UAE: Where oil will still be king

On the flight back from Dubai, I picked up a copy of Monocle’s The Forecast, and found inside an article about Masdar City in Abu Dhabi. During one of our company visits we visited the “city,” a ~$12 billion project to create a perfectly planned city in the middle of the desert (sound familiar?) with the mission of being solar-powered, carbon-neutral, zero-waste and car-free. The article praises the efforts of careful urban planning, but “it’s hard to imagine anyone dreaming wistfully of living there.” The streets are empty, it’s almost eerily quiet, and there’s not yet enough development to make it seem more inviting than any other corporate park. While it does seem similar to many of the other cash rich developments in the emirate (Ferrari World), in reality Masdar is “a bulwark against decline built by people who have come to enjoy power and wealth, and have no interest in losing it.” As we heard time and again at many company visits, Abu Dhabi knows oil will, eventually, run out and are seeking to diversify ahead of that scary event.

Perhaps most interesting is the quote from the director general of IRENA, a renewable energy agency that we visited early in the week; he says that Masdar City is a hugely counterintuitive idea. It seemed to us (or perhaps just me) that IRENA was also counterintuitive – an intergovernmental agency focused on clean energy, headquartered in a country and funded by a government that is almost entirely dependent on oil and natural gas. When questions about this were posed to IRENA, they looked at us as if we were the ones confused.

Masdar City (via Monocle)
Masdar City (via Monocle)

Upon our return to the US, we had one final class together where we discussed our overall thoughts and shared reflections on the trip. There was a consensus that the country will still be fully dependent on oil for the next ten years, that only after that timeline would things start to change. Abu Dhabi just simply has too much of it, and the rest of the world depends so much on it, for there to be a true push away from oil in an economic sense. Another comment was on the ubiquity of foreign workers in the UAE, sometimes making it easy to forget you were smack in the Middle East. While that that workforce, by some estimates 98% of the population in the UAE, is integral to the economy and sustains the existence of Dubai and Abu Dhabi, it’s hard to tell if there is a real sense of belonging. There are very strict rules on citizenship, which can only be conferred if you are born to an Emirati father. There are a few other, hard, ways to gain citizenship, but for the most part one’s tenure in UAE is entirely dependent on work visas. Many in class thought it was dangerous for the emirates to rely on so much foreign labor; there is a lack of ownership in the wealth creation and nation-building, because ultimately as an expat you are never fully welcome. It’s unclear if and when this might change, but judging by a quick poll in class a majority of us will still gladly move over for a short term period. The lure of a tax-less workplace plus higher salary is just too hard to resist for a MBA grad.

What are your thoughts?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s