Friday, February 09, 2007

Middle East Observations

We have now completed our third leg of our journey. We had hoped to visit Beruit where a childhood friend of Betinha lives with her husband, but after their recent problems it was strongly suggested that we not go there. We next tried for Saudi Arabia but couldn’t get a visa without a personal invitation from a Saudi. We added Doha, Qatar to Dubai, UAE, which was one of top picks to go visit on this trip. Here are my observations as we journeyed through two Arab countries.

Day One—Doha, Qatar

Our flight landed in Doha at about 10 pm, after almost missing our connection in Bahrain due to a late take-off from Athens. Fortunately, we were carrying all of our bags and were able to make the connection without having our bags on a later flight.

One of the strange things at both Bahrain and Doha airports is that we had to use stairs to board and leave the plane, something I haven’t done at major airports in years. The reason for this became apparent at the Doha airport when a family of four and another group of two bankers were met at the base of the stairs with waiting limos which whisked them away without having to bother with luggage, customs and other trials of modern travel. We were not so blessed.

We hired a driver at the hotel who gave us an interesting three hour tour of the town, seeing a falcon center, US base and incredible building before leaving us at the old market in the downtown. It lived up to our expectations of an Arab bazaar.

Qatar built some incredible stadiums for the Asian Games which were held here in December. The main stadium included a 400’ tower that must have had an incredible Olympic Flame from the size of the tower. They had hoped to showcase the country for 50,000+ tourists but only about ¼ of that number showed up.

Henry Ford would be proud of Qatar. Every woman is decked out in black, although the men are a bit more colorful. Red and white checked head dresses seem to be the popular item for them. The women’s headgear is black.

The country is only about 4,000 sq. miles in size with a population of about 800,000. Half of them live in Doha and there must be several million guest workers, from what we saw. Our driver from Nepal makes $400/month, working 12 hours/day for six days/week. He was very diplomatic about his feelings about Qatar.

The country is awash in oil and gas. They have 900 trillion cu. feet of gas reserves and gas products make up 60% of the GDP. Oil reserves have increased from 4 billion barrels in 1999 to over 27 billion today. Production in 2006 was over 800,000 barrels/day.

When we were trying to find a restaurant at noon I asked a young driver where we could find one. He responded, “Jump in and I’ll take you to a nice one.” He was a computer programmer for Qatar Customs and in hopes of entering college. When I asked him about their exports and imports, he responded, “We export petroleum, petroleum products and gas, nothing more. We import everything else.”

Qatar was a British protectorate until 1971. It is ruled by Shiekh Al Thani and an elected Advisory Council. The sheikh is determined to diversify the country away from its dependency upon oil and gas. He started the Al-Jazeera TV network, developing its financial infrastructure and attempting to develop its tourism industry.

One project is visible from our hotel room where tens of thousands of acres of land have been reclaimed from the Arabian Sea, moving desert sand. The Pearl Qatar is in the shape of palm trees and several dozen construction cranes were visible from our room. I would estimate that we saw 300 to 500 construction cranes in our tour of the town.

Our one disappointment was not being able to watch the famous Qatar camel races which weren’t being run on the days we were here.

Day Two—Doha, Qatar

The headline in this morning’s newspaper is “Severe sand shortage hits Qatar’s construction sector.” You can’t make things like this up. It would be like saying Alaska is facing an ice shortage. Actually the country has plenty of sand, but it is treated sand that they are lacking because of the demand they are having because of the massive construction boom.

We spent last night at their major mall, walking around a huge mall in which 99% of the goods are imported. We were surprised that we haven’t seen anyone out praying when the call for prayers comes on over the loud speakers. We thought that they all prayed at the right times. Hmmm!

I wanted to go talk to a guy who obviously had five wives (several pregnant) and several children trailing him through the mall. Betinha suggested that I take a look at the jewelry store instead.

We’ve now talked to several workers from countries including Nepal, Indonesia, Nigeria, Philippines and India. To a person they have seemed to be discontented with their situation. They are living four to a room, working 6 days per week and making around $400 to $600/month. They are not allowed to marry nor have children.

We also are amazed at the construction going on but are not at all impressed with the quality of it. It looks great from the outside, spectacular in fact, but doesn’t look as good in a couple of years.

Both Betinha and I have a funny feeling about Qatar. Something just doesn’t seem quite right even though in looking at it you would guess that they are really booming. My guess is that they will do well for the next five to ten years, but I’m not sure beyond that.

Day Three—Dubai, United Arab Emirates

Wow! Wow! Wow! It was all we could think as we drove from the airport to our hotel on the beach of the Arabian Gulf. We had never seen so much building going on at one time in one city as we saw in Dubai. And, unlike Doha which struck as being very artificial, this city seemed to have neighborhoods and the buildings flowed with it. Betinha said it best, “This looks like a real city. Doha looked like a Lego’s city that someone had decided we’ll put this building here and this one over there.” There wasn’t any continuity to it, unlike what we were seeing in Dubai. It felt to us that Qatar was a Dubai want-a-be, but didn’t have it quite figured out yet.

I’m writing this from the pool deck of our own private tent or at least what it is supposed to look like in Bedouin Time, except we have a full bathroom, king sized bed, TV, mini-bar and also a temperature controlled pool something that every self respecting sheik should have when the temperature gets over 120 degrees.

We had a rough landing at the airport yesterday because of a sandstorm, which gave the town the appearance of dusk at 4:30 in the afternoon. A later thunderstorm, which only lasted a few minutes, resulted in the lights going out at our restaurant. Evidently they don’t get much rain, because a short rain seemed to flood everything. Someone told us later that they had gone five years without any rain, but that they had started to get some rains in the past two years.

Dubai’s history is one of taking on impossible projects that many thought were foolhardy and then proving the so called “experts” wrong. Let me share some of the early history of the Emirate. The town was formed at the mouth of a six mile long creek and developed into a fishing and pirating town. The British got tired of the pirating and cracked down on the region in1820.

In the late 1800s the local ruler decided upon a novel approach. He exempted ½ of the local pearl divers from paying the normal pearling tax. The industry boomed and many divers from other Gulf areas moved to tiny Dubai. In the early 1900s the neighboring Persians (now Iran) increased their import taxes and the Dubai ruler who had seen the impact of lower taxes upon pearl production decided to set the city up as a duty free zone. Dubai’s population doubled to 20,000 by 1920 as traders flocked in from all over the region. The 1920s were the first of many boom times in the area.

The 1930s worldwide depression hit Dubai particularly hard. Demand for luxury pearls plunged and new Japanese technology for the production of cultured pearls greatly diminished demand for natural pearls. But trade in other goods continued to flourish, creating a deep rift between the native pearl divers whose living standard was plunging and the newer immigrant traders. The first democratic advisory councils were set up to try to alleviate some of the tensions that resulted.

The 1950s saw the start of the massive oil boom in the region, although Dubai’s oil production was miniscule when compared to neighboring countries. In the late 1950s, Dubai decided to borrow $850,000, an amount greater than the entire income of the Emirate, in order to dredge the Creek for ocean going freighters. The decision was ridiculed. “Who is going to want to ship things here?”

But, the need for heavy equipment for the oil industry and Dubai’s strategic location and low taxes made that decision appear as a stroke of genius, with shipping revenue quickly becoming the Emirate’s main source of income. A decision to build an airport (really only land strip from the hard desert sand) in 1960 was also derided but Dubai’s open skies approach quickly turned it into a favorite hub for several carriers. Other projects such as a 1967 decision to spend $40 million on a new seaport and a 1976 decision on a $2.5 billion container port which required building the world’s largest man-made harbor were called “ridiculous” by the experts. The container port sat virtually empty for almost ten years before taking off.

In each case Dubai, a relatively small country that was not much bigger than a fair sized city has made some audacious decisions which have worked out for them in the long term. They took chances that other similar places passed upon. And their population doubled by the early 1970s, shot up to 250,000 in 1980, 700,000 in 1995 and passed the 1 million mark in 2004. Only 20% of that total population are citizens, with the remaining 80% being workers who are needed for its growing trade and industrial base.

Today they are taking even more chances as they try to position themselves as the London, New York or Hong Kong of the Middle East.

Here are some of the projects that they currently have underway:

• Building 300 islands in the Arabian Sea with hundreds of miles of new high-valued shoreline, creating a new area greater than Manhattan. One project is in the shape of the world map.

• Burj Dubai is being built as the world’s tallest office tower. It is half completed and work goes on 24/7.

• A Tropical Forest is being built in the desert

• Dubai Silicon Oasis is being set up to manufacture semiconductors, following upon successes in Internet City and Media City within Dubai.

• They are completing a new airport that will be the size of London’s Heathrow and Chicago’s O’Hare combined.

• Dubai is building a shopping mall that will be two or three times larger than Mall of the Americas. They will issue Segways and GPS monitors to shoppers to help them in navigating the mall.

There are also projects on the drawing boards to build an underwater hotel, take people into space and the manufacture of jumbo airplanes and their parts. Any one of these projects would be over-the-top for most countries, but all being done in one country and with only 1.5 million people! It is incredible.

This is a city that never stops dreaming. A local person told me, “We are going to be New York without the traffic, Miami without the vice and Las Vegas without the casinos.”

Already the country is bringing in 6 million tourists/year with the UK, Germany, Russia and France leading in visitors to the country. Hopes are that both the U. S. and China will become the new visiting countries, taking their number of visitors to over 15 million within 10 years.

“The national bird of Dubai is the crane….the building crane,” was an often made joke during our stay. In traveling around it was quick to see why. Over 25% of the world’s 100,000 cranes are located in Dubai. Presently over 2,000 office and residential towers are under construction.

Betinha and I are off to ride camels.

Day Four—Dubai Airport

Camel riding consisted of two rows of camels that were led out into the desert. We were in the second group at the end of the line, not a position that I like to be in. It is a particularly bad spot as your view is multiple rear ends of other camels. I tried to coax our camel further up in the line, to no avail.

Last night Betinha slept, dreaming of a young Omar Sharif as Lawrence of Arabia galloping across the sands in front of our Bedouin tent. I slept with one eye open after we were informed after our camel ride that camels wait until you are asleep, find you in your tent and sit on you if you have been mean to them during the previous day. I hoped that our camel knew I was only kidding when I was urging it onto the front of the camel line.

Early this morning we embarked on a falcon hunting demonstration. Falcons and Arabian horses are the popular animals of choice in Dubai and other Middle Eastern countries. The falcons were domesticated over 2,000 years ago when the Bedouin herdsmen jealously saw the migrating falcons feasting upon freshly killed birds as they survived upon dates and camel milk. Once they learned how to capture these magnificent birds and turn them into their hunters, their diets improved dramatically. Working together with Saluki dogs which helped to flush birds in the bush and to track down the kill of the falcons, falcons became an important and revered part of Middle Eastern culture.

The birds we watched in training weighed from 770 to 1050 grams (about 2 pounds) and the trainers are careful to keep the weight within 20 grams of its ideal hunting weight. Too heavy and they fly away because they aren’t hungry enough and too light and they run out of energy for the hunt too soon. The birds eat about 10% of their body weight each day.

A pure white or black falcon can bring up to $300,000 and even a common bird will bring $3,000 in the falcon market in Dubai. Emirates Airline will fly the birds in first class seats with their handler. Each bird takes up one seat.

One final interesting point made to us was that the male is usually the smaller of the species and must be careful in the wild in its mating process. If the female doesn’t find your mating skills up to snuff, she will kill you and eat you. I didn’t particularly like Betinha’s comment of, “As it should be.”

We found the Al-Maha Resort to be extremely well thought out, developed and run. The 100 square mile property was set aside by a prior sheik as a reserve for the preservation of the natural desert. A South African company was hired to develop and run the facility something that they do with many South Africans who have grown up in the safari business.

We found in our quick trip to Dubai that this approach of finding the best in the business to run the local operations in Dubai to be standard operating procedure in the country. The staff were very well trained, seemed interested in their jobs and were fully engaged. There was a night and day difference between Dubai and Qatar in our experience.

Overall we were very impressed with Qatar and Dubai, but uneasy about the “Command and Control” sense of these Arab countries. In particular, we question the long term strategy of bringing in alien workers without their families. These workers make up 80% of the population but probably 95% of the workforce. Not allowing these workers to unleash their natural entrepreneurial talents is something I think they will regret.

We are off to Viet Nam, Cambodia and Hong Kong.

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