Monday, December 14, 2009

[RED DEMOCRATICA] CFR.org Daily Brief, December 14, 2009

 

From the Council on Foreign Relations

December 14, 2009

View this newsletter as a web page on CFR's website.

EXECUTIVE SUMMARY

- Abu Dhabi bails out Dubai.
- N. Korean cargo plane with arms seized.
- Obama criticizes bankers ahead of talks.
- Chilean presidency moves to runoff.

Top of the Agenda: Dubai Bailout

In a surprise turnaround, Abu Dhabi announced (WSJ) it will give United Arab Emirates neighbor Dubai $10 billion to help it pay off its debts, after the government tried to distance itself from conglomerate Dubai World's debts. Ten billion dollars will be used to repay a $4.1 billion bond that matures Monday, issued by Nakheel, a property developer owned by Dubai World. The rest will be used to finance Dubai World's needs until the end of April 2010. The bailout boosted local stock markets, with Dubai Financial Market's main index up 10 percent and Abu Dhabi's market up 7.9 percent. Dubai World began talks with banks to restructure its debt last week and said the new funds offer "a stable basis for the restructuring process." Analysts say Abu Dhabi's decision restored confidence in the federation. Dubai also announced a bankruptcy framework in case Dubai World is unable to resolve the restructuring of its $26 billion in debt.

Stock markets in Asia were lifted (NYT) by the announcement. The Japanese yen, which typically rises with perceived market riskiness, eased against the U.S. dollar and the euro. Growing fears that other indebted companies, such as Dubai Holdings, a conglomerate owned by Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum, would also be unable to meet their obligations compelled Abu Dhabi to take action. Abu Dhabi may also have been influenced by Nakheel's creditors, many of which are foreign hedge funds seeking to secure their valuable assets.

Analysis

In the New York Times, Claudia Pugh-Thomas says Dubai is facing a "midlife crisis" and may lose its meaningfulness on the world stage, but its sizeable population of expats may not find it easy to leave.

In the Washington Post, CFR's Sebastian Mallaby says the nonchalance with which global financial markets reacted to the Dubai crisis indicates a growing financial bubble in which investors "shrug off most bad news."

MIDDLE EAST: Iran Uranium Swap Offer

U.S. officials dismissed (PRESSTV) Iran's offer to swap small batches of its low-enriched uranium on the island of Kish.

PACIFIC RIM: North Korean Cargo Seizure

Thai authorities seized (GlobalTimes) a cargo plane arriving from North Korea Sunday carrying thirty tons of weapons, including rocket-propelled grenades and components for surface-to-air missiles.

China-Turkmenistan: Chinese President Hu Jintao unveiled (BBC) a 4,300-mile-long gas pipeline running from Turkmenistan through Kazakhstan and Uzbekistan to China.

SOUTH AND CENTRAL ASIA: Afghanistan Police Attack

Sixteen members of the Afghan National Police were killed (Quqnoos) at checkpoints in Afghanistan's southern province of Helmand and northern province of Baghlan.

Pakistan: Senior U.S. officials are trying to expand CIA drone strikes beyond Pakistan's tribal regions and into Quetta, a major city, an attempt to pressure Pakistan into pursuing Taliban leaders there, the L.A. Times reports.

AFRICA: Zimbabwe Political Crisis

Zimbabwe's ruling party, the African National Union Patriotic Front, is showing signs (DailyNation) of disintegration. The party's fifth National Congress ended without any agreement on its constitution, which would affect the selection of President Robert Mugabe's successor.

Africa: AIDS activists say President Barack Obama is falling short (EastAfrican) of predecessor George W. Bush's achievements on PEPFAR, the country's AIDS treatment program in Africa.

AMERICAS: Obama on Bankers

Relations between the banking industry and the Obama administration are deteriorating (WSJ), as Obama prepares to meet Monday with bankers to discuss increased lending to boost job growth, banker compensation, and Congress' financial-industry regulatory bill.

Chile: Rightist candidate Sebastian Piñera won a plurality (LAHT) in the Chilean presidential election Sunday and faces a runoff with center-left candidate and former President Eduardo Frei.

EUROPE: Berlusconi Attack

Italian Prime Minister Silvio Berlusconi went to the hospital (Guardian) Sunday after an attacker hit his face and knocked him to the ground at a political rally.

EU: The European Union is calling (DerSpiegel) for the International Monetary Fund to institute a global tax on financial transactions called the Tobin tax, which U.S. officials strongly oppose.
 

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