Nov 27th 2008 | DUBAI
From The Economist print edition
As the sheen comes off glitzy Dubai, the other Gulf states are getting nervous too
“THEY said you couldn’t create islands in the middle of a city,” shouts a property advertisement over a jammed Dubai motorway. “We said, what’s next?” The range of answers has become gloomier by the week, as the debate moves from whether the Dubai property bubble will burst to just how bad it is going to get. Some nervous bankers think property prices could fall by 80% or so in the next year or so. A few months ago, rich foreigners who had bought villas in Dubai were complaining about the quality of the sand on their artificial beaches or the difficulty of getting water to circulate around the twiddly fronds of the man-made island shaped like a palm. Now prices for some smart developments have been cut by 40% since September, shares in property firms have lost 80% of their value since June, and big developers are laying people off.
The region’s banks will suffer too. Gulf policymakers are still making cheery statements about the region’s limited exposure to subprime loans but are quieter about heavy investments in inflated local property markets by regional banks, particularly Islamic ones. But worried banks are sharply reining in their mortgage lending. A series of arrests of senior businessmen as part of a fraud investigation is also making people twitchy. There is even talk of a coming “Gulf Enron”.
While the stunning opacity of government economic data is increasing the air of uncertainty, Muhammad Alabbar, who heads Emaar, a giant state-controlled property developer, took the rare step of telling people how indebted the country is. Together, the government and state-owned enterprises owe $80 billion—148% of GDP. Dubai still has a far larger stock of assets, at least some of which are likely to be sold, to cover the debts, to Abu Dhabi or the federal sovereign-wealth fund of the seven-state United Arab Emirates, of which Dubai and Abu Dhabi are the two richest.
The rest of the Gulf has met Dubai’s phenomenal boom with a mixture of envy and emulation. Now there are hints of pleasure at the idea that the epicentre of bullishness may be humbled. But there are worrying questions for the others, too. Could the Dubai property slump prove contagious? Will the Gulf Co-operation Council pull together to protect the region’s economy? Should its planned monetary union be set aside as governments focus on protecting their own currency?
Who do we listen to now?
Since everyone else has been trying to copy Dubai, it is unclear how economic policy should be reshaped if the model has to be rescued. Advisers who have been preaching free markets and foreign investment will have a tougher time as economic power shifts back to the more conservative, oil-rich governments such as Abu Dhabi and Saudi Arabia.
Political stability may be affected too. A worsening economy may encourage political reform, on the assumption that people can be more easily bought off in times of plenty. At a recent BBC debate in Doha, Qatar’s capital, on whether Gulf Arabs value profit over people, young Qataris said critics of their countries’ poor treatment of foreign workers should look on the bright side; local citizens benefit from large gifts of land and free university education. Since the oil boom began in 2003, mega-rich Qatar has ramped up public spending by an average of 28% per year; the less well-endowed states have had to make do with annual rises of some 15-20%.
Several GCC economies will go into budget deficits next year for the first time since at least 2002, including Saudi Arabia, whose budget is based on oil at around $50 a barrel but excludes the cost of Saudi Aramco’s massive programme of capacity expansion. Unemployment will rise as thousands more young people, many of them graduates with high expectations, enter the job market. Social unrest is likely to brew. The question is whether governments will meet it with repression or political concessions.
Friday, November 28, 2008
Nov 27th 2008 | DUBAI
Sunday, November 23, 2008
Remember those unusual but wonderful letters to Mrs. Gandhi from Nehru? I was reminded of them when I read this online. This is apparently from Obama to his daughters: Malia and Natasha (aka Sasha).------------------
Friday, November 21, 2008
Updated. Muscat confidential Not blocked anymore. May I proffer my most profound Oppologies to you all.
It was blocked for at least an hour this morning, but comments indicate it's Omantel incompetence as opposed to a delibrate action.
The immedaite assumption that the bock is an incursion on our already limited freedoms, is pretty valid when one considers Omantel's habit of blocking websites they think we are too stupid to be exposed to.
Once again, Sorry for Jumping the gun!
Posted by Suburban at 8:58 AM
Wednesday, November 19, 2008
Any one here a Mac user?
Would you be interested in joining up with other Mac users in Oman to set up an Oman Mac Users Group?
The goal of the user group is to begin as an informal group where members can get together occasionally and share experiences and advice regarding Macintosh platform. Eventually the group should set up an online presence and expand its membership and promote increased Mac usage in Oman. The group can leverage membership with the official Apple distributors in Oman to gain discounts on purchases for its members as well.
If interested please reply here.
Posted by muscati at 5:28 PM
Monday, November 17, 2008
Hello all Bloggers and Blog readers,
How about a casual meet?
All bloggers, blog readers, enthusiasts (even curious ones) are welcome. Hope to see some masquerade too!
Choose your dates: 17th / 18th / 19th December (just timing between eid hols and AGCC meet). Do make your response post here.
We are watching this space and taking a head count. Depending on the number location will be fixed and informed later.
You could also suggest what we can be in the Agenda. (Apart from refreshments :-0 )
Oman Blogosphere is calling you.............................
PS: Bloggers please post this news in your blogs too to widen the Net scourge. Tks.
Wednesday, November 12, 2008
For those like me who missed His Majesty's speech in the annual opening of Majlis Oman (Council of Oman), it has already been uploaded on YouTube and you can see the full speech above. Beautiful speech.
May God bless His Majesty the Sultan and keep him for this great country. =)