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Do you think Dubai’s debt crisis has been blown out of proportion by the world’s press?

Do you think Dubai’s debt crisis has been blown out of proportion by the world’s press?

The results are in.

December 13, 2009 1:44 by

Whether you agree with the negative press Dubai has received recently or not, you cannot deny that recent events have not helped shield the emirate from widespread criticism. Only weeks after Sheikh Mohammed bin Rashid al-Maktoum assured investors that the Dubai government and its subsidiaries will meet its financial obligations, the government announces that Dubai World and Nakheel asked investors for debt standstill of six months for a whopping $26 billion.

And top it off, officials made the announced right before the Eid al-Adha and National Day vacation, which meant that investors around the world had no means of getting more information on the issue.

To date, no one’s really clarified the issue, and investors are still guessing if the emirate will meet its financial obligations.

Dubai World’s financial problems instigated a barrage of negative press for the emirate, with analysts insinuating Dubai was experiencing a financial apocalypse that will destroy the once booming commercial hub.

Kipp won’t argue whether Dubai deserved the bad press, because we don’t have enough information from government officials and industry leaders to take a stand (and because we don’t want to be banned).

Instead, we’ve left it up to you to decide. According to Kipp’s poll, 21 percent of readers think the international press has blown Dubai’s debt crisis out of proportion, and is always looking for ways to degrade Dubai. However, the majority – 48 percent – think Dubai is partially responsible for the negative press, claiming the emirate is “not as transparency as some would like it to be.”

Meanwhile, 30 percent of respondents think Dubai is entirely responsible for the negative coverage, claiming the emirate “deserves” it. And finally, 1 percent of Kipp’s readers don’t care either way, claiming they have not been affected by the crisis.

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  1. Fait on December 13, 2009 7:50 pm

    This sums it up for me, taken from the FT

    When public relations executives reflect on the way Dubai has handled its communications strategy over the past two weeks, they grimace before the adjectives fly thick and fast.

    “Shambles” and “disaster” are common criticisms, along with agreement that the handling of the announcement that Dubai World was seeking a standstill agreement with creditors exacerbated market reaction, triggered uncertainty and caused untold damage to the reputation of the Gulf’s business hub.

    In depth: Dubai debt crisis – Dec-08.Dubai rebounds after merger called off – Dec-10.Pressure on Istithmar’s overseas assets – Dec-09.Dubai property merger blocked – Dec-09.Dubai utility faces $2bn debt demand – Dec-08.Creditors meet Dubai World in payment push – Dec-07..The mistakes made would be part of “a fool’s guide of what not to do when announcing something of this level of importance”, says one PR executive.

    The executive cites three critical errors: the timing of the statement, released just as an extended Middle East public holiday began and the US prepared for Thanksgiving; the lack of detail, with the standstill request mentioned in the penultimate paragraph of a one-page statement; and the failure to offer investors and analysts any forums to gather information about what the statement meant.

    The result was a vacuum in which speculation was rife and investor confidence nose-dived – particularly after officials had talked up the prospect of the emirate meeting its obligations ahead of the statement.

    Sheikh Mohammed sought to quash criticism
    The irony is that Dubai is awash with public relations companies, from the large companies that ply their trade across European financial markets to independent firms unique to the Middle East. And Dubai Inc has employed some of the best known.

    In March, Finsbury was brought in by Dubai’s Department of Finance to explain “to stakeholders the new financial strategy of Dubai” as the emirate struggled with its debt burden. But in July, after a change at the top of the department, the firm was replaced by Brunswick, another respected agency, which has had to handle the November bombshell and its aftermath.

    The question experts are now asking is whether the emirate’s leaders are willing to heed advice from the consultants they hire.

    During the boom years, they were able to brush aside scepticism as Dubai burnished its brand with each extravagant project. But since the crisis struck, there has been scant willingness to acknowledge the severity of Dubai’s problems, observers say. Brunswick declined to comment, citing client confidentiality.

    One problem, observers say, is the autocratic system of governance in a city-state ruled by an absolute monarch that is bereft of democratic institutions.

    Michael Field, an expert on the region, says: “If Dubai had allowed open debate – a free press, some questioning of its policies, citizens being able to sue the government, etc – it might not have got itself into its present situation.

    “But it has been absolutely impossible for anyone in public to question the Dubai dream. And since the apparatus began to crumble about a year ago, Dubai has been in denial of its problems. It seems utterly unable to criticise itself or accept any criticism from foreigners.”

    When Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s ruler, first spoke on the issue – almost a week after the standstill was requested – he blamed the media, accusing it of exaggeration. Earlier, he had used an investment conference to tell critics to “shut up”.

    Lower-level officials are either unable or unwilling to speak out, observers say. “It is difficult to get a statement from any executive; everybody seems to be scared to say the wrong thing,” says Eckart Woertz at the Gulf Research Centre. “Dubai World needs a public face, a captain of the ship to say ‘there is a leakage but everything is under control,’ but there is no public face.”

    Dr Woertz points out that some lieutenants had been demoted during the economic crisis. Two of Dubai’s best communicators, Nasser al-Shaikh, the former finance chief, and Omar bin Sulaiman, who headed the Dubai International Financial Centre, were sacked this year.

    PR executives believe Dubai still has a chance to repair some of the damage, but only if attitudes change.

    “The race to be the trade and financial hub of this region is still Dubai’s to lose, they are still in pole position but there has to be some change of attitude,” says one. “Instead of looking to blame people, actually just sitting around and saying, ‘let’s focus … and how we can bring the international community along with us?’

  2. ajay on December 14, 2009 9:13 pm

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