Asia-Pacific News

Abu Dhabi the "Big Winner" in Dubai Crisis

Abu Dhabi is going to benefit from the Dubai debt crisis, said David Riedel, president & founder of Riedel Research Group, after the emirate nation pumped $10 billion into Dubai on Monday, part of which will help troubled state-owned conglomerate Dubai World repay its debt.

Abu Dhabi to Gain from Dubai Crisis: Analyst

"Abu Dhabi waited till the very last minute to do what they ended up doing, which was extending this lifeline. So it is interesting to think about why they waited so long. Clearly, they wanted Dubai to sweat somewhat," Riedel told CNBC's Asia Squawk Box.

Now, the big question on everyone's minds is what Abu Dhabi is going to demand from Dubai in return for the aid.

"I think they are going to get their pound of flesh ... It might be ownership of Emirate Airlines, it might be inheriting the mantel of regional financial services. Abu Dhabi, I think, is going to be the big winner here. And they are playing their cards pretty well so far, to take what they want out of this region."

The surprise bailout may have eased fears of a potential debt default and lifted financial markets but there may be more trouble lurking under the surface, he added.

"Dubai is a symptom of a larger problem. I think you have got a similar problem in emerging Europe, in the Baltics and so on and so forth," said Riedel.

European banks could be in trouble, he warned, as they have lent aggressively to these frontier markets.