The UAE’s recent decision to bar an Israeli pro tennis player a visa to play in the Dubai Tennis Championships is indicative of a decisive choice the UAE must make in confronting the financial crisis the country faces. The UAE’s path to prosperity has for a long time been based upon its choice of putting profits before politics in the policies it has pursued. During the Iran-Iraq War, the UAE shrewdly maintained its neutrality with all parties involved—serving as a safe free port in the otherwise dangerous waters of the Persian Gulf. Likewise, the UAE formed an alliance with the United States in the 1990s to protect itself from the military threat posed to it by Iran, while at the same time becoming Iran’s most important trading partner. In particular, Dubai has sought to create an identity for itself based upon commercial openness, religious and ethnic tolerance, and individual opportunity.
Now, when faced with its first great economic crisis, it has a crucial choice about how it seeks define its reputation. When times are good, it’s easy to choose prosperity over politics. Yet, when times get difficult, there are temptations for leaders to engage in political pandering and scapegoating to divert national attention away from the country’s truly pressing issues.
Dubai’s rulers have been know for their clairvoyant leadership, investing in the world’s large man-made port before there was any demand for it, creating an innovative system of free zones to attract global commerce and FDI, and leading the way in opening up the UAE politically and commercially. Dubai’s reputation and extraordinary success were not coincidental, but earned through making difficult, far-sighted choices. How much the current economic crisis will hurt Dubai in the long run will be a question of the extent to which it can weather the crisis with its reputation intact. To date, Dubai has chosen to known for its prosperity rather than its politics and that has been a successful model for it. Yet, it’s difficult to choose the policies of prosperity over those of politics when there is no prosperity to be had in the near-term. The issue that Dubai’s leadership must confront is to what extent it will risk damaging its hard-fought commercial reputation for ephemeral political benefits that may cost it dearly down the road.