Hillary says Hello?, and Halliburton says Dubai!

I don't know why you say Hello?, I say Dubai.

Investors unfazed by Halliburton announcement

The world's second-largest oil-field services company and biggest U.S. contractor operating in Iraq said the new office in Dubai will help strengthen its presence in the Eastern Hemisphere, where its business is growing.

Through its KBR subsidiary, Halliburton also is the Pentagon's largest private contractor operating in Iraq. Under a logistics contract with the Army valued at more than $25 billion, KBR serves up meals, builds bases and provides other support services for U.S. troops.

Halliburton officials skipped some of the corporate courtesies that would usually attend such an announcement, failing to notify Houston Mayor Bill White and other community leaders in advance.

Investors appeared mostly unfazed by Halliburton Co.'s stunning announcement Sunday that it will open a new headquarters in the United Arab Emirates and move its chief executive officer there.

Industry analysts, meanwhile, were mostly optimistic about the announcement because they said it signaled that Houston-based Halliburton is serious about expanding its reach around the world.

U.S. lawmakers remain openly suspicious of the United Arab Emirates, despite the growing prominence of its bustling financial center, Dubai.

A political firestorm erupted last year when a Dubai-based marine terminal operator tried to take over operations at six major U.S. ports. Lawmakers repeatedly recalled that much of the money used to fund the Sept. 11 terrorist attacks was funneled through the United Arab Emirates' banking system.

The Gulf state of Qatar on Monday affirmed its interest in taking a stake of up to 10 percent in European defense and aerospace group EADS, which has been pummelled by problems at its Airbus unit.

"When you look into the future, it's really going to be these (national oil companies) that are going to control the future production," noted Amy Myers Jaffe, a fellow for energy studies at Rice University's James A. Baker III Institute for Public Policy. "Who do the oil service companies work for? They are working for the companies that are producing the oil and gas."

Jaffe was in Dubai on Sunday to discuss a report the Baker Institute has just completed on the changing role of these national oil companies.

That report points out that these national oil companies controlled some 77 percent of the world's proved oil reserves in 1995. In contrast, Western international oil companies hold less than 10 percent of the global oil and gas resource base.

Clinton on Halliburton and Dubai By Kate Phillips

Senator Hillary Rodham Clinton lashed out at Halliburton today for its announcement that it would open a corporate headquarters in Dubai and move its chief executive officer there. The action has raised a lot of questions, and Senator Clinton was quick to link the company to its multi-billion defense and war contracts as well as its ties to Vice President Dick Cheney.

“Does this mean they’re going to quit paying taxes in America? They’re going to take all the advantage of our country but not pay their fair share of taxes. You know, they get a lot of government contracts… Is this going to affect the investigations that are going on? Because we have a lot of evidence about their misuse of government contracts and how they have cheated the American soldier, cheated the American taxpayer. They have taken money and not provided the services. So, does moving overseas mean that we won’t be able to pursue these investigations?

“I think it raises a lot of very big concerns and I think we’re going to be looking into that in Washington. I think it’s disgraceful that American companies are more than happy to try to get no-bid contracts, like Halliburton has, and then turn around and say, ‘But, you know, we’re not going to stay with our chief executive officer, the president of our company, in the United States anymore.’ Well, I’m proud to be an American and I’m proud that this is the greatest country in the world.”

Dick Morris: Clinton on Dubai Payroll

Halliburton: We're going to Dubai-land!

Few things get the Web's conspiracy theorists hopping more than Halliburton, the oil services and military logistics provider that boasted current Vice President Dick Cheney as its CEO from 1995-2000. So when the company announced on Sunday that it was moving its corporate headquarters to Dubai, the rumors started flying instantly.

• Dubai has no extradition treaty with the U.S., one blogger wrote, so Halliburton's top execs will be safe should the company be found guilty of any crime.
• It's all about the taxes and Dubai's business-friendly regulations. Some companies move to the Caymans, but Halliburton's going to Dubai-land!
• The Democrats have taken over Congress, and Halliburton wants to get as far away as possible from Henry Waxman.

Far be it from me to rain on anyone's anti-Halliburton parade, but the company will continue to be legally registered in the U.S., so the move is not quite the equivalent of a corporate relocation to the Bahamas. This could also be a case where the explanation being proffered might actually be the true one. Halliburton is desperately trying to unload its military logistics and contracting subsidiary, KBR, and wants to focus on oil field services.

As How the World Works waits to see how big this story gets, I'll content myself with the fabulous explanation offered by a Texas congressman:

Rep. Kevin Brady, R-The Woodlands, said the news "is not surprising."

"It would make sense," Brady said, for an oil and gas company to "go where oil and gas is," Brady said. "America these days essentially vilifies our own energy companies."

It's our fault! We didn't love Halliburton enough! Now the jilted company is seeking a warmer embrace from the friendly folks in Dubai.

Mohammed Abbas and Anna Driver report for Reuters in the online San Diego Union-Tribune, rightly or wrongly, that "It [Halliburton] plans to list on a Middle East bourse once it moves to Dubai.


Adding a potpouri of bits to the story, CBS reports, Members Of Congress Criticize Move As Insult To U.S. Soldiers And Taxpayers

Sen. Patrick Leahy, D-Vt., called the decision to move as "an example of corporate greed at its worst."

"This is an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years," Leahy said in a statement.

Federal investigators last month alleged Halliburton was responsible for $2.7 billion of the $10 billion in contractor waste and overcharging in Iraq.

Dubai is an Arab boomtown, where free-market capitalism has been paired with some of the world's most liberal tax, investment and residency laws.

Labourers angered by low pay and long hours are preparing to take their protest into the luxury malls they built by Dan McDougall

Kamal swats away a swarm of black desert flies from his face as he pours coffee from a battered tin pot. His calloused hands are shaking as he looks furtively at his 'watchman' standing outside in the courtyard.

'If we are caught speaking to you here, we are finished, you understand that? They will throw me in prison and deport everyone in this camp, not just the people in this room. They are actively looking for us,' he tells me.

The construction workers, packed together inside the tiny hut in one of Dubai's harsh desert labour camps, are breaking the most fundamental of all the draconian laws governing immigrants within the United Arab Emirates - they are holding a union meeting, a practice that is banned in all but one of the Gulf States.

They are also plotting their next move in protest at their treatment by their Arab employers who, they claim, exploit them for cheap labour. It's a move that will, for the first time, involve direct confrontation with the millions of tourists who visit the city every year. They plan to shame foreigners into taking notice of their plight.

Dubai, one of the country's seven emirates and uniquely poor in oil, is at the pinnacle of a decade-long building boom that has transformed the city into one of the world's most popular tourist destinations. Today it is the largest construction site in the Middle East, home to luxurious hotels and three of the largest shopping malls on the planet. Each year an estimated 700,000 Britons visit the city to take advantage of its sunshine and pristine beaches. Record numbers from the UK are shunning the Spanish costas to buy property in the region. By 2008 an estimated 250,000 Britons will call Dubai their second home.

The city's unrivalled building frenzy may be creating one of the Middle East's most modern and alluring holiday destinations, but it is supported by an increasingly disgruntled foreign labour force whose basic human right - the right to voice their opinion - is denied. 'One of the world's largest construction booms is feeding off impoverished immigrant workers in Dubai, but they're treated as less than human,' said Sarah Leah Whitson, Middle East and North Africa director at Human Rights Watch.

Welcome to the other side of Dubai

It is the fastest growing city on earth, ... a neverland, rising out of the barren desert and fringed by beaches and a ski resort. There are no taxes. And it is the favoured destination of Britons wishing to work and play abroad.

Fifty per cent of the world's supply of cranes are now at work in Dubai on projects worth $100bn - twice the World Bank's estimated cost of reconstructing Iraq and double the total foreign investment in China, the word's third-largest economy.

... the glistening towers that soar above the shopping malls, the six-lane highways and the world's only seven-star hotel with suites that can cost $50,000 (£28,000) a night....

Almost everything is for sale in this part of the United Arab Emirates. Among the developments springing up daily are Flower City, which aims to take over the international flower trade from Amsterdam; Hydropolis, an underwater hotel alongside another with revolving mountains; a Chess City with buildings in the shape of chess pieces; the $5bn Dubailand, which will become the world's biggest theme park - bigger than Manhattan and dwarfing Disneyland. Then there are the 300 manmade islands in the Arabian Gulf in the shape of different countries of the world ...


The one thing money cannot buy in Dubai, however, is UAE nationality. Around 80 per cent of the population are foreigners from no less than 160 different countries and the Maktoums appear to be prepared to let the foreigner-to-local ratio grow even wider. But however long the expatriates stay, they will not be allowed citizenship. Visas are tied to jobs, and there is always the risk of being thrown out when the contract ends.

The average pay for an unskilled labourer is around $4 a day, and that is enough of a lure for the impoverished of India, Pakistan, Sri Lanka and Bangladesh to flock to the UAE. The jobs are arranged through contractors and those who get them have to take out loans, often at exorbitant rates of interest, to pay for their passage. On arrival in Dubai, their passports are confiscated to prevent absconding while they are on contract.

Details of how companies repeatedly abused the system have recently begun to emerge. Workers were often not paid for months as their contracts drew to an end and then promptly kicked out when they demanded their wages. (Their visas expired at the end of the job.)

But now, in an attempt to become a serious commercial player, Dubai is negotiating with the World Trade Organisation and, as a result, is having to clean up its act. A big sign at the arrivals lounge of Dubai International airport professes " Dubai Cares". The police and the labour ministry has set up a hotline for foreign workers with complaints; civil servants turn up at factories and labour camps to listen to grievances and have, on occasions, ordered restitution from the firms involved.

But the problems have continued....

But what about the citizens of Dubai? How do they see this influx of foreigners - many of whom, especially from the West, bring with them an alien culture which jars with Muslim customs. Jamal, who sells real estate, said he has done well out of the commercial boom. But, in the back of his mind, he said, there is a feeling of uneasiness.

"Our leaders want to turn us into a modern, first-world country, and that is good. But the place has become all about money. Do you know, there wasn't any real protest here about the Danish cartoons of the prophet - Dubai was the only place in the Muslim world where there was no outcry. What does that say about us?" Meanwhile, Jamal pointed out, the Dubai stock exchange, along with the rest of the Gulf, experienced a spectacular fall in share prices earlier this month.

"Maybe that was a sign. Maybe we need to slow down and think about things," said Jamal. "Everything is going too fast. Is it getting out of control? That is a big worry."

Promise and Illusion in a New Arab City by Anthony Shadid

To Sharaf and others, Dubai is the answer to the Arab world's ills, so diverse that conversations in taxicabs are sometimes a patois of Arabic, English and Hindi. Its architecture suggests Pharaonic ambition; at 3 billion square feet, the amusement park known as Dubailand will be three times the size of Manhattan, complete with a replica of the Eiffel Tower and a 60,000-seat stadium. The city's growth, vision and dynamism -- to advocates, at least -- chart a way forward for Arab development independent of the Bush administration's emphasis on democratic reform. Arab expatriates who have flocked here declare Dubai a success and say that the Arab world needs a success story.

"We're seeing the beginning of an Arab renaissance, and I find it very hopeful," said Nasser Saidi, a former Lebanese minister and the chief economist of the Dubai International Financial Center.

But a darker undercurrent pervades the success of Dubai ["an autocratic city-state ruled by a dynasty"]. Hundreds of thousands of foreign workers ["the city-state's citizens make up just one in five of its 1 million residents"] toil with few rights and sometimes just above subsistence. Unrest has mounted; last month, laborers rioted near the site of Burj Dubai, planned as the world's tallest skyscraper, where a new floor is added every week. The Islamic piety visible in the rest of the Persian Gulf has receded behind a rollicking nightlife of bars, clubs and prostitution so rampant it is assumed to have official sanction. The city has a history as a shipping hub for contraband, including illegal drugs and nuclear weapons components. Rumors of money-laundering are laced through the real estate speculation that has sometimes driven prices to double in six months.

At the heart of what Dubai and its globalization are creating, two cities overlap. One is a dystopic, even soulless vision of the future, where notions of civil society, individual rights and identity are subsumed in the logic of capital. The other is a rare triumph of the private sector in an Arab city that provides a model for prosperity and a force for integration, reversing decades of disappointment and defeat.

Over a lunch of Lebanese appetizers at a fashionable restaurant, Sharaf and his boss, Saeed al-Muntafiq, chief executive officer of Tatweer, traded aphorisms on the rise of the Dubai model. Dubai had little oil of its own (oil accounts for just 5 percent of Dubai's economy), so it was forced to diversify to prosper. To prosper, it needed skilled workers. To attract that talent, it had to ensure that it would be the most free-wheeling, hospitable and libertine of the traditional Gulf Arab states.

"Look around you in this restaurant," Sharaf said proudly. "Just take a look."

At the tables, none of them empty, were Emiratis in traditional dress, men in suits and women in skirts. Snippets of English and a plethora of Arabic dialects were audible. There were perhaps 30 nationalities seated here, he said.

"Here's an example of what I'm talking about," he said. "They're all sitting side by side and all doing it with respect."

It is remarkable how little U.S. policy figures in conversations here. Religion comes up usually only in the context of illustrating Dubai's tolerance. Unlike in Egypt, Lebanon or Syria, almost no one mentions the Bush administration's talk about democratic reform. Politics, in fact, is rare in Dubai, where power resides with a single family, the Maktoum clan. In this city of transients, 85 percent of its workforce foreign, politics hardly exists.

For good reason, Muntafiq said.

"Democracy is a means, not an end," he said. [Guambat invites commentary/debate but only after full article is read and digested.]

"It's a system, a process, a tool. What is the end? I don't know, but I have my own opinions -- a world-class health-care system, a world-class education system, a job for every person willing and able, rule of law, civil rights and liberties. I would have thought these would be the outputs of democracy. Does it matter how we get there? I don't know, but I'm asking the question. I'm not saying we should or shouldn't have it, I'm just saying it doesn't really matter here."

The city's gritty beginnings have become part of the legend of the Dubai model. Its museum celebrates records that as recently as 1908 summed up Dubai's wealth in a few typewritten lines, including 4,000 date trees, 1,650 camels, 45 horses, 380 donkeys, 430 cattle and 960 goats. Pearl diving and fishing were mainstays until a generation ago. The Indian rupee served as the currency until 1966.

The itinerant city Roken [a civil rights, Muslim lawyer] sees today is unrecognizable, not even Arab. All that remains of the neighborhood of his youth is the mosque. When he goes to a mall, he estimates that 99 percent of the patrons are foreigners, and he rarely hears Arabic. Despite religious prohibitions, drinking is unabashed, and he fears public wine-tasting parties are on the way. The beaches of his youth were either taken over by hotels and their occasionally topless sunbathers or frequented by Westerners whose dress he deems inappropriate. He grimaces at women jogging in the streets, sometimes with their dogs, considered unclean under Islamic law. The celebration of Islamic holidays and the country's national day on Dec. 2 pale before the more commercialized commemoration of Christmas.

Arguments for democratic reform in the Arab world are often offered as an antidote to the region's stagnation and repression. Roken argues for democratic reform, but on different grounds. Only with more say by citizens like him can the process of Dubai's globalization be stanched. His democratic vision is not of a different society, but of a society he once had.

"The brakes are accountability, sharing in the decision-making," he said. "These things will work as brakes on the train's speed. If citizens had a say, I don't think the city would have turned into this."

Dubai then and now, and now and then

Halliburton in the Stew