Dubai was covered with sand about 5,000 years ago. The earliest recorded mention of Dubai is in 1095, in the "Book of Geography" by Abu Abdullah al-Bakri. Documented records of Dubai exist only after 1799. In the 19th century the Al Abu Falasa clan (House of Al-Falasi) established Dubai, which remained a dependent of Abu Dhabi until 1833. In 1833 the Al Maktoum dynasty, descendants of the House of Al-Falasi, left Abu Dhabi and took over Dubai from the Abu Fasala clan without resistance. Dubai came under the British by the "Exclusive Agreement" of 1892. Then two catastrophes struck the town; first in 1841 a smallpox epidemic broke out in the Bur Dubai and in 1894 fire swept through Deira burning down most homes.
Dubai was an important port of call for foreign traders, mainly from India, many of whom settled down in the town, known for its pearl exports until the 1930s. Dubai's pearl industry perished during World War I, and later by the Great Depression of the late 1920s, causing a mass migration of people to other parts of the Persian Gulf. Since its inception, Dubai was constantly at war with Abu Dhabi. In 1947 a border dispute escalated into war between Dubai and Abu Dhabi, which was settled by the British. Border disputes continued even after the formation of the UAE until 1979.
Electricity, telephones and an airport were established in Dubai in the 1950s by the British. In 1966 oil was discovered after which the town granted concessions to international oil companies. This led to a massive influx of foreign workers, mainly Indians and Pakistanis, making the population Dubai from 1968 to 1975 grow by 300%. Now there are about 12,00,000 (1.2 million) Indians in Dubai, making it one-third or about 33% of Dubai population.
On 2 December 1971 Dubai, together with Abu Dhabi and five other emirates, formed the United Arab Emirates (UAE) after Britain left in 1971. In the 1970s, Dubai continued to grow from revenues from oil and trade, even as the city saw an influx of Lebanese immigrants fleeing the civil war in Lebanon. The Jebel Ali port, reputedly the world's largest man-made port, was established in 1979. Jafza (Jebel Ali Free Zone) was built around the port in 1985 to provide foreign companies unrestricted import of labor and export capital.
During the Persian Gulf War of 1990 Dubai banks faced massive withdrawal of funds. In 1990s, however, many foreign trading communities, from Kuwait during the Gulf War, and later from Bahrain during the Shia unrest, moved their businesses to Dubai. Also, Dubai provided refueling bases to allied forces lead by USA at the Jebel Ali Free Zone during the Gulf War and the 2003 Invasion of Iraq. Oil price hikes after the war forced Dubai to focus on trade and tourism, which are now the main source of income, oil contributing only about 6% of Dubai’s revenues.
The flourishing Jebel Ali Free Zone lead to duplicating its model to establish new free zones, such as Dubai Internet City, Dubai Media City, Dubai Maritime City and more. The construction of Burj Al Arab, the world's tallest freestanding hotel, and new residential properties were used to promote Dubai to the world’s richest and celebrity people. Since 2002 there has been an increase in private real estate investment in recreating projects such as The Palm Islands, The World Islands, Burj Dubai and The Dynamic Tower. But economic growth has been accompanied by high inflation (11.2% as of 2007), resulting in huge increase in cost of living. Dubai is the second most expensive city in the Gulf Region and 20th most expensive city in the world.
Dubai's government runs under a constitutional monarchy, and has been ruled by the Al Maktoum family since 1833. The current ruler, Mohammed bin Rashid Al Maktoum, is also the Prime Minister of the UAE, and member of the Supreme Council of the Union (SCU) of the emirates.
Though Article 25 of the Constitution of the UAE provides for the equitable treatment of all persons with regard to race, nationality, religion and social status, many of Dubai's 250,000 foreign laborers live in conditions described by Human Rights Watch as being "less than human." NPR reports that workers "typically live eight to a room, sending home a portion of their salary to their families, whom they don't see for years at a time." On 21 March 2006, workers at the construction site of Burj Dubai, upset over bus timings and working conditions, rioted damaging cars, offices, computers and construction tools. The global recession has caused the working class of Dubai to be hard hit, with many workers not being paid and not being able to leave Dubai.
Judicial rulings in Dubai with regard to foreign nationals were under dark cloud, for instance, the alleged attempts to cover up the rape of the 15-year-old French-Swiss girl Alexandre Robert and the recent mass imprisonment of migrant laborers, most of whom from India, on account of their protests against poor wages and living conditions. Prostitution, though illegal, is conspicuously present in the emirate because of the economy dependence on real estate, tourism and trade. AMCIPS found that women from Russia, Ethiopia and some African countries are the most common prostitutes, while Indian prostitutes are part of an organized prostitution network. A 2007 PBS documentary entitled “Dubai: Night Secrets” reported that prostitution in clubs is tolerated by authorities.
According to the Statistics Center of Dubai, the population of Dubai was 1,422,000 as of 2006, with only about 15% made up of UAE nationals. About 80% of the expatriate population is Asian, chiefly Indians (51%), Pakistani (15%), Bangladeshi (10%) and others (10%), and in addition 16% (or 288,000 persons) living in collective labor camps were not identified by nationality, but were believed to be primarily Asian.
The UAE's Provisional Constitution declares Islam the official state religion, but Dubai also has large Christian, Hindu, Sikh, Buddhist, and other religious communities. Non-Muslim religious groups are permitted to advertise group functions but distributing religious literature is strictly prohibited under penalty of criminal prosecution, imprisonment and deportation for “engaging in behaviour offensive to Islam”.
Burj Dubai, currently the tallest building in the world, is being built primarily by poor immigrants from South Asia. Press reports indicated in 2006 that skilled carpenters at the site were paid the equivalent of UK£4.34 a day and the migrant laborers paid only UK£2.84, hardly enough to sustain in the skyrocketing prices of Dubai. As a result, on 21 March 2006, about 2,500 workers upset over buses that were delayed for the end of their shifts took to riots. As of 17 June 2008 there were 7,500 skilled workers employed in the construction of Burj Dubai, unskilled workers not counted.
Dubai's gross domestic product as of 2005 was US$37 billion and now the Dubai Government sits on a debt of US$ 80 billion, out of which 75% is caused by the government owned Dubai World, chaired by Sultan Ahmed bin Sulayem. On November 26, 2009, Dubai proposed to delay repayment of its debt, which raised the risk of the largest government default since the Argentine debt crisis in 2001, as Dubai World asked to delay for six months payment on $59 billion of debt.
As a result stock markets and financial institutions around the world cracked on Friday. The emerging markets like Hong Kong and South Korea fell by 5%. Taiwan 3%, Australia and China 2%, and the Indian Sensex fell by 645 points to settle back at 223 points (1.3%).
Over a million Indians work in Dubai, i.e., one-third or 33.33% of the Dubai population. They send home about 10 to 12% (over Rs 24, 300 crores) of the total remittance of US$ 52 billion (Rs 2,43, 000 crores) Indians send from abroad. If Dubai World’s request for repayment of its debts is not accepted, there would be a huge crash of Dubai economy leading to job losses for Indians and other migrant communities. The most affected would be workers from Indian states if Kerala, Maharashtra, Gujarat and Punjab.
At present 12% of India’s total foreign remittances come from Dubai and 8% of India’s non-oil exports go to Dubai. Though the Indian Government sources say the Dubai financial collapse will not affect India much, most people in India feel it is going to affect a lot of people.
However, there is a ray of hope if what Al Jazeera and other agencies report come true: “Abu Dhabi to 'assist' Dubai World” – “Abu Dhabi is moving to bail out on a selective basis the state-owned Dubai World, whose debt default led to a sharp drop in global markets, a senior official has said”.
Abu Dhabi Investment Authority alone manages over half a trillion US dollars, and if they want they can easily bail out Dubai with a Government debt of US$ 80 billion out of which US$ 59 billion is that of Dubai World. It is a drop in the ocean compared to half-a-trillion US dollar! Abu Dhabi is one of the wealthiest states in the world and analysts feel it can easily bail out Dubai, both being prominent emirates of the UAE.
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