First it was Dubai, with its glittering path-breaking facade, and now it is the capital of the United Arab Emirates (UAE), Abu Dhabi. At 38, as the federation of seven emirates preened itself to celebrate the National Day, Dubai sprang a bombshell by seeking a six-month freeze on billions of dollars of debts plunging regional and world markets, the capital with the world’s biggest sovereign wealth fund was going about its business to become the new magnet for the region.
It was ironical that days before Dubai shocked the markets, Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and the federation’s Prime Minister, met the international press, including myself, to show the stiff upper lip. Sheikh Mohammed is a hands-on ruler in managing Dubai’s ascent to the region’s trading hub and the aggressive, if extravagant, development of hotels, malls, marvels of tourist attractions and the world’s highest building at 800 metres, still under construction, piercing the sky like a missile. Dubai recently opened a spanking new metro.
The world economic crisis was particularly unkind to Dubai because it prospered on tourists and a diversifying economy and borrowed to build brash new attractions, including a ski slope in a mall. When tourist levels and hotel occupancy fell and property prices halved, Dubai was in trouble, to be bailed out by Abu Dhabi to the extent of $10 billion, with two Abu Dhabi banks more recently buying Dubai paper for $5 billion. Dubai can still call upon the remaining $5 billion tranche Abu Dhabi had agreed upon.