Dubai development may be down, but it's not out

If a city can be spectacularly quiet, this waterfront city-state has certainly qualified in recent months. Hundreds of abandoned construction cranes languish above Dubai's gated communities and beach-side developments and, most dramatically, up and down Sheikh Zayed Road, its high-rise spine. According to a recent estimate in the Middle East Economic Digest, projects worth a staggering $335 billion in the United Arab Emirates -- of which Dubai, with a population of about 2 million, is the largest member -- are stalled or have been canceled outright.

Dubai's residents, roughly 85% of them expatriates, have been left to wonder if the current crisis is merely a pause, a recessionary lull that will be painful but temporary, or closer to a fundamental reckoning that will entirely reorder the emirate and how it does business. The same question is being asked in cities around the world, of course. But it's a particularly acute, even existential one here, since it goes right to the heart of Dubai's self-image.

During the boom years of the last decade, the emirate -- which has only a tiny fraction of the oil reserves held by the capital of the UAE, Abu Dhabi -- became synonymous with frenzied real estate speculation and headlong growth. It operated as a highly efficient machine for attracting capital from around the globe -- in some cases from investors who, for political reasons, rejected the idea of sending it to the U.S. -- and turning it into real estate. In a fundamental sense, many of Dubai's skyscrapers were conceived and designed primarily as vessels to store excess liquidity. If the endless rows of stalled towers now resemble mere shells, perhaps shells are all they were ever meant to be.