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Tue 1 Dec 2009 11:00 PM

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EU Ministers hope for limited fallout from Dubai

EU Ministers say that Dubai debt crisis shows that the GFC is still to end.

EU Ministers hope for limited fallout from Dubai
EUROPEAN HOPE: EU Finance Ministers say their countries have no serious risk from the Dubai Debt crisis. (Getty Images)

European finance ministers said on Tuesday they saw only limited fallout from Dubai's debt troubles but that it showed the global financial crisis had yet to end.

Ministers from the euro currency zone sounded cautiously confident about potential problems beyond the Gulf as financial markets recouped some of the losses incurred after the holding company, Dubai World said last week that it could not pay its debts.

Swedish Finance Minister Anders Borg, arriving for talks in Brussels on reducing deficits and tightening financial regulation following recession in Europe, said European bank exposure appeared to be "reasonable".

"So far I have not seen a serious risk coming from Dubai (for the euro zone)," Finnish Finance Minister Jyrki Katainen added before a regular meeting attended by European Central Bank chief Jean-Claude Trichet.

"But of course it is very worrying that there are still areas or countries like Dubai ... which can shape our economies. The atmosphere is still weak, and growth is not yet on a strong enough path."

Global markets took a pounding when news broke last week that state-controlled Dubai World, which led the emirate's transformation into a regional hub for finance, investment and tourism, was unable to pay its debt.

But on Tuesday, Asian, European and U.S. stocks regained ground following the lead from Wall Street overnight as fears of contagion eased, despite further falls in stock prices in Dubai, Abu Dhabi and Qatar.

Dubai World has unveiled details of a restructuring that focuses chiefly on $26 billion of debt owed by its main property firms, Nakheel and Limitless.

German Finance Minister Wolfgang Schaeuble told reporters on arrival for the talks in Brussels that Dubai's difficulties showed the world was not yet through the crisis that began in 2007 when a global credit boom turned to bust.

The blow-out sparked a recession across the industrialised world and beyond, including a tumble in house prices and the property boom that Dubai's massive construction projects came to symbolise.


U Kadir 9 years ago

OK Arabian Business, I shall take the bait. "...countries like Dubai..." said the Finnish Finance Minister - that got a chuckle out of me!

Dan 9 years ago

I can not remember at any time during the last 5 or 6 years of Dubai advertising itself in the global media, explaining that it’s a city in UAE. It was always Dubai and not UAE. Even now the different Emirates advertise themselves independently on the global market. Not so strange that many people still make such a mistake. I wish they would have much closer cooperation and ties on the global arena.

Joe P 9 years ago

He said '' areas or countries like Dubai" --- a word like area can refer to anything!!!!