A Time Picture of Abu Dhabi

ABU DHABI 1980's

I have never been to Hong Kong or Shanghai in the late 19th century (obviously for logistical reasons) but I feel from viewing some records that Dubai's vibe today seems similar to such places -minus the poor slumps of course.

Abu Dhabi, on the other hand, was until 1990 the embodiment of what a Utopian national Arab capital would have been like if the Arab Nationalists of 1960's got their way in history.

After 1991, Abu Dhabi enjoyed a decade of Cultural Localism -a condition where the distinctiveness of the Locals could be felt in every aspect of culture and social relations. Personally, I am glad I lived my teenage rebellion in such a decade.

ABU DHABI IN 1990'S

Today, the city is being reinvented as the regional core of industry and innovation, capital and culture, and politics and partnerships.

If Dubai is becoming the mercantile London of the Middle East, Abu Dhabi is definitely the region's industrious Berlin. I wonder which city in this part of the world dreams about the creative city of lights.

ABU DHABI IN 2008

Who Lives in The Emirates

For any person who lives in -not visits- The Emirates the place has a unique cultural vibe to it.

Today, and as of August 2008, The Emirates has 3 major cultural groups. The division is based on political, economic, and social commitment and investment in The Emirates. They are put in order of highest commitment and investment in The Emirates as follows:

1) The Locals -i.e. the citizens of The Emirates. Naturally, this group is the most committed to the prospects of life in The Emirates and invest the most in its political, economic, and social future and stability. For that, most government initiatives -e.g. environmental benefits, medical care programs, salary increases...etc- start with this group before being extended to all groups.

2) The second group is the MENASA group, which refers to the major cultural group in The Emirates. It includes people coming for employment purposes from the Middle East, North Africa, and South Asia (thus the acronym). This group is the largest demographic group in size and the primary generator of everyday economic life in The Emirates.

People of the MENASA group and the Locals hold very different views on issues such as legitimate state leadership, government role, language, political loyalties... etc. Unfortunately, these legal and culture-specific differences are viewed as a challenge when attempts are made to create a hybrid cultural future for The Emirates.

3) Finally, there are the Western Guests. They make up a small-but-influential cultural group. It mainly includes people from Western Europe, North America, and Australasia. Many members of this group help design and implement the strategy for The Emirates' future. However, there seems to be a strict adherence to the guest worker attitude within the majority of its members. In general, this group invests the least in The Emirates compared to the other two groups.

In this blog we will be looking at various issues in The Emirates given this division of the 3 major cultural groups. Learn their names for future reference (Locals; MENASA; Western Guests).

The Emirates' Top Trump

It seems obvious that the real estate market in The Emirates is not afflicted by an economic bubble.

In Dubai, for instance, the war in Iraq in 2003, the threat of terrorism, persistent inflation, traffic congestion, and high-profile corruption cases in large property development firms have not had a significant effect on the expansion of the real estate market. This indicates that there is an intrinsic value in the properties being bought and sold by residents and investors in the country.

Looking at one popular type of property, condominiums, one observes that the specifications and quality of such properties is converging to a similar global standard in most of the advanced urban areas in the world. From Yale Town in Vancouver to Mont Kiara in Kuala Lumpur condominiums have almost an identical feel to them with all their high-tech facilities and black-marbled kitchen counter tops. So there is a factor beyond the quality of what is being offered in the market that makes Dubai's condominiums in such a high demand regardless of regional and global threats.

That factor is perhaps the standard of living in The Emirates. From India to Morocco, the major cities in The Emirates enjoy the highest standard of living in the entire region. In terms of services and amenities, it is comparable to many western countries. This fact is The Emirates' top trump.

The high standard of living creates an increasing demand in moving into and remaining in the country, which keeps the price level in general continuously rising. However, that rise in the price level cannot be called a natural rate of inflation. The inflation rate increases variably regardless of the income growth of the country as a whole.

Policy makers in The Emirates have to take into account this factor when tackling any economic problem. The aggregate demand pull can put a halt to any corrective action taken by officials to boost the well-being of the economy.

More importantly, preserving the pleasant lifestyle of The Emirates must be a top priority. Needless to say, the job of preserving it must be taken up by all since all residents are affected by the standard of living in the country.

Any asset taken for granted and not properly accounted for can be severely undervalued. If the quality of life in The Emirates is undervalued then deterioration could set in. Therefore to preserve this asset, contributions from all residents -through paying taxes, getting involved in environmental initiatives like car pools and recycling activities...etc- should be an obvious next step.

At present, it is people's tastes that make The Emirates such a success, and the officials know how to prolong this identity. But one cannot deny that people acquire new tastes as well.

Restoring a Marriage Bond

The Emirates has seen two major economic booms: one that took off in the mid-1970s and the other that we are experiencing as I write.

Before this current upswing -supported by oil prices per barrel in the triple-digit range- The Emirates had a unique marriage bond between wage rates and the standard of living. It was a bond not expressed in a declared minimum wage, but rather a bond maintained by creating a business environment that allows small businesses to survive easily.

This business environment allowed small businesses to provide goods and services to the lower earning sections of the labor force. Thus, providing the low-earning worker a decent standard of living -which is the aim of a minimum wage policy.

Low-skilled South Asian workers -working on a daily rate- were able to buy basic necessities without having to sacrifice the share of income that is sent back home at the end of each month. More specialized workers were also able to sustain a higher standard of living for themselves and their families in The Emirates by satisfying their market needs from higher quality outlets. The same story applies all the way to the highest earning workers in general, the Emiratis.

Store rents and other costs were diverse enough to accommodate the wide range of businesses that cater to each individual group according to its income. Most working individuals in The Emirates were able to sustain a decent life- for themselves and their families- whether their families were present in the country or not.

However here is were the happy story ends. A bitter divorce between the prevalent wage rates and the standard of living was announced with the declaration of pay-hikes to government employees in The Emirates along with a discontinuation of many welfare-style programs (such as programs regarding commercial building management, property rental regulation... etc).

This sudden, sharp hike in the money supply in circulation, future expectations resulting from rising government wages and oil prices, and the general increase in the demand for moving into The Emirates have contributed to one of the most vicious inflation periods the country has ever witnessed. Needless to say, rental properties were now difficult to retain.

Before trying to target this inflation that is storming its pleasant lifestyle like a hurricane, The Emirates has to bring immediate aid to the most damaged groups. One way to do so is by restoring the marriage bond between the wage rates and the standard of living in the country. That can be done through various means. Two of such means are: restoring the bond through a minimum wage policy or by bringing back the previous setup that ensured the market had something to offer to each income group. I prefer the latter.

Where I Stand

As a new dawn of progress and prosperity unfolds in the United Arab Emirates (or The Emirates as yours truly likes to call his home), a new breed of minds has to be prepared to take on the challenges of the day. I stand amidst the men and women of this mission.