A view of one of the new highways leading to the airport from the Dubai Marina.
DUBAI — The planned replica of the Las Vegas Strip and a glow-in-the-dark copy of a Giza pyramid are now delayed. But only a few miles away, workers are busy on a series of government-backed projects of a far more practical nature.
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A highway being built between the new airport and the Jebel Ali Free Zone.
A hulking “aerotropolis” — nearly twice the size of London’s Heathrow Airport — is rising from Dubai’s sands, designed to fan cargo and people toward neighboring cities that are expected to boom in the next decade.
Highways are expanding to speed goods to the airport from ships at the nearby Jebel Ali seaport, the Middle East’s largest, toward even faster delivery routes by air. And a subway system is spreading across town, amid hopes that people will flock once again to this city as the global economy revives.
Chastened after an extravagance-fueled debt crisis last year at Dubai World, the state-run investment giant, Dubai is getting back to basics.
Glamorous whimsies like a giant artificial island shaped like a palm tree are giving way to more pragmatic priorities meant to revive Dubai’s status as the dominant trading hub between the industrially advanced West and the oil-rich Middle East.
“While the world was languishing in recession, Dubai didn’t pause for an instant in building an airport and a huge network of logistics,” said Jim Krane, author of “City of Gold,” a history of Dubai. “So when the recovery comes to the global economy, they should be ready.”
Despite Dubai’s recent brush with disaster, the economy here still stands out as the most globally integrated in the Middle East, with business lubricants like banking and hospitality industries, even if the legal system and government policy-making remain opaque.
Although a barely concealed security system operates hidden cameras across the city, and authorities encourage people to report “detrimental” behavior that violates any of Dubai’s many unspoken moral standards, it remains the most Westernized and tolerant society in a region challenged by rising Islamic fundamentalism.
“There’s no one within 1,000 miles that comes close to matching what Dubai has built,” said Simon Williams, an analyst at HSBC in Dubai. “It is dealing now with the effects of deceleration, but it will grow once again.”
To do so, however, Dubai is being forced to curb some excesses. Stung by negative publicity over its opulence, leaders have swept out Western-leaning decision makers who once helped drive the breathtaking ambitions of Dubai’s ruler, Sheik Mohammed bin Rashid al-Maktoum.
More influential now are some of Dubai’s most circumspect business families, including Ahmed Humaid al-Tayer, whose retail empire has brought Bloomingdale’s and other big American brands to Dubai, and Ali Rashid Ahmed Lootah, whose entrenched merchant family holds a number of key government positions.
“There’s a new injection of conservatism in Dubai,” said Steven Blackwell, an independent Middle East expert.
To be sure, Dubai still faces considerable hurdles — not least the continued uncertainty about growth prospects in the United States and Europe, where slowdowns have damped trade and business here.
Dubai’s economy is almost entirely service-based, virtually void of manufacturing or agriculture or oil income, which makes it highly dependent on global trends in trade, banking and tourism. Also unclear is the extent to which the Dubai World debacle has sapped funds needed for a speedy completion of the critical public works projects.
Moreover, the huge oversupply of office and residential space has led to a collapse in real estate prices outside the core business district — even as developers continue planting skyscraper forests on the edge of town that seem likely to further depress prices and weigh down any economic recovery.
The real estate crisis also exposed severe problems with governance. Thousands of property disputes are in a legal twilight zone because of an archaic federal court system based on Arabic law that has bewildered Westerners and made many think twice about investing further in Dubai, even if its fortunes do pick up.
The International Monetary Fund predicted that the Dubai economy would shrink by 0.5 percent this year after a 2.5 percent contraction in 2009.
The outlook for the future could improve, though, now that Dubai World has won approval from creditors for a $24.9 billion debt overhaul plan. Dubai International Capital, another state-owned holding company, plans to repay $2.6 billion in debt by selling assets.
In many ways, Dubai’s fortunes depend on Abu Dhabi, the patriarch of the United Arab Emirates, which reluctantly swooped in to save Dubai with a $20 billion bailout.
The family and tribal links between both emirates stretch back for generations. Abu Dhabi, with its vast oil wealth and diplomatic clout, is one of America‘s key allies in the Persian Gulf. It has quietly consolidated its long-standing conservative influence over its profligate neighbor Dubai, according to Western diplomats and analysts.
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