jennifer. >> it makes total sense that jen and i would come on. >> there is no reason. >> i'm going to talk to jen for you. >> it will be fun. just the three of us. we'll just hang out. don't fight over me. >> we'll hang out like demi, ashton and the other ones. >> chelsea, thank you. >> thank you, piers. hello, i'm monita rajpal at cnn london. the philippines election commission says the former president has been charged with large-scale vote fraud. new york city police say they have arrested almost 300 people in occupy wall street protests across the city, scuffles erupted when crowds tried to block the new york

stock exchange and other public areas. the protest movement began two months ago on september 17th. frustrations over the financial crisis are also playing out in greece. thousands of people poured into the streets of athens to commemorate a student uprising in 1973 but it quickly turned into a demonstration against new government austerity measures. the ruling coalition plans to submit a new round of budget cuts to parliament later today. u.s. secretary of state hillary clinton will go to myanmar next month to check on pro-democracy reforms there. it will be the first visit there by a u.s. secretary of state in half a century. it comes eight months after the long ruling military junta allowed the establishment of a military government. those are the world headlines, i'm monita rajpal. "world business today" starts right now.

it's 5:00 p.m. here in hong kong. hello, i'm andrew stephens. it's 9:00 in london. i'm nina dos santos. welcome to "world business today." let's send you straight to the european stock market action. investors have been trading for an hour and one minute at the moment, as you can see, reacting negatively to ongoing uncertainty over the handling of europe's ongoing debt crisis. a proposal was turned down once again. we have the cac 40 down by 0.75%. heavier losses for the likes of the dax. let's have a look at how aids effecting the bond markets. the spiraling cost of borrowing across these regions really is

what has been affecting things of late. italy, this is the country that's surpassed that 7% crucial level beyond which economists say it just becomes too expensive to finance yourself out in the open markets. the italian bond yields are coming down today as you can see, in today's session. still, hovering close to that 7% mark is 6.83. let's look at another country that people are worried about across the euro zone. it's spain and its bond yield have been rising yet again today, perilously close to that 6.83 mark. that country has an election going on at the moment. political upheaval plays into that. france, this country is still paying about 2% more to bore owe on the open markets than germany which is paying quite a bit less. let's have a look at the netherlands. this is one of the more financially comfortable countries across the euro zone. even it has been facing higher

borrowing costs of late. finally ab austria, its bond yields are coming down today, still 3.5%, that's the euro zone high for that country as well. andrew? >> high bond yields, nina, as you've been saying, usually equal low equity prices. we saw in the u.s. and here in asia. that's how the key asian markets finished this week. pretty big losses across the board. nikkei, down by 1.2%. 1.75%, nearly 2 in shanghai and nearly 2 in australia. a pretty miserable end for the asian markets, all being undermined by what's going on in europe, nina. >> andrew, if we take a look at the u.s. markets it was a sea of red in the stock market on

thursday. investors remained on edge again about the european debt crisis. that led to pretty steep drops of more than 1% for all of the major indices. let's have a look at the closing figures when things finally settled. the dow jones industrial average finished 1.1% lower. we had the nasdaq dropping almost 2% in the middle as you can see there, and the s&p 500, the broader index wasn't that far off either. when it comes to how the u.s. markets may open five hours from now, they look set for a fairly flat open when trading begins later on today, particularly the nasdaq and the dow, their futures trading virtually flat. we must also point out that we do have some of the options expiring on some of these stocks, which means they'll be trading without the rights to their dividends and that sometimes can breed weakness into the markets, especially with the ongoing concerns here in europe where i am.

andrew? >> we call it technical considerations when markets went down. things have changed a bit. back in 2008 it was the collapse of a housing bubble in the united states that brought the global economy just about to its knees. now as the economic picture darkens once again, the specter of another housing bust could be on the horizon, not in the u.s. but in china. new figures from the statistics bureau shows chinese property prices are falling. in a survey of nearly 07 cities, nearly half saw a decline in the price of housing in october. that's twice the number of cities where house prices fell in september. it has some people worried whether the authorities in china can deflate that bubble without parking a property crash. a big correction would certainly have serious implications for the country's economy and by implication it would have an impact on the rest of the world.

eunice yoon has this report. >> reporter: this man is giving away bmws in the chinese city of wen jao. it's also a signal that china's property market could be in for a rough ride. >> everyone is watching the housing prices in china. people are worried that the market is a bubble. agents say the prices have fallen by 20% so far this year. chinese real estate is a key driver of global growth, accounting for about a fifth of china's economy, helping to lift prices of steel, cement and other materials at a time when countries in the west are losing steam. in recent years, home prices in manufacturing towns like wenzjou

rising, demand for apartments are on the decline, prompting agents like lynn to show in a new luxury car, worth 10% of one of his flats. homes are harder to sell, he says. an unstable situation was created for the real estate market. housing has been increasingly out of reach for the vast majority of people here. a concern for authorities looking to prevent any social unrest. the government should definitely be doing more, this laborer says. we work so hard, yet it's nearly impossible to afford to live anywhere. to ward off those complaints, beijing pledges to continue its campaign to calm prices, a move investors hope won't take china's economic engine when the rest of the world is trying to stay afloat. eunice yoon, cnn, wenzjou.

marches were held across the united states. in new york where the protests first began, police say they arrest 2d 45 people. this i-report video appears to show new york city officers dragging a woman along the street by her hair before other protesters came to her defense. and on the west coast, police say they arrested 48 people in several incidents in portland, oregon. 50 protesters were arrested in los angeles with bail set at around $5,000. >> now, spanish voters head to the polls this weekend. in just a moment we'll be speaking to some of the country's young voters who say unemployment is making theirs a lost generation.

welcome back. you're watching "world business

today" live from london and hong kong. >> in europe, tensions are running high as the british prime minister david cameron gets set to meet his german opposite number angela merkel, the chancellor in berlin later today. the two leaders have very different views on the euro zone crisis and indeed, the shape of the whole european union overall. that could make for a lively exchange later on today. joining us now from berlin with more on what we could expect is frederik pleitgen. the uk has long been using this euro zone crisis to further its own ambitions. what kind of meeting is this going to be like? it could be pretty fraught. >> it could indeed be pretty fraught, nina. german newspapers are calling this potentially a friendly conversation without tea. you're absolutely right. there are very different views, both on the euro zone as well as indeed the entire shape of the future of the european union. angela merkel, of course, believes that the austerity plans and the bailout measures

that have already been put in place and are currently being worked on are going to be enough. she wants the bailout measures that have been decided on to be able to unfold at first. the british prime minister takes a far different view, he feels that the european central bank needs to be more involved in the bailout of countries like italy and spain as well and also that germany needs to be more financially involved as well. angela merkel was at a press conference yesterday, she held a speech there and she said that any country that believes that the european central bank is going to be able to solve the euro zone crisis, she believes, that that simply isn't going to be the case. she thinks that only political reforms will lead to the end of the euro zone crisis. then of course you have this whole big topic, which is a very interesting one. that's the one of europe moving at two different speeds, you have the euro zone countries starting to have their own summits and decisions. then you have countries who are in europe, inside the eu but outside of the euro zone. of course, the uk and britain is

of course a country that is very much also beginning to have issues with the euro zone crisis. however, has absolutely no say in how the euro zone crisis being dealt with. that's certainly thing that david cameron is not very happy about, nina. >> frederic, a lot of this hinges on potential treaty change. we're talking about changing the legal framework that governs the eu. that's one of the things that david cameron really doesn't want to see. >> yes. he was talking about sort of utopian vigs a couple of days ago and said that politicians shouldn't get bogged down with that. that, of course, a straight shot at angela merkel. she touched on that during her speech. she felt that european integration had been a work in process. she feels that germany and other countries are going to try and move european integration forward. the big question on that is of course, fiscal and financial

integration where angela merkel feels that the european union in the medium term run really. that's something that's unique for that kind of thinking. we know any sort of decisions and treaty changes usually take decades to implement. she feels in the medium run, the european union should have power to bust their budget and countries like germany that have quite a good budget could essentially file a suit against countries that consistently bust their budget. she feels those mechanisms should be in place. that's something that britain is not very fond of either. this is a meeting that could be quite chilly, if you will and will be a lot of differing views on a lot of subjects, nina. >> contentious stuff. thanks ever so much. fred pleitgen joining us from berlin.

andrew? >> cameron and angela merkel and many others, too, will be looking at spain this weekend as the country goes to the polls there. spain's general election is taking place against a backdrop of bond yields we've been talking about. they've risen close to the unsustainable 7% level and unemployment among young people now running at around 45%. we spoke with young spaniards who explained their difficulties in finding work and who they blame for it. >> reporter: what's your experience been with trying to get a job in spain? >> it's really -- now it's quite impossible to find work. you can look for 20, 30 different places and they will say just the same. if you have some place we will call you if we are interested but we don't have any job for you now. >> it's difficult to find a permanent job, because normally the bosses of the companies

normally offers of work temporarily like three months, six months, one year. >> who do you blame for spain's economic crisis? >> i think we are a little bit responsible because we lived -- we say we are living very good, we spend a lot of money, i buy my car, i buy my building but it was like a bubble that has explodes. more harder than other countries. >> 30 years ago we have a lot of factory, we had a lot of factory s, a producing sector. and now it changes. >> now the majority of the families in spain are making a lost money that they don't have in the past, buying the cars, the houses. >> we are really trying to find another kind of economy and

another kind of answer to their life questions. >> but in spain, you know, youthful employment is at 46%. gdp is almost 0. you think none of that matters? >> i think unemployment is not a huge problem in spain because we have a big underground economical area. >> you really don't think the unemployment is a problem? >> no. i think not. >> i think yes. i think it's the bigger problem now. if the people will not have work, the economy will not work. it's like a circle. if the economy doesn't work, you don't have -- you will not get a job. >> reporter: would you ever consider going abroad to get work? >> yes, personally, i'm leaving in six months. i'm looking -- i'm trying to get experience outside of spain because it's very difficult to get a job. >> coming up next on "world

business today," unraveling occupy wall street. it's a rapidly growing movement in the united states and also around the rest of the world. but how much do you really know about it? we'll break it down for you, next, when we come back. is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade and check my investment portfolio, research stocks, and set conditional orders. wait, why are you taking... oh, i see. hey max, would it kill you to throw a guy a warning bark? [ dog barks ] you know i wanted a bird. [ male announcer ] e-trade. investing unleashed. there's no time like the present to consider all your health insurance options. does medicare alone meet your needs? would additional coverage be better for you? well, now is a good time to take a look at an aarp medicare supplement insurance plan,

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five, six week low against the dollar. the found pretty steady at 1.58 and the yen at 76.7. a little stronger against the green back. welcome back. you're watching "world business today" live on cnn. let's go back to one of our top stories this hour. occupy wall street protests have been reaching a climax in the u.s. on thursday, police arrested hundreds of protesters across the country. question is, what are they so passionate about? christine romans now explains. >> reporter: this has lasted much longer than any other protest i've seen on wall street and i've seen a lot of sit-ins and protests and marches. this is definitely one that has more legs than any i've ever seen. occupy wall street has been trying to raise awareness of this growing income gap, this growing opportunity and wealth between the richest people in america and the rest of us, the 99% they say.

they're protesting inequality, lack of opportunity, a jobs market that's not working for everyone. too much student debt and kind of they feel like they've been sold a bill of goods that they've taken on this student debt for a place in an economy that's not giving them a job that's going to help them pay off that student debt. what they're protesting, they're protesting business as usual in washington and business as usual on wall street. both of those two big institutions, two big power structures in america, that they think have conspired to make the wealthy wealthier and not serve the middle class and poor people. when you talk to them, they say we're not going to draw up a specific list of demands. we're here to draw awareness to the numbers that don't lie, that the rich are getting richer, the mid rl barely holding on and the poor are getting poorer and

there are fundamental unfairnesses that have to go with greed in banks and greed in washington that make this continue. the richest 1% of americans made $343,000 last year or more, according to the irs. that 1% has seen its income trip from 1979 to 2007. at the same time, the middle class has seen its almost up about 40% and the poofr, the very bottom of that income has barely seen it move. you've seen a widening income gap, the biggest, widest income gap we've seen in this country in 70 years. more than punishing the 1%, what they're saying is we are the 99%. what about us? we are a bigger group, we can be strong. we can stand here and occupy some place and show you and raise awareness that your policies are not benefiting everyone, they're only benefiting a few. so rather than indicting the top

1%, there are those who do that, they're trying to turn the focus on the 99% who they say have been left behind. >> christine romans breaking it down for us. you're watching "world business today." when we come back, a lion of a deal. boeing commits to its biggest ever order. but you probably wouldn't guess which airline is shelling out the cash. more on that? just a moment. i'd race down that hill without a helmet. i took some steep risks in my teens. i'd never ride without one now. and since my doctor prescribed lipitor, i won't go without it for my high cholesterol and my risk of heart attack. why kid myself? diet and exercise weren't lowering my cholesterol enough. now i'm eating healthier, exercising more, taking lipitor. numbers don't lie. my cholesterol's stayed down. lipitor is fda approved to reduce the risk of heart attack and stroke

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hello and welcome back to the show from cnn lon didn't, i'm nina dos santos. >> i'm andrew stevens at cnn

hong kong. you're watching "world business today." fly high, buy big if you're boeing that is. the company is finalizing its biggest commercial order ever from the indonesian airline lion air. this deal is worth $21.7 billion, according to boeing. for that lion air will receive 230 of the new generation short hole 737 aircraft. lion has also agreed to purchase rights for another 150 planes and that would mean another 14 billion in boeing's bank account. the ceo of lion air told us he's optimistic about the growth of passenger numbers in indonesia. >> because we have growth continuously for almost 10% to 20% a year, last year we had 50% growth, we are hoping for 35% growth. this is what i'm talking about the mission of growth.

the government is investing in the infrastructure, and the existing airport could become 24 hours. >> certainly booming aviation secretarier acord together boss of lion air in indonesia or the growing demand in that sector comes as the country's overall economy continues to expand as strongly as well. indonesia recorded four straight quarters of growth, the third quarter gdp up more than 6% compared with a year earlier. it's weathering the global slowdown better than other economies because much of the growth is coming from crucially domestic spending. lion air currently has about 50% of market share in aviation, in indonesia. it says it wants to increase that to 70% by 2014.

peter, first of all, do you think an order this size is justified in these difficult economic, global economic times? indonesia's obviously not isolated. >> it's not isolated, no, but as you said in the introduction, domestic growth is still very strong there and across most of asia, even though we might even see a slowdown, in the next on or two years, these orders are looking forward to the end of the decade and beyond. during that period we're going to see absolutely unprecedented growth across this region, not just in indonesia. >> we've certainly seen a huge growing in the number of airlines and aircraft in indonesia. there has also been many questions raised about the safety record in indonesia. how has that improved in recent times?

>> you know, there have been two aspects to this. one has been the regulatory oversight where indonesia was particularly weak. i think much of that has been rectified now. the national flag carrier, which was black listed by the european union has in the last few months reinstated service through to europe. it's been removed from that black list. so the safety situation is improving there. one of the problems was it grew so fast. and -- it grew 500% over the first part of the decade -- the first part of the century. in those circumstances it's hard to keep control of things. what's happening now is a better process of consolidation. with lion air, i think it's a very reputable, well-run airline. >> as common with many emerging economies, the fast-growing economies, i'm thinking of india and china to a lesser degree, infrastructure fails to keep up with growth.

with indonesia where you have so many islands, thousands and thousands of islands, how difficult is it going to be to get that infrastructure in place to service this explosion in air travel? >> that is a serious problem. i should stress, of course, we're not just talking about indonesia, these aircraft are not all designed for indonesia. they're designed for taking a substantial part of the space in the asian, particularly the southeast asian growth area. that has been a big problem. the infrastructure structure issue in indonesia has been a big problem. government has lagged where the private ener to prize side of things have gone ahead. jakarta airport particularly is solely in need of additional space. a lot of the outer islands, smaller airports, do need substantial investment. these are going to be constra t constraints, no doubt about it. >> do you see, do you foresee problems with basically

controlling this huge boom in aviation in the asia-pacific region, sort of keeping air space clean and keeping the whole process moving smoothly forward? >> yes. i think in a lot of ways we're fortunate because the technology is now there to allow for great improvements in air space management. i think there will be what you might call natural constraints on growth. those are in things like the areas where we're also seeing shortages like pilots, like engineers. these really are already in china and even in india causing aircraft to be grounded purely because they're aren't enough human resources for them. there are some constraints on this potentially enormous upside. but i think generally speaking, there is sufficient vacant spaces in much of the infrastructure to allow this expansion. >> the center were asia-pacific

aviation. thanks for joining us. >> thank you zblrch let's focus in on kingfisher. the shares of this company currently trading down about 7.5% on the bound-based stox exchange. a report in the financial times says kingfisher is close to sealing a multimillion dollar deal to save its flagging business. the chairman told the paper that he's in talks with some 14 banks as well as a private investor to secure a short-term loan worth $370 million. kingfisher has been forced to cancel flights and reduce operating costs affected to try and edeuce operating because because it's been so affected by rising fuel prices of late. it's reporting debt standing at $1.3 billion. we're going to stay in the asia region for the moment. there are signs of warming relations myanmar. at the meeting of the

association of southeast nations, asean,. mr. obama noted the country's recent progress towards democratic reforms. >> there's far more to be done. we remain concerned about burma's closed political system, it's treatment of minorities and holding of political prisoners and its relationship with north korea. we want to seize what could be a historic opportunity for progress and make it clear that if burma continues to travel down the road of democratic reform, it can forge a new relationship with the united states of america. >> mr. obama's decision came after he discussed myanmar's current political situation with the noble lawyurette aung san s

kyi. the u.s. says that myanmar formally known as burma, needs to continue these democratic reforms before it can consider loosening economic sanctions. they've been in place for more than 20 years and include u.s. investment ban in myanmar, asset freezes on businesses and banks as well as a ban on their imports. lifting sanctions would give myanmar a nice economic boost. it currently is one of the poorest countries in southeast asia with an estimated per capita gdp of $570 per person. if you compare to the u.s., per capita gdp stands at $47,000, andrew, it just puts it into perspective. >> it certainly does, doesn't it? with this shortened version of "world business today," let's quickly bring you up to date with what's happening in the markets here. that's how the markets finished.

the nikkei suffering the least, down by 1.2%, hong kong down by 1.75%, shanghai nearly 2 and australia nearly 2 as well. it remains, nina, as it has all week, exactly what is happening in europe, particularly with the bond yields and the growing factor of ris, europe that we have to sort out this crisis. >> we're seeing some of the situation here in europe where i am. we're about 90 minutes into the trading session at the moment and this is where the markets stand, firmly in the red. they are coming off intraday lows but there's not too much respite on the bond yield side. they are facing high borrowing costs. moving on to weather, in europe's alpine region, a lack of snow is delaying the ski season and leave something businesses with empty slopes at the moment. let's go to the meteorologist ivan cabrera standing by as always at the cnn international

weather center to tell us all. ivan, how's it looking? >> not looking good. not panicking yet. but some other resorts have canceled in fact their opening weekend coming up. we don't have snow on the ground. that is a problem for the slopes. you can't ski without snow. take a look at europe. we've had these monster highs that have dominated the pattern. we've been well below average. the cold air is in place across the higher elevation here. we just don't have the moisture. we can't make the snow for you. front moving through the uk. that's where the weather is right now across europe, really, as this high continues to stay large and in charge. we do need rain in scotland. thankfully at least we're doing that for the uk here. for the rest of us, and specifically for the alpine region here we are not looking good. i want to show you fascinating nasa perspective satellite imagery here. these are clouds in the wispy

white. right here, this is your snow pack. this is a year ago, november a year ago. this is the way it looked opening weekend was fantastic. look at what's happened a year later. we have barely any snow. i mean just the highest peaks here across the alpine region are we seeing snowfall. i'll get you in closer to some of the resorts. in switzerland, a couple resorts have canceled the opening weekend. we just don't have enough snow. watch what happens, a year before, we had plenty of snow on the ground, we had happy skiers and happy resorts here and business was doing just fine, thank you. but this is the way it looks right now. i tell you what, cold up there but not snowing and that's the way it's going to stay as we head through the next several days. we are waiting for the snow across the alps. nina, andrew? >> okay, ivan, thanks ever so much for that. ivan cabrera.

>> that's amazing, just nothing around there. that's big business for the european countries, the snow season. we'll have to say farewell for now, this shortened version of "world business today." i'm andrew stevens in hong kong. >> i'm nina dos santos in london. you're watching cnn, the world's news leader. uh, i'm in a timeout because apparently riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket

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inside and defense spending throughout the region. the dubai air show took off this week with the region's carriers leading the way. qatar airways announced a $6.4 billion for 55 planes over intense haggling over contracts. but that deal wasn't the biggest. emirates placed a record-breaking order for from boeing. the company may be looking to buy more. >> look at the fleet. i think it will be between 350 seater and 300 seater and 500 plus. i think this is something we are focusing on. >> we saw your profits go down in the first six months of the year by 0.75%. you're not hesitating to add capacity. why not? >> i think if we're talking about the emirates last year, it was a record profit. it was a good year.

the fuel prices was much lower than what we've seen in 12 months. it was an exceptional year but also we are proud to see that the six months of our operation also being profitable and we believe in the next six months we would be able to achieve profit and we will have a profitable year. >> you went heavily on the 777 with this record order for boeing. is that because the a-350 just wasn't reliable enough in terms of production, so you put your bets on boeing this time around? >> still our existing commitment on the a-350 exists. and we speak. the 777 is also something that did very well for emirates. that's why we have today about 239 aircraft on order in the next few years.

>> one company that relies on the growth of the regional carriers is aircraft maker boeing. the middle east will require around $450 billion worth of aircraft between now and 2030. some 2,500 planes. i caught up with the ceo of boeing's commercial plane division, jim alba, and asked him about the growth in the region. >> the traffic, if you go back to 2009 was up 15% in this area. last year it was up close to 18%. this year because of the arab spring it's close to 9%, 8.6%. those are good numbers. i think this part of the world is unique in that it can connect every city pair in the world from here. that's why they're buying the long-haul airplanes, so they can be the hub for the entire world. that's what they're trying to do. >> they're suggesting a 40% drop in earnings, earnings primarily in the europe and the u.s., it won't trickle into the emerging markets in your view? >> what you're seeing happen is run by fuel prices.

that's why the reduction from this year and last year and the forecast for next year is positive, as we like to see. i view that as an opportunity for us. what do our airline customers want? they want to make money. they want efficiency of their airplane and they want to an environmentally friendly airplane. that helps our customers make money. that helps our customer not being driven from a profitability standpoint by fuel prices. >> despite rising fuel costs affecting commercial airlines, one sector that's not witnessing any signs of a downturn is defense. rising tensions over iran are driving regional governments to boost weaponry. the middle east spent $111 billion on defense last year, a 2.5% increase from 2009. and saudi arabia remains the region's biggest military spendser. leoni lakhani takes a closer look at the industry. ♪ >> reporter: for middle eastern countries looking to bolster

military might, they're finding options here at the dubai air show. the world's main defense contractors are making their presence felt in a multibillion dollar industry. ♪ state-of-the-art aircraft from around the world are all on display here as the gulf arab countries look at their strategies to build up their military capabilities. experts say gulf countries are spending an increasing amount of gdp on defense. >> we have a continuation of the ongoing arms buildup in the region, with a strong focus on air power and air defense. >> reporter: saudi arabia is the biggest military spender in the gulf, followed by the united arab emirates. the exact numbers are unclear because details aren't generally disclosed. a potential $06 billion agreement between the united states and saudi arabia over five to ten years is believed to be the single largest component

of the region's defense spending. the spending may seem big but experts say so are the threats. >> they vary a bit, one month it may be terrorism, the next month it may be the threat of nuclear weapons. but it's a region with security challenges. and the nations here are looking for ways to cope with those challenges. >> reporter: add to that increasing concerns about the perceived threat from iran. >> the defense strategy and the procurement policies in the arab gulf countries are very much centered on iran. and the perceived perception of iran's growing strength and ballistic missile and cruise missile and other conventional forces, plus its nuclear capabilities. >> reporter: iran maintains its nuclear program is for producing energy, not weapons. still, concerns remain and the

gulf region is building up not just its u.s. but also european weaponry. >> we are already in service with the unified in saudi arabia and other countries that are unified, qatar and the emirates as well. >> reporter: ties with western allies remain tight but it seems the emphasis for these gulf countries today is to develop their own forces and resources. leoni lakhani for "marketplace middle east," dubai. oil giant exxon signed a deal in northern iran but not everyone is happy about it. we take a look at the rising tensions between the semiautonomous region of kurdistan and baghdad, when we come back.

♪ kurdistan's regional government believes 40 billion barrels of oil lie beneath the soil. exxonmobil has announced it will begin exploration there. that deal is causing contention with iraq's central government in baghdad as arwa damon found out. >> reporter: here in kurdistan, the word is out, exxonmobil is coming. the billions of barrels that lay beneath this specific area are already being drilled by a smaller american competitor. but now exxonmobil has signed its own deal with the kurds, to explore for more oil in the kurdish semiautonomous region of iraq. these oil rigs are a taste of what's to come. the prime minister of the krg, the kurdistan regional government is elated over the dynamic changes the deal could

bring to his region. >> i was hoping that my colleagues in baghdad would welcome this, welcome this as a success, a company like exxon which has come to kurdistan, should be viewed as a successful iraq by the federal government. >> reporter: far from it. the deal has the government in baghdad fuming. it considers any deal with the krg illegal and has a policy of black listing any company that signs them. the heightened tensions manifested themselves in this oil conference in irbil. >> i also say to our partners in baghdad, very clearly and directly, kurdistan has a constitutional right to developing its oil resources. and there is no way that we will allow ourselves, yet again, ever again, to be held hostage to the whims of some bureaucrats in baghdad. >> reporter: this former

national security adviser to the central government, under orders from the top, slammed the deal, threatened to ban the oil giant exxonmobil and pursue it with legal action. exxonmobil has a major service contract signed with the central government in one of iraq's southern oil fields. the deal with the krg has some speculating that it's part of bigger political maneuvering. >> in imagine dad, some people perceive this contract to be targeting the federal government to weaken the government and it has some political connotation with it. >> reporter: the issue isn't so much about oil money. both sides agree that revenues go straight into the central government coffers. it's about control. the rkg wants a law that authorizes the regions to issue contracts and profit-sharing contracts at that.

baghdad wants to retain its grip and be the only authority to sign contracts. the kurds say they will not be stopped. visual evidence of just how oil rich this part of iraq is is seen right here. these are oil seeps and they're fairly common across all of kurdistan. now when it comes to the industry, this is considered to be dead oil, basically you can't extract it. but what happens is that during the summer months, the oil bleeds out every so slowly from the rock face and hardens in the winter. everyone knows this tantalizing verification of how wealthy this part of the country is could easily turn from a blessing into a curse. arwa damon, cnn, irbil, northern iraq. that's it for this edition of "cnn money morning." i'm john defterios. thanks for watching. we'll see you next week.