Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
Greek Prime Minister George Papandreou said Sunday that Greece will miss the 7.6 percent deficit target that was agreed upon with the European Union and International Monetary Fund in July as a prerequisite for a second financial rescue package. The country's most recent budget plan showed a deficit of 8.5 percent (Guardian) of GDP for this year.
The Greek government called a cabinet meeting on Sunday to approve a new 2012 draft budget after three days of talks with the so-called troika–the European Commission, the European Central Bank, and the IMF–to determine whether Greece is eligible (WSJ) for the next €8 billion tranche of its original EU-IMF bailout. The government agreed on new austerity measures for 2011-2012, and a plan to put thirty thousand public sector workers (NYT) on reduced salaries by the year's end, forcing the majority into early retirement.
Ahead of a meeting of eurozone finance ministers (Bloomberg) on Monday, EU Economic and Monetary Affairs Commissioner Olli Rehn said it was still unclear whether Greece's budget cuts would be adequate to allow for the release of the next aid tranche.
European stock markets opened down (DeutscheWelle) this morning.
Greek sovereign debt levels appear unsustainable and a default may be inevitable. Most economists think the question now is how to make the process orderly, explains this CFR Analysis Brief.
The eurozone, once seen as a crowning achievement in the decades-long path of European integration, is buffeted by a sovereign debt crisis of nations whose membership in the currency union has been poorly policed, explains this CFR Backgrounder.
Austan Goolsbee, a former economic advisor to U.S. President Barack Obama, tells Der Spiegel that Europe must recapitalize its banks immediately to avoid the risk of a financial collapse.
Gunmen attacked police headquarters in Iraq's western Anbar province (al-Jazeera), taking fifteen officials and policemen hostage and killing at least two.
This CFR Timeline provides an interactive slideshow detailing events since the U.S. invasion of Iraq in 2003.
ISRAEL: U.S. Defense Secretary Leon Panetta said Israel is "increasingly isolated" in the Middle East and needs to marry its military strength with strong diplomatic efforts (Politico) in order to achieve lasting security in the region.
This CFR Crisis Guide offers an in-depth, multimedia look at the history of the Israeli-Palestinian conflict and its geopolitical repercussions.
IRAN: Speaking at a conference on the Palestinian question (Haaretz) in Tehran, Iranian President Mahmoud Ahmadinejad said the Israeli-Palestinian conflict–and wider Mideast strife–could be resolved if Israel's Jewish immigrants returned to their countries of origin.
Iran's ambitions as a regional power and links to suspected terrorist groups pose stiff challenges to its neighbors and the world, explains this newly released CFR Crisis Guide.
Filipino Militants Free U.S. Hostage
A Filipino-American woman, who was kidnapped by suspected Abu Sayyaf Islamist separatists (ManilaBulletin) in July in the southern Philippines, was released Sunday night. The militants are believed to still be holding her son and nephew.
PAPUA NEW GUINEA: Tribal fighting between the Agarabi and Kamano tribes in the country's eastern province left fifteen people dead (Australian). Over one hundred police were deployed to restore order in the market town of Kainantu.
SOUTH AND CENTRAL ASIA
Haqqani Network Denies Killing Rabbani
Siraj Haqqani, a leader of the Taliban-allied Haqqani (BBC) militant network based along the Afghanistan-Pakistan border, said the group was not responsible for last month's murder of Afghan peace envoy Burhanuddin Rabbani. Haqqani also insisted that his network was not linked to Pakistan's Inter-Services Intelligence agency, despite competing claims by the United States.
Meanwhile, Pakistani Prime Minister Yousuf Raza Gilani confirmed Sunday night that his administration will start peace negotiations (ExpressTribune) with all divisions of the Taliban, including the Haqqanis. If the talks fail, Gilani said, the government will take military action on the militants in North Waziristan.
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.
ICC to Investigate Ivory Coast Election Violence
The International Criminal Court said it would investigate killings and rapes committed in the Ivory Coast following last year's disputed presidential elections. At least three thousand people (Reuters) were killed in what the ICC alleged were war crimes.
NIGERIA: The Shell oil company (Guardian) awarded lucrative contracts to Nigerian militants, contributing to deadly violence between feuding militias, according to an investigation by the oil industry watchdog Platform.
U.S. Trade Deals to Move Forward
U.S. President Barack Obama could send long-stalled, bilateral free trade pacts (WSJ) with South Korea, Colombia, and Panama to Congress for approval this week. If ratified, the trade deals are expected to increase U.S. exports by $13 billion.
The U.S. needs to revitalize trade policy and spur foreign investment in this country–timely ingredients for a job-creating economic resurgence, says former senator Thomas Daschle, co-chair of a CFR independent task force on trade and investment.
BRAZIL: Brazilian President Dilma Rousseff, in Brussels for the Brazil-EU summit (MercoPress), will meet with her European counterparts to discuss expanding trade ties between the EU and the Mercosur block, as well as increased Brazilian investment to assist with the eurozone debt crisis.
Defense Cuts Undermining U.S.-European Alliance
Despite NATO's success in Libya, U.S. and EU defense cuts–a result of a weak global economy–are putting pressure on NATO's long-term efficacy and diminishing military ties (FT) between the United States and Europe.
In his testimony before the House Armed Services Committee, CFR's Max Boot argues that the impact of budget cuts has the potential to devastate our armed forces and do more damage to their fighting capacity than any other external foe.