DUBAI, United Arab Emirates — The Dubai company that has raised security concerns in Washington with its deal to manage ports in six U.S. cities epitomizes the global economic ambitions of this small emirate, which seems to daily send another glittering bank or post-modern financial tower racing skyward.
Lacking the large oil reserves of many of its neighbors, the ruling Maktoum family began working three decades ago to turn Dubai into a crossroads of commerce and the economic power of the seven sheikdoms that form the United Arab Emirates.
Dubai's growing prominence as an investment capital has allowed state-owned Dubai Ports World to spend billions of dollars on building and acquiring terminals in more than 15 countries. The company's success mirrors Dubai's urge to become the best and build the highest. But alongside the emirate's quick ascent, there have been revelations that its loosely regulated markets and banks have attracted Al Qaeda militants, drug smugglers and nuclear black marketeers.
Government and business leaders here say such characterizations are exaggerated and note that the emirate is a proven ally in the U.S.-declared war on terrorism.
The Dubai Ports World controversy was sparked by its $6.8-billion deal to acquire Britain's Peninsular & Oriental Steam Navigation Co., which would give it control over port operations in six U.S. cities. Seeking to allay concerns, DP World formally requested Sunday that the U.S. committee that approved the deal in January conduct a more intensive, 45-day review. In addition, the company said that it would maintain the U.S. operations as a separate business unit until May 1 or the end of the review, whichever comes first.
"Security should not be an issue. I don't know of any other country cooperating more with Washington on terrorism more than the UAE," said Mustafa Alani, a senior security consultant at the Gulf Research Center, a regional think tank based in Dubai. "A lot of Arab money left the U.S. after Sept. 11 because people were scared for their investments. This was a way to turn a new page and reopen things. But now it's blocked for unjustified reasons."
Another analyst, who spoke on condition of anonymity because of government sensitivity, said the controversy was a reflection of Dubai's business style.
"This is not exactly an innocent place," the analyst said. "There are financial irregularities and no transparency. Once you step onto the world economy, the world has a right to ask questions about who you are."
Dubai and the other emirates emerged from British control in 1971. The ruling family sought prosperity through commerce. Dubai opened the Jebel Ali port, which is used by the U.S. Navy, and began reaching into regional markets.
The rise in oil prices brought billions of dollars into Dubai's financial centers, helping pave the way for DP World's rise. In late 2004, DP World paid more than $1 billion to acquire CSX World Terminals. The purchase widened the company's interests in Europe, Asia and Africa.
DP World outflanked other investors to clinch the deal for Peninsular & Oriental. P&O holdings included ports and terminals in New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans. The deal would make DP World the globe's third largest ports operator. To many in Dubai, it is another indication that the emirate's international aspirations are being realized.
Dubai is a dizzying blueprint of man-made islands and sharp-angled high-rises with tinted glass that seem to billow along the coast. One of the most discussed ventures these days is Burj Dubai, a mixed-use tower that is expected to be more than 2,300 feet high, which would make it the tallest in the world.
Hotel lobbies are full of men in Western suits and Arab headdress, whispering over briefcases and thick binders. The language of commerce is English, but the accents come from across the world. About 80% of the residents are foreign-born.
"Was Dubai planned this way or were the organizers behind it even surprised?" Sulaiman al-Hattlan, editor-in-chief of Forbes Arabia, asked. "Traffic is getting worse by the day, but on the other hand look at the region around Dubai with its lack of reform on social and economic issues. You can look at Dubai as a serious improvement. It's a positive sign for globalization. Everyone comes to Dubai."
The emirate's loose financial regulations and lack of red tape mean projects like Business Bay, a plan for 230 commercial and residential towers, many hovering above water, can move along quickly. But that same lack of oversight attracted sinister investments too.
Al Qaeda and the former Taliban government in Afghanistan used Dubai for money laundering and arms trading. U.S. investigators found that more than $120,000 was funneled through UAE bank accounts to Mohamed Atta and other Sept. 11 hijackers.
