Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
In an annual speech to the European Parliament, European Commission President Jose Manuel Barroso said that the eurozone sovereign debt crisis posed the "greatest challenge" (DeutscheWelle) in the history of the European Union and called for further EU integration to stem the tide. He maintained that Greece, the epicenter of the crisis, would remain in the single currency zone.
Barroso also proposed a tax on financial transactions (FT) in the EU, which could bring in as much as $50 billion in new revenue per year. He is expected to outline plans for greater fiscal integration and the introduction of common eurobonds in the coming weeks.
Barroso's speech came as Greece teeters on the brink of default. Eurozone governments are in the process of ratifying an agreement to expand the temporary eurozone bailout mechanism, the European Financial Stability Facility, and provide Greece with a second rescue package. The German parliament (Reuters) is set to vote on the plan tomorrow.
The financial crisis that began in August 2007 has entered a new and more dangerous phase. A positive feedback loop between banks and weak sovereigns is emerging, with a potentially calamitous effect on the eurozone and the global economy, writes the Financial Times' Martin Wolf.
Members of German Chancellor Angela Merkel's center-right coalition, alarmed that the euro bailout fund may be given even greater powers than planned, have threatened a bigger-than-expected rebellion in a parliamentary vote tomorrow, explains Der Spiegel.
The Bundestag vote will not answer the question of whether Germany is prepared to do enough to stop the euro from falling apart, says the Economist.
U.S., EU Condemn Israel Settlement Plans
The United States and the European Union condemned plans by Israel to construct over one thousand new housing units in occupied in East Jerusalem (al-Jazeera), calling it counterproductive to restarting the Israeli-Palestinian peace process.
This CFR Crisis Guide offers an in-depth, multimedia look at the history of the Israeli-Palestinian conflict and its geopolitical repercussions.
SYRIA: In an effort to garner support from Russia and China, EU leaders dropped plans for immediate sanctions in a new UN resolution targeting Syrian President Bashar al-Assad. The measure condemns Assad's violent crackdown (BBC) on anti-government protesters and threatens sanctions if the violence doesn't end.
Philippines Assesses Typhoon Damage
A deadly typhoon left twenty-one people dead (al-Jazeera) and dozens more injured around the capital of Manila. The Philippines government estimated damages–particularly to the country's vital agriculture industry–at $2.3 million.
CHINA: A subway crash in Shanghai injured at least two hundred and fifty people, raising new concerns about whether the Chinese government has sacrificed safety measures (FT) in its effort to rapidly expand high-speed transportation systems.
SOUTH AND CENTRAL ASIA
Pakistan Warns U.S., Looks to China
Pakistani Prime Minister Yousuf Raza Gilani cautioned the United States against accusing Pakistan of supporting the Taliban-allied Haqqani militant network (Dawn), and he underscored Pakistan's ties with "all-weather friend" China.
The United States has effectively issued an ultimatum to Islamabad implying greater unilateral action against Pakistan-based extremist groups, but Washington must be prepared to act on it, says CFR's Daniel Markey.
AFGHANISTAN: An attack at a police checkpoint (Guardian) near the city of Lashkar Gah in Helmand province–where militants maintain a number of strongholds–killed eight Afghan police officers. The attack came a day after a suicide bombing in the city that targeted a police truck.
This CFR Timeline examines the events that precipitated the U.S. war in Afghanistan and the history of the war.
Guinean Security Forces Crackdown on Opposition Protest
Guinean security forces used truncheons and tear gas to break up an anti-government protest, killing at least three demonstrators. The opposition protesters claimed that an upcoming parliamentary election (Reuters) is being rigged by President Alpha Conde.
SOUTH AFRICA: The government refused to say whether it would grant an entry visa to the Dalai Lama to visit fellow Nobel laureate Archbishop Desmond Tutu (WSJ), signaling apprehension over straining the relationship with China, its largest trading partner.
Second Minister Resigns over Bolivia Protest Crackdown
Bolivian Interior Minister Sacha Llorenti became the second minister in President Evo Morales's cabinet to resign over a government crackdown on indigenous activists protesting the construction of a highway through the Amazon forest (MercoPress). Morales suspended construction of the highway earlier in the week and said he would put the project to a referendum.
CHILE: Student leaders agreed to hold talks with the government of President Sebastian Pinera over education reform (BBC) after protesting for five months against an education system they say is unequal and under-funded.
Violence near Serbia-Kosovo Border Crossing
Ethnic Serbs in northern Kosovo threw pipe bombs (DeutscheWelle) at NATO peacekeepers by a disputed border crossing with Serbia–which refuses to recognize Kosovo's 2008 declaration of independence–prompting the soldiers to fire rubber bullets at the demonstrators.