Case study: Reshaping the Dubai Model In early 2013, analysts were warning that Dubai was suffering from the global down

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Case study: Reshaping the Dubai Model
In early 2013, analysts were warning that Dubai was suffering
from the global downturn. Managers and employees across all sectors
were worrying about their jobs. Property owners were seeing
spectacular falls in the value of their investments. Dubai had been
renowned for its extravagant projects and schemes. What had been
seen as a glowing example of growth and prosperity was now being
cited as an example of a country in crisis management. Dubai’s debt
burden had reached US $100 billion.
Dubai has always been a magnet for investors. It went tax-free
at the beginning of the twentieth century, but by the 1960s, oil
revenue funded huge infrastructure projects. Dubai does not have
significant oil reserves, so the focus has been on commerce,
tourism, and aviation. To some extent it has embraced western
lifestyles and courted multi-nationals. While the UAE as a whole,
with its rich reserves of oil, had the capacity to ride out the
global downturn, Dubai itself would need a radical rethink.
The rethink would come in the shape of new leadership. Out went
the ambition to be the regional hub for 2 billion people. Just nine
years before, Dubai had been able to confidently state that
investors in Dubai would see greater returns on their capital (then
around 18 per cent) than leaving their funds in the bank. Dubai
could boast that no one who had invested in the city had ever gone
bankrupt.
Key decision makers like Sultan bin Sulayem, Chairman of Dubai
World; Mohammed al-Gergawi, Chairman of Dubai Holdings; and
Mohammed Alabbar, Chairman of Emaar Properties, all lost influence.
New, more conservative decision-makers were on the rise, such as
Mohammed al-Shaibani, Ahmed al-Tayer, and Abdulrahman al-Saleh. The
new decision-makers already had a reputation for careful mergers
and acquisitions, cost-cutting exercises and dealing with financial
problems.
The “new” men are a combination of close advisers to the ruler,
Sheikh Mohammed bin Rashid al-Maktoum, members of old merchant
families and, above all, more conservative in their financial
approach.
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