**DUBAI - UAE leaders on Tuesday stressed federal unity and rallied behind Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum in an effort to ease investor fears as local markets continued to reel from the debt crisis enveloping Dubai.
**“We would like to comfort everyone that our country today is stronger and better, and that our economy and society are healthy,” said Sheikh Khalifa bin Zayed al-Nahayan, UAE president and ruler of Abu Dhabi, in a statement ahead of UAE National Day.
Sheikh Khalifa also voiced support for Sheikh Mohammed, saying the country’s prime minster and his cabinet “face every morning challenges, but plan and remove all obstacles to score achievements”.
Dubai and its leadership have been in the eye of a global tornado of negative media coverage for the past week over the government’s debt problems and how the restructuring has been handled, which have sent global markets into a tailspin.
The Dubai government announced last week that Dubai World was to ask creditors and those of real estate unit Nakheel for a six-month debt “standstill” while it restructures, shocking investors after weeks of upbeat talk from government officials.
Sheikh Mohammed said the global reaction to the restructuring of Dubai World showed a lack of understanding.
“They do not understand anything,” he said when asked about reaction to Dubai World’s standstill request and restructuring plans, adding that “it is the fruit-bearing tree that becomes the target of (stone) throwers”.
Sheikh Mohammed also stressed his government and Dubai World are separate entities as the government looks to distance itself from the struggling state-owned conglomerate.
“Mixing up of the Dubai World group and the government of Dubai was wrong,” Sheikh Mohammad told reporters during a visit to offices of Dubai Television.
The Dubai government dropped another bombshell on Monday with news it would not guarantee Dubai World’s debts, which account for around $60 billion of the emirate’s total debt pile of at least $80 billion.
Analysts said the government’s move to distance itself from Dubai World is a far cry from the boom years when its expansion-hungry firms gobbled up money from investors with the unwritten understanding these investments were backed by the emirate.
Local markets continued to suffer on Tuesday, taking no comfort in Dubai World’s $26 billion debt restructuring announced in the early hours of the morning.
Dubai’s benchmark closed 5.6 percent lower and Abu Dhabi’s index finished down 3.6 percent, their second day of heavy losses, while other Gulf bourses also witnessed heavy selling pressure.
Kuwait’s main index declined 2.7 percent, while Qatar’s benchmark index dived 8.3 percent
The share declines come despite a recovery in global markets as fears over the wider fallout from Dubai’s debt woes eased.
The MSCI world stock index ended up 0.15 percent on Monday, while its Emerging Markets index was up 1.18 percent after suffering losses the previous day.
(Source Maktoob News)