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Idle hands, Part II

Idle hands, Part II

For the UAE’s most populous emirate, avoiding recession may mean preventing an exodus of human as well as financial capital, Part II.

February 18, 2009 1:19 by

Click here to read Part I.

A national dilemma

Dubai’s government has rung up $80 billion in public debt trying to create a local economy that can stand on its feet  without petroleum revenues. The emirate’s fast-growing population is a key ingredient in those plans.

Before the global credit system seized up in October, every month 25,000 people were relocating to Dubai.  That’s 800 a day, 33 per hour. Each newcomer presumably chips in demand for local goods and services, and props up the emirate’s property and rental markets. Losing that vital source of new demand would make it a lot harder to keep Dubai’s real-estate-heavy economy expanding.

The first sign that some kind of policy response was in the works came in early January, when The National newspaper in Abu Dhabi reported the ministry of labor was considering quick reforms to allow jobless expatriates to stay in the country beyond the current 30-day limit. But changing the rules to keep jobless residents, their investments and spending habits rooted to the emirates may not be an easy task.

The UAE’s 3.2 million foreign workers are considered a security threat as well as an economic input. Less than a fifth of residents are UAE nationals, and many of them worry that the tide of foreigners could wash away their sense of national identity. Plus, weeding out bad apples from heaps of immigration applications is a daunting task.

As Anwar Gargash, the UAE’s minister of state and foreign affairs, told the United Nations panel reviewing his country’s human rights record in December: “the unique challenge of demographics in our country remains a key issue, not only in terms of national identity but also in terms of our national security. Our policies must always take this into account.”

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