THE SPINE JUNE 19, 2010
You may recall that, during the Bush presidency, Dubai World, a flagship corporate asset of the emir and his kin, had been discovered servicing and actually owning some U.S. ports on the Atlantic coast and the Gulf of Mexico. You will not be surprised that I wrote against this. Or that Tom Friedman wrote for it. Frankly, I didn't trust the emirate to serve as guardian to the ships going in and out of the docking facilities or, more generally, to patrol sensitive entry points to great harbor cities like New York, Baltimore, Miami and 19 other municipal areas. In the end, Congress forced the sale of these assets and everybody could sleep at peace from then on. Or, at least, relative peace. President Bush was unhappy. This was 2006.
I'd more or less forgotten about miraculous Dubai until President Obama mentioned it and its "astonishing progress" in his Muslim rousing cheerleader address at clerical Al-Azhar University just about one year and two weeks back from today. Well, just about Thanksgiving time in 2009 the emirates (of which is Dubai is only one) found themselves no longer so rich. In fact, they found themselves in terrible troubles. Actually, it happened a bit earlier. But Arabs are deft at disguising reality. But, in the end, their hotels were going empty, their condominiums couldn't be financed, they were soon deporting their south Asian workers. I don't know what happened to their 7-star underwater hotel. Or whether they are still refrigerating their beaches. I suppose Bill Clinton also no longer draws down a quarter of a million bucks for speeches...but that may be because Hillary's job forbids even the poor husband such financial activity. What a sacrifice
As you may have gathered, I am addicted to the Financial Times because of its sober financial reporting and despite its relentless anti-Israel and (almost) anti-Semitic tropes. On Friday, the FT carried two stories about the oil-less little principality which sups off the oil riches of its neighbors. One is headlined "Blow for Dubai World Asset Sale" and the other "Probe Fears Undermine Dubai's ISS Sale." ISS is Inchcape Shipping Services, the largest asset of the now-squeezed royals. Dubai World had put it up for sale.
So what's the rub? After all, "ISS is the jewel in the crown of Dubai World's private equity portfolio." This jewel also sits atop the Queen Elizabeth II ocean liner, Cirque de Soleil, Houghton Mifflin, Harcourt Brace, which carry heavy debt burdens. But the main asset of ISS is its contractual obligations with the U.S. Navy to "act as an agent to (its) fleet of warships in the Middle East." Apparently, the Department of Justice is now conducting an investigation in to how or whether these contracts have been fulfilled. The assumption is that they have not been. The Brits have similar contracts. Who knows.
Anyway, several potential acquirers have just dropped out of the bidding.
Maybe China will replace the U.S. contenders. That would be "astonishing progress" on the part of Beijing.