[RED DEMOCRATICA] CFR.org Daily Brief, August 12, 2010

 

August 12, 2010 View this newsletter as a web page on CFR's website. EXECUTIVE SUMMARY - Markets Drop Amid Global Slowdown Fears - Iraqi General Warns on U.S. Pullout - New Flood Threat in Pakistan - Russia Deploys Missiles in Abkhazia Top of the Agenda: Markets Drop Amid Fears of Global Slowdown Following steep declines (AP) Wednesday in U.S. and European equities, Asian stocks slid modestly on growing doubts about global economic growth. The Dow Jones industrial average slumped 265 points, moving back into the red for the year. Market drops followed a spate of developments signaling a slowing economy (NYT) in the United States and abroad. On Tuesday, Federal Reserve officials warned that the pace of recovery in the United States had slowed. U.S. trade data for June showed the largest gap since October 2008 at $49.9 billion (FT), indicating that the world's largest economy cannot rely on foreign trade to offset slowing. As stocks declined, investors rushed for safety in government debt like U.S. Treasury securities, driving benchmark market interest rates to their lowest levels in more than a year. Economists predict the U.S. economy may confront high unemployment (Bloomberg) and lackluster growth for some time. Analysis Investment manager John C. Michaelson looks at the U.S. Fed's policy of near zero interest rates and argues that lowering interest rates too much may not stimulate recovery (WSJ), but actually slow it. Assessing the Fed's latest decision to use proceeds from its mortgage-bond portfolio to buy long-term Treasury securities, the New York Times says the Fed's options now are more limited than they were three years ago, and the consequences of its actions potentially more dangerous. Background Read the full text of Fed statement here. MIDDLE EAST: Iraqi General Warns on U.S. Troop Withdrawal Iraq's top army officer Lieutenant General Babaker Zebari warned against the planned U.S. troop withdrawal by the end of next year, saying the Iraqi military might not be ready (al-Jazeera) to take control for another decade. Meanwhile, Washington stressed Wednesday that the United States is on target (AP) to end combat operations by the end of this month and meet its deadline for removing all troops by the end of 2011. Lebanon: Defense Minister Elias Murr said the country will reject U.S. military aid (DailyStar) should it come with conditions that weapons not be used against Israel. His comments followed a decision by the U.S. Congress to suspend $100 million in aid following last week's clash on the Lebanon-Israel border, which left two Lebanese soldiers, a senior Israeli army officer, and a Lebanese journalist dead. SOUTH ASIA: New Flood Warnings in Pakistan Pakistan on Thursday issued new flood warnings (NYT) to several cities in Punjab and Sindh provinces that could last into the weekend. President Asif Ali Zardari flew to a hard-hit area on Thursday for a first look (Dawn) at the two-week crisis after criticism about trips abroad and his government's perceived slack response. In a new interview with CFR.org, U.S. Special Representative for Afghanistan and Pakistan Richard C. Holbrooke said the international response to Pakistan's flood disaster has been inadequate so far. Afghanistan: Worsening insurgent violence in many parts of the country is raising concern (NYT) about Afghanistan's ability to hold a fair parliamentary election scheduled for September 18. In a recent CFR media call, Senior Fellow Stephen Biddle discussed how to define success in Afghanistan. PACIFIC RIM: Rains Hamper China's Rescue Efforts Heavy rain in northwest China is disrupting rescue efforts in Zhouqu County, which was hit by a landslide Sunday that killed more than 1,100 people. Hundreds more are still missing, with hopes of finding survivors fading (GlobalTimes). Meanwhile, as fears of disease outbreak rise, the state media reports that medical workers and specialists in epidemic prevention have been sent to the area. Japan: Japan's finance minister warned against the yen's rise Thursday, threatening to take "appropriate action," an indirect reference to currency market intervention (WSJ). Yoshihiko Noda's remarks showed a heightened sense of caution among Japanese currency officials over the yen's recent rise to a fifteen-year high against the dollar. AFRICA: Ugandan Rebels on 'Forced Recruitment Drive' Uganda's rebel Lord's Resistance Army is on a massive forced recruitment campaign (BBC) in central Africa, says Human Rights Watch in a new report. The watchdog group says the LRA, which has fought the Ugandan government since 1986, brutally abducted at least 697 adults and children over the past eighteen months. Rwanda: Kigali was struck by a grenade attack (NYT) on Wednesday night, two days after President Paul Kagame was overwhelmingly reelected. The police said that three people had been arrested and twenty had been taken to a hospital. AMERICAS: Former Al-Qaeda Cook Sentenced A U.S. military jury recommended a fourteen-year sentence (AP) Wednesday for an al-Qaeda cook, but he could be released much sooner under a plea bargain that will limit the time he spends in prison. Sudanese-born Ibrahim Ahmed Mahmoud Qosi pleaded guilty last month to supporting terrorism, making him only the fourth detainee at the U.S. military prison at Guantanamo Bay to be convicted since the facility opened in 2002. Colombia: A suspected car bomb exploded (Reuters) in the north of capital Bogota near a main radio station on Thursday, slightly injuring four people and blowing out windows in nearby buildings. EUROPE: Russia Deploys Missiles in Abkhazia Russia announced Wednesday that it had deployed (RFE/RL) an advanced surface-to-air missile system in Georgian enclave Abkhazia, to provide antiaircraft defense for Abkhazia and South Ossetia, another rebel Georgian region. Moscow recognized the two as independent states after a brief war with Georgia in 2008. Georgian officials condemned the move, calling it a violation of the peace agreement drawn up at the end of the conflict. Greece: The Greek economy shrank by 1.5 percent (Telegraph) in the second quarter, and the unemployment rate jumped to 12 percent, pointing to a deepening recession as the country battles a debt crisis. Greece's GDP has fallen 3.5 percent in a year, and the country has been forced to make severe public spending cuts since it sparked a Europe-wide debt crisis earlier this year.

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