Monday, February 02, 2009

The abandoned cars in Dubai as the indicator of economy

There is a new big parking space near my office to park unsold cars. The car sales have dropped drastically as well as local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months.
Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight. A large number of such owners are from Indian, Sri Lanka, Bangladesh and other South Asian countries
The global economic crisis has brought Dubai's economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt. Several people have been laid off in the past months after the realty boom started unraveling.

In the Gulf, the truth about the economy might be found in counting cars

From Monday's Globe and Mail
February 2, 2009 at 12:00 AM EST
DUBAI — Here's my definitive litmus test for the resilience and depth of Dubai as a place that can continue to expand economically after weathering the current global economic recession: How many abandoned cars are actually parked at the Dubai airport?
In a land of superlatives and seemingly endless hyper growth, the scale of the stories circulating about the number of abandoned cars at the airport is equally gigantic. In the past few weeks in Beirut, Abu Dhabi and Dubai, I have heard friends and acquaintances report authoritatively that, variously, 15,000 or 10,000 or 6,000 cars have been parked and abandoned at the airport by their foreign owners. These people lost their jobs, did not have enough money to complete their car payments, and found the easiest way out was to park their car at the airport and leave town for good.
The variety of stories circulating about this little drama is matched by the range of reports one reads and hears in the Gulf about the real state of the local economies in Abu Dhabi, Qatar, Dubai and other emirates - from deep disaster, to a manageable two-year recession, to a simple little blip on the charts that will see economic growth only drop slightly from 9 to 6 per cent, or something of that magnitude that totally removes any impact of a global economic collapse, miraculously detouring around these enchanted lands.
The abandoned cars are a good barometer of two important dynamics: Some core, critical facts and figures about their economies are simply not known to the public, but at least the gap in verifiable data is bridged by splendid rumours.
Foreign and local investors need to know the truth about these economies that have grown so impressively, in large part due to surplus oil wealth shifting into speculative investments in real-estate projects. If investors have doubts about the economic facts of these sheikdoms and emirates, they will quickly send their money to other markets where the facts are known. Investors do not mind bad news about economic losses or retrenchment. What they despise and fear is being left in the dark about economic realities.
Also, providing accurate, verifiable information about the realities of the economic downturn in the Gulf may be the first major "political" test these countries face in modern times. They can cement relations between citizens and their state on the basis of something more enduring than short-term materialism. If they can speak honestly to their own citizens and provide them with a clear, comprehensive picture of current conditions and expected trends, they will have enriched the entire Arab world with an example of true pioneering development and state-building that is much more meaningful than a shopping mall or a Hummer showroom.
We need one Arab government - just one - that will react to the global and regional economic recession by speaking the truth to its people, disclosing real unemployment rates, debt buyouts, contraction or expansion trends, and other such things. I have not seen such an example to date, but I suspect that the first Arab government that musters the courage to speak honestly will reap a reward of rare and incalculable proportions: the trust of its people.
I would like to hear one sheik, emir, king, sultan, president-for-life, or wise and vanguard-beloved leader of the dazed and pulverized masses explain the true extent of the crisis that is upon us, and ask for citizen participation in weathering the storm and generating ideas for coming out of it in decent shape.
The various emirates throughout the Gulf region that have grown at breakneck speed in the past three decades are having to adjust to supply-and-demand economic realities after living through nearly four decades in which they thought that they operated by different rules.
These statelets have enjoyed sufficient income to keep their citizens living happily for the most part, and also to offer jobs to millions of guest workers, while generating spectacular speculative investment opportunities for all those who dared to gamble. Now that the speculative bubble has burst, citizens, guest workers and rootless investors alike need some accurate news about just how bad or manageable things really are.
Anybody can be a popular leader by offering endless commercial contracts when the oil wealth is flowing non-stop. But only real leaders succeed when times are hard, oil income is down and economies are shrinking, and they maintain their credibility by telling their people the truth about the difficult times.
The current economic recession is a moment that cries out for an Arab leader who can speak truthfully to his people on the issues of the day that really matter, including how many abandoned cars may be parked at the airport. I suspect that the chances of this happening in the emirates and sheikdoms of the Gulf are probably higher than in any other Arab region - if the Gulf's self-image of pioneering, orderly, humane national development is a fact rather than mostly an image.
Rami Khouri is editor-at-large of the Beirut-based Daily Star and director of the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut.


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