The serious consequences for stock markets in the UK and elsewhere of Dubai conglomerate DP World's request for a 6 month postponement of its debt repayments has been headline news.However, there is another story underlying the collapse of the patently unsustainable Dubai asset bubble which has prompted my return to economic matters. This is a story about the darker side of the world's property hotpots in recent years, and how the good sense of one Senator Hilary Clinton has helped protect the United States economy from this latest episode of global financial turmoil.
Would Europe's new High Representative for Foreign Affairs and Security, and, indeed, the Iraq Inquiry - see previous posts - please take note !
To begin with Iraq. Following the invasion of that country in 2003, the United States made the largest investment in re-construction since the Marshall Plan following World War II. Nevertheless, it was remarked upon by some commentators at the time that large amounts of this investment found their way out of Iraq and into increasingly speculative real estate markets in countries such as the US, UK and, you guessed it, Dubai.
On the back of this boom - to which key UK business interests, incidentally, have been critically exposed - D P World went on a global spending spree, a prize purchase of which was the British P&O Group. This group had a world-wide shipping and property portfolio which included strategic assets in North America. However, Senator Clinton took the lead in blocking the sale of key US facilities to DP World on grounds, amongst others, of national security.
What her counterparts in the UK and Europe were doing we can only guess, but the answer is clearly not a great deal, which is precisely why these matters need to be thoroughly investigated at the present time.
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