Dubai went to sleep last Monday night in roughly the same shape it did on the night of November 24 – assured that the troublesome US$3.5 billion (Db12.85bn) Nakheel sukuk would be repaid on time, but with questions still to be answered about its remaining debts.
So that was a lot of fuss about nothing then, wasn’t it? In the 20 intervening days, global markets briefly convulsed immediately after the standstill request, regional markets took a bigger hit over a longer period, and Dubai found itself for a short time compared with Iceland and Argentina as economies that had let their financial situation get out of hand, to the extent that their standing in the world took a serious knock.
In the course of the global crisis, much has been written about “moral hazard”, but there is an equally serious danger out there too: reputational hazard. Dubai has run the gauntlet of reputational hazard these past 20 days.
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