through Mubadala, its powerful sovereign-wealth fund—will snap up parts of Dubai’s
distressed economy. The two emirates will also merge redundant institutions, perhaps
combining their stockmarkets, for example.
Exactly how much help Dubai will need is an open question. It is notorious for
publishing economic indicators months or years late. Debt levels have long been a
mystery. In the prospectus for bonds issued in September 2020 it listed public debt at
124bn dirhams ($34bn), a modest 28% of GDP. That figure does not include a bunch of
government-related entities, however. Add them to the mix and Dubai’s debts are closer
to 77% of GDP, estimates Moody’s, a rating agency.
There will be renewed talk of merging Emirates and Etihad, the official airlines of Dubai
and Abu Dhabi. They operate from airports just 131km apart (a second Dubai airport,
now under construction, is closer still). A merger makes sense in an era of soft demand.
Etihad lost $870m in 2019; its numbers for 2020 look even worse. But combining the
two will be a hard sell, if only for reasons of prestige.
That will not be the only source of awkwardness. Abu Dhabi is investing heavily in
theme parks, a financial sector and a film industry—all of them in direct competition
with Dubai’s. Meanwhile the UAE’s increasingly assertive foreign policy, run from Abu
Dhabi, will rankle Dubai: tensions with Turkey and Iran are bad for business. Those
border checkpoints will come down in 2021. But the relationship between the two
emirates will be fraught for other reasons.
| Section menu | Main menu |