THE UNITED ARAB EMIRATES DUBAI, United Arab Emirates The Dubai economy is expected to fall by 11% in 2020, according to S&P, with the emirate’s already high debt load poised to rise as several of the emirate’s most important sectors struggle to recover from the impact of the coronavirus pandemic.
“Dubai’s economy is expected to fall severely by roughly 11% in 2020, owing in part to its concentration in travel and tourism, two of the areas most affected by COVID-19,” S&P Global Ratings stated in a client note last week. The economy will “only recover to 2019 levels by 2023,” according to the report.
Is Dubai experiencing a financial crisis?
Dubai, where property prices have been steadily declining for more than a decade, is now dealing with the consequences of the global epidemic. Despite an increase in visitors following a gradual reopening, the disease outbreak has harmed key economic sectors such as tourism and construction.
What is Dubai’s current economic situation?
GDP is expected to grow 4.7 percent in 2022, up 0.1 percentage points from last month’s prediction, and 3.8 percent in 2023, according to FocusEconomics.
Is Dubai still owed money?
The UAE’s legal system is founded on both civil and sharia law concepts. Each emirate has its own court, with Abu Dhabi’s supreme court. Dubai is one of only two emirates in the UAE that does not participate in the federal court system. Instead, it brags about its cutting-edge legal system. The Dubai International Financial Centre, a special economic zone with over 2,000 banks and businesses, has its own courts that follow common-law principles and hear cases in English. Applications to this special economic zone are carefully scrutinized, with financial and technological companies having the best chance of being accepted. Cornelius’ businesses, like most in Dubai, were registered outside of this zone and were therefore subject to the jurisdiction of the national courts, which apply national law.
Capital trials in these courts can start and end in a single day. Prosecutors seldom lose cases. On the bench, the prosecuting attorney frequently sits next to the judge. Foreigners present at the trial have overheard conversations between the prosecutor and the judge in which the former looked to be giving the latter instructions. Defendants are frequently prevented from testifying. During the more than 100 court sessions he has attended in the ten years since his incarceration, Cornelius has never been allowed to address the judge. Because of the bad translation, he frequently struggled to grasp what was going on. Patronage is used to run the system. “The only way for a foreigner to be acquitted is to have enough clout to secure a pardon,” one international lawyer explained.
Cornelius learned the hard way that the law can be extremely harsh in money disputes. Debt is treated as a civil problem in most Western countries. Charles Dickens’ father was imprisoned in a debtors’ prison, and Dickens’ depictions of the horrifying conditions in these institutions in his novels aided a movement that eventually led to their abolition in the United Kingdom in 1869. The UAE, on the other hand, still considers debt to be a crime.
For property offences, Dubai’s courts impose draconian punishments. Even a single bounced check can land you in jail for up to three years if you don’t pay on time. This makes it easier for dishonest claimants to get their money “In situations connected to debt collection, exploit the criminal system,” says Rhys Davies, a barrister working on Cornelius’ case.
The obligation is not discharged by a prison sentence. If the debtor is unable to repay the money when his or her initial term expires, the creditor may petition the court to keep the prisoner detained forever until the obligation is paid. Debtors may find themselves in a Catch-22 situation: if they can’t leave prison, how will they be able to repay their debts? For almost a decade, some Indian laborers have been imprisoned in the UAE for debts as small as $1,000.
Companies, banks, public personalities, and even private citizens manipulate the system to become long-term detainees. Even in the absence of evidence, the authorities can detain someone and prevent them from leaving the country based on a mere claim.
Many of Radha Stirling’s clients are, or have been, detained in Dubai, a group that assists foreigners caught up in the emirate’s court system “Debt captives.” Even individuals who are not imprisoned may have their freedom restricted. Typically, the accused loses their employment, and their bank account is frozen. “As a result, previously drafted checks may bounce, aggravating their troubles,” Stirling explains. “They can’t find a new job to pay off the debt because no one with a pending police case is eligible for a work visa. And a travel ban prevents them from leaving Dubai until the unpayable debt is settled.”
Debtor’s relatives are also vulnerable. Albert Douglas has been in prison in Dubai for two years when cheques issued by his son’s flooring company bounced; his son had left Dubai, so the creditors went after Douglas because he was a signatory on the company’s books. Douglas attempted to flee to Oman, fully knowing of the emirate’s brutal treatment of debtors. He was apprehended while jumping a border fence. He now fears that he may die in prison at the age of 60.
Even those who manage to leave the country may be subjected to the UAE’s exploitation of Interpol “Red Alert” system Despite the fact that collecting debts isn’t part of Interpol’s mandate, the UAE occasionally gets around this by reclassifying debt as a criminal offense “Interpol does not validate charges placed in its databases by national crime bureaus. The person named in the notice faces detention and probable extradition to the UAE. According to Stirling, even a frivolous matter can take up to nine months to be dismissed.
Sir David Calvert-Smith, the former director of public prosecutions in the United Kingdom, highlighted the UAE’s use of red notices in a report earlier this year “Interpol’s “undue influence” Major-general Ahmed Naser al-Raisi, the Emirati interior ministry’s inspector-general, was elected as the organization’s next president in late November. Foreigners who had previously been detained in Dubai fought against him gaining the job, claiming that in his prior position, he had overseen arbitrary arrests and torture.
The UAE’s abuse of red notices includes everything from petty extortion to terrorist acts “according to Calvert-assessment, Smith’s “for political benefit against anyone viewed as a threat to the regime.” A British woman was apprehended and detained at a restaurant in Rome over an alleged credit card debt of a few thousand dollars.
Some Indian laborers have been imprisoned in the United Arab Emirates for more than a decade for debts as small as $1,000.
According to Stirling of Detained in Dubai, “Interpol has been utilized by Dubai’s financial businesses as their own personal debt collectors.” She believes that in certain cases, the reported debts may not exist at all. “The debt shakedown has essentially been mastered in the UAE,” she claims. “They sometimes identify persons who owe them nothing in order to extort money from them. “Give me assets or money to drop it, or I’ll make further accusations,” the sheikh, bank, or whoever is behind the case will say after the target is jailed overseas.”
The United Arab Emirates also use more violent methods. Former PepsiCo executive Zack Shahin is now the head of DIB’s property division. He was convicted of stealing $30 million in 2008, despite the fact that no money could be linked to him, and sentenced to four years in prison. In 2012, he was released on $1.4 million bond because American officials voiced worry about his health. He fled to Yemen, where the American embassy arranged for him to go back to the United States. According to some reports, the Yemeni authorities agreed to send him back to the UAE at the last minute. According to supporters of Shahin’s release, he was caught at the airport by security operatives from Dubai, who appeared to have carte blanche in Yemen. He was marched aboard a jet back to Dubai with a gun shoved against his back. He is still imprisoned there.
Dubai’s debtor policy appears to be at odds with its own economic model. Debt has fueled some of the country’s most important businesses, such as real estate and tourism. Dubai’s gross government debt was 77 percent of GDP in 2020, which was a reasonable level. However, this does not include borrowings by significant state-owned corporations. According to S&P, a credit-rating agency, when these were factored in, the ratio was a whopping 150 percent. Dubai has relied on international banks’ willingness to restructure loans since flirting with default in 2008-09. “It’s an economy that’s mostly supported by Western banks and is reliant on their forgiving character,” says a former banker who was involved in the bailout talks. “It is tremendous hypocrisy for a country to treat its own debts so harshly.”
Is Dubai’s economy doing well?
There were just a few hotels available for tourists in the early 1990s, and Dubai never had the same huge oil income as Abu Dhabi, so something had to change. In 1994, the Burj Al Project (Burj Al Arab Hotel) provided the economy optimism as a long-term strategy with the goal of becoming the world’s top tourist destination. Dubai, as one of the most popular tourist destinations in the UAE, has experienced a significant economic transformation during the last 50 years or more.
The recession that rocked the worldwide economy recently has had a significant impact on several of Dubai’s major investments. Despite the fact that Dubai’s economy was built on the oil industry, the city’s banking and financial centers in the port area, as well as the service industries, were severely impacted when Dubai’s property market experienced a major downturn in 2008-2009 as a result of the global economic slowdown. As a result, the majority of its ongoing projects, as well as expatriate jobs, were harmed. In addition, it was revealed that Emaar had around $70 billion in credit and the state of Dubai had an extra $10 billion, with a total real estate asset value of $350 billion.
Dubai has also positioned itself as a global tech hub that caters to areas such as finance and information technology. The TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority), which includes EMC Corporation, Microsoft, Hewlett-Packard, Dell, Oracle Corporation, and IBM, as well as media organizations such as BBC, MBC, CNN, Reuters, and Sky News, is an enclave that houses well-known IT firms such as EMC Corporation, Microsoft, Hewlett-Packard, Dell, Oracle Corporation, and IBM.
Dubai is on its way to becoming one of the fastest-growing economies in the Middle East, with a promising growth rate of 6.1 percent in 2014. Dubai has strong trade ties with a number of countries. China was named as Dubai’s main trading partner in 2014, followed by India and the United States.
Tourism has recently emerged as a significant economic driver. In 2018, Dubai received 15.93 million tourists, maintaining its position as the world’s fourth most popular destination. Due to its numerous souks, over 100 malls, and countless shopping centers, Dubai has emerged as the Middle East’s shopping hub. Due to the city’s roughly 250 gold shops, Dubai is known as the ‘City of Gold.’
Dubai has won the proposal to host the much-anticipated Expo 2020, which is expected to strengthen the economy and create over 270,000 jobs.
Is Dubai going to be a ghost town?
Dubai’s tourism chief has claimed that the emirate will not become a “ghost town” after hosting World Expo 2020, justifying plans to nearly increase the number of hotel rooms.
In the run-up to the worldwide event, Dubai is spending $8 billion on infrastructure and has announced plans to assist developers in building 80,000 new hotel rooms by the Expo’s opening.
Helal Saeed Almarri, director general of Dubai Tourism and Commerce Marketing (DTCM), said the rooms will not be left unoccupied after the event, which is estimated to attract 25 million people over the course of six months.
Is Dubai deteriorating?
THE UNITED ARAB EMIRATES DUBAI, United Arab Emirates According to figures from the Dubai Statistics Center, Dubai’s economy declined by 10.9 percent year on year in 2020, reflecting a city struck hard by the coronavirus pandemic and the halting of global travel.
Dubai, the commercial hub of the United Arab Emirates, has a population of 3.4 million people and is strongly reliant on industries including as hospitality, tourism, retail, and travel, all of which were hit hard by the pandemic in the first year.
Where does Dubai’s money come from?
With a GDP per capita of $57,744, the UAE is the world’s third richest country, after Luxembourg at number two and Qatar at number one. The production of items and provision of services connected to petroleum, petrochemicals, aluminum, and cement account for the majority of its revenue.
Is Dubai only for the wealthy?
Dubai is one of the world’s wealthiest states or emirates, thanks to oil. The city serves as a prosperous commerce center for the Gulf and Africa. Despite the fact that Dubai has little oil, the black gold has made it wealthy. Dubai has become an opulent state admired around the world in less than 50 years because to its strong economy. Dubai has become a global economic powerhouse because to its oil industry and forward-thinking corporate methods.
Is it safe to live in Dubai?
In 2020, the UAE was the only country in the world with three cities ranked in the top ten safest in the world: Abu Dhabi, Dubai, and Sharjah.
Strict penalties, lengthy jail sentences, widely publicized convictions, and the deployment of undercover cops all add to Dubai’s reputation as one of the safest cities in the world.
It’s not uncommon to find a high-end car parked outside a store with the keys in the ignition, or a laptop left unattended for a half-hour or more.
Is the UAE in financial trouble?
Following up on our recent report, the UAE Cabinet has declared an Emergency Financial Crisis in the Official Gazette on January 31, 2021.
As a reminder, in 2020, Federal Law No. 9 of 2016 (the Corporate Bankruptcy Law) was revised to include a new chapter covering measures that would apply during an Emergency Financial Crisis. An Emergency Financial Crisis, according to the amendment, is “a general condition that impacts trade or investment in the country, such as a pandemic, natural or environmental disaster, war, or other similar events.”
Due to COVID-19, the UAE Cabinet has recently confirmed that an Emergency Financial Crisis will be judged to exist from 1 April 2020 to 31 July 2021.
- If a debtor chooses to file for bankruptcy (which may result in the debtor’s restructuring or liquidation), the Court will:
- may accept such an application and refuse to appoint a trustee in bankruptcy proceedings if the debtor can demonstrate to the Court that their financial hardship was caused by the Emergency Financial Crisis; and
- During the Emergency Financial Crisis, the debtor shall not take any precautionary measures against the debtor’s assets that are required for the debtor’s business to operate.
- If the debtor’s bankruptcy application is accepted by the Court, the debtor may request a period of not more than forty business days to negotiate a settlement with its creditors (with the settlement period offered not to exceed twelve months). If creditors holding at least two-thirds of the total debt agree, the settlement will be binding on all creditors (noting there is no need for a majority of creditors).
- Bankruptcy proceedings that were filed and accepted by the Court prior to the declaration of the Emergency Financial Crisis will be continued, and the Court has the authority to extend the time limits set out in the Corporate Bankruptcy Law (doubling the prescribed time periods).
- Directors and managers of a corporate debtor have the authority to pay the company’s employees’ unpaid wages and salaries (excluding allowances, pay raises, and other contingent payments) without regard to preference issues.
- The debtor may ask the Court to help him or her acquire fresh secured or unsecured funding.