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Council on Foreign Relations Daily News Brief
January 31, 2014

Top of the Agenda

Emerging Markets Steady, Under Pressure

Emerging-market stocks stabilized on Friday after a turbulent week, and currencies such as Russia's ruble and Turkey's lira traded just above multiyear lows after central banks took action to stem the biggest selloff in years (Reuters). But weak inflation data from Europe on Friday morning added new jitters to emerging-market currencies, which have spread to eastern European countries such as Hungary and Poland (WSJ). Currency depreciation and inflation have dramatic effects on wealth. In Argentina, for example, local stocks more than doubled in pesos since October 2011, but lost 15 percent over the same period when investments were tracked in dollars (Bloomberg).


"People in several emerging markets are hedging against rising domestic inflation and a depreciating home currency by shifting savings into U.S. dollars. Russia's leading tabloid, Komsomolskaya Pravda, advised its readers this week to shift 30-40 percent of their savings into U.S. dollars and euros," writes James Kynge in the Financial Times.

"The larger point is that Turkey isn't really the problem; neither are South Africa, Russia, Hungary, India, and whoever else is getting hit right now. The real problem is that the world's wealthy economies—the United States, the euro area, and smaller players, too — have failed to deal with their own underlying weaknesses," writes Paul Krugman in the New York Times.

"Argentina's problems are considerably more serious than those of emerging countries such as Turkey, Brazil and South Africa and have little to do with international markets, from which Buenos Aires has been isolated since its last financial crash in 2002. Rather, they are the product of the same mistakes that have produced previous busts: uncontrolled government spending, heavy taxes on exports coupled with strict controls on imports and disincentives to foreign investors," the Washington Post writes in an editorial.


Pacific Rim

Thailand Prepares for Tense Poll

Thailand will hold an early election on Sunday as Prime Minister Yingluck Shinawatra hopes to reaffirm her mandate after facing months of antigovernment protests. Although the vote is expected to go smoothly in most of the country, it is unlikely to result in the formation of a new government (AP).

CFR's Joshua Kurlantzick explains in this blog post why Thailand is undergoing an "unannounced coup."

CHINA: The White House criticized China's restriction on press freedom after a New York Times reporter was forced to leave the country, and raised concerns over other journalists who wait months or years for credentials (SCMP).


South and Central Asia

Afghan Roads Crumbling After Billions in U.S. Investments

The Afghan government has been unable to maintain its road network, which was expanded significantly with a $4 billion donation by the United States and Western donors, raising questions about the government's capabilities and concerns about the future of Afghan commerce (WaPo).

This Council Special Report assesses Afghanistan's prospects after the U.S. military drawdown.

AFGHANISTAN: The United States scrapped funding for an opinion poll preceding Afghanistan's April presidential election after an earlier poll prompted accusations that the Washington was trying to manipulate the outcome of elections (Reuters).


Middle East

Iran Faces Water Supply Crisis

Lake Urmia, once Iran's largest lake, has lost 95 percent of its water in recent decades, indicating a nationwide water shortage that may lead to rationing in Tehran and other major cities (NYT).



Uganda’s Role in South Sudan Raises Old Questions

Uganda, which has intervened militarily in several regional conflicts, is seen as a risk to a tenuous cease-fire in South Sudan, where Ugandan troops rushed in to tip the balance in favor of the sitting government against rebel forces (WSJ).

RWANDA: The UN Security Council voted to renew sanctions against the Democratic Republic of Congo in a vote that caused a heated argument between Rwanda and the DRC (AFP).



Weak Ukraine Army Can’t Settle Political Rift

After two decades of budget cuts left Ukraine's army with poorly trained and equipped soldiers, the military doesn't appear to be an option for President Viktor Yanukovich to reestablish order in the country (Bloomberg).

RUSSIA: Researchers in Russia, the UK, and the World Health Organization tracked alcohol consumption in Russia and found that 25 percent of Russian men die before the age of 55, mostly due to alcohol-related diseases (BBC).



Obama Nominates Michael Rogers to Head the NSA

President Barack Obama nominated Navy Vice Adm. Michael S. Rogers to head the National Security Agency and U.S. Cyber Command. If confirmed, Rogers will lead an agency that has been battered by the revelations of classified documents by former NSA contractor Edward Snowden (LATimes).

This CFR Backgrounder explains the controversy surrounding U.S. domestic surveillance.

CANADA: The Communications Security Establishment Canada, the country's spy agency, was allegedly tracking the wireless devices of passengers who passed through airports, according to documents leaked by Snowden (CBC).



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