Who is exactly in charge around here ? as you rightly stated the extreme centralisation and desire to comply with local cultural behaviour , i.e fear of offending , lead to indecision on a grand scale . This renders all middle management impotent (in the managerial sense) except for administrative issues and minor changes to daily routine.
I'm not sure that the "head in the sand" mentality garnered by the "shoot the messenger" attitude (how's that for overuse of metaphors - issue that guy a yellow card) is really a result of the local culture. In fact, if you look around the industry (and other industries), you see a lot of the same, destructive behavior. The difference is that most of the companies that mimic this behavior have stockholders that must be placated on a quarterly basis. Emirates is in the unique situation of being able to take a longer view. Why they are so focused on the short term is really a mystery to me.
I suspect that the impotent middle management is partially a function of the way TC and others choose to manage along with a desire to control costs (a laudable goal). I came from an airline that would lose money if you gave it to them in a bag so I can appreciate the desire to keep a lid on things. Unfortunately, you set up the organization to avoid one problem and you create two in its place. Somewhere else on this forum, a former Emirates manager stated that he oversaw 70 to 80 people yet only had budgetary authority up to Dh500. That, in my mind says it all.