“This company is independent of the government.” Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, tetchily confirmed yesterday that his emirate will not guarantee the debts of Dubai World, the publicly owned local conglomerate now struggling with $59bn of debt.
The hereditary ruler of the city-state also brushed aside concerns that the announcement last week that Dubai World wanted to delay the repayment of some of its debt indicated a greater crisis for Dubai itself. Sheikh Mohammed told reporters that international investors “do not understand anything”.
That may be true. The cost of insuring against a default by Dubai – now $56,931 to insure a million dollars of the emirate's debt – could be too high. Investors, however, cannot be blamed for not understanding the relationships between Dubai's institutions that are, whether intentionally or not, kept blurry and ambiguous.