A week after Dubai ask creditors for a "standstill" on paying back about $60 billion debt till May 2010, Dubai is trying to restructure $26 billion worth of debt from Dubai World but at the same time, it is now ring-fencing prized assets from their creditors.
In case you are confused on why the debt had suddenly lowered to $26 billion because you heard that Dubai has about $80 billion in debt and the "standstill" was for $60 billion, this is because the Dubai government is getting away with murder. Dubai is basically saying that Dubai World is an independent company and the Dubai government does not guaranteed Dubai World's debt, even though Dubai World is a government-owned company.
So Dubai is saying that it is only liable for the remaining $20 billion worth of debt, and not the $60 billion owned by Dubai World. In a bid to avoid economic meltdown, this move is seemingly being accepted by their neighbors. Regional support, or at least acceptance, for the move has been strong as no one want to see a collapse in Dubai. This means that if you are one of those who owe part of the $60 billion debt of Dubai World, you are not going to see your money ever again.
That is nothing short of bloody murder. First off, if the debt is truly $26 billion, Dubai's oil-rich neighbor, Abu Dhabi, would have ridden in as the white knight long ago. In fact, if the debt is truly $26 billion, Dubai wouldn’t have to ask for a standstill. Their assets are valued at around $50 billion, so they are more than capable of paying $26 billion. The fact that they ask for the standstill means that they know they are liable for the $60 billion. Why else would they ask for a standstill?
Does that matter now? Not really, especially when you can get away with it like Dubai.