the Dubai Department of Finance has appointed Brunswick as its PR adviser.
Brunswick brief a bellwether for change in Dubai
Alan Parker, the founder of the communications group Brunswick, has a little motto about the role of financial public relations in the delicate pas de deux between the business world and the media: "You must always avoid getting in between the actors and the footlights." Mr Parker, who built London Brunswick from scratch in the 1980s to become one of the biggest PR firms in the world, with offices in 15 countries, meant that he and his fellow communications executives should never become the news themselves.
Their job was to facilitate transmission of information between companies and executives, and the press, broadcast and web-based organisations that try to shed light on the business world. On the whole, I agree with that dictum. The minutiae of comings and goings in the world of PR - who has won what client, which firm has tendered for which account, or which executive is being lured from one firm to another - is largely incidental to the real business of business and deserves to stay firmly in the specialist trade press.
But occasionally PR activity becomes an intrinsically interesting matter in itself. It illustrates how companies and executives are thinking if they decide to hire or fire one firm in preference to another, or do away with PR advice altogether. It can be a straw in the wind of corporate strategy. Last week's brief but intriguing announcement from the Dubai Department of Finance (DoF) fell into this category. The DoF, in the name of director general Abdul Rahman al Saleh, announced it had appointed Brunswick as its PR adviser and thanked Finsbury, its London-based rival, for its help this year.
One in, one out it seemed, but talking it through with PR professionals in Dubai over the past few days, there is rather more to the matter than first seems apparent. I believe there has been another significant shift in the way Dubai is approaching the effects from the global economic crisis, which tells us much about the emirate's priorities for the rest of the year. When Finsbury was appointed in March, it was taken by the media as a welcome sign that Dubai Inc had fully signed up to the principle of transparency and openness that was often lacking in the past in its dealings with the international and local media.
Finsbury's job was to explain how Dubai was planning to meet the challenges of the post-crisis world, and in particular the US$80 billion (Dh293.84bn) of debt the emirate had built up in its headlong rush for regional leadership. Simon Moyse, a straight talking, experienced PR executive with stints in Moscow and London's Treasury, was parachuted into Dubai to try to stem the negative press the emirate had been getting from the serious business media.
His main ally in this task, and the man who was instrumental in his firm's appointment, was Nasser al Shaikh, then the director general of the DoF, but Mr al Shaikh departed soon after in circumstances that have still not been fully explained. It is customary for a change at the top to prompt a change in PR firms, so perhaps we should look no further than that for an explanation of Brunswick's recent appointment.
But I believe there is more to it than that. Brunswick's brief with DoF is narrower than Finsbury's. It has been hired explicitly to explain to a sceptical global media how Dubai will disburse the funds from the financial support fund launched by Dubai last February with a $10bn bond backed by the Central Bank. This is key to Dubai's medium-term economic strategy. The funds are to be used to support cash-strapped corporates deemed essential to the emirate's future development, many of whom are struggling with debts to - often foreign - contractors or with financing obligations on the international markets.
A large part of the existing $10bn, perhaps most of it, has already been used to support the developer Nakheel, arguably the worst affected by the global crisis. Dubai hired Rothschild, the investment bank, to help it establish a fund, which would then disburse the cash, but the bank has now completed that task and its contract finished at the end of last month.
Brunswick's challenges are these: to explain how and why some corporates will get funds while others will not; to explain progress on the second tranche of the fund, which is being marketed around the world but, according to bankers, has not met with a strikingly warm reception by international investors, and may also end up with the backing of the Central Bank; and finally to tell the world, via the international media, how Dubai will meet the significant funding obligations it has to satisfy over the next 12 months.
Most notable is the $3.5bn sukuk from Nakheel, which has to be honoured in December. The firm's appointment is a sign that these pressing financial commitments are assuming a larger significance in the minds of the leaders of Dubai Inc, rather than any broader notions of the emirate's reputational risk. In short, it is a signal that Dubai is getting down to the nitty-gritty, and even considering a selective default on one or more of its liabilities.
For Finsbury, there is still a job to be done in Dubai. The firm will report to the newly established Brand Dubai on the emirate's global media image, and is picking up some other business, notably the Dubai Pearl project. But Brunswick will shoulder the main and crucial burden of explaining Dubai's financial position to the world. With such a high-profile commission, it will be a challenge for the firm to stay out of the limelight.