km
Price: From Dh412,500
On sale: Deliveries start in October
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
On sale: now
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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