Dubai ruler emphasizes links to oil-rich Abu Dhabi

Dubai ruler stresses close ties to wealthy Abu Dhabi, tells doubters to 'shut up'

• By Adam Schreck, Associated Press Writer
• On 10:45 am EST, Monday November 9, 2009

DUBAI, United Arab Emirates (AP) -- Dubai's ruler on Monday strongly emphasized the debt-burdened emirate's close ties to its oil-rich neighbor Abu Dhabi, and told critics who question the bonds between the two to "shut up."

The comments appear aimed at dispelling perceptions of a rivalry between the two emirates -- both of which have spent heavily but often independently to boost their own international clout -- by stressing freewheeling Dubai's place within the broader United Arab Emirates federation.

Sheik Mohammed bin Rashid Al Maktoum broke away from a prepared Arabic speech detailing his belief in the underlying strength of the Dubai economy to make his point about national unity in English.

"Dubai and Abu Dhabi are one," he said. "I assure you that we'll be there for each other when we need it," he added later.

Questions about Dubai's relationship with its richer neighbor have grown louder since the global economic crisis battered the city's core industries and property market, exposing deep financial problems.

The UAE was founded in 1971 when Dubai and Abu Dhabi banded together with five smaller sheikdoms. The Gulf Arab country, an important U.S. ally just across the water from Iran, now ranks as the Arab world's second largest economy after Saudi Arabia.

Over the years, the country has worked to balance the ambitions of Dubai, which despite little oil has blossomed into a booming trade and financial hub, with those of more conservative Abu Dhabi, holder of nearly all of the country's oil and gas reserves.

"Since the UAE was created ... we've seen a long struggle of Dubai trying to maintain some autonomy," said Christopher Davidson, a professor at the University of Durham who has written extensively about the UAE.

In his rare public comments Monday, Sheik Mohammed stressed the tribal bonds and blood relations between the hereditary rulers of the two emirates. Abu Dhabi's leader serves as president of the federation, while Sheik Mohammed is vice president and prime minister.

The comments come as Dubai works to dig itself out from under at least $80 billion in debt amassed by the city-state's government and its numerous state-run companies.

Dubai earlier this year turned to the UAE's central bank in the capital Abu Dhabi for a $10 billion emergency loan. The state has said it expects to raise an additional $10 billion in financing before the end of the year.

Investors are eager to see whether Dubai will be able to raise further funds from private investors or will again need to tap the federal government's oil wealth through the central bank.

Sheik Mohammed said only that he expected the second $10 billion bond package will be well received, suggesting possible outside investment. He gave no specifics.

Dubai's ruler also confronted critics who say the sheikdom was slow to react to the global financial crisis, saying the government "preferred to wait rather than rushing" so it could restructure its state-owned companies to better cope with the new economic reality.

Some of those companies, like Emirates airline and port operator DP World, continue to report profits despite the downturn. But many others have been forced to shelve ambitious growth plans and lay off thousands of foreign workers.

Still, Sheik Mohammed said he is confident the worst of the financial crisis has passed.

"As the global economy stabilizes, Dubai today is well placed to exploit its inherent strength and its key strategic location," he said.

Many observers viewed Dubai's earlier decision to borrow cheaply from the central bank as a bailout by Abu Dhabi -- a characterization Dubai rejects. Several analysts -- as well as journalists -- questioned what Dubai would need to give up in exchange.

But Sheik Mohammed sought to quash such talk Monday, saying in English the press "should really do their homework" about his country.

"I just want to tell these people who nag about Dubai and Abu Dhabi to shut up," he added.

The comment drew laughter and applause from top Dubai officials and investors attending the speech.

Davidson, however, said the comments were "a mistake" that could hurt rather than help Dubai's credibility.

"Investors are not going to be satisfied with these off-the-cuff comments that 'we're all one.' It just smacks of desperation really," he said.

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