Heads in hands but expats vow to stay on

“Last night at dinner, people had their heads in their hands,” a British expatriate said as she fretted about the viability of her new fashion business. Local newspapers have in recent months played down the impact of the financial crisis. No one now can be in any doubt.

As the gravity of Dubai’s debt problems has crystallised over the past couple of days, white-collar workers have once again become troubled about their jobs and even the solvency of the banking system. Business owners are worried about outstanding payments, especially from units belonging to troubled Dubai World, the government-owned holding company.

Some of Dubai’s 1.2m expatriates were on Friday considering cleaning out their bank accounts on Monday, the first day of business after Eid al-Adha, the ”Feast of Sacrifice” holiday weekend. This was in spite of the federal government guaranteeing deposits at the start of the crisis last year.

Others worried about what would happen when the stock market re-opened. “It’s going down straight away and then what can we do,” said one local investor, who like many others wanted the government to keep the market closed.

Cecil, a Sri Lankan driver, said he was worried about his job, but he was not going to let the gloom damp a rare day off for the underpaid labourer class.

At the other end of Dubai’s social spectrum, bankers were hauled into their offices over the holiday to keep an eye on bond movements. Some Americans cancelled trips home for Thanksgiving.

Some people take a more sanguine view. Many among the 120,000 Britons and half a million Indians who have made Dubai their home say they are in for the long haul.

For wealthy expatriates, the tax-free dream of all-year sun and daily golf sessions continues, especially as the cost of living has fallen sharply since the crisis began. They are the voice at every dinner party defending Dubai and its leadership style.

Even if some of their confidence has gone, most will not countenance a return home.

“This is an overreaction. People will still want to do business in the region and Dubai is the place to live,” said one. “OK, this is a knock-back but once everyone comes to grips with this we can get back to  normal.”

Sultan Sooud Al Qassemi, a prominent local commentator, said Dubai should be able to get through the crisis, thanks to its infrastructure, tolerant lifestyle and diversified economy. He was still concerned at the way the city’s debt pile had tarnished Dubai’s name.

“At the height of the boom and even after it ended it wasn’t easy for any of the senior officials to go to the ruler and admit that they made massive mistakes,” he said.

“Had these senior officials come clean last year, the world’s reaction would have been much more muted.”