DUBAI, United Arab Emirates — It was the celebrity endorsement that marketers dream about.
Before harnessing up to film stunts for the next “Mission: Impossible” on the face of the world’s tallest tower, Tom Cruise bounded onto stage in the skyscraper’s plush new Armani Hotel to promote shooting in Dubai.
With cameras rolling, he thanked the emirate’s ruling sheik and praised the city as “very cinematic,” deeming it “beautiful” four times in under a minute.
Publicity stunt it may have been, but the filmmakers’ decision to set a large part of the movie here also reflects the headway Dubai has made on its own tough mission: to again charm investors and repair its reputation a year on from its market-rattling financial crisis. It’s a task that could take years to complete.
The pint-size Persian Gulf emirate sent tremors through the world economy a year ago this week when it effectively acknowledged it couldn’t repay billions of dollars as promised. Lenders who had relied on government backing for conglomerate Dubai World and a web of other state-linked companies found no such guarantees, leaving them scrambling for details from a city-state as famously tight-lipped as it was opaque about the health of its globe-trotting businesses.
Almost overnight, Dubai went from being seen as the Arab world’s glamorous answer to Wall Street and Las Vegas to a city-sized subprime borrower with way too many maxed-out credit cards.
A year on, both those conflicting images contain a measure of truth.
“Across the board we’re probably better off than we were a year ago in Dubai,” said Rachel Ziemba, an analyst at Roubini Global Economics. “But the recovery of the Dubai economy is going to be a lot slower than people anticipated.”
Topping the list of challenges is more than $100 billion in Dubai debt still hanging over bank balance sheets from Tokyo to New York. Some state-owned holdings have been quietly sold off. Others are struggling.
Just last week, Loehmann’s, an 89-year-old U.S. clothing retailer owned by the emirate, filed for bankruptcy protection.
Bankers grumble that financial transparency is still lacking — an indication of a lesson not completely learned. While Dubai has begun to crack open its books, the full extent of its debt problems — and its ability to fix them — remain unclear.
