A Visit To Dubai Inc.
Aug. 3, 2008

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(CBS) This segment was originally broadcast on Oct. 14, 2007. It was updated on July 30, 2008.


Dubai is a tiny sheikdom nestled along the Persian Gulf on the
eastern edge of the Arabian peninsula and part of a tiny, oil-rich
country called the United Arab Emirates. Over the course of just a few
decades, it has transformed itself from a spit of sand about the size
of Rhode Island into the Singapore of the Middle East.

It's a political, economic and financial success story, in a region torn by conflict, and as 60 Minutes
first reported last October, it's all the vision of one man, Sheikh
Mohammed bin Rashid al Maktoum. He rarely gives interviews and but he
gave one to correspondent Steve Kroft, along with a tour of his sheikhdom.

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No matter how many articles you read or how many pictures you see,
they don't quite capture the enormity and the energy of Dubai. It is a
physical manifestation of Arab oil wealth set in concrete, glass and
steel, a place so rich and ambitious that is changing the geography of
the world as a business center, transportation hub, and tourist
destination.

It's a 21st century city at the crossroads of a new world.
Skyscrapers rise in clusters, man-made islands rise from the sea, and
entire neighborhoods with hundreds of office buildings and apartments
that rise from the sand. And it is all Sheikh Mohammed's vision.

One project, called by some the "largest construction site on
earth," was just desert several years ago. The site employs half a
million laborers, working 12-hour shifts on a reported $300 billion
worth of projects, building Sheikh Mohammed's dream of a modern,
efficient and tolerant Arab city with fine restaurants, a vibrant
nightlife, that is both the playground and business capital of a new
Middle East.

"What are you trying to do here? What do you want this place to be?" Kroft asks.


"I want it to be number one. Not in the region, but in the world," Sheikh Mohammed says.


Asked what he means by "number one in the world," Sheikh Mohammed
says, "In everything. High education, health, housing. Just making my
people the highest way of living."


At 59 years old, he is one of the richest people in the world, a
member of the Maktoum family which has ruled here for nearly two
centuries. He is a former air force pilot and an avid horseman who
competes in cross country endurance races and is one of the largest
breeders of thoroughbred race horses in the world.

By Western standards his marital situation is a little complicated.
He’s married to Princess Haya, the daughter of the late King Hussein of
Jordan, but he also has another wife who is rarely seen in public.

He is frequently described as a workaholic and, as 60 Minutes found one morning, always in motion. The sheikh, who likes to stay on his feet, walks around without a security detail.


He is famous for dropping in unannounced at construction sites and government offices to see how things are going.


He uses his cars as mobile offices, traveling most of the time by himself.


There is a little bit of Donald Trump in him, at least when it
comes to showmanship and getting people to come to Dubai. "You know
this building up here? This is where we have snow skiing," Sheikh
Mohammed points out.

The strange looking building the sheikh had pointed out is the
world's tallest indoor ski slope. Outside it may be 120 degrees but
inside it feels like the Alps.

There is the Dubai World Cup, showcasing the fastest horses in the
world running for the world's richest purse. Not to mention the most
luxurious hotel in the world, the Burj al Arab, where the cheapest room
is $2,000 a night.

"Why do you want everything to be the biggest, the tallest?" Kroft asks.


"Steve, why not? Why not? If you can have it in New York, why can’t we have it here?" Sheikh Mohammed asks.


"Why are you in such a hurry? Most people would try and do this in a lifetime, not five years," Kroft asks.


"I want my people to live better now. To go to high school now. To
go to good health care now. Not after 20 years," the sheikh explains.

His people, the descendants of Bedouin tribesmen, pearl
divers and traders, now make up a small fraction of the population in
the emirate. They enjoy one of the highest standards of living in the
world, with free healthcare and college tuition and no taxes.

The rest of the population are foreigners -- European, Indian,
Russians, Iranian, and Saudi -- and they are coming at the rate of
25,000 per month. They are developers, architects, middle managers,
domestics and bellboys, all united by a common goal: to make money.

"People can smell the opportunity. And they go for it," says
Georges Makoul, vice president for Morgan Stanley in charge of its
Middle East region.

He believes Dubai has the perfect business environment for
multi-national corporations. It is strategically located halfway
between the financial capitals of London and Singapore, a billion and a
half people within a three hour plane flight, and it is the perfect
jumping off point to tap the emerging markets of South Asia.

"So essentially what's happened is that Sheikh Mohammed and the
Maktoum family were able to convince people to come in vest money
there," Kroft asks Makhoul.


"Well they articulated a very good case or investing in Dubai. And
I think they jump started it with some of their own investments,"
Makhoul explains.


The initial investment was made by Sheikh Mohammed's father, who
decided to dredge a coastal waterway called "The Creek," which had been
the center of Dubai's commercial activity for centuries. It was the
beginning of what would become one of the largest ports in the world
and a major transshipment point for goods headed to and from Asia.


Next, Sheikh Mohammed came up with the idea of turning Dubai into
an international center for finance and media. He set up a series of
free trade zones, promising no taxes, minimal regulation, and special
incentive to corporations willing to locate to the emirate.

And he began building it all, convinced they would come. And they have.


"It’s an amazing experiment," Dr. Omar Bin Sulaiman, the governor
of Dubai’s financial district, tells Kroft. "Everything is done with
risks, but calculated risks."


Since it opened three years ago, the Dubai International Finance
Center has attracted banks, investment firms, and capital from around
the world. And according to Dr. Bin Sulaiman, this is just the
beginning of what will eventually be a city within a city.

What is the financial district going to look like in five years?


"Five years from now you're gonna see towers on your right, towers
on your left. You're gonna see a kilometer-and-a-half garden where you
can exercise. And if you're bored of that, you can go underneath it for
a kilo-and-a-half shopping mall," Bin Sulaiman explains.


"Kilo and a half, that's more than a mile?" Kroft asks.


"Yes. And it is not the largest shopping center in the world. Because that's next door," Bin Sulaiman tells Kroft, laughing.


Next door is the Burj Dubai development, where the largest shopping
center in the world is under construction at the base what will become
the world's tallest building.


It is being built by Emaar Properties, by some measures the world's
largest real estate developer. It is one-third owned by Sheikh Mohammed
and the Dubai government, which has a financial stake in almost all of
the development in the emirate.

Emaar’s chairman, Mohamed Alabbar, took 60 Minutes
up to what was then the top of the building, past what will be the
first Giorgio Armani hotel, and floor after floor of million dollar
apartments. It was already nearly a mile high, and when it is finished
it will be twice as tall as the Empire State Building.

But Alabbar isn't worried about finding tenants with deep pockets.
"We are about 85 percent sold. We sold 1.1 billion U.S. in two nights,
which is really amazing," Alabbar explains.


Alabbar, educated in the United States, is one of Sheikh Mohammed's
young lions, protégés hand picked by the sheikh to run one of his
largest enterprises.

Another is Sultan Ahmed bin Sulayem, the chairman of Dubai World,
who also runs a significant part of Sheikh Mohammed's business empire.
"I think he looks at Dubai. What does Dubai need? What is missing in
Dubai? And when he thinks there's something missing, we're gonna do
it," Sultan Bin Sulayem says.


Eight years ago, Sheikh Mohammed decided what Dubai needed
was more waterfront property and beaches for all the tourists who are
going to come. Dubai only had 60 miles of coastline, so ordered Sultan
Bin Sulayem to create more.

"After two months, I came to him and I showed him this picture, of
a perspective of a picture of an island. He said 'How much beach is
this going to give us?' I said seven kilometer. He said 'Why not 70?'
You know he always ask you the impossible. Not what you are able, but
what you cannot do," Sultan Bin Sulayem remembers.


"So, Sheikh Mohammed gave you the land and told you to start building?" Kroft asks.


"He gave us the water," Sultan Bin Sulayem says. "We have to make the land."


Business consultants told him the project was unfeasible, but with
no environmental regulations to stop him, Sultan began dredging a
hundred million cubic yards of sand from the Persian Gulf, along with
seven million tons of rock to form a man-made Island in the shape of a
palm. It more the doubled the coastline of Dubai, and created
waterfront condos and homes for 150,000 people, not including 35
hotels.

"Most people, if they brought in a business consultant, and they
told them, 'This is a terrible idea. It's not gonna work.' They
wouldn't do it," Kroft remarks.


"Most people, yes, but not us," Sheikh Mohammed says.


"I must tell you, your Highness, that there are some members on
your team who, from time to time had doubts. I won't name them, but
they looked and they said, after you told them what you wanted they
said, 'This is impossible,'" Kroft remarks. "They thought that you were
crazy."


"Yeah, if you don’t want to name them, I can name them," the sheikh said, laughing.


It's easy to laugh about it now. The palm island project sold out
in less than a week, and houses that initially went for $1 million are
being resold by original investors and real estate speculators for five
times that. But the day 60 Minutes went ashore, a month after the official opening, the island was a ghost town.


"People just started moving in," Sultan Bin Sulayem explains.


It's not clear when or if people will actually start moving in.
Most of the properties were bought as second or third homes by wealthy
Arabs, Russians, and Europeans to be used a few months a year, or as
real estate investments, or a way to move money offshore to a safe
haven. But it has not stopped the building.

Three more off-shore developments are underway, including a chain
of 300 man-made islands, some of which will be private. They are shaped
and situated to resemble a map of the world, which is what the project
is called. Demand is said to be strong, but to many, Dubai has the feel
of a speculative bubble, that could burst.


Man-made islands with multi-million dollar homes on them are only
one component of Sheikh Mohammed's vision to make his kingdom a safe
haven for capital and a model for social and political change in the
region.

From financiers and entrepreneurs, to construction workers and
maids, Dubai has become a kind of El Dorado, the setting for a modern
day gold rush. Everything is in overdrive. And not surprisingly, the
speed of it all has had unintended social and political consequences.


"A number of people have described you as the chief executive
officer of a huge business enterprise. Is that an accurate way of
describing what you do?" Kroft asks the sheikh.


"Actually, yes. I change the way of government to make it like a big company," Sheikh Mohammed says.


Some people call it Dubai Inc. and, besides investments at home,
includes extensive holdings throughout the Middle East and around the
world. In the U.S. its list of properties is way too long to go into
but includes resorts, hotels and real estate holdings from Las Vegas to
New York. The company is also negotiating to buy a significant interest
in the NASDAQ stock exchange.

"Could what's happened here have happened in any other Arab
country?" Kroft asks Abdul Rahman al Rashed, the general manager of Al
Arabiya, one of the most influential news organizations in the Middle
East.


"No way. No," Al Rashid says.


"What is it about the rest of the Arab world that that would've
made it incredibly difficult, if not impossible, to do what's been done
here?" Kroft says.


"I think lack of vision, heavy bureaucracy, lousy governments and corruption," Al Rashed says.


Asked what Dubai's reputation is in the rest of the Arab world, Al
Rashed tells Kroft, "Remember, we have 300 million people live in this
region. Eighty-six percent of the youth being questioned, they say they
want to come to Dubai. Their destination number one is not London, is
not New York, as it used to be in old days, or France. It is Dubai."


But the sheikh is also trying to construct a new society based on
religious tolerance and gender equality, at least in the work place. He
has made recruiting and promoting women a priority.



"I think we, the government, we are doing all that we can to really
make of you a leader and we are concentrating on the woman," the sheikh
remarked at a meeting.


That's a significant change for women from a conservative Muslim culture.


"The resistance that people already have in our society because of
the religious background and cultural background should reduce," a
female attendee at a meeting said to the sheikh.


"That's right. I agree with you, but ah I only worried that you take over all," he replied, to laughter.


It isn't the only cultural change taking place in Dubai. For
starters, being outnumbered by foreigners nine to one has had a huge
impact on the local population. Bikinis are mixing with burkas, and
churches with mosques, as traditional customs are challenged by modern
sensibilities.