EARLIER this year, Nasser al-Neyadi from the United Arab Emirates (UAE) leapt off Dubai’s newly opened Burj Khalifa, the tallest building in the world. He descended 672 metres (2,205 feet) in less than a minute, his fall broken by a parachute which opened ten seconds into the jump.
From the heady heights it reached in 2008, Dubai, one of seven members of the UAE, has fallen almost as far and as fast. Its hopes for a soft landing have always rested with its wealthy neighbour, Abu Dhabi, which sits on over 90% of the UAE’s oil reserves. But for a few horrible weeks at the end of last year, Dubai’s parachute refused to open—or perhaps the emirate simply fumbled as it reached for the ripcord.
In November Dubai threatened to default on a $4.05 billion sukuk, or Islamic bond, issued by Nakheel, a troubled property developer belonging to Dubai World, one of three government-owned conglomerates that set the pace for Dubai’s development. The announcement threw the emirate and the global credit markets into a vertiginous free-fall. As the ground approached, Abu Dhabi released more funds and the sukuk was eventually paid on time. But Dubai World’s other debts remained to be restructured. It was not clear who would get paid, how much or when.
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