TOP NEWS: Nat’l Security / Foreign Affairs: August 8, 2012

Excerpts and more top stories

SYRIA: Rebels Withdraw From Parts of Aleppo as Government Forces Mass

Damien Cave and Alan Cowell, NY Times – Rebel forces in Aleppo, Syria’s largest city, said on Wednesday that government forces had launched a ground assault, forcing them to pull back from parts of the city because their ammunition was running low, as new disputes arose around the contentious issue of foreign military support for President Bashar al-Assad, and for the opposition.

SYRIA: Syrian rebels feel abandoned, betrayed by U.S.

Liz Sly, Washington Post –  As the Arab world’s bloodiest revolt continues to maim, kill and ravage lives on an ever-escalating scale, anti-American sentiments are hardening among those struggling to overthrow President Bashar al-Assad, in ways that could have profound consequences for the country and the region in a post-Assad era.

SYRIA: Tensions Rise Over Iranian Hostages

Farnaz Fassihi, WSJ - A band of 48 Iranians being held hostage by Syria’s rebel army are thought to  have ties to Iran’s elite Revolutionary Guard Corps, as the rebels claim – a connection denied by Iran, which says the hostages are religious pilgrims, warned it would hold the U.S. responsible for their fate, and vowed to stand by the Syrian regime

SYRIA: What the U.S. should do in Syria

Zalmay Khalilzad, Opinion, Washington Post – The United States has a window to facilitate an orderly transition in Syria without deploying military force. But the window is narrowing — and the Obama administration will need to adjust its political strategy to succeed.

SYRIA: Syria instability leaves U.S. at crossroads

Karen DeYoung and Anne Gearan, Washington Post – The collapse of the U.N. initiative on Syria, rebel gains that opened a corridor from Turkey to Aleppo, and a rash of high-level defections mark a turning point in the Syrian crisis and in the Obama administration’s plans for influencing the outcome.

SYRIA: FSA, Jordanian official say defecting Syrian premier hid in Syria; reached Jordan Wednesday

AP via Washington Post – The rebel Free Syrian Army and a Jordanian security official say Syria’s defecting prime minister arrived in Jordan Wednesday, two days after hiding in a “safe location” inside Syria near the border.

EGYPT: Egypt bombs Sinai sites where it believes militants are hiding

Ernesto Londoño, Ingy Hassieb and Henry Shull, Washington Post – The Egyptian military launched airstrikes early Wednesday that authorities said were intended to target extremist militant cells that have taken root in the northern Sinai, near the Israeli border.

EGYPT: Sinai violence strains Hamas-Cairo ties

Tobias Buck, FT - For the past five years, the Islamist Hamas movement has looked to the Sinai Peninsula as a crucial strategic asset – a vast and lawless stretch of desert that allowed the rulers of Gaza to smuggle goods, people, weapons and money into its coastal stronghold. Now, however, the peninsula may have grown too anarchic even for Hamas, which says it has much to lose and nothing to gain from the surge in extreme Jihadist activity in the Sinai.

EGYPT: Egypt’s Sinai Problem

Editorial, NY Times – The border attack in the Sinai Peninsula will test Mr. Morsi’s ability to establish control over the lawless Sinai, and it is also a test of his approach toward Israel. Whatever divides the two countries, there will never be true stability if Egypt cannot find ways to work with Israel on security issues and to continue honoring their 1979 peace treaty.

EGYPT: Washington’s Myopic View of Egypt

Barak Barfi, Opinion, NY Times – With Egypt caught between a military reluctant to cede the reins of power and a recently elected Islamist president eager to take hold of them, a steady stream of senior American officials has landed in Cairo to nudge the two sides toward compromise. But by focusing on the struggle between ruling elites and their commitment to the peace treaty with Israel, Washington is neglecting Egypt’s larger problems — those that incited an apathetic population to overthrow a president in office for three decades.

EUROZONE: Monti under pressure to renounce bailout

Guy Dinmore and Giulia Segreti, Ft – “We can do it alone” is the latest rallying cry to be heard in Italy as economists and politicians shower Mario Monti with proposals to use the country’s own vast but often dormant resources to slash its debt mountain rather than become hostage to the perceived diktat of Germany and Brussels.

EUROZONE/ SPAIN: Spanish PM prompts debate over EU aid

Peter Spiegel. FT - Last week’s signal from Spain’s prime minister that he may be prepared to request assistance from the eurozone’s €440bn rescue fund to drive down his country’s borrowing costs has shifted the debate back to where it was more than a month ago: what strings will be attached to such aid?

EUROZONE: This will not be enough, Mr Draghi

By Sebastian Mallaby, Opinion, FT - The ECB has announced that it will resume purchases of sovereign bonds. In principle, this policy could salve the crises of peripheral Europe by reducing borrowing costs. But US experience teaches that there is all the difference between the shock-and-awe bond purchases pursued in the first round of quantitative easing and the tepid intervention of today.

ENGLAND/GROWTH: Bank of England cuts growth forecast

Sarah O’Connor, FT - The Bank of England has cut its economic growth forecast for the next two years sharply after admitting the financial crisis had inflicted more lasting damage on the UK than previously thought.

ENGLAND/STANDARD CHARTER: British MPs accuse US of anti-City agenda

Jim Pickard, FT - Several senior British MPs accused US regulators of pursuing an anti-City of London agenda in its assault on Standard Chartered, suggesting it was part of an apparent campaign to weaken a rival financial centre.

CHINA: Chinese Military Pushes for More Domestic Sway

Edward Wong and Jonathan Ansfield, NY Times – A series of events this year that have fueled concerns among Communist Party leaders over the level of control they exercise over military officials, who are growing more outspoken and desire greater influence over policy and politics.With China’s once-a-decade leadership transition only months away, the party is pushing back with a highly visible campaign against disloyalty and corruption.

CHINA: China reforms fail to end stocks’ bad run

Simon Rabinovitch, FT - When Guo Shuqing became China’s top securities regulator in October, investors hoped that he would bring a reformist zeal to the job that would help break the stock market’s two-year losing streak. They were right about the zeal but wrong about the impact on the market. After a brief climb upwards, the benchmark Shanghai Composite Index is down nearly 13 per cent since Mr Guo took office.

CHINA: Chinese Trial Is Test for Party Elite

Jeremy Page, WSH - When Gu Kailai, the wife of a disgraced Chinese politician, walks into a courtroom here on Thursday, it will mark the start of one of China’s most significant trials in a generation. The conclusion is all but foregone: Ms. Gu is expected be found guilty in the murder of a British citizen, Neil Heywood, with whom she had close business ties. The trial’s aftereffects, however, could be far-reaching

JAPAN: Japan trade deficit leaps in first half

Ben McLannahan, FT - Japan’s trade deficit quintupled in the first half of 2012, as soaring fuel bills after the Fukushima nuclear crisis were compounded by lower exports.

IRAN: Why the Iran Oil Sanctions are Biting

Michael Levi. CFR - Last week the Obama administration tightened its oil-related sanctions against Iran. This was followed by new congressional legislation that promises to extend those sanctions further. Yet less than a year ago, most observers found such stringent sanctions against the Iranian oil sector unthinkable. What has happened to so fundamentally change the picture?

RUSSIA: Prosecutor urges jail for Russian punks

Catherine Belton, FT - A Russian prosecutor has called for three-year jail sentences for members of female punk band Pussy Riot for “desecrating” Russian Orthodox traditions when they performed a profanity-laced “punk prayer” lambasting Vladimir Putin in a Moscow cathedral.

S. KOREA: Signs of Korea Slowdown Suggest July’s Rate Cut May Have Come Just In Time-SocGen

Reshma Kapadia, Barrons – When the Bank of Korea cut interest rates in July in a surprise move it seemed to be a preemptive strike. But economic tidbits over the last month suggest it may have made the move “in the nick of time,”

AFGHANISTAN: Three NATO troops killed in double suicide attack in Afghanistan

Sayed Salahuddin, Washington Post – Three NATO troops were killed Wednesday when two suicide bombers targeted them as they walked to a meeting of Afghan officials in Konar province, officials said.

SUDAN: US seeks $3bn for Sudan oil deal

Katrina Manson and William Wallis, FT - The US wants China and Arab states to help foot the $3bn bill for a deal designed to unlock oil production and set Sudan and South Sudan back on the path to peace.

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