Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
Credit rating agency Standard and Poor's downgraded Spanish debt by two notches (WSJ) to triple-B-plus from single-A on Thursday evening. At the same time, the national statistics bureau said employment had risen to an eighteen-year high of 24.44 percent in the fourth quarter of last year, more than double the eurozone average. Spanish borrowing costs rose on Friday, raising new market fears that the eurozone's fourth-largest economy was falling prey to the ongoing sovereign debt crisis.
"In private, conservative elites in Spain recognize that austerity targets have to be softened and that a new policy mix is needed. In public, they keep silent because they are too weak to confront Berlin, Brussels and Frankfurt; too scared of financial markets to lead the revolt; and too afraid of Spanish citizens finding out," writes José Ignacio Torreblanca in the Financial Times.
"One idea is for Spain to have a system-wide asset-protection scheme, where the banks' toxic assets would be insured by euro-zone guarantees. Another is for the rescue funds to issue bonds to Spain's own bank-rescue fund, just as the EFSF gave Greek bondholders a bond instead of cash as part of that country's debt restructuring," says the Economist.
"Rather than fixating on deficit targets, official Europe should be watching the danger lurking in Spanish banks. Like the Irish, Spaniards overinvested in property during the easy-money days, and banks' losses on residential mortgage-backed securities will probably trigger some form of public support as the housing bubble deflates further," writes Raymond Zhong in the Wall Street Journal.
Chinese Dissident Escapes House Arrest
Chen Guangcheng, a blind rights lawyer who has been under house arrest in rural Shandong Province for nineteen months, escaped and is in hiding in Beijing (BBC), rights advocates said. Chen released a video addressed to Chinese Premier Wen Jiabao, in which he urged the government to protect his family.
JAPAN: The United States agreed to move approximately nine thousand U.S. Marines off the Japanese island of Okinawa (WSJ) to Guam, Australia, and Hawaii. There are currently eighteen thousand U.S. troops stationed in Okinawa.
In this CFR Policy Innovation Memorandum, CFR Senior Fellow Sheila A. Smith argues that the time has come for Japan and the United States to set priorities for military missions, formalize mechanisms for crisis management coordination, and work toward a long-term basing strategy.
SOUTH AND CENTRAL ASIA
Pakistan Deports Bin Laden Family
Former al-Qaeda leader Osama bin Laden's family, including his three widows and their children, were deported from Pakistan to Saudi Arabia today (AFP), almost a year after U.S. forces killed bin Laden in a raid on his compound in Abbottabad, Pakistan.
PAKISTAN: A Pakistan International Airlines flight en route from Karachi to Bahawalpur was forced to return to Karachi after a passenger threatened to hijack the plane (ExpressTribune).
UN Chief Says Syria in 'Contravention' of Peace Plan
UN Secretary General Ban Ki-moon said the Syrian government was "in contravention" of a UN-Arab League peace plan and cease-fire (al-Jazeera) with opposition forces, following a deadly blast in a heavily populated area of Hama yesterday.
ISRAEL: Israeli Defense Minister Ehud Barak said yesterday that the chances "appear low" that the Iranian government will abandon its nuclear program (NYT) amid increased international pressure. The comment came a day after Israel's top general suggested the Iranians were "rational" and would not move to build a nuclear weapon.
Iran's more receptive tone with Western powers in nuclear talks signals concerns about the bite of sanctions and the threat of an Israeli military strike, says CFR's Ray Takeyh in this CFR Interview.
U.S. Warns Sudans of Possible Sanctions
The United States circulated a draft resolution to the UN Security Council outlining sanctions on Sudan and South Sudan if they do not heed the demands of the African Union by ceasing clashes along their disputed oil-rich border (Reuters).
With Sudan and South Sudan on the brink of war, the United States and China must press both sides to return to the negotiating table, says Africa expert Jendayi Frazer in this CFR Interview.
WEST AFRICA: The regional Economic Community of West African States agreed to send troops to Guinea-Bissau and Mali (BBC) to monitor the return to civilian rule following military coups in both countries over the past two months.
Dutch Parties Reach Budget Deal
Dutch Prime Minister Mark Rutte's caretaker government secured the backing of three left-leaning opposition parties, garnering a parliamentary majority for its austerity package yesterday evening. The Dutch are expected to present a proposal to the European Commission by the end of the month on reducing the country's deficit to 3 percent of GDP by 2013 (WSJ).
New Charges against U.S. Secret Service Agents
The U.S. Secret Service is investigating allegations that some of its agents hired strippers and prostitutes in El Salvador (al-Jazeera) ahead of a visit by U.S. President Barack Obama last year. The new charges come on the heels of a similar scandal that erupted following the president's visit to Colombia earlier this month.
ARGENTINA: The Argentine National Securities Commission said yesterday it would inform British regulatory authorities on the legal actions that Argentina plans to take against oil companies "illegally operating in the Malvinas Islands" (MercoPress), or the Falklands.
Campaigns Step Up Battle on Foreign Policy
Republican candidate Mitt Romney's adviser Richard Williamson warned (FP) that developments in North Korea, continued unrest in Syria, and Iran's nuclear ambitions signal an unraveling Obama administration foreign policy. Also on Thursday, the Romney campaign released a statement announcing the support of former secretary of defense and national security adviser Frank Carlucci, who worked under President Ronald Reagan, and former national security adviser Stephen Hadley, who worked under President George W. Bush.
Vice President Joe Biden, as anticipated, took the general election battle directly to theforeign policy and national security arena, touting President Obama's international successes from the last three years. Obama may be looking to further boost his national security credentials today with a visit to Fort Stewart in Hinesville, Georgia, to court military families and veterans (WashPost), both considered crucial groups of voters.
Editor's Note: For more information on the presidential election and foreign policy check out CFR's campaign blog, The Candidates and the World.