The latest bailout of Dubai by its big brother Abu Dhabi was seen as a surprise in some quarters. Abu Dhabi had, after all, sat on the sidelines while Dubai World teetered on the brink. It had only stepped in when a $4.1bn Islamic bond held by the state-owned company's property developer Nakheel came due.
But having already pumped in billions, and with contractors going unpaid while stockmarkets around the world caught colds from Dubai's latest brush with financial flu, the only surprise was that Abu Dhabi waited as long as it did. Dubai World is, well, just too big to fail, something at least one of its major lenders (Royal Bank of Scotland) knows a thing or two about.
What next is the question that should really be occupying minds right now. Abu Dhabi's oil-fuelled bailout no doubt comes with more than a few strings attached. What those strings are we may never know, which rather gets to the point. A major issue with the way this crisis has played out has been the lack of transparency shown by the authorities in Dubai. Just last week the emirate's finance chief was busily railing against the media for spreading "blind panic".
No one doubts that the emirate has endured some truly horrible headlines in the past few months, and that hasn't made it any easier to sort out the mess. But it wasn't the world's financial scribes that were responsible for the black hole in Dubai World's balance sheet.
Thanks to its oil-rich neighbour, Dubai will not be allowed to collapse into the shifting sands, at least for now. But to regain some of its lost prestige, it needs to learn lessons. At the moment, it doesn't even look as if Dubai is in the right classroom.Reuse content