Monday, June 7, 2010

[RED DEMOCRATICA] CFR.org Daily Brief, June 07, 2010

 

From the Council on Foreign Relations

June 7, 2010

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

EXECUTIVE SUMMARY

- Global Markets Fall on EU, U.S. Worries
- Israel Ambassador Rejects Flotilla Inquiry
- North Korea Shuffles Top Posts
- Germany to Cut Welfare, Military Spending

Top of the Agenda: Global Markets Fall on EU, U.S. Worries

European and Asian markets fell sharply (NYT) Monday due to continued fears about Europe's debt and the strength of the U.S. economic recovery. Disagreements among finance ministers at the weekend meeting of the Group of 20 added to market jitters. Officials offered mixed opinions on whether fiscal stimulus should be continued and on the merits of a global bank levy. Hungary upset investors Friday by suggesting it could default on its debt, which many European banks hold. Hungary's center-right government later backtracked on the comments. In the United States, the job market grew more slowly than economists predicted, adding to concerns about a possible double-dip recession.

Hungary's government called an emergency session over the weekend to draw up an economic plan aimed at restoring confidence (WSJ) in the country's creditworthiness.

The G20 communiqué stated the group no longer thinks fiscal spending is sustainable or effective in fostering recovery because investors are no longer confident (FT) about some countries' public finances.

Analysis:

On FTAlphaville, PIMCO's Mohammad El-Erian says the G20 made no meaningful progress in providing "a unifying magnet for increasingly disparate and uncoordinated national policy approaches."

In Fund Strategy, Daniel Ben-Ami says the eurozone may stave off collapse, but it has already split into a two-tiered institution.

Background:

Read the G20 communiqué (PDF) in full.

MIDDLE EAST: Israel Ambassador Rejects Flotilla Inquiry

Israel's ambassador to Washington, Michael Oren, said Israel would reject (NYT) an international inquiry into last week's flotilla raid, though Israel has yet to make any formal announcement. Separately, at least four Palestinians were killed when Israeli navy commandos opened fire (Guardian) on what they said was a squad of militants in diving suits off the coast of Gaza.

Israel's response to a humanitarian aid flotilla off Gaza marked another setback for U.S.-Turkish relations and could complicate the latest U.S.-brokered Mideast peace talks, says CFR's Steven Cook.

Iran: At a ceremony marking the twenty-first anniversary of the death of Ayatollah Ruhollah Khomeini, hardliners heckled (RFE/RL) his grandson, Hassan Khomeini. Opposition leader Mir-Hossein Mousavi condemned the verbal attack as a move by hardliners who are angry over Hassan Khomeini's support for leaders of the Green opposition movement.

PACIFIC RIM: North Korea Shuffles Top Posts

North Korea shuffled (WSJ) its top officials during a rare parliamentary session, in a move that appears to consolidate North Korean leader Kim Jong-Il's power before transferring it to his son, Kim Jong-Un.

China: China's coastal factories are raising salaries; local governments are hiking minimum wage standards; and an expected rise in the value of China's currency against the U.S. dollar is likely to raise the cost of Chinese manufacturing, all resulting in higher global consumer prices (NYT).

SOUTH AND CENTRAL ASIA: Eight Sentenced in India's Bhopal Leak

An Indian court sentences (al-Jazeera) eight people to two years in jail over the 1984 Bhopal gas plant leak that killed thousands.

Afghanistan: Investigators suspect private Afghan security firms are using U.S. funds to bribe the Taliban and fake attacks (NYT) to get more business.

AFRICA: Soccer Stampede in South Africa

Thousands of soccer fans stampeded (WSJ) outside a stadium in South Africa before an exhibition game between Nigeria and North Korea, leaving fifteen people injured five days before the World Cup begins.

Madagascar: The EU is set to suspend (BBC) development aid to Madagascar for another year over new president Andry Rajoelina's refusal to form a consensus government and hold fresh elections.

AMERICAS: BP Says Some Success with Oil Capture

BP executives said they have had some success (WashPost) in their efforts to capture oil pouring into the Gulf of Mexico from the containment cap placed over the damaged well.

This CFR Backgrounder examines the growth of deepwater drilling and the challenges of balancing strong environmental regulation with efforts to expand U.S. domestic oil production.

Latin America: U.S. Secretary of State Hillary Clinton arrived (MercoPress) in Lima, Peru, for a two-day Organization of American States meeting, where U.S. differences with Brazil may feature prominently.

EUROPE: Germany to Cut Welfare, Military Spending

Germany is close to an agreement (FT) on cutting welfare and military spending to reduce the country's budget shortfall.

Turkey: Public anger in Turkey over Israel's seizure of a Turkish-flagged aid ship has prompted concern (WashPost) about whether Turkey's Islamic-oriented government is turning away from the West.

Turkey's recent diplomatic strains with the United States and Israel reflect the "more assertive and self-confident" posture of a country looking to reestablish its role as a major influence in the Middle East and Central Asia, says expert F. Stephen Larrabee.
 

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