The Camel Road

February 4, 2010 by · Leave a Comment 

By Sumayyah Meehan, MMNS Middle East Correspondent

“As a camel beareth labour, and heat, and hunger, and thirst, through deserts of sand, and fainteth not; so the fortitude of a man shall sustain him through all perils.”

~Egyptian King- 14th Century

camel-s Long gone are the days when camels, also known as the ‘ships of the desert’, were considered mere beasts of burden. Over the past few decades, the beleaguered camel has come up in the world and is often considered, by more than a few wealthy Arab businessmen, to be a crowning jewel in a portfolio of glittering capitalism.

Every year the love of all things with skinny legs and a giant hump is brought out for all to see at the annual Al Dhafra Festival in Abu Dhabi, which started this week and runs until February 8. Located in the heart of Zayed City lies a barren and desolate unpaved road that comes to life but once a year.  Nicknamed “Millions Street” after many a million dollar deal that has been struck up over the years, the mere 3 kilometer long road is an internationally recognized commercial site for some of the best camels in the entire world. It’s also the site of the festival that draws in both a local and international crowd.

Camel owners and aficionados from all over the Middle East descend upon the tiny Gulf emirate in the weeks leading up to the camel show and auction. Organizers treat their wealthy guests to camel beauty pageants, camel petting sessions and an auction fit for a king’s ransom.  As a result of the buzz surrounding this social event, members of the non-camel loving set can also line their wallets with some cold hard cash simply by catering to both man and beast. Savvy merchants often set up tents and offer a host of camel-related gear, from plushies to woven mats, and traditional UAE handicrafts. The municipality has also gotten in on the game by offering meals and water for the human guests while providing fresh fodder for the four-legged ones. There is even a makeshift mosque, camel hospital and a grocery store.

The starting price for one of the perfectly pampered and preened camels is a whopping 50,000 Dirhams and often skyrockets to several millions of dollars. This year more than 28,000 camels are on display with each one carrying its own price tag based on breed and beauty. In the first days of the festival, reports in the local media already revealed that a wealthy local businessman named Hamdan Bin Ghanim Al Falahi bought several camels to complete his prestigious flock to the tune of 45 million Dirhams.

As for the beauty pageant, a team of judges determines which camels are the youngest, most beautiful, possess the best lineage and who are most well behaved. The prizes for the winners of the beauty pageant stand to win an estimated 42 million Dirhams. Owners busy themselves throughout the day fussing over the camels to ensure that everything is picture perfect. Once the sun sets, the festivities hit a peak and last well into the morning. It’s all smiles for the owners who stand to earn millions if one of their camels catches the eye of a ‘cash cow’ of a buyer.

Looking back at past events, several lucrative sales have been made. Most notably were the sales of two camels that had made a name for themselves in the region. The camel named Marokan fetched an estimated 15 million Dirhams while his equally beautiful compatriot Mura’a was purchased for 10 million Dirhams. Camel breeding and herding is big business in the Gulf region which has pretty much catapulted itself out of the global credit crunch with only a couple of scratches. Event organizers hope to continue the event in the future and share a bit of the traditions of the UAE with the rest of the world.

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Abu Dhabi’s Dubai aid shrinks to $5 bln

January 21, 2010 by · 1 Comment 

By Amran Abocar and Nicolas Parasie

2010-01-08T095618Z_1575008665_GM1E6181DQ601_RTRMADP_3_EMIRATES

Expert sky diver and BASE jump enthusiast Omar Al Hegelan (C) descends on to Burj Park Island after free falling from Burj Khalifa in Dubai, January 5, 2010. Al Hegelan and Nasser Al Neyadi both expert divers, have broken the record for the world’s highest BASE jump after free falling from the tallest building in the world, and made their landing on Burj Park Island after covering a vertical descent of 672 metres (2,205 ft). Picture taken January 5.

REUTERS/Stringer

DUBAI, Jan 18 (Reuters) – Dubai said on Monday that half of a $10 billion bailout from Abu Dhabi last December came from an older debt deal, highlighting what analysts said was the emirate’s poor market communications and lack of transparency.

Investors said news that Abu Dhabi directly lent less new money than previously thought also indicated the wealthy emirate wanted more evidence of Dubai’s fiscal probity, after helping it avert an embarrassing default on a state-linked bond.

“The government works behind a high degree of opacity and I think market players have factored that in,” said Khuram Maqsood, managing director of Emirates Capital.

The UAE is not known for exercising best practice transparency but that doesn’t mean they’re not trying. But I don’t think they’re there yet and I think people recognise that.”

A Dubai government spokeswoman said the last minute lifeline last Dec. 14 included $5 billion raised from Al Hilal Bank and National Bank of Abu Dhabi which was announced on Nov. 25.

“Obviously it’s a lot less cash than we had assumed,” said Raj Madha, an independent analyst based in Dubai.

“The interesting thing is what it says about the behaviour of Abu Dhabi: whether they are just rushing through a large amount of money or whether they are providing funding where required.”

Five-year credit default swaps for Dubai stood at 426 basis points, up from 423 basis points on Friday.

Dubai rocked global markets last Nov. 25 when it requested a standstill on $26 billion in debt linked to its flagship conglomerate Dubai World and its two main property developers, Nakheel and Limitless World.

The $5 billion raised from the two Abu Dhabi banks was part of a $20 billion bond programme announced early last year. The UAE central bank signed up for $10 billion of that in February.

But it was unclear whether Abu Dhabi’s $10 billion bailout on Dec. 14 — which enabled Dubai World to repay a $4.1 billion Islamic bond, or sukuk by developer Nakheel — was entirely new money or included the bond to the Abu Dhabi banks.

The government spokeswoman, who spoke on condition of anonymity, said the Gulf Arab emirate had already drawn down $1 billion of the $5 billion from the banks, provided under a five-year bond priced at 4 percent, with the rest yet to be used.

The remainder of the funds, some $4.9 billion, may come from the banks’ or the Abu Dhabi government directly, the spokeswoman said, through another of its investment vehicles.

“The question is whether there will be more funds coming in; because as things stand today, Dubai without further support will find it very difficult to drive a favourable bargain with its creditors,” said a Gulf-based banker.

Asked whether Dubai would seek more funds, the spokeswoman declined to comment.

Abu Dhabi’s support in December came nearly three weeks after the standstill news and amid a lack of communication by Dubai which shook global markets and may have caused lasting damage to the reputation of the Gulf business hub.

CREDITOR TALKS

Dubai World is in the midst of talks with its creditors to finalise a formal standstill agreement that would last for six months, during which the conglomerate will restructure its remaining debt burden, estimated at some $22 billion.

The conglomerate has insisted the restructuring is limited only to certain units and has ringfenced its jewels such as ports operator DP World.

In a research note on Monday, UBS said there was a high probability Dubai World would have to offer “sweeteners” to creditors to bring them onside in the debt talks.

That could include higher interest rates or equity swap options to persuade creditors to give up claims to key assets, like the profitable port operator.

“It is unlikely that Abu Dhabi’s support has peaked just yet and the probability of further balance sheet assistance is high,” UBS economist Reinhard Cluse said.

But he said Abu Dhabi, the biggest and wealthiest of the seven member United Arab Emirates federation, would not want to act solely “as a channel for cash” and would demand systemic changes.

Dubai has said the Abu Dhabi lifeline is contingent on Dubai World reaching an acceptable standstill with creditors.

Uncertainty over the restructuring has weighed on UAE markets as investors fret about the outcome amid a dearth of information.

The conglomerate said this month it is “some time away” from presenting its formal plan to creditors, though it is expected in coming weeks.

“Clearly there were critical time deadlines last year that required extraordinary measures,” said Mashreq Capital Chief Executive Abdul Kadir Hussain, of Abu Dhabi’s bailout.

“But whatever form is required, whether it’s the federation or Abu Dhabi, what is critical now is a well-documented plan for repayment and … a strategy that will show how all of this will be taken care of.” On Monday, the Financial Times said some creditors to the conglomerate are seeking to offload loans to reduce their exposure to the conglomerate.

(Additional reporting by Chris Mangham and Dinesh Nair; Editing by John Irish and David Cowell)

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Dubai Officials’ Confidence-Building Britain, US Trip

December 17, 2009 by · Leave a Comment 

By Amran Abocar and Steve Slater

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An investor looks at stock information at the Dubai Financial Market December 16, 2009.   REUTERS/Mosab Omar

DUBAI/LONDON (Reuters) – Two top Dubai officials are visiting Britain and the United States over the coming days to rebuild investor confidence after neighboring Abu Dhabi helped bail out the emirate’s flagship company.

A source close to the government said the officials were already in London and would be in New York on Thursday and Washington on Friday to meet financial and political leaders.

“This is the next step in Dubai’s commitment to greater transparency,” said the source.

“They will spend the next few days meeting financial, economic and political leaders in London, New York and Washington, D.C. to discuss the actions taken this week to stabilize global markets.”

The emirate, famous for its man-made islands in the shape of palms and for other infrastructure projects, rocked global markets on November 25 with a request for a standstill agreement on $26 billion of debt linked to Dubai World and its two main property units, Nakheel and Limitless World.

The roadshow is being led by Sheikh Ahmed bin Saeed al-Maktoum, chairman of Dubai’s Supreme Fiscal Committee and the uncle of Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum. Until recently he was best known as leader of the Emirates airline, but his public profile has risen since the debt crisis erupted.

Also on the trip is Mohammed al-Shaibani, deputy chairman of the same committee. He heads Sheikh Mohammed’s court and is chief executive of the Investment Corporation Dubai, which oversees the government’s investment portfolio.

‘Comprehensive Solution’

Earlier this week, Abu Dhabi, which produces 90 percent of the United Arab Emirates’ oil exports, provided $10 billion of financial aid to its fellow UAE member to meet the debt obligations of Dubai World until the end of April and to stave off a bond default by Nakheel.

Some $4.1 billion of the rescue funding helped Nakheel repay an Islamic bond, or sukuk, on Tuesday, a day after its due date.

The Abu Dhabi lifeline came in the form of bonds, at similar terms to a $10 billion bond issue to the UAE central bank in February, which carried a coupon of 4 percent per annum for the five-year, fixed-term issue.

Dubai also announced this week it would implement immediately an insolvency law modeled on U.S. and British practices in the event Dubai World needs to seek protection from its creditors. Meanwhile, Dubai’s ruler ordered the creation of a tribunal, headed by three international judges, to oversee any disputes between Dubai World and its creditors.

“They want to explain what happened this week,” said another source close to the government. “It’s very much the transparency message and to discuss the fact they presented a comprehensive solution.”

With the bond repayment out of the way, Dubai World must now agree a standstill with creditors, allowing it time to undergo a massive restructuring. It is slated to meet representatives from some 90 banks in Dubai on Monday.

(Editing by Andrew Callus and Kenneth Barry)

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Dubai Babylon: The glitz, the Glamour – and Now the Gloom

December 3, 2009 by · Leave a Comment 

Property of TVS, Inc. Dubai, the Arabian city state that tried to turn itself into Manhattan-on-the-Gulf inside a decade, looks this weekend as if it may end up more like an expensive imitation of Sodom and Gomorrah. No brimstone, no vengeful God, but still an awful lot of wreckage after an orgy of hedonistic excess.

This, until last week, was the world capital of greed, a Legoland of lolly, where flashy malls, artificial islands, and preposterous skyscrapers were run up in no time; where monied chancers booked into £4,000-a-night hotel rooms; and where celebrities who didn’t know better were lured into a place that was even gaudier than their own homes. People said it was all built on sand, but, after the businesses at the core of the Dubai empire revealed a black hole of $80bn, we now know it was actually built on debt, semi-slave labour and the glossiest puffery that borrowed money can buy.

This, before we get down to the juicy details, is not how Gordon Brown saw it. The Dubai dream was largely the creation of the late Sheikh Maktoum and his successor, the current ruler Sheikh Mohammed. The day before Dubai’s shock debt announcement, the sheikh was in London. According to UAE’s national news service, Gordon Brown said he was “impressed with the quick recovery made by the UAE economy and the measures made by the leadership and government there that led to minimal impact of that crisis on the country’s economy.”

Once upon a recent time, this was true. At the height of Dubai’s property bubble, developers competed to outdo each other and impress the sheikh with more and more outlandish projects at the city’s annual property show Cityscape. Ski fields in the desert and the world’s largest shopping mall of 1,200 shops, complete with an aquarium housing 400 sharks, are among the projects already built, and plans for an underwater hotel.

Prospective buyers would queue for hours for the chance to purchase off-plan property. Ten minutes later they would sell on to someone at the back of the queue for a £10,000 profit.

While the economy boomed, the city partied hard. Dubai quickly became a favourite playground for Russian gangsters, Bollywood movie stars, and British footballers and their WAGs. David Beckham and Michael Owen were among those splashing out on multimillion-pound properties on the Palm, while Brad Pitt and Denzel Washington were also rumoured to have homes there.

Paris Hilton made a version of her reality show in the bars and malls of city this year. On any given night, parked out front the Grosvenor Hotel, with its popular bars, would be an eye-popping collection of the most expensive sports cars. “Soon,” one sheik was quoted as saying, “every Count of Monte Cristo will be in Dubai. In 10 years, only rich and famous people will live here.” And the servants? “I would hope robots or clones will do all that by then.”

With Western cash came Western cultural norms. Though foreign residents need a liquor licence to drink in their own homes, alcohol is widely available in hotel bars. All-you-can-drink brunches where expatriates got sloshed on champagne became the favoured way of passing Friday afternoons. While the Muslim community spent the holy day at the mosque, Westerners drank themselves legless.

It was at one of these infamous brunches that two Britons fell foul of the strict laws that govern the state. Michelle Palmer, 36, and Vince Acors, 34, who had met for the first time that day, were sentenced to three months in prison in July 2008 after being arrested for having sex on the beach. Not long after, British women Marnie Pearce and Sally Antia were jailed for adultery after their husbands told the police they were having affairs. Yet Arab men will drink openly in hotel bars and prostitution is rife.

The Burj Dubai, the world’s tallest skyscraper at 818m, disappears into the clouds high above this emirate of contradictions. Dubai is an architectural odyssey, yet an urban planner’s worst nightmare which employed, until recently, 50 per cent of the world’s largest cranes. The people of the more sedate and richer emirate of Abu Dhabi 70 miles down the road have often been said to shake their heads at the money its neighbour has wasted. Abu Dhabi’s developments such as the breathtaking Yas Marina Circuit used in this year’s Formula One championship have been carefully planned.

Dubai has simply built bigger and bigger with little thought given to planning. It was bound to fail: no city or region could sustain such growth – particularly as the oil that drove that expansion has been slowly running out. The financial crisis simply exacerbated the long-term structural problems of its economy. Last week’s announcement that Dubai World, the developer of the famous man-made Palm Jumeirah island development that can be seen from space, wanted a standstill on its repayments on a chunk of its $60bn indebtedness shocked the financial markets. Banks in London and Edinburgh, such as HSBC and the Royal Bank of Scotland, had lent Dubai World billions of pounds. Now there is the very real possibility that they will lose much of this as Dubai World defaults.

On the Palm, on the Persian Gulf’s man-made coastline, is the Atlantis Hotel, an imposing construction of two towers linked by a bridge. Kylie Minogue sang at its star-studded opening last year, with spectacular fireworks visible for miles a one-night jamboree that cost £20m. Dubai World could not have chosen a worse time to open the seven-star hotel.

Attracting Western tourists has been one of the pillars of Dubai’s gross domestic product growth, but as Westerners tighten the purse strings so Dubai’s tourism industry has started to wobble. The fear now is that the dreams of Sheikh Mohammed could turn into an economic nightmare for both the emirate and the rest of the world. Economists are analysing whether this is the disaster that will create a so-called W-shaped recession – that is, two collapses rather than just the one of a V-shape.

It might seem extraordinary that a tiny emirate of about 1.5 million people could cause such global turmoil, but Dubai is intertwined with some of the most everyday parts of the UK economy alone. Dubai World owns P&O, the ferry operator, while Dubai International Capital (DIC), the state’s international investment arm, has a 20 per cent stake in the company that runs Madame Tussauds, the London Eye and the Sea Life Centres.

The reciprocal nature of the UK and Dubai economies means that British firms are now coming to the rescue. The Independent on Sunday can reveal that Dubai World’s big lenders, led by the UK-based institutions, have lined up the London-based financial restructuring team a accountants KMPG to salvage the $30bn-plus they are owed. A formal appointment is expected this week.

They will have their hands full.

Gulf state’s holdings: Small sample of Dubai’s global reach

Millions of dollars have been invested in Sheikh Mohammed’s passion: thoroughbred racehorses. In Newmarket, he owns Dalham Hall stud farm and Godolphin stables. The sheikh’s 4,000 acres in Ireland make him the largest farmer in the country. He also owns 7,000 acres of paddocks in Britain and 5,000 acres of farmland. Other assets owned by Dubai investors include:

* The QE2, currently moored in Cape Town
* The Adelphi on the Strand and the Grand Buildings in Trafalgar Square
* A 20 per cent stake in Cirque du Soleil, the Canadian circus troupe
* Budget hotel chain Travelodge
* A stake in Merlin Entertainments, which runs Alton Towers, Madame Tussauds and the London Eye
* Scottish golf course Turnberry
* Chris Evert tennis clubs in the US
* A ski resort in Aspen, Colorado
* A 21 per cent stake in the London Stock Exchange
* Ports and ferries group P&O

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The Crimson Tide

March 26, 2009 by · Leave a Comment 

By Sumayyah Meehan MMNS Middle East Correspondent

Red%20Tide

It sounds like something out of a sci-fi blockbuster. A mysterious red blob suffocates and kills anything that gets in its way as it slithers along, leaving mayhem in its wake.

However, in the case of the current crimson tide washing up in the GCC, truth is stranger than fiction. Known as ‘red tide’, the phenomenon is caused by a thick growth of phytoplankton called dinoflagellates, and it occurs naturally.

However, scientists have discovered that some variants of the occurrence may also be a by-product of human activities, such as development programs to extend land borders by adding fillers to the sea, or the dumping of waste into the ocean. The red tide suffocates fish and other marine life to death. Areas of the coastline affected by the phenomenon are often littered with the carcasses of fish, crabs and other sea creatures.

Typically, the red tide rears its’ ugly head in the spring. However, this year the red tide arrived as early as this past October off the coast of the UAE where it still lingers and is spreading to other GCC States including Oman. This past January the Ministry of Environment and Water in Abu Dhabi appointed a specialized team to develop a national course of action to cope with the problem that has left many beaches in the kingdom empty as well as several dinner plates. The ministry has also launched an intense media blitz to inform the public how to stay safe during the peak of the red tides. While studies have shown that it is safe to swim in the tainted water, being in close contact with the algae can cause severe respiratory problems. As for eating the marine life that is veritably soaking up the contaminated water, it is safe to consume seafood as long as the catches are caught fresh and alive. Officials have warned the public from scavenging through the several tons of dead fish that have already washed up along the coast. A mass clean up effort is continuously underway in the affected regions to collect the decomposing corpses and incinerate them at a public facility.    The government of the UAE also plans to develop a system of satellites to serve as an early warning system for when the red tides begin to roll in.

This past week the State of Kuwait was put on alert as the red tide began looking for its next victim. The Environment Public Authority (EPA) in Kuwait has warned the government to give the phenomenon special attention for the sake of public health. The Kuwaiti government sent scientific expert, Dr. Mona Hussein, to the UAE this week to study the red tides first hand before they make landfall in Kuwait. Dr. Hussein will collect water and dead fish samples to bring back to Kuwait for further studies.

As a result of the red tides, the tourism industry in the GCC has taken a massive hit especially in Dubai where divers from all over the world come to enjoy the crystal blue waters and immaculate coral reefs. The murky waters are keeping tourists away and isolating the public from their own coastline.

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