Dubai: Dubai is calling to account some of the leading architects of its financial crisis. The debt-laden emirate this weekend installed new people in some of its most powerful financial roles. But while change is welcome, the management overhaul of Dubai Inc will not in itself be enough to restore confidence among international investors.
The moves look dramatic. A board reshuffle at the Investment Corporation of Dubai saw the departure of two members who are also the chairman of Dubai Holding and Dubai World, two of the emirate’s most troubled groups. The Governor of the Dubai International Financial Centre (DIFC) is also being replaced. This is as close to accountability is it gets in Dubai, whose ruler, Sheikh Mohammed bin Rashid al-Maktoum, effectively calls the shots.
With $80 billion of debt, Dubai needs to signal that its management of the economy will be more prudent hereon. The new brooms are perceived to be members of the old guard. That marks the latest shift towards Dubai’s more conservative past, following the shock replacement in May of Dubai’s finance minister, Nasser Al Shaikh, with the more reserved Abdulrahman Al Saleh.
The new Governor of the DIFC, Ahmed Humaid al-Tayer, established his reputation within the United Arab Emirates government based in Abu Dhabi. That may give some comfort to Abu Dhabi ahead of its expected support for a $20 billion bond issue that Dubai must complete by mid-December to refinance some of its debt.
After the mess Dubai has got itself into, some might say that any change is good. But so long as there is continuity at the very top, reshuffles can achieve only so much. If Dubai is fully to regain the confidence of the markets, it could do worse than appoint a heavy-hitting independent adviser to oversee its financial reforms – and lend credibility to the repair effort.
