Egypt Strikes Back at Militants in Sinai
The Egyptian government cracked down on Islamic militants today in response to the killing of 16 police officers near the Israeli border. Going after border guards on Sunday, gunmen who swore to destroy Israel carried out the deadliest attack in Sinai since 1979. They were shot by Israeli forces shortly after crossing the border. Egypt’s new President, the moderate Islamist Mohamed Morsi, promised to retaliate, and sent 500 troops to control the region, which is dominated by the militants. He also fired his intelligence chief and the governor of the Province of North Sinai, and replaced the head of his presidential guard as well as the commander of the country’s military police. It’s a delicate balancing act for Morsi, who became close to the Hamas movement that rules the Gaza Strip. Israel and Egypt have been at peace for 33 years.
Bank of England Lowers Growth Forecast
Bank of England Governor Mervyn King announced that the central bank cut its forecast for economic growth in the U.K., stating the country’s recovery will be a “slow process.” He also endorsed Prime Minister David Cameron’s plan for a budget squeeze, which includes spending cuts and adjusting taxes, saying that it was put in place faster than expected, which would mean “less consolidation” later on. He added that the greatest risk the country is facing is Europe’s crisis, made worse by a insufficient policy on the part of Eurozone leaders.
July Hottest Month on Record for Contiguous U.S.
With an average temperature of 77.6 degrees Fahrenheit (25.3 degrees Celsius), July was the the hottest month since records began in 1895, even hotter than July 1936, which reached an average temperature of 77.4°F. This is a 3.3°F (1.8°C) increase over the 20th century average. This was accompanied by a drought that covered 63 percent of the contiguous U.S., with 22 percent falling into the category of “extreme to exceptional drought.” Both crops and livestock from the Great Plains to the Midwest suffered as a result. Meanwhile, the usually uncontroversial farm bill that would renew subsidies and aid to farmers is still stuck in Congress. On August 2, the House passed a one-year extension of the 2008 bill for livestock-only disaster spending to rescue those hit by the drought, before leaving for summer recess. It stands little chance of passing the Senate, but President Barack Obama called yesterday for Congress to resume work on a new five-year program.
China Prepares for Political Transition amid Military Recriminations
China is preparing for a once-in-a-decade political transition that will take place at the Communist Party’s 18th Congress later this year. President Hu Jintao, who is due to retire, is looking to promote ally Hu Chunhua to the Politburo Standing Committee, the country’s most powerful decision-making body, in order to protect his legacy and prevent retribution against him and his family after he steps down. Should this not be possible, “Little Hu” could also take over the post of party chief in Shanghai. Hu Jintao has also been trying to shrink the nine-member committee to seven, while others are pushing for 11. It is expected that he will appoint Vice-President Xi Jinping to replace him. This is a sensitive period for China’s political class: military leaders have been vocal about playing a bigger role in policy and politics, which has prompted the government to launch a campaign about loyalty. Politicians became worried about certain generals because of their ties to deposed Politburo Member Bo Xilai. Hu will keep his position as the chairman of the Central Military Commission, even after he leaves, to maintain stability.
New York Inquiry into Standard Chartered Infuriates BOE, Fed, Treasury Department
New York Regulator Benjamin Lawsky’s investigation of U.K. bank Standard Chartered’s dealing with Iran seems to have surprised the Bank of England, which saw in it an overreach by American authorities. BOE Governor Mervyn King asked that the British authorities be consulted and that public comments not be made until the investigators know more. It also appears that Lawsky’s move caught the U.S. Treasury Department and the Federal Reserve off guard, angering them. Some officials believe that the amount of Standard Chartered’s transactions that violated sanctions against Iran was closer to $14 million, rather than the $250 billion the New York banking regulator claims the bank laundered. The Fed, which has been investigating the financial company since 2010, hadn’t yet established an exact amount when New York announced it was taking action on Monday. Generally speaking, authorities move together in money-laundering cases.