Tuesday, December 01, 2009
Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, today criticised international investors' reaction to the Emirate's debt crisis, claiming: "They do not understand anything."
The defiant ruler, whose Government yesterday washed its hands of Dubai World, the state-owned conglomerate that owes $59 billion (�35.8 billion), also said: �We are strong and persistent."
Sheikh Mohammed's comments follow support from Sheikh Khalifa bin Zayed al-Nahayan, President of the United Arab Emirates, who said that Dubai's leader and his Cabinet �face every morning challenges, but plan to remove all obstacles to score achievements�.
Well yes, that's much more reassuring. Thanks, guys!Just a couple of weeks ago Sheikh Mohammed's quirkiness was highlighed by Tyler Cowen. And Andrew Ross Sorkin's well-written story includes this note:
What about the risk? The view was, and apparently still is, that if Dubai gets in trouble, its oil-rich neighbors in Abu Dhabi will bail everyone out to avoid damage to their collective reputation and, by extension, the region�s economy. Just as the United States stood behind its banks, in part, to avoid losing the confidence of foreign investors, Abu Dhabi might have to do the same.Damian Reece at the Telegraph in London echoes a similar story and reminds us of who Dubai's #1 trading partner is: Iran. That connection could use further scrutiny.
That had to be what Citigroup, with its firsthand expertise with bailouts, must have been thinking when it lent $8 billion to Dubai last year. Oh, and here�s an interesting fact: Citigroup made the loan to Dubai on Dec. 14, 2008. Take a look at the calendar � that�s after it received tens of billions in TARP funds. Citigroup�s chairman, Win Bischoff, said at the time, �This is in line with our commitment to the U.A.E. market in general, and reflects our positive outlook on Dubai in particular.� Good call.