Council on Foreign Relations

- Investors eye spread of Dubai debt crisis.
- Iran pledges expansion of nuclear facilities.
- China rejects EU calls for yuan appreciation.
- Indian economy beats growth expectations.

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.

Analysis

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 U.S. protection.

The head of Iran's nuclear program, Vice President Ali Akbar Salehi, told Iranian state radio that a plan to build ten new uranium enrichment facilities is a direct response (AP) to the International Atomic Energy Agency's censure of the Islamic Republic last week. "We had no intention of building many facilities like the Natanz site, but apparently the West doesn't want to understand Iran's peaceful message," Salehi said (ILNA).

Israel: Hamas is increasingly "Islamizing" the Gaza strip through repression of women and banning of certain freedoms, Bloomberg reports.

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.

India's economy grew 7.9 percent (TimesofIndia) in the three months up to September, boosted by increased industrial production and government stimulus efforts.

Sri Lanka: Former Sri Lankan army chief Sarath Fonseka announced he will run for president (al-Jazeera) in next year's election against his former ally, President Mahinda Rajapaksa.

Somali pirates on Monday seized a Greek-owned oil tanker carrying crude oil from Saudi Arabia to the United States, posing new security and environmental risks to the region (AP).

Equatorial Guinea: Equatorial Guinea's President Teodoro Obiang Nguema won 96.7 percent of the vote in the country's election Sunday, despite concerns over potential vote rigging (Bloomberg).

According to exit polls and preliminary results, opposition leader Porfirio Lobo appears to have won Honduras's presidential runoff (MercoPress). Regional countries, however, have said ousted incumbent Manuel Zelaya should instead be reinstated.

Uruguay: Jose Mujica, a former leftist guerrilla, won a presidential run-off (LatAmHeraldTribune) in Uruguay Sunday, according to exit polls.

Russian President Dmitry Medvedev has proposed a draft European security treaty that would commit signatory countries to NATO-like security pledges in case of an attack (EU Observer) on one of its members.

Germany: The trial against alleged Nazi prison guard John Demjanjuk began in Munich (DeutscheWelle) on Monday; he faces charges of killing 27,900 people while working at the Nazi death camp Sobibor.