Dubai #2: Creek to Port

As it lay ignored, Dubai had one special thing – its creek, writes Tomas Pueyo.


Why did the creek matter?

“A creek provides protection for ships from sea storms and pirates, so Dubai could theoretically be a port.”

But with so many other ports around, why would anybody care for Dubai, which (remember) had nothing to trade or sell anyway? Well, Dubai’s rulers had progressively made sure the place was safe from pirates and robbers. The most important port under the Ottomans was Basra. But as Basra got taxed more and more, merchants and traders began to look for alternatives.

 

It was now (1901) that Dubai created what we would call an SEZ (Special Economic Zone) today. Easy land purchasing, no taxes, a safe haven, tolerance to all beliefs. Of course, this playbook could have been tried by other creeks in the region. Why then did Dubai capitalize the most?

“A big reason was that it was weak. That weakness was an asset, not a liability: The port was not huge, the Sheikh was not powerful, so if he tried anything, merchants would just pack up and go.”

Dubai went all out and began to develop infrastructure in Dubai (telephone lines, airport, electricity network etc). This was before Dubai struck oil!

 

When oil was tapped (1969), Dubai knew it had little, so they had to plan ahead to use its income wisely and build for the post-oil era. With oil, Dubai Creek became the largest export-import port in the Gulf. Dubai decided to double down on trade, building a new port, Port Rashid. In 1979, aluminium production was started, adding value and generating jobs. A 3rd port was opened in Jebel Ali. Dubai would thus become (and remain) the largest port in the Gulf.

 

Knowing oil income would end soon, Dubai diversified quickly into other industries, from trade to finance to transportation to real estate to construction to (yes) tourism.

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