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Confusion reigns in Dubai crisis

The Dubai crisis took an unexpected turn today when the ruling family suggested that the world had misunderstood last week's debt repayment announcement and had overreacted. It now turns out that Dubai World, which is strongly associated with the Dubai authorities, has asked for a restructuring of its $26 billion debt not the $60 billion debt which had initially been mentioned.

The very fact that it has taken nearly a week for the authorities to step forward and confirm the situation shows the inexperience which has blighted the growth in the economy over the last decade. We have seen regulations and rules introduced overnight which has upset and confused many investors who have ploughed billions upon billions of dollars into the region. Even though, at the moment at least, the debt pile in question is nowhere near $60 billion initially mentioned, there is concern that an extended period of uncertainty could produce a domino effect in the state.

Worldwide stock markets bounced this morning on news of the "misunderstanding" but this is a situation which is not over yet. There will likely be more twists and turns in the saga as slowly but surely the "real facts" emerge from what is potentially a very difficult and dangerous situation.

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