Dubai's debt problems clouded national day celebrations in the United Arab Emirates where a shaken financial community is trying to solve its debt crisis.

Dubais request of a payment delay on $26 billion of debt owed by government-owned Dubai World exposed the frailties of "quasi-sovereign" lending as the country marked its 38th anniversary.

The request has also provoked questions about whether Abu Dhabi, the oil-producing powerhouse of the seven-emirate federation, will rescue its ambitious neighbour.

Dubai's government has made clear it will not guarantee the debts of Dubai World, the financial group which already has at least $60 billion in liabilities overall, including those of units not included in the restructuring.

Al Jazeeras Dan Nolan reports on how the two cities work on rebuilding ties.