Centre for Contemporary Middle East Studies University of Southern Denmark Working Paper No. 6 June 2006

Martin Hvidt Governance in Dubai: The emergence of political and economic ties between the public and private sector

© Martin Hvidt Centre for Contemporary Middle East Studies University of Southern Denmark Campusvej 55 5230 Odense M, Denmark E-mail: [email protected]

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Abstract ‘Developmental state theory’ claims that the most developmental states are characterized by dense ties between the public and the private sector. This study aims to explore these ties, as they unfold in the autocratic and neo-patrimonial setting of Dubai. The study argues that a critical juncture took place in the early twentieth century when the ruler of Dubai persuaded the business community of the Persian city-state Lingah to relocate to Dubai. It instituted the strong private sector and probusiness development path which has characterized Dubai ever since. The study furthermore argues that the current public – private ties are mainly informal in nature, and consists of i) the majlis and its counterpart the ‘open doors policy’, and ii) leadership through multiple roles.

Introduction As amply documented the Middle East has been the slowest region in the world to embrace liberalization and the application of open and outward-oriented economic policies (Dasgupta, et al. 2002; Dodge. 2002; Hvidt. 2003:202; Hvidt. 2004:81ff; Iskandar. 1997:4; World Bank. 2003). This is especially the case with the larger oil rich Gulf States.1 The Emirate of Dubai is an exception to this general rule. For decades, it has focused upon development by applying liberal policies through which it has achieved undeniable results. It has embraced globalization with vigour and it’s continuing effort to attract foreign direct investments has placed Dubai on the international map as an active player in the globalized world of trade, industrial development, external financing and tourist activities. The state headed by Sheikh Mohammed Bin Rashid al Maktoum has extended a conscious effort to develop Dubai, which only 50 years ago, was a small and poverty-ridden settlement of 30.000 people.2 Today more than 1.3 million people live there in a thriving economy. Over the years, the state has initiated a series of bold and visionary projects (e.g. The Palm Islands, the Burj al-Arab, the worlds only seven star hotel, Jebel Ali, the world’s largest manmade harbour, Dubai International 1

An earlier draft of this paper was presented at the Middle East Studies Association conference in Washington D.C 19-22 November 2005 in the workshop “Iran and the Gulf” under the title “Dubai: A successful Developmental state.” 2 Sheikh Mohammed bin Rashid Al Maktoum, has been the de facto ruler of Dubai since 1995 when he was appointed Crown Prince, and became official Ruler following the death of his older brother Sheikh Maktoum bin Rashid Al Maktoum on January 4th. 2006. Subsequent Sheikh Mohammed has been delegated the positions as Vice President and Prime Minister of UAE. For more details see: http://www.sheikhmohammed.co.ae/english/index.asp

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Airport and numerous spectacular sporting events) in an effort to stimulate development and brand Dubai as an open and vibrant economy. Today Dubai is often referred to as the Shanghai or Hong Kong of the Middle East. It is plausible that Dubai’s developmental achievements are related to its governance structure. It encompasses an (soft) autocratic rule, strong developmental visions, a lean and efficient state apparatus, active market interference, reliance on the market mechanism and a pragmatic (not ideological) approach to development. The governance structure is furthermore characterized by neo-patrimonialism, which implies that the regime is organized around the ruler as an individual, maintaining other members of the elite in a relationship of personal dependence on his grace and good favour (Herb. 1999:15). The above characteristics of the governance structure in Dubai are relatively well described and analyzed (Abed and Hellyer. 2001; Davidson. 2005; EIU. 2005; Financial Times Business. 2005; Hvidt and Jensen. 2005; MEED. 2004; MEED. 2005; Sampler and Eigner. 2003). One aspect of the development effort has, however, so far not undergone a systematic review namely the ties that exist between the public and the private sector. It is the aim of this paper to explore these ties. According to Evans (1989:581) the most effective states [the developmental] are characterized by ‘embedded autonomy’, which implies that the state not only possesses a well functioning bureaucracy, but also dense ties between the public and the private sector. He defines public-private ties as the “concrete set of social ties that binds the state to society and provide institutionalized channels for the continuous negotiation and renegotiation of goals and policies” (Evans. 1995:12). Furthermore these ties provide the possibility of decentralized implementation of state initiated policies and strategies by private entrepreneurs (Evans. 1995:12). The underlying claim behind Evans concept of ‘embedded autonomy’ is that the public-private ties perform essential functions related to the development effort of the state. This is true for all capitalist societies where the state relies on the private actors to implement major parts of its development programme. Only in command economy societies such as the pre-1989 Soviet Union can such ties be considered irrelevant to state apparatus implementation of policies. The aim of this paper is thus not to test Evans theory, but more modestly, to explore in some depth one phenomenon of a so-called developmental state, namely the public-private ties as they unfold in the autocratic and neo-patrimonial setting of Dubai. Being autocratic and neo-patrimonial implies a governance form where decision-making is centred on the ruler. However this type of rule still needs to be legitimate in the eyes of the citizenry (Ayubi. 1995:Chapter 1; Hudson. 1977:Chapter 1; Luciani. 1990). In this perspective, the need for legitimacy softens the autocratic leadership style. In a democratic governance structure the private sector, along with other parts of society, usually establishes formal channels of interaction with the state bureaucracy. In the autocratic and neo-patrimonial structure this is generally not so. The ruler is the sole decision maker, and through his patronage networks he posses a significant influence over the private sector. Thus, the private sector in states such as Dubai is not formally included in the decision making structure of the emirate. This

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does not however imply that the private sector is excluded from influence over policy formulation and decision-making. In this paper it is assumed that the more the development strategy relies on the activities of the private sector, the more influence the actors of this sector will have in relation to policy formulation and decision-making. Furthermore, and as a corollary to this, it is assumed that the greater economic power of the private sector in relation to the ruler (the ruler – merchant power balance) the more influence the private sector will have in regard to decision-making. Thus, to study public-private ties in an autocratic and neo-patrimonial society, leads us to focus on power relationships. Three working questions will guide the analyses performed in this paper: i) What role is the private sector set to play in Dubai’s development strategy? ii) How has the ruler – merchant power balance developed over time, and where does it currently stand? And finally iii) which formal or informal channels exist through which the public and private sector currently interact? The analyses are carried out through the three sections of the paper: First a historical analysis will be carried out in order to determine the role the private sector is set to play in the development strategy of the country. Secondly the changing power balance between the ruler and the merchants will be analyzed in order to determine its impact on the policy formulation in the emirate. And thirdly, the public-private ties in present day Dubai will be analyzed in order to determine which formal and informal channels exist through which the public and private sector interact. Data for the first analysis is primarily written sources. Data for the second is a combination of written sources and interviews. The author conducted 18 interviews in Dubai in January 2005 with decision makers and public employees at various levels in the state apparatus and among private businesses.

Methodology This paper applies a ‘historical institutionalist’ approach.3 Historical institutionalism originates from group theories of politics and structural-functionalism prominent in political science during the 1960s and 1970s. At an overall level it i) accepts the contention that conflict among rival groups for scarce resources lies at the heart of politics and ii) it sees institutional organization of the polity or political economy as the principal factor structuring collective behaviour and generating distinctive outcomes (Hall and Taylor. 1996:937). Within historical institutionalism institutions are defined as “the formal or informal procedures, routines, norms and conventions embedded in the organizational structure of the polity or political economy” (Hall and Taylor. 1996:938). In other words, institutions encompass rules of a 3

‘New institutionalism’ is commonly subdivided into historical institutionalism, rational choice institutionalism, and sociological institutionalism (Hall and Taylor. 1996:936). This paragraph is based on this source. Se also (Peters. 1999:Chapter 4).

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constitutional order or the standard operating procedures of a bureaucracy or simply conventions governing the interplay between various segments of society. As such, public-private ties can be view as institutions. Three features of ‘historical institutionalism’ seem especially relevant for the analyses to be carried out in this paper: First, it assigns prominence to the role that power and asymmetrical relations of power play in decision-making. Institutions distribute power unevenly among social groups and thus provide some groups or interests disproportionate access to the decision-making process. Second, historical institutionalism holds a distinctive perspective on historical development based on an image of social causation that builds on the concepts of ‘path dependency’ and ‘critical juncture.’ According to Hall and Taylor (1996:941) path dependency implies rejecting “the traditional postulate that the same operative forces will generate the same results everywhere in favour of the view that the effect of such forces will be mediated by the contextual features of a given situation often inherited from the past.” This implies that institutions are seen as relatively persistent features of the historical landscape and one of the central factors pushing historical development along a set of ‘paths.’ Furthermore historical institutionalists often divide the flow of historical events into periods of continuity punctuated by ‘critical junctures,’ i.e., moments when substantial institutional change takes place thereby creating a ‘branching point’ from which historical development moves onto a new path (Hall and Taylor. 1996:942). Thus, an important question for historical institutionalists is which events trigger the critical juncture. Third, historical institutionalists typically seek to locate institutions in a causal chain that accommodates a role for other factors, notably socioeconomic development and the diffusion of ideas. They have been especially attentive to the relationship between institutions and ideas or beliefs (Hall and Taylor. 1996:942). This paper argues, that a critical juncture took place in early 20th century when the ruler of Dubai choose to provide economic incentives to the Persian based merchant class to relocate to Dubai. It instituted an extreme pro-business path on which Dubai has based its subsequent development. Furthermore, due to the success of including the merchant class from Persia and other successful state interventions in the economy, the belief that the state (in earlier days the ruler) not only could but also should influence the future development of the emirate through being pro-active became dominant. This lesson can be summarized in the often-quoted saying that “Dubai shapes it own future.” Dubai – a deviant case As mentioned the aim of this paper is not to test theory, but more modestly, to explore in some depth one phenomenon of a so-called developmental state, namely the public-private ties as they unfold in the setting of Dubai. As such this paper belongs to the category of ‘single country comparative studies’ (Peters. 1998:62ff). Dubai’s development record is unique, not least in a Middle Eastern setting. Thus, from a methodological point of view, Dubai must be considered a ‘deviant case.’ Dubai is however a critical case to study, not because it provides insight in issues

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which can be generalized to major segments of the Middle Eastern states, but exactly because Dubai is deviant in its approach to development. As such documenting and analyzing the case of Dubai provides possibilities for expanding our understanding of the link between state structures and development in the Middle Eastern region and not least what an alternative development path might look like.

Historical analysis of the emirates development strategy The historical overview will be divided into the following four periods; the relocation of trade era (1870s - app. 1925), the pre-oil era (app. 1926-1968), the oil era (1969-1980) and the globalized era (1981-).

The relocation of trade era In the latter part of the 18th century the city of Lingah in Persia was the dominating harbour in the Gulf region. It was, at that time the hub where East met West, a stopping point for most goods going into the Gulf, and for the few products leaving for export. Most notably, Lingah was the undisputed centre for the Gulf pearling trade.4 At the end of the 18th century the Persian government, in need of financial sources, imposed taxes on the Al Qawasim-run governate of Lingah. In 1887 the conflict escalated to a point where the Persians employed military force and took control over the small city-state. During the following years taxes were repeatedly raised and new charges levied for basic services. This led the business community to look for more suitable places to do business on the Arab coast of the Gulf. At the outset Dubai was not their first choice. Sharjah og Ras Al Khaimah, the neighbouring emirates to Dubai, both offered better port facilities and a larger settlement of traders at that time. Learning about this situation, the ruler of Dubai Sheikh Maktoum took the decision to do whatever necessary to persuade the merchants of Lingah to move to Dubai in 1901. First of all he declared Dubai a free trade port and abolished all import and export tariffs. Secondly, he and his trusted men took personal contact to the key businessmen in Lingah and offered them free land and other benefits in return for a commitment to set up in Dubai. Thirdly, he offered the business community guarantees of protection and fourthly, he demanded rigorously that all who resided in Dubai or used it as a trading post were tolerant of each others, thereby signalling, that tribal, ethnic or religious issues would not influence the individual merchants’ social standing (Wilson. 1999:32). In our understanding these concessions made to the business community have formed the critical juncture for the future development of Dubai.

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(Davidson. 2005:154-158; MENA. 2005:1181ff; Peck. 1986:21ff; Wilson. 1999:26-42) are use as the primary sources for the historical overview.

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The strategy succeeded and over a short number of years, significant parts of the trade relocated from Lingah to Dubai. The relocation of the major Persian merchants was followed by a substantial inflow of smaller traders, craftsmen, seafarers and their families, since their economy was largely based on the large trading houses. By the 1920s it was becoming clear that the situation in Iran would not improve, wherefore many of the Persian merchants who had taken up temporary residence in Dubai earlier in the century realized that they were unlikely to return to Lingah and decided to take up the rule of Dubai’s offer to settle permanently in the emirate (Davidson. 2005:158). The Persian merchants had made significant contributions toward Dubai’s prosperity, and by deciding to remain they cemented Dubai’s commercial preeminence. As such, business skills, entrepreneurship, and trading links with Asia and Africa were effectively transferred from Iran to Dubai. Already in 1901 there were believed to be 500 Persians and 52 Banians (British-Indian subjects) in Dubai (Davidson. 2005:13). A quantitative expression of the resulting growth can be found in the amount of ships that called on Dubai. As Wilson (1999:34) reports, in 1899 only five ships from the Bombay and Persian Steam Navigation Company called upon the city. In 1902 this figure rose to 21 and a year later the service was established at regular fortnightly intervals. In 1906 more than 7000 men in Dubai were engaged in the pearling industry.

The pre-oil ear During the pre-oil era Dubai seemed not only to consolidate but also expand its entrepreneurial /commercial focus and thus to consolidate the established ties between the public and the private sector. The economy of Dubai was badly hurt by the decline of the pearling industry during the 1930s and 1940s, but by the early 1950s the economy was regaining its strength. As the commercial ships grew larger and the Creek of Dubai suffered from significant silting – often preventing even relatively small fishing boats to enter Dubai, the need to widen and deepen the Creek became apparent. Dredging the Creek was estimated to cost around £600.000, which was an impossible investment for the government of the day with its restricted revenues. A deal was struck between merchants and the ruler partly on the initiative of the merchants. It was proposed that the government impose customs fees of 4% on imported goods. Secondly the so called ‘Creek Bonds’ were issued ensuring that most of the major users of the Creek had a personal investment in the project, and thirdly, a loan of £500.000 was raised from the emir of Kuwait (Wilson. 1999:81). The project, which was carried out between 1958 and 1960, became an even greater success than hoped for. More shipping lines decided to use Dubai as their main port in the Gulf, not least the British, and the volume of cargo rose significantly. This in turn spurred the construction of new warehouses and other port facilities. By 1960 the Creek project had secured Dubai the best port and infrastructural facilities in the

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area and consolidated its position as the trading entrepot of the Trucial States.5 As a result tax and customs earnings grew at such a rate that the Ruler was able to pay back the loan to Kuwait far earlier than originally agreed. Besides the Creek project Dubai undertook a number of significant initiatives during the 1960s in order to develop the country and provide for increased commercial activities. Dubai International Airport was inaugurated in 1960 securing stable and frequent flights to Europe and Asia, hotels were build to accommodate visitors, a national bank with a strong commercial focus was established etc. As a result, trading continued to thrive. By 1966 the earthwork for a new and much larger harbour just outside the Creek was started. Port Rashid, as the new harbour was called was inaugurated in 1971.

Dubai in the oil era In the neighbouring states i.e. Abu Dhabi, Oman, Kuwait and Saudi Arabia the influx of vast oil revenues made a significant impact on the relationship between the government and the private actors. These states evolved into what Luciani (1990:71) terms ‘allocation’ states.6 The characteristic of such states is that they are freed from their domestic economic base in the effort to secure state revenues. In other words, in the ‘allocation’-state the state does not need to tap the domestic economy through an array of fiscal instruments, and as such little emphasis is placed on developing an efficient economic base. The opposite is true in the ‘production’ state. In the oil rich Gulf-states the tremendous income from oil export was accrued to the royal families, which then was charged with the task of distributing the oil wealth in society. A prime vehicle for this distribution is the abolition of taxes but includes also distribution of social services and various other benefits. Thus in the ‘allocation state’ the population assumes a role of passive recipients of services and benefits and as such the state and the private sector are far less dependent on each other, than in the ‘production’ state. The ‘allocation’ state furthermore provides the economic basis for the establishment of neo-patrimonial state structures. In Dubai, the impact of the oil revenues did not result in a shift from a ‘production state’ to an ‘allocation state.’7 The main reason is that the oil reserves found in Dubai are small both in absolute and relative terms, and expensive to extract.8 This left the rulers with little choice but to build on Dubai’s existing strengths in order to create a developed and sustainable economy before the oil era

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The Trucial coast also termed the Pirate coast, or Trucial Oman includes the seven Emirates which today make up United Arab Emirates (Abu Dhabi, Dubai, Sharjah, Ras al-Khaimah, Umm AlQaiwain, Ajman and Fujairah. 6 See (Luciani. 1990:71ff) for an in depth discussion of ‘production’ versus ‘allocation’ states. 7 This however does not imply that some of the characteristics of the allocation state cannot be found in Dubai. See (Davidson. 2005: chapter 4). 8 Dubai’s oil reserves were in 1991 estimated at 4 billion barrels, which will run out by 2016 if 1990 level of production continues. In contrast Abu Dhabi’s oil reserves are estimated at 94 billion barrels http://www.datadubai.com/oil.htm

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came to a close.9 The development path Dubai had followed since the turn of the 20th century, encompassing the positive lessons learned according to the benefits of ‘nursing’ a business environment, promised a more passable development track, than reliance on oil. Thus, during the oil era Dubai continued to create opportunities for an active and diversified business environment. Port Rashid was inaugurated in 1971, and later expanded. Dubai Dry Docks was opened in 1979. The construction of Jebel Ali, which is know to be the largest manmade harbour in the world, commenced in 1976 and was completed in 1983. The aim of Jebel Ali was not only to significantly increase Dubai’s port capacity, but also to host a large industrial zone, which would be instrumental in diversifying Dubai’s economy away from reliance on oil, and most importantly the harbour attracted new commerce to the emirate (Wilson. 1999:183). These projects, in combination with the low tax and customs regime, added to Dubai’s continuing commercial advantages. One effect was the influx of more business. Dubai received a fresh wave of Persian merchants in the 1970s as a result of the Iranian government’s decision to increase taxes even further in Lingah. Businesses from India also relocated activities to Dubai as a result of New Delhi’s decision to impose duties on India’s gold trade. Furthermore, as pointed out by Davidson (2005:158) “It would seem likely that Dubai benefited enormously from the destruction of Kuwait in 1991 and from the Shi’a unrest in Bahrain three years later: in both cases it would appear that a significant number of businesses relocated to Dubai.”

Dubai in the globalized era In the mid-1980s and especially in the 1990s Dubai has embarked on a development strategy, which aims to take full advantage of globalization. A key aim is to attract private investments not only from local sources but also and especially from regional and international firms (Intv. 6. 2005). The level of foreign direct investment (FDI) has increased significantly after 2001 (UNCTAD. 2005) one reason being that Arab investments especially from Saudi Arabia has increased following the 9/11 terror attacks.10 The exact level of FDI flowing into Dubai cannot be determined because FDI statistics are not available for the individual emirates within United Arab Emirates. Official UNCTAD figures put the level of investments at 840 million dollars in 2004 (UNCTAD. 2005) while Financial Times Business (2005) estimate 9

(Sampler and Eigner. 2003:153). “Some analysts predict that Dubai may soon have to become a net oil and gas importer. Thus, for the long-term prospects, nothing less than massive development will do.” Middle East Economic Digest, December 1st. (1994 p. 14) quoted in (Davidson. 2005:155). 10 Foreign direct investments is direct investment which occurs across national boundaries, that is, when a firm from one country buys a controlling investment in a firm in another country or where a firm sets up a branch or subsidiary in another country (Dicken. 2003:51). The total level of foreign direct investments held by Arab countries outside the Arab world is estimated at 500 billion dollars. Some of these investments have however been channelled back into the Arab world after 9/11 (Henry and Springborg. 2001:155). Saudi investors account for approximately 15% of investments in UAE (MEED. 2006:42)

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the inflow to more than 2 billion dollars annually. As pointed out by Kongstrup and Matar (2005:5) viewed globally it is somewhat surprising that UAE including Dubai does not attract higher levels of FDI, and point out that the bulk of recent investments in Dubai in particular, have been financed domestically. In an interview with Dubai Development and Investment Authority the author was informed that FDI in 2004 amounted to 14% of GDP and was expected to rise to 50% in 2005 (Intv. 6. 2005). A key factor contributing to private financial inflows is the conscious effort of the Dubai government to create options for investment. In the most recent Article IV consultation with UAE, IMF concludes that “Dubai’s policy of extending foreign ownership of land and properties for real estate developments have resulted in a construction boom and a significant increase in FDI in this sector.”(IMF. 2005). In 2005 Dubai won award of the fDi magazine as the Middle Eastern City of the Future due to its friendly investment climate (Financial Times Business. 2005). Currently the value of planned and under-construction projects in Dubai primarily to be financed by private capital amount to approximately 200 billion dollars (MEED. 2005:42).11 Furthermore, as means to attract higher levels of private investments Dubai extends an effort to provide state-of-the-art infrastructure, adequate (and probusiness) legislation, a lean an efficient bureaucracy, and not least access to a large pool of cheap labour. At present around one million expatriate workers are based in Dubai.12 In short, as globalization deepens and the competition among countries for investments become more intense, the ruler of Dubai aims to offer a package of benefits to national and international firms that provides ‘an offer they can’t refuse.’ By the year 2000 the non-oil contributions to Dubai’s GDP was 94 %, thereby confirming that the non-oil sectors, such as manufacturing, tourism and trade today creates the bulk of the emirates GDP (Davidson. 2005:159). Both the level of FDI inflow to the country and the non-oil-related GDP provides evidence that the diversification strategy is well underway. In comparing development in Dubai and Abu Dhabi - a classical rentier state - Davidson (2005:159) notes: Thus, in light of these different historical circumstances, it is apparent why Dubai’s strong commercial traditions coupled with its comparatively modest oil wealth have facilitated and spurred a more rapid and wholesale diversification of the economy, especially in the non-oil-related trade sector. In summary, the conscious attempt to persuade the merchant community from Lingah to set up in Dubai was a strategic move which has had significant implications for the development which followed in the 20th and 21th century. It created the open and liberal trading regime and placed Dubai on a path dependent course, which it has followed since. As Wilson (1999:36) in a somewhat tumid language points out: 11

See also (Financial Times Business. 2005). The population in Dubai was in 2003 1.204.000. Approximately 90% of the population is expatriate workers (MENA. 2005:1186).

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Sheikh Maktoum was only to live until 1906, but in those eight years, his rule had set in motion the beginnings of Dubai’s historic trade base, a legacy which nearly a century later continues to fuel the astonishing growth of the emirate. Through a series of major infrastructural development project the various rulers of the Maktoum family have taken the lead in developing the country, in order first to expand the economy and later to diversify its economic base. Neither trade nor pearling could be assumed to form a stable economic base for the development of the country, which was underscored by the decline of the pearling industry in the 1930’s, nor could the limited oil revenues, which appeared later. Then as now, a key feature in the development strategy has been to attract private business – or more precisely to attract capable people to set up business in Dubai. The Persians from Lingah, Banians, Indians and lately as a consequence of Dubai’s emphasis on attracting FDI and diversify its economy, a broad range of international business executives residing over subsidiaries of international firms. From this overview it can be concluded that the private sector has played and still plays a crucial role in the development strategy of Dubai. The state has taken the lead in the development effort, but with the purpose of spurring activities within the private sector. Financial Times Business (2005) underscores this point in the following statement: Politically stable, Dubai has a forward-looking, responsive government with a progressive, pro-business attitude and a strong commitment to the private sector. Business-friendly regulations and a favourable tax and customs framework have played a key role in attracting business investment from all over the world in almost every sphere of economic activity. Thus, as pointed out above, the rulers’ ambitious plan to develop Dubai into an investment based and diversified economy relies to a high extent on the active participation of the private sector.

Ruler – merchant power balance in Dubai As in most of the Gulf-states prior to oil, the rulers and the merchants had been strongly dependent on each other. Herb (1999:57-58) points out that the relationship between the rulers and the merchants prior to oil took the character of a protection agreement: the merchants subsidized the rulers, while the rulers in turn protected the merchants’ trade. In addition Herb notes that “The merchants did not translate their economic power into institutions through which they could exert political control over the state,” and furthermore that the “merchant bargaining power lay in the mobility of their trade (and of pearling) which allowed them to flee to a different shaykhdom if the rulers’ exactions grew too heavy.”

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By the turn of the 20th century the merchants seem to have been in a rather favourable bargaining position due to the fact that they were involved in lucrative adventures such as trade with pearls, gold and slaves. As pointed out by Davidson (2005:12 and 14): [...] given that their capitalist ventures were frequently more lucrative than the rulers’ more limited sources of income, it was often they who were the main financiers of any local projects, or indeed any local wars. At some occasions the merchants were even able to check the ruler’s power. However, as the century progressed new sources of wealth flowed into the region significantly strengthening the rulers economic position and thereby his ability to ‘buy’ support from the Bedu-tribes and the merchant elites. During the early part of the 20th century economic dependency on Britain and India continued to increase with many of the rulers in the area beginning to receive and rely upon generous income from e.g. imperial air landing rights and oil concessions. The British priority in the area was to secure the Trucial coast as a “British lake” under total control of Bombay and effectively seal it off from all other economies (Davidson. 2005:35).13 Through these generous ‘gifts’ Britain hoped to secure that neither concessions for pearling, fisheries or (potential) oil went to rival countries.14 […] the ruler of Dubai at that time, believed, as did the other rulers receiving such vast incomes from concessions, that these guaranteed annual rents were to be his personal profit. Consequently, the […] balance of power between the wealthy indigenous merchant class and the rulers began to shift, especially as the newly rich sheikhs were able to reduce their reliance on taxation and instead distribute wealth to their people (Davidson. 2005:37). Adding to the changing ruler – merchant power balance was the decline of the pearling industry. This industry had its zenith in the late 1880s, and by the early 1930s it experienced a marked decline due to a combination of worldwide depression and not least increased competition from Japanese cultured pearls (Davidson. 2005:7). Thus, during the 1930s and 1940s, the merchants’ income decreased whereas the ruler’s rose. This significantly tilted the power balance in favour of the 13

In 1892 Britain entered an ‘exclusive’ treaty with the Trucial rulers, in which the sheikhs “undertook not to cede, mortgage or otherwise dispose of parts of their territories to anyone except the British Government, nor to enter into any relationship with a foreign government, other than the British, without British consent” (MENA. 2005:1181). Britain had undertaken to protect the states from outside attack in the perpetual maritime treaty of 1853 (Davidson. 2005:28). 14 Rivalling countries were France, Germany, Russia and later US. Dubai started to receive payments for air landing rights in 1937 and payments for oil concessions in 1938 (Davidson. 2005:36). Payments for oil concessions were substantial. The Dubai concession gave the ruler 60,000 rupees on signing, a generous annual income of 30,000 rupees, and guaranteed the ruler 200,000 rupees from the oil company upon the discovery of any oil (Davidson. 2005:36).

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ruler who took advantage of the situation and instituted a neo-patrimonial state structure. The merchant class had “little option to accept the rulers’ new coalitions, and thus began to receive distributed wealth and many […] financial patrimonialclientalist favors” in exchange for their complete political compliance (Davidson. 2005:92). The merchants, however, were not absorbed into this structure without resistance. In 1938 Dubai’s merchants, with inspiration from the reform movement in Kuwait, attempted to readjust the existing power balance by imposing reforms on their ruler. The merchants requested that the ruler shared his wealth and allowed a larger part of it to be managed by the community in the interest of improving social conditions and boosting indigenous development. The merchants and other disgruntled notables (including parts of the rulers’ extended family) which made up the Dubai reform movement, did not depose their ruler, but instead installed a fifteen-member chamber with the ruler as president that should command seveneights of Dubai’s total revenue. During the period of less than one year when the merchants’ majlis was in operation it created a number of important institutions, including a municipal council, planned for a social security system for the elderly, electing new customs officials to be employed by the state, not the ruler, reopened Dubai’s schools, and established an education department.15 In 1939 the majlis decided to add even more limitations to the rulers’ income by allowing him only to retain 10.000 rupees of the state’s revenues for personal use. Later in 1939, the ruler, backed by a loyal contingent of Bedu soldiers and not least Britain, dissolved the majlis and regained control over Dubai (Davidson. 2005:39ff).16 While the merchants’ majlis was only in operation for a short period of time, it made significant imprint on the future. During the 1940’s and 1950’s after the ruler had consolidated his power, most of the reforms and planned improvements instituted by the merchants’ majlis were implemented. One lesson to be learned from the Dubai reform movement is that the ruler of that time was willing to implement reform initiatives, but only if he was fully in charge of society. Thus, when oil finally began flowing out of Dubai society had already been transformed into a neopatrimonial state structure, where all segments of society – including the merchant class - were vertically linked to the ruler personally.17 In this respect oil wealth did not lead to a significant change in state structure in Dubai. Oil certainly consolidated the neo-patrimonial state structure, but did not create them. The limited oil resources and continuous efforts to develop the business environment made Dubai escape the 15

The private schools which were established during the early part of the century primarily by the larger merchants had at that time been closed as due to decline of the pearling industry (Wilson. 1999:75). 16 There are different interpretations of the origin of this event. While Davidson (2005) primarily view the episode as a conflict between the ruler and the merchants, Herb (1999:140) argue that it was primarily a family dispute. The episode is furthermore described in (Peck. 1986:39-40) and Wilson (1999:57). 17 “In neopatrimonial states the ruler organizes the regime around himself personally, maintaining other members of the elite in a relationship of dependence on his personal grace and good favor. Outside the elite, society is kept politically inchoate” (Herb. 1999:15).

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problems of rentiertism and the so-called ‘Arab Disease’, which plagued the neighbouring ‘allocation’ states following the influx of the oil wealth. 18 The consolidation of neo-patrimonial state structures in Dubai, however, does not imply either that the public-private ties were weakened or that the bargaining power of the merchant class was eradicated. Peck (1986:127) e.g. notes that “The prominent men of commerce play an important role in making political and economic decisions in the emirate, characteristically guided to a very great extent by their solicitude for the state's trade links with the outside world”.19 It can be argued, that the power balance, especially since the 1980’s seem to have shifted back in favour of the merchants (or by now the wider internationalized business community hosted in the country). While the current ruler Sheikh Mohammed, no doubt, exercises control over a significant part of economic activities in the emirate through his neo-patrimonial network, backed by the oil incomes and the annual contribution from its wealthy neighbour state Abu Dhabi,20 the rulers ambitious plans to develop Dubai into an investment based and diversified economy fully relies on the active participation of the private sector. The more successful Dubai becomes in attracting private investments, the more dependent the ruler will become on the business community. Globalization institutes a renewed emphasis on the borderless world and thus the ability of business to ‘vote with their feet.’ The story of Lingah illustrated that if the merchants are dissatisfied with the ruler or the business environment in a Sheikhdom, they simply leave, and with them their economic activities. With Qatar, Bahrain and Lebanon close by and the boomeconomies of Asia (Shanghai, Hong Kong, South Korea, India and not least China) only a little further away, this threat is still imminent. Thus, due to the globalized nature of Dubai’s recent development, the historical power balance between the ruler and the merchants, in my view, is replaced by at new balance namely between the ruler on one side and a class of both local and international business entrepreneurs on the other. This significantly limits the ruler’s room to deviate from the present path dependent, strong pro-business development course. This is so because such a policy change would endanger the development project he is heading. The rule is under constant threat that parts of the business elites might leave the country in order to seek better opportunities elsewhere. And as such the ruler is forced to accommodate the wishes of the new internationalized business class in policy formulation and execution. In summary: The section has reviewed and analyzed the historical origin of the public – private ties in Dubai. It has been argued that the power balance between the ruler and the merchants, have changed considerably over time. At the outset the 18

The ’Arab Disease’ is a term used to describes the phenomenon that ”dependency on the rent from oil has reduced Arab incentives to diversify their economies, develop alternative manufacturing capacities, promote export-oriented industries, encourage domestic savings, and anchor income on solid productivity grounds” (Kubursi. 1999:311). 19 Most of the interviews conducted by the author confirm this standpoint. 20 It is believed that Abu Dhabi donates 100.000 barrels of oil daily to Dubai in support of Dubai’s development projects (Davidson. 2005:162). At current prices of approximately 50 $ a barrel this ‘gift’ represent a value of close to 2 billion dollars a year.

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rulers and merchants were sharing power in a somewhat equitable manner. This relationship tilted in favour of the ruler as the pearling industry declined, and at the same time, the ruler received generous ‘rents’ from the British government. The merchants’ majlis instituted by the Dubai reform movements in 1938 signified a low point in the bargaining position of the merchant class. Following this incident the weakened merchant class was absorbed into a patrimonial-clientalist state structure, where all segments of society, including the merchant class became vertically linked to the ruler. Oil revenues, it was argued, did not change this relationship, but merely reinforced it. In the 1980’s and onward the ruler-merchant power balance was once again changed, this time to the benefit of the merchants (now the internationalized business class hosted in Dubai) as Dubai follows a development strategy based on the private sector’s ability to attract FDI and reap the benefits of globalization with increasing vigour.

Public-private ties in present day Dubai This section of the paper will analyze the specific channels for the public-private ties, which exist in present day Dubai. It will look for formal as well as informal channels through which this interplay takes place.

Formal channels of interplay between the public and private sector The formal channels would likely be various bodies and mechanisms in the state structure, which institutionalize the interplay between the two parties and facilitate a frequent and continuous negotiation of ideas and policy formulation. In Dubai there does not seem to be any formal bodies at the state level, which facilitate the interplay between the public and the private sectors. A formal body called the Executive Council was announced in February 2003.21 This council supposedly consists of the Sheikh Mohammed and the 16 heads of sections in the Dubai administration. It is furthermore said to include several sub-committees e.g. an economic council in which representatives from the private business sector should take seats. However, there is no indication that this body has become operational. In fact several of the interviewees informed the author that this council and it subcommittees were not functioning (Intv. 6. 2005; Intv. 7. 2005). From this I conclude that there are no formal bodies in which the public and the private sector interact.

Informal types of interplay between the public and the private sector There are however two informal channels which facilitates the interplay between the public and the private sector. i) the majlis and its counterpart the ‘open doors policy’, and ii) the multiple roles leadership. 21

(Intv. 4. 2005), see also (Davidson. 2005:198).

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Majlis and the ‘open doors’ policy As Herb (1999:40-41) points out, a tradition of consultation between rulers and ruled is deeply embedded in the political traditions of the Gulf States. He furthermore agues, that efforts by the Arabian dynasties to consult with their citizenries take four main forms, which all, confusingly, are called majâlis.22 1) In its most basic sense a majlis is simply an informal social gathering of men, often held weekly in a special room built for the purpose 2) Members of the ruling dynasties and other important men hold more formalized versions of these meetings, which amount to audiences in which citizens can present complaints. 3) On a yet more institutionalized level, we find the appointed body known as majlis al-shura, or “consultative council.” 4) Finally, the ruling families of Kuwait and Bahrain (though the latter only briefly) have set up parliaments whose members run for elections. These are the majalis al-tashri’i, or “legislative councils.”23 In Dubai the present type majlis is of the first and second type, which means that the majâlis in Dubai do not have any formal consultative or legislative powers. In Sheikh Rashid’s rule (1958-1990), his majlis consisted of a set group of leaders, which functioned in place of a formal government organization. More recently, the term has taken on a broader meaning, ranging from informal sessions at which virtually anyone is welcome to exclusive meetings among senior government officials and/or business leaders (Sampler and Eigner. 2003:137). The shaykh’s majlis was - and is an institution designed to facilitate the vital privilege of direct communication between the ruler and the subjects who acknowledge his authority (Heard-Bey. 1999:144). In addition to this function the majlis is a forum for socializing, problemsolving, information sharing, reflection and debate at many levels of the community. Furthermore the majlis performs an essential function in […] contemporary Dubai, namely to make the Sheikhs priorities and values widely known among the key decision makers in the emirate (Sampler and Eigner. 2003:158). The majlis of the ruling family is linked with a broader network of majâlis being headed key business and community leaders. As Sampler and Eigner (2003:137) notes

22

‫ ﻣﺠﻠﺲ‬is transliterated to majlis while the plural form ‫ ﻣﺠﺎﻟﺲ‬transliterates to majâlis. Herb furthermore point out that, “the dynasties have gone to great lengths to portray the majlis, in the sense of a personal audience with the ruler or other member of the ruling family, as a form of political participation, an alternative to –or substitute for-democratic institutions” (Herb. 1999:41).

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At any majlis, guests discuss current events and business, watch television (invariably programmes on news or current affairs), have tea and sweets, and make deals. The enduring popularity of this phenomenon guarantees that news travels fast from one majlis to the next, eventually reaching Sheikh Mohammed’s majlis, where the most important strategic decisions regarding the emirate are often made. Davidson (2005:198) note that the function of the majlis has changed over time as the bureaucratic structures of the society has changed Just as the modern institutions have developed in response to public need and demand, however, so the traditional forms of tribal administration have adapted. With many relatively routine matters now being dealt with by the modern institutions, so the traditional ones, like the majlis, have been able to focus on more complex issues rather than on the routine matters with which they were once heavily involved.” As such, the majâlis, continue to provide an important informal consultative channel between the ruler and the citizens in Dubai (Intv. 6. 2005). This view is seconded by UNDP, who recognizes that the majâlis provide an important forum for local social and political development,24 and by Heard-Bey (1999:145) who, however, argues that the majâlis only work for the nationals in the country. The open-doors policy The majlis is the physical representation of what many refer to as a key ingredient of the communicative structure in Dubai, namely the ‘open door’ policy. As the term indicates this policy implies that any leader keeps his or her door open for people and their problems, ideas and visions, which they may wish to present. The open-doors policy encourages leaders at all levels to be accessible to the elites in the country and its citizenry. Sheikh Mohammed, like his father Sheikh Rashid, makes a point of being visible in the public sphere. He inspects construction sites, visits exhibitions, talks to business people, takes lunch with people in public restaurants, strolling on his own through shopping arcades etc. This conduct not only reinforces the impression that the ruler is well informed in regard to daily life in Dubai, but furthermore, it signals openness and accessibility. The activities of the ruler are broadcasted on local television daily. The open-doors policy, however, does not only relate to the ruling family. The government sector and the private companies follow the same example, thus making the open-doors policy a general conduct. Khalid Bin Sulayem of the Department of Trade and Commerce Marketing explains it like this:

24

Quoted from Davidson ( 2005:199).

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Any employee can come at any time and meet with me or call me. Not only in working hours, even in evenings at home. Every day people do this. After I have dinner at home people come. Even until midnight or one o’clock in the morning (Sampler and Eigner. 2003:135). An ingrained feature of the open-doors policy is that it places a premium on new ideas. According to interviews conducted by the author, the ruler actively encourages people to present new ideas or projects to him especially when these ideas are related to the economic development of the emirate (Intv. 2. 2005). And people are rewarded for such ideas, e.g. through promotions or delegation of further responsibility. Sampler and Eigner who aim to distill the critical leadership factors, which have created the foundation for the economic success of Dubai, point out that the management style in Dubai resembles a private commercial business. Among other aspects of ‘Dubai Inc’ they highlight the active and creative leadership, fast decision making, trust, and risk taking as central features of the current regime in Dubai (Sampler and Eigner. 2003:74ff). The interviews conducted by the author in Dubai, confirm the impression that the open-doors policy is functioning and is encouraged in the day-to-day operation of the country. And one could say, for good reasons. While there is no doubt that citizens acknowledge a rulers authority and his rule, the open doors policy provides a degree of legitimacy to this rule, not least because this policy adds to a common understanding that the power distance in society is short. As stated repeatedly in the interviews “everyone can get access to the ruler if he wishes so.” This finding is seconded by Heard-Bey (1999:144): While a tribesman now has little influence on the choice of the next ruler in his emirate, and has little say in who represents his emirate in the Federal National Council, he nevertheless remains confident that if he has a substantive grievance, he can put it to his shaykh. Sampler and Eigner (2003:157) argues that the open-doors policy provides direct access between the business elites to the Sheikh himself. Dubai’s open-door policy enables business people to meet Sheikh Muhammad and express their thoughts about the implications of new government initiatives on their business. These authors furthermore argue, in contrast to Herb-Bey, that access to the ruler is not restricted to nationals. A Lebanese business women residing in Dubai explains: Sheikh Mohammed’s office will pick up representatives from each industry, and they will call us into the majlis. We’ll be around 100 people and Sheikh Mohammed will say, ‘No taboos. You represent Dubai. Dubai is not just for the nationals. Dubai is for you. You contributed to the success of Dubai.’ And

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then he will invite people to stand up and talk about anything (Sampler and Eigner. 2003:137-138). The impression conveyed in the above quotations and in the interviews conducted by the author, is that the ruler makes a point of listening to the business community. Furthermore, there seem to be relative agreement between the ruler and the business community over the overall aims of development in the emirate. Lastly there is no indication that the business elites […] challenge the ruler’s authority.

Leadership through multiple roles Another form of public-private ties is the multiple leadership roles. In Dubai, senior government officials head a variety of public, private, semi-private and independently managed government-owned companies. Sampler and Eigner (2003:139) provides these illustrative examples: Anis Al Jallaf is CEO and managing director of Emirates Bank International; and chairman of the Dubai International Financial Centre Mohammed Ali Alabbar is director general of the Department of Economic Development; chairman of Emaar; vice-chairman of Dubai Aluminium Company, Dubai World Trade Centre and Dubai Cable Company; and a director of national Bank of Dubai and the Dubai Chamber of Commerce and Industry. Sultan Bin Sulayem I executive chairman of the Ports, Customs and Free Zone Corporation; and chairman of Dubai Palm Developers and Tejari.com (In early 2005 he was furthermore appointed chairman of Dubai Holding). The general picture is that a relatively small group of approximately 20 trusted men and to a lesser degree women are heading and thus controlling a significant part of the assets of both public and private firms in the emirate (Intv. 8. 2005). Historically the various rulers of Dubai have included and relied on persons recruited from the trading community as their closest advisors and personal lieutenants.25 In Dubai trust between each individual and the ruler is the key to rise in this system. And trust builds on previous successes. Thus, the more successful a person is, either as a private business man or a government employee, the more responsibility he or she may be rewarded by the ruler. In this way private businessmen are absorbed into the state structure by appointment to various official positions.

25

This is a unique feature in the governance of the Gulf states, and stands in sharp contrast to the neighbouring states that fall under the category of ‘dynastic monarchy’ where members of the ruling family take up most if not all leading positions in society. See (Herb. 1999:75) for and in-dept discussion of dynastic monarchies.

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The appointment of people to high-level positions is part of the patrimonialclientalist favours discussed earlier in this paper and is facilitated by the fact that the government commands significant economic resources. While a good number of firms are privately owned, in the truest sense of the word, a number of the major companies in Dubai are state owned enterprises which were erected in order to build and diversify the economy (e.g. Dubai Gas and Dubai Aluminium). Besides those there are a number of firms, which operate in a grey zone between public and private ownership. Examples of these are the property development firms Emaar and Dubai Holding. Emaar was started by a grant from the ruler, but has lately been developed into a private firm with it own board of directors and its stocks floated on the local stock exchange (Intv. 3. 2005). Despite this, the state continues to be supportive of these firms by for instance providing them with free land for their development projects. It was furthermore reported to the author during one interview, that the ruler makes a point of investing state money in each of the major developments, which take place in the country (Intv. 6. 2005). This system of mixing private and public financing in development projects seems to be widespread in the region (GSN. 2005) and leads to increased control by the ruler over actual project implementation. One reason for establishing publicly owned firms and projects is the conscious investment strategy of the government of Dubai to make the first and thus, most risky investments in order to spur private development. As Sample and Eigner note (2003:73) “Indeed, risk-taking appears to be crucial part of the government's role, as family-owned businesses in Dubai are famously risk-averse.” While the argument for this cross financing and the habit of providing newly started firms with a start up grant is a part of the rulers’ development drive, it certainly provides him with a significant level of control over many of the firms.26 The situation in Dubai resembles the situation in Japan, Shanghai, Hong Kong or Korea where state initiated and controlled conglomerates (the Zaibatsu or chaebols) to make up the implementing arm of their effort to develop the country.27 The outcome of this is that the distinction between public and private is blurred. It is thus characteristic for the neo-patrimonial state structure to combine the centralised ownership structure with an extreme concentration of power placed in the hands of a relatively small group of trusted persons. People are handpicked by the ruler for their proven abilities and not least for their loyalty towards him. This provides the ruler with an exceptional degree of control over the economic activities of the emirate.28 The members of the ruling family themselves are also directly involved in business activities. The ruler of Dubai Sheikh Mohammed invests his own money in high profile projects e.g. Burj Dubai which is said to be the only seven star hotel in the world. His older brother Sheikh Hamdan is a part of the government structure and 26

It is my impression that most of the public owned industries in Dubai are financed by a start-up grant, and left to prosper or crumble away according to their performance in the economy (Intv. 7. 2005). 27 See e.g. (Cumings. 1999:89; Johnson. 1987:161). 28 This bears resemblance to the concept of ’crony capitalism (Henry and Springborg. 2001: Chapter 5).

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assigned to special projects. He is e.g. chairman of the Health Care City and responsible for all government run corporations e.g. Dubai Aluminium Company and Dubai Gas. The youngest brother Sheikh Ammad carries no official responsibilities, but makes his living as a businessman and investor.29 The multiple role leadership thus removes the boundaries between business and government and adds credibility to the often-heard saying in Dubai that ‘Government is business, and business is government.’ The fact that the ruler and the government operate commercial businesses provides them with intimate knowledge of the needs and wishes of the business environment, and as such it provides a high degree of information in regard to the possibility of decentralized implementation. It furthermore provides a direct communication channel between business and government and therefore enables rapid and effective responsiveness to occurring problems and changing market opportunities (Sampler and Eigner. 2003:168). It also implies that initiatives e.g. to enforce minimum environmental standards or safety regulations for the workforce, or to boost tourism activities are not issues to be negotiated between the private sector on one side and the government on the other as we are used to in the West. It rather can and does takes place as an informed discussion among the members of the small group of trusted men and the ruling family which are all involved in business undertakings themselves. It lies outside the scope of this paper to discuss whether or not this is an adequate setup to regulate business activities but it does, without doubt, makes the government highly informed and not least sensitive to the wishes and demands of the business sector. This point is underscored by Sampler and Eigners finding that the multiple role leadership […] ensures a mutuality in the interests of business and government. Members of the inner circle of leaders who are involved in many private and governmental organizations are thus in a position to feed information back to the rulers on practically any subject. In effect, they appear to take the place of governance boards or consultative bodies (Sampler and Eigner. 2003:138). In summary: The majâlis and the open-doors policy provides a range of informal channels through which the business community can, and does, interact with the leadership on all levels. The multiple role leadership and the high degree of state control of economic actors provide close ties between the public and the private sector. The government has fostered an organised set of partly private actors who can provide useful intelligence and the possibility of decentralized implementation of essential state policies.

29

Details on the specific responsibilities of the Sheikhs originate from personal interviews (Intv. 7. 2005).

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Conclusion The analytical point of departure for this paper was Ewan’s concept of embedded autonomy. He hypothesised that the most effective states [the developmental ones] are characterized by ‘embedded autonomy’ a concept, which expresses a combination of a well-developed, bureaucratic organization with dense public-private ties. The analyses carried out in this paper were delimited to deal with only one of these issues, namely the public-private ties. This analysis was structured around the following three working questions: i) What role is the private sector set to play in Dubai’s development strategy? ii) how has the ruler – merchant power balance developed over time, and where does it currently stand?, and iii) which formal or informal channels exist through which the public and private sector interact? According to the first question it was argued that the conscious attempt to persuade the merchant community from Lingah to set up in Dubai was a strategic move, which placed Dubai on a path dependent development course which saw the development of the emirate as a function of the active encouragement of private business activities. During more than a century the various rulers of Dubai have pursued this strategy through the creation of a series of major infrastructural development projects and not least through the institutionalization of a liberal and pro-business trading regime based on low taxes and customs, adequate legislation, openness, and little bureaucratic ‘red tape.’ Then as now, a key feature of the development strategy has been its reliance on the private sector. This strategy has been pursued through a range of initiatives to attract capable people from all corners of the world to set up business in Dubai. In contrast to the neighbouring states, oil revenues did not result in the establishment of an ‘allocation’ state, but was largely used to support the continuation of a pro-business trading regime established earlier, through the creation of a wider range of business opportunities. The hope was that when oil revenues came to dwindle Dubai would have a sustainable economy. The historical analysis thus, testifies a significant role for the private sector. According to the second question the issue of the ruler-merchant bargaining power was to be addressed. It was found that the power balance between the ruler and the merchants has changed considerably over time due to differences in the economic standing of the two parties. As the pearling industry declined in the 1930’s, and at the same time, the ruler received generous ‘rents’ from the British government the merchants bargaining position declined. The ruler seized the opportunity and absorbed the weakened merchant class into a patrimonial-clientalist state structure. It was argued that in the 1980’s and onwards the ruler-merchant power balance changed once again, this time in favour of the merchants (now the internationalized business community), as Dubai followed a development strategy based on attracting FDI with increasing vigour and thus reaping the benefits of globalization. Globalization implies two things. First, that a larger part of the economy (partly based on FDI) is out of the direct control of the ruler himself (i.e. his neo-patrimonial network), and second, that the ruler is under constant threat that parts of the business

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community might leave the country and seek better opportunities elsewhere. The implied effect of both of those features, it was argued, provides increased pressure on the ruler to listen to and to accommodate the wishes of the business community. The third question was concerned with the specific public-private ties in present day Dubai. It was argued that the interplay between the various public and private actors was characterized by a lack of formal institutions, structures or channels that could link the public and the private sector. It was, however, shown that a range of informal channels does exist. Notably, the majlis and its counterpart the ‘open-door’ policy and leadership through multiple roles were examples of this. The majlis provides a forum for direct communication, problem solving and exchange of ideas and visions. The open-doors policy specifically encourages leadership at all levels to listen to both the elites in society and the citizenries including also the private business community. Both make the leadership accessible and open to new ideas and furthermore add legitimacy to the rule. The multiple role leadership provides an intimate relationship between the government and the private sector. In compliance with the established neo-patrimonial state structure, the ruler surrounds himself with a small group of trusted men and women who control significant parts of the assets in both the private and public firms in the emirate. In addition it was pointed out, that the members of the royal family themselves operate private and public businesses. Through the multiple role leadership the distinction between public and private sectors gets blurred, as private businesses are absorbed into the governance structure. Thus, it was concluded that the multiple role leadership structure, create strong ties between the public and the private sector. The analyses have shown how the sheikhs, the merchants and parts of the wider business community are liked through various public-private ties. The present ties are characterized by a power balance between the ruler and the internationalized business community in Dubai, which places pressure on the ruler to listen to and accommodate the wishes of the business community. This however does not imply an end to or a destabilization of autocratic rule in Dubai. The strong pro-business environment in the emirate seems to provide a common platform for the ruler and the business elites, which facilitates that policy formulation is carried out in an atmosphere of consent between both parties. One might hypothesize in fact that the rulers have viewed their constant drive to attract new segments of businessmen and investments to Dubai as a stabilization and consolidation of their rule. The various rulers in Dubai – and not least - the current ruler Sheikh Mohammed is said to be more pro-business and less risk-averse than the family-owned businesses in Dubai. In other words, the inclusion of new segments of businessmen in Dubai’s economic base does not only serve the purpose of expanding the economy, but could equally be seen as an attempt by the ruler to put pressure on and thus vitalize (through increased competition) the national business elite to conform to his ambitious development visions. The analyses have furthermore shown that there is a relatively organized set of private actors in place who can provide useful intelligence and the possibility of

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decentralized implementation. It was argued that, in the effort to boost development, the government has been instrumental in creating many of the key economic actors through establishment of both public and semi private firms and conglomerations. The leadership of these were furthermore organized into a highly hierarchical leadership structure, headed by the ruler’s group of trusted men. This both offers the government an exceptional degree of intelligence concerning business matters and furthermore allows for rapid and consistent implementation of its visions.

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