Tuesday, June 8, 2010

[RED DEMOCRATICA] CFR.org Daily Brief, June 08, 2010

 

From the Council on Foreign Relations

June 8, 2010

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

EXECUTIVE SUMMARY

- EU Sovereign Debt Fears Continue
- Ahmadinejad to Visit China
- Japan's New PM Unveils Cabinet
- Spain Public Sector Protests Austerity

Top of the Agenda: EU Sovereign Debt Fears Continue

Concern over the eurozone's sovereign debt continued to escalate (WSJ), even as EU officials have tried to allay fears by agreeing to monitor national budgets more closely and impose sanctions on excessive budgets. The measures would allow the EU more control over budgets' structures, earlier sanctions for countries headed for fiscal problems, and more scrutiny of countries' total debt, rather than just their budget deficits. Analysts worried about the negative impact of budget cuts on euro-area growth, as well as negative comments by rating agency Fitch about Britain's fiscal woes.

Fitch said Britain needed more severe budget cuts (FT) than what its April 2010 budget set out, precipitating a decline in the pound's value by 0.5 percent against the dollar and the euro.

The comments followed British Prime Minister David Cameron's announcement that the country's finances were "worse than we thought," as he laid the groundwork (WashPost) for spending cuts and policy changes to be detailed later this month. Germany, meanwhile, announced an $80 billion, multiyear package of cuts that would trim fifteen thousand public-sector workers.

Analysis:

In the Times of London, the Hudson Institute's Irwin Stelzer says the market worries are "all reasonable, but all a bit overblown." The more likely outlook is for a continued recovery fueled by low interest rates and a new stimulus bill, though the pace of growth is uncertain.

In the Financial Times, Jeffrey Sachs says Keynesian economics is on its way out, in the wake of global stimulus packages that have not worked and have merely exacerbated over-borrowing.

MIDDLE EAST: Ahmadinejad to Visit China

China said it is expecting (AP) Iranian President Mahmoud Ahmadinejad to arrive in China on June 11 to attend the Shanghai Expo.

Israel: The Israeli military will conduct (Bloomberg) its own investigation of the May 31 flotilla raid, which left nine pro-Palestinian activists from Turkey dead.

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.

PACIFIC RIM: Japan's New PM Unveils Cabinet

Newly minted Japanese Prime Minister Naoto Kan named a new cabinet (NYT) aimed at tackling the country's political and economic problems and breaking with the financial scandals of his predecessor.

Listen to CFR Senior Fellow Sheila Smith discuss the implications of the surprise collapse of former prime minister Yukio Hatoyama's government.

China: Japan's Honda Motors was hit by another strike (WSJ) in southern China at an affiliated parts company, as more of the region's workershope to secure wage increases.

SOUTH AND CENTRAL ASIA: India Renews Kashmir Talk Offer

Indian Prime Minister Manmohan Singh renewed (BBC) an offer of talks with Kashmiri separatists who shun violence during a visit to a university in Indian-administered Kashmir.

Afghanistan: The forced resignations of Afghanistan's two top security officials signals (NYT) Afghan President Hamid Karzai's increasingly impulsive decision-making and deepening isolation at home and abroad.

AFRICA: Developed World Damaging African Trade

A new report by the African Development Bank says developed countries have responded to the global financial crisis by adopting protectionist measures (allAfrica) that damage Africa's export trade.

Libya: The UN's refugee agency said Libyan authorities have ordered (BBC) it to close its office without any reason.

AMERICAS: Obama Attacks BP's Hayward Comments

U.S. President Barack Obama criticized (FT) initial comments made by BP Chief Executive Tony Hayward, who suggested there would be a minimum environmental impact from the Gulf oil spill.

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.

Honduras: U.S. Secretary of State Hillary Clinton urged (NYT) Latin American countries to improve ties with Honduras, as Argentina, Brazil, Ecuador, Nicaragua, and other nations refuse to recognize the new Honduran leader, Porfirio Lobo.

EUROPE: Spain's Public Sector Protests Austerity

Spanish public-sector workers launched (BBC) their first major strike in protest of austerity measures, which include a 5 percent pay cut.
 

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