DUBAI Nov 30 Long shadows from the global
financial downturn hang over the United Arab Emirates as it marks
its 38-year existence with flags and fireworks this week.
A debt crisis in Dubai has undercut investor confidence in
the brash emirate's ambitions. It remains to be seen whether the
UAE's oil-producing powerhouse Abu Dhabi will seize the chance
to puncture the dreams of its freewheeling neighbour.
Balloons in the green, white, red and black of the UAE flag
adorn myriad shopping malls for Wednesday's independence
anniversary. Streets and trees are ablaze with fairy lights.
But beyond the fanfare, many in the seven emirates that
united in 1971 when the British departed will be wondering what
the future holds, especially for Dubai's bold attempts to build
itself into a glittering financial, trade and tourism magnet.
Investors are holding their breath as Dubai restructures its
biggest companies. Last week it asked creditors for a six-month
freeze in repayments of debts worth more than $5 billion.
Abu Dhabi, the largest emirate by size, containing most of
the UAE's oil wealth and housing its central bank, will "pick
and choose" how to assist debt-laden Dubai, an official said.
Analysts see power in the federation shifting Abu Dhabi's
way in the wake of Dubai's debt crisis.
The UAE, created 38 years ago under Abu Dhabi ruler Sheikh
Zayed bin Sultan al-Nahayan, has held together despite old
rivalries between some of its ruling families.
Dubai, ruled by the Al Maktoum family, developed as a
trading entrepot. Since the 1990s its population has shot up to
1.7 million, swelled by professionals from around the world.
Now some doubt the boom times will return.
"Dubai is the icing on the cake -- and it is melting," said
London-based banker Tom Acreman, as he snapped photographs of
Burj Dubai, the world's tallest skyscraper.
The tower, due to open on Jan. 4, is being built by Emaar
Properties, whose chief was removed last week from the board of
one of Dubai's top holding firms as part of a shakeup in the
government's three major corporate entities.
Burj Dubai stands alongside other mega projects, such as
three man-made palm islands, the world's first indoor ski slope
and its longest driverless train, as another symbol of Dubai's
relentless ambitions -- which sometimes upset its neighbours.
"The city has exploded too fast, it's difficult to know how
much money, tangible assets they really have," Acreman said.
Yet Dubai and Abu Dhabi have made huge strides in developing
the UAE in just a few decades, harnessing dynamism to deep
pockets in a combination many other Middle East countries lack.
"In the space of less than 40 years, for a country to build
such huge infrastructure, have the first metro in the Gulf,
create two airlines among the best in the world, and have a
financial centre are quite substantial achievements," said
Laurent-Patrick Gally of Shuaa Capital.
To join the "Dubai dream", hundreds of thousands of
foreigners flocked to the emirate, which for more than six years
carved out a niche as a Middle Eastern hub for business and fun.
Exposure to international markets took its toll on Dubai
when the global crisis hit in late 2008. Job cuts and project
cancellations prompted thousands of expatriates to return home.
Emma Kristensen, head of the child support group Twins,
Triplets or More, said she was not yet considering leaving, but
she and her Danish husband were not keeping savings in Dubai.
"We have moved our money overseas to Denmark, where it is
safer," she said.
(Editing by Alistair Lyon and Janet McBride)
((firstname.lastname@example.org; +971 4 391 8301; Reuters