Deconstructing Sheikh Mo
December 1st, 2009
Given Dubai World’s recent decision to shaft its own creditors, it is worth revisiting the remarks made by Dubai’s leader Sheikh Mohammed Bin Rashid Al-Maktoum in a speech to a recent investment conference.
Al-Maktoum (pictured above) was addressing a conference organised by Bank of America Merrill Lynch in Dubai’s Raffles Hotel on November 9th, just three week’s before Dubai World’s shock ‘standstill’ announcement. Among other things he said:-
“The global financial crisis, despite its temporary effects, will not dissuade Dubai from its ambition of development; it will not topple Dubai from its leading position; it will not distance Dubai away from playing an integral part in the global economy; and it will not break the determination of our people to continue the process of development.”
“Perhaps there are some who believe that Dubai could have acted more quickly to address the global financial crisis.
You could say that again!
“I am confident that the worst is over, and that the darkest clouds of the economic crisis have passed. Now as the signs of a global recovery emerge, Dubai is in a position to invest and make use of the underlying market conditions and continue on the race towards excellence.
“Here are the facts. Dubai is a combination of the right ingredients that make it the perfect choice for the global investment community whether some people like it or not.
Hint of wishful thinking, disingenuity or even truculence here, Sheikh Mo?
I would like to stress that those who believed that Dubai’s economy and success were based solely on the real estate sector were pointedly wrong. It’s true that there was a substantial real estate boom in the past few years, but it’s unfair [to] undervalue the Dubai story as that and only that. Putting the property surge aside, Dubai’s success and development is far broader and runs much deeper than that, as a result of diverse strategies and strategy diversification.
Yes there is more to Dubai than just property. Unfortunately, however, Sheikh Mo allowed the emirate’s property bubble to inflate to such a magnitude — far bigger than those in places like Ireland, Spain or the UK — that its collapse has proved catastrophic. Outside real estate, the ways in which Dubai chose to diversify its economy are likely to prove unsustainable. This is because many were dependent on the mirage of wealth afforded by over-generous and naive overseas lenders, for whom it will now be a case of once bitten twice shy.
Speaking of the United Arab Emirates, Sheikh Mo said:-
“The union of these seven emirates represents an unshakable force and an impregnable fortress that cannot be weakened by challenges. This union is the source of all our confidence and our strength.
He seemed to be implying to the assembled financiers that Abu Dhabi was on standby to provide some kind of bailout to Dubai’s more reckless companies. If this was his intention, Sheikh Mo was seeking to deceive. It is now apparent that Abu Dhabi has no such intention.
“My optimism that the end of the crisis is near; my confidence in Dubai’s ability to restore its strong growth rates in the not too distant future; this is based on the philosophy and legacy of my inherited Bedouin origins, of which I am proud.
Sorry, Sheikh Mo, your crisis is probably only just beginning. But if things get really bad, at least you’ll be able to revert to that tent in the desert.
“The economic slowdown has given us time to pause, contemplate and study the things around us.”
You bet it has. Unfortunately, though, you didn’t do nearly enough pausing, contemplation or studying when the credit crisis first commenced in early 2007. Instead, you hubristically assumed that Dubai would be immune and carried on spending other people’s money with gay abandon. A bit like Sir Fred Goodwin at RBS.
“Transparency and open dialogue are effective and vital elements in the structure of mature and civilized nations.”
I agree. But on this basis, I’m afraid Dubai does not qualify as either mature or civilised. The emirate’s press is by no means free with most local newspapers serving as progaganda-sheets for your autocratic regime. They have subjected their readers have been subjected to misinformation about Dubai’s financial position for years.
It’s also worth pointing out that copies of the Sunday Times of November 29th were impounded at the border, apparently because the business section carried photo-montage of yourself drowning in a sea of debt! The truth hurts, does it?
- To read more on Dubai from ianfraser.org, click here
- To read an opinion piece from WSJ on why lack of transparency is Dubai’s biggest problem, click here
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While I agree the Sheikh is suffering from a severe dose of O’Riordanism, I’m not convinced Dubai is the only place that has suffered from lack of freedom in the press with regards to financial crisis. Most of the UK press prefers to give us the news of any financial doom AFTER the event and never before even when they have been informed of it.
I know from experience that while some journalists would like to publish articles that forewarn or inform the public of catastrophic behaviour in the financial sector, the in-house media lawyers ensure these get spiked, and the end result is that our media is little better than Dubai’s – and our editors have their hands tied.
While the Sheikh, and other Panglossian politicians come out with more endless drivel about how the recession is almost over I hope more in the British Press will follow your example and start telling it like it is.
Dubai is giving the world a headache but there are still plenty of nasty truths about the behaviour of British banks which need to come out into the open in order that the whole system can finally be exorcised.
Otherwise we are all, with the exception of a few Sheikhs and bankers, going to be living like Bedouins in the near future.