Top of the Agenda: Cyprus Reaches Ten Billion Euro Deal
International lenders reached a deal with Cyprus Monday morning on a ten billion euro bailout deal (FT) that would prevent the collapse of its banking system and keep the country within the eurozone. The amended deal, which comes a week after the Cypriot parliament rejected a proposed bank levy on small and large deposits, avoids the controversial levy on bank accounts, but will force large losses on big deposits in the island's two largest lenders. European and Asian shares rallied (Reuters) on Monday while yields on Italian and Spanish government debt fell sharply (Bloomberg). The new deal will not be put to a vote in the Cyprus parliament.
"Nobody doubts that, after such a severe blow to its lucrative banking sector, Cyprus will be pushed into a harsh recession. Some sources in the troika tentatively estimate that GDP will shrink by about 10% before any hope of recovery. Perhaps the biggest question is this: once the banks have been cleaned up and shrunk, where will Cyprus find economic growth?" writes the Economist.
"Cyprus's economy is going to suffer greatly over the next few years, and its citizens are going to blame Europe for their woes; it's entirely possible that they will voluntarily leave the euro, if the alternative is negative economic growth as far as the eye can see, along with a massively overvalued currency," writes Felix Salmon for Reuters.
"As a number of people have pointed out, Cyprus is arguably better positioned than Iceland to do an Iceland, because devaluing a reintroduced Cypriot currency could bring in a lot of tourism. But will the Cypriots — who haven't even reconciled themselves to the end of their round-tripping business — be willing to go there?" writes Paul Krugman for the New York Times.
China's Xi Jinping Begins Africa Tour
Chinese President Xi Jinping arrived in Tanzania at the start of a three-nation Africa tour (SCMP) after finishing a two-day visit in Moscow. His visit, which will include South Africa and the Republic of Congo, is driven by Beijing's appetite for resources and African demand for Chinese imports.
Anti-Muslim mobs attacked three more towns in predominantly Buddhist central Myanmar over the weekend. President Thein Sein had declared a state of emergency (AP) in the region on Friday and deployed army troops to the worst-hit city, Meiktila, where thirty-two people were killed.
AFGHANISTAN: The United States handed over full control (al-Jazeera) of the Bagram military prison to Afghanistan on Monday after a week of negotiations between U.S. and Afghan officials.
Riad al-Assaad, the commander of the opposition Free Syrian Army, was injured in a bomb explosion (al-Arabiya) on Monday and is being treated in Turkey. The news comes after Syrian National Coalition leader Ahmed Moaz al-Khatib resigned from the dissident body.
CAR Rebel Chief Declares Himself President
Michel Djotodia, leader of the Seleka rebels in the Central African Republic, declared himself president (Reuters) and pledged to name a power-sharing government after seizing the capital of Bangui on Sunday. The United States, France, and Chad called on Djotodia to respect the terms of a January power-sharing agreement.
MALI: French President François Hollande confirmed Saturday that Abdelhamid Abou Zeid, a top leader of al-Qaeda's North Africa branch, was killed (France24) in northern Mali late last month.
Italian President President Giorgio Napolitano asked center-left leader Pier Luigi Bersani to form a government in a bid to resolve the country's political gridlock (GazettaDelSud) after last month's inconclusive parliamentary election. Bersani's alliance has a majority in the House, but not the Senate.
CFR's Charles Kupchan reflects on Italy's political stalemate and its effect on the Eurozone in this First Take.
Argentina Continues Falklands Dispute
Argentina will meet with UN Secretary General Ban Ki-moon this week in New York to renew its long-standing demand that the UK hold talks with Argentina on the Falklands/Malvinas sovereignty dispute (MercoPress).
BRAZIL: Pope Francis plans to visit Brazil (UPI) in July for a Catholic youth celebration, marking his first scheduled trip to that continent. The festival is expected to attract hundreds of thousands of people.