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Dubai on the Auction Block?

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Here's the premise: an entire region is up for auction. "Mark your calendars for an opportunity of a lifetime," reads the ad copy. "In a bold step towards the future of global real estate, Nayruz invites you to bid for the ultimate luxury: the Middle East."

In her "corporate intervention," entitled The Equity Is in the Circle, recently on display at the Istanbul Biennial, artist Oraib Toukan has designed a project for selling the 16 countries of the Middle East, from wealthy Abu Dhabi to conflict-prone Afghanistan. She created the holding company Nayruz and prepared all the materials for an auction in Dubai in 2012. Then she interviewed a set of experts -- advertising executive, real estate agent, game theorist, diplomat -- on how to execute her audacious scheme. Should the region go up as a whole or in pieces? Should the bidding be open or secret? How to deal with the potential backlash from pesky nationalists?

A few years ago, such an art project would simply be satire. But everything appears to be up for sale these days. The Salahis are trying to get six figures from the media for the story of their recent White House gate-crashing. Calvin Gosz of Sheboygan, Wisconsin just sold his name to a Finnish consumer electronics retailer: He will now be known as Verkkokauppa Com. Several towns have gone up on Ebay's auction block.

So why not a country, or even an entire region? In the past, imperial powers carved up the Middle East, drew boundaries, extracted resources. The United States is vainly trying to build nations in Afghanistan and Iraq. Why not go auction off countries to the highest bidder rather than the superpower with the most fighter bombers? Maybe Warren Buffett can do a better job rebuilding Afghanistan than NATO has so far.

Toukan's speculative project came even closer to reality last week when Dubai World, the enormous investment company, teetered on the verge of default. What's bad for Dubai World is bad for Dubai. The government-run business is responsible for three-quarters of the country's $80 billion debt. And what's bad for Dubai, at least according to global financiers, is bad for the world economy. After all, a number of major banks are invested in Dubai World. And if a wealthy Middle Eastern emirate goes belly up, what does that say about the prospects for pulling the global economy out of recession?

The story of Dubai World parallels the financial problems experienced elsewhere. The corporation built a huge bubble of real estate, port facilities, transportation ventures, and the like. And it was largely financed through debt. Dubai, you see, is almost tapped out of oil, which accounts for only about 5% of the tiny country's GDP.

Dubai's economic vision is perhaps best epitomized by Dubai World's latest project, an $8.5 billion casino in Las Vegas that is opening just in time to take advantage of Sin City's recession-era contraction. It's a grand gesture that is literally and metaphorically built on sand. Meanwhile, back home in Dubai, it's not Sin City but Sim City. "Dubai's constitution is the Guinness Book of World Records as it builds the largest theme park in the world double the size of Disneyland, throwing in the Pyramids of Egypt, an Eiffel Tower that is taller than the original tower, Taj Mahal that is one-and-a-half times bigger, and the Leaning Tower of Pisa that duplicates the defect," writes Canadian architect H. Masud Taj. "Also the biggest mall in the world containing the largest aquarium in the world, the tallest building in the world, the tallest hotel in the world, the largest international airport in the world, the biggest artificial island in the world with the longest artificial beachfront in the world." Dubai has even brought in Brad Pitt as a "design consultant" for a new hotel.

Dubai, then, represents everything that is wrong with the global economy. Dubai World, which sports the slogan "The Sun Never Sets on Dubai World," has leveraged its way to the top. Its expansion has been sustained by an enormous real-estate bubble. Its survival depends on rampant consumerism. Its image revolves around size and celebrity and simulacra. And the whole edifice relies on migrant workers, most of them from South Asia, who are paid poorly, treated terribly, and forbidden to strike.

It's no surprise that the Dubai house of cards is on the verge of collapse. It's also no surprise that the Dubai government is trying to distance itself from the problems of Dubai World: always a good strategy to let others pick up the pieces (like richer Abu Dhabi). The problem is that Dubai is not alone in its profligacy. Other countries -- Latvia, Hungary, Greece -- are also struggling with mountainous debt. Investors are getting antsy. The auction block, as Oraib Toukan predicted, may well be just around the corner.

Maybe Google will step in and buy up its first country.

Cross-posted from Foreign Policy In Focus, where you can read the full post. To subscribe to FPIF's e-zine World Beat, click here.