Dubai’s debt woes could have an impact on a key experiment in the renewable energy sector.
In late November, Dubai indicated that its state-controlled investment firm Dubai World needed to restructure $26 billion in debt, sending a shock through global markets.
Dubai is part of the United Arab Emirates, a federation of seven city-states ruled by hereditary clans. It is largely bankrolled by neighboring Abu Dhabi, which uses Dubai as the UAE business center.
Of interest to CleanTechies in this is the potential impact on Abu Dhabi’s Masdar, the world’s first green city project, which is backed by Abu Dhabi. Masdar was envisioned as a prototype no-carbon city, and renewable energy companies and investors have been lobbying to gain a foothold in its planning.
The initial speculation is that in the intertwined and private world of UAE finances, the Masdar project may suffer as investors back off. But some speculate that Abu Dhabi is so heavily emotionally invested in the project that they will back it, seeing it as a future source of technological innovation that will reap intellectual property benefits when the oil wells run dry.
Guessing what will happen next in the murky world of this Middle Eastern city-state is impossible. But speculators look at the problems in Dubai, a nation build largely on real estate speculation (imploding), tourism (expats are fleeing, leaving behind their debts) and finance (see the small matter of restructuring that $26 billion) and worry that this is the next domino.
Unless Masdar is deemed too big to fail in the eyes of the oil players of the region. And wouldn’t that be irony piled on irony.
[photo credit: The Library of Congress]