[ti:Dubai Feels the Financial Pain ]
[ar:Steve Ember]
[al:Economics Report]
[by:www.21voa.com]
[00:00.00]This is the VOA Special English 
[00:03.02]Economics Report.
[00:04.81]In recent years, 
[00:06.31]a shining city grew 
[00:08.40]in the desert of Dubai on
[00:11.03] -- and even off
[00:12.28] -- the Gulf coast. 
[00:13.77]An island shaped 
[00:15.76]like a palm tree 
[00:17.01]was built for hotels, 
[00:18.75]homes and entertainment.
[00:21.64]In October of last year 
[00:23.75]the same developer announced plans 
[00:26.78]for the world's tallest building yet. 
[00:30.07]But the economic downturn soon 
[00:33.22]forced the Nakheel company 
[00:35.11]to suspend those plans.
[00:37.65]Dubai is in the United Arab Emirates, 
[00:41.68]a thirty-eight year old 
[00:43.27]federation of seven territories 
[00:45.57]ruled by emirs. 
[00:47.61]But, unlike its neighbor Abu Dhabi, 
[00:50.75]oil has not fueled Dubai's growth.
[00:54.33] Oil is only six percent of its economy. 
[00:58.42]Instead, the property 
[01:00.81]and service industries 
[01:02.90]have led its expansion.
[01:05.09]Now Dubai finds itself 
[01:07.69]in financial pain. 
[01:09.58]And its reaction has some 
[01:11.85]investors worried.
[01:13.34]Last week, 
[01:15.03]Dubai's largest investment company 
[01:17.57]called for a six-month delay 
[01:20.13]in paying some of its debts. 
[01:23.02]Dubai World Group is seeking 
[01:26.25]to renegotiate terms 
[01:28.35]on twenty-six billion dollars in debt. 
[01:32.13]All of it is linked to Nakheel, 
[01:35.42]which is part of Dubai World.
[01:37.57]The government owns Dubai World 
[01:40.65]and will take control of 
[01:42.75]its restructuring. 
[01:44.60]But Dubai's finance chief said 
[01:47.25]the government does not guarantee its debt.
[01:51.53]Dubai World owes creditors
[01:54.53]a total of sixty billion dollars. 
[01:57.52]The company is not an investment vehicle 
[02:01.06]for the government like a sovereign wealth fund. 
[02:04.49]It is a holding company
[02:07.28] for businesses in land development, 
[02:09.62]port operations, energy 
[02:11.97]and financial services. 
[02:14.25]The group has used borrowed money 
[02:16.89]for economic development.
[02:18.93]Ghiyath Nakshbendi of American University 
[02:22.17]in Washington notes that the problems 
[02:24.91]are linked to a worldwide collapse 
[02:28.05]in real estate prices.
[02:30.09]"Emerging markets are as victim
[02:34.32]to the world meltdown
[02:37.81]as any other economy and 
[02:40.45]there are no exceptions."
[02:42.40]He expects the debt restructuring 
[02:44.59]to be successful. 
[02:46.03]He says Dubai and its leaders
[02:48.72] have too much to lose to let creditors 
[02:52.21]-- like banks in Britain 
[02:53.86]-- suffer losses.
[02:55.25]Still, 
[02:56.35]last week's announcement 
[02:57.99]was a surprise. 
[02:59.43]Now Dubai World is faced 
[03:01.67]with selling properties 
[03:03.32]at heavy losses to raise money. 
[03:05.77]Some experts question how willing 
[03:08.96]Abu Dhabi will be to rescue Dubai. 
[03:12.15]Their relationship is sometimes tense.
[03:15.44]Ghiyath Nakshbendi says 
[03:17.63]Dubai World will have 
[03:21.47]to change its ways.
[03:23.31]"I think Dubai went 
[03:25.20]a little bit too fast 
[03:27.64]and they borrowed too much money 
[03:30.23]in a very short period of time."
[03:33.31]Of course, Dubai was not alone 
[03:35.75]in gathering debt 
[03:37.24]during the easy credit years. 
[03:39.43]There are worries that 
[03:41.24]the crisis could be the 
[03:42.89]first of more to come 
[03:44.45]in other parts of the world.
[03:46.69]And that's the VOA Special English 
[03:49.97]Economics Report, 
[03:51.67]written by Mario Ritter. 
[03:53.36]I'm Steve Ember.