Dubai's debt shakes world markets
Thursday 26 November 2009
Debt-swamped Dubai today asked for a six-month reprieve on paying its bills, causing a drop on world markets.
The fallout came swiftly after yesterday's statement that Dubai's main development engine, Dubai World, would ask creditors for a "standstill" on paying back its 60 billion dollar debt until at least May.
The company's property arm, Nakheel - whose projects include the palm-shaped island in the Gulf - shoulders the bulk of money due to banks, investment houses and outside development contractors.
In total, the state-backed networks nicknamed Dubai Inc. are 80 billion dollars in the red and the emirate needed a bailout earlier this year from its oil-rich neighbour Abu Dhabi, the capital of the United Arab Emirates.
Markets took the news badly - with the Dubai woes and the continued fall of the US dollar giving investors twin worries.
Dubai became the Gulf's biggest credit crunch victim a year ago. But its ruler, Sheik Mohammed bin Rashid Al-Maktoum, had continually dismissed concerns over the city-state's liquidity and claims it overreached during the good times.
When asked about the debt, he confidently assured reporters in a rare meeting two months ago that "we are all right" and "we are not worried," leaving details of a recovery plan - if such a plan exists - to everyone's guess.
Then, earlier this month, he told Dubai's critics to "shut up."
After months of denial that the economic downturn even touched it, the Dubai government earlier this year showed signs of trying to deal with the financial fallout that has halted dozens of projects and prompted an exodus of expatriate workers.
Last week, Sheik Mohammed demoted several prominent members of Dubai's corporate elite and replaced them with members of the ruling family, including his two sons, one of whom is his designated heir.
Businessmen who fell out of favour were closely associated with Dubai's phenomenal success. They include the head of Dubai World, Sultan Ahmed bin Sulayem, and Mohammed Alabbar, the chief of Emaar Properties, developer of the Burj Dubai and hundreds of other projects.
Brits who migrate to Costa del Sol more unhappy than those who stay at home
LAPD releases haunting crime scene photos from its archives
A History of the First World War in 100 moments: The mutiny that sent a ripple of fear through the Empire
Peaches Geldof funeral: Bob Geldof leads tributes at emotional service in same church she married husband Thomas Cohen and mother Paula Yates was buried
Malaysia Airlines flight MH370: Concerns grow among search officials that missing jet ‘may have landed somewhere else’
- 1 William Shakespeare's 450th birthday: 50 everyday phrases that came from the Bard
- 2 David Cameron's constituency office calls police on food bank campaigners Bishop of Oxford and Reverend Keith Hebden
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 Women take on Bear Grylls over 'sexist' male-only desert island show
- 5 Malaysia Airlines flight MH370: Concerns grow among search officials that missing jet ‘may have landed somewhere else’
Very Competitive: Austen Lloyd: Clinical Negligence - Oxford An opportunity f...
£55000 - £62000 per annum + outstanding benefits and bonus: Pro-Recruitment Gr...
£120 per day: Randstad Education Luton: Reception teacher required for an Outs...
£35000 - £45000 per annum + excellent company benefits : Pro-Recruitment Group...