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Can Kuwait help Dubai?
Kuwait has offered to help the UAE financially with Dubai’s debt woes. But is Kuwait in a position to lend a hand?
December 16, 2009 3:29 by Aarti Nagraj
Kuwait offered to help out the UAE during the debt crisis in Dubai, Sheikh Mohammad al-Salem al-Sabah, Kuwait’s foreign minister told reporters during the GCC summit in Kuwait.
“I called (UAE foreign minister) Sheikh Abdullah bin Zayed and offered Kuwait’s assistance,” he said. “There is no doubt that we want to assist our brothers in the UAE.”
“I said we are with you in good times and the bad,” he added.
On November 25, Dubai asked creditors for a six-month debt delay for its conglomerate Dubai World. Global markets dropped sharply following the news, leading to media frenzy on Dubai’s downfall. Abu Dhabi announced that it was giving $10 billion to Dubai on Monday, the same day that a $4.1 billion Islamic bond of Nakheel, the property arm of Dubai World, matured.
Although Kuwait’s offer has not been accepted so far – at least not publicly – is the country in a comfortable position to offer financial help at the moment?
The country was hit badly by the global financial crisis; the Kuwaiti stock exchange lost 30 percent last year, and in February this year, Kuwait’s Central Bank governor Sheik Salem Abdul-Aziz Al Sabah announced a $5.15 billion economic stimulus package to help struggling investment companies.
“We expect (the bill) to generate a good measure of confidence in Kuwait,” he said at the time, adding the package will “reduce the risk of an economic recession.”
The government also promised to guarantee all deposits in local banks to restore confidence.