Thanks to Wikicommons
Imagine for a moment someone owes you money (sounds familiar?) and then they tell you they may be, um… a little late paying it back (sounds rather too familiar?).
Now imagine that debtor is Dubai World, a company owned by the oil- rich emirate of Dubai (one of seven emirates, similar to states in the US) that makes up the United Arab Emirates.
Now imagine they owe you the hefty sum of $59 BILLION DOLLARS. (Yes, that’s BILLION).
We at USDemocrazy would get mighty worried… and the world stock markets were a bit worried at the news.
For the past couple of years Dubai has been turning the desert into an oasis.
The New York Times has a wonderful collection of photos covering this bloom (and some of its demise).
Now it seems the project has hit a desert dry spell. This new Middle Eastern real estate was metaphorically build on…well, sand.
There were warning signs.
At the Daily Beast, Matthew Yglesias scoffed at Dubai’s economic model remarking
Why would a place with a smaller population than Kansas need the world’s biggest mall, massive skyscrapers and a massive land reclamation projects? Well, it didn’t.
Andrew Sorkin, of the NY Times, agrees noting that
It’s a pretty good bet that a city with an average temperature of 90 degrees and an indoor ski slope is probably living a little too large.
Dubai is also feeling the heat in other ways.
Johann Hari, in an article for the Huffington Posts, describes the country’s questionable labor practices
Dubai is finally financially bankrupt – but it has been morally bankrupt all along.
The immigrant laborers used to build Dubai came mostly from South East Asia. They flocked there to collect high wages that could enrich themselves and their families.
Now, many are being laid off and sent home.
Some hope the mega-wealthy emirate Abu Dhabi would use its oil wealth to shore up Dubai. There are no signs of a bail out currently.
Free Exchange, brought to you by the Economist, suspects the impact could have be a lesson for other countries.
Don’t worry though the games not up for our desert friend. Patrick Seale, writing his opinion for the NY Times, chimes in that
In my view at least, the world has been far too quick to suggest that the glossy city-state is about to go bankrupt.
It looks like we’ll just have to wait and see if Dubai is standing on quick profits or quicksand.
