Dubai Rides the Oil Boom

New towers spring up along a highway through Dubai's Marina district.

More broadly, Dubai has managed to shrug off most of the traditional factors that held other regional economies back—inept bureaucracies, suffocating state control, bans on foreign ownership of land or companies, and prohibitions on nightclubs or liquor. Dubai has always welcomed outsiders, says Sheika Lubna al Qasimi, the UAE minister of foreign trade. "Here, you have an environment built for them," she says. "This society practically caters to the yuppies, the families, and young people."

In reality, this strategy requires a constant balancing act between catering to western interests and guarding Muslim sensibilities. Dubai's nightlife is lively. But while alcohol can be served in hotel restaurants, other restaurants remain dry. Many swimming pools offer ladies-only hours, but western women wear bikinis on the same beaches where some Arab women wear full-length abayas. "Dubai is a place for Arabs to let their hair down," says Dale Griffith, a vice president of Emirates Airlines, "and to relax with their families in a way many can't back home."

But there are some Emiratis who are uneasy about the degree to which these liberties have been taken (including the blatant presence of prostitutes in many of the city's hotels). "Dubai has always been tolerant, but this tolerance has been exploited by others," Ebtisam al-Kitbi, a political science professor at UAE University, says during an interview at an upscale European coffee shop in Dubai. She turns to scowl at a woman nearby who is wearing a revealing top. "They don't take into consideration that this is still an Arab and a Muslim country," she says. "I don't say this should be like Saudi Arabia, but people feel they are losing their identity."

There is another cost when it comes to people's personal and political freedoms. Several tourists have spent months in jail for having trace amounts of marijuana in their shoes or pocket lint. And when it comes to democracy, the UAE has made little more than token efforts, meaning that all important decisions are still imposed by the royal family.

There aren't that many Emiratis pushing openly for more democracy. Kitbi, a rare exception, recently gave a speech in which she complained that UAE nationals have "deficient citizenship," that many feel marginalized, and that they are "excluded from the decision making." The response was tough. "Some condemned me here as adventurist and crazy," she says, adding that she has been excluded from delegations and events. "People don't ask for political rights because they are getting a lot of economic benefits."

With its focus so squarely on business, Dubai is an explicitly apolitical place, which has allowed U.S. business to operate side by side with Dubai's massive 400,000-strong community of Iranians. But UAE officials also see themselves as an example for their more troubled neighbors. "It's a good model not only for the Middle East but for other countries as well," says Qasimi. "We could have had our oil and sat on it, but we built dynamics for a truly enterprising society."

There are many questions about whether Dubai can continue to deliver all that it promises. The city's official tourist map shows all kinds of elaborate artificial islands and attractions, but on a closer look, the bulk of them are still marked as being under construction. In some cases, building has yet to begin, meaning it will be more than a decade before the dust begins to settle.