The Morning Brief - Lignet
Italy: A New Prime Minister, But Maybe Not a New Day
Markets may have been relieved by the formation of a national government
in Italy two months overdue, but there is still plenty of reason for
worry. If the new prime minister, Enrico Letta, reverses the budget
cutting done by his predecessor as he has promised, Italy could quickly
become economically unstable. If he does not, Italy could quickly become
politically unstable. It does not seem likely that Letta can succeed
unless Europe's situation sees significant improvement.
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Grim Religious Freedom Report Unlikely to Change US Policy
A new report issued this week by the U.S. Commission on International
Religious Freedom described serious violations of religious freedom,
especially by China, Saudi Arabia, and Pakistan, but these human rights
abuses are likely to take a backseat to other bilateral U.S. trade and
economic issues and the report will not lead to any new efforts by U.S.
diplomats.
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Joint US-South Korean Military Exercise Ends Amid Ebbing
Tensions
The eight-week annual U.S.-South Korea military exercise ‘Foal Eagle’
that ended quietly this week was considered successful and sent a strong
message to North Korea. Although tensions with the North rose to
extremely high levels during the exercise, the situation has eased over
the last few weeks and diplomatic talks look likely by the end of the
year.
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Egypt: Morsi Moves Could Lead to ‘Summer of Flames’
Hope for real democracy in Egypt is fading as President Mohammed Morsi
accelerates efforts to expand his power by undermining democratic
institutions. Morsi’s new move to replace large numbers of judges would
remove the opposition’s only peaceful and legal avenue to challenge his
rule and could leave it with no choice but to engage in violent protests
over the next few months.
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Cybersecurity Threat Likely to Kill SoftBank’s Bid for Sprint
With the third largest U.S. cell phone company up for sale and a
Japanese company with a close relationship with China about to buy it,
alarm bells are being raised in Washington. Will the U.S. government
allow the Japanese company, SoftBank, which relies heavily on
telecommunications equipment made by the Chinese company Huawei, to buy
Sprint Nextel? It appears likely that SoftBank’s bid will be derailed
and that Dish Network Corp., which has made a competing offer, will win
out. But there are other factors at work, as well.
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South Africa’s ANC Strengthens Grip During Crisis
A series of recent moves by South Africa’s ruling African National
Congress (ANC) to solidify its control over the country’s political
landscape appear to be driven by its growing concern that ongoing
economic and social troubles could undermine its hold on power.
Unprecedented levels of unrest over the past year have tested the
leftist party’s authority as it struggles to project an aura of
invulnerability before presidential elections next year.
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Four Reasons Why Obama Won’t Close Guantanamo
Despite President Barack Obama’s new pledge to close the Guantanamo Bay
detention facility, LIGNET sees four reasons why this will not happen.
These reasons range from a lack of political support at home and abroad
to the dangerous nature of the remaining Guantanamo inmates.
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Is Algeria at Risk of a Late Arab Spring Uprising?
Algeria’s illusion of stability was ripped away last week on news that
76-year-old strongman President Abdelaziz Bouteflika had suffered a mild
stroke and was flown to France for medical treatment. Rumors of the
Algerian president’s failing health come at a pivotal moment for the
country as it faces increasing unrest.
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IMF Loan Delay Putting Egypt in Danger of Collapse
Egypt’s negotiations with the International Monetary Fund for a $4.8
billion loan have dragged out for months as the country falls further
into an economic crisis. Egypt won’t agree to cut food and fuel
subsidies, a move the IMF is requiring as a condition of the loan, but
if it doesn’t get the loan, the entire region could descend into chaos.
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Argentina: Politics Turning Toxic with Kirchner Power Grab
Argentina’s President Cristina Fernandez de Kirchner has rammed new
judicial reforms through the legislature in yet another effort to seize
more power and undermine democracy. The reforms are likely to hurt the
country’s economy and could mark the beginning of a new period of
authoritarianism in Argentina.
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UK Hedge Fund Manager: Chinese Model is Unsustainable
In an exclusive interview with LIGNET, UK hedge fund director Jeremy
Bradshaw said that although China’s economy will probably rebound by the
end of the year, there is trouble on the horizon for its export-oriented
economic model. Reforms are desperately needed in the Chinese banking
system, but Bradshaw sees no prospect of this happening anytime soon, in
part because many state-owned enterprises are saddled with debt and have
become addicted to artificially cheap credit.
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Kosovo Agreement Could Bring Peace to the Balkans, Finally
Motivated by a desire to end its isolation in Europe and increase its
prospects for joining the European Union, the Serbian government signed
a historic pact on April 19 to normalize relations with its former
breakaway province of Kosovo. The Serbs living in northern Kosovo,
however, have rejected the pact and could wreck plans for peace.
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Despite Global Slowdown, 'Poor' Countries Adding Jobs
Many people believe that the global financial crisis has had a crushing
impact on global employment and incomes, but this is only really true of
developed economies and is not a fair representation of the labor market
in emerging countries. In fact, employment markets in North America,
Western Europe and Japan contrast strongly with the dynamic job creation
that is underway in Latin America, Asia, the Middle East and sub-Saharan
Africa.
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