59-year old Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum has seen his personal fortunes plummet from $12 billion down to $6 billion because of the ongoing global recession, as well as some other reasons. Dubai, an emirate of the United Arab Emirates, ‘was forced to ask for a handout from neighbor Abu Dhabi when credit markets tanked.’ Nonetheless, the sheik remains to be one of the world’s biggest racehorse owners, with 68 stallions and operating stables in six countries, including Japan, Australia and the U.S.’
It is said that beleaguered state-owned Dubai World owns DP World Ltd., the third-largest international port operator; Istithmar World, a private equity firm that acquired Barney’s New York in 2007; and Nakheel PJSC, builder of palm-shaped islands in the Persian Gulf. ‘Growth of such assets required high level of borrowing; when credit markets contracted, concerns arose about its $80 billion combined government and state-owned company debt. After months of bickering, Abu Dhabi bought $10 billion worth of five-year bonds; a permanent fix is still being hammered out.’
Over the last few decades, and exacerbated by the global economic crisis, Dubai’s debt has piled up due to credits incurred by government-related companies ‘to fund development at home and acquisitions abroad, to extend the emirate’s wealth and international reach.’
When Sheik Mohammed became crown prince in 1995, ‘he assumed effective control of the emirate’s economic development.’ He describes his ‘business approach as hands-on and ambitious.’ “I take decisions and I move fast. Full throttle,” he used to say.
Operationally, this is how he did it: ‘He organized the economy around state-owned conglomerates, picking loyal deputies to head each one. They competed against each other for projects and capital, tapping local and global banks that were eager to lend amid an oil-fired regional boom.’ Unfortunately, when the global economic meltdown hit full throttle last year, ‘foreign investors fled Dubai’s property market, a pillar of the economy.’
