Against the backdrop of Greece’s debt crisis and the threat of contagion, the UAE central bank governor Sultan Nasser al-Suweidi announced on 10 May that the country’s banks were well capitalised and would not be affected by the problems that their counterparts in Europe currently face.

“There’s no link between Greece and the GCC countries. Greece is on one continent and the GCC is on another,” said Al-Suweidi.

Certainly, it is fair to say that Gulf banks’ balance sheets have limited exposure to Greece’s debt, but in light of the news that the EU and the Washington-headquartered International Monetary Fund (IMF) are coughing up $146.2bn in funding to prevent the debt-stricken country from defaulting on its massive debt, it is also reasonable to suspect that it could make it harder for sovereign borrowers in the Gulf to raise funds going forward. 

Investor wariness of the region will have been compounded further by the news that broke on 10 May that a second government-owned conglomerate, Dubai Holding, was looking to restructure several billion dollars of debt on its two subsidiaries, Dubai International Capital and Dubai Group.  

These moves echo those of Dubai World, which renegotiated $23.5bn of debt in mid May.

Greece may be geographically removed from this region, but its problems have turned the light on other countries grappling with sovereign debt, and with Dubai and its state-owned companies owing $109.3bn the emirate will find it difficult to escape the stigma that those countries now face.