Foreign Correspondent: Middle East

Changes on the Gulf

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Dubai, U.A.E. The Gulf countries, comprised of Sultanate of Oman on the eastern edge of the southern coast; United Arab Emirates, Qatar and Bahrain on the south, Saudi Arabia, Kuwait and Iraq along the west coast, and Iran to the north, all rich in oil, are in a hurry to develop. With few exceptions this development is being forced on the subjects by strong central governments. The few exceptions are not far behind in the process of centralizing and controlling the economic future of their nations.

Saudi Arabia has proclaimed that as of December 22, 1976 no foreigners may own, wholly or partly, any business in the kingdom. Observers feel that spells trouble since a good deal of business management has been under the control of experienced foreigners.

A number of rulers, heads of states and men of influence harbor the notion that all it takes to grow is to throw money around. Such an attitude is now coming under strain as in the case of Iran where the Shah has had to cut back on a number of projects and has even resorted to searching for money in the foreign markets. The glory of pompous claims about raising the economic level of their nations to the level of free industrialized world with the aid of their oil wealth seems to be slipping away.

The United Arab Emirates, and particularly some of its semi-independent sheikhdoms, have so far followed a very common-sense approach to their development by opening their gates to immigrants and giving them freedom in their activities. Dubai, with so few natural resources, has shown its capacity to grow and develop in an atmosphere of freedom. But it may be not too long before Dubai, too, will give in to the pressure from Abu Dhabi, its major partner in the federation, for a stronger central government and more controls in the local economy.

This was one of the major issues over which Sheikh Zayed, Ruler of Abu Dhabi, threatened to step down at the end of his term as the President of the U.A.E., on the federation's fifth anniversary. Other issues involved border disputes between Dubai and neighboring Sharjah, and participation of member rulers in the central budget which so far had been financed almost solely by Abu Dhabi. Dubai, however, being mainly dependent on its own resources, has managed to retain its sovereignity to a large extent.

A major instance of difference in economic freedom between Abu Dhabi and Dubai is that whereas Abu Dhabi's government requires foreign businessmen and professionals to take up a local partner, so far no such rule applies in Dubai. But it is anticipated that some sort of change in regulations requiring local partners will be forthcoming in Dubai as well. This is a way of enriching and distributing the wealth among the local populace, which comprises a bare 20 percent of residents in the area.

Socially, foreigners find life more tolerable and culturally active in Kuwait, Bahrain, Qatar, U.A.E., Oman and Iran than in the rest of the Gulf states. In Saudi Arabia, the sale and consumption of alcohol is completely banned and movie theaters are nonexistent. Abu Dhabi is relatively "dry" compared to Dubai, due to Abu Dhabi's greater emphasis on political issues, in Dubai, the emphasis is still mostly on commercial success.

People often wonder how long the present rate of development in the various Gulf states will continue. Most local observers estimate that in 10 years everything will go kaput. In the U.A.E., for instance, the building construction industry continues to boom. The various city-states vie with each other in their development of various projects, many of which are redundant (such as international airports and communication complexes). The seven sheikhdoms together have eight different military units: one for each state and one central defense system.

The spectacular development in building construction has not as yet put a halt to the skyrocketing rents. Increases of 20 to 30 percent per year are the present norm. Living in Dubai is nearly twice as expensive as living in New York. A local building owner can recover the cost of construction in two to three years. Still, a sense of caution is growing and everyone expects the rents to take a deep plunge in the near future. The main factor in this erratic situation is the still-continuing influx of people from all over the world.

The war in Lebanon is responsible for a good share of this influx into U.A.E. and other Gulf states as well. Lebanese, both Muslims and Christians, have flocked to Dubai to find an alternative to the mess their country is in. Now that there is some semblance of peace in Beirut, many of them are packing their bags to go back home.

Culturally, a number of changes have been taking place in this region. Women are beginning to come out of their Burqas (veils) and are beginning to participate more actively in public life. Arabs are a proud people and it is a common sight to see them carrying guns of one sort or another as they go about their business. In business they are beginning to get shrewder and sophisticated, adopting the ways of the west. Still, much of the trend toward westernization is superficial, adopting forms without adopting values.

The traditional ban against lending money at interest is beginning to give way to modern realities. A number of Arabs have opened banks of their own. Some of the Gulf states are considering unifying their currency by 1978. It is not yet clear what criterion or standard will be employed in having a common currency. In case the standard considered is not gold, then most likely it will be one of those pipe- dreams that fizzles out, principally because under the veneer of brotherhood there lurks the urge to maintain personal power over the region under their command.

Many significant changes can be expected over the next decade. If and when the problem of Palestine is resolved, the one common bond of unity is most likely to be replaced by issues on which there is far less agreement.