Dubai excels at projects that require more money than common sense (the world's largest indoor snow resort, for example) but perhaps the ultimate swaggering demonstration of wealth is the proposal to build a canal across the emirate's mountainous hinterland.

The project to link the Gulf with the Indian Ocean would cost more than $200 billion (£114 billion) but reduce journey distances by only about 100 miles.

The Suez and Panama Canals were built so ships did not have to circumnavigate entire continents. The Dubai to Fujairah channel would merely cut off the tip of Arabia.

The canal would, however, allow ships to avoid the Strait of Hormuz and avoid Iran's influence over that treacherous stretch of water.

More than 90 per cent of the Gulf's oil, which accounts for 40 per cent of the world's traded supplies, must be transported through the Strait every day and Iran has made clear it will block the channel if threatened.

This would obviously be bad for oil consumers but it could turn ugly for Gulf producers so a $200 billion insurance policy might look attractive to states such as Saudi Arabia, Kuwait and Iraq.

As for the staggering sum involved, $200 billion is only what the United States is willing to pay to bail out its sickly mortgage giants, Fannie Mae and Freddie Mac.

Given the need to secure oil supplies from the Gulf, this canal could turn out to be just as economically important as supporting the US mortgage market. Perhaps we should all chip in.

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