Protests against austerity spread across Europe (+ analysis); US officials express vague fears about terror plot aimed at Europe; China-Japan spat prompts ban on rare earth used in hi-tech industry; Two Koreas hold military talks; and more
Top of the Agenda: EU Workers Protest Austerity in Brussels
Thousands of people from across the EU gathered in Brussels to protest (BBC) the severe austerity measures many national governments are planning in response to the sovereign debt crisis. A general strike began in Spain, with protests planned in Greece, Poland, Italy, Latvia, Ireland, and Serbia. The European Trade Union Confederation (Etuc) said the protests represent the frustration of many workers who feel they are paying for the mistakes of banks and the financial sector. The slogan of the protest in Brussels, which unions hoped would draw one hundred thousand people from thirty countries, was "No to austerity, priority to jobs and growth." Etuc said the financial crisis had already led to twenty-three million job losses across the EU. In Spain, the first nationwide strike in eight years (WSJ) nearly shut down Madrid's commuter trains and buses and brought most industrial production to a halt.
Fears about another Greek-like debt crisis intensified in Ireland and Portugal, as investors sold off bonds and analysts warned the countries might be heading for bailout requests (WashPost). Standard & Poor's warned it might further downgrade Irish bonds due to the skyrocketing cost of the country's government bank rescue, which could reach $46 billion. The Irish economy stalled in the second quarter, dropping 5 percent at an annualized rate. Portugal's failure to rein in loose spending has also exacerbated fears of a new round of financial turbulence in global markets.
Analysis:
In the Wall Street Journal, Irwin Stelzer says the European Central Bank's demands for more spending cuts and higher taxes in eurozone countries might "just be producing the downward spiral that American President Barack Obama and Britain's shadow-chancellor-in-waiting Ed Balls have been warning about."
In the Financial Times, Ralph Atkins says it is unclear whether "Germany can offer the leadership the eurozone wants, or needs."
This CFR geoeconomics graphic looks at the risk of corporate debt in fiscally shaky eurozone countries.
PACIFIC RIM: South and North Korea Hold Military Talks
South and North Korea hold their first military talks in nearly two years (KoreaTimes). Tensions between the two countries remain high after one of South Korea's warships was sunk in March and the probability of a father-to-son power transfer in North Korea.
Tensions on the Korean peninsula need to be managed carefully so that growing South Korean and U.S. intolerance for Korean belligerence doesn't lead to unintended military escalation, say CFR's Scott Snyder and Paul Stares.
China-Japan: China's customs agency is still not allowing regular shipments of rare earths (CNBC) to Japan to resume. All shipments were halted last week after a Chinese fishing boat incident in disputed waters sparked tensions. Japan's economy minister described the shipment issue as a "de facto ban" that could damage the Japanese economy.
The escalating dispute between Beijing and Tokyo is a challenge for Washington and raises concerns about Chinese maritime activities in the Asia Pacific, says CFR's Sheila Smith.
ELSEWHERE:
- No Progress on Mideast Talks
- US Probes Links to Europe Terror Plot
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org