Mario Monti forms cabinet in Italy; markets remain sceptical of new Italian government; Obama tells Australian parliament US will take a long-term role in shaping Asia-Pacific; African leaders step up pressure on Somalian rebels; police discover "drug tunnel" stretching from Mexico to the US; and more

Top of the Agenda: Monti Forms Cabinet amid Eurozone Pressures

Italian Prime Minister Mario Monti appointed an emergency cabinet of technical experts (WSJ) drawn from academia, the private sector, and Italy's civil service. Monti, who will also serve as finance minister, was appointed to rein in Italy's high public debt and fend off further eurozone sovereign debt contagion.

Still, markets remained skeptical (NYT) as investors pushed yields on Italian ten-year bonds above 7 percent, a borrowing rate widely considered to be unsustainable.

Investors also drove interest rates up in the more stable countries of France, Belgium, Austria, Finland, and the Netherlands. At a debate in the European Parliament, President of the European Commission Jose Manuel Barroso said the eurozone was facing a "systemic crisis" (DeutscheWelle).

France called on the European Central Bank (Guardian) to play a bigger role in stabilizing eurozone bond markets, while Germany remained adamant that that ECB does not have the authority to do so. The disagreement contributed to market volatility.

Analysis

Germany remains adamantly opposed to using the ECB as the lender of last resort to prop up the common currency. But with debt contagion rapidly spreading to several more eurozone countries, France has upped the pressure. The future of the EU may be at stake, says this Der Spiegel analysis.

Germany's central bank chief and the new ECB chief, Mario Draghi, have a lot in common, notes this analysis by the Economist.

Monti faces the daunting task of reining in Italy's high public debt. He will have to tackle fiscal irresponsibility to rebuild market confidence and prevent the eurozone's third largest economy from defaulting, explains this CFR Analysis Brief.

The exit of Silvio Berlusconi and the arrival of Mario Monti marks a watershed moment for a nation still crucial for both Europe and the world. But Italy has lost both economic and political influence, writes La Stampa's Marta Dassù.

 

PACIFIC RIM

Obama Addresses Australian Parliament

U.S. President Barack Obama told the Australian parliament that the United States was committed to playing a "long-term role" (Australian) in shaping the Asia-Pacific economically and militarily. The day before, Obama announced a plan to station up to twenty-five hundred U.S. troops in Australia.

Obama's announced expansion of U.S. defense ties with Australia has prompted debate among Australian analysts over balancing a strategic U.S. alliance with growing economic ties with Beijing, says this CFR Analysis Brief.

INDONESIA: Meeting in Bali for its annual summit, the Association of Southeast Asian Nations agreed to allow Myanmar to chair (al-Jazeera) the group's 2014 gathering, citing the country's recent democratic reforms.

 

ELSEWHERE:

African leaders step up pressure on Somalia

Police discover "drug tunnel" stretching from Tijuana to San Diego

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.