United States, Dubai: Understanding the Links

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Commentator Terence Smith visited one of the United Arab Emirates last year. In Dubai, he found a culture so capitalistic and ostentatious that he immediately understands why the U.S. government would be cultivating this rich nation's friendship.

MELISSA BLOCK, host:

Way before the current furor over Dubai Ports World, commentator Terrance Smith visited Dubai. He'd covered the Middle East for years as a journalist, but he wasn't prepared for what he found.

TERRENCE SMITH reporting:

Ski Dubai, the billboard read, as we descended the stairs from the plane into the 80-degree December night air. Ski Dubai, where it snows every day. Inside a 25-story windowless building that rises out of the sprawling Mall of the Emirates, the interior is air-conditioned down to 29 degrees, and fresh, manmade snow covers the short, steep slopes.

Indoor skiing in the desert is just one more eccentric, nature-defying contradiction in gilt-edged, Dubai, which also boasts air-conditioned golf, chilled swimming pools, over-the-top resorts and scores of skyscrapers, including one under construction at 160 stories that is to be the world's tallest. With the price of oil around $60.00 a barrel, hundreds of billions of dollars are flowing into Dubai, which is one of the seven city states that comprise the United Arab Emirates. Russian mafia money has found its way there as well.

A trillion tons of sand has been dredged up from the sea and arranged offshore to create three new housing developments in the shape of palm trees. A shimmering shorefront hotel that resembles a spinnaker filled with a breeze offers rooms for $1,500 a night and up. Nothing that can be built by man is too grand, too costly or too much for Dubai. It's a glittery, fashion-crazy metropolis that the designer Giorgio Armani recently dubbed the new New York.

An American friend who lives there explained how business works, Dubai style. The luxurious seafront apartment he was renting was sold out from under him by the owner, who'd paid $1 million for it a couple of years ago. The Russian buyer arrived for the transaction, inspected the premises quickly and paid on the spot with $2.5 million in cash that he carried in a suitcase.

Beyond ostentatious wealth, Dubai has become a major banking center. It's granted landing and naval visiting rights to the U.S. The Dubai government, which is to say Sheikh Mohammed Bin Rashid Al Maktoum is pro-western and free-market. Dollar-by-dollar, the Emirates are becoming a strategic counterweight to the more radical Arab regimes in the region and to Iran across the Gulf.

Suddenly, Americans are paying attention to the United Arab Emirates. Secretary of State Condoleezza Rice flew to Abu Dhabi today. Americans are trying to decide whether the U.A.E. is friend or foe or something in between. What is clear is that it's becoming a force to be reckoned with and that the U.S. had better decide what kind of relationship we're going to have with this new economic powerhouse.

BLOCK: Commentator Terrence Smith covered the Middle East for the New York Times.

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