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Dubai seems to be ducking responsibility for its financial crisis
Abu Dhabi looks ready to step in with a partial bail-out, but its price will be high.
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DUBAI, UNITED ARAB EMIRATES - If global investors were looking for reassurances from Dubai that it would stand behind its massive, debt-swamped investment conglomerate, they got none Monday. Instead, the Gulf city-state seemed to wash its hands of the woes.
The message from Dubai fueled worries of default by the conglomerate, involved in projects around the world -- from Gulf banks and ports in 50 countries to a six-tower hotel-entertainment complex in Las Vegas.
Investors hope the conglomerate, Dubai World, will either discuss restructuring of $60 billion in debt or that Dubai's oil-rich neighbor, Abu Dhabi, will step in to restore confidence by footing any bills.
Dubai and Abu Dhabi are the most powerful of seven statelets that make up the United Arab Emirates, but sharply different styles have long made them rivals. For any help, Abu Dhabi will likely demand a price, possibly including greater say in Dubai's affairs.
Abu Dhabi, seat of the UAE's federal government, has been more conservative, religiously and financially, relying on oil wealth to fuel growth. Dubai -- with no oil resources -- has been freewheeling, racking up debt as it built skyscrapers, artificial islands and malls complete with ski slopes.
Government-owned Dubai World has been the engine for much of that growth. So it was a bombshell last week when Dubai announced the conglomerate wanted to defer debt payments until at least May.
Dubai officials have largely been silent since then and when Dubai's top financial official made his first comments Monday, it was not reassuring.
Abdulrahman al-Saleh distanced the emirate from Dubai World's debt, saying that while the business was government-owned, it was "established as an independent company."
"Given that the company has various activities and is exposed to various types of risks, the decision, since its establishment, has been that the company is not guaranteed by the government," he said.
Lenders should take some of the responsibility for the problems, he said, arguing they lent money on the basis of project feasibility, not on assurances by Dubai's government.
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