Council on Foreign Relations

- News reports parse Obama budget; deficit concerns loom.
- Palestinian reconciliation talks to open in Egypt.
- U.S. crackdown on Mexican drug gangs leads to 755 arrests.
- Violence continues in Bangladesh following mutiny.

President Barack Obama's first budget, which he is scheduled to deliver to Congress today, will provide more details about how the new U.S. administration plans to tackle its ambitious agenda on the economy and foreign policy.

The Washington Post reports the plan, which will call for a budgetary expansion in the near-term but then longer-term cuts, is built on the assumption that Congress can resolve some politically contentious issues. For instance, the Post reports Obama's plan seeks to make permanent the president's tax cuts for the middle-class, and to pay for it using an infusion of cash from a politically controversial cap-and-trade system for carbon emissions. The Wall Street Journal looks at another major outlay, for healthcare expansion, and says Obama's budget will propose tax increases on upper-income Americans and cuts in government spending--particularly on the Iraq war--to pay for it. The Post article reports, however, that some of the plans projected savings are based on an unrealistic premise that Washington would otherwise continue to spend $170 billion yearly on the Iraq war.

Reuters reports that overall, Obama will forecast a $1.75 trillion deficit this year--up from about $1.3 trillion last year, and representing over 12 percent of U.S. gross domestic product, the highest level since World War II. The article notes, however, that Obama has pledged to halve the deficit he inherited from President Bush within four years.

Background:

- A new Daily Analysis looks at some of the geopolitical implications of the United States running a large deficit.

Representatives from the Palestinian groups Hamas and Fatah meet today in Egypt for unity talks. Al-Jazeera reports the groups held unofficial talks yesterday and agreed to a prisoner release as a show of good faith ahead of today's official talks.

LEBANON: The Daily Star reports the Lebanese government has released three of seven suspects it is holding in connection with the killing of Lebanese Prime Minister Rafik Hariri in 2005.

ISRAEL: Reuters reports differences between the Likud and Kadima parties over whether to pursue a two-state solution to the Israeli-Palestinian conflict could scuttle the efforts of Likud chair Benjamin Netanyahu to form a governmental coalition with Kadima.

The director of the U.S. Defense Department's missile defense agency says the United States has successfully passed scenarios (Stratfor) testing its ability to use its missile defense systems to intercept missiles fired from North Korea. The Korea Times reports North Korea, meanwhile, has pressed ahead saying it will soon fire a "satellite" into orbit.

CHINA-U.S.: The BBC reports on a spat between Beijing and Christie's auction house in Paris over the planned sale of two bronze artifacts China says were illegally taken from the country 150 years ago.

Al-Jazeera reports a border-guard mutiny in the Bangladeshi capital of Dhaka has continued today, despite gun battles with government troops and a warning from the prime minister that the mutinous guards will face a harsh response. BBC reports the government is claiming the mutiny is over and guards have surrendered, and have been offered amnesty by the prime minister

PAKISTAN: Pakistan's Prime Minister Yousaf Raza Gilani says the recent court decision to ban former Prime Minister Nawaz Sharif and his brother from participating in politics has weakened Pakistan's democracy (Dawn).

The Wall Street Journal reports Pakistan's President Asif Ali Zardari, who had pledged to bring the country together, finds himself in an increasingly tight spot politically.

Zimbabwe made an urgent plea for aid money (BBC) from its neighbors to support its collapsed economy at a meeting of the Southern African Development Community.

KENYA: A UN official called for two Kenyan government officials, the country's attorney general and a senior police official, to resign (East Africa Standard) for their actions during and after Kenya devolved into political violence early last year.

The BBC reports a sweeping U.S. crackdown on Mexican drug gangs operating in the United States has led to 755 arrests.

- A recent CFR.org Backgrounder profiles Mexico's drug war and how it relates to the United States.

COLOMBIA-ECUADOR: World Politics Review reports that tensions between Colombia and Ecuador are still running high a year after Colombian troops launched controversial cross-border raids into Ecuador while fighting FARC rebels.

A European Union task force led by the European Commission has proposed that Europe needs new bodies (FT) to monitor systemic risk and regulate financial institutions across the region.

KOSOVO: Serbia's former Prime Minister Milan Milutinovic awaits trial today for alleged war crimes during the 1999 war between Kosovo and Serbia. The AFP previews the trial.

In Thursday's roundup: more reaction to President Obama's address to a joint session of Congress; a new United States approach to Syria; and India's responsibility for the dangers posed by Pakistan.

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