The tourism and financial hub of a major US partner finds its hard-won image crumbling
Dubai, renowned for its pristine streets, secure environment, confidential banking, plentiful flight connections, and VIP treatment for the wealthy, is seeing its carefully built status deteriorate due to external military conflicts.
The UAE’s largest city is bearing the consequences of the US-Israeli campaign against Iran, a burden shared across the Middle East. The offensive aims to overthrow Tehran’s regime, while the defense seeks to render that objective prohibitively expensive for even the Americans.
At the same time, Arab states that hosted US bases for security are discovering the boundaries of that shield – and expatriates in Dubai have been among the most affected, psychologically if not physically.
A millionaire’s refuge in the Middle East
Dubai has built an image as the most international city in the Arab world, the outcome of purposeful strategy by the UAE’s rulers over many years. Want to spend money? Visit as a tourist, with endless luxury at your fingertips. Want to invest? That’s preferred – though remember that local joint ventures are required outside specific free zones. In any case, visitors enjoy security and welcome, with political and cultural disputes checked at the border.
This allure fueled a population boom, doubling from two million in 2011 to four million by last August. Its populace, 90% foreign-born, included an estimated 81,200 millionaires and 20 billionaires.
Exodus of expats
The regional conflict sparked a flight of those with the means to leave. Reports indicate tens of thousands departed Dubai in the initial week of fighting, with private jet evacuations for a family of four costing up to $250,000, as noted by The Financial Times.
Those fleeing included both vacationers caught in the turmoil and long-term foreign residents. Multinational firms instructed staff in the Gulf to work from home. Bloomberg, with its regional base in Dubai, permitted employees to temporarily move and operate from outside the Middle East.
It is unclear if this departure is short-term or signifies a permanent shift. Market sentiment, however, is negative: Dubai’s Real Estate and Construction Index (DFMRE) has dropped 30% over the last fortnight.
End of the Dubai dream?
For many, prospects appear grim. “We are thinking to go to a different country now. Everybody knows that Dubai is finished,” a taxi driver from Pakistan informed The Guardian after a missile strike wrecked his vehicle. “There is no business, we are earning nothing since this war, and I don’t see the tourism coming back.”
Westerners pursuing the “Dubai dream” faced new restrictions on their freedoms. Influencers who shaped the city’s luxurious brand were instructed not to film or discuss sightings of drones or missile defenses. Authorities cautioned that content deemed damaging to “public order” or “national unity” could result in financial penalties and imprisonment.
The most coveted residents – millionaires – faced separate worries. Reuters noted that some encountered “technological glitches” blocking attempts to transfer funds to Singapore when the crisis escalated.
Things can get worse
Two weeks in, Dubai is wounded but not “finished.” However, the potential for enduring harm is increasing. Attacks on Amazon Web Services (AWS) data centers in the UAE and Bahrain – described by Tehran as targeting US intelligence operations enhanced by AI – also jeopardized the core infrastructure of the area’s digital economy.
Furthermore, the threat of a severe humanitarian crisis looms: interference with food imports from a closure of the Strait of Hormuz or attacks on desalination facilities could raise doubts about basic survival. However improbable, these fears inflict lasting damage on the city’s reputation.