‘Someone at some point will have to pay.’ Saudi Arabia will emerge as the real economic force.

ALEC HOGG: In this week's Boardroom Talk we focus on Dubai, and feature an extended interview with Dr Christopher Davidson, author of the acclaimed book, Dubai, the Vulnerability of Success. On Wednesday evening, after the markets had closed for the long weekend in the Middle East and the US, Dubai announced that it would not be servicing nor repaying any of its $80bn debt for at least the next six months. We pick up on the discussion that I had with Christopher Davidson, a 12-minute discussion. We've just taken a little part of it for you tonight. I asked him whether the timing of this was in or out of character.

"CHRISTOPHER DAVIDSON: Entirely in character in the Gulf States over the years. We've seen national holiday special events being used to time particularly sensitive pieces of news. This of course is the beginning of the second Eid holiday this year, and of course the US Thanksgiving. The Dubai crusher happened yesterday and of course the S&P and Dow Jones were not in action.

ALEC HOGG: And where do you see it going from here, Christopher?

CHRISTOPHER DAVIDSON: Well, the next step is: what do the foreign companies do that just haven't been paid? Some of them have been waiting a month, 12 or 18 months in some cases, what do they do? Do they file lawsuits, and if so, who against? The government of Dubai? Well, what's the point if there is nothing in the coffers? Do they try and sue the ruling family of Dubai? After all, during the boom years the ruling family was more than happy to have a very blurred distinction between itself and the government's wealth.

ALEC HOGG: And is the party over?

CHRISTOPHER DAVIDSON: Absolutely, yes.

ALEC HOGG: Where would Dubai be in, say, five years' time?

CHRISTOPHER DAVIDSON: I would say Dubai would be a regular city within the United Arab Emirates, completely controlled by Abu Dhabi.

ALEC HOGG: So all those buildings, all the developments that have been put there over the past couple of decades standing empty?

CHRISTOPHER DAVIDSON: No, not at all. The buildings will always be filled. Dubai has a successful port operation, successful airline. It's just a question of who is actually going to be in control of them.

ALEC HOGG: When South Africa had a debt standstill in 1985 it took six years for this country in very harsh economic conditions to repay the debt that was owed. It did manage to repay everything, and remains a borrower in the international community. Do you think that that's going to be the approach that Dubai will take - that, despite the difficulties that it will cause, they will in fact repay all the debt?

CHRISTOPHER DAVIDSON: Well, if Dubai and the United Arab Emirates do hope to become a genuine player in the international economy, and an actual liberal economic environment, these debts will have to be paid up at some point - they can't just write them off. So someone at some point will have to pay. This means the United Arab Emirates will be burdened by this debt for many years to come. The bigger picture is it means that the United Arab Emirates' assets become the regional economic superpower and now are going to ... play second fiddle to Saudi Arabia, which will emerge as the real economic force.

ALEC HOGG: Fascinating insights there from Christopher Davidson, an academic and author of the acclaimed book, Dubai, the Vulnerability of Success. We were very fortunate to get him. He's been quoted all over the world, and you heard him right here on SAfm.

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At least they do not have a dysfunctional government with 50 PLUS murders a day being the norm. Viva the ANC. Viva Mugabe.Viva no white people. by Failure on November 30 2009, 10:52 Find this comment inappropriate? Report it

DUH! Dubai was over when you started advertising "can't lose" buy property in Dubai adverts on your web site by Munch on November 30 2009, 11:10 Find this comment inappropriate? Report it

what this really proves... ... is that God has both a great sense of humour and an appreciation for irony. After all, Arabia is merely the same bling as SA except on a somewhat grander scale. A nation of camel drivers and slave traders find themselves . .more sitting on oceans of hydrocarbons. Serendipitous indeed. But the nature of camel driving and slave trading is inbred and does not vanish overnight; forget the bling. Does this remind you of another country? ( hint; it is situated at the southern tip of Africa where a substantial portion of the inhabitants have not yet learned the concept of soap or hermaphroditism but who yet believe that an economy can grow ever upwards on social hand outs. . .less by Plutarch on November 30 2009, 11:31 Find this comment inappropriate? Report it

@failure "failure"...hmmm, let me guess...it's a family name right? by phill on November 30 2009, 11:43 Find this comment inappropriate? Report it

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