I could get very bitter and twisted in this post: if I do, please forgive me. I lived in Dubai for thirteen years before moving to Spain a couple of years ago. We knew, about eight years ago, that Dubai was committing financial suicide. Nary a month went by without some new and totally barmy mega-project being announced. The Emirate had opened itself up a bit so that foreigners could buy property there, but only in Government-approved developments - principally those being built by Nakheel (Government-owned), Emaar (semi-Govt) and Damac (private and quite probably bankrupt by now). Many of our friends bought houses on some of these developments: a few of them made shitloads of money by speculatively buying and selling. I dare say the rest of them are now sitting on a mountain of negative equity, and praying five times a day to the deity of their choice that they will still have a job in the morning.
There's no get-out, you see. The United Arab Emirates (of which Dubai is a constituent Emirate) doesn't have a proper bankruptcy procedure for individuals or companies. If you default on a loan, the only legal recourse for the lender is to have you thrown in jail until such time as you can pay what you owe. You think I'm joking, don't you? I wish I was - you can even be jailed for issuing a cheque that subsequently bounces (and the country is very much cheque-driven: if you rent a flat for a year, you either have to pay the whole year's rent upfront, or give them three or four post-dated cheques). I know many people whose only way out was to run.
The attitude of Dubai (and, let's be fair, the rest of the Arabian/Persian Gulf region) to non-fulfilment of financial obligations opens up the fascinating possibility of Dubai World being jailed in its entirety for planning to delay a massive bond repayment. Or, at least, you might think, its owners / top management / shareholders would be held responsible. These would mostly turn out to be members of Dubai's Ruling family, the Maktoums, with Sheikh Mohammed bin Rashid Al Maktoum at the pinnacle of that posse.
I was intrigued / fascinated / pissed off throughout my years in the Middle East by the attitude of my paymasters towards putting money in my pocket. The direct employers that I worked for usually had a policy of keeping foreign workers a few months behind with their salaries so they wouldn't run away (I don't know if it ever occurred to them that if they treated their employees decently, they wouldn't want to run away). Running my own business, I rarely had problems getting paid by Western or Asian clients, but Arabs could be hard work and Government agencies were fucking impossible. In the end, I declined any approaches from the Government because I just couldn't afford to finance them.
And now, with a breathtaking display of utterly crap timing (close of business the day before a 10-day Government holiday), Dubai World announces it has no chance of paying the next installment of its bond repayments, and suggests its investors should wait six months. Yeah, right. Meanwhile, Abu Dhabi will be picking off Dubai's prized assets for fire-sale prices, and there's still little possibility of Dubai being able to pay for any of the stupid stuff it has left.
Federal Donuts and Abe Fisher
2 hours ago