TOP NEWS: Nat’l Security / Foreign Affairs: July 17, 2012
- Pentagon Bulks Up Defenses in the Gulf
- IMF: Doubt Weighs On Economy
- ECB shows signs of bailout flexibility
- Syria Hardens Response to Clashes in Damascus
- Clinton Says Iran Sanctions Working
Excerpts and more top stories
PERSIAN GULF: Pentagon Bulks Up Defenses in the Gulf
ADAM ENTOUS AND JULIAN E. BARNES, Wall Street Journal – The Pentagon is building a missile-defense radar station at a secret site in Qatar and organizing its biggest-ever minesweeping exercises in the Persian Gulf, as preparations accelerate for a possible flare-up with Iran.
ECONOMIC GROWTH: IMF: Doubt Weighs On Economy
SUDEEP REDDY, Wall Street Journal – The International Monetary Fund cut its outlook for global economic growth and urged policy makers to take bolder actions to bolster the faltering recovery. Fund Forecasts 3.5% Global Growth in 2012 and Warns EU and U.S. of the Perils of Policy Inertia; Steep Falls for Italy, Spain.
Peter Spiegel and Claire Jones, Financial Times - For an institution that has long resisted any leeway in paying private investors what they are owed – Mr Trichet fiercely resisted Greece’s sovereign bond default last year, for example – Mr Draghi’s change of heart is significant. “Draghi is moving in the right direction, towards a proper resolution mechanism where everybody gets hit,” said Lucrezia Reichlin, a former ECB director of research. “This is very different from past policy and it is going to create market tensions if not managed properly.”
EUROZONE: US dollar is no haven from the eurozone
Axel Merk, Financial Times Opinion – In some ways, we already have a United States of Europe: when a weak country asks for help, it receives aid in return for ceding sovereign control over budgeting. The main difference to the emerging vision of Europe is that budgets ought to be reviewed before a crisis erupts. We are inching towards the vision in a typically European piecemeal fashion, with weak countries taking the lead, incentivised by market pressures.
EUROZONE/GERMANY: German Court Delays Ruling on Fund
WILLIAM BOSTON, Wall Street Journal – Germany’s highest court on Monday said it won’t make a decision until Sept. 12 on whether to impose a temporary injunction that would block Europe’s permanent bailout fund from taking effect. The court’s announcement adds uncertainty to Europe’s efforts to combat the debt crisis. Many legal analysts predict the court will ultimately allow Germany to ratify the permanent bailout fund, but say that a final ruling may not come for months.
EUROZONE/ITALY: Italian Banks Downgraded by Moody’s
NATHALIE TADENA, Wall Street Journal – Moody’s Investors Service lowered its long-term ratings on 10 Italian banks and its issuer ratings on three Italian financial institutions by one to two notches Monday, following its downgrade of Italy’s government bond rating last week. The ratings company noted its downgrade of Italy’s long-term ratings last week indicates an increased risk that the government might be unable to provide financial support to its banks in financial distress.
EUROZONE/GERMANY: ZEW Investor Confidence Declines To Lowest Since January
Gabi Thesing, Bloomberg – German investor confidence declined for a third month in July as the euro area’s debt crisis and cooling global demand dimmed the economic outlook. Germany’s economy, which grew 0.5 percent in the first quarter, is running out of steam as austerity measures across Europe and weakening global growth curb demand for its goods and damp confidence.
NEIL MacFARQUHAR and J. DAVID GOODMAN, NY Times – Antigovernment activists on Tuesday reported a third day of street battles in the Syrian capital of Damascus as rebels fought Syrian Army forces in several restive neighborhoods near the edge of the old city. Activists in the northern Damascus suburb of Qaboun said the Syrian forces were backed by helicopter gunships, an apparent hardening of the government’s response to urban fighting that has spread toward central Damascus and the seat of President Bashar al-Assad’s power.
Liz Sly, Washington Post – In a camp of converted shipping containers surrounded by a barbed-wire fence, 11,500 Syrians spend their days waiting and wondering when they might be able to go home. Most of them fled for their lives in an instant, never imagining their exile would last so long.
JOSHUA MITNICK, Wall Street Journal – Secretary of State Hillary Clinton sought Monday to reassure Israel that U.S. efforts to block Iran’s nuclear ambitions are working, but said the strategy of diplomacy and economic sanctions needs more time to play out.
RICK GLADSTONE and ELISABETH BUMILLER, NY Times – A 677-foot United States Navy refueling ship in the Persian Gulf opened fire on Monday with a .50-caliber machine gun on what appeared to be a 30-foot sport fishing boat after it ignored repeated warnings to stop, killing a crew member and causing a spike in oil prices that reflected the heightened tensions in the region between Iran and the United States.
JODI RUDOREN, NY Times – Visiting Israel for the first time in nearly two years, with the Palestinian peace process seemingly on perpetual hold, Secretary of State Hillary Rodham Clinton said Monday that “the status quo is unsustainable” and urged leaders from both sides back to negotiations.
ISABEL KERSHNER, NY Times – Israel’s social justice movement struggled to respond after a protester, Moshe Silman, set himself on fire at one of the largest protests in the country’s history on Saturday. After Mr. Silman’s tragic protest, it seemed unlikely that the social justice movement would continue to be a source of cheer.
PAKISTAN: Wheeling and dealing with Pakistan
Washington Post Editorial – Trucks are trickling across the border between Pakistan and Afghanistan this month, thanks to the latest patch-up between the Obama administration and Islamabad’s fractious menage of generals and elected politicians. Nevertheless, the past seven months, during which Pakistan blocked the supply traffic, have underlined the reality that the deeper alliance that the Obama administration once hoped to forge with this nuclear-armed Muslim nation is out of reach for the foreseeable future.
ALAN COWELL, NY Times – As the 2012 London Olympics approach, heralded by stories of busloads of athletes getting lost and a shortfall in security personnel that required the deployment of an extra 3,500 soldiers, the head of the global company providing security staff said its performance had been a “humiliating shambles.”
CHOE SANG-HUN, NY Times – A day after dismissing its military chief, North Korea on Tuesday announced the promotion of a little-known general to vice marshal, a move widely seen as the new leader Kim Jong-un’s attempt to tame the military and reshape the regime’s power elite to consolidate his authority.
Joshua Partlow, Washington Post – The United States and its allies have devoted years of effort and billions of dollars to improve the delivery of basic services in rural Afghanistan. Instead, what is emerging in ever starker relief is a governance vacuum as U.S. forces begin to draw down. U.S. officials and residents say what worries them most is the weakness of the local and provincial governments being left behind, which command virtually no resources and almost no authority.
TERRORISM/HSBC SCANDAL: HSBC Allowed Laundering, U.S. Probe Says
Jesse Hamilton and David Voreacos, Bloomberg Businessweek – HSBC Holdings Plc (HSBA) did business with firms linked to terrorism, failed to guard against money- laundering violations in Mexico and bypassed U.S. sanctions against Iran, according to U.S. Senate investigators.
CHINA: The Road to Nowhere
Simon Rabinovitch, Financial Times – Fears that excessive investment is heightening the danger of a sharp slowdown are fuelling debate about whether Beijing should apply the brakes to growth today. The rush to catch up on housing and infrastructure has been unseemly. But the leadership does not want to see an abrupt downturn that leads to unrest.
BELARUS: Europe’s Last Dictatorship
ANDREJ DYNKO, NY Times Opinion – Belarus remains Europe’s last dictatorship, as the former Secretary of State Condoleezza Rice called it in 2006. Years pass, but little changes in this landlocked country of 9.5 million people. While its neighbors Poland, Lithuania and Latvia have joined the European Union, and while Ukraine struggles to follow them, Belarus has become the champion of “Eurasian integration,” a leading member of the club of post-Soviet autocracies, along with the likes of Russia and Kazakhstan.
VICTORIA BURNETT, NY Times – Economic changes have met with resistance within the Communist system, putting the government’s stated goals in jeopardy. Nearly two years into the Cuban government’s economic overhaul aimed at slashing public payrolls and bolstering private enterprise, the reforms have slowed so much that many Cuban entrepreneurs and intellectuals are questioning the aging leadership’s ability — or will — to reshape one of the world’s last Communist systems and shift nearly half of the island’s output to private hands.
Marcy Gordon, AP via Huffington Post – Europe’s largest bank had lax controls that allowed Mexican drug cartels to launder billions of dollars through its U.S. operations for seven years, a Senate investigation found.
EU/SOUTH KOREA: Deal Boosts Korean Car Exports to Europe
MATTHEW DALTON, Wall Street Journal – The impact of a free-trade deal between South Korea and the EU is coming into sharper focus amid a rise in Korean car imports and Peugeot’s announcement of the first car-plant closure in France. South Korean auto giants Hyundai Motor Corp. and Kia Motors Corp. have made major inroads into the weak European market at Peugeot’s expense, and the trend may continue as the EU’s new trade agreement with Seoul phases out import tariffs on cars over the next four years.
INDIA/FRACKING: In Tiny Bean, India’s Dirt-Poor Farmers Strike Gas-Drilling Gold
GARDINER HARRIS, NY Times – Profits from a hard bean that is crucial in the drilling process called hydraulic fracturing, have improved the lives of poor farmers in northeastern India. Fracking may also have spoiled some rural water supplies and caused environmental damage in parts of the United States, but it is hard to find anyone in Rajasthan who sees fracking as anything but a blessing.
Mure Dicker, Washington Post – It has been slow for a chain reaction, but more than a year after the biggest nuclear crisis in a quarter century, Japanese demonstrations against atomic power are beginning to generate serious steam.