UAE promises to prop up Dubai banks; Iran raises stakes in nuclear row; China rejects yuan appreciation; Indian economy grows nearly eight percent; and more
Top of the Agenda: UAE Lends Money to Dubai
The United Arab Emirates has pledged to lend money to banks (NYT) in Dubai in an attempt to head off the spread of another financial crisis. Investors fled the stocks of banks with outstanding loans to Dubai and its investment arm, Dubai World, last week, after Dubai World asked for an extension on repaying its debts. Central bankers and government officials were watching Monday's stock markets for signs that fears are spreading. Asian markets closed up 3 percent, while European markets had dropped about 1 percent by midday Monday. Though Dubai is not big enough to spark financial turmoil outside the Middle East, analysts worry that investors might flee risky markets altogether in search of safer havens.
Dubai and Abu Dhabi's main stock markets fell 8.3 percent and 7.3 percent respectively Monday, the biggest decline since October 2008. Asian shares rebounded on hopes that the Dubai debt crisis would not spread to other financial markets after the UAE central bank's announcement. Dubai's debt crisis is making it more expensive (BBC) for other countries with large deficits, such as Greece and Latvia, to sell their debt.
The government in Abu Dhabi, which already injected $10 billion into Dubai's economy this year, has not indicated that it will lend the emirate more money, a shock to investors, the Wall Street Journal reports.
In the Times of London, author Jo Tatchell says Dubai's misfortunes have given Abu Dhabi the chance to take political control of the region.
In Canada's National Post, columnist David Frum of the American Enterprise Institute says the visions of Dubai becoming an international banking center were "subtly foolish" and depended on US protection.
PACIFIC RIM: Chinese Yuan Appreciation
Chinese Premier Wen Jiabao rejected calls from EU political and economic leaders for the yuan to appreciate, saying it is unfair (GlobalTimes) to call for yuan appreciation while imposing trade protectionism on China .
South Korea: South Korean President Lee Myung-bak's decision not to move a portion of the national government from Seoul to a new city is sparking criticism (WSJ) of the government's attempts to wean itself off massive infrastructure projects.
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org