Friday, May 21, 2010

[RED DEMOCRATICA] CFR.org Daily Brief, May 21, 2010

 

From the Council on Foreign Relations

May 21, 2010

View this newsletter as a web page on CFR's website.

EXECUTIVE SUMMARY

- U.S. Senate Passes Financial Reform
- Clinton Condemns S. Korea Ship Attack
- U.S. Force Buildup Begins in Afghanistan
- German Bundestag Approves EU Bailout

Top of the Agenda: U.S. Senate Passes Financial Reform

The U.S. Senate approved (WSJ) a sweeping financial regulation bill that increases government oversight of the financial sector . The legislation, aimed at stabilizing markets and avoiding another financial meltdown, passed in the Senate 59 to 39--with four Republican senators in support. It must now be reconciled with a bill passed by the House of Representatives in December before President Barack Obama can sign it into law. The bill establishes a new "systemic risk" regulator, a consumer protection division within the Federal Reserve, more power for the Fed to supervise systemically important financial firms, and allows the government to seize and liquidate failing financial firms to prevent panic and bailouts. It also brings the derivatives market--a major player in the 2008 crisis--under regulation, forcing most contracts to be traded through third parties.

Obama will use the bill's passage to help boost (WashPost) his party's political outlook in November.

Analysis:

The financial reform bill passed by the Senate appears likely to help lessen the risks of a system linked to recent economic upheavals, but it is doubtful the new measures will work as designed, writes CFR's Sebastian Mallaby.

In the New Republic, Noam Scheiber says the Senate bill doesn't really fix the problem of "too big to fail." The new resolution authority is still a bailout in effect and only applies to U.S. banks even though most "megabanks have an international footing."

The Senate bill does not impose sufficient capital standards for banks, says Mark Calabria in the New York Post. It only says the new council of regulators may recommend that the Fed impose more stringent standards.

Background:

Read the highlights of the Senate bill here.

MIDDLE EAST: Russia and Iran May Persist on Air Missile Sale

Head of Russian parliamentary foreign affairs committee Mikhail Margelov said sanctions on Iran would not stop (Reuters) Russia from delivering S-300 surface-to-air missiles to Tehran, which the United States and Israel have asked Russia not to do.

The Security Council will maintain pressure on Iran to cease its uranium enrichment program if it moves forward with sanctions, but that won't likely change Tehran's course, writes CFR's Richard Haass.

Israel: Palestinian negotiators surprised the Obama administration with a bold opening offer in peace talks that includes concessions on territory beyond those offered in the past, the Wall Street Journal reports.

PACIFIC RIM: Clinton Condemns S. Korea Ship Attack

U.S. Secretary of State Hillary Clinton condemned (NYT) North Korea for the deadly torpedo attack on a South Korean Navy ship in March and promised an international response with China and Japan.

South Korea's charge that North Korea caused the sinking of one of its warships is likely to result in a drawn-out effort to get the UN Security Council to censure Pyongyang, writes CFR's Scott Snyder.

Thailand: After reestablishing order (Reuters) in Bangkok, Thai Prime Minister Abhisit Vejjajiva said he was committed to national reconciliation but made no offer of fresh elections.

SOUTH AND CENTRAL ASIA: U.S. Force Buildup Begins in Afghanistan

The U.S. soldiers who will lead the buildup of U.S. forces in Kandahar this summer began arriving (WashPost) this week and received a crash course on the region's problems. The U.S. military launched (WSJ) an investigation into the killings of as many as three Afghan civilians by American soldiers.

Pakistan-India: Pakistan told India it wants to begin (PressTrustofIndia) formal arbitration proceedings over an Indian dam project in Kashmir, threatening to heighten tensions ahead of high-level bilateral talks.

AFRICA: South Sudan Swears In First President

Salva Kiir, the leader of Sudan's former SPLM rebels, was sworn in (BBC) as the first elected president of the semi-autonomous south after a landslide victory in April elections.

In a new Council Special Report, Katherine Almquist says the United States should be prepared to recognize and assist an independent southern Sudan.

Uganda: Human Rights Watch urged the U.S. government to swiftly implement (HumanRightsWatch) new legislation passed in Congress last week to protect civilians in Central Africa from Ugandan rebels, who have led a "brutal killing campaign in northeastern Democratic Republic of Congo" this year.

AMERICAS: U.S. Intelligence Director Resigns

U.S. Director of National Intelligence Dennis Blair announced his resignation (LAT) after a rocky sixteen-month tenure that included a series of attempted terror attacks and intelligence breakdowns.

Mexico: Mexican President Felipe Calderón escalated his assault (NYT) on Arizona's new immigration law in his speech to a joint session of the U.S. Congress.

Calderón's state visit to Washington aims to emphasize the growing cross-border partnership on Mexico's drug war, but immigration tensions could surface, says CFR's Shannon O'Neil.

EUROPE: German Bundestag Approves EU Bailout

The German lower house of parliament approved (DeutscheWelle) its 148 billion euro portion of the eurozone bailout.

Eurozone: The crisis over eurozone public finances threatens to sideline (FT) the region's economic recovery, with German business confidence waning and manufacturing growth slowing.

Saving the European Union requires a plan to allow fiscally weak member countries to fail, as well as painful lifestyle changes and some loss of national sovereignty, says Daniel Gros, director of the Centre for European Policy Studies.

TRANSNATIONAL: Market Volatility Continues Rising

The market's volatility index jumped (DowJones) to its highest point since April 2009 Thursday after the United States reported an increase in jobless claims and concerns over Europe's debt problems persisted.
 

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