Six hundred years ago, Ibn Khaldoun, the pre-eminent Arab social scientist, argued that tough desert tribes would always supplant urban elites in an inexorable cycle of renewal.
A contemporary example of this evolutionary theory occurred at the World Economic Forum last weekend as Omar bin Sulaiman, the long-standing chief of the Dubai International Financial Centre, was abruptly dismissed. The news was imparted in a terse press release, while Hamdan bin Mohammed Al Maktoum, the emirate’s crown prince, addressed the forum. Fairly or not, much of Dubai’s elite is being made to atone for the wastage that accompanied a period of giddy growth that has turned into bust.
In a move more symbolically important than Mr bin Sulaiman’s dismissal, Mohammed al-Gergawi, chairman of the ruling family’s Dubai Holding conglomerate, Sultan bin Sulayem, who presides over the indebted Dubai World , and Mohammed Alabbar, chairman of Emaar Properties, last week left the board of the Investment Corporation of Dubai. ICD is a government holding company led by Mohammed al-Shaibani, the increasingly powerful head of the ruler’s court.
The departures should help assuage the concerns of Dubai’s financiers in the banking community and of members of the Abu Dhabi government, some of whom have been calling for change at the top, people with knowledge of the situation say.
The ruler’s court has installed new officials at ICD and the financial support fund, a body overseeing the $20bn bail-out for cash-strapped state enterprises. But the removal of Mr bin Sulaiman, who helped put Dubai on the global financial map, has surprised many. It echoes the experience of Nasser al-Shaikh, the chief of the finance department, who was publicly sacked in April.
The two were prominent younger Dubai leaders who were addressing the emirate’s $80bn debt, and who helped coax February’s $10bn bail-out loan from the central bank of the United Arab Emirates.
Some say Mr bin Sulaiman is the latest victim in a political tussle that has seen increasing powers vested in the ruler’s court. Mr Gergawi, who used to be chief vizier, has lost much power, and Mr bin Sulaiman, a protégé, seems to have followed, the people say.
The latest sacking comes amid a government audit investigation into excessive bonuses and financial abuse, which has uncovered wrongdoing across the emirate’s state-linked real estate companies.
True, it was the ruler who appointed these lieutenants to turn his vision of a world-beating Dubai into reality, and who encouraged a competitive environment that quickly built the infrastructure that the city now hopes can contribute to an economic revival.
These rivalries also fuelled excess. Dubai’s “masters of the universe” disregarded sustainability and increased the scale of mega-projects in order to trump colleagues’ plans.
The merchants who helped the ruling Maktoums turn a sleepy fishing village into a regional trading and commercial centre have been quietly suggesting that heads need to roll. So it is no surprise that Mr bin Sulaiman’s replacement is Ahmed al-Tayer, an old financial hand from one of a number of influential families, who have been calling for a return to a more conservative style.
The question now is whether a traditional approach will work for the DIFC. Mr bin Sulaiman revived the centre after its difficult birth in 2004 amid a scandal over regulatory independence. His blend of sales zeal and the promotion of culture and education has embedded the centre as a cornerstone of the emirate’s growth, so that it has weathered the global storm well.
The DIFC still faces challenges. Many executives have fallen idle amid the downturn, prompting wags to rename it “Dubai International Food Court”. There is also the prospect of renewed competition from Abu Dhabi and Qatar, two hydrocarbon-rich neighbours with financial ambitions of their own.
But the competition to be the regional financial centre is still Dubai’s race to lose.
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