DUBAI, United Arab Emirates — If global investors were looking for reassurances from Dubai that it would stand behind its massive, debt-swamped investment conglomerate, they got none Monday. Instead, the Gulf city-state seemed to wash its hands of the financial woes that have rattled world markets.
The muddled message from Dubai has fueled worries over a possible default by the conglomerate, which is involved in projects around the world — from Gulf banks and ports in 50 countries to luxury retailer Barneys New York and a grandiose six-tower hotel-entertainment complex in Las Vegas.
Many investors are hoping that the conglomerate, Dubai World, will either openly discuss restructuring of some $60 billion in debt with its creditors, or that Dubai's larger, oil-rich neighbor, Abu Dhabi, will step in to restore confidence by promising to foot any bills.
The two are the most powerful of the seven highly autonomous statelets that make up the United Arab Emirates, but their sharply different styles have long made them rivals. For any help, Abu Dhabi will likely demand a price, possibly including increased say over Dubai's affairs.
Abu Dhabi, the seat of the UAE's federal government, has been the more conservative, religiously and financially, relying on its oil wealth to fuel growth. Meanwhile, smaller Dubai — without any oil resources — has for the past decade been the freewheeling boomtown, racking up debt as it built extravagant skyscrapers, artificial residential islands and malls complete with indoor ski slopes.
Government-owned Dubai World has been the engine for much of that growth at home and abroad. So it was a bombshell last week when Dubai announced that the conglomerate wanted to defer debt payments until at least May.
The United Arab Emirates' two main stock exchanges registered record declines Monday as they opened for the first time since the announcement, after a long Islamic holiday.
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