DUBAI: Dubai is facing the worst debt crisis of its history that could hurt its reputation but, unless reciting poetry and joking with journalists over tea are signs of stress, its ruler seemed comfortable this week.
We are strong and persistent, Sheikh Mohammed bin Rashid Al-Maktoum declared.
It is the fruit-bearing tree that becomes the target of stone-throwers, the poetry lover said of those who criticize Dubai, part of the seven-member United Arab Emirates.
Sheikh Mohammed, a graduate of Britain s Sandhurst military academy, has never shied away from bold statements and is hardly likely to admit defeat or failure in the face of a global backlash to the emirate s handling of its debt crisis.
The decision by government-owned Dubai World to request a payment standstill on a maturing Islamic bond as it works out how to restructure $26 billion worth of debt sent shockwaves through global markets and took Emiratis by surprise.
People like myself are dismayed at how it has been handled, said Abdul-Khaleq Abdullah, an Emirati political science professor. Sheikh Mohammed is a very ambitious person and has taken Dubai forward … he will be much more cautious as a result.
It was apparent last month that the ruler was becoming more involved in tackling the emirate s financial problems.
In a Nov. 9 speech intended to reassure foreign investors, he briefly switched into English to tell critics: Shut up!
Then he clipped the wings of his closest aides from the boom years just days before the Nov. 25 debt bombshell, replacing them with his sons and uncle.
The keen equestrian followed that up with a lightening visit to Britain to meet the Queen. Two days after world markets slumped on Dubai debt fears, his chief bloodstock adviser was still buying horses at Tattersalls auctioneers.
If Sheikh Mohammed, 60, who lists the memoirs of Richard Nixon and Charles de Gaulle among his top reads, was worried that his vision had gone awry, it didn t immediately show.
I ve known him a long time, said Mohi bin Hendi, chairman of the Bin Hendi Group. He s patriotic, straightforward, clear, kind and yet very hard with people who do not follow the right procedures.
Dramatic transformation
Dubai has won much praise as it transformed itself from a sleepy fishing port into a thriving metropolis, a process driven by Sheikh Mohammed, and previously by his father and brother.
Dozens of towers have popped up from the desert, including the world s tallest, Burj Dubai. Emirates is one of the fastest growing airlines globally, while port operator DP World is arguably Dubai s crown jewel.
The emirate s financial center houses banks from Standard Chartered to HSBC, while oil services behemoth Halliburton picked Dubai as its global headquarters.
Still, for a man who has always enjoyed the international limelight, harsh scrutiny by global media and the financial community cannot be pleasant.
In response Sheikh Mohammed has delivered messages via selected local media, leaving crumbs for investors to feed from.
Fitch Ratings on Wednesday even downgraded the ruler s personal company, Dubai Holding, to junk amid lingering confusion between government and non-government enterprises.
In the past week, Sheikh Mohammed has sought to calm local fears. Just a few years ago he was trumpeting Dubai s strengths.
In 2003 at the launch of the unfinished Dubailand project, a multi-billion development to rival Disneyland, he sold the Dubai dream to investors. I would like to tell capitalists that Dubai does not need investors. Investors need Dubai, he declared.
When I encourage you to invest, I am not asking you to put your money into a fire – I guarantee that your money will be invested in carefully studied projects, the ruler said.
Admitting mistakes to ruler
Sheikh Mohammed has always believed competition among his lieutenants would help drive Dubai s economic expansion.
This has put the emirate on the international map and created eye-catching conglomerates such as the Arab world s largest real estate firm Emaar Properties.
But as the empire got bigger and Sheikh Mohammed himself took greater responsibility at a federal level – in 2006 he became UAE vice-president and prime minister – it became harder to keep tabs on each company as the projects mushroomed.
At the height of the competition … it wouldn t have been too popular to be the first to go to the ruler and to admit that an executive made mistakes, said Sultan Sooud Al Qassemi, a fellow at the Dubai School of Government.
Even after the Dubai World media frenzy of last week we have yet to see that happen. Mistakes are a natural part of doing business but they need to be acknowledged in order to learn from them and move on.
Whatever mistakes may have been made, many locals still see Sheikh Mohammed as the man to lead them out of crisis. (He) is known for his wise leadership of Dubai, said Ahmed Saif Belhasa, an Emirati businessman.
He is one of the most successful leaders in the Arab world and we can only wish there were more like him.
