- February 1, 2010 Vol. 4 No. 2

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Built on Sand: It Is Not Just in the Middle East that Debt Levels Are Looking Shaky

by David Swan

Dubai’s fall from grace has been quick, yet not unexpected. Over the past few years, as ski slopes were constructed in the desert, islands created and taller and taller structures built, commentators questioned the sustainability of the Emirate’s economic growth.

Dubai’s ambitions are not confined to real estate; it has big ambitions to become the leading financial centre within the Gulf Co-operation Council (GCC). However, these ambitions may have to be put on hold, not because of the debt of Dubai World, but because of how the issues surrounding it were handled. In November 2009, with the four-day Eid holiday about to start (and the US Thanksgiving holiday coinciding), a brief message stating that Dubai World was seeking a standstill agreement on its liabilities under its lending arrangements was made. Then silence.

For Dubai, which has in the past bee

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