LETTER FROM DUBAI: The gloomy mutterings from underneath the Ramadan curtains
It's that time of year again, when the Dubai International Financial Centre (DIFC) resembles a tent city built to accommodate thousands of refugees. Giant curtains have been strung across the entrances to the cafes and restaurants, to shield those people who are observing the daytime fast of Ramadan from the sight of those who are not - which, in the overwhelmingly foreign enclave of the DIFC, includes an awful lot of bankers.
The fact that the cafes and restaurants are open at all this month amounts to a cultural concession by the authorities, as in the rest of the UAE and GCC (except in many hotels) they stay firmly closed to all comers until the Moslem fast is broken at sunset. This relaxation of the country's norms is just one reason why the DIFC attracts so many foreign financiers; the most radical concession of all being to have given the free zone its own legal system and courts, based largely on English law.
The talk behind the curtains is gloomy about business prospects in the short term. The triple whammy of summer, Ramadan, and the Arab Spring, which on their own were guaranteed to reduce the pace of deal making and general activity, has been turned into a quadruple by the spectacular manner in which the US and EU are mismanaging their finances.
This debacle has hit local share prices hard; the bellwether FTSE NASDAQ Dubai UAE 20 index fell 9% in the first few days of August and has not recovered. Volumes on the stock markets are down and an announcement this week by Oman's Renaissance Group that Topaz, its Dubai-based oil services subsidiary, had uncovered internal fraud has hardly lightened the mood.
Earlier this year Topaz pulled an IPO it was planning in London, which would have been the first IPO anywhere by any Dubai-based company for three years. There are rumours that at least one big investment bank is so gloomy about the prospects of finding new work in the region that it is planning to haul many of its staff back to London.
If so, it may be too pessimistic. The Kuwait Financial Centre expects Saudi Arabia to grow by 7.5% this year. Dubai itself has little trouble borrowing in the markets these days, at rates that many European countries would die for, and the IMF is predicting nearly 3% GDP growth for the emirate this year. More reassuring than dry numbers are signs that Dubai retains some of the chutzpah that fuelled its astonishing growth before 2009.
A fatwa by the Grand Mufti of Dubai that people living high up in Burj Khalifa, the world's tallest tower at nearly 830 metres, must break their fast three minutes after everyone else, because the sun sets later up there, turned into a wonderful marketing coup as the media sent news of the decision around the world. Very Dubai.
And if bankers in Dubai are still feeling depressed, they can console themselves with a trip to one of the local bars. The UAE is the only GCC country where they serve alcohol during Ramadan.
