1 00:00:02,360 --> 00:00:09,639 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I'm Stephen Carroll and 2 00:00:09,680 --> 00:00:12,280 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,320 --> 00:00:14,520 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,560 --> 00:00:20,079 Speaker 1: experts here at Bloomberg. You had one thousand people a 5 00:00:20,160 --> 00:00:23,840 Speaker 1: day arriving in Dubai, immigrating net you know, booming economy 6 00:00:23,840 --> 00:00:25,439 Speaker 1: in the Middle East and obviously is going to be 7 00:00:25,440 --> 00:00:28,400 Speaker 1: in disarray at this point. One of the long term 8 00:00:28,520 --> 00:00:31,800 Speaker 1: effects that could come out of this is a reassessment 9 00:00:32,120 --> 00:00:36,120 Speaker 1: of the whole profile of the golf people really value, 10 00:00:36,159 --> 00:00:39,440 Speaker 1: you know, stability and safety in those hubs. It's not 11 00:00:39,960 --> 00:00:42,360 Speaker 1: always going to be just about the low taxes. 12 00:00:42,880 --> 00:00:44,720 Speaker 2: You know, if you're living and operating in a place 13 00:00:44,760 --> 00:00:48,000 Speaker 2: and you didn't anticipate this, it's quite scary and it's 14 00:00:48,040 --> 00:00:48,920 Speaker 2: quite unsettling. 15 00:00:51,640 --> 00:00:54,840 Speaker 1: For years, it's been a destination of choice for hedge funds, 16 00:00:54,960 --> 00:00:58,840 Speaker 1: finance professionals, and other wealthy expatriates drawn by the sun 17 00:00:59,320 --> 00:01:03,200 Speaker 1: Sea and zero income tax. Dubai's rise as a global 18 00:01:03,280 --> 00:01:06,480 Speaker 1: financial hub is built on a reputation for safety and 19 00:01:06,520 --> 00:01:09,120 Speaker 1: stability in a part of the world that's used to 20 00:01:09,160 --> 00:01:12,880 Speaker 1: seeing upheaval. But the US and Israeli strikes on Iran 21 00:01:13,040 --> 00:01:16,200 Speaker 1: and the missiles and drones fired in response by Tehran 22 00:01:16,480 --> 00:01:20,880 Speaker 1: have called that status into question. Here's why Dubai's global 23 00:01:20,920 --> 00:01:28,200 Speaker 1: reputation is under threat. Our Middle East economics reporter Abir 24 00:01:28,240 --> 00:01:32,120 Speaker 1: Abu Omar joins US now for more air. Dubai's a 25 00:01:32,120 --> 00:01:34,200 Speaker 1: place you know very well. You've lived and reported there 26 00:01:34,240 --> 00:01:37,640 Speaker 1: for many years. How would you describe how it's changed 27 00:01:37,680 --> 00:01:39,160 Speaker 1: over the past ten years. 28 00:01:39,440 --> 00:01:42,679 Speaker 2: So I actually grew up in Dubai, and over the 29 00:01:42,680 --> 00:01:47,000 Speaker 2: past two decades it's certainly changed. You're seeing a lot 30 00:01:47,040 --> 00:01:52,240 Speaker 2: of those new skyscrapers that have taken the city's skylines. 31 00:01:52,280 --> 00:01:54,600 Speaker 2: You're seeing a lot of people come from all over 32 00:01:54,640 --> 00:01:58,760 Speaker 2: the world, places that Dubai hasn't attracted. These people previously 33 00:01:58,800 --> 00:02:03,000 Speaker 2: are now slooding into Dubai for multiple reasons, coming for 34 00:02:03,120 --> 00:02:06,639 Speaker 2: the geography of Dubai and the wider United Arab emergens. 35 00:02:06,680 --> 00:02:09,240 Speaker 2: Don't forget Abu Dhabi is the capital of the UE, 36 00:02:09,320 --> 00:02:11,920 Speaker 2: and it's also attracting a lot of these people that 37 00:02:11,960 --> 00:02:15,720 Speaker 2: are looking to soak the sun and enjoy a tax 38 00:02:15,760 --> 00:02:19,920 Speaker 2: free haven that is quite convenient for people from all 39 00:02:19,960 --> 00:02:23,240 Speaker 2: around the world. After COVID, you've seen an influx of 40 00:02:23,320 --> 00:02:27,519 Speaker 2: Western white collar professionals come to Dubai, come to the 41 00:02:27,560 --> 00:02:31,880 Speaker 2: DIFC that is the financial district, to essentially just work there. 42 00:02:32,080 --> 00:02:35,880 Speaker 2: And don't forget that Dubai it kind of tracks all 43 00:02:35,919 --> 00:02:39,160 Speaker 2: different time zones. So you're awake during Asia Open, you're 44 00:02:39,160 --> 00:02:42,000 Speaker 2: awake during Europe Open, and you're awake during US Open, 45 00:02:42,080 --> 00:02:45,640 Speaker 2: so you're taking into account all these different time zones 46 00:02:45,840 --> 00:02:48,160 Speaker 2: and that really works for people who work in the 47 00:02:48,160 --> 00:02:51,160 Speaker 2: finance industry, but also wider industries. 48 00:02:51,520 --> 00:02:54,520 Speaker 1: There have been conflicts in the Middle East in recent years, 49 00:02:54,680 --> 00:02:57,720 Speaker 1: not exciting what's been happening in recent days. How did 50 00:02:57,720 --> 00:03:00,880 Speaker 1: they play out for this new community that to Dubai. 51 00:03:01,120 --> 00:03:04,880 Speaker 2: You're right, I mean, it's not uncommon for these kinds 52 00:03:04,919 --> 00:03:07,600 Speaker 2: of conflicts in the Middle East to be heard of. 53 00:03:08,000 --> 00:03:12,120 Speaker 2: We've been hearing about them since the seventies when the 54 00:03:12,240 --> 00:03:15,800 Speaker 2: Islamic Revolution took over in Iran. But the one that 55 00:03:15,960 --> 00:03:18,840 Speaker 2: is the most recent to our memories is in June 56 00:03:19,000 --> 00:03:21,519 Speaker 2: of last year, and that is the Twelve Day War 57 00:03:21,600 --> 00:03:24,440 Speaker 2: as we refer to it, between Iran and Israel. And 58 00:03:24,520 --> 00:03:28,520 Speaker 2: those were the times when we started asking the question, Okay, 59 00:03:28,720 --> 00:03:32,160 Speaker 2: is Dubai's haven status going to come into question here. 60 00:03:32,639 --> 00:03:36,040 Speaker 2: We wrote multiple stories back then about whether Dubai is 61 00:03:36,080 --> 00:03:38,880 Speaker 2: going to be affected by the Twelve Day War, and 62 00:03:38,920 --> 00:03:42,120 Speaker 2: the consensus back then was, look, Dubai will maintain this 63 00:03:42,200 --> 00:03:46,280 Speaker 2: reputation as a place that stands apart in the Middle 64 00:03:46,280 --> 00:03:49,680 Speaker 2: East that had been written with conflict over the past 65 00:03:49,800 --> 00:03:53,720 Speaker 2: few decades. Now, this time is different because Dubai is 66 00:03:54,280 --> 00:03:58,960 Speaker 2: being hit. Dubai is the target of those Iranian attacks, 67 00:03:59,040 --> 00:04:03,880 Speaker 2: the target of the Iranian retaliation. Previously, up until this moment, 68 00:04:04,200 --> 00:04:07,640 Speaker 2: Dubai was quite immune to what we've seen, and you 69 00:04:07,800 --> 00:04:11,280 Speaker 2: saw the influx of people coming in, the tourists coming in, 70 00:04:11,320 --> 00:04:15,240 Speaker 2: the numbers of tourists have been rising consecutively every single 71 00:04:15,320 --> 00:04:18,839 Speaker 2: year in Dubai in the wider UAE, and so you 72 00:04:18,960 --> 00:04:22,200 Speaker 2: haven't seen an impact pretty much on the status of 73 00:04:22,240 --> 00:04:25,640 Speaker 2: the city. This time around, I would say, has been 74 00:04:25,680 --> 00:04:27,400 Speaker 2: different and is quite different. 75 00:04:27,480 --> 00:04:31,880 Speaker 1: Stephen, So, how has that been different this time around? 76 00:04:31,920 --> 00:04:34,920 Speaker 1: What's changed with this war for Dubai. 77 00:04:35,400 --> 00:04:40,560 Speaker 2: Iran's retaliation this time around has focused on golf countries, 78 00:04:40,640 --> 00:04:45,480 Speaker 2: not just the UAE. Iran has retaliated against the United Ara, Arias, 79 00:04:45,480 --> 00:04:49,080 Speaker 2: Saudi Arabia, Qatar, Aman and Kuwi. Those are the GCC 80 00:04:49,240 --> 00:04:54,359 Speaker 2: nations that are US allies that home some US military 81 00:04:54,440 --> 00:04:58,760 Speaker 2: bases as well. So Iran's retaliation against the UAE has 82 00:04:58,760 --> 00:05:04,720 Speaker 2: seen does, if not hundreds of drones. We've seen ballistic attacks. 83 00:05:04,760 --> 00:05:08,280 Speaker 2: We've seen Dubai in a state that we've never seen 84 00:05:08,320 --> 00:05:11,400 Speaker 2: it at quite frankly before. Now I'm in London now 85 00:05:11,440 --> 00:05:14,760 Speaker 2: and I've seen the videos over on social media, just 86 00:05:14,800 --> 00:05:17,000 Speaker 2: like I'm sure you have. And this is a state 87 00:05:17,080 --> 00:05:20,760 Speaker 2: that I've never seen Dubai, and this is quite unheard of. 88 00:05:20,920 --> 00:05:24,560 Speaker 2: I mean, we call this crisis unprecedented. No one had 89 00:05:24,560 --> 00:05:28,200 Speaker 2: ever thought that the UAE would go through something like this. 90 00:05:28,640 --> 00:05:32,000 Speaker 2: I mean, if you look at online tallies of the 91 00:05:32,040 --> 00:05:35,320 Speaker 2: safest cities in the world, you've got Middle Eastern cities, 92 00:05:35,440 --> 00:05:38,680 Speaker 2: primarily those in the Golf the Arabian Gulf, take up 93 00:05:38,800 --> 00:05:42,559 Speaker 2: the top slots consecutively every single year. Dubai, Abu Dhabi, 94 00:05:42,680 --> 00:05:46,680 Speaker 2: Riyad are seen as the safest cities in the world. 95 00:05:46,720 --> 00:05:49,560 Speaker 2: And so when something like this happens, Although we've heard 96 00:05:49,560 --> 00:05:52,480 Speaker 2: a lot from the government that those were interceptions of drones, 97 00:05:52,520 --> 00:05:57,920 Speaker 2: those were interceptions of ballistic missiles, it kind of sends 98 00:05:58,040 --> 00:06:02,680 Speaker 2: jitters among the heavily expatriate population. Remember seven, I mean 99 00:06:02,720 --> 00:06:07,480 Speaker 2: the UAE is made up of ninety percent expat population. 100 00:06:07,560 --> 00:06:10,480 Speaker 2: The local population or the imorts, make up less than 101 00:06:10,520 --> 00:06:13,359 Speaker 2: ten percent of the overall population. So there is a 102 00:06:13,560 --> 00:06:18,240 Speaker 2: major flight risk among people in the wider UAE, but 103 00:06:18,320 --> 00:06:22,279 Speaker 2: certainly in Dubai, which homes the majority of the UAE's 104 00:06:22,480 --> 00:06:26,279 Speaker 2: population who work and live there. And so what we've 105 00:06:26,320 --> 00:06:30,680 Speaker 2: seen is those people starting to question whether the status 106 00:06:30,680 --> 00:06:32,839 Speaker 2: of Dubai as a safe haven or as the status 107 00:06:32,839 --> 00:06:35,760 Speaker 2: of Dubai as the city that they don't really need 108 00:06:35,800 --> 00:06:39,400 Speaker 2: to think about their personal safety. And we're seeing people 109 00:06:39,440 --> 00:06:42,760 Speaker 2: considering leaving. We're seeing people go to the borders of 110 00:06:42,760 --> 00:06:47,279 Speaker 2: neighboring Gaman to try to escape the United Arab Immirates 111 00:06:47,640 --> 00:06:50,560 Speaker 2: and Dubai because the airspace is closed. And so this 112 00:06:50,600 --> 00:06:53,400 Speaker 2: is I would say, the first time we ever question 113 00:06:54,240 --> 00:06:58,760 Speaker 2: the status of Dubai as a safe haven that harbors 114 00:06:58,960 --> 00:07:00,960 Speaker 2: all these people from all around the world, over two 115 00:07:01,040 --> 00:07:04,000 Speaker 2: hundred nationalities in the Gulf city. 116 00:07:04,520 --> 00:07:08,039 Speaker 1: Will this then permanently damage Dubai's image. 117 00:07:07,839 --> 00:07:11,120 Speaker 2: It's hard to tell. At this point. Dubai's reputation is 118 00:07:11,160 --> 00:07:14,160 Speaker 2: definitely risk at this point, more so than ever, as 119 00:07:14,200 --> 00:07:19,440 Speaker 2: I mentioned, the rulers and government officials. Top government officials 120 00:07:19,440 --> 00:07:23,880 Speaker 2: have been deployed across international media channels to send a 121 00:07:23,960 --> 00:07:27,440 Speaker 2: sense of calm among people. We had a briefing yesterday 122 00:07:27,480 --> 00:07:30,920 Speaker 2: that hosted a bunch of ministers, a bunch of officials to 123 00:07:31,040 --> 00:07:35,160 Speaker 2: again calm down people. You've seen the ruler of the UAE, 124 00:07:35,320 --> 00:07:39,640 Speaker 2: Mohammad Benzaied or Mbizet as he's commonly known, walk among 125 00:07:39,720 --> 00:07:41,680 Speaker 2: the crowds in Dubai Mall that is one of the 126 00:07:41,800 --> 00:07:45,200 Speaker 2: largest malls in the world with crawm Prince of Dubai 127 00:07:45,560 --> 00:07:49,000 Speaker 2: to have coffee after if Dar. Now it's Ramadan in 128 00:07:49,120 --> 00:07:52,240 Speaker 2: the UEE, and so it's quite symbolic to see the 129 00:07:52,320 --> 00:07:55,480 Speaker 2: ruler and the cramp prince of Dubai, the biggest city 130 00:07:55,520 --> 00:07:59,200 Speaker 2: by population, walk among people. And that is intentional, right, 131 00:07:59,200 --> 00:08:01,640 Speaker 2: that is to send them a sort of calmness. Now, 132 00:08:01,800 --> 00:08:05,960 Speaker 2: is the city's reputation going to be shattered permanently? Too 133 00:08:06,000 --> 00:08:09,520 Speaker 2: early to tell, But this is a game changer, Stephen. 134 00:08:10,000 --> 00:08:13,240 Speaker 2: This time around is different from all previous times, and 135 00:08:13,280 --> 00:08:15,920 Speaker 2: so this is one of those times where officials in 136 00:08:15,960 --> 00:08:18,960 Speaker 2: the city, the rulers of the country will have to 137 00:08:19,000 --> 00:08:22,800 Speaker 2: look at and think, Okay, how do we balance this back? 138 00:08:22,920 --> 00:08:26,320 Speaker 2: How do we re establish Dubai as a place where 139 00:08:26,320 --> 00:08:29,240 Speaker 2: people should feel welcome, where people should feel like this 140 00:08:29,400 --> 00:08:32,480 Speaker 2: is a convenient place to live, this is a safe 141 00:08:32,520 --> 00:08:35,360 Speaker 2: city to live in, and we want to keep coming 142 00:08:35,400 --> 00:08:38,480 Speaker 2: back to Dubai, whether as tourists or whether to go 143 00:08:38,679 --> 00:08:42,640 Speaker 2: and live there. So I wouldn't call it from now 144 00:08:42,679 --> 00:08:46,400 Speaker 2: to say that the reputation is shattered, but I would 145 00:08:46,400 --> 00:08:50,079 Speaker 2: definitely say that it changes the balance in the equation 146 00:08:50,400 --> 00:08:52,400 Speaker 2: a little bit this time around. 147 00:08:52,559 --> 00:08:55,920 Speaker 1: Okay. Our Middle East economics reporter Abir abut Omar, thank 148 00:08:55,960 --> 00:08:59,240 Speaker 1: you for more explanations like this from our team of 149 00:08:59,280 --> 00:09:02,040 Speaker 1: three thousand journalists and analysts around the world. Go to 150 00:09:02,080 --> 00:09:07,160 Speaker 1: Bloomberg dot com slash explainers. I'm Stephen Carroll. This is 151 00:09:07,200 --> 00:09:09,920 Speaker 1: here's why. I'll be back next week with more. Thanks 152 00:09:09,920 --> 00:09:10,440 Speaker 1: for listening.