Top of the Agenda: Global Markets Soar on Fiscal Cliff Deal
Congress broke a rancorous stalemate late Tuesday by approving a plan (WashPost) to avert the fiscal cliff after House Republicans conceded to President Barack Obama's demand to let taxes rise on the nation's richest households. European and Asian markets rallied on Wednesday (Reuters) in reaction to the news, while safe-haven dollar and German government bonds fell. The measure will shield middle-class taxpayers from tax increases set to take effect this month, but will also let rates rise on wages and investment profits (WSJ) for households making more than $450,000 a year, marking the first time in more than twenty years that a broad tax increase has been approved with GOP support.
"Frankly, in a way this reminds me of FDR and his meetings with key advisors after his 1932 election. He told them that he was not sure what he would do about the economy of the Great Depression, but famously said he needed to 'try something, anything.' We are in pretty much the same situation," writes John Zogby for Forbes.
"By avoiding that hit and finally nailing down numerous features of the tax code, the deal lifts a cloud that had hung over the economy and investor confidence. But on almost every other point, the deal falls short of already low expectations," writes the Economist.
"If subsequent agreements make sustained progress towards addressing our long-term fiscal challenges, this deal may be seen as a significant first step; if not, it's further evidence of dysfunctional government," writes CFR's Robert Kahn.
Japan's Abe Emphasizes South Korea Ties
Japanese Prime Minister Shinzo Abe extended an olive branch to neighbor South Korea by instructing a special envoy to convey to President-elect Park Geun Hye that Japan sees its relations with the country as "extremely vital" (JapanTimes),a softening of diplomatic ties since last August when a territorial spat strained relations.
NORTH KOREA: North Korean leader Kim Jong-un called for economic reform (SCMP)in a rare New Year's address that also appeared to take a conciliatory tone toward South Korea.
This CFR report investigates issues in Japan-South Korea relations.
SOUTH AND CENTRAL ASIA
Militants Kill Seven Aid Workers in Pakistan
Gunmen shot dead seven Pakistani teachers and health workers on Tuesday, six of them women, in the latest spate of attacks (NYT)against charity and aid workers that officials have attributed to the Taliban.
MYANMAR: Myanmar's military aircraft has been targeting rebel areas in the northern Kachin state over the last five days (BBC). Conflict with Kachin rebels resumed last year after a seventeen-year truce.
Aleppo Airport Closes Amid Syrian Clashes
The international airport in Syria's second city of Aleppo, where fighting has been at a stalemate since July, has closed after continued attacks by rebel forces (al-Jazeera). Opposition groups say more than 44,000 people have been killed since Syria's unrest began in March 2011.
This CFR Expert Roundup delves into what U.S. policy should be in Syria.
EGYPT: An Egyptian satirical show host is facing an investigation (IBT)for allegedly insulting President Mohamed Morsi and his backers.
UN Security Council Imposes Embargo on Congo Rebels
The United Nations Security Council imposed an arms embargo Monday on two armed Congolese rebel groups accused of rape and mass killings (LATimes), a move that came just before Rwanda, which has been accused of backing the rebels, joined the Council for a two-year term.
IVORY COAST: Sixty-one people died and more than two hundred were wounded in a crowd stampede (AP) after a New Year's fireworks show early Tuesday in Ivory Coast's main city of Abidjan.
Turkey Launches Disarmament Talks With PKK
Turkey has opened disarmament talks with Abdullah Ocalan, the jailed leader of the Kurdistan Workers party, marking the first time an official has confirmed negotiations with a broader peace agenda (FT). The PKK, which is labeled a terrorist group by the United States and the European Union, has been fighting a guerrilla war in eastern Turkey since the mid-1980s.
PORTUGAL: President Aníbal Cavaco Silva announced that he will send this year's controversial budget to the Constitutional Court to assess its fairness (BBC), although his right-of-center government has supported its drastic tax hikes.
This CFR expert roundup lays out prospects for the global economy in 2013.
Chávez Aware of 'Complex' Condition
Venezuelan Vice President Nicolas Maduro said on Tuesday that President Hugo Chávez is aware of his delicate condition (Reuters) after a fourth cancer operation in Cuba that left him with multiple complications.