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...panic, finger-pointing and schadenfreude that has ensued, though, it's easy to forget that the gulf is more than just Dubai. Neighborhood rivals - some of them much wealthier than Dubai thanks to much bigger oil and gas deposits - have emerged from the financial crisis in better shape than their badly bruised neighbor. The gulf region is poised not only to recover from the global slump this year, but could become the second most important center of world economic growth after the economies of east and south Asia, according to John Sfakianakis, chief economist for Banque Saudi Fransi in Riyadh...

Author: /time Magazine | Title: The Lessons of Dubai | 2/22/2010 | See Source »

Other countries in the gulf are spinning the same line: cherry-picking the best of Dubai while avoiding the worst. Saudi Arabia, the region's behemoth, has ambitious plans for new development, and Riyadh, its capital and biggest city, is bound to host the central bank for a proposed future gulf single currency. But for all its shopping malls and skyscrapers, Riyadh will never be the region's financial center so long as there is no place for investment bankers to celebrate their deals by popping champagne corks. Most global professionals don't want to live in a country where...

Author: /time Magazine | Title: The Lessons of Dubai | 2/22/2010 | See Source »

...less conservative than Saudi Arabia, but its ban on alcohol is also a major stumbling block to becoming a tourism and professional services hub. Bahrain - another of Dubai's challengers in financial services - has a thriving banking industry and the most ethnically and religiously diverse local population in the gulf. But its tolerant feel is threatened by tensions between the élite Sunni minority and the less powerful Shi'ite majority, as well as Islamist political parties that have benefited from the kingdom's tentative experiments with democratic elections. (See 10 Things to Do in Dubai...

Author: /time Magazine | Title: The Lessons of Dubai | 2/22/2010 | See Source »

...Maktoum, the Emir of Dubai, is able to take daring risks not just because he is a hereditary ruler, but because he is unaccountable to the vast majority of Dubai residents, 95% of whom are foreign and who live in Dubai subject to his favor. Other places in the gulf have larger native populations, or more active national assemblies than Dubai. While rulers in those places are no doubt authoritarian, they still have to tread more carefully with public opinion, or at least the opinion of the conservative religious, military and business circles that keep them in power. (See pictures...

Author: /time Magazine | Title: The Lessons of Dubai | 2/22/2010 | See Source »

...legal cases and more financial turbulence, but will also reassure investors that Dubai is learning from its mistakes. To keep attracting foreign residents with the skills to run a modern economy - and to better educate its own citizens so they can play a bigger role in that economy - the gulf's cities will also have to open up more. Dubai could well lead the way. "Dubai has been proving naysayers wrong for so long that I'm wary of being pessimistic," says Jim Krane, author of City of Gold: Dubai and the Dream of Capitalism. "It's certainly...

Author: /time Magazine | Title: The Lessons of Dubai | 2/22/2010 | See Source »

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