The Week in Review
Middle East
Israel has given in to Hamas and effectively ended the blockade of the Gaza Strip. On Sunday, Israel announced it will now allow anything into Hamas-controlled Gaza as long as it cannot be used for military purposes. An official in the Prime Minister’s Office said that the land blockade, which had been in place since September 2007, had been aimed at weakening Hamas and gaining the release of kidnapped Israeli soldier Gilad Shalit. The lack of progress on both counts, he explained, is what is behind the change in policy. Of course, Hamas and the terrorists who sponsored the Gaza-bound “humanitarian” mission just three weeks earlier would see it as nothing less than a resounding victory for challenging Israel. Not only did their mission draw a lethal retaliation from Israel’s navy, followed by a tidal wave of international outrage against Israel, but it brought enough international pressure on Israel for it to end its economic sanctions against Gaza. Once again, a massive win for the Islamist terrorists and a humiliating defeat for the Jews—and Israel’s faltering ally America played no small part in orchestrating that through the massive pressure it brought to bear on the Jewish state.
In addition, diplomatic officials said that Israel is considering asking the European Union to send monitors to be present at Gaza’s land crossings. By allowing the EU to station inspectors at the Gaza checkpoints, Israel would be taking “a first step towards surrendering its sovereign control over its borders,” writes Caroline Glick in the Jerusalem Post (June 21). This is an especially dangerous proposition in light of Bible prophecy that warns that a European power will actually double-cross Israel in the end time.
Meanwhile, the international criticism of Israel’s raid on the Turkish flotilla continues, with Turkey and 11 other southeastern European nations condemning Israel’s action in a statement issued on Wednesday. “The Turkish-backed declaration highlights Turkey’s attempts to garner support for its stance against Israel, especially at a time when the United States seems less than willing to support that position,” writes Stratfor (June 23).
Europe
The introduction of a two-tiered euro system is being discussed among German and French cabinet officials, a senior European official told the Telegraph June 19. The more stable northern countries, such as Germany, France, the Netherlands, Austria, Denmark and Finland, would form their own “super-euro” zone, in the ideas under discussion. The more indebted countries—Greece, Spain, Portugal, Italy and Ireland—would still keep the euro, but remain outside of the “super-euro” group. “The philosophy is the stronger countries might need to move away from countries they can’t afford to bail out,” the official told the Telegraph. “As a way of containing the damage, they may have to do something dramatic, though obviously in the short term, implementation is difficult.” One option is for Germany to lead the richer countries into a new single currency. The remaining countries would be able to deflate the euro, making their debts worth less and thus easier to repay. The northern countries would be unaffected by this, and would continue to enjoy a strong and stable currency. The Trumpet has long forecast, based on Bible prophecy, that Europe would be dominated by a combination of 10 nations. Currently the eurozone is made up of 16. Could this crisis be what whittles Europe down to 10 core nations? Perhaps. This is where the overall trend is leading. Keep watching the euro crisis.
On June 21, Berlin rejected U.S. calls for G-20 nations to focus on growth rather than curbing debts, setting the stage for an atmosphere of strife at this weekend’s Group of 20 summit in Toronto. In a June 16 letter, President Barack Obama had urged his G-20 counterparts to maintain whatever stimulus programs their governments could finance. The letter was widely regarded as a criticism of Germany and its planned austerity measures, which foresee $107 billion in spending cuts between 2011 and 2014. German Finance Minister Wolfgang Schäuble rebuffed Obama’s remarks on Monday, saying, “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis. That’s why they have to be reduced.” Schäuble said he believes that at the summit, Germany “will face up to the international debate … with a great deal of self-confidence.” Berlin’s rejection of Washington’s stance showcases a broadening economic policy divide between Europe and the U.S. Gone are the days when Washington could set an agenda and lead the world in adhering to it. The summit will display the deep-rooted differences in the way America and Germany are approaching the financial crisis.
After weeks of coalition negotiations, Germany’s Social Democratic Party and the Green Party have agreed to establish a minority government in North Rhine-Westphalia, the country’s largest and richest state. The June 17 decision takes its place on a growing heap of bad news for Chancellor Angela Merkel, as the move means her Christian Democratic Union (cdu) no longer holds the majority in Germany’s upper legislative chamber. If the coalition successfully congeals, it will significantly alter the balance of power in the Bundesrat, Germany’s upper legislative chamber, erasing Merkel’s majority. This means that her already fractious coalition would have an even tougher task of passing legislation. The cdu’s drop in popularity is attributed to the party’s involvement in a financial scandal, and growing disillusionment with Merkel’s overall performance in Berlin. A Forsa poll published on June 16 showed that the disillusionment is not limited to North Rhine-Westphalia. The poll showed that 47 percent of people across Germany now want new elections, and that Merkel’s approval rating is at its lowest point since she was elected chancellor in 2005.
Belgian police raided a Catholic headquarters office and the home of a former archbishop in Belgium on June 24. They searched the property of Cardinal Godfried Danneels, who retired as the head of the Belgian church in January, looking for evidence of child abuse by the church. “These are searches based on some allegations made to the Brussels prosecutor denouncing sexual abuse of minors by certain people in the church,” said a spokesman for the Belgian prosecutor’s office. Watch for the Catholic Church to push back against these kinds of allegations. It does not like being subject to raids by national police.
Asia
On June 19, China’s central bank announced that it was prepared to move toward reforming the country’s exchange rate regime to allow more flexibility. Two days later, the yuan rose by 0.4 percent against the dollar. Although a relatively small move, it sent the yuan to its highest level since September 2008 and was hailed as a political victory for the U.S., which has argued that the undervalued currency destabilizes global economic growth and gives Beijing an unfair exporting advantage. But the revaluation carries potential risks that could undermine Western economies. Europe’s prolonged economic downturn, and European money fleeing into the U.S., could cause a free-floating yuan to actually weaken relative to the dollar, rather than appreciating. This could tilt America’s trade imbalance further into Beijing’s favor. Other analysts say the move is largely symbolic, and is only a political strategy designed to relieve pressure from Washington. For America, the gravest danger is that a legitimate lift of the currency peg means China would need to reduce U.S. government debt purchases, which would drive interest rates up. For an economy addicted to debt, the implications could be devastating. America has complained about the trade imbalance with China that results from the yuan’s peg to the dollar, but it is that same imbalance that enables America to maintain its debt-fueled policies. The U.S. can’t have both. China’s loosening of the yuan’s peg to the dollar, whether symbolic or legitimate, will not solve Washington’s problems. But it may replace the smoldering fire of trade imbalance with the raging inferno of soaring interest rates.
In the lead-up to this weekend’s G-20 summit in Canada, some analysts have interpreted a “leaked” Russian foreign-policy document to mean that Russian President Dmitry Medvedev is shifting Moscow toward a more pro-Western stance. But a study of the 18,000-word paper, published in May, reveals these sentiments to be naively optimistic. Although the document was greeted warmly because it avoided overtly bellicose language, a close reading illustrates that the Kremlin remains preoccupied with the establishment of a Russian sphere of influence and undermining the West. For example, it emphasizes the need to “consolidate the cis (post-Soviet) area” and calls for the “abandonment by the United States of unilateral actions aimed at deploying in Europe elements of a global missile defense that are capable of undermining Russia’s deterrence potential.” It also speaks of reviving the European Security Treaty proposed by Medvedev last year, to assist in the “containment of nato’s expansionist activities.” The document goes on to call for an end to “attempts by forces outside the region to interfere in Russia’s relations with the cis countries.” It discusses a need to bring Ukraine “into the orbit of economic cooperation with Russia.” The paper also discusses continued collaboration between Moscow and Tehran on nuclear energy. Despite the blind optimism and skewed interpretations of Western analysts, this unofficial foreign-policy document is as anti-Western as anything Moscow has officially released. During the G-20 summit and beyond, world leaders will not be interacting with a new, friendlier Russia, but the same anti-West Kremlin.
Latin America
Venezuela continues to embrace socialism. Two weeks ago, government troops seized 120 tons of rice, as well as coffee and powdered milk, from the pro-Chávez neighborhood of Catia in Venezuela’s capital, Caracas. The authorities claim that the owners were planning to sell their food above the government-mandated prices. The government claims it is helping the poor. Critics point to the 80,000 tons of food that was recently discovered rotting in government warehouses. Food isn’t Venezuelan President Hugo Chávez’s only target. On June 23, Oil Minister Rafael Ramirez announced that Venezuela would nationalize 11 oil rigs owned by Helmerich and Payne, a U.S. company based in Oklahoma. The rigs have been idle for months, as Helmerich and Payne awaits payment from Venezuela’s oil company. This seizure—or stealing—of the property of an American firm should have provoked a strong reaction from the U.S. However, Washington has remained silent, too weak-willed to defend itself.
Mexican authorities found the rotting remains of 12 people in sinkholes close to the resort city of Cancun, officials announced on June 18. They discovered six bodies in the same place early in June. This comes shortly after police found 64 bodies in a silver mine in Taxco, Mexico, in late May. “It was like a quicksand, but filled with bodies,” said Luis Rivera, a criminologist who was one of the first people at the site. Mexico’s violent drug war is still raging. On June 14, gunmen killed 12 police officers in an ambush in Michoacan. The same day, 18 men, armed with an assault rifle and a sledgehammer tried to break out of a special security block at a prison in Mazatlan. Between 17 and 28 people died in the attempt. The next day, police killed 15 gunmen after an hour-long battle outside Taxco. On June 19, the mayor of Guadalupe Distrito Bravos, Jesus Manuel Lara Rodriguez, was assassinated after receiving numerous death threats. These are just a few incidents in what seems set to become Mexico’s deadliest month yet.
Anglo-America
Australians appointed a new prime minister on Thursday. Former Prime Minister Kevin Rudd’s popularity plunged from stellar levels just last year due to a tax fight with mining companies and failed policies including a promised carbon emissions scheme and stemming the flow of illegal immigrants. Rudd lost the support of party leaders, who feared a defeat at the hands of the conservatives in coming elections. In an emotional farewell speech Thursday morning, he resigned, and soon Deputy Prime Minister Julia Gillard was sworn in as Australia’s first female prime minister. Ms. Gillard hails from the left side of the ruling center-left Labor Party, and is expected to maintain a foreign policy that focuses on China for trade and the U.S. for security, and might even move Rudd into the post of foreign minister.
The flow of oil into the Gulf of Mexico increased Wednesday morning when an underwater robot bumped a venting system. The accident forced BP to remove part of the system that had been capturing a large amount of oil, before it could be replaced later in the day. Along with Louisiana and Alabama, heavy oil is washing up as far east as Panama City, Florida. The hurricane season that has now arrived is complicating plans, as tropical weather patterns get more severe. The industry evacuates all personnel from the gulf in advance of any major storm. More than two dozen ships and rigs are currently at the disaster site. Some of them need six or seven days’ warning to detach from the well, a lose-lose situation for cleanup efforts.
America’s top commander in Afghanistan was relieved of his duties on Wednesday. Gen. Stanley McChrystal was summoned to the White House to face the president after disrespectful comments the general’s staff made toward the administration were published in an entertainment magazine. McChrystal, a 34-year veteran of the paratroopers, Special Forces, and Desert Storm, had a habit of showing up on patrols, but also of stepping out of line from the elected administration. He will be replaced by Gen. David Petraeus, head of Central Command and architect of the counterinsurgency strategy in Iraq. In the interim, British Lt. Gen. Nick Parker has assumed command. The shakeup comes in the crucial stages of a major offensive in Afghanistan about 12 months ahead of the president’s deadline to start pulling U.S. troops out.
Despite June being national homeownership month, new home sales in May plunged 33 percent to the lowest level on record, the AP reports. Even though a drop was expected after the federal tax credit ran out, the plunge down to 410,000 surprised analysts. Mortgage rates also have sunk to the lowest level on record, with 30-year fixed loans hitting 4.69 percent and 15-year loans dropping to 4.13 percent.
On Tuesday, Pew Research released a poll detailing what Americans think life will be like in 2050. In 40 years, a large majority of people believe cancer will be cured, new energy sources will be used, and computers will converse like humans. However, Americans also believe the U.S. will suffer a nuclear terrorist attack (53 percent), the world will face a major energy crisis (72 percent), and will be plunged into another world war (58 percent).
