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25-Jan-12 World View: Euro Crisis Deadlock Leads to Finger-Pointing and German Isolation

This morning’s key headlines from GenerationalDynamics.com.

  • Euro crisis deadlock leads to finger-pointing and German isolation
  • Private investors demand that Europe meet October commitments
  • Demands that European Central Bank take a haircut too
  • Germany becomes increasingly isolated in Europe over euro crisis
  • Dubai Airport sets record in 2011
  • Egypt’s military ends emergency law, but not for ‘thuggery’
  • China’s police fire into crowd of Tibetan protesters as unrest increases
  • Arab League monitoring in Syria near collapse as GCC pulls out
  • Pressure grows on Russia to approve U.N. Security Council resolution on Syria

Euro crisis deadlock leads to finger-pointing and German isolation


IMF director Christine Lagarde calls on Europe to save the euro (EPA/AP)
IMF director Christine Lagarde calls on Europe to save the euro (EPA/AP)

It appears more and more that the long knives are coming out, as the days go by with no agreement on how much each entity will have to lose when Greece defaults. The International Monetary Fund (IMF) lead off by cutting its forecast for global growth, warning that the world economy might be derailed. The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere,” said the IMF. IMF managing director Christine Lagarde called on Europe to bolster its rescue funds, which means that core countries, especially Germany, should commit a lot more money. Bloomberg

Private investors demand that Europe meet October commitments

The IMF, Germany, and some eurozone countries are all demanding that private investors take a larger and larger “haircut,” but Charles Dallara, representing the private investors, drew a line in the sand over the weekend. Dallara has said that a net haircut of 65% is their final offer, while Germany and the EU want the private investors to accept a haircut of well over 70%. “Our position is quite clear…[and] is fully consistent with the October 26-27 agreements,” Dallara said. “What we asked is that authorities stick to their own commitment.” The original “deadline” to reach an agreement was originally early last week. Then it was changed to Friday, then to Monday, and now they’re saying that the deal will be reached next week. Market News International

Demands that European Central Bank take a haircut too

The IMF also demanded that the European Central Bank (ECB) be willing to take a “haircut,” along with the private investors. The ECB bought the bonds at below face value as part of a program to prevent the collapse of Greek debt markets in 2010. It has also been accepting Greek bonds as collateral for cheap loans to teetering Greek banks. The bonds, with estimated yields in excess of 7 per cent, will provide a big return if Greece does not default and they are held to maturity. Private investors are objecting to the ECB’s insistence its bonds be paid in full while the private bondholders are being urged to agree to a cut of at least 65% on their holdings. Kathimerini and Financial Times (Access)

Germany becomes increasingly isolated in Europe over euro crisis

German Chancellor Angela Merkel has pledged to Germans that she won’t invest another euro in efforts to rescue the currency. But, in the rest of Europe, the grumbling of those who claim that Germany is trying to dictate economic and financial policies to the rest of the EU is growing louder. According to Danish Prime Minister Helle Thorning-Schmidt, “The split is dramatic. That is being massively underestimated in Berlin.” Southern European countries, now joined by France, are demanding that Germany put more money — a lot more — into the European Stability Mechanism (ESM) to enlarge it significantly to a €1 trillion bailout fund. At the same time, countries like Italy and France are ganging up on Germany, and Merkel’s demands for balanced budget requirements for euro countries are meeting increased resistance in Brussels. Der Spiegel

Dubai Airport sets record in 2011

Dubai Airport on Tuesday said it handled a record 51 million passengers last year, an 8% increase over 2010. If the same growth continues in 2012, then Dubai will be the second largest airport in the world, behind London Heathrow. Khaleej Times (UAE)

Egypt’s military ends emergency law, but not for ‘thuggery’


Egyptian women chant slogans against the ruling military council and the government (AFP)
Egyptian women chant slogans against the ruling military council and the government (AFP)

Egypt’s military ruler, Field Marshal Hussein Tantawi said Tuesday in a televised address:

“I have taken a decision to end the state of emergency, in all parts of the country, except in fighting acts of thuggery, starting on the morning of January 25, 2012.”

However, activists are calling the announcement phone. “Who do you think are the thugs the military is talking about? It’s the protesters they don’t like,” said one. Bikya Masr (Cairo)

China’s police fire into crowd of Tibetan protesters as unrest increases

Reports indicate that dozens of Buddhist monks were injured and one was killed on Monday when Chinese police fired into a crowd of protesting monks who were chanting for Tibetan freedom and return of their spiritual leader, the Dalai Lama. Unrest is growing again between Tibetans and Han Chinese, as 16 Buddhist monks, nuns and other Tibetans self-immolated in the past year, four in this month alone. AP

Arab League monitoring in Syria near collapse as GCC pulls out


Anti-government protester in Yemen with the colors of the national flags of Yemen and Syria on his face (Reuters)
Anti-government protester in Yemen with the colors of the national flags of Yemen and Syria on his face (Reuters)

The nations in Gulf Cooperation Council (GCC) announced on Tuesday that they were pulling their participants in the Syria observer mission sponsored by the Arab League, following the lead of Saudi Arabia, who made such an announcement on Saturday. The Arab League received approval from Syria to continue the observer mission until February 23, but with far fewer countries participating. The Arab League observer mission is widely considered to be a failure, since the regime of Syria’s president Bashar al-Assad has continuing slaughtering, massacring, torturing and mutilating unarmed protesters, right under the noses of the Arab League monitors who were supposed to be stopping the violence. Particularly controversial was the the leader of the Arab League mission, Sudan’s General Mohammed Ahmed al-Dabi, who is thought to have participated in his own program of slaughtering, massacring, torturing and mutilating innocent people in the Darfur genocide. Syria’s Foreign Minister Walid al-Muallem said yesterday that “half the universe” was conspiring against Syria, adding, “It is the duty of the Syrian government to take what it sees as necessary measures to deal with those armed groups that spread chaos.” Independent

Pressure grows on Russia to approve U.N. Security Council resolution on Syria

As the observer mission in Syria nears collapse, the Arab League is will ask the U.N. Security Council to approve a resolution condemning the violence in Syria. Such a resolution would be strongly supported by the U.S. and the Europeans, but would be opposed by Russia and China, who have used a veto to block such resolutions. The Russians have expressed deep regret for approving last year’s resolution authorizing a no-fly zone over Libya because they say that the West used the limited resolution to conduct a massive, unapproved military operation in Libya. Syria is a close ally of Russia, and have said that they will veto any resolution condemning Syria. Syria’s Foreign Minister Walid al-Muallem said:

“A blind man cannot discourse about colors. They want to defy the future of Syria without considering the opinion of the Syrians.

Our relations with Russia have deep roots. Russia cannot welcome foreign intervention in Syria. That is too much.”

But the pressure on Russia is growing from the Arab League and the West, and with the bloodbath continuing in Syria without letup, Russia may be forced to change its mind. Russia Today

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