The Week in Review

Middle East

Turkey-Israel rift deepens: Turkey announced September 2 it was expelling the Israeli ambassador and suspending military and economic ties with Israel because Israel is refusing to apologize for its actions against Turkish ships that attempted to breach the Gaza naval blockade a year and a half ago. The United Nations’ Palmer Report, released the same day, largely exonerated Israel. It called for Israel to express regret and pay compensation to the families of the Turkish casualties, something that Israel has long offered to do. Turkish President Abdullah Gül said Turkey’s “steps announced today were just the first phase” of retaliation against Israel. On Monday, 40 Israeli passengers on board a flight from Tel Aviv to Istanbul experienced the beginning of phase two. When the Turkish Airlines flight touched down in Ankara, the Israeli visitors were separated from the rest of the passengers. They had their passports confiscated and were put into interrogation rooms where they were forced to strip down to their underwear and held for 90 minutes before being allowed to leave. The following day, Turkish Prime Minister Recep Tayyip Erdoğan announced his intention to increase Turkey’s naval presence in the Eastern Mediterranean. Turkey, which is trying to become the dominant Islamic power in the region, is trying to increase its Islamic “street cred” by these actions against Israel. The worsening of Israel-Turkey relations, together with Israel’s loss of Egypt as a strategic ally, means a further deterioration in Israel’s strategic position. As this occurs, Israel appears to be looking to Europe for support. “In a move that few believe is a coincidence,” reports Courcy’s Intelligence Brief, “on September 4 Israel signed a security cooperation agreement with Greece.” Watch for this trend to continue as Israel finds itself increasingly isolated.

Israel in danger of losing space edge: Israel is in danger of losing its qualitative military edge in space, the outgoing chief of Israel’s military space program warned last week. Brig. Gen. Hayim Eshed, who founded Israel’s Defense Ministry Space Division 30 years ago, said, “Today, we have a relative edge over the rest of the region and parts of the world in certain space capabilities, some of which other countries are trying to copy. If, however, we do not increase our investments in the next two years we stand the risk of losing our edge.” Eshed said the government had refused to release funds pledged last year intended to turn Israel into a space superpower.

Europe

German Constitutional Court says “yes, but” to bailout: Germany’s Constitutional Court said Wednesday that past eurozone bailouts do not violate Germany’s basic law, but imposed conditions on future bailouts. Parliament’s budget committee, it ruled, must approve all such dispersals of funds in the future. This gives the budget committee a veto over how the money in Europe’s European Financial Stability Facility is used. The financial markets sighed with relief that the court did not impose stricter conditions. But, as Ambrose Evans-Pritchard writes, “euphoria is surely misplaced.” Germany’s parliament is, according to the court ruling, “prohibited from establishing permanent mechanisms under the law of international agreements which result in an assumption of liability for other states’ voluntary decisions, especially if they have consequences whose impact is difficult to calculate.” So Germany cannot be expected to foot the bill for another nation’s debt as long as that other nation remains in control of its own budgetary decisions. Economic analyst for the think tank Open Europe, Raoul Ruparel, notes: “[T]he wording used by the court … seems to suggest that joint debt in the eurozone could be constitutionally allowed if it involved a stronger German say over other member states’ fiscal policies. This could set Europe up for a major clash of national democracies in future, should Eurobonds be deemed necessary to hold the single currency together in the long term.” Evans-Pritchard notes that the court ruling “restricts the ability of Chancellor Angela Merkel to strike rescue deals at EU summits, leaving it unclear how she or any future chancellor could respond to the sort of crisis that blew up in late July of this year when Italian and Spanish bond yields reached danger levels above 6 percent.” So the court decision throws a spanner in the works and at the same time hints that Germany may be able to fix the mess if it is allowed to dictate the budgets of those countries needing the bailouts.

Merkel’s coalition suffers in elections: Angela Merkel’s Christian Democratic Union (cdu) and her coalition partners the Free Democrats (fdp) both did badly in a state election in Mecklenburg-Western Pomerania on September 4. The cdu’s percentage of votes fell from 28.8 percent to 23.1. The fdp did even worse. Its share of the vote fell from 9.6 percent to 2.7, meaning it didn’t win enough votes to have any seats in the state parliament. All the left-wing parties gained votes, and even the neo-Nazi National Democratic Party (npd) managed to hold on to five out of its six seats in the parliament. The vote is part of a string of failures for the ruling coalition. It is the fifth out of six state elections so far this year where the cdu has lost votes, and it is the fourth time the fpd has failed to get any seats in the state parliament. “Something is deeply wrong in a society when the npd has greater success in a state election than the fdp,” warned the Suddeutsche Zeitung. Merkel continues to struggle politically.

German finance minister: EU nations must give up more economic power: EU nations need to sign a new treaty that gives Brussels more authority over national budgets, German Finance Minister Wolfgang Schäuble said at a private meeting of Christian Democratic Union (cdu) and Christian Social Union (csu) leaders on September 1, according to Bild. Such a treaty is necessary “even when we know how difficult a treaty change is,” he said. Schäuble’s proposed treaty would also distinguish between the 17 eurozone members and the rest of the European Union. This would formalize the two-speed Europe that has been developing in the wake of the euro crisis. The same day, the cdu and csu’s party group in parliament said it wants the German parliament to vote on any measures the European Financial Stability Fund (efsf) takes that would affect the German budget. Seeing as the efsf relies on German loans, this would give the German parliament veto power over any substantial support for indebted nations. The Trumpet has long said that Germany would demand control over eurozone nations’ finances in return for bailing them out.

Indebted states must give up control of their budgets, says the Netherlands: Eurozone nations that consistently break budgetary rules should be forced to surrender control over their budgets to a European commissioner or else leave the eurozone, said Dutch leaders September 7. Countries that “systematically infringe the rules must gradually face tougher sanctions and be allowed less freedom in their budgetary policy,” wrote Dutch Prime Minister Mark Rutte and Finance Minister Jan Kees de Jager in their proposal, which was outlined in the Financial Times. They called for the creation of a commissioner for budgetary disciple with “clear powers to set requirements for the budgetary policy of countries that run excessive deficits.” This commissioner would require an indebted country to change its finances. “If the results are insufficient, the commissioner can force a country to take measures to put its finances in order, for example by raising additional tax revenue,” wrote Rutte and de Jager. The nation would also face escalating sanctions from the EU. “The final stage will involve preventive supervision, and the budget will have to be approved by the commissioner before it can be presented to parliament,” they said. “From now on we must prevent countries from violating the rules with impunity and leaving other countries, which do observe the rules, to foot the bill.” De Jager claimed that the Netherlands has “much more influence than people think” and said that Germany and Finland broadly support the Dutch proposal. Expect the economic crisis to take more power away from debtor nations and put it in the hand of the creditors.

Schröder calls for United States of Europe: The only solution to the euro crisis was a “United States of Europe,” former German Chancellor Gerhard Schröder said in an interview with Spiegel published in English on September 5. “The crisis we are currently experiencing makes it abundantly clear that you can’t have a common currency without a common fiscal, economic and social policy,” he told the magazine. Eurozone nations, he said, “will have to give up some of their national sovereignty.” The Lisbon Treaty, he said, did not go far enough. “Now that the crisis has emphasized that the things that could not be done until now are necessary to overcome the crisis, we have to take advantage of the opportunity,” he said. The crisis, he argued, means that public opinion has shifted toward a more integrated Europe. “This crisis presents a great opportunity to create a real political union in Europe,” he said. “I’m convinced that this has majority appeal in the member states.”

Bank warns eurozone breakup could lead to war or military government: The Swiss Bank ubs warned that a breakup of the euro could have dire political costs. “It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war,” it wrote in a report titled “Euro Breakup—the Consequences,” published on September 6. “The costs are high—whether it is a strong or a weak country leaving—in purely monetary terms,” it wrote. “When the unemployment consequences are factored in, it is virtually impossible to consider a breakup scenario without some serious social consequences.” The Trumpet has warned for years that a radical change in the eurozone would accompany the rise of a new authoritarian government.

Natural gas starts following directly from Russia to Germany: Natural gas began flowing through the Nord Stream pipeline to Germany from Russia under the Baltic Sea on September 6. The pressure in the pipeline will become high enough for it to be fully operational in a month. This development comes as Ukraine and Russia appear to be heading toward another dispute over gas prices. But with Nord Stream in place, if Russia shuts the gas off to Ukraine this winter, it will not affect Western Europe as much, meaning Russia will face less pressure to end the blockade. The pipeline gives more power to Russia and Germany, and takes it away from the gas transit countries like Ukraine.

Catholics and Orthodox should confront secularism together, says pope: All Christians should work together to fight “a secularization capable of impoverishing the most profound aspects of man,” Pope Benedict xvi said in a message to the 12th Inter-Christian Symposium, meeting from August 30 to September 2 in Thessaloniki. The letter, conveyed to the meeting by the president of the Pontifical Council for Christian Unity, called for more unity in spreading Christian teaching between Orthodox and Catholics.

Asia

Gas deal sets stage for Putin’s return to Kremlin: Russian Prime Minister Vladimir Putin’s endorsement of an agreement with ExxonMobil to harvest gas and oil from the Russian Arctic delivers a strong indicator that he will return to the Russian presidency in elections next year. Neither Putin, who was president from 2000 to 2008, nor current President Dmitry Medvedev, has officially announced whether they plan to run for the presidency in the March 2012 election. However, Putin demonstrated that he remains Russia’s primary leader by securing the Exxon deal after tensions in Russia’s dual power format prevented a similar agreement from coming to fruition earlier this year with British oil firm BP. “It confirms my personal view that Putin is coming back. He can guarantee the deal much more effectively if he is ensconced back in the Kremlin,” said Vladimir Frolov, president of a Moscow-based government relations firm. As prime minister, Putin officially ranks under Medvedev but remains influential under a power-sharing deal drafted in 2008 when Putin helped place Medvedev into the Kremlin. Russian law did not permit a third successive term for Putin. Putin made plain that he was the key player behind Russia’s deal with Exxon by attending the signing ceremony on August 30. By conducting business with Putin instead of Medvedev, Exxon indicated its belief that Putin’s leading role in Russia will be official once again after the election. “Putin is demonstrating that he is the person in charge and if ExxonMobil had tried to make the deal with Medvedev, nothing would have happened,” said Pavel Salin, an analyst at Russia’s Center for Current Politics. With Putin’s return to the Kremlin will come a more assertive and a more ambitious Russia.

Russia will bolster military cooperation with allies to preempt uprisings: Russia and six former Soviet states are moving to boost their political and military ties in order to protect each other from the type of revolts that are toppling regimes in North Africa and the Middle East. Last Saturday, Nikolai Bordyuzha, general secretary of the Collective Security Treaty Organization, said, “The events in North Africa opened our eyes to many things. We must reflect on what happened there and develop means of defense.” According to Bordyuzha, the alliance of former Soviet countries agreed to develop “a mechanism to assist the legitimately elected leadership of a country to protect constitutional order,” which might involve political, law-enforcement or military support. The tightened ties will also allow Moscow to expand its influence in former Soviet Union nations, thereby aiding the Kremlin in its quest to oppose nato’s growth into Eastern Europe.

Russia successfully test fires upgraded Topol ballistic missile: On Saturday, Russia’s Strategic Rocket Forces test fired an improved version of the Topol ballistic missile, which is believed to be the pinnacle of modern missile technology. With an operational range of 6,500 miles and the ability to travel at 10 times the speed of sound, the 550-kiloton warhead missile is regarded as the fastest of any man-made technology. The staggeringly powerful weapon can also be maneuvered midflight, making it nearly impossible to target once it is past its boost phase of flight. Regarding the older version of the Topol, Scott Ritter, a former intelligence officer and weapons inspector in Russia, said, “The Bush administration’s dream of a viable [national missile defense] has been rendered fantasy by the Russian test of the SS-27 Topol-M.” Now the Topol is more powerful. The Kremlin has sworn to boost its nuclear arsenals in Europe unless the United States discontinues its pursuit of a missile defense shield there. Moscow’s successful test of the upgraded Topol indicates Russia’s blustering is not empty talk.

Africa

Violence breaks out between Christians and Muslims in Nigeria: At least 50 people have been killed this week in violent clashes between Christians and Muslims in central Nigeria’s volatile Plateau State. According to local authorities, 14 of them were killed when Christian youths attacked Muslims as they gathered to celebrate the end of Ramadan. The Plateau State straddles the boundary between Nigeria’s mostly Muslim north and largely Christian south. From Nigeria west to Somalia, religious tensions between Christians and Muslims are escalating.

Mining firms abandon South African assets: Mining firms Anglo American plc and Rio Tinto plc announced on Monday that they plan to sell their stake in South Africa’s largest copper producer, Palabora Mining Co. Both companies said the decision to sell was based on a desire to focus on larger, longer-life assets. Analysts note, however, that a number of companies have been selling smaller assets in South Africa as political risks increase. Such moves should offer a warning to South Africa’s ruling party, which is currently in a debate over how to reform the mining industry, including the option of nationalization. Many investors feel that a policy of nationalization will transform South Africa into a second Zimbabwe.

Anglo-America

Cameron wants a United States of Europe: British Prime Minister David Cameron reiterated his calls for a more unified and integrated eurozone before the House of Commons Liaison Committee on September 6. The same day, his chancellor of the exchequer, George Osborne, made the same calls, saying, “In the eurozone, member countries must follow the remorseless logic of monetary union and make more progress on institutional reform and fiscal integration.” Cameron pointed out that Europe needs more integration for the euro to work. “To make a single currency work either you need all the countries to behave in a more Germanic-like way in terms of fiscal responsibility and debt levels, or you need to have some way of transfers between countries,” he said. Both options would require more integration. Both men argue that Britain benefits from a financially secure Europe as a trading partner and therefore Britain should encourage the eurozone to further unite—taking, as they see it, the only path to financial stability. Britain, however, would opt out of that integration. Others are making the same point. Herman van Rompuy said on September 7 at a speech at the London School of Economics: “One of the lessons that we have to draw from the current crisis is that we need more fiscal integration, but not without fiscal discipline.” Financial conditions are about to force some eurozone nations to integrate more fully. But a farsighted British foreign policy would not rejoice at this. British foreign policy for centuries has been aimed at preventing a united power from dominating the Continent. What Cameron is supporting will be very dangerous for Britain.

EU to create military HQ without Britain: Foreign Ministers from France, Germany, Italy, Poland and Spain wrote to EU High Representative of the Union for Foreign Affairs and Security Policy Baroness Catherine Ashton on September 2 calling for her to set up a military headquarters as a “matter of urgency,” according to the Daily Telegraph. The letter instructs Ashton to use a new legal mechanism in the Lisbon Treaty to bypass Britain’s veto. If the letter is authentic, it shows the major EU powers are determined to work toward a common military despite Britain’s objections.

Wildfires rage through Texas: A devastating outbreak of wildfires in central Texas has destroyed more than 1,000 homes this week. These fires have also killed at least four people and incinerated more than 135,000 acres, according to the Texas Forest Service. Americans can expect fires and other unnatural disasters to persist and even worsen in the time ahead.