Watchman Newsletter

Germany Says U.S. Federal Reserve Heading ‘Wrong Way’ With Monetary Easing

Bloomberg (Link) - Rainer Buergin & Rebecca Christie (October 23, 2010)

The Federal Reserve’s push toward easier monetary policy is the “wrong way” to stimulate growth and may amount to a manipulation of the dollar, German Economy Minister Rainer Bruederle said.

Fed Chairman Ben S. Bernanke yesterday gave Group of 20 finance ministers and central bankers meeting in Gyeongju, South Korea an overview of the U.S. central bank’s efforts to jumpstart the world’s largest economy. His strategy, which investors expect will soon include greater asset purchases, drew criticism at the talks, said Bruederle.

“It’s the wrong way to try to prevent or solve problems by adding more liquidity,” Bruederle told reporters yesterday, saying that emerging-market officials were among the critics. Bruederle, a member of the Free Democratic Party, the junior partner in Chancellor Angela Merkel’s government, stepped in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

The debate over the Fed’s strategy comes as the G-20’s advanced nations sought to alleviate concerns over big swings in capital flows to emerging markets by promising to be “vigilant against excess volatility” in exchange rates. The U.S. central bank completed purchases of about $1.7 trillion of debt in March to support the recovery. The policy-setting Federal Open Market Committee next meets Nov. 2-3.

Up to $1 Billion in U.S. Aid Winds Up In Taliban Coffers

Fox News (Link) - Ed Barnes (October 22, 2010)

As much as $1 billion in U.S. aid has been diverted from programs meant to stabilize Afghanistan and has wound up in the hands of the Taliban and other insurgency groups, war analysts and government auditors say. 

In fact, they say, graft has gotten so bad that the U.S. government estimates that only about 10 percent of the aid budget actually reaches the people in Afghanistan who need it.

“Right now corruption is more important than the politics,” Michael Thibault, co-chairman of Congress’ independent and bipartisan Wartime Commission on Contracting, told FoxNews.com. “I have been there seven times in the last year and the estimates I have been told are that 20 to 40 percent of the aid funding goes to corruption.”

“The problem,” he said, “is the Afghan culture and the subcontracting practices of the companies that do business there.”

US to announce major military aid package for Pakistan

BBC News (Link) - Kim Ghattas (October 21, 2010)

The US is set to announce a significant package of military and security aid to Pakistan on Friday, the final day of the latest US-Pakistan strategic talks.

The multi-year aid package will be “no-strings-attached,” officials say.

But the Obama administration will make clear it expects Islamabad to do more in the fight against Islamic militants.

Since 2005, Pakistan has received more than $1bn (£636.4m) of military aid a year from the US - and received close to $2bn for the last fiscal year.

US officials said Pakistan needed further, specific assistance for the fight against militants and needed to know it could rely on the US in the long term.

The aid, expected to be close to $2bn, will be contingent on approval by the US Congress and will pay for equipment needed in counter-insurgency and counter-terror operations, among other things.

Magnitude-6.7 earthquake hits northern Mexico

Yahoo! News (Link) - AP (October 21, 2010)

A powerful earthquake struck offshore in Mexico’s Gulf of California on Thursday, causing people to flee into the streets in the western state of Sinaloa, but there were no reports of damage or injury.

The U.S. Geological Survey initially reported the magnitude of the quake as 6.9, but later in the day revised it to 6.7. It hit at 11:53 a.m. (1:53 p.m. EDT, 1753 GMT).

The tremor struck about 72 miles (116 kilometers) south of Los Mochis, a city just inland from the coast in Sinaloa. It was centered at a relatively shallow depth of 5.6 miles (9 kilometers).

Sinaloa civil protections authorities said there were no reports of injuries or damage.

Poll: 41% of Palestinians support resuming the Intifada

The Jerusalem Post (Link) - Lahav Harkov (October 21, 2010)

If direct talks fail, 41 percent of Palestinians support the resumption of an armed Intifada, according to a poll released on Thursday by the Harry S. Truman Research Institute for the Advancement of Peace at the Hebrew University and the Palestinian Center for Policy and Survey Research in Ramallah.

Sixty-four percent of Palestinians surveyed believe they need success in direct talks more than Israelis, while 51% of Israelis think both sides need success equally. Both groups are skeptical that negotiations will succeed with 5% of Israelis and 6% of Palestinians thinking they will yield an agreement, but 78% of Israelis support their continuation. Only 30% of Palestinians support continuing talks.

If peace talks fail, 69% of Palestinians support turning to the UN Security Council to recognize a Palestinian State, and 54% support unilaterally declaring a state, according to the poll's findings. 40% support dissolving the Palestinian Authority, should talks fail, and 27% believe there should be a one-state solution. Neither Palestinians nor Israelis consider it likely that an independent Palestinian State will be established next to the State of Israel in the next five years.

‘Iranian power has swung from mullahs to Ahmadinejad’

The Jerusalem Post (Link) - Herb Keinon (October 21, 2010)

Iranian President Mahmoud Ahmadinejad’s visit to Lebanon last week was a “watershed” that rammed home for many in the Arab world the realization that the Iranian leader does indeed have hegemonic designs in the region, Malcolm Hoenlein told The Jerusalem Post on Wednesday.

Hoenlein, the executive vice chairman of the Conference of Presidents of Major Jewish Organizations, said at a briefing with the Post’s editorial staff that Ahmadinejad’s Lebanon visit was a “game changer” because it gave Iran a foothold in the Mediterranean, something it had sought and failed to achieve for centuries.

This, along with Teheran’s ties with Syria and Gaza, the infrastructure it is building in Iraq and its presence in certain eastern provinces in Saudi Arabia, said Hoenlein, is all bringing home to many the reality of Iran’s drive for regional dominance.

Hoenlein said one indication of the degree to which the Arab world is taking notice is the recent resumption of commercial air traffic between Egypt and Iran, cut off following the 1979 Iranian revolution.

“The relationship between the two countries has been terrible,” he said. “But Egypt is looking at the situation and doesn’t have confidence that Iran will be stopped. They are hedging their bets, and this is the first step.”

Full speed ahead on EU diplomacy after Strasbourg vote

EU Observer (Link) - Andrew Rettman (October 20, 2010)

The European Parliament on Wednesday (20 October) adopted by a crushing majority new budgetary and staff regulations for the European External Action Service (EEAS), clearing the last legal hurdle for the launch of the new institution.

“It’s a historic vote. We’re all one happy family now,” an official in the entourage of EEAS chief Catherine Ashton told EUobserver.

EU foreign ministers are set to approve the parliament decision when they meet in Brussels on Monday. Ms Ashton is then expected to name people for the three or four top posts in her service on Tuesday or Wednesday. Another 100 or so senior posts remain to be filled by the end of the year.

The British baroness now has until 1 December - the official launch date - to find a new home for the EEAS in the EU capital. EU Council secretary general Pierre de Boissieu is not keen to shift his translators out of the Lex building in the EU quarter in Brussels to make room, leaving the so-clled Axa or Triangle building a few hundred yards up the road still in play.

Syrian official: Time to replace Hariri

YNet News (Link) - Roee Nahmias (October 20, 2010)

Is Syria working to replace Lebanon’s prime minister? A Damascus official has told Lebanese daily al-Akhbar that “we must make a deep change in Lebanon. Saad Hariri is the only obstacle to reconciliation between the Syrian and Lebanese people.”

According to a report published Wednesday, Syria is disappointed with Hariri’s performance, particularly after a series of meetings with Syrian President Bashar Assad over the past year after the two reconciled.

Damascus officials believe the relations with Lebanon are not as strong as expected, pointing a finger at Hariri.

“Two years ago, Damascus thought that if it would open a new page with Hariri – trust would be built between the two people, so it decided to reconcile with him without any other practical alternative,” the unidentified Syrian official said.

Obama mission: Billions to Pakistan, billions from India

The Times of India (Link) - Chidanand Rajghatta (October 19, 2010)

The Obama administration is lining up at least $2 billion in fresh, new military aid to Pakistan even as it is lobbying for billions of dollars in defense sales to India ahead of the US President’s visit to the region early November.

Two weeks before the India trip however, the US is all set to shower yet another round of military largesse on its dubious ally, ostensibly to help it fight extremists, who by Washington’s own accounts are fostered, protected, and promoted by Pakistan.

The aid package is set to be announced during the US-Pakistan “strategic dialogue” – the second this year – starting Wednesday in Washington DC.

The arms bonanza comes just weeks after India’s defense minister AK Antony conveyed New Delhi’s reservations to Washington about US arms to Pakistan invariably being lined up against India, something even the Obama administration has on occasions recognized.

It also comes amid stunning disclosures pointing to direct ISI (and therefore the Pakistani state’s) involvement in the 26/11 terrorist attacks on Mumbai, which sites President Obama is expected to visit on November 6. Six Americans were among 172 people killed in the carnage.

How Iran brokered a secret deal to put its ally in power in Iraq

Guardian UK (Link) - Martin Chulov (October 17, 2010)

Iraqi prime minister Nouri al-Maliki’s renewed grasp on power has been brought about by the Middle East’s most powerful Shia players. Photograph: Reuters In the sprawling slums of Baghdad’s Shia heartland, signs of triumph are everywhere. Loyalists of Muqtada al-Sadr are posting giant images of the cleric in hospitals, schools and on neighbourhood squares. Cakes and nuts, usually reserved for festivals, are being served to guests of key officials.

Sadr’s followers say theirs is a movement whose time has come. It has been like this for 16 days, since the exiled cleric confirmed his support for a second term for the incumbent prime minister, Nouri al-Maliki. That move looks set to revolutionise political life in Iraq and, potentially, recast the brittle nation’s dealings with the west.

Hours after Sadr’s endorsement, on 1 October, the bulk of Iraq’s Shia political blocs announced that Maliki was their candidate for prime minister, after seven months of political torpor.

This crystallised two things; that Maliki would likely out-manoeuvre his rivals, and that those who supported him would want, in return, more than their share of treasure. On the regional chessboard that is Iraqi politics, Maliki’s move was akin to putting his key rival, Iyad Allawi, in check.