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There's no fear in Dubai

A.B.A. ▼ | January 24, 2010
The new about Dubai's debt shocked the world and there are two reasons for that: Dubai was the symbol of a great wealth, and it was forgotten that global crisis is just that: global.
Dubai
DubaiThe new about Dubai's debt shocked the world and there are two reasons for that: Dubai was the symbol of a great wealth, and it was forgotten that global crisis is just that: global.


The numbers are scary: Dubai World said it would like to delay repayment of some 25 billion dollars and Dubai's debt could be as much as 170 billion. Those numbers are bigger than GDP of many countries and the first information about repayment was enought to spread the fear among investors. However, we think that there's no reason for fear and that Dubai, and Emirates for that matter, are in no danger.

First and the most important, the debt is huge but Emirates economy is huge, too. Big Dubai companies has steady cash flow and they pay their obligations in a regular way. Dubai doesn't rely on oil anymore and that was very good decision decades ago. The greatest amount of money comes from other business ventures and the fact is that all businesses are not struck with the global crisis equally. In fact, some of them, like selling of luxury goods, are in very good shape. So, all eggs are not in the same basket and that is good.

Secondly, Dubai is very connected with the rest of the world but in a positive way. The crisis which started with subprime mortgages in the United States wasn't significant for Emirates because money was in another ventures. Air industry, telecommunications, tourism and building industry are just examples of business diversity in Dubai.

Thirdly, business people from all over the world still see Dubai as one of the best place for doing business and managers and workers would like to get there, too. The fact is that it is harder to get the job in Dubai, but as it has always been - the highest quality is always welcome. So, there will be enough jobs for high-tech industry, top building masters, finest lawyers and, to put it shortly: the best of the best are still welcome in Dubai.

Furthermore, it is easy to follow Dubai closely and to forget other Emirates. However, Emirates are just that: United Arab Emirates. They are created to be stronger together and that's the main reason why Abu Dhabi gave the financial aid to Dubai. Of course, there is a bit of politic here, fight for the influence is always very tempting, but those are internal things that have no significant influence on the relation Dubai - world. But, Emirates will stick together and that is one the their greatest strength.

We think that the main reason for writing and talking about Dubai's debt is that even the most experienced businessmen are not used to hear "Can you borrow me 25 billions?" However, Emirates are the unique place in the world and they will stay that for many years to come. The reason is simple: you and me can be 1000 dollars in debt in we will survive because that's not a life-threatening debt. Dubai, in the other hand, can be billions in debt, Dubai will survive. Don't forget that steady cash flow it the most important thing for every business and Dubai has no problem with that.


 

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