For years, Dubai seemed unstoppable, an oasis of excess boasting indoor ski slopes and manmade islands, the world's tallest tower and dreams that reached even higher.
Now the bills are coming due, and the emirate's debt problems are tarnishing a place built on borrowed time and money — and threatening to spill into other Gulf Arab nations.
State-owned conglomerate Dubai World's call for a delay in repaying some of the $60 billion it owes creditors will likely make international investors view even more fiscally conservative countries through a lens of uncertainty, analysts say.
The announcement is "impacting everybody in the region — the good and the bad," said John Sfakianakis, chief economist at Saudi-based Banque Saudi Fransi-Credit Agricole Group.
"Right now we're still seeing the impact of this, and the impact will be that everybody is being negatively perceived," Sfakianakis said.
In Dubai and in other Gulf nations, rulers keep tight control over information on their fiscal standing and dealmaking even as they draw in hundreds of billions of investment dollars.
For example, in Saudi Arabia, the Arab world's largest economy, few were aware of the $22 billion debt crunch confronting two of the kingdom's largest privately held conglomerates earlier this year. The news filtered out as the companies fought each other in court, with one accusing the other of fraud.
While international investors were once willing to gamble on Gulf countries, largely because of their oil wealth, the global financial meltdown made them less willing to take risks. The Dubai crisis will only heighten those concerns, analysts say. .....................>>>>...............>>>>.................http://www.foxnews.com/story/0,2933,577428,00.html?test=latestnews
Abu Dhabi bails out Dubai with $10B DUBAI, United Arab Emirates — Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring while sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown’s star companies. The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts. Investors cheered Monday’s news. Dubai’s main index shot up 10.4 percent at the close and markets elsewhere rose modestly. Prior to the crisis, most investors had assumed the Dubai government itself, possibly with Abu Dhabi’s help, would guarantee debts amassed by its chief growth engine. Dubai authorities are scrambling to reshape the business hub’s battered image, vowing that the citystate is committed to “transparency, good governance and market principles.” Officials outlined a new legal framework that promised to increase openness and protect creditors in future dealings with the conglomerate, offering lenders succor in a country where formal bankruptcy proceedings are largely untested.
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