A picture of 40 skyscrapers lit at night adorns the wall of a nondescript office in the centre of the Sudanese capital, Khartoum. The towers include the headquarters of oil companies investing billions in the country, a luxury five-star hotel and apartment blocks where flats sell for around €400,000. At street level, restaurants and cafés line the banks of the Nile. Beyond them is a forest, a park and Khartoum’s first golf course.

Named Al Sunut, the development would not look out of place in Dubai. It is the brainchild of one of Sudan’s biggest companies, the DAL Group, and the €2bn centrepiece of the new capital.

Al Sunut is not the sort of thing likely to be found in a failed state, yet that is exactly what many experts believe Sudan has become. Outside the capital poverty rages. Millions are displaced, infrastructure is non-existent, and the threat of violence is constant. Sudan is blighted by a conflict that spans a generation. For 21 years, up until January 2005, the country was in a state of civil war. Southerners, mainly Christian and animist, fought the Islamist government based in the north. Some two million people are estimated to have been killed in this time. As the north-south peace process drew to a close, a fresh conflict emerged in Sudan’s western region, Darfur.

A rebel uprising against alleged marginalisation sparked a brutal response from the government, which the UN describes as crimes against humanity‚ and the US labels genocide. An estimated 2.5 million people have been displaced by the violence, while the UN estimates that more than 200,000 have been killed. With UN troops patrolling the south of the country and African Union forces in Darfur, it is estimated that half of Sudan’s 35 million people are living under the protection of foreign troops.

Khartoum, however, operates like a city state, separate from the troubles and abject poverty that blight the rest of the country. The capital is in a bubble, determined to turn itself into Africa’s Dubai. Ignored by the West, a city is being built that promises to defy the restrictions imposed by trade bans and sanctions.

A bustling city of roughly eight million people, sprawled along the banks of the Nile, Khartoum is taking the first tentative steps towards becoming a glistening metropolis that local business leaders and politicians believe will one day rival Doha, Abu Dhabi and Dubai. For now though, this is still a hope rather than a reality. The picture of Al Sunut on the DAL Group headquarters wall is computer-generated. Yet the fact such a project is under way – foundations for the first towers are already in place – indicates how fast this city, which likes to see itself as a bridge between Africa and the Middle East, is changing.

The slogan below the picture reads: “The only way to protect the future is to build it”. There is no doubt that Khartoum is building its future – and at an astonishing rate. Cranes are visible from every rooftop. Shops selling luxury goods open every month. For a city that only installed its first escalator in 2004, the pace of change is breathtaking. Overall GDP has more than doubled in the past five years to €20bn. Per capita GNI has also doubled, from €224 to €462.

Investment is flooding in, but there is little from the West. The US has imposed strict sanctions while European countries have shied away. Dealing with Europe and the US has become impossible, claims Hani El Khidir, managing director of the Al Sunut project. So Sudan has turned east. China, as in so many other parts of Africa, has ploughed billions into the economy – mainly to secure most of Sudan’s growing oil supply. From just 63,000 barrels per day in 1999, Sudan last year produced 397,000 bpd, bringing in around €361m a year – half the government’s annual budget. With additional oil blocks now fully operational, it has exceeded 500,000 bpd this year.

Oil has lubricated the wheels of a stagnant economy and heralded the beginning of an unprecedented period of sustained investment. India and Malaysia have also become major players. The more recent investors, however, are from Sudan’s Arab allies. United Arab Emirates, Kuwait and Qatar are all involved in new commercial developments.

Dressed in matching grey shirt and trousers, Dr Abdul Rahim Hamdi, is one of the most influential men in Khartoum. In the 1970s and 1980s he founded four Sudanese banks, including the country’s first Islamic bank. Three years ago, he set up the Khartoum stock exchange. Dr Hamdi was the man whom President Omar al-Bashir turned to after his 1989 coup, to rescue the economy. “When we came in, Sudan had a socialist command economy. We undertook to liberalise the economy completely and turn it into a market-driven one. That is the basis for the boom we are experiencing.”

While the move to encourage investment from the East is credited for much of the turnaround, it was not something Sudan wanted to do, says Dr Hamdi. “It was a pragmatic decision. The West didn’t want us. We couldn’t go anywhere else. We have completely reoriented our economy to the East. With these sanctions and this political warfare against us we decided to turn east. The West offered us nothing so we ignored them.”

US sanctions have been in place for a decade. Originally introduced because of Sudan’s alleged links with Islamist terrorists – Osama Bin Laden made Khartoum his base in the 1990s – the ongoing crisis in Darfur ensures they will not be lifted soon. President Bush added fresh sanctions in May, naming 30 companies that could no longer use the US banking system. Few western companies invest in Sudan and those that do are under pressure from activist groups to pull out.

The most obvious example of Arab investment, and of Khartoum’s boom, is visible from anywhere in the city. The distinctive oval-shaped tower of the Borj Al-Fateh hotel is designed to look like a ship’s sail drifting in from the Nile. A residential tower, modelled on a lighthouse, will be built alongside it. Together, the nautical-themed buildings are set to become icons of the new Khartoum, with their silhouettes as its symbol.

The Borj Al-Fateh has been funded by the Libyan Arab Foreign Investment Company, an off-shoot of the Libyan government. Costing an estimated €72m, the complex is as much an aid project as an investment. Libya didn’t expect to see much return on its money when it came up with the plan in 1999. At that time, Sudan’s economy was in a parlous state and inward investment was pitifully low.

“They have taken the first steps on the road towards the new Sudan,” says Ghula, Borj Al-Fateh’s general manager, sitting in his less than luxurious on-site Portakabin office. “To reach it is a very long way. They need to settle all the political problems as well as the problem of sanctions. It is clear now that Khartoum is going to be one of the best capitals in the Arab world.” Five-star hotels in Khartoum are thin on the ground. Until this year there was just one, the Hilton, although even that was stretching it. But by the end of the year, the city will boast two new luxury hotels with another set to be opened in 2008.

Once complete, the Borj Al-Fateh will hold 190 rooms and 50 suites across 19 floors. Down the road, not far from Khartoum’s airport, lies the main competition. Like the Borj Al-Fateh, the Al Salam Rotana is an Arab investment. From the outside it looks more like a Travelodge – the sort of hotel found beside a British motorway – than a five-star luxury hotel. On the inside though, it’s a different story. The suites are stylishly decked out in expensive shades of brown, with two large plasma screens.

“This city needs a deluxe product,” says Nader Reda, a 32-year-old Egyptian brought in from the company’s office in Cairo to run the sales team. “Soon we will have competition, but I am happy. It will be our motivation.”

Despite having been open for two months, parts of the Al Salam still feel incomplete. Reda grimaces when he talks about the blank walls and the half-filled gym. “We’ve had 50 containers stuck in Port Sudan for two months. Paintings, antiques, pool furniture, gym equipment. It’s all stuck there.” When will it arrive? “Who knows? This is Sudan.”

Mind-boggling bureaucracy and colonial-era infrastructure certainly impede the city’s development. But for the growing middle class, western-style consumerism is being adopted. The number of houses edging to the €1m mark, complete with large, manicured gardens and swimming pools, is growing by the month. New housing complexes offer on-site health centres and shops. No sooner have the foundations been put in than the plots are sold.

“It is not about what we need anymore,” says Tariq Khairi, the man responsible for the electronic giant LG’s largest showroom in the Middle East and Africa. “It’s about what we want. The whole culture is changing. Sudan, in the past, was very conservative.”

There are few places in Khartoum, however, where Sudanese are able to enjoy life in the way people do in the Gulf’s major cities. “[Nightlife] is a problem,” says 28-year-old Dalia Sayed Abugabal, a lifelong resident who works at the Mercedes showroom. “We gather in people’s houses, sometimes go to Ozone.”

Ozone is an outdoor coffee shop packed every night with young Sudanese with western tastes meeting friends and flirting with strangers. It has gained such a reputation that it now has to close on Thursday nights – the start of the weekend here – because of the allegedly lewd behaviour of some of its patrons.

Khartoum’s planners accept the city needs to offer more in the way of entertainment. It takes little advantage of its most famous commodity, the Nile. While Cairo boasts riverside cafés and restaurants, the banks of the Nile in Khartoum are lined with government ministries.

Slowly, they are being shifted out. “We must develop the land by the Nile,” says Dr Mohamed Ali Abdul Halim, senior consultant to the Khartoum state planning ministry. A smartly dressed middle-aged man with a perfectly groomed moustache, he has just agreed to three major developments in the area by investment companies coming from Qatar, United Arab Emirates and Kuwait. “Why are the Gulf people coming?” he asks. “They are coming because the return of investment is much higher now. Boom time is coming.”

Most agree it would come quicker if the West would invest too but there is little chance of that until peace has been brought to Darfur, just two hours’ flight away. “The government should understand that their political decisions have a massive effect on the economy,” says Al Sunut’s El Khidir. “There is a positive side to Sudan but we will only prosper if they sort out the negative side.”

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