An Unlikely Criminal Crossroads

From Egypt to Afghanistan, when terrorists and gangsters need a place to meet, to relax, maybe to invest, they head to Dubai, a bustling city-state on the Persian Gulf. The Middle East's unquestioned financial capital, Dubai is the showcase of the United Arab Emirates, an oil-rich federation of sheikdoms. Forty years ago, Dubai was a backwater; today, it hosts dozens of banks and one of the world's busiest ports; its free-trade zones are crammed with thousands of companies. Construction is everywhere--skyscrapers, malls, hotels, and, soon, the world's tallest building.

But Dubai also serves as the region's criminal crossroads, a hub for smuggling, money laundering, and underground banking. There are Russian and Indian mobsters, Iranian arms traffickers, and Arab jihadists. Funds for the 9/11 hijackers and African embassy bombers were transferred through the city. It was the heart of Pakistani scientist A. Q. Khan's black market in nuclear technology and other proliferation cases. Half of all applications to buy U.S. military equipment from Dubai are from bogus front companies, officials say. "Iran," adds one U.S. official, "is building a bomb through Dubai." Last year, U.S. Immigration and Customs Enforcement agents thwarted the shipment of 3,000 U.S. military night-vision goggles by an Iranian pair based in Dubai. Moving goods undetected is not hard. Dhows--rickety wooden boats that have plowed the Arabian Sea for centuries--move along the city center, uninspected, down the aptly named Smuggler's Creek.