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Dubai's Western-oriented image couldn't save ports deal

DUBAI, United Arab Emirates—Two miles off the coast of Dubai, Dutch ships work day and night sucking up sand from the bottom of the Persian Gulf to create the latest vision of the emirate's ruler: an ambitious, $3 billion, 300-island development project in the shape of a globe where, for $10 million, you can own a piece of The World.

Sheik Mohammed bin Rashid al-Maktoum has spent years dreaming up spectacular projects in this tiny enclave on the toe of the Arabian Peninsula, in a bid to carve out a free-market refuge in the Middle East that some have dubbed Dubai Inc.

Almost overnight, the sheik's attempts to package his emirate as an enlightened pioneer in an unstable region were eclipsed by the furor in Washington over plans to turn over management of six U.S. ports to a Dubai-owned company.

Critics of the deal have demonized Dubai—which features the world's most luxurious hotel, the richest horse race on the planet and the region's first indoor ski resort—as a terrorist refuge, a bank for militant Muslims and an al-Qaida transit lounge.

The Dubai-owned company at the center of the ports controversy surrendered to the intense political pressure on Thursday and announced that it intended to sell its stake in the American ports to a U.S. firm. The move might quell the firestorm, but the aborted deal could have a far-reaching effect on the Middle East and on Arab-American relations.

"Dubai is a trendsetter for the Arab world," said Abdulkhaleq Abdulla, a professor of political science at Emirates University. "This is where the United States should encourage trend-setting for moderates, for a free economy, for globalization. If America loses this friend, they are losing a potential future Arab tiger."

Surprise in Dubai gave way to shock and then resentment over what many considered to be thinly veiled Arab bashing by Americans trying to score election-year points.

"Arab investors don't want to invest in the West if it's going to be no entry or a one-way street," said Mohammed Abdul Mannan, an executive with Dubai's Department of Tourism and Commerce Marketing. He warned that the collapse of the deal could be "the final nail in the coffin to Arab investment in the West."

While the rulers of Dubai have long prided themselves on promoting tolerance in the conservative region, no one has been more instrumental than al-Maktoum in creating the modern face of the most liberal of the country's seven emirates.

The 56-year-old sheik, who recently took over as vice president and prime minister of the United Arab Emirates, has engineered most of Dubai's modern landmarks. The avid rider created the Dubai World Cup, the world's richest horse race. He spearheaded the launch of Emirates Airlines. He lured major Western companies by creating free enterprise zones such as Internet City and Media City, where CNN, the BBC and Reuters all have offices. He pushed development of the world's only seven-star hotel, a 1,050-foot-tall coastal icon in the shape of a billowing sail that's featured on Dubai license plates.

Perhaps most audaciously, the sheik is transforming Dubai's 40-mile coastline by adding more than 600 miles of new oceanfront development such as The World and a trio of palm-shaped projects fanning out in the gulf waters.

Circling one of the palm projects in the water will be a stanza of the sheik's poetry that will read, in part: "I write on water like no man before me/Challenges reveal who true men are."

Al-Maktoum's poetry provides a window into his personal and political worldview. While his poems often speak of love and patriotism, others appear to cater to the region's widespread anti-Western sentiments. In "Myself, for Al Aqsa, I Sacrifice," al-Maktoum urges Muslims around the world to fight to regain the Al Aqsa Mosque, the third holiest site in Islam, which is in a part of Jerusalem that Israel captured from Jordan in the 1968 Six-Day War.

The Arab country's hostility to Israel became a key factor in the push to kill the port deal. While an Israeli-run shipping company backed the sale, American critics noted that the UAE officially supports the Arab boycott of Israel. The UAE blocks phone calls to Israel, along with access to Israeli Web sites, which it deems "inconsistent with the religious, cultural, political and moral values of the United Arab Emirates," along with pornographic sites and other sites critical of the government.

Yet Brian Kerins, the U.S. military attache in the UAE, called the relationship between the two countries "superb." Dubai is the most popular port in the world outside the United States for the American military to relax. America runs its own section of the port and patrols the waters around warships routinely berthed in Dubai.

The push to transform Dubai into an elite playground and business center began decades ago as the emirate came to grips with its fate as one of the few oil-poor places in the area.

Dubai draws in twice as much money from its aluminum plant as it does from oil, which accounts for just 6 percent of the emirate's gross domestic product.

That reality prompted al-Maktoum to set up a series of government-run businesses.

The network of companies has radically altered the Dubai landscape, which resembles a giant erector set filled with massive cranes towering over construction sites encircling the city. In many parts of the city, throngs of workers from India and Pakistan in blue construction overalls vastly outnumber Arab businessmen in traditional, long white robes.

After creating a posh retreat, Dubai Inc. began searching the globe for investments. Dubai has bought stakes in DaimlerChrysler, the company that runs Madame Tussaud's Wax Museums, and New York City's famous Essex House hotel on Central Park South.

But none of the investors foresaw the intense backlash to its plan to take over management of six American ports from a London-based company, a move that was aimed at enhancing Dubai's ability to serve its global transportation customers.

Critics chafe at suggestions that their concerns are racist and say there are legitimate worries about any foreign government running American ports. And some have dubbed Dubai as a gateway for terrorists by pointing to the Sept. 11 commission's report, which said the UAE "was becoming both a valued counterterrorism ally of the United States and a persistent counterterrorism problem."

Ironically, it was Dubai's reputation for its Western-infused life that made it attractive for al-Qaida, which used it to help acclimate the Sept. 11 terrorists to American life by showing them how to shop and blend in. The financiers also used city banks to funnel money to the hijackers.

But Western diplomats say the UAE has been one of the region's more staunch allies and consider such incidents anomalies rather than indicators of an anti-Western worldview.

"Dubai is such a hub for the region, whether it's ships, money or people. If it's going from one part of the region to another, or to another part of the world, it's likely to go through Dubai and it's not because it's an open bazaar for terrorism," said one Western diplomat, who spoke on condition of anonymity because of the sensitivity of the subject. "It's because everything funnels through here. Bad things have slipped through, but they have moved in recent years to prevent that with anti-money laundering laws and counterterrorism laws."

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(c) 2006, Knight Ridder/Tribune Information Services.

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