Dubai Makes Drunken Sailors Look Restrained

Dubai, as you know, recently spooked investors.  They were worried that its problems with the $80 billion it took on in debt in order to build itself to a tourism and financial hub would be unpaid.  Some analysts said that Dubai's problems could result in a major sovereign default problem.

So, naturally, Dubai would pull back and cut its spending, right?  After all, having to deal with the embarrassment of having to turn to your wealthy neighbors in Abu Dhabi and begging for a bailout would be humiliating.  So naturally, spending would be restrained going forward.

While that's what a logical person would conclude, it is important to keep in mind that Dubai's legacy is not one of logic.  How else could a country get even a general interest publication like AskMen to highlight their top ten most outrageous projects?  Restraint doesn't seem to be a word in the vocabulary of Dubai's leaders.

So it should come as no surprise that Dubai wants to spend "billions" to expand its airport and to complete construction of another one that's just 25 miles away from its main airport.  Dubai's main airport, Dubai international, had about 41 million passengers pass through it last year.  Its capacity, which is 60 million, will be built up to 75 million with the expansion.  And Dubai won't be done after that expansion, with a push to build capacity to 97 million coming on the heels of the boost to 75 million.

Dubai is also building the Al Maktoum airport, which will have a capacity of 120 million passengers.  The cost of building this airport will be $33 billion.

Analysts at CB Richard Ellis raised concerns over Dubai's airport expansion plans.  "The capacity of the airports and expansions already announced would satisfy Dubai's needs for the foreseeable future," they said.

It seems like Dubai hasn't learned its lesson from its problems last fall.  The humiliation it suffered from its prior debt problems seems to have been forgotten already.  Just looking at the numbers, the total capacity for Dubai's airports would be 217 million passengers.  To put that in perspective, during 2008, there were 809 million airline passengers in all of the United States.

According to the Census Bureau, as of January 31, 2010, the United States has a population of 308 million.  The population of Dubai as of 1.42 million as of 2006.

Even giving Dubai credit for its position as a major transportation hub for the Middle East and its growth, it is difficult to argue that having airports with a capacity for 150 times its population is a logical decision.  The United States isn't a slouch in its importance as a transportation hub, and Dubai would have the capacity to handle about a quarter of total traffic for the United States.

Related articles by Zemanta

• Davos 2010: Will Dubai Be a Drag on Gulf Region? (nytimes.com)