Is the Dubai Government Completely Broke?

As the Dubai saga flows into the weekend and with no new information forthcoming, some perplexing questions come to mind. According to official figures (which at this point are highly suspect), Dubai World a state-sponsored entity and parent company of Nakheel (the real estate developer) has a total debt outstanding of $59 billion of which $9.2 billion is coming due in the next 4 months ($4.3 billion in December and $4.9 billion in 1Q 2010). In addition, according to Bloomberg, in 2008 Dubai World had assets of $99.6 billion and revenue of $14.2 billion.

Now the first question that comes to mind is how broke is the Dubai government that it could not come up with a mere $4.3 billion to tide Dubai World over? A not too large a sum for Dubai, when you consider that just last November, the government revealed that Dubai had well over a $1 trillion in assets to support its ~$100 billion of debt load. Unless of course, they were flat out lying, which looks to be the case right now.

Additionally the government asked for a 6 month moratorium, so this is not a short-term cash flow mismatch. The problem is much larger. And it is unlikely that Dubai choose the default route without having first explored all options with Abu Dhabi. After all Abu Dhabi is probably their biggest creditor. Which brings us to our last question: Is Abu Dhabi's financial position as strong as the media portrays? If it is then why would they choose to let Dubai go under? Such an action is surely not in their best interest.