Reflecting on the accuracy of the International Press over the past week, I can honestly say that I have not witnessed such an outpouring of concentrated nonsense as that which was produced about Dubai’s Debt…..since Tony Blair stood up in Parliament and told a hushed audience that if Saddam Hussein ate a bad prawn he could easily, and he might well, press a button and then the whole world would disappear!
Let me explain:
1: Dubai is not a country; politically it’s just like Texas.
Dubai is an emirate which is from a political perspective very much like Texas, there is a family that stays in power for generations; in the case of Texas it’s the Bush family, in Dubai it’s the Maktoum family.
Texas is part of the United Emirates of America (UEA) Dubai is part of the United Arab States (UAS) …Err, well something like that, check it out on Wikipedia!
Texas always has a bit of an issue with those Yankee-Communists in the Federal Government in Washington, Dubai ditto, except with Abu Dhabi.
Texans are rebels and proud of it. Dubai likes to be a rebel from time to time, for example it signed on to be part of the UAE in 1971 but it didn’t sign the formal constitution until 1996, it kept an independent army until 1997, it is not a member of OPEC (UAE is), and during the Iran-Iraq War it supported Iran, (the UAE supported Iraq).
Apart from that it’s all just one big happy family and the folks in Dubai just love the folks in Abu Dhabi, just like the folks in Austin Texas love the folks in New York.
The only real difference politically is that Dubai does not make any contribution to the Federal UAE budget and Abu Dhabi finances the whole of the Federal Budget (Defence, Public Education, and Public Healthcare, and also runs the Central Bank).
That’s because Abu Dhabi has oil and Dubai’s oil ran out (just like Texas).
2: As a place to live, Dubai is Just like Texas.
Texas believes that it is the best thing since sliced bread and it never tires of telling people about it, just like Dubai.
Texas is hot and it has a lot of tall buildings covered in glass which they keep icy cold inside regardless of energy costs. The bosses (generally male, overweight and prone to perspiration) sit next to the window (the hottest place), and the peons (often thin multi-sex, and not prone to perspiration) sit far from the window (the coldest place), so they have to wear Arctic clothes to go to work.
No self-respecting Texan would be seen dead in an office without (a) wall to wall glass and (b) wall to wall 100% blinds so that he/she can keep out the light so they can see their computer screen. It’s exactly the same in Dubai.
3: Dubai thinks BIG!
Texas had Enron who invested in fantastic projects “offshore”, and went bust.
Dubai had Nakheel who built projects “offshore” (in a free zone i.e. outside the jurisdiction of the UAE), and also bought a lot of property all over the world on 100% gearing at the top of the market, and appears to be “in financial difficulty”.
Enron was a Limited Liability Public Company with “opaque” accounting systems, Nakeel is a Limited Liability Company with "opaque" accounting systems (no one is sure if it is private or public, although since it does not list anywhere and no one knows who the owners are chances are it’s private).
4: Enron was not a SWF
Nor is Nakheel or Dubai World.
5: Enron’s debt was not “sovereign”
Nor is Nakheel’s nor is Dubai World’s
I hope that’s clear.