Retaining a Shari’a Stability17th December 2009
Abu Dhabi stepping in to bail out Dubai is news in itself, but if they hadn’t, the repercussions for Shari’a Banking would be equally significant.
Defaulting on the Islamic bonds (Sukuk) could have destabilised the Islamic finance sector at a time when the world isn’t in the best financial health. This damage limitation exercise by Abu Dhabi means Islamic finance is still profitable ‘post Dubai’ (Forbes).
The Middle East remains as a ‘one to watch’ financially although the Dubai case study may have taken a little luster off the perceived wealth and impervious perception of the region. Perhaps ironically, the ME is indebted to Dubai when it comes to ‘the Middle East Brand and the magnetism of ‘Brand Dubai’. All other countries in the region have arguably gained more than they stand to lose in the perception of Dubai and it’s neighbours being a land of opportunity and future thinking.