Crisis in Dubai

There is no place in the world, when it comes to investment, like Dubai. Its 7th heaven for architects, investors, and the oil sheiks themselves. But now during this period of financial crisis it seems that the heavens have finally cracked open.

Dubai is one of the seven emirates of the United Arab Emirates (UAE). It is located south of the Persian Gulf on the Arabian Peninsula. 1971 Dubai, together with Abu Dhabi and five other emirates, formed the United Arab Emirates after former protector Britain left the Persian Gulf in 1971. In the beginning Dubai acquired its fortune by trading oil, but during mid 90’s it started profiling it self as a more tourist place with a lots of investment opportunists.
But when the credit crunch hit the world it particularly hit hard in Dubai. Dubai hasn’t the massive oil reserves that Abu Dhabi has, so it is more dependent on foreign investments. During the crisis the money seemed to stop coming. That was particularly bad for the city of Dubai because with ongoing projects and a 1.2 million construction peope that need to get paid it seemed that Dubai’s party was coming to an end. Lucky for the Dubai big brother Abu Dhabi invested billions of dollars and leaned it even more. So for it looked like Dubai was saved. Think again.

This week a story broke in the media that Dubai World (one of the biggest national companies) is in financial trouble. Its on top off the already existing problems that Dubai has. (Expats who are feeling the country and leaving there expensive cars at the airport with an I’m sorry note. Small firms who go bankrupt, scandals with false investment opportunities.)

I hope for Dubai’s sake that the government is coming with a good plan because so far they haven’t done anything expect panicking. I think the best thing to do is not stop construction but to complete buildings that are already underway. They can ask Abu Dhabi to help finance because economic activity creates revenue, that revenue can be split big Abu Dhabi. Lucky for Dubai the end is near. I only hope they have learned some lessons for the future, like maybe its not a good idea to build a mile high tower.