Middle East

The emerging relationship between Iran and Egypt continued to progress this week with Egyptian President Hosni Mubarak holding talks with Iran’s parliament speaker, Gholam-Ali Haddad-Adel, on Wednesday, the first such high-level meeting in almost 30 years. The Iranian official was in Cairo as part of a high-ranking Iranian delegation to attend the fifth conference of parliamentarians from Islamic countries. Haddad-Adel told journalists, “Maybe some people think that the U.S. is applying pressure to stop the return of relations between Egypt and Iran but President Mubarak has said that he does not accept any pressure from the U.S. and that his positions are based on Egypt’s interests.” In reality, Mubarak is probably feeling the pressure of Egypt’s own Islamists, the Muslim Brotherhood in particular. In the wake of Hamas’s breaching of the Gaza/Egypt border last week, the Muslim Brotherhood has staged about 80 anti-government demonstrations. With Mubarak vulnerable, Iran is pressing its advantage to gain influence in Israel’s southern neighbor. Early in the week, the Iranian foreign minister said that Tehran was on the threshold of re-establishing diplomatic ties with Cairo, and was only awaiting a signal from Egypt.

Meanwhile, Hamas has used the Gaza border crisis to establish itself as a player in any agreement on the border issue. Egypt has been working with Hamas in attempts to control the border since the breach and has hosted Hamas representatives for discussions on the issue. Israel’s attempts at isolating Hamas are simply not working.

Iran also continues to interfere in Lebanon, where riots on Sunday killed six Hezbollah supporters. The Shiite opposition groups Hezbollah and Amal were protesting against the Western-backed Lebanese government. Stratfor suspects that Hezbollah is not altogether upset at the killings and may even have had a part in instigating them. Its sources report that “the Hezbollah leadership is planning a series of widespread protests and is desperate for a legitimate reason to launch them. The shootings give Hezbollah leaders a good excuse to start up mass demonstrations and add to the instability in Lebanon at a time when Hezbollah, Iran and Syria all are looking to force their demands on the Lebanese government and its Western backers.” A return to civil war remains a distinct possibility for this divided country.

On Wednesday, the final report of the Winograd Committee on the conduct of Israel’s 2006 war with Hezbollah was released. Though the report was highly critical of both the government and the military, concluding that Israel did not win the conflict and did not effectively respond to Hezbollah’s rocket attacks on Israel, it was not as severe or condemning of Prime Minister Ehud Olmert as many expected. While the release of the report may not have been a fatal blow to Olmert’s government, the Israeli prime minister remains on shaky ground politically. It appears the only thing keeping his coalition partners’ support is the lack of a credible alternative leader—and that a vacuum of leadership would open the door for opposition leader Benjamin Netanyahu to return to power.

Also this week, President Bush announced in his State of the Union address that 20,000 U.S. troops would return from Iraq in the next few months and would not be replaced.

Europe

The Vatican continues to show that it is a strong force in Europe . On Thursday of last week (January 24) Italian Prime Minister Romano Prodi was forced to resign by the Vatican. Turkey is also taking note of the Catholic Church’s growing influence. Turkish Foreign Minister Ali Babacan got to the core of the reason why Ankara has yet to join the European Union last Saturday. Speaking to reporters over the weekend at the World Economic Forum in Davos, Babacan warned the European Union not to become a “club of Christians.” A “club of Christians,” however—specifically, Roman Catholics—is what the EU has been all along.

In another incident, the EU further demonstrated its undemocratic nature this week. Several members of the European Parliament were attempting to use parliamentary procedure to slow down debate in the assembly, protesting the lack of a referendum on the Lisbon Treaty in most nations. Europe’s solution: The parliamentary president was simply given the power to silence the protesters.

Finally, in France, Societe Generale, the nation’s second-largest bank, reported what may be the banking fraud of the century. Allegedly, a rogue bank employee illegally wiped out multiple billions worth of bank money. The bank blamed the $7.1 billion hit on a 31-year-old trader who supposedly acted alone to speculate in the future’s markets. The whole scam carries shadowy implications for the global banking industry.

Asia

Moscow is maintaining its efforts to draw its former Soviet states back into the Russian sphere of influence. Friday last week, Russian Prime Minister Viktor Zubkov signed a series of agreements with Belarus and Kazakhstan at the Interstate Council of the Eurasian Economic Community (EurAsEC). These agreements create a customs union between Russia and these two former Soviet states. Such a union establishes these three nations as a free-trade zone with a common external tariff. “We hope that Kyrgyzstan, Tajikistan and Uzbekistan will join it as soon as they are ready,” Zubkov said. “There are no doubts that if these efforts continue we will reach the goal—the creation of a single economic space in EurAsEC.”

This past Wednesday, Russian Foreign Minister Sergei Lavrov met with his Belarus counterpart to sign a one-voice foreign-policy plan. This plan lays a basis for Russo-Belarusian cooperation on key global political issues and acts to prevent Western efforts to isolate Belarus. Russia is continuously working to enhance its political and economic influence over its former Soviet states and is not about to allow the Western world to hinder this process. Growing ties between Russia and Belarus may prove to be yet another sore spot in Russo-European relations. The European Union has gobbled up almost all of Russia’s former European satellite nations. Moscow is taking steps to regain Belarus. Expect tensions to rise as the two emerging global powers work to outdo each other in determining where the EU-Russian border will lie.

Gaining influence in Belarus and Central Asia is not Moscow’s only economic goal, however. On Thursday, Dmitry Medvedev—Russia’s likely next president—called for Russian investors to follow China’s example and buy up foreign companies in order to bolster the Russian economy. Medvedev pledged Kremlin support to any company seeking assets abroad. Expect Medvedev to function as a willing pawn of Russian President Vladimir Putin and to continue to push forward Putin’s policies for returning Russia to the power and prestige of its Soviet days.

China is also seeking to join Russia as a dominant influence in the Central Asian region. On Friday of last week, China’s top legislator, Wu Bangguo, and Kazakhstan’s chairman of the Senate, Kasymzhomart Tokaev, met to increase cooperation between the legislatures of the two nations. China has been expanding oil and natural gas pipelines, as well as railways, into Kazakhstan in recent years. Expect China and Russia to work together to bring Central Asia on board as a stable member of a forming Asian power bloc.

Africa, Latin America

South Africa’s power problems blacked out the country’s gold, platinum, coal and diamond production for five days this week. Production has resumed at a rationed 90 percent, but the country as a whole continues to suffer from the blackouts. Because of insufficient government planning, the blackouts will continue for at least five years, according to the Economist.

Rebels intending to oust the president are advancing toward the capital in Chad. Considering that they are also threatening oil fields in southern Sudan, this means “Sudan’s Darfur conflict is far from over,” according to Stratfor. The European Union is planning to send about 3,700 troops to Chad to protect those displaced by the fighting in Darfur.

Crisis talks in Kenya were suspended Thursday after an opposition lawmaker was shot by police—the second in three days. Since the reelection of President Mwai Kibaki, 300,000 have been displaced; nearly 1,000 have died.

Finally, Venezuelan President Hugo Chavez this week encouraged fellow Latin American governments to pull billions of dollars in reserves from U.S. banks. He and other leaders have formed a new Latin American bank, Bolivarian Alternative for the Americas, as a substitute.

Anglo-America

On the heels of last week’s global stock market slide, fueled in large part by fears over America’s staggering economy, more shockwaves coursed through financial markets this week. France’s second-largest bank, which recently wrote down another $3.02 billion in bad U.S. mortgage investments, admitted this week to losing $7.1 billion. Societe Generale blamed the disaster on a single junior trader who made a lot of bad bets on the futures market and cooked the books to cover his tracks. The incident left investors wondering what other dirty secrets the banking sector is covering up.

Britain’s financial regulator released a report saying that over a million Britons are overstretched on their mortgages. The Financial Services Authority pointed out three risk factors it found troubling: deposits of 10 percent or less, mortgages longer than 25 years and mortgages more than 3.5 times the borrower’s annual salary. More than 1 million are dealing with two of these three risks; more than 100,000 face all three. Added to this is the fact that many Britons are struggling with a large amount of non-mortgage debt.

Across the pond, the United States is facing record levels of foreign investment. In 2007, foreign investors bought $414 billion in American stock companies, factories and other properties, a new record. In fact, the figure was up 90 percent over 2006 and more than twice the average for the last decade. It made up a quarter of all announced deals for the year. The first half of January saw another $22.6 billion in American companies change to foreign control, more than half the value of all announced deals for that period.

Americans are distrusting the media; less than 20 percent believe all or most of what the media reports, down from 27 percent in 2003, according to a Sacred Heart University poll. A large number of Americans recognize the media attempts to influence public opinion and public policy, rather than simply report facts. The study also exposed the widening gap between the Americans’ perception of the war in Iraq and media coverage of it, with majorities saying negative reporting hurts troop morale, encourages terrorists and damages prospects for U.S. success.