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Council on Foreign Relations Daily News Brief
November 13, 2012

Top of the Agenda

Top of the Agenda: Greece Raises Funds to Avoid Default

Greece avoided default on Tuesday after raising $5.15 billion from the sale of short-term treasury bills that will go toward making a $6.4 billion debt repayment due later this week (AP). The debate over Greece's troubled public finances has intensified rifts between eurozone finance ministers, who on Monday postponed agreement on Greece's long-delayed $39.7 billion aid payment for yet another week after a public spat (FT) between the International Monetary Fund and EU creditors roiled negotiations. Jean-Claude Juncker, chair of the eurogroup of finance ministers, announced that Greece's debt reduction target would be moved to 2022 from 2020, prompting IMF chief Christine Lagarde to vehemently defend the IMF's original timeline. Officials will meet again on November 20.


"A silver lining in the dark cloud is a recent suggestion by EU finance ministers and the IMF that Greece be allowed to reduce debt by purchasing it at a discount in the secondary market. Lower debt, and reduced debt service, would improve debt-related ratios and stimulate faster economic growth. But the finance ministers could not agree on how the buyback would be financed. This is where global financial markets can help without putting the burden on European taxpayers," writes Komal Sri-Kumar for the Financial Times.

"Either way it is clear that Greece's debt will at the very least need to be rescheduled, for example by lengthening maturities or lowering interest rates. The IMF seems to be holding out for outright forgiveness of debt now held mostly by the official lenders, hence the euro-jargon of Official Sector Involvement (OSI). This is politically explosive in Germany and other creditor nations, because it would mean admitting that money lent to Greece had been lost forever," writes the Economist.

"If you take forecasts from the European Commission seriously, Greece enjoys one formidable advantage over Spain: Its economy is running well below capacity, while the Spanish economy, despite an unemployment rate around 25%, is operating relatively close to full steam," writes Matthew Dalton for the Wall Street Journal.



Dalai Lama Turns to Japan

The Dalai Lama urged Japanese lawmakers on Tuesday to visit Tibet for an investigation into the spate of self-immolations (AFP) spreading across the region. Nine Tibetans have set themselves on fire in the past week to protest Chinese rule, an act China has blamed on the Dalai Lama.

AUSTRALIA: U.S. Secretary of State Hillary Clinton arrived in Australia (SydneyMorningHerald) Tuesday for a round of annual defense talks aimed at boosting military and political cooperation between the two countries. The visit will will likely be her last to Australia in her current post.

This CFR Analysis Brief discusses the U.S.-Australia alliance.



Aung San Suu Kyi Visits India

Myanmar's opposition leader Aung San Suu Kyi arrived in Delhi (TheHindu) on Tuesday in her first visit to India, where she attended college while her mother was the Burmese ambassador, in almost forty years. She will meet Prime Minister Manmohan Singh, tour parliament, and deliver a public lecture.

AFGHANISTAN: The Haqqani network, a branch of the Taliban responsible for a series of attacks in Afghanistan, said it was ready to enter peace talks (Telegraph) with the United States if sanctioned by Mullah Omar, the head of the Taliban.

CFR's Daniel Markey explains three things to know about the Haqqani network and its blacklist status in this video.



Arab League Backs Syrian Opposition

The Arab League recognized the newly formed Syrian opposition bloc, which has already drawn backing from Gulf states and Western powers, and called on other opposition parties to join the coalition (AlJazeera). The announcement comes a day after opposition groups reached an agreement in Qatar to unite against the government of Syrian President Bashar al-Assad.

ISRAEL: In an effort to halt escalating rocket attacks on the south, Israel may resume its contentious practice of assassinating militant leaders (AP) in the Hamas-ruled Gaza Strip, two months away from elections.

CFR's Elliott Abrams discusses Israel and Gaza in this blog post.



UK Wary of Aid to Rwanda

The UK's International Development Secretary Justine Greening said the country will reflect "very carefully" before giving more financial aid to Rwanda (BBC) — a warning that comes after her predecessor drew fire for signing off on £16 million in aid on his last day despite concerns surrounding Rwanda's alleged backing for the M23 militia in Democratic Republic of Congo.

WEST AFRICA: The Economic Community of West African States says it hasn't given up on the option of dialogue (ThisDay) to resolve the crisis in Mali's north, despite recent preparations for military intervention.



Angela Merkel Visits Portugal

German Chancellor Angela Merkel received a hostile reception in Lisbon (FT), where she reiterated the need for reforms and fiscal discipline during the one-day visit seen as a show of support for the centre-right government's hard line on a €78 billion bailout program.



Brazil and Argentina Sign Military Agreement

Brazil announced on Monday its first agreement on combined operations with Argentina (MercoPress) that would allow forces to act jointly in catastrophe situations and peace missions. Argentina has similar pacts with Peru, and is expected to extend them to Chile and Bolivia.

BRAZIL: Brazil's Supreme Court sentenced former presidential chief of staff Jose Dirceu to nearly eleven years in prison (LAHT) on Monday for his role in a congressional vote-buying scheme during the first two years of President Luiz Inacio Lula da Silva's tenure.



Voters Want to Keep Bush Tax Cuts, Poll Says

A new Rasmussen poll shows that 60 percent of likely voters want tax cuts – including those implemented during George W. Bush's administration – to be extended.

Business Insider has put together a list of people who are possible replacements for outgoing Treasury Secretary Timothy Geithner, including Facebook COO Sheryl Sandberg, Erskine Bowles of the Simpson-Bowles Commission, and former head of the Federal Deposit Insurance Corporation Sheila Bair.



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