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The modern emirate of Dubai, whose principal city is also called Dubai, is a land of contrasts. It sits squarely in the Arabian Desert, but has miles of beautiful coastline. Political and social turmoil stirs in parts of the broader Middle East, yet this is one of the world's most stable places. Dubai's Islamic heritage and Western orientation give it a unique position in the region - friendly with neighboring countries but largely sheltered from their troubles. The government is a constitutional monarchy with only limited democratic elements, while the economy is a managed capitalist system experiencing rapid growth until 2009. Conservative communities live in relative harmony alongside liberal ones. Local culture is protected, even as widely divergent customs from abroad are tolerated. Although Arabic is the official language, English is widely spoken. These contrasts reflect a city whose international outlook is grounded in the customs of contemporary Islam, a land characterized by its Arabian heritage and willingness to embrace change.

Dubai is a truly multiethnic society. Roughly, half its population of about 1.6 million (there are about 4.5 million people in the entire U.A.E., making Dubai the most populous emirate) hails from South Asia, a quarter from other Arab countries and Iran, and about 10% from the West and elsewhere in Asia. The Indian, Iranian, and Pakistani communities are the largest. Among the Western population, British expatriates are most prominent. The local population makes up less than 20% of the total, making Emiratis a minority in their own land. But what is remarkable is their success in protecting their culture in the midst of such sweeping change. Dubai's new emphasis on its historic areas and cultural centers, as well as its promotion of traditional pastimes such as camel racing, falconry, and dhow sailing, represent a concerted effort to safeguard the local culture.

Religion and family life lie at the core of Emirati society. Relationships are strong not just within the immediate family but among the extended family, which often lives together. Respect for elders is a core value. Traditional song, dance, and poetry remain integral to the Emirati experience. Families still arrange marriages, which the bride and groom must agree to, and weddings are a significant cultural event that can last up to 2 weeks. They have become increasingly expensive, and the government has established a Marriage Fund to assist locals with affording the enormous wedding costs and dowries and encourage them to marry Emiratis rather than non-nationals. The bride typically moves in with the husband's family after marriage, but she does not take her husband's last name.

Emirati women may seem sheltered by some Western standards, but their role in local society is changing. Unlike in some more traditional Islamic countries, women in Dubai drive and move around the city unescorted. They have equal educational opportunities and increasingly work outside the home - 65% of students in U.A.E. universities are women, as are 40% of government employees. With increased education and exposure to Western cultures, their readiness to commit to traditional roles as housewives is less certain. As in so many places, the younger generation is much more open-minded than the older one.

Emiratis are easy to recognize because of their national clothes. Local men wear an ankle-length white garment known as a dishdasha and a white or red-checkered headdress called a gruta. It is secured on the head with a black cord, the agal. Local women typically wear a full-length dress covered by a black abaya, and conceal their hair with a headscarf called a sheyla. Some women, particularly in the older generation, also cover their face with a veil. Both men and women are increasingly accessorizing their traditional dress to achieve greater individuality.

Dubai is the U.A.E.'s commercial center and the second-largest emirate in the federation, after the capital Abu Dhabi. A widespread misconception is that Dubai's wealth comes from oil money. Unlike Abu Dhabi, which holds almost 10% of the world's proven oil reserves, Dubai's oil is almost gone. Two decades ago, oil revenue made up half of Dubai's GDP; today it accounts for no more than a couple of percentage points. Dubai's engines of growth are fueled instead by the diversified economy, revolving around trade, tourism, manufacturing, communications, housing, and financial services. The strategic location explains its success as a business hub. It sits at a crossroads between the Far East, Asia, Africa, and Europe. More than 6,000 companies from over 120 countries operate in Jebel Ali, Dubai's deepwater port and enormous free-trade zone for manufacturing and distribution.

Foreign labor is responsible for most economic activity. Job sectors tend to be stratified among nationalities, and few Emiratis work in the private sector, preferring instead lucrative public-sector jobs. All Emiratis receive excellent government benefits, including education, healthcare, and access to financial resources. With an increasingly young demographic, however, the U.A.E. will need to work harder to find a sufficient number of jobs for them in the future. The foreign population does not have access to the same benefits that locals receive, and living and working conditions for unskilled foreign workers can be onerous.

Tourism is an increasingly important source of revenue for Dubai. The number of annual visitors here more than doubled from 3 million in 2000 to more than 7 million in 2009, and tourism officials are aiming ambitiously for 40 million visitors by 2015. There are 60,000 hotel rooms already in operation, with another 30,000 in the pipeline. Major developments like the Palm Jumeirah, Dubai Marina, and Downtown Dubai at the Burj Khalifa are meant not just to dazzle, but also to bring in tourist dollars.

Until 2009, Dubai's growth was phenomenal. Cranes and construction sites dominated the city, and people joked that the crane was the national bird. The impact of the global financial crisis (and the concurrent falling oil prices) had a much-storied effect on Dubai: tales of luxury cars left abandoned at Dubai Airport by debt-fleeing foreigners, with notes of apology taped to the window, captured the imagination of the Western media. Reports circulated of work visas being precipitously cancelled (some said at the rate of 1,500 a day), leading to mass deportations and economic dislocation. Real estate prices plummeted by more than 30%, and scores of construction projects were said to be cancelled or indefinitely on hold. Perhaps the most significant headline grabber was Abu Dhabi's bailout of Dubai. Both the amount of the bailout as well as the impact it generated are kept close-hold by the U.A.E. government and are surprisingly difficult to untangle.

What is known is that by 2009 Dubai had run into major debt trouble - estimates of the debt reached as high as $100 billion. At the heart of the trouble was the announcement that Dubai World, a major investment arm of the Dubai government, had racked up $59 billion in debt it could not service, and that it was seeking suspension of its interest payments and considering stalling or canceling a number of projects run by its main developer, Al Nakheel Properties. Reverberations on Wall Street and other major markets were immediately felt, although the exposure of most foreign banks was in reality limited (with most of Dubai World's debt held by domestic and U.A.E. banks). Immediately following this announcement, numerous hotel, residence, entertainment, and other large-scale projects were put on hold, and many have remained that way. Investment money dried up, construction slowed to a standstill, and a significant number of foreign laborers left the emirate. Some observers compared Dubai to a house of cards that was now tumbling down.

To cope with the crisis, Dubai launched a $20 billion bond program. The U.A.E. Central Bank and Abu Dhabi-based banks bought the largest shares, and in December 2009, Dubai received an additional $10 billion loan from Abu Dhabi. Dubai World was saved from bankruptcy, at least for the time being, with infusions of capital. Sheikh Mohammed also created an office designed to repair and uphold Dubai's image as a friendly place for business.

By 2010, there were signs the crisis had subsided. Although Dubai's recessed housing and construction sector continued as a major drag on the economy, tourism appeared to pick up with the rebounding global economy. During peak season, many hotels were full and restaurants teeming with people. Looking at the economy overall, the IMF estimates that Dubai's economy contracted by 2.5% or more in 2009, with signs that it would grow just slightly in 2010.

Abu Dhabi's influence as a result of its bailout of Dubai is a subject of much speculation. Some things can be easily observed - the most striking example that the world's tallest building, the Burj Dubai, when completed was renamed the Burj Khalifa, in honor of Sheikh Khalifa bin Zayed, the ruler of Abu Dhabi. Additionally, numerous billboards bearing his portrait now line the main roads of Dubai and decorate the lobbies of all major hotels (images of the rulers of Dubai used to be more prominent than those of Abu Dhabi here).

Some have wondered whether Abu Dhabi's financial help came with a quid pro quo that Dubai needed to become more conservative. Announcements of a "courtesy policy" not previously seen here began showing up in various public places, banning overt displays of affection and behavior deemed disrespectful of local values. Although Dubai officials deny there have been any social changes as a result of the Abu Dhabi bailout, it's possible to sense that some changes are afoot.

The extent to which Abu Dhabi would seek to curb what has been termed its "errant brother" remains to be seen, however, given that much of the genius of Dubai's development strategy lies in its relatively laissez-faire attitude toward social and economic issues. One might imagine Abu Dhabi approaching any heavy-handedness with care, given the centrality of Dubai's success to the U.A.E.'s global reputation.

Looking ahead, there's reason to expect that Dubai will continue its forward march. Political stability, economic openness, social tolerance, and the high quality of infrastructure here will serve the emirate well in an era of globalization. Dubai's regional standing is also helped by the lack of stability in much of the Middle East, which makes it a safe spot by comparison. No one knows exactly how far Dubai's debt extends, and what impact it (and the Abu Dhabi bailout) will have on future growth, but it's doubtful that Dubai will end up permanently damaged by the crisis.

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