Europe should not count on an oil-backed Dubai bail out

Many analysts shrugged off the long-term repercussions of Dubai’s request, on the grounds that oil rich neighbour and fellow UAE federation member Abu Dhabi would stump up the necessary cash to save Dubai’s face – and by extension – the federation’s reputation on the world stage.

But the composition of the UAE economy is a rare – and therefore barely tested – model. Each of the seven component emirates retains the physical rights to its natural resources. And neighbouring Abu Dhabi sits on no less than 95% of the UAE’s oil reserve.
The federation is considered ‘rich’ in terms of per-capita wealth, but those reserves of liquid cash overwhelmingly reside in Abu Dhabi’s coffers. This leaves Dubai, a city built not on the back of oil, but on high-end real estate and 5-star tourism, flailing badly in the wake of global recession.

In the deserts of the Middle East, flora is rare, bar the plastic palm trees at Dubai International Airport; yet if ever a city was out on a limb?

Abu Dhabi has already bailed out Dubai to the tune of