Make no mistake,” a friend told me over lunch in Abu Dhabi a few months ago. “Everyone here knows Dubai’s in trouble, but this isn’t the new Lehman. Abu Dhabi will help them out but there will be a heavy price to pay. Dubai will soon be a suburb of Abu Dhabi.”
While global financial markets nervously await clarification of Dubai’s debt restructuring, the Emirates are alive with talk of political change. Abu Dhabi’s refusal to sign a blank cheque to underwrite Dubai Inc has shocked the world far more than it has shocked the region.
It has been common knowledge here for months that Dubai’s property investment business is on the ropes. The real talk is not of how to plug the gap in DubaiWorld interest repayments but of how Abu Dhabi is going to pick and choose how it helps its neighbour.
Dubai’s misfortune is a long- awaited opportunity for Abu Dhabi and it is positively glowing with schadenfreude. It has watched its wayward neighbour squirm as its global property and investment markets are exposed and is poised to assert its position. The bailout symbolises the start of a push for regional supremacy, a changing of the guard in the United Arab Emirates.
Though barely on the Western radar, Abu Dhabi, the quiet Emirate, is capital of the UAE and is the world’s richest city. This is where the real power and influence in the region reside. And Abu Dhabi has been playing a long game. Quietly amassing vast oil riches (the true extent of which are unknown) it has been nursing a long-term objective: centralisation of the UAE under the leadership of the ruling Al Nahyan family, securing greater political power and influence abroad in the process.
The strategy is simple. Abu Dhabi will cherry-pick the successful big- name assets and transfer them to Abu Dhabi control. These deals have been under discussion for some months. It has already sought to secure majority stakes in the Burj skyscraper and the Emirates airline, symbolic jewels in Dubai Inc’s crown.
But Abu Dhabi has a precarious balance to strike. The volume of Dubai’s debt is still undisclosed. Figures of about $70 billion may be hugely conservative, with some officials suggesting twice that amount. This uncertainty fuels international fear. For all its Islamic duty to face-save brothers in need and preserve the financial stability of the region, Abu Dhabi does not want to burden itself with unravelling undisclosed bad debts.
If it wanted, Abu Dhabi could resolve Dubai’s problems in an instant. The $750 billion in its sovereign wealth fund is the tip of the iceberg. Most of the wealth here is undisclosed and held privately in the hands of the Royal Family and a mix of government-owned investment companies. Through the boom years this blurring of the line between State and private wealth has been readily accepted. Now, as Aidan Birkett, of Deloitte, and a planeload of financiers arrive in the UAE to broker deals, it may be the time when ruling family and private money are used to fill in financial black holes. Debts to banks such as Barclays, RBS and HSBC are unlikely to be publicly plugged.
But while the Makhtoums, Dubai’s ruling family, continue to impose a news blackout locally we must assume that the British Government will try to do private deals that ensure the £250 million owed to British companies is paid.
Such privacy, lack of accountability and strategic largesse are all characteristics of the Bedouin tribes; an unchanging and unsettling foundation to business here that obscures the view of those seeking clarity and transparency. In short, this is an Arab thing.
The bigger prize is political change for the region. Abu Dhabi wants to take control culturally and politically. It knows that Dubai, under the glitzy reign of the Makhtoums, expanded rapidly and in ways that Abu Dhabi felt to be un-Islamic. It is hoping that the loss of face among Dubaians and among the world’s business communities will provide the impetus for a change of ruler.
Though undeclared, the hope is that these events will force the leadership of Dubai to resign. In a modern playout of ancient tribal politics Abu Dhabi wants Dubai reined in and put on a short leash. They are looking for the Makhtoums to fall in line with Abu Dhabi’s new vision for a modern Islamic state. “The only question is, how obstinate will Dubai’s leaders be,” says Christoper Davidson, a Gulf expert at Durham University.
As the state of Dubai’s finances becomes increasingly clear, the position of the Makhtoums becomes increasingly difficult. Financial probity and personal integrity are the cornerstones of business. In a country where a dud cheque is a criminal offence, even the smallest slip is magnified. The story breaking just before Eid was a tactic to buy time to sort things out.
On the ground the inevitable shift away from Dubai has already begun, albeit cloaked in secrecy. Carillion the building firm, is just one of many quietly relocating its business. Five thousand of its twenty thousand staff have been moved from Dubai to Abu Dhabi over the past 18 months.
“No one would lose sleep over Dubai surrendering its autonomy” says Mr Davidson. “Abu Dhabi is a proper state, well administrated and in a far better position to handle the debt.” Much of what we have witnessed is bluster between the tribes. Abu Dhabi will not let Dubai collapse. It is not in the interests of the UAE for that to happen. There is too much pride at stake. But it knows that this is its opportunity to wrestle quietly for supremacy. With a city vision — the 2030 plan — already transforming Abu Dhabi, Dubai’s fall is indeed fortuitous.
The city and business plans laid down by Sheikh Zayed, late ruler of Abu Dhabi and founder of the UAE, have stood his people in good stead. Now, with Dubai’s delusions of grandeur gone, we are, at last, seeing a long-awaited shift of influence in the Gulf.
Jo Tatchell is the author of A Diamond in the Desert, published by Sceptre
Order By:
Would you like to post a comment? Please register or log in
function blogURL(bUrls) { window.location=bUrls; } fieldset { float:left; width:165px; border:0px; margin:0px; padding:0px; } OUR COLUMNISTS
Columnists
Select David Aaronovitch Simon Barnes Camilla Cavendish Jeremy Clarkson Giles Coren Robert Crampton Daniel Finkelstein Michael Gove Anatole Kaletsky India Knight Dominic Lawson Leo Lewis Rod Liddle Magnus Linklater Ben MacIntyre Bronwen Maddox Minette Marrin Carol Midgley Caitlin Moran Richard Morrison Matthew Parris Michael Portillo Libby Purves William Rees-Mogg Melanie Reid Peter Riddell Hugo Rifkind Sathnam Sanghera Frank Skinner Graham Stewart Andrew Sullivan Rachel Sylvester Janice Turner Guest contributors
Blogs
Select Alpha Mummy Archive Blog David Aaronovitch Asia Exile Baby Barista Blockbuster Buzz Gerard Baker Charles Bremner Big Brother Mary Beard Comment Central Consumer Central Cricket Blog Eco Worrier Faith Central Fashion Formula One Ruth Gledhill Inside Iraq Ariel Leve India Knight Money Rafael Nadal News Blog William Rees-Mogg Rugby Sinofile Mick Smith Sports Commentary Irwin Stelzer Peter Stothard Surf Nation Technology Travel Urban dirt Video Wimbledon
Camilla Cavendish wins award for family justice campaign
Columns urging greater openness in family courts win Paul Foot Award
Cartoon More cartoons Peter Stothard
The Editor of the TLS writes on books, people and politics
A Don's Life
Mary Beard of Cambridge and the TLS on culture ancient and modern
Is this the world's worst crime photofit? Comment Central MOST READ MOST COMMENTED MOST CURIOUS Most Read Skip Most Read Today Climate change data dumped Swiss voters back right-wing minaret ban The 50 Biggest Movies of 2009 Tiger Woods ‘was fleeing his angry... MOST COMMENTED Skip Editor's Pick Today if(isArticle == "true" && articleHeadlines.length!=0){ for(var j=0; j=45){ headline = articleHeadlines[j].substring(0,44)+"..."; } document.write(""+headline +""); } }else{ fSubmitMostCommented('http://community.timesonline.co.uk/ver1.0/Direct/Process'); } MOST CURIOUS Skip Most Curious Today Paris does the can’t-can’t as... Taking the private jet to Copenhagen Swedes hit on nail beds as cutting-edge... Dial V for violence: gory news films are... Focus Zone Need to Know:
Industry sectors news at a glance. Interactive heatmap, video and podcast
Business Travel:
Everything the Business Traveller needs to know to make a better trip
Winter Sports:
Get ready for the winter sports season, with our resort guides and snow reports
Mapping Business:
We are backing British business, what is the confidence of the nation and what businesses are succeeding?
The Future of Energy:
Growing demand for energy, oil that is harder to reach and the rise of carbon dioxide emissions. We examine the energy challenge
Europe by Train:
With rail travel in Europe on the rise, we review the benefits of travelling by train
My Dinner Party:
In this special section we explore new food trends to help improve your dinner party and impress guests
More reports:
Enjoy further reading from Travel to Fashion, Business to Sport, discover more
Need to Know Business Travel Winter Sports Mapping Business The Future of Energy Europe by Train My Dinner Party More reports Births, deaths, marriages
Place your announcement
Encounters Dating
We'd love to find you someone special
Crossword Club
Sign up today or try one of our free demo crosswords
Free CV Review
Sell yourself! Have your CV reviewed by experts
Announcements
Search The Times Births, Marriages & Deaths
Online Sudoku with daily prizes Find a Lawyer
Cut your legal costs
Popular Searches on Times Online 2010 movies | books | chess | crosswords | fantasy football | fashion | formula 1 | horoscopes | Michael Jackson | need to know | obituaries | recipes | redundancy calculator | science | sudoku | swine flu | twitter | university guide | wine | wintersun
Shortcuts to help you find sections and articles
Classifieds Cars Jobs Property Travel Cars Skip Cars of the Week Ferrari F355 F1
1998 £47,955
Virgin Car Insurance
12 months for the price of 11 and a 5% discount. Offer ends 31/11/09
Apply for car finance?
Check your free Experian credit report before applying
Great car insurance deals online
Car Insurance
Search for more cars and bikes Jobs Skip Jobs of the Week Business Development Executives
to £60K + bonus (OTE £90k) Lord Search & Selection Location Flexible
Consulting Roles All Levels
PwC’s Consulting practice helps businesses of all shapes and sizes work smarter and grow faster.
Sales Professionals
£85k CPA
Commmercial Project Manager
Highly Competitve Specsavers Whiteley, near Southampton
Search more Jobs Properties Luxury development in the heart of Battersea.
Moments from Battersea Park.
Double-fronted 4 bed, 4 reception house near Eltham Palace.
For sale with Winkworth
Eager to get on the property ladder?
Find out about shared ownership.
Looking for a Mortgage?
See your free Experian credit report beforehand
Search for more properties Holidays Skip Travel of the Week Save up to £740pp on Malaysia Holidays
7nts - Penang £499; Borneo £699; All Inclusive £799 including flights, taxes, accommodation and private transfers
Ski Weekend Specialists since 1986
For your�ultimate tailor-made ski holiday, click here
Great Travel Insurance
Get covered on your travels with a superb range of policies at great prices. Visit InsureandGo.com
Fabulous Villas in Barbados
World Class Golf, Spa and preferential Beach Club.��Private estate overlooking West Coast Villas from £275 per night inclusive of Golf
Search for more holidays Place your advert now
Search Ad Reference:
Where am I?
Home Comment Columnists Guest contributors Contact us Back to top NewsCommentBusinessMoneySportLife & StyleTravelDrivingArts & EntsArchive Times Online Times Archive Google TLS Archive
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
Blogs
Columns urging greater openness in family courts win Paul Foot Award
The Editor of the TLS writes on books, people and politics
Mary Beard of Cambridge and the TLS on culture ancient and modern
Industry sectors news at a glance. Interactive heatmap, video and podcast
Everything the Business Traveller needs to know to make a better trip
Read Full Article »