Top the Agenda: Hollande Calls for Euro Bonds at EU Meeting
French President François Hollande appealed to his European counterparts to adopt so-called euro bonds at an EU dinner summit in Brussels on Wednesday. Hollande argued that such a debt collectivization measure (DerSpiegel) would allow the eurozone to jumpstart growth and better combat the ongoing sovereign debt crisis. German Chancellor Angela Merkel, who has called for strict austerity measures to tackle the crisis, rejected the idea, arguing that euro bonds would be in violation of EU law. At the same time, EU leaders expressed support for Greece remaining the eurozone (WSJ), even as political uncertainty there threatens to undo Greece's most recent EU-IMF financial bailout and force the country into default.
"If Greece perseveres with current policies within the eurozone, its economy will shrink and stagnate. The country will become an impoverished, ageing and deeply unequal corner of Europe, a neo-colony in all but name. Greek society is unlikely to accept this fate and will probably force a default on public debt in the first instance," writes Costas Lapavitsas for the Financial Times.
"The direct financial costs of a Greek exit to the country's creditors are more manageable than they were, but they are still large. By far the biggest losers of any Greek exit would be European taxpayers. The Greek central bank owes about €100 billion to the other central banks that are members of the euro. If Greece were to default on that debt Germany alone would probably take a hit of about €30 billion," says the Economist.
"But financial weakness in Greece isunlikely to spark a global crisis analogous to the one triggered by Lehman Brothers' collapse in September 2008--even if economic woes eventually force Greece to exit the monetary union. Instead, the global consequences of southern Europe's debt crisis are more likely to resemble the Latin American sovereign debt crises of the early 1980s, the East Asian crises of 1997-1998, and Argentina's crisis at the turn of the millennium," write Thomas Oatley and Kindred Winecoff for ForeignPolicy.com.
China Accuses U.S. of Violating Trade Rules
The Chinese Ministry of Commerce alleged today that U.S. support for six clean energy projects violated World Trade Organization rules and created barriers to trade (WSJ), in the latest trade dispute between the two countries.
A Pakistani court convicted of treason Shakil Afridi--the doctor who helped the U.S. Central Intelligence Agency find Osama bin Laden--and sentenced him to thirty-three years in prison (NYT), a senior Pakistani official confirmed.
PAKISTAN: A suspected U.S. drone strike today (AP)--the second one in twenty-four hours--killed ten alleged militants in the North Waziristan tribal region, Pakistani intelligence officials said.
Iran Talks with World Powers Extended
Negotiations between six world powers--China, France, Russia, the United States, the United Kingdom, and Germany--and Iran over the latter's disputed nuclear program were extended into an unscheduled second day on Thursday after diplomats failed to persuade Iran to halt its processing of medium-enriched uranium (BBC).
MALI: Interim President Dioncounda Traore--beaten by demonstrators who broke into the presidential palace in Bamako on Monday--traveled to Paris for medical treatment yesterday (AP). The Economic Community of West African States had tasked Traore with restoring civilian rule in Mali following a military coup in March.
UNITED STATES: Secret Service Director Mark Sullivan apologized for his agents' alleged involvement in a prostitution incident in Colombia (WSJ) that occurred prior to President Barack Obama's visit to Cartagena last month, during a U.S. Senate hearing yesterday.
Retired general and former secretary of state Colin Powell criticized Mitt Romney's foreign policy team and the advice they are giving their candidate as too far to the right for most of the country or even most of the Republican Party (MSNBC).
President Barack Obama hinted at his foreign policy successes in a commencement address at the U.S. Air Force Academy Wednesday, noting that the class of 2012 is the first in nine years to graduate with no U.S. personnel fighting in Iraq and is the first class since September 11, 2001, that can see a clear path to the end of fighting in Afghanistan.
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