Government-owned investment company Dubai World seeks a six-month freeze in paying $26 billion in debt. Could this be a signal of more problems to come elsewhere in the world? Transcript of radio broadcast: 03 December 2009
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.
Volunteers help millions of young people around the world understand economics. Transcript of radio broadcast: 26 November 2009
This is the VOA Special English Economics Report.
This year, Junior Achievement marks its ninetieth anniversary of educating young people about business and economics. The nonprofit organization is the largest of its kind. Jack Kosakowsky is executive vice president.
JACK KOSAKOWSKY: “We are the oldest business and economic education organization in the world. We’re now serving nine-point-two million young people around the globe in one hundred twenty-three different countries.”
Programs begin in elementary school and continue through middle and high school. The education is based on the ideas of market-based economics and entrepreneurship.
Shakara Walker shows a product her group of students is marketing at JA offices in Atlanta, Georgia
Junior Achievement began in nineteen nineteen in Springfield, Massachusetts. Two business leaders, Horace Moses and Theodore Vail, joined with Senator Murray Crane of Massachusetts to start the group.
For more than fifty years, Junior Achievement programs operated through clubs that met after school. But in nineteen seventy-five, JA also began to teach business skills during the school day.
Volunteers from the community teach about businesses, how they are organized, and how products are made and sold. The volunteers also teach about the American and world economies and about industry and trade.
The Junior Achievement Company Program teaches young people how entrepreneurship works. They learn about business by operating their own companies.
Students develop a product and sell shares in their company. They use the money to buy the materials they need to make their product, which they then sell. Finally, they return the profits to the people who bought shares in the company.
Chellsey Cruz joined a student-operated company two years ago. The Higher Grounds Cafe in West Hills, California, sells high quality coffee.
She says her experience has given her valuable training that will help her for a lifetime.
CHELLSEY CRUZ: “It taught me to be dedicated, and that if you want to be successful, you have to put in a lot of time and effort. You really have to work at it.”
Junior Achievement says three hundred eighty-five thousand volunteers support its programs around the world. In the United States alone, there are nearly twenty-three thousand places that hold Junior Achievement events.
Junior Achievement Incorporated and Junior Achievement International combined their operations in two thousand four. They formed Junior Achievement Worldwide. Its headquarters are in Colorado Springs, Colorado.
And that’s the VOA Special English Economics Report, written by Mario Ritter with additional reporting by Faiza Elmasry. Transcripts, MP3s and podcasts of our programs can be found at voaspecialenglish.com. And you can follow us on Twitter at VOA Special English. I’m Steve Ember.
