Dubai must take course on more conservative policy: expert
Azerbaijan, Baku, Nov. 28 / Trend U. Sadikhova /
The Emirate of Abu Dhabi is sure to assist the Dubai government. It will be the first action at this stage, expert on Arab countires' economy, senior fellow at the William Davidson Institute of Michigan State University, Riad al Khouri, told Trend over phone from Amman.
Earlier, the request of the Dubai government to the investors to delay payments on the obligations of Dubai World for half a year caused panic on global stock, commodity and currency markets. Investors did not expect that the oil-rich emirate will not be able to pay debts regarding high oil prices.
"Abu Dhabi can give money to these companies on legal and warranty basis, or even buy some of their shares. However, Abu Dhabi is waiting for changes in the strategy of Dubai. The head of Dubai has replaced his top advisers and experts," Riad al Khouri said.
"I think that the crisis will continue for some time. One should realize now that Dubai must change its strategy. The same happened in the United States in 2008 when the U.S. government allowed some banks to collapse, rather than support them. They wanted to teach some people. We observe the same process in Dubai", the expert said.
This situation is a signal for Dubai to change its strategy. Dubai must become less expansive. It should take a course on a more conservative policy, including social and cultural spheres. That is, some spheres in Dubai, such as the construction sector must become more constructive. Dubai will restore its image as a financial center. The current situation will be recreational shaking for it.
The investment state-owned Dubai World company's debts amounted to $59 billion in August. Dubai government's total debt amounts to $80 billion. It stated that the request to delay payment of debt also applies to the construction company Nakheel, which is a subsidiary of Dubai World.
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