JONATHAN MANN, CNN CORRESPONDENT: Building dreams in Dubai. A tiny synthetic city-state has transformed itself and is now literally changing the landscape around it, making its own new world out of oil money and ambition.

Hello and welcome...Joining us now to talk about it is the author of that "National Geographic" piece, former Reuters correspondent based in Dubai, Afshin Molavi, now of the New America Foundation...Let me ask you first of all, Dubai does not have all that much oil compared to its neighbors. So where's all the money coming from?

AFSHIN MOLAVI, NEW AMERICA FOUNDATION: Well, you know, in many ways, I mean, you're absolutely right, Jonathan. Dubai is, in fact, running out of oil. Around 6 percent of its GDP comes from oil.

But they occupy a very important strategic geography. They are right near the very oil-rich countries of the Arabian peninsula, Saudi Arabia, Qatar, Kuwait. They are very close to India and India's rise is in many ways nourishing Dubai as well. And very close to the Iranian plateau, where there is a great deal of historical wealth in many ways.

So Dubai has benefited from being the place -- the place to invest. If you are a Saudi investor, and after 9/11 you didn't want to deal with the strictures that the United States government was putting on you as an investor, if you're a Kuwait investor, if you're an Iranian, you go to -- suddenly, there's a place in your own region, as you've described, a Manhattan of the Middle East, where you can put your money.

So they've very much benefited from the oil price rise. The GCC countries alone, which are Saudi Arabia, Oman, Bahrain, Kuwait, Qatar and the United Arab Emirate, combined, they are about the 15th largest economy in the world. So there is a lot of wealth in the area, and when they're looking for good investment opportunities, Dubai is the best bet.

MANN: Now, in Dubai, why all the mega projects? Everything you've said so far makes it sound like a very reasonable place to put your money, but it's outsized. I don't know, it's not irrational, but it's certainly got some wild ideas about construction. Why are they building all that stuff?

MOLAVI: You know, this is a debate that's gone back to, you know, the very beginnings of Dubai and the rise of modern Dubai.

When Sheikh Rashid bin Saeed Al Maktoum, who is the father of the current rule of Dubai, Sheikh Mohammed, decided to widen Dubai's creed in the late 1950s, it was a massive construction project, and everybody said, well, why is he doing this? You know, what ships are really going to come to Dubai and trade in Dubai? Businessmen are not going to come and set up shop in Dubai.

But they have a pretty simple philosophy. It's build it and they will come. And thus far, in the expansion of the creek, in the creation of this massive Jebel Ali Port in 1975, and in the creation of these massive hotels and resorts, they seem to have -- this idea of build it and they will come seems to have worked.

Last year alone, Dubai attracted more tourists than India. I mean, think about that for a moment. A country -- a city-state of 1 million to 1.5 million people attracted more tourists than a country of a billion people. So in some respects, this model has worked for them.

MANN: It has worked in a very bizarre and lucky way, in a sense, because when people talk about Dubai, they talk about its success, they talk about its economy. They don't talk about its politics. There doesn't seem to be any politics, which is strange when you think about it, with so much wealth to be divided up, there doesn't seem to be much competition or disagreement about how it's being divided. Where is the politics that Dubai should be having?

MOLAVI: Yeah, no, that's an important point. And in many ways, Dubai politics today is very much like Dubai politics of 100 years ago, where you have the Al Maktoum ruling family and who engage in politics by engaging in what are called majlises, these gatherings of Dubai notables, in which they discuss the relevant issues of the day. Now, those Dubai notables do not have necessarily any power, but the Al Maktoums do listen to them.

Now, Dubai also is in an odd position because it has about 10 percent of its population as UAE nationals, so you've got about 85 to 90 percent of the population who don't even hold passports of the country that they're living in. So it's massively dominated by expatriates. So it would be a very unique experiment in democracy if they were to move towards that goal...

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