Dubai or Debtai ? The rise and fall of Dubai ! Will Dubai Allow Vegas Style Gambling ?

All that glitters is not Gold. The country built on loans ! Dubai or as I call it Debtai has its image tarnished after the country defaults on its $87 billion loan. Governments can run commercial operations (as is the case in Dubai). They can bail out commercial operations (as we've seen in the West). But who bails out the governments themselves when they go bankrupt like what has happened in Dubai ?

Rumours are afloat that the Rulers of Dubai are considering allowing gambling in the debt ridden State. Dubai has all the ingredients of becoming a Middle Eastern version of Las Vegas ? Lets watch as the rulers of Dubai are shoved into a corner. Watch for the ads -Atlantis Dubai - Casino and Hotel !

Even though Dubai is on the brink of collapse its still expecting 8 million tourists a year. Dubai has become a tourist heaven because of its bargains and deals. Desperate for business Dubai is advertising 24/7/365 sunny days and Five Star hotels on half the price. Its the number destination for Europeans in the Winter.

From the pinnacle of the world economic boom to the brink of bankruptcy, Christopher Davidson of Durham University explains some of the background to the glittering city in the desert.

The inability of the government of Dubai to refinance the massive debts incurred by its largest state-owned company, Dubai World, has sent shockwaves throughout the world prompting many observers to ask not only how severe the economic crisis is, but also what exactly is Dubai and who is in control of it?

This time last year, Dubai was making headlines for entirely different reasons.
It was the opening party of the non-Casino version of Atlantis hotel, the star attraction of the city's man-made palm-shaped island. Organisers spent millions on the fireworks and even more on the celebrities.

As the sky exploded overhead, broadcast live around the globe, it was Dubai's message to the world that it had arrived. But as Dubai's elite sipped their champagne, the financial crisis was already beginning to take its toll in the West. For Dubai, this was the last night of extravagance before the credit crunch came knocking. And so, 12 months on, the headlines are very different. But who spoiled the party, and how?

IS THIS WHOLE COLLAPSE THING A GIMMICK

Observers looking at the whole Dubai crisis smell a rat. The rulers took loans for everything they were building in Dubai. Offering builders free land or sea as down payment the rulers got $87 billion of loans from banks all over the world.

The banks invested heavily in real estate projects. The rulers kept most of the money and hoarded all the income from these investments.

Some insiders believe that the rulers are setting the stage to allow gambling in Dubai. Staging themselves by defaulting on their debt they are looking for a reason to allow 'limited' gambling in Dubai on in the hotels that are off shore. Most hotels built in Dubai are on artificial islands and are not on mainland Dubai, UAE. The rulers are trying to follow the example of Mississippi in the US. The conservative State of Mississippi in the US also allowed gambling on hotels that were offshore. These hotels were built on reclaimed land in the Gulf of Mexico and were off the mainland US.

The critics are sceptical the way this debt default has folded. All of a sudden the rulers of Dubai do not have $87 billion ? The critics smell a rat and most believe they need a reason to allow gambling in this Islamic nation. Gambling is banned in Islam and the elders in the ruling family are against allowing gambling in Dubai.

WHAT APPARENTLY WENT WRONG IN DUBAI

Dubai does not have the enormous oil wealth enjoyed by its neighbours such as Abu Dhabi. Its main source of wealth has historically been as a port.

Although frequently described as a city state or even as a country in its own right, Dubai is a constituent member of the federation of United Arab Emirates along with six other emirates.

The main share indexes in the UK, France and Germany had all fallen by more than 3% on Thursday. But after falling further in early trade on Friday, the UK's FTSE 100 closed up 1%, and both Germany's Dax index and France's Cac 40 ended more than 1% higher.

Certain London-based hedge funds who had bet on Dubai World being bailed out could have an uncomfortable few weeks ahead. Those close to the company have suggested that various refinancing options have been on the table for at least a month, although details have not been revealed until now.
A six-month suspension on interest payments is believed to be the most likely option.
David Buik, senior partner at BGC Partners, said: "You can't just say to the world: 'I don't want to pay my debts'. There is no income coming in from any of these properties. I think this is shocking PR."

The news shook markets that are recovering from the collapse of the US housing market and contagion that threatened to rupture the global financial system last year.
It was the timing of the announcement as much as the lack of clear information that heightened nerves. The first news emerged late on Wednesday, as the Muslim world was preparing for its Eid celebrations.
It also coincided with the closedown of the world's most important share market, with US markets winding down for Thursday's Thanksgiving holiday.
Uncertainty of the scale of banks' exposure to Dubai hit banking shares at first. However, bank shares recovered strongly throughout Friday morning.
Threat to confidence. The biggest underlying fear is that Dubai's problems could reignite the international financial turmoil of the credit crisis.

WHAT IS DUBAI WORLD?
The emirate's flag bearer in global investments
Has a central role in the direction of Dubai's economy
Assets include DP World, which caused a storm when trying to take over six US ports
Property arm Nakheel built The Palm Islands and The World developments

Chris Skinner, chairman of the Financial Services Club, said: "We're very heavily interlinked. Dubai is the key financial centre in the Middle East."
Any knock to economic confidence could lower global demand for a whole range of commodities, including oil.

Dubai, which has less oil money than many of its neighbours, became a trading and tourism hub with global ambitions. Dubai World, the conglomerate that led the emirate's expansion, had $59bn (£36bn) of liabilities as of August, a large proportion of Dubai's total debt of $80bn. Its subsidiary Nakheel was the builder of the landmark palm tree-shaped island developments off Dubai.

Atlantis Hotel Dubai:

Will the Atlantis in Dubai remain the non-casino kosher version of the Atlantis Hotel ? Critics do not believe that ! Look what Atlantis Dubai has to offer !

Atlantis's the latest word in Gulf excess - a sprawling $US1.5 billion ($A1.8 billion) resort boasting a $US25,000 ($A30,044.50)-a-night suite and dolphins flown in from the South Pacific, all atop a palm tree-shaped island.

Inspired by the legend of the lost continent, the resort offers "experiences that are new to the Middle East," said its president and managing director Alan Leibman, in line with the emirate's penchant for superlatives and drive to become a top tourist destination.

At Atlantis, this includes water thrills, a marine habitat and more than a dozen restaurants run by world-class chefs including Japanese sushi mogul Nobu Matsuhisa and Michel Rostang of France.

The first guests were welcomed this past week at the site on Palm Jumeirah, one of three palm tree-shaped man-made islands emerging off the coast of Dubai.

The opening even as construction work continues on Palm Jumeirah underscores Dubai's race to more than double the number of visitors to 15 million by 2015.

One of seven emirates making up the United Arab Emirates, Dubai already hosts one of the world's most exclusive hotels, the sail-shaped Burj al-Arab, dozens of other luxurious seafront hotels, and the "Burj Dubai," Arabic for Dubai Tower, the world's tallest skyscraper.

With a distinct desire to offer the tallest and biggest, Dubai will also have the world's largest shopping mall.

And the Atlantis fits right into the picture, as "an entertainment destination that is truly different to anything that exists in the resort category in the region," aid Leibman.

But that might not be for long. Scores of other ambitious ventures are underway or in the pipeline, including Dubailand, a series of billion-dollars entertainment and leisure projects touted as the Middle East's very own Orlando, which will include a Universal Studios theme park.

The "Palm" islands face competition on their own turf from "The World", a cluster of some 300 artificial islands looking like a blurred vision of the planet's nations.

Developed by Kerzner International as only the second such resort after the Atlantis-Paradise Island in the Bahamas, Atlantis-The Palm cost 1.5 billion dollars and has 1539 rooms at rates ranging from US$700 dollars to a staggering US$25,000 for some suites.

The hotel opened on schedule despite a recent fire which ravaged its lobby, though the pomp and ceremony have been put off until the formal inauguration in November.

According to the management, the hotel is nearly fully booked. But although Dubai has become a regional business and tourist hub, promoters said they are targeting the US, European and Asian markets and do not expect clients from the Middle East to fill up more than a quarter of the establishment.

"Aquaventure", a water playground of over 18 million litres of water, is accessible to visitors for prices ranging from A$64 for children to A$75 for adults. The waterscape features water slides with names such as "Leap of Faith", including two which catapult riders through shark-filled lagoons.

Atlantis' marine habitat will be stocked with thousands of marine animals and include a "Dolphin Bay".

But one of the main attractions which promoters are counting on to draw crowds faced with a wide choice of entertainment in Dubai are the resort's top-end restaurants run by world-class chefs.

"What I'm offering here is authentic French cuisine, not a bit of everything. I am a champion of tradition" in French cuisine, said the two-star Michelin chef Rostang of his French Brasserie.

Environmentalists have long criticized both Palm Jumeirah island and some of the features of the Atlantis hotel. And analysts wonder if global financial turmoil will crimp Dubai's big hopes for tourists.

Dubai is not blinking. The 113-acre resort on the artificial island off the coast is among the city-state's biggest bets that tourism can help sustain its economy once regional oil profits stop flowing.

"You don't build a billion-and-a-half dollar project just anywhere in the world," said Leibman.

With its own oil reserves running dry, Dubai hopes to woo those eager to make money and those who know how to spend it - even as much of the global economy sours.

For years, the emirate - one of seven semi-independent states that make up the United Arab Emirates - has been feverishly building skyscrapers and luxury hotels.

A key piece of the strategy has been to cultivate an image in the West as a sun-kissed tourist destination despite its intense summer heat, conservative Muslim society and dearth of historic sites.

Among the daring projects are an indoor ski slope, the as-yet-incomplete world's tallest skyscraper and a growing archipelago of man-made islands such as Palm Jumeirah - the smallest of three such projects planned.

Much of the focus at the Atlantis, modeled on a sister resort in the Bahamas, is on ocean-themed family entertainment. The resort has a giant, open-air tank with 65,000 fish, stingrays and other sea creatures and a dolphinarium with more than two dozen bottlenose dolphins flown in from the Solomon Islands.

The hotel's top floor aims squarely at the ultra-wealthy. A three-bedroom, three-bathroom suite complete with gold-leaf, 18-seat dining table is on offer for $25,000 (A$30,000) a night.

Environmental groups and some people in the Solomons protested the sale of the dolphins to the resort as well as the 30-hour plane flight to get them to Dubai.

Dubai's development has long been criticized by environmental activists, who say the construction of artificial islands hurts coral reefs and even shifts water currents. They also point to growing water and electricity consumption.

Developers seem undaunted. For the moment, the Atlantis shares the island only with rows of high-end houses and construction sites. But other international names are set to move in.

Donald Trump plans a hotel straddling the center of the tree-shaped island's "palm," and the storied QE2 ocean liner will become a hotel and a tourist attraction docked alongside its "trunk." An 1,800-seat theater nearby will house a permanent Cirque du Soleil show beginning in summer 2011.

"Palm Jumeirah in and of itself will become one of Dubai's major tourist attractions," said Joe Cita, chief executive of Nakheel's hotel division.

Boosting the number of attractions on the island will not only entice more visitors, but also persuade them to spend more time and money in the city, he said.

By 2010, Dubai aims to attract 10 million hotel visitors annually, up from about seven million in 2007. Atlantis alone will increase the city's hotel capacity by three per cent.

So far, demand appears strong. The Middle East had the highest hotel occupancy rates in the world during the first half of the year, with Dubai leading the region at 85.3 per cent, according to professional services firm Deloitte Touche Tohmatsu.

Dubai also had the highest room rates in the region, although revenue growth is slowing, Deloitte noted.

Atlantis' backers are optimistic they can fill its 1539 rooms despite the economic uncertainty wracking some of the world's richest economies. Their focus is on well-heeled travelers from Europe, Russia, Asia and elsewhere in the Middle East.

"People will still take family holidays," Leibman said. "Dubai is still good value when you're paying in pounds, (or) you're paying in euros."

Nakheel, the developer, and Kerzner, the hotel operator, are both privately held companies and do not release sales data. Leibman said demand from tour groups looks strong well into the first part of next year.

Yet Marios Maratheftis, head of regional research for the Middle East, North Africa and Pakistan at Standard Chartered Bank in Dubai, said there is "good reason" to be concerned that global financial problems could hit Dubai's tourism industry. Nevertheless, he said, the city's long-term outlook remains positive.

Kerzner has grown increasingly close to Dubai in recent years. In 2006, the company took itself private in a $3.8 billion deal partially bankrolled by a division of Nakheel's state-owned parent, Dubai World. Nakheel retains a large stake in the company.

Nakheel's hotel division has expanded rapidly. The company's holdings include New York's Mandarin Oriental, the Fontainebleau in Miami Beach, and the W Hotel in Washington.

Its parent also owns a minority stake in MGM Mirage Inc. and is teaming with that casino operator and Kerzner to build a multibillion-dollar casino on the Las Vegas Strip.

But don't expect to find roulette wheels at Dubai's Atlantis. Islamic prohibitions against gambling ensure casinos remain off limits.

Millions of dollars have been invested in Sheikh Mohammed's passion: thoroughbred racehorses. In Newmarket, he owns Dalham Hall stud farm and Godolphin stables. The sheikh's 4,000 acres in Ireland make him the largest farmer in the country. He also owns 7,000 acres of paddocks in Britain and 5,000 acres of farmland. Other assets owned by Dubai investors include:

* The QE2, currently moored in Cape Town

* The Adelphi on the Strand and the Grand Buildings in Trafalgar Square

* A 20 per cent stake in Cirque du Soleil, the Canadian circus troupe

* Budget hotel chain Travelodge

* A stake in Merlin Entertainments, which runs Alton Towers, Madame Tussauds and the London Eye

* Scottish golf course Turnberry

* Chris Evert tennis clubs in the US

* A ski resort in Aspen, Colorado

* A 21 per cent stake in the London Stock Exchange

* Ports and ferries group P&O