The Dubai bubble bursts

Economic collapse is never a laughing matter, but I won’t be shedding any tears over the Dubai headlines today. In case you missed it, Dubai World, the state-owned investment and construction company, has announced that it needs to delay the next repayment on its $80 billion debt. Stock markets took a bit of a stumble as banks with big investments in Dubai absorbed the news. Just two years ago Dubai could boast that it had a quarter of all the world’s cranes, but they’re silent now. Construction has stopped, the decade long property bubble burst.

For one thing, Dubai is a monument to hype and ego. World’s biggest man-made island, world’s tallest tower, it’s all there. It’s also massively unsustainable – outdoor air conditioning, indoor ski slopes, golf courses in the desert. Per capita carbon emissions are the highest in the world. Even if it didn’t succumb to debt, Dubai would fall to a water crisis or an energy crisis eventually. Not that investors have noticed. “I am confident that the leadership of Dubai and the UAE will overcome any short-term issues they face,” said the head of HSBC today, “and continue to lay the foundations for sustainable growth.”

Most importantly however, Dubai was built on slave labour. It’s hard to believe it’s possible in our modern world, but the magnificent buildings were built by Indians, Filipinos and Bangladeshis, many of whom paid considerable sums for the job, only to find on arriving that they will never earn enough to go home. With minuscule wages, dire living conditions and no way out, they are slaves in all but name. No doubt the Emirates will rally round and bail them out, but for that, Dubai doesn’t deserve to be saved.

But before we resort to gloating, we should remember that Dubai is simply the extreme end of what we’re all guilty of – huge luxury propped up on debt, unsustainable resource use and exploitative labour practices. Our way of life can’t go on either, and the sooner we realise that, the less painful it will be when the bubble bursts.