Dubai Debt Problems - Someone Else's Fault

As per this article from The National

Dubai’s financial slowdown should be treated as a “special case” caused by the downturn in world trade and had nothing to do with the intrinsic productive capacity of the emirate’s economy, the UAE economic report says.

It seems the culprits were:

1. Banks and investors who didn't provide sufficiently long-dated capital to finance Dubai's real estate projects.
2. Foreign investors whose tremendous and apparently imprudent large capital inflows contributed to a form of the "Dutch" disease causing rampant inflation.
3. The global financial crisis.  Long time readers of this blog will appreciate our standing comment that this is a "global" and not a "Global" crisis.

Despite the short-sighted actions of these external parties, there are a few bright spots:

“The case of Dubai is ‘special’ also because very large investments have been made in its soft infrastructure, in both industry and government, which will have highly positive effects on the long-run development of the emirate,” the report says.

Besides being "special", and I trust you'll note the comparison here is Emirate-wide:

“But perhaps the biggest improvement in the overall productivity of the UAE in general, and specifically in Dubai, is the high efficiency of Dubai government agencies and departments which adopt first-best policies and international best practices …,” the report says.

 And

When these factors are recognised, it will position Dubai as one of the “most competitive cities in the long run”, the report concludes.

A hat tip to The National for helping to set the record straight.