Gulf's woes bode ill for the oil and gas we need

Times of London ^ | 11/26/08 | Carl Mortished

[TigerLikesRooster]

Gulf's woes bode ill for the oil and gas we need

Carl Mortished: World briefing

Alistair Darling's Pre-Budget Report on Monday contained at least one item that raised not a flicker of attention at Westminster but which will have been keenly noticed far away in the Gulf: he has decided that Islamic bonds will not form part of the Government's borrowing programme in the near future.

The scrapping of Britain's first sukuk (a loan instrument that complies with Islamic strictures on the immorality of interest) will be seen as a slap in the face, a cold shoulder at a time when Islamic financial institutions are being buffeted by a catastrophe of real estate, the seeds of which were planted in America and Europe.

Dubai is not bust, but government debt of $80 billion (£52 billion) casts as big a shadow over the economy as Burj Dubai, the nearly kilometre-high skyscraper under construction in the city-state. As with the tower, no one quite knows how high the debt will go and, in a carefully staged announcement on Monday, nervous property investors were told that the Government of the United Arab Emirates would stand behind Dubai's obligations. Meanwhile, a deal was done to bail out two struggling mortgage banks that dominate the city-state's overheated property market. Amlak Finance and Tamweel, an Islamic lender, were folded into a shadowy government institution out of which emerged a new entity, Emirates Development Bank.

[TigerLikesRooster]

I read a similar article on argriculture. Lack of credit could drive down farming operation, resulting in less food. Now same things could happen to oil?

[TigerLikesRooster]

Ping!

[B4Ranch]

How do these Islamic loans work? Do you know?