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DUBAI - Shaikh Mohammed Bin Rashid Al Maktoum.

Dubai under the Maktoums is more of a family "corporation" than a state. In describing the "corporation", one British expatriate has said the Maktoum brothers function as follows: Shaikh Mohammed, the third and most favoured son of the late Shaikh Rashid, is "the CEO". Shaikh Maktoum, the eldest and the current ruler of Dubai, is the "chairman". Shaikh Hamdan is "the chief of the landed gentry" as well as the treasurer. Shaikh Ahmad, the youngest of the four and in charge of security, is "the playboy" who is often abroad.

The crown prince of Dubai since late 1990 and UAE defence minister since the early 1970s, Mohammed is the day-to-day ruler of the emirate. Chairing the most vital departments, he controls all the sectors in Dubai, and directs the family's lucrative horse-breeding business. His post as federal defence minister is a counter-weight to that of Abu Dhabi Crown Prince Shaikh Khalifa Bin Zayed, who is the deputy supreme commander of the UAE armed forces. Mohammed holds the rank of general.

Born in 1949, Mohammed received a military education from the Mons Officer Cadet Training College and Sandhurst in the UK. He also studied at Cambridge. He began his career as director of the police and public security in Dubai before the UAE was created. He founded a 6,000-strong army for Dubai. He became UAE minister of defence in 1972.

Mohammed has been worried since 1997 that, despite the glitz and glitter that characterises Dubai, financially the emirate has been barely breaking even. It is doomed to spend and expand in luxury. To cut costs, in late he got Dubai's army to be integrated into the federal system of Abu Dhabi. But there was a trade off, as Mohammed asked for and got the following:

1. Abu Dhabi Ruler and UAE President Shaikh Zayed agreed for his emirate to provide Dubai with natural gas by pipeline as from June 2001 at a specially discounted price. Dubai was running short of gas to supply energy for new development and the situation was getting very serious.

In return for this, the UAE Offset Group (UOG), a brainchild of Shaikh Zayed's favourite third son Mohammed Bin Zayed who is the chief of staff (see following pages), later launched a huge project called Dolphin to develop natural gas in Qatar and import it to Abu Dhabi, Dubai, the rest of the UAE, as well as to Oman, Pakistan and India. This gas should replace Abu Dhabi's supplies to Dubai, and Dolphin Energy (DEL) will replace ADNOC as the seller (see Dubai's gas imports in Gas Market Trends No. 25).

2. Abu Dhabi now foots almost the entire bill of Dubai's own defence, thus cutting huge costs which until 1997 used to be borne by the emirate.

After Mohammed Bin Rashid secured long-term benefits for his emirate in return for military integration, has gradually got Dubai's security forces to be integrated into the federal system. He had little to worry since he was to retain his post as UAE defence minister indefinitely.

3. UOG, a high-powered venture capital group formed in 1991 and getting investment funds from Abu Dhabi's defence suppliers as part of its offset programme, in October 1998 became Dubai's main partner in the new Emirates Basic Industries organisation (Sinaat Al Emarat). This is to invest in major petrochemical ventures and heavy industries in Dubai and elsewhere in the UAE (see DT of this week) and will co-ordinate with Dubai Aluminium (Dubal) before launching any similar venture within the union.

In return for co-ordination in planning basic industries, to avoid duplication, UOG gives priority to Dubai in big offset investments.

Mohammed has been the effective head of the Dubai Petroleum Department since 1982 and as such he controls the hydrocarbon sector and the related downstream industries. He has acquired wide technical and marketing knowledge of the petroleum business, a complex subject which a few citizens in Dubai could emulate. His key aide in petroleum marketing is a British expatriate, rtd. Brig. Barclay, who works from his UK home most of the time.

"The Boss", as Shaikh Mohammed is known by aides, has keen interest in the financial and business affairs of Dubai, which are the main portfolios of his elder brother Hamdan. He has nominated the CEOs of businesses which the Dubai government owns or controls. It was at his initiative that Emirates Petroleum Products Co. (EPPCO) was established in Dubai in 1980 as a products marketing unit.

Likewise, Emirates National Oil Co. (ENOC) was set up in 1993 to invest in upstream and downstream ventures. While the upstream ventures are to be abroad, such as its 69.4% stake in Dragon Oil of Ireland which has two oil producing fields in Turkmenistan (see Gas Market Trends No. 24), ENOC's downstream activities are located mainly in Dubai and Fuhairah; and has a 120,000 condensate splitter in Jebel Ali on stream since 1999 (see OMT 7 DT No. 25).

Mohammed was behind the Jebel Ali free zone, Emirates Airline and various other projects. He was behind the plan, launched at the beginning of 1997, to raise the non-oil sectors' contribution to Dubai's GDP from 81.2% in 1996 to 100% by 2015. He is the chairman of the Dubai Economic Development Department, with its CEO being economist Mohammed Ali Alabbar. Shaikh Mohammed is also behind many annual events held in Dubai and attracting a huge number of people, such as the international air shows, conferences and exhibitions, the famous Dubai Shopping Festival, etc. Extensive facilities for such events and a plethora of five-star hotels - the amazing Burj Al Arab which is the world's most luxurious hotel with the world's most expensive suites, is one example - have attracted high profile meetings to Dubai. The annual IMF/World Bank meetings will be held in Dubai in 2003. He has consolidated Dubai's position as a leading sports centre with the coming of Formula One motor racing to the emirate.

On Jan. 27, 2000, Mohammed issued an order granting all GCC nationals "the same rights and responsibilities to practice trade in the emirate as those enjoyed by UAE citizens". Previously no non-UAE national could hold a general trade licence; and GCC nationals were limited to owning one commercial and one residential property. The edict implied regulations covering company ownership could be changed. Until then non-UAE nationals could not own more than 49% in limited liability companies.

Mohammed can be tough, too, and can reach anyone in Dubai. On Feb. 20, 2000 he dismissed the entire management of Dubai courts as, after a surprise visit, he found offices empty and managers absent. The director of the criminal laboratory at Dubai police HQ was also sacked. After his tour, he issued a warning to staff at all government departments, ordering them to abide by official working hours and improve performance. He issued a final warning to the assistant undersecretary at the defence ministry for being absent from his office before 9.30 am.

Having made the world's free trade Internet City a reality a year later, Mohammed said on Oct. 29, 1999: "My vision is very simple. In the future, all commercial action will be in cyberspace. But the cyber world will need a ground base on this physical world...and I want Dubai to be the best physical location in the world for any and every virtual company". Among incentives there are 100% foreign ownership and 50-year renewable land leases at low prices, together with blanket exemption on taxes. This zone will house an internet university and a research and development centre.

He would not stop there, as Shaikh Mohammed now rules Dubai through the world's first e-government. This is optimising the day-to-day operations of government departments and giving the residents easy access to public services. Since late 2001, all departments have implemented the initiative which hinges on synergy between government and the private sector. Residents can apply for driving licences, IDs, work permits and trade licences through the internet. Likewise they can file complaints, use credit card numbers to pay their dues, and so forth.

Shaikh Mohammed has a unique passion for horse racing. He and his brothers have some of the fastest thoroughbreds in the world. They have controlled British horse-racing for more than 16 years. Their lucrative racing interests extend to Australia and the brothers are described as the world's most dominant thoroughbred owners. The Al Quoz racing stables are located near Jebel Ali in a cluster of inconspicuous buildings with whitewash walls and mud-red tiled roofs. The stables not only house some of the finest thoroughbreds in the world, but they are also the headquarters of Godolphin - the Mohammed-inspired racing operation.

After having started up horse-racing in Dubai, Mohammed has moved the horses which did not measure up in England to the Dubai stables since 1993. This has affected horse-racing in Australia. In 1998 he criticised the stud conditions in Britain and hinted he would move the family business out of the UK. This caused a major sensation in Britain, where a big part of the business depends on the Godolphin operations.

In early 2002 London's five-star Hyatt Carlton Tower, part of Mohammed's business empire, came under the management of his Jumeirah Int'l chain of hotels - as the US group Hyatt's 20-year contract to run the 220-room hotel expiring at end-2001 was not renewed. It became the first Jumeirah hotel outside the UAE, where he has built a portfolio of five luxury hotels, a water park and a hospital academy. With his chain including Burj Al Arab, the world's tallest hotel in the shape of a sail, Jumeirah Int'l is to own and manage a big number of luxury hotels on both sides of Suez.

The Mohammed Bin Rashid Techonology Park, one of his projects announced on May 21, 2002 by Dubai's Ports, Customs and Free Zone Corp, is to be built on a 3-sq-km site adjacent to Jebel Ali Free Zone (JAFZ). The park is to provide international companies with R&D presence in the region - starting with technologies in water desalination, treatment, energy, oil and gas exploration and insulation. The park's CEO, Shihab Ghanem, is one of Shaikh Mohammed's aides. The park's soft opening is schedule for late 2003. Companies wishing to set up there will build their own facilities under 50-year leases, and the park will provide the basic infrastructure.

In March 2002 he made one of this sons, Shaikh Maktoum Bin Mohammed, head of the board of directors of another free zone called Dubai Technology, e-Commerce and Media City. Under him are Abdel Hamid Juma'a, a new CEO of Dubai Media City; and Omar Bin Sulaiman, a new CEO of the Dubai Internet City. The latter are members of the board, along with Vice Chairman Hashim Al Dabal, Ahmad Bin Byat and Saeed Al Muntafiq. Bin Byat in March 2002 became the free zone's director general, replacing Mohammed Al Gergawi - close to Shaikh Mohammed who has since returned to the executive office of the crown prince. The head of the e-government initiative,, is Shaikha Lubna Al Qassimi who is a niece of Sharjah's ruler.

Two sons of Shaikh Mohammed, Rashid and Hamdan, has just attended the UK royal military academy at Sandhurst for one year.

Shaikh Maktoum Bin Rashid Al Maktoum: Ruler of Dubai and UAE Vice President, Maktoum is the UAE's prime minister. He inherited these positions from his father Shaikh Rashid, who died in November 1990. He formed a cabinet on Nov. 20, 1990. Before that, when he was UAE deputy prime minister, he was somewhat disengaged from the affairs of the federal state, devoting more time to his role as crown prince of Dubai. That was because his father had been in a coma for years. (See the family's history in Gas Market Trends).

Maktoum and his brothers are a close knit group and all were educated in prestigious institutions in Britain, with Maktoum, Hamdan and Mohammed having graduated from Cambridge. Maktoum's 20-year old son died in a car crash in February 2002 as he was racing in Dubai.

Maktoum had been tipped for the UAE premiership since 1981, when Shaikh Rashid became seriously ill and made him crown prince of Dubai. His style has not changed much, but he has been able to efficiently project an element of continuity into the functioning of Dubai's government and that of the UAE as a whole. On March 25, 1997, he reshuffled the UAE cabinet for the first time since 1990 after lengthy negotiations with UAE President Shaikh Zayed Bin Sultan Al Nahyan and the union's other rulers.

The UAE cabinet is described in the constitution as "the executive authority" for the union. The prime minister is chosen by the UAE president in consultation with the other Supreme Council members. The prime minister selects the ministers after consulting with the president, and these are drawn from the seven emirates according to a quota system worked out in the early 1970s. The more populous emirates have a larger quota of ministers than the smaller entities. Usually, each ruler presents the premier-designate with a list of ministers to fill his quota.

Among Abu Dhabians filling Shaikh Zayed's quota, Sultan Bin Zayed Al Nahyan, the second eldest son of the UAE president, was retained as deputy premier; Obaid Al Nassiri was given the oil portfolio; Abdullah Bin Zayed, 29, of the UAE president's brilliant sons, got the information post from Khalfan Al Roumi; Hamdan Bin Zayed, another of the UAE president's brilliant sons, was retained as state minister for foreign affairs; UAE attorney general Mohammed Al Dhahiri, who was made minister of justice, Islamic affairs and endowments, replaced justice minister Abdullah Bin Omran Taryam and Islamic affairs and endowments minister Mohammed Al Khazraji (with the two ministries merged); the interior minister, Gen. Mohammed Said Al Badi, was kept in his post; also kept in his post was higher education minister Nahyan Bin Mubarak Al Nahyan.
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Publication:APS Review Oil Market Trends
Date:Jun 24, 2002
Previous Article:UAE - Part 3A - Dubai's Decision Makers.
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