Dubai Bound

The giant Halliburton company made the surprising announcement last week that it is moving its corporate headquarters from Houston to Dubai. The idea is to be closer to key customers and operations, most of which are in the Middle East.

Halliburton, you may recall, was headed by Dick Cheney before he got a more interesting job a few years ago. The company is heavily involved in providing logistical support for U.S. military forces in the Middle East, and some of its government contracts have been on very favorable terms.

Dubai is a city-state, part of the United Arab Emirates, which became well known in the U.S. last year when a company called Dubai Ports World sought to buy control of some U.S. port facilities. The plan was abandoned after a huge political controversy erupted.

I can see that, from a business point of view, the move to Dubai by Halliburton makes sense. Politically it doesn't look good at all, though. The result was opinion pieces like this one:

So I say if Halliburton chooses to go, it should go away with good riddance. But at the same time, its government contracts should be reallocated to other companies and it should be delisted from the New York Stock Exchange. After all, Halliburton says it wants to list on a foreign exchange anyway, likely in the Middle East. The company clearly is looking to give up its American citizenship. It should then have to suffer the consequences of that decision too. MORE

In a globalized economy the concept of businesses having any one nationality is a little hard to pin down. Energy companies are the best example because the large ones operate in numerous countries. We are so used to this that we forget we are buying gas from Royal Dutch Shell and that BP stands for British Petroleum.

In any case, the tiny city-state of Dubai clearly has its sites on becoming a global financial center, much like Hong Kong or Singapore. Most of the 1.2 million residents are foreigners, making the city a multicultural melting pot. A massive construction boom is turning it into a gleaming city comparable to the best Europe or North America have to offer. The Wall Street Journal had an interesting perspective on the Halliburton move and Dubai:

But what makes this place more than a just a curious shopping haven is the fact that it provides an alternate model to the current ethnic and religious strife rending the region a few hundred miles to its north. In Dubai, no one cares what you believe or to which God you pray. The only criterion for success and social acceptance is the almighty dollar. It is hyper-capitalism both in attitude and practice, complete with banking laws so noninvasive that they make Switzerland look unattractive.

Christian-Palestinian businessmen do deals with Indian Muslims, who team up to build condos that are then sold to Malaysian millionaires or Kuwaiti sheikhs. Global investment banks facilitate contracts between the royal Maktoum family and the very American Boston Properties (led by Mortimer Zuckerman) to buy and sell prime real estate in Manhattan. And not only does Donald Trump get his name into the action, but the government of Dubai is also a major holder of Kerzner International, one of the world's premier gambling and resort companies that happens to be majority-controlled by a South African Jewish family.

That said, however, Dubai is very much an Arab city-state. It prides itself on becoming -- along with neighboring Abu Dhabi -- a Muslim model for tolerance, affluence and global success. That it manages to do so should belie prejudices in the West that the Arab world is incapable of participating in the global system until it unburdens itself of the doctrinal rigidity of some forms of Islam. MORE (subscription required)

One of the benefits of capitalism is that the pursuit of profits can help people overlook their other differences and learn to work together. The relationship between the West and the Muslim world could use a little more such cooperation. I doubt Halliburton has such altruistic motives in moving to Dubai, but on balance it is a positive thing.

In a related story, Texas A&M and some other colleges are opening a branch campus in Qatar, another tiny state in the Persian Gulf. As with Halliburton, this seems a little odd at first but is probably a good move for everyone.