Abu Dhabi support expected to come at a heavy price
THE political power of Abu Dhabi, which has governed the United Arab Emirates (UAE) since its formation in 1971, is likely to be further strengthened by the debt crisis in Dubai.
Consultancy Eurasia Group said yesterday the capital has strong incentives not to let Dubai collapse but any support would come at a price.
“Longer term, Abu Dhabi will use this opportunity to establish greater influence over political and economic decision-making in Dubai, and Dubai will consequently adopt a more conservative financial model,” the consultancy said. Abu Dhabi, the capital of the UAE, has already said it will not underwrite all of Dubai’s debts and will instead look at them on a case-by-case basis.
The comments fuelled speculation that Abu Dhabi would demand a political price for a Dubai bail-out.
While Dubai developed at break-neck speed with little thought to planning, Abu Dhabi has adopted a more conservative approach.
Abu Dhabi is currently building a cultural island off the coast that will house branches of the Louvre, and the Guggenheim museum, and it recently held the Formula One finale on newly built Yas Island.