Description: This is
a VOA Special English Economics Report.
See text below
Text:
In recent years, a shining city grew in the desert
of Dubai on -- and even off -- the Gulf coast. An
island shaped like a palm tree was built for hotels,
homes and entertainment. In October of two thousand
eight the same developer announced plans for the
world's tallest building yet.
But the economic downturn soon forced the Nakheel
company to suspend those plans. Dubai is in the
United Arab Emirates, a thirty-eight year old
federation of seven territories ruled by emirs.
But, unlike its neighbor Abu Dhabi, oil has not
fueled Dubai's growth. Oil is only six percent of
its economy. Instead, the property and service
industries have led its expansion. Now Dubai finds
itself in financial pain. And its reaction has some
investors worried.
In November, Dubai's largest investment company
called for a six-month delay in paying some of its
debts. Dubai World Group is seeking to renegotiate
terms on twenty-six billion dollars in debt. All of
it is linked to Nakheel, which is part of Dubai
World.
The government owns Dubai World and will take
control of its restructuring. But Dubai's finance
chief said the government does not guarantee its
debt.
Dubai World owes creditors a total of sixty billion
dollars. The company is not an investment vehicle
for the government like a sovereign wealth fund. It
is a holding company for businesses in land
development, port operations, energy and financial
services. The group has used borrowed money for
economic development.
Ghiyath Nakshbendi of American University in
Washington notes that the problems are linked to a
worldwide collapse in real estate prices. He says:
"Emerging markets are as victim to the world
meltdown as any other economy and there are no
exceptions."
He expects the debt restructuring to be successful.
He says Dubai and its leaders have too much to lose
to let creditors -- like banks in Britain -- suffer
losses. Still, the announcement was a surprise.
Now Dubai World is faced with selling properties at
heavy losses to raise money. Some experts question
how willing Abu Dhabi will be to rescue Dubai. Their
relationship is sometimes tense.
Ghiyath Nakshbendi says Dubai World will have to
change its ways. He says Dubai borrowed too much
money in a very short period of time. Of course,
Dubai was not alone in gathering debt during the
easy credit years. There are worries that the crisis
could be the first of more to come in other parts of
the world.
And that's the VOA Special English Economics Report.
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Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
