Raymond Barrett

Sunday Business Post
By Raymond Barrett

The full extent of Dubai’s financial implosion was revealed this week as the world’s tallest building was officially opened amid much fanfare in the small Persian Gulf emirate. At a height of 828 metres – twice the height of the Empire State Building – Burj Dubai was meant to be the crowning glory of a decade-long economic boom that saw the former fishing village morph into a global financial and leisure hub.

However, as parachutists dived from its upper floors and fireworks exploded around the iconic structure, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum announced that the iconic tower had been renamed Burj Khalifa in honour of the ruler of neighbouring oil-rich Abu Dhabi, which has bailed out Dubai to the tune of $25 billion over the last year.

While some commentators described the sudden name change as a ‘nod’ to UAE President Sheikh Khalifa Bin Zayed Al Nahyan, in truth it was more of a genuflection.

In its quest to establish itself as a global player an array of companies owned by the Dubai government have run up debt obligations of at least $80 billion. The Burj Khalifa cost $1.5 billion and stands above a fountain estimated to have gobbled up $200 million alone.

But after defaulting on repayments towards the end of last year, Dubai turned to Abu Dhabi and its sovereign wealth fund of around $700 billion for help. The price Abu Dhabi seems to have extracted for its billions is the renaming of Dubai’s most illustrious architectural achievement.

This will no doubt have been galling for Dubai’s ruling Maktoum family, who have traditionally asserted their independence within the United Arab Emirates (UAE).

However, Sheikh Mohammed asserted that the underlying economic structure of the UAE was resilient enough to deal with the current global economic crisis.

‘‘This is yet another proof that our national economy is robust and that our leadership, institutions and private sector are capable of surmounting difficulties and confronting challenges with resolution, fearlessness and confidence,” he said.

Global capital markets will have been reassured somewhat by these words which suggest that Dubai is rekindling a more acquiescent relationship with cash-rich Abu Dhabi.