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Council on Foreign Relations Daily News Brief
October 16, 2013

Top of the Agenda

Top of the Agenda: Mixed Market Fallout on Debt Limit Impasse

Fitch Ratings said it put the U.S. AAA credit rating on watch for a potential downgrade because of the standoff over raising the country's debt limit (LAT). CME Group, an operator of financial exchanges, raised the collateral that investors must deposit to clear trades on routine assets like interest-rate swaps, a move that followed a similar decision by the Hong Kong bourse last week (Bloomberg). Yet Wall Street money managers are reportedly doubtful that the Treasury will run out of money on Thursday and instead see November 1 as the true debt deadline, a perception that could give Washington more time to reopen the government and raise the debt ceiling (Guardian).

Analysis

"The administration also needs to decide what it would do if the ceiling were not to be lifted in time—be it now, next month or at a later date. The least bad answer would be: keep borrowing. The president cannot state he would do so, before the fact. Indeed, he must deny it, since knowing this would lower his opponents' incentive to raise the ceiling. Yet, if it came to the worst, he would have to borrow," writes Martin Wolf in the Financial Times.

"The Beltway budget melodrama rolls on to its predictable and dreary end, with both sides now split over increasingly small differences. None of this is worth a partial government shutdown, much less the risk of a debt default, and both sides are looking like losers. Let's get it over with," the Wall Street Journal writes in an editorial.

"It made sense for other countries to embrace the dollar in an earlier era, when the United States was willing to act as guarantor of global stability. But today, with Republicans in Congress wielding default as a lever in a vain attempt to kill Obamacare, perhaps it is no surprise that the rest of the world is getting more serious about finding an alternative," writes Eduardo Porter in the New York Times.

 

PACIFIC RIM

Japan to Build 14 New Power Plants

Japan plans to complete twelve natural gas–fired power plants in 2014 and is on track to start up two new coal units this year as the country struggles to replace the capacity lost from the shutdown of nuclear reactors and curb its imports of expensive crude and fuel oil (Reuters).

CAMBODIA: Closing arguments began Wednesday in the UN-backed war crimes tribunal of Khmer Rouge leaders in Cambodia. A verdict is expected next year (AFP).

 

SOUTH AND CENTRAL ASIA

Afghan Forces Fend Off the Taliban in 2013

Afghan security forces were able to thwart many attacks by the Taliban during this year's fighting season and didn't give up territory to insurgents, according to U.S. commanders (NYT). Still, Afghan forces took heavy casualties that some officials said were unsustainable.

This CFR Backgrounder explains the origins and resiliency of the Taliban.

PAKISTAN: Prime Minister Nawaz Sharif finalized the agenda for his meeting with President Barack Obama next week. Talks will center on negotiations with the Afghan Taliban and facilitating the U.S. withdrawal from Afghanistan (Express Tribune).

 

MIDDLE EAST

Iran Presents Proposals at Nuclear Talks

Talks between Iran and the United States, Russia, China, France, Britain, and Germany resumed in Geneva on Wednesday, focusing on an Iranian proposal that could ease suspicions of its nuclear weapons ambitions. Though details were not made public, Western officials said the proposal was "very useful" (al-Monitor).

IRAQ: Nearly 500,000 Iraqis died due to the U.S.-led war, according to a new study that estimates 60 percent of deaths were caused by violence and 40 percent by reduced access to health care (al-Jazeera).

 

AFRICA

Kenya Trial Threatens Viability of ICC

As African leaders appear increasingly opposed to the International Criminal Court, the African Union will hold a summit to discuss the mass withdrawal of member states from the Rome Statute, the ICC's constitutive treaty (Business Day Live).

CFR's John Campbell argues in this blog post that the ICC promotes accountability, which is essential to good governance.

NIGERIA: Security forces said forty suspected terrorists from Boko Haram were killed earlier this week as the military repelled three simultaneous attacks in Borno State (This Day).

 

EUROPE

Russian Opposition Politician Set Free

An appeals court upheld opposition leader Alexei Navalny's conviction for embezzlement but suspended his five-year sentence on Wednesday, setting him free but likely preventing a presidential run in 2018 (Moscow Times).

GERMANY: Chancellor Angela Merkel's options for creating a new coalition narrowed after the Greens said talks with her party failed (BBC).

 

AMERICAS

Thousands Protest in Brazil

Protesters clashed with police in Brazil's largest cities, Rio de Janeiro and Sao Paulo, after marching in support of striking teachers on Tuesday. Some demonstrators who appeared to be part of the Black Bloc organization vandalized businesses (USA Today).

 

 

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