Just a normal part of restructuring

It is already an achievement for Dubai World to be where it is today in the restructuring process.

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This new development is not a deal-breaker. Although some might interpret each twist and turn of the Dubai World restructuring as a confrontation or a row, what is happening is a normal, routine part of the process of restructuring billions of dollars of debt in a relatively short time. When Aidan Birkett presented his proposals last month, there was never the slightest chance they would be instantly greeted with unanimous approval by the 90-plus financial creditors and the thousands of contractors and customers owed money by the group and its property offshoot Nakheel.

To have got where they are today - with approval in principle from banks, the international ratings' agencies, and big global institutions such as the IMF - is in itself an achievement. Against that background, you should regard the complaints of local banks that they are disadvantaged compared with foreign creditors as something of a sideshow. Certainly, the likes of Emirates NBD and Abu Dhabi Commercial Bank have a duty to their shareholders to get the best possible deal from Dubai World.

But this time the problem is not really in the power of Dubai World to solve. The UAE financial creditors will take a bigger hit than their international rivals mainly because of higher funding costs in the Emirates. London bank borrowing rates stand at 0.6 per cent, much cheaper than Emirates rates of 2.3 per cent. That is an anomaly that needs to be rectified for the ultimate success of the Dubai World restructuring, and for the recovery of the UAE property market, on which so much depends.

The Central Bank of the UAE has shown itself to be innovative and generous on several occasions since the financial crisis began. Here is another opportunity to intervene to good effect by taking steps to cut the cost of borrowing across the country. fkane@thenational.ae