The Gulf in recovery

When the full scale of the problems facing property and logistics conglomerate Dubai World were revealed to the world late last year, it caused ripples around the globe. Not only because the announcement that the company would need to delay repayments of its US$26bn was made just before the Eid al-Adha religious holiday, but also because most had settled into the assumption that the worst of the financial crisis had passed. Dealflow was starting to return, banks had reopened their hitherto closed loan books and capital markets across the world were again starting to show signs of life.

The British press, not known to miss an opportunity for hyperbole or the dissemination of spurious innuendo, was quick to seize the moment. It foretold the imminent collapse of Dubai, the dissolution of the UAE and by extension the passing into oblivion of the Gulf region as a whole, along with other entities such as the entire UK banking industry, for instance.

Thankfully, little if anything the UK press writes comes to pass. Despite experiencing a period of severe discomfort, Dubai World was successfully able to restructure its debts and avoid collapse. The Gulf states have powered on – taken the whole incident in their stride as a mere blip (albeit a necessary one: it yielded the introduction of an insolvency code to deal with any disputes arising out of the company’s restructuring) in their development trajectories. 

But that the press – and quite a few others – posit a link between Dubai’s troubles and that of its Gulf neighbours is also of some import. It serves as evidence that misconceptions about the region still exist. Dubai may be the region’s most high-profile celebrity, may have been used as a stepping-off point for investors and capital bound for elsewhere in the region, but the days of it being used in this fashion are surely numbered not because of its recent difficulties, but because other Gulf states have been quietly, conscientiously building their profiles.

Abu Dhabi, with its abundance of natural resources and comparative fiscal prudence remains a mainstay, while further afield Oman, Bahrain, Kuwait and Saudi Arabia are all garnering their fare share of interest, especially among law firms who seem to be as good a barometer as any of actual and potential investment levels of any given location.

ALB reports from the Gulf on what the region’s recent rejuvenation means for lawyers there.

NEXT: Testing times for international firms in the Middle East

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