Inside Dubai Inc.

(3 of 3)

The congressional uproar leaves Dubai's bosses feeling burned by a double standard, one that promotes globalization only when it is within the U.S.'s comfort zone. "The media is saying 'The world is flat', but when it comes to Arabs there are a lot of barriers," says a Dubai official. "People are thinking about the clash of civilizations. It's important for the world to see us working together." Sheika Lubna al-Qasimi, Dubai's Minister of Economy and Planning, predicts that the bottom line will win out after the review. "At the end of the day, this is about business," she told TIME. Whatever the outcome, she adds, it won't halt military and intelligence cooperation between the U.S. and her country.

Yet if the U.S. is going to block deals for what Dubai sees as political reasons, there is less of an incentive to trade with American companies--and it could bolster Dubai's effort to attract Arab capital to its nascent financial center. More concretely, Dubai is committed to $200 billion in projects, including expanding the city of Dubai's airport, and tons more hotels and condos. Dubai recently unveiled a plan to create a "global aerospace manufacturing and services corporation" that will offer leasing and repair services, challenging firms like General Electric (start-up funds: $15 billion). Emaar is building an entire city in Saudi Arabia, a $23 billion project that will include an airport, seaport, schools and hospitals.

All this activity has fed speculation that Dubai Inc. is a bubble built on debt. Certainly, Dubai is a borrower. "The big secret is that Dubai doesn't have much money," says Harry Alverson, managing director of the Carlyle Group. "Most of what they do is very leveraged." Yet borrowing to finance growth is what hot companies--and countries--do. That's why Carlyle is a partner. And why Alabbar is confident the Dubai miracle is no mirage. "The whole region needs to be served," he says, "and there is nobody there except Dubai."