Remember the huge flack created a few years ago when the sovereign wealth fund of Dubai, one of the fiefdoms of the United Arab Emirates, had the inside edge on a contract for the management of some of America's largest ports? People of all political stripes were so outraged that their country would sell out to some "Middle Eastern sheikh" that the company in question, Dubai World, backed out -- even after a charm campaign about the revival of the once sleepy city that included a story that took up 2/3 of an episode of 60 Minutes. The area was actually expanding out into the sea with palm tree shaped islands, that sail shaped eight star hotel (the Burj Dubai) and a massive shopping mall that included the biggest bowling alley in the Middle East and even an indoor ski hill with snow generated by machine all day and night.
My, how times have changed ... today, many world markets were shaken up by the news that Dubai World has asked for a six month extension on an upcoming interest payment -- a whopping $3.5 billion. Reason: Like most places during the boom, Dubai grew too big and way too fast and it's finally, like the rest of us, facing reality. Its dream of becoming the next great financial centre, after London, New York City and Hong Kong was, like the desert surrounding it, dust in the wind. And with the US markets closed today, one can only imagine the huge sell-off that will happen tomorrow during the biggest shopping day of the year -- if the company defaults, major banks in North America and Europe could be on the hook for about $40 billion in bad loans.
Hard to believe this is the same Dubai that advertised not that long ago in both the G&M and the NP for jobs working as oil technicians and accountants, for payrates in the six figures; even higher than what's being offered for some jobs in the Alberta Tar Sands. The benefit package included a six week vacation back home, fully paid by the company, each and every year in the five year contract. You can imagine how many people wanted to be the guy -- or girl -- in Dubai.
There are lessons here for us. The boom is bound to end at some point in Western Canada and off the East Coast. Not just the volatility in the price of oil but just the unrealistic cost of living is driving many away. These are tough times, but we need to find a way to diversify and make our locales a place that welcomes all kinds of business with long term growth. Otherwise, like countries overly dependent on just a minimum number of resources (and non-renewable ones at that) we may be shooting ourselves in the foot.
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