3-Oct-11 World View — Greece Misses Requirements For Next Bailout Payment

This morning’s key headlines from GenerationalDynamics.com.

* Greece misses requirements for next bailout payment

* Greece’s banks face nationalization

* Terrorist groups in Pakistan are splintering into smaller groups

* US aids Uzbekistan despite human rights record

* Defense Secretary Leon Panetta warns that Israel is too isolated

* Venezuela’s Chavez promises China all the oil it needs

* China using Tibetan plateau water as weapon

Greece misses requirements for next bailout payment


Doctors and medics march during a protest in central Athens on Friday (Reuters)
Doctors and medics march during a protest in central Athens on Friday (Reuters)

In an emergency cabinet meeting on Sunday, Greece’s government approved €6.6 billion of austerity measures, in order to meet the conditions laid down by the “troika” (European Commission, European Central Bank, International Monetary Fund) as conditions to receive the next €8 billion payment in its second bailout. Greece needs the money by mid-October to avoid bankruptcy. The new austerity measures include creation of a “labor reserve” of 30,000 public employees who will not have to do any work, but will receive 60% of their salaries. This will get around a constitutional provision that guarantees civil servants jobs for life. However, the new austerity measures do not meet the conditions set down by the troika, which will meet again on October 13 to decide whether to give Greece the money anyway. Bloomberg

Greece’s banks face nationalization

Once the current crisis is past, and Greece receives its next €8 billion bailout payment, it’s expected that plans for an orderly default by Greece will be openly discussed. According to one plan, holders of short-term Greek bonds will take a 21% “haircut” (loss of principal) in return for receiving long-term bonds that are guaranteed by the EU. But a consensus is building among economists, politicians, and investors that at least a 50% haircut will be required. However, Greek banks are among the largest holders of Greek bonds, and they would have to be recapitalized immediately to avoid collapse, but in a depressed market that wouldn’t be possible. So the only remaining choice would be for Greece’s government to nationalize all the banks. Reuters

Terrorist groups in Pakistan are splintering into smaller groups

The deaths of al-Qaeda chief Osama bin Laden in 2011, and Tehrik-e Taliban Pakistan (TTP) head Baitullah Mehsud in 2009, have resulted in a splintering of these large terrorist organizations in Pakistan. Now there are numerous smaller militant groups, such as Badar Mansoor, Al-Furqan, Al-Mukhtar, Al-Kharooj, Al-Azam Brigade, Asian Tigers, Jand-ul-hafsa, Lashkar-e-Baluchistan, Punjabi Mujahedin, Jandullah, Itihad-e-Mujahideen Khurasan, and Al-Qital. The small groups can more easily cover their finances and make plans, but their independence makes it harder for them to coordinate their actioins and maintain a united front. RFE/RL

US aids Uzbekistan despite human rights record

With the United States and Nato allies looking for northern supply routes to Afghanistan, to bypass or replace the Pakistan supply route, the U.S. government is offering military assistance to the Islam Karimov led government of Uzbekistan. Uzbekistan is strategically important, because it offers an overland route to Afghanistan, and the transportation costs will be significantly less compared to the alternative route through Kyrgyzstan. This despite calls from numerous human rights organizations for the U.S. to put human rights before military concerns. However, the protest movement against Karimov’s regime is gaining strength. RFE/RL


Defense Secretary Leon Panetta warns that Israel is too isolated

Defense Secretary Leon Panetta, who is arriving in Israel on Monday, said he would reaffirm U.S. security commitments to Israel, and will try to help it improves its increasingly poor relationships with neighboring countries Egypt and Turkey. “It’s pretty clear, at this dramatic time in the Middle East when there have been so many changes, that it is not a good situation for Israel to become increasingly isolated. And that is what has happened,” said Panetta. Reuters

Venezuela’s Chavez promises China all the oil it needs

With the largest known oil reserves in the world, Venezuela is developing a closer relationship with China, and President Hugo Chávez is promising to provide China with all the oil it needs. Council on Hemispheric Affairs,

China using Tibetan plateau water as weapon

All the 10 major river systems of Asia including the Indus, Sutlej, Brahmaputra, Irrawady, Salween and Mekong originate in the Tibetan plateau. Of the world’s 6.92 billion people, for nearly 2 billion (29 per cent) living in South Asia from Afghanistan to the Ganga-Meghna-Brahmaputra basin and in Southeast Asia the rivers flowing from Tibet constitute the lifeline. However, China is building dams on all of these rivers, effectively using water as a weapon, and there are already reports that the quantity of water in many of the rivers flowing from Tibet to South Asia and South East Asia is on the decline. Institute for Defence Studies and Analysis (IDSA)

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