IN EARLY APRIL, DUBAI'S MUNICIPAL GOVERNMENT reported that the number of abandoned cars the symbol par excellence of the once-high-flying emirates economic bust rose by 10 percent in the first three months of this year from the same period a year earlier. But rather than seeing that indicator as a sign that the economy was taking a turn for the worse, leaders attributed the pickup to simple efficiency: The authorities now have three tow trucks to bring in vehicles, compared with just one last year.
The car repo business, with numbers that can be good or bad, depending on how you look at them, is a good metaphor for Dubais economic and financial condition. The emirate, which splashed on the global scene a decade ago with a flashy, money-is-no-object development philosophy, only to be brought down by the near-default of some of its flagship companies three years ago, has been quietly getting a handle on its debt problems. Since late 2009, Dubai and its government-related entities have restructured more than $20 billion of bank debt, nearly two thirds of the total, by arm-twisting creditors with a decree that resembles a Western-style bankruptcy restructuring. The emirates economy is also on the mend, with moderate growth buoyed by a rebound in tourism and trade.
Dubai may have bounced off the bottom, but it still has a long way to go to resolve its debt problems and return its economy to robust health. Government-related entities such as Dubai World, the conglomerate that....