Comparing Dubai a success story and Belize a failure. July 12, 1998

REPORT #17 July 12 1998
Comparing Dubai a success story and Belize a failure

Produced by the Belize Development Trust

Just for speculative purposes let us compare the recent developments of two countries. Belize and Dubai.

Dubai was a hard scrabble protectorate of Britain on the Arabian Gulf. No resources and run by a monarchy. They call them Sultan, Shiek, or Emir in that part of the world. The current population of Dubai is about 600,000 compared to the 220,000 of Belize.

Dubai was basically a fishing town, on a creek, where boats were built. Sounds just like Belize. The climate is similar too. Pearl diving was an industry, until cultured pearls from Japan killed the market. They only have desert in the hinterland, so they had no resources like Belize for agriculture, or forestry exploitation. In many ways Dubai was worse off than Belize for resources. Yet Dubai always did better than Belize.

How did they do it? They had a couple of factors that are lacking in Belize. One was a continuous continuity of government policy and encouragement. This through their clan structure and hereditary ruler and family. They had a small population like Belize with everyone related in some way or other to other citizens. In order to achieve this in Belize, which is a polyglot population and has a much larger land area and scattered population, we would have to provide continuity of government policy, by a Federated system of District Governments, which would control a small national government and the policy and spending. This would give Belize a longer term continuity in government and development policy. The parliamentary system we use, gets some new crackpot amateur, with ideas elected to office every five years which they have to try. This making continuous development impossible and long term investment because of the divide and conquer nature of competitive political party politics, impossible because of the cycles of political change.

The first thing Belize needs then, that Dubai has, is continuity of long term development policy, a curb on the size of government, operating from a smaller system of government. I would not in Belize recommend the monarchy system used in Dubai, it would not fit; but a Federated District Government model, like that of Switzerland, using Cooperative rules like our fishing cooperatives would work very well to give government policy continuity.

The second thing is a change in the tenor and approach to commercial re-exporting attitudes. Dubai always stood on it's own feet, with self sufficiency, even though it has had a larger population than Belize and less physical resources. The difference was in how those human resources developed and were used. For the most part, Dubai people are entrepreneurs. Let us examine, how their merchants operate.

For decades, even centuries, the Dubai coastal community have operated in syndicates. Merchant syndicates. They re-export. Perhaps gold across the 2000 miles of Indian Ocean to India, or American cigarettes to Iran. It is the syndicated aspect of Dubai entrepreneurs that is different to the similar operations in Belize.

Belize has always re-exported, from long before it became a colony, or gained independence. The difference was, that merchants in Belize operated for the most part alone. There are a lot of risky investment ventures in the world and the Dubai merchants met this, much like the Englishmen at Bristol, by grouping citizen merchants into syndicates. To reduce risk. I recommend you read the book "Dubai" by Robin Moore. It is 28 years old, but indicative and instructive as to a state of mind, of both the government of Dubai and it's citizens. Entrepreneurs all. Though a novel, much of the dreams expressed in this book have now become a reality in Dubai today. The novel expressed the desire to have an ocean harbor, or port for ocean going ships, office buildings, fresh water, electricity and other things. All this has now been done in the last 25 years. Due to a small oil field find, which is due to expire fairly soon and dry up. This gave a cash flow, which in Dubai they invested in infra-structure to enable them to continue the economic re-export trade they know best from tradition, experience and history.

The point of this, the small oil revenue aside, is that Dubai was self sufficient before the oil find and will be self sufficient after the oil dries up shortly. Because of their human resources, experience, skills and attitudes to economics and business. All the things that Dubai aspired to acquire; the port, the jet airstrip, the electricity, the water, all these things, Belize is already blessed with in abundance. While Belize does not have cash flow from a small oil find, Belize has the cash flow from agriculture exports and forestry. Things that are not available to Dubai citizens as they live on the edge of a vast desert. Their only assets in Dubai were human resources, and the Creek. A place on the coast of the Indian Ocean, in which Dhows could enter, and load and unload cargo. This has now been enlarged artificially and modernized. The Creek was the most important asset Dubai had, other than the attitudes and spirit of it's people. Belize has many port areas with potential and it's own merchant creek right through the main port town.

Belize merchants have re-exported whisky to Mexico and American cigarettes to Guatemala. The difference has always been, that merchants were greedy and preferred to do things alone. When you do things alone, you cannot take much in the way of risk, nor realize the profits that come from risky ventures. Gold re-exporting out of Dubai can return 200 % profit on a shipment. Then again, sometimes the dhows were hijacked and the load dumped, stolen, or lost. So the syndication of merchants and investors allowed large shipments and economic re-export trade to develop but with smaller risk by individuals. It is the forming of syndicates and the reduction of risk that makes Dubai merchants superior to those of Belize. Or the merchants of olden trading sailing ship days out of Bristol, England.

Belize merchants are for the most part limited with minor amounts of capital. They cannot grow, because they do not have the capital to risk. They never developed syndicates to share risk and larger investments of a speculative nature. The other aspect of Belize merchants is cowardice. They did for the most part, insist that Mexicans and Guatemalans come to Belize and buy their merchandize and do their own re-exporting. This means any markup, or profit was minimal. Safe, but minimal!

Here lies the fundamental economic difference between the successful self sufficiency of Dubai and that of the failure of Belize to realize it's possibilities and potential. It is all in attitude and experience. Human resources again.

St. Martin in the Eastern Caribbean carries on a thriving re-export trade from the Dutch side.

For those with some sort of false moral influence, everything one does in Dubai, St. Martin, or would be done in Belize for re-exporting is legal. At least to the point it arrives at it's new destination. Dubai, USA and Switzerland have shown that economics, and real money are the only true harbingers of a high standard of living, national cash reserves and general wealth. All other political arguments to one side.

Syndication of investment in Belize is needed. Small investments that would accept risk of loss, but put together make sufficient potential for a good profit. Then a product and destination crying out at high prices for the product you wish to re-export.

I am out of touch with such things now in Belize, but did for some decades dabble in warehouse overrun of manufactured clothes from Honduras, through Belize, to Mexico and house building lumber from Honduras, which the former was a solitary investor and the latter was a syndicate.

I have tried to rack my brains to think of what things could be re-exported by forming investment syndicates in Belize today. But I lack the intimate knowledge of such things from the mainland port to guess. My experience was always that Belizean merchants were wary and timid. Though the Arab/Belizeans and Indian/Belizeans were more open to such ideas.

The only thing I can think of that would work like a high risk, high profit venture, speculative investment would be in the field of finance. For the sake of argument, I would offer to sponsor a syndicate for speculative option investing, which is my current trade and occupation. It is the only thing I am familiar with today. Let us say for example, twelve Belizeans could be found to put in $1000 USA each for a $12,000 minimum option speculative high risk investment. The returns could be 200 % per year but since I would operate it, I would want half. That makes a potential return of 100 % per year. The return may be less and indeed there is risk of loss and I expect that the loss could be as much as 30 % of the investment. I have a cut off value at 20 % loss in my own speculative accounts, but this is not always controllable and the investment can go down to 35 % before you can recover sometimes. The upper limit in my style of option speculative investment is around $50,000 USA. For larger sums of money, one has to go to the S&P 500 futures contract. In this, it is not unusual to see draw downs ( losses ) reach 50%, but again the high risk potential profit rewards are triple digits for a year. Minimum total investment here is around a $100,000 and an upper limit of around $500,000 USA for trading account size.

I would doubt very much if any Belizean would risk any money, be it $1000 minimum, or larger sums as part of a high risk speculative investment syndicate to build a big enough account size for speculative financial investment. Yet this example is equivalent to what they do in Dubai every year and sometimes several times of year among the merchants there.

You can see the difference between attitudes and human resource development and why one country like Dubai with smaller physical resources than Belize and a larger population is self sufficient and why the nation of Belize is heavily in debt to the tune of a half billion dollars.

The two major differences are the continuity of government planning and re-export attitudes. The second part is the lack of high risk venture speculators in Belize with small amounts, that would form speculative syndicates to take potentially higher rewarding risk.

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