Dubai's old guard takes the reins

Zawya.com -

Ibn Khaldoun, the great Arab philosopher-historian, predicted that urban elites would grow so fat on the excesses of power that they would be ousted by hardier Bedouin tribes. They, in turn, would be seduced by the ease of sedentary life and succumb to another generation of desert warriors, creating an endless circle of renewal.

In Dubai, a contemporary version of his theory is being played out 18 months into the emirate's deepest recession since the famines that followed the second world war.

The giants of the Dubai boom years are seeing their influence wane, or being ousted altogether, as the ruler of the city state, Sheikh Mohammed bin Rashid al-Maktoum, allows a more conservative class to return to prominence.

Last week Sultan bin Sulayem was replaced as chairman of Nakheel, the troubled developer that lies at the heart of the $24bn (€17.7bn, £15.7bn) restructuring of the government-owned Dubai World conglomerate.

Mr bin Sulayem, who remains chairman of Dubai World, is not the only member of the elite seeing his power whittled away. Mohammed Gergawi, chairman of Dubai Holding, the personal conglomerate of the ruler, has also seen his influence wane. So has Mohammed Alabbar, the chairman of Emaar, a top developer.

Other technocrats who rose to prominence during the boom have suffered a more complete fall from grace, notably Omar bin Sulaiman, the former chief of the Dubai International Financial Centre, who has been detained during a police investigation into excessive bonuses.

"As Dubai looks to solve its debt problems, it also has to give the appearance of a new team to manage things. It's a message of accountability. These guys made mistakes and you can't keep them to run the city now with a new path into the future," says Abdulkhaleq Abdullah, a political science professor at Emirates University.

The new power in town is Mohammed al-Shaibani, director-general of the ruler's court, who also runs a holding company overseeing the government's key commercial enterprises, such as the airline Emirates. Welcomed by some as a tough technocrat, he has concentrated power around the ruler's court, along with the finance department and a support fund designed to help government-linked companies.

Mr Shaibani, who was looking after the ruler's interests in London when Dubai's debt-fuelled boom began, has risen to power amid an intense anti-corruption audit. This campaign is seeking the return of stolen funds to the state's coffers, but analysts warn it is also creating a sense of drift as senior executives watch their backs.

Mr Shaibani's rise has coincided with the return of the city's established families, who helped previous rulers turn Dubai from a sleepy fishing village into a regional commercial hub.

Members of this mercantile elite - such as the Tayers and Lootahs - played an understated role in the development craze of the last decade. Some counselled against the strategy of over-leveraged real estate development.

Nakheel's new board consists largely of members of established Dubai families. The hope is that they will have the experience to restructure the developer using the government's $8bn cash injection and revive the city's moribund property market, which has seen prices halve since the bubble burst in late 2008.

"One could maybe interpret this as the ruler making concessions to the city's business oligarchs: he drifted away from them and now he is rediscovering them," says Mr Abdullah. "The question is, will this be a temporary arrangement until recovery comes or something more permanent?"

The return of the old guard may reflect a consensual approach to recovery. But some argue that the government should be creating modern institutions to replace the cycle of change predicted by Ibn Khaldoun.