Dubai Bust

Dubai’s banking sector could exist only because it was backed by an implicit security guarantee from the United States. Every rich country has skyscrapers, but there is only one that can be counted on to defend the skyscrapers of others.

My National Post column this weekend focuses not on Dubai's default, but on the illusions spawned by Dubai's rise.

Dubai’s banking sector could exist only because it was backed by an implicit security guarantee from the United States. The credibility of that guarantee was spectacularly enhanced by the first Gulf War of 1990-91, and not so coincidentally Dubai took off soon afterward.

As with Dubai, so with so many other emerging economic powers, from South Korea to Chile. Their wealth depends on security provided to them by the United States.

Far from indicating a “post-American world,” the skyscrapers of Dubai are symbols of that American world as much as the monuments of American cities. Arguably even more so: Every rich country has skyscrapers, but there is only one that can be counted on to defend the skyscrapers of others.