Dubai Feels the Financial Pain

March 16th, 2010 at 09:36am Under Economy Report

This is the VOA Special English Economics Report.

In recent years, a shining city grew in the desert of Dubai on — and even off — the Gulf coast. An island shaped like a palm tree was built for hotels, homes and entertainment.

In October of last year the same developer announced plans for the world’s tallest building yet. But the economic downturn soon forced the Nakheel company to suspend those plans.

Dubai is in the United Arab Emirates, a thirty-eight year old federation of seven territories ruled by emirs. But, unlike its neighbor Abu Dhabi, oil has not fueled Dubai’s growth. Oil is only six percent of its economy. Instead, the property and service industries have led its expansion.

Now Dubai finds itself in financial pain. And its reaction has some investors worried.

Last week, Dubai’s largest investment company called for a six-month delay in paying some of its debts. Dubai World Group is seeking to renegotiate terms on twenty-six billion dollars in debt. All of it is linked to Nakheel, which is part of Dubai World.

The government owns Dubai World and will take control of its restructuring. But Dubai’s finance chief said the government does not guarantee its debt.

Dubai World owes creditors a total of sixty billion dollars. The company is not an investment vehicle for the government like a sovereign wealth fund. It is a holding company for businesses in land development, port operations, energy and financial services. The group has used borrowed money for economic development.

Ghiyath Nakshbendi of American University in Washington notes that the problems are linked to a worldwide collapse in real estate prices.

GHIYATH NAKSHBENDI: “Emerging markets are as victim to the world meltdown as any other economy and there are no exceptions.”

He expects the debt restructuring to be successful. He says Dubai and its leaders have too much to lose to let creditors — like banks in Britain — suffer losses.

Still, last week’s announcement was a surprise. Now Dubai World is faced with selling properties at heavy losses to raise money. Some experts question how willing Abu Dhabi will be to rescue Dubai. Their relationship is sometimes tense.

Ghiyath Nakshbendi says Dubai World will have to change its ways.

GHIYATH NAKSHBENDI: “I think Dubai went a little bit too fast and they borrowed too much money in a very short period of time.”

Of course, Dubai was not alone in gathering debt during the easy credit years. There are worries that the crisis could be the first of more to come in other parts of the world.

And that’s the VOA Special English Economics Report, written by Mario Ritter. I’m Steve Ember.

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Going Digital: California’s Textbook Project

March 14th, 2010 at 09:34am Under Education report

This is the VOA Special English Education Report.

California has a new program called the Digital Textbook Initiative.

ARNOLD SCHWARZENEGGER: “Starting this fall with high school math and science, we will be the first state in the nation — the first state in the nation — to provide schools with a state-approved list of digital textbooks.”

That was Governor Arnold Schwarzenegger in June, talking about his effort to get schools to use materials available free online. He listed reasons why he thinks digital textbooks make sense.

About 2,000 California school employees march in San Jose on August 5 to protest state budget cuts, in a California School Employees Association photo

California approves traditional textbooks in six-year cycles. Digital ones can offer the latest information. They lighten the load of school bags. They save paper and trees, and make learning more fun and interactive. And lastly he said they help schools with their finances.

The state has had to make severe cuts in school spending because of deep financial problems. More than six million students attend California public schools.

Earlier this year, California invited content developers to offer digital math and science materials for high schools. These had to meet at least ninety percent of the state’s learning requirements. Specially trained teachers examined sixteen textbooks and approved ten of them.

Six of the ten were published by the CK12 Foundation. Co-founder Neeru Khosla says the nonprofit group had been developing digital science and math books for about two years. The foundation paid teachers and other education professionals to write and edit them. The money came from a group financed by the Khosla family. The AMAR Foundation also supports projects in India.

California cannot require schools to use the digital textbooks. Individual school districts will have to decide for themselves.

Susan Martimo, a California Department of Education official, says she does not expect widespread use right away. Her best guess is that some schools with a lot of technology will be the first to use them, but only in addition to their traditional books.

School administrators point out that the texts may be free online, but students need a way to access them. Not everyone has a computer or electronic reader. Schools could print out copies, but that would not help the environment. Also, there is the cost to train teachers to use digital textbooks effectively.

Next week: a look at digital textbooks in college. And that’s the VOA Special English Education Report, written by Nancy Steinbach. You can find transcripts and podcasts of our reports at voaspecialenglish.com. I’m Steve Ember.

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