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NightWatch 20111110


For the Night of 9 November 2011

Iran: Iran is willing to negotiate with world powers that are concerned with its nuclear program but only if the other parties are respectful, an Iranian Foreign Ministry spokesman said on 9 November.

Comment: "Respectful" apparently means "not threatening sanctions." The statement is aimed at deflecting pressure from Western states to tighten UN sanctions.

Russia-Iran: The Russian Foreign Ministry announced it will not support new UN sanctions against Iran based on the new report by the International Atomic Energy Agency. "According to our initial evaluations, there is no fundamentally new information in the report," the Foreign Ministry said in a statement.

Comment: Earlier this week NightWatch reported that the critical question about the report is whether it is based on new evidence or a re-evaluation of existing evidence. Russia has taken the position that the report is a politically biased re-evaluation of existing evidence.

Palestinian Authority: For the record. Palestinian officials said they expect the request for full UN membership will be defeated and that they have an alternate plan to seek an upgraded observer status. This is the first recent public update on the status of the UN application.

Niger-Libya-al Qaida: On 6 November the Nigerien Army destroyed a convoy of six heavily armed, four-wheel drive vehicles transporting weapons from Libya near Assamaka in northern Niger, according to Radio France Internationale on 9 November. Army units killed 13 men and 13 were taken prisoner. One soldier was killed and others wounded in the clash. Malian Touaregs led the convoy, comprised of Libyans loyal to former Libyan leader Qadhafi, an unnamed army officer said.

Meanwhile, several news services reported a statement by Mokhtar Belmokhtar, a leader of al Qaida in the Islamic Maghreb (AQIM) who claimed that his group obtained Libyan arms during the Libya struggle against Qadhafi. He also claimed AQIM has benefited similarly from instability in other Arab states.

Comment: The reported intercept and clash in Niger is credible evidence that tends to corroborate earlier news reports that a variety of groups received weapons from pillaged Libyan armories. It also lends support to the AQIM boast.

Greece: Update. Papandreou resigned but progress towards forming a new government has been slow.

Italy: Either a new Italian government will be formed or parliament will be dissolved, Italian President Giorgio Napolitano said on 9 November. An electoral campaign will be carried out in a brief time span, Napolitano said. It is certain that Italian Prime Minister Silvio Berlusconi has decided to resign, and the stability law will be approved in the next few days, Napolitano added. Italian lower house speaker Gianfranco Fini is trying to have the Italian financial stability package approved by 12 November, a parliamentary source said.

Comment: The high yield on Italian bonds is an indicator of threat to the financial system. The crisis has moved beyond assessments of risk. A Bloomberg analysis suggested Italy is too big to fail, but also to big to save.

European Union: French and German officials have discussed the EU overhaul to reorganize the European Union into a smaller eurozone, an unnamed senior EU source on 9 November. Brussels, Paris and Berlin policymakers suggest the smaller eurozone work toward deeper economic integration regarding fiscal policy, EU sources said.

However, a French Finance Ministry spokesman denied plans to reduce membership. French President Nicolas Sarkozy said the eurozone would move forward more quickly than the 27 EU members and that the "two-speed" Europe is the model that should be followed. The plan has not been put into action yet, another EU official said.

Comment: The gravity of the financial crisis and the threat of a ripple effect are highlighted by the occurrence of even informal discussions about shrinking the European Union. In studying violent political instability, living systems under stress always contract. The government reduces the volume, quality and frequency of services it provides and the geographic area over which it provides them in order to reach a sustainable position short of collapsing. It tries to find a set of lines it can hold to avoid collapse and to prepare for returning to normality.

Contraction may be understood as the first step in a process whose ultimate end state is organizational or systemic collapse. Collapse is not inevitable, but more frequent than recovery in instability case studies. Recovery almost always requires significant outside intervention of some sort, such as a surge, and even that might only provide temporary relief from the stress that caused the shrinking.

A contraction of the EU in this financial crisis would parallel the behavior of governments experiencing violent internal instability, such the insurgency in Afghanistan or the opposition uprising in Syria. In both countries, the government's ability to provide public services has contracted under violent stress. In Afghanistan the US  troop surge has provided temporary relief in some areas, but is not a permanent solution.

The Greek bailout is a surge that has proved inadequate to stop the financial crisis or keep it from spreading. The increase in bond yields represents one aspect of shrinkage, of credit worthiness.

This is not a prediction of EU collapse or Italian collapse, but it is a warning that long experience shows that once living systems begin to contract they seldom recover on their own and might not even with outside help. Financial systems also are living systems.

End of NightWatch for 9 November.

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