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Tuesday, March 19, 2013

Cyprus Turns Down Bailout Deal, Faces Default

Cypriot lawmakers rejected today a rescue deal that would have forced most bank account holders to give away at least 6.75 percent of their savings to the government. The country, whose banks lent the equivalent of eight times the island’s economy and then suffered the repercussions of the Greek recession, needed €10 billion ($13 billion) to stay afloat and now faces bankruptcy by June. While this a relatively small amount for the European Union (EU), the terms of the loan, set by the group of EU Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), break a basic EU rule that guarantees bank deposits smaller than €100,000. The news created uncertainty across the region as European citizens and markets worried this rule could be done away with in other member states that face financial difficulties. Fearing a run on its banks, the Cypriot government ordered yesterday that they all be closed until Thursday. In the absence of a deal, rumors abounded they would stay shut until March 26, causing major logistical issues. The U.K.’s Royal Air Force, which owns a base on the island, flew a plane-load of cash for its soldiers, the equivalent of €1 million. Should Cyprus not find a solution, it may be forced to leave the euro, a scenario some say may cause contagion across the euro area.

Iraq: 57 Dead in Suicide Attacks on Eve of 10th Anniversary of U.S. Invasion

At least 57 people died and another 200 were injured today in Iraq as 19 bombs exploded and a Ministry of Finance official was assassinated on the eve of the 10th anniversary of the U.S. invasion. The bombs were placed in Shi’ite areas of Baghdad by Sunni militants with links to Al Qaeda and rebel groups in Syria, in an effort to create a larger sectarian conflict. In response to the attacks, the government said it will postpone local elections in the provinces of Anbar and Nineveh for six months because of increasing violence. The rest of the country will vote, as planned, on April 20. Energized by their gains, the Sunni ranks are growing as they regroup, sheltered by the desert in Anbar, near the Syrian border. The pace of their attacks is accelerating. The war in Iraq, which was declared on false information about the existence of weapons of mass destruction, left a trail of destruction and created a political void where sectarian violence thrived. It has only got worse since the departure of U.S. troops in 15 months ago.

Syrian Rebels, Government Accuse Each Other of Chemical Attack

The Syrian government and its opponents blamed each other for using chemical weapons near Aleppo, the nation’s former commercial capital. If this is true, it would be the first time in the two-year civil war that such weapons were used. The event could also cause an escalation of the conflict as U.S. President Barack Obama, who has so far refused to intervene militarily in Syria, has warned Syrian President Bashar al-Assad that the use of chemical weapons would be a red line. The country’s Information Ministry said the rocket loaded with chemical agents killed 16 people and injured another 86. The Syrian Observatory for Human Rights, which is based in London, said 26 died, including 16 soldiers. Reacting later today, White House Press Secretary Jay Carney said it was “deeply skeptical” that the rebels had carried out a chemical attack. “We would also warn the regime against making these kinds of charges as any kind of pretext or cover for its use of chemical weapons,” Carney added. The news came as newly-appointed Prime Minister of the Syrian Opposition Ghassan Hitto said in his inaugural speech his side will not enter discussion with Assad.

EU May Ban Pesticides to Protect Bees

The European Commission, the governing body of the European Union (EU) could force a ban on pesticides linked to a drop in the world bee population. The news came after EU leaders failed to agree on such a measure, which pesticide makers such as Syngeta and Bayer say could hurt the region’s agriculture and cost billions of euros. If the member states don’t reach a compromise, the Commission would then be free to rule. “Forcing through the ban is one of the options available to us but first we need to reflect politically on the best way to proceed,” said EU Spokesman Frédéric Vincent, who works for the Commissioner for Health and Consumers. In January, the European Food and Safety Authority (EFSA) said neonicotinoids contained in certain pesticides were harmful to honeybees.

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