COVER: Is the Party Over? (All overseas editions). Middle East Regional
Editor Christopher Dickey reports that the economic meltdown has come to
Dubai, the city-state in the United Arab Emirates that, more than any other
place on earth, is the creation of worldwide commerce. But now, the global
economy is imploding and Dubai is feeling it. Dickey examines how the ripple
effects of the current crisis keep spreading and their impact on the region.
Foreign workers are already being sent back to their homes. Skyscrapers are
standing unfinished, their skeletons baking in the sun. For the past decade at
least, real-estate speculation has been the national sport. The price of
houses and apartments, many of them not yet built, rose by 43 percent in the
first quarter of this year alone. Today, among many other holdings, Dubai owns
a 43 percent share in NASDAQ OMX and a 20.6 percent share in the London Stock
Exchange. Nobody was ready for the plunge in prices over the past four months
that has taken oil down to little more than a third of its price last summer.
Dubai turned out to be "insulated [but] not isolated," says Mary Nicola, an
economist with Standard Chartered Bank.
http://www.newsweek.com/id/172641
POINT OF VIEW: Zachary Karabell. Too Big to Fail. Karabell, president of
RiverTwice Research, writes that although Dubai's economy, fueled by high oil
prices and easy credit, has been hit hard by the same global contraction that
has already hurt much of the world, reports of Dubai's demise are premature.
"First off, Dubai is just too big to fail," he writes. "It is the second-
largest economy in the United Arab Emirates and retains the backing of the
largest, Abu Dhabi, which holds massive oil reserves of nearly 100 billion
barrels and has a sovereign wealth fund in excess of $1 trillion." He writes
that it's never been clear exactly how much of the boom in Dubai was
subsidized by Abu Dhabi or if Dubai did it all on their own. "Whatever the
truth, Dubai is too important to the U.A.E for its leaders to let it fall."
http://www.newsweek.com/id/172643
NATO in the West Bank. Jerusalem Bureau Chief Kevin Peraino reports that a
recent proposal to deploy NATO forces in the West Bank as part of any
Obama-era peace deal is quickly gaining advocates in Washington and the
Levant. Former U.S. national-security advisers Brent Scowcroft and Zbigniew
Brzezinski both recently endorsed the idea. The president-elect's nominee to
head the National Security Council, Gen. James Jones, is also said to favor
such a force. Israelis and Palestinians have raised tepid protests, but even
they seem to be realizing increasingly that a strong international presence
will be critical if any deal is to be struck -- and if it's to stick.
http://www.newsweek.com/id/172638
Germany's Frau Nein. European Economics Correspondent Stefan Theil reports
on German Chancellor Angela Merkel's actions in response to the worst global
recession in decades. In Washington, London and Beijing, governments are
taking the line that this downturn requires extraordinary policies, and have
passed a plethora of spending programs they say will help their citizens and
companies weather the recession. The Germans lead a much smaller group of
countries, including Poland and Denmark, that don't deny the depth of the
crisis, but weigh the costs of spiraling government outlays higher than their
possible benefits. What is certain is that this isn't just a dispute over the
effectiveness of policy. It has turned into a fight over influence and money,
pitting Merkel and her allies against the leaders of France, Britain and
Italy, who are calling for German help (and treasure) for a more muscular
European response.
http://www.newsweek.com/id/172619
How the West Won Ukraine. Moscow Bureau Chief Owen Matthews and Special
Correspondent Anna Nemtsova report that although Ukraine will likely not be
allowed entry into NATO, polls show that Ukranians simply do not much care
about NATO membership. They have their eye instead on a far bigger prize.
Close to 50 percent of Ukranians, and all the major political parties, now
favor joining the European Union. If this trend continues, it would represent
a fundamental shift in Ukranian thinking.
http://www.newsweek.com/id/172608
No Fanning the Flames. Special Correspondents Jason Overdorf and Sudip
Mazumdar report that last week, when U.S. Secretary of State Condoleezza Rice
visited India, thousands of Indians took to the streets of Mumbai, Delhi and
other cities to protest. Yet, while there were a few scattered chants of
"Death to Pakistan," the marchers who carried roses, candles and posters,
directed most of the ire not at India's perennial enemy, the terrorists, or
the ruling Congress party. Their anger was reserved for India's politicians in
general. The protestors' slogan: "Enough is enough."
http://www.newsweek.com/id/172610
Thailand Slides Toward Civil War. Hong Kong Bureau Chief George Wehrfritz
and Contributor Jamie Seaton report that in Thailand, after antigovernment
demonstrators finally ended their weeklong occupation of Bangkok's two
airports, stranded travelers started their journeys home. But for Thailand's
citizens, its politicians, its business community and its foreign investors,
nothing concrete has been resolved. Political extremism is mounting, and a
frightening new phrase has slipped into the political lexicon: civil war. And
it's a uniquely Thai version, featuring extreme political violence and
dividing the nation into rich vs. poor, urban vs. rural, north vs. south and
pro- vs. antiglobalization.
http://www.newsweek.com/id/172612
WORLD VIEW: End of the Line for Islamabad. Newsweek International Editor
Fareed Zakaria writes that if the Mumbai attacks were India's 9/11, it's
response is quite different from the United States in the weeks following that
event. Much of the debate among Indians has focused on their government's
lack of preparedness, poor intelligence, and bungling response, but the Indian
government has not rushed to war. "The one country that could do more than
any other to change the military's mind-set is America."
http://www.newsweek.com/id/172567
THE LAST WORD: Jiang Jianqing, ICBC's chairman. Jiang Jianqing, chairman
of the world's largest commercial lender in China and one of the world's
biggest financial institutions, discusses the economic future of China and the
world. When comparing our current financial crisis to that of 1998, he says,
"No two crises are alike, but there are common roots. In 1998, there was a lot
of talk about the emerging markets not managing risk well. Now, it seems the
U.S.-a market we thought was very mature and well developed-has not managed
risk. The key point [in both cases] is greed."
http://www.newsweek.com/id/172620
