The Gulf States and the unbearable heaviness of excess

7 May 2023

The Gulf States’ business models have pivoted towards wealthy people for whom matters like human rights or tasteless displays of excess are either minor concerns or the entire point. At what cost?

As the global financial system totters and staggers, with multiple banks from the US to the EU failing or about to fail, I began to wonder what was going on in those places in which financial failures and belt-tightening are just a foreign concept. Like the Gulf States, with their bloated sovereign assets, long fattened by the good fortune of having oil under their sands.

I have tried to make it a life’s goal never to go to Dubai. Not even in transit through their opulent airport. I will not, I fear, achieve this goal — a business trip is apparently on the cards soon.

I don’t have a particular allergy to Dubai versus other similar displays of metropolitan ostentation. But it’s not only the prospect of seeing impossible skyscrapers, marble-bedecked hotel lobbies and too many Ferraris clustered together in close quarters that makes me wince.

It is also because the skyscrapers and hotels were built by nameless, faceless, exploited, uninsured and unprotected immigrant workers living out of sight in hot, cramped containers and cinder blocks on the edges of town.

Consider, for example, the orgy of spending that went into the recent Qatar soccer World Cup. More money was splurged on infrastructure build than all the other soccer World Cups combined.

A reported 400 of these nameless workers died in the process. And that is just the official figure, sure to be an undercount. Four hundred workers dead would bring down a government in any half-decent democracy.

My interest in this world was sparked by an article by Scott Galloway about the rise of vulgar build-and-spend in the Gulf States. Galloway is an irreverent celebrity professor at New York University and one-half of the always edifying, always amusing podcast Pivot with co-host Kara Swisher.

The piece starts with a roundup of the impossible excesses now being built in the oil-rich kingdoms and sheikdoms, with the primary purpose of attracting rich people to visit, reside, set up companies and spend.

Galloway writes: “Let’s start with a 105-mile-long glass-domed mega-city in the desert to house 9 million people with no cars, staffed by robots, and powered entirely by wind and solar. Oh, and it will have a ski resort. And its own moon.

“This sci-fi mega-city is the centrepiece of Saudi Arabia’s Neom project, budgeted at $500-billion. Keep in mind, that’s the budget — and nine out of 10 mega-projects go over budget. Saudi Arabia is also building the Diriyah Gate, a $20-billion property development that will add 20,000 homes to the historic district of Diriyah, and the Red Sea Project, which will build 1,000 homes and 50 hotels across 22 small islands.”

And then there’s The Line, also part of Neom. From their PR material: “The Line is planned to be a 170-kilometre linear city that will house nine million people. It will run from east to west across the Neom region. According to the developer, the city will consist of two parallel, 500-metre-high, linear skyscrapers standing 200 metres apart. The buildings will be clad with mirrored facades.”

A dystopian nightmare

This particular development and its endless slash of swaggering overreach through the desert looks to be a dystopian nightmare from science fiction. Who would choose to live there? To step out of one’s room and into a robot taxi to travel in a straight line to another indoor skyscraper, an indoor ski slope, an indoor park? While breathing processed air and being tracked by ID tags and surveillance cameras?

A lot of people, apparently. And similarly in the other countries in the region, each being designed to be more fantastical than the next; a gladiatorial contest of excess.

At what cost? The petro-wealth being invested is one thing; adding up the numbers ceases to have any meaning at some point. But it is worth also considering other costs.

Consider this quote from Nadhmi al-Nasr, the CEO of Neom, which was caught on tape: “I drive everybody like a slave. When they drop down dead, I celebrate.” Lovely.

Why now? The Gulf States have long had pots of money to splurge on stuff, which they did, but mainly elsewhere, like UK and European real estate, football teams and marquee-worthy brand hotels and retail chains.

Well, it turns out that their money spigot is running dry. The squeeze is coming from two directions.

The most important is that the oil reserves are dwindling, with Bahrain expected to run dry by 2030 and Oman by 2040 and the rest following during the next number of decades.

The second is that increasing environmental pressure has retarded the prices of oil as other cleaner technologies start to come onstream at scale, their prices getting closer and closer to oil-fuelled energy.

And as Galloway points out, what do you do when your business model starts to fail? You either go out of business or you pivot.

Where the Gulf States have pivoted to is wealthy people for whom matters like human rights or tasteless displays of wealth are either minor concerns or the entire point of the exercise. And so — luxury, ostentation, world-class entertainment and sports events, tax breaks and a waiving of some of the more burdensome structures of religious conservatism, hence, alcohol availability and a thriving and tolerated sex trade.

This has historically been smart business. Luxury brands like LVMH, Hermès and Compagnie Financière Richemont have a captive audience who are generally protected from the vagaries of markets and economies and have built market caps of hundreds of billions of dollars each.

While one might expect luxury items to feel the pinch when times are tough, the resilience and historical growth of these companies tell a different story. And that is because the very rich like to consume. Visibly. Conspicuous wealth and status are friendly bedfellows. Status does not retreat without a fight, even when banks are failing.

I suspect that my extreme distaste for these places is perhaps a little disingenuous, given that I like a good splurge as much as the next person. But everyone has their limits for the boundaries of ostentation, and the scale of these new totems of vainglory just makes me despair at where the money might have been better spent.

The Percy Bysshe Shelley poem Ozymandias looms large as I look at the photos and rendering of these mega-projects.

Its final lines are a fitting plea for the future of these projects:

“Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.” DM

Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg.

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A dystopian nightmare