The UK trade minister yesterday pointed to signs of progress on Dubai World's US$26 billion (Dh95.49bn) debt restructuring.
UK minister encouraged by signs of progress
The UK trade minister yesterday pointed to signs of progress on Dubai World's US$26 billion (Dh95.49bn) debt restructuring. The comments by Lord Davies followed earlier warnings by British officials that a quick and fair resolution was necessary to maintain Dubai's international reputation. "There are signs that some progress is being made, from what I hear from banks, and I am hopeful that that process can continue," said Lord Davies, who is touring the region with a delegation representing 70 small British businesses.
Earlier this week, Aidan Birkett, the chief restructuring officer for Dubai World, met British banks in London that are estimated to be owed $5bn by the Dubai Government-owned group. The main UK banks involved in the restructuring are Royal Bank of Scotland, HSBC, Standard Chartered and Lloyds. Lord Davies said the resolve of those banks "has been tested in the short term" by the financial problems at Dubai World, but that their troubles with the indebted conglomerate would not jeopardise their long-term commitment to the region. "They have been here for a long time and are here to stay for the long term," he said.
Lord Mandelson, the UK business secretary, last month urged Dubai World to quickly conclude a deal with its creditors during a visit to the UAE. He said the restructuring would shape the outside world's view of Dubai and affect its ability to attract investment in the future. Lord Davies said the crisis had harmed Dubai's reputation among British companies and contractors, many of whom had not been paid for their work.
"In the short term this has hit their confidence," he said. "But in the long term will the businesses pull out? No." A significant number of UK contractors have been unpaid for many months after the financial crisis sent property prices in free fall, sapped the region of liquidity and left companies such as Nakheel, a unit of Dubai World and the developer of the Palm islands, heavily indebted. "Clearly, the companies and consultants are keen for their fees to be repaid, but they are also absolutely committed in the short, medium and long term to Dubai," said Edward Oakden, the British ambassador to Abu Dhabi.
Asked whether the British firms with outstanding dues had made any progress towards being paid, he said: "Over the last nine months there has been a period of taking stock by the Dubai authorities as to what was the best way forward. This process is moving forward rather than backward. There is a dialogue between the Dubai authorities and those owed money." In July, Lord Davies urged Dubai-based companies to repay British contractors and suppliers. According to an analyst cited by the New Civil Engineer, a UK trade journal, British consultants in Dubai alone were owed Dh2.2bn early last year. He stressed the potential opportunities for small businesses to trade with the UAE, particularly as it invested heavily in infrastructure.