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NightWatch 20120129


For the Night of 29 January 2012

Afghanistan: France and Afghanistan have reached an agreement that NATO should speed up its timetable for transferring combat operations to Afghan forces in 2013, French President Sarkozy said Friday. He also announced that he would withdraw French combat forces by the end of 2013.

Sarkozy, alongside Afghan President Karzai who was in Paris for a previously planned visit, said France had told the U.S. of its plan, and will present it at a meeting of NATO defense ministers in Brussels on 2 and 3 February. "We have decided in a common accord with President Karzai to ask NATO to consider a total transfer of NATO combat missions to the Afghan army over the course of 2013," Sarkozy told reporters.

Comment: The announcement apparently represents the outcome of the high level talks that were promised in the aftermath of the killing of four French soldiers a week ago. It appears to contradict a statement early last week by the French Foreign Minister that promised French support to Afghanistan long past 2014, including military training.

The announcement about proposing an earlier transfer of combat responsibilities to the Afghans appears to be cover for the French withdrawal, and an inducement for the Taliban to agree to talks between the Karzai government and the Taliban in Saudi Arabia, proposed this weekend.

Regardless of the intentions of the French and Afghanistan governments, the public image is withdrawal. European financial problems have sapped enthusiasm for the Afghan adventure.

The Taliban have not reacted in pubic to the announcements, but are certain to consider them a victory. A more immediate concern is the security of the capital region, where the French provided the largest combat contingent. Taliban may be expected to test the new security arrangements by executing sensational attacks in Kabul.

Iran: For the record. International Atomic Energy Agency (IAEA) chief inspector Herman Nackaerts and his six-member team of officials and experts arrived in Tehran on 29 January for a three-day visit to Iranian nuclear facilities. The timing of Iran's agreement to accept the inspection team suggests the decision to accept inspectors is a reaction to the effects of sanctions.

EU-Germany-Greece: Update. German Chancellor Merkel suggested that the EU should have overisght authority over the Greek budget. The Greek government promptly rejected the proposal.

France: For the record. French President Sarkozy announced on 29 January plans to introduce a 0.1 percent tax on financial transactions to come into effect from August this year in France. The new tax would affect sales of stock, but not bonds, beginning in August 2012.

Sarkozy said he hoped to "create a shock" with the controversial "Robin Hood" tax and inspire other European countries to follow his lead, despite vocal opposition from other EU leaders. He said in a television interview that the tax would enable French companies to keep jobs at home instead of outsourcing them abroad. Advocates of the tax see it as a potentially significant revenue generator as well as a penalty against speculation, but critics say it could cause investors to pull their money out of countries applying it.

Comment: At this point, the new tax is a proposal. Sarkozy provided no insights about its possible implementation and his statement appears intended to help build his popularity in anticipation of elections in April. Nevertheless a transaction tax on stock sales has been under discussion in the US and Europe and remains highly controversial. Sarkozy is the first government official to dare float the idea, even as a political trial balloon.

End of NightWatch for 29 January.

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