The Global Report: May 17, 2012

By Michael J. Lockhart

This week's news roundup looks at the death of the German-French EU rule, this weekend's NATO summit, and rising tensions in Asia.

Welcome to the Global Report: our weekly column of the most important issues happening across the planet. From politics to war, monarchies to dictatorships, and everything in-between, we’ve got it covered. It’s world news, style.

This weekend’s NATO Summit in the U.S. (Chicago) has added two more high-profile attendees to its guest list with Pakistani President Asif Ali Zardari and Australian Prime Minister Julia Gillard.  Gillard has accepted the invite and agreed to continue to fund the International Security Assistance Force (ISAF), which has been instrumental in NATO’s handover of Afghanistan. Pakistan’s last-minute acceptance comes while it is at odds with the U.S.; it has been blocking supply routes through the country in yet another show of reluctance after the unauthorized raid last year that killed Osama Bin Laden.

Europe is now in one of its most vulnerable states since the beginning of the Greek Debt Crisis earlier this year. Yes, Greece may have had its ups and downs, forced the Troika of pan-European institutions and banks to give it funds lest it collapse, and threatened to devalue the entire financial market, at least the E.U. would have made it through, albeit by a small margin. Why? Because of the politically incestuous entity known as “Merkozy,” the E.U.-supporting pillar that was the German-French alliance of Chancellor Angela Merkel and President Nicolas Sarkozy. Together, their domineering position in European politics made them invincible, allowing them to swiftly deal with outspoken but less wealthy nations, as well as giving them the confidence to confront David Cameron’s U.K. coalition over changes to the European constitution.

With that in mind, last week’s election of France’s new Socialist President François Hollande on a platform of anti-austerity is as frightening to the E.U. constitution as it is to the financial markets that have already gone into damage control fearing a downfall. If Hollande breaks ranks with Merkel and attempts to break the strict German financial system–designed measures put in place to prevent a continent-wide collapse, then not only will Germany be on the hook, but it could lead to the austerity-bound nations of Ireland, Portugal, Italy and Spain missing their deficit targets at even greater losses. Even worse, they could end up like the newly elected Greek leaders who are unable to form a stable government, which could lead to a full-out rejection of the measures created in February to keep them within the Euro zone.

After his first meeting with Merkel earlier this week, Hollande’s vision of “economic growth” was seen to be strongly on the agenda, but as Merkel reiterated, their newfound relationship would find balance between differences and common goals. We anticipate that Hollande will be wary of attempting to dramatically alter markets initially, lest he cause destruction and be blamed for the downfall. It’s apparent he has respect for the tried-and-tested Merkel and will surely be hesitant to cross her this early in the game. The upcoming NATO and G8 summits will be his first real tests in the position, so we’ll definitely be checking in on those.

As for Greece? Merkel, Hollande and the E.U. have made it blatantly clear that Greece’s fate within the Euro zone rests solely in their hands at this point. If the Greeks reject austerity, they will fall; and no state in the world is going to give them another shot.

The ongoing Syrian conflict took yet another interesting turn yesterday as the U.S., along with the Gulf Cooperation Council (GCC) of Arab monarchies, have approved the import of weapons into Syria to be delivered to the rebel force. As a public warning to the Syrian government, the U.S. has made it known that included in the military aid is the addition of anti-tank weaponry which would be exceptionally effective when dealing with the sizable tank-based military force that the government uses. We doubt that this information will force Syria to cooperate, but it sends a stern warning that allies of the rebels are willing to fight fire with fire.

The ongoing conflict in Guinea-Bissau took another positive step over the weekend as the Economic Community of West African States (ECOWAS) began to deploy troops to help facilitate the governmental transfer to civilian rule. We reported about this situation last month when a military coup destabilized the area and forced ECOWAS to intervene.

Ethiopian-moderated discussions between Sudan and South Sudan began earlier today with the hope of ending the almost yearlong hostilities between the two nations. The African Union (AU) will be paying close attention; we reckon that the UN will be watching closely as well over this highly volatile situation.

It’s a cat and mouse game in Asia this week between China and the Philippines, with both countries trading economic jabs  over the tense relationship over territorial water claims. China has begun holding fresh produce exports from the country without processing in response to the Philippines rejecting a Chinese fishing ban in the South China Sea. A spokesperson for the Philippines stated that the ban breaches the country’s rights under the UN Convention on the Law of the Sea.

A meeting between the leaders of China, Japan and South Korea that took place over the weekend has led to an apparent rift in Chinese-Japanese relations, with China only agreeing to meet bilaterally with South Korea after previously scheduling a separate meeting with the Japanese Prime Minister as well. In a statement given Sunday, Chinese Premier Wen Jiabao urged Japan to respect China’s concerns and interests. There is speculation that this action stems from a recent conference of a Chinese separatist minority in Tokyo for which the Japanese government allocated entry visas for.

In Creature Feature news, the Australians are planning to pack the eggs of an endangered frog into coolers and drop them out of a helicopter onto an alpine marshland in order to help repopulate the species. Oh, and yet another shark attacked another boat…somethings never change.


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