Dubai has found something new to polish its rusty chain of ambitions with: Islamic finance.
How will the two mix? Islamic finance is about ethical use of money -- for example, investment in gambling, arms trade and alcohol business is prohibited.
Does this Arab emirate represent similar ethical values?
Can Dubai or the United Arab Emirates create high regulatory standards to ensure that Islamic banks and financial institutions operate in a proper environment?
In a country where the line between private and public affairs of officials is difficult to make out, only an inveterate optimist can trust its ambitious plans.
If Dubai wants to be taken seriously in the Islamic financial sector, it must avoid the temptation of doing business the way it runs its real estate sector.
The out of control property sector when it went bust about four years ago destroyed the lives of countless home buyers, and the UAE banking system was able to avoid a major crisis only after the central bank provided huge bailout cash.
We know what a shady business Dubai’s property was, with unscrupulous companies cheating people by promising them non-existent assets.
Let us hope that Islamic banks and financial institutions, whose business practices won them so much respect during the Wall Street-produced global financial crisis, will never be part of speculative UAE property schemes.
Islamic finance is about community, service, promotion of honest industry and healthy commerce. No one should abuse the system for exploitation and speculation.
Dubai is used by many Wall Street and London players for their regional operations and they are notorious for breaking laws and manipulating systems to make money.
Regulators must create systems that will ensure the highest degree of compliance with a degree of openness that will not hinder good people from exposing corruption and malpractices.
In a place where the prevailing motto is money and more money, such standards will be hard to achieve.
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