UAE Ruler Backs Dubai Govt – Claims Economy is Fine

The UAE President Sheikh Khalifa bin Zayed Al Nahyan on the eve of 38th National Day said that the country's economy was ‘fine’, and supported the efforts by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum and his team in managing the crisis. He purportedly came out with a statement after last week Dubai World, the largest investment firm in the Middle East made standstill request while it restructured for its $59bn of liabilities.

Zayed stated the leadership and the people of UAE were confident, and would continue steadily and consistently the implementation of what it had adopted in terms of strategies and plans. The top priority was to build national capacity and launch human energy directed toward the horizons of excellence, innovation and competition, he added.

Dubai World’s announcement not only rocked the very financial establishments of the UAE but also many financial institutions of the region including that of neighbouring Qatar. Later, while the Dubai government detached itself from the investment firm calling it functioned as a separate entity, stock markets fell to the lowest level in eight years in Dubai, and Abu Dhabi and Qatar experienced similar trends as well.

On Monday, Abdulrahman al-Saleh, director general of Dubai's department of finance said creditors should partly shoulder the responsibility for their decision to lend to the companies. Besides, Saleh remarked in an Arabic interview to Dubai TV, a station owned by the ruler of Dubai that the people think that Dubai World was part of the government, which was incorrect. On the contrary, John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group, said the distinction between the Dubai government and the investment company appeared minimal.

Without directly referring to the Dubai’s crisis, Sheikh Khalifa said any crisis on its severity would not be a reason for hesitation or retreat, neither a justification to despair nor inaction. He further added by saying that the country’s economic model would enable it to move from a labour-intensive economy to a more viable one of high-tech and knowledge-based which underscored environmental protection, and preservation of jobs for its progeny.

By Jose Roy