Contact Us

To learn more about our solutions and services, please contact us.

NightWatch 20120105

NightWatch

For the night of 5 January 2012

Pakistan: On 30 December the Supreme Court of Pakistan ruled that it would investigate the memorandum alleged to have originated from President Zardari and sent to former US Chairman, Joint Chiefs of Staff, Admiral Mullen, seeking US assistance to avert a Pakistani military coup. In short, the Pakistani Supreme Court found for the Pakistan Army and against the Pakistan government.

Pakistani news services reported a wave of civilian criticism of the ruling, including that it duplicated a parliamentary investigation and was biased against the government in favor of the Army because of bad blood between Zardari and Chief Justice Chaudhry.

Comment: The ruling prolongs a constitutional struggle over Zardari's legitimacy as president, dating to Musharraf's suspension of Zardari's criminal sentence for corruption. Zardari has never been pardoned.

Both the Pakistan Army and the Chief Justice have grounds for wanting Zardari to resign. A Supreme Court investigation is not likely to be more honest than its parliamentary counterpart, but the overwhelming conclusion is that all parties judge the President of Pakistan increasingly has become a political liability. Zardari is not likely to resign any time soon, but the institutional struggle will divert attention from economic and internal security issues.

Iran: On the fifth day of new sanctions, China and Japan have cut imports of Iranian oil and the European Union (EU) agreed in principle to halt oil imports from Iran. China, the EU and Japan buy about half of Iran's exports of 2.6 million barrels of oil per day.

Financial news services reported a decline in the value of the Iranian rial and a rush to convert holdings into American dollars.

Comment: The sanctions are biting enough to prompt the Iranians to offer a new rounds of nuclear talks this week. Nevertheless, the underlying strategy is unproven that sanctions without an explicit military threat will compel a country's leadership to sacrifice a strategic defense program.

It has been tried for a decade and a half in North Korea with no result. North Korea has, no doubt, passed on its wisdom to Iran, one of its primary nuclear and missile customers.

Iranians will suffer, for certain, but the sanctions model looks flawed as a behavioral modification strategy. Instead of forcing the Iranian leadership to "cry uncle", as one analyst reported, outside pressure is much more likely to unite Iranians behind the government, at least in the short run.

Iranians might want the ayatollahs to lighten up internal restrictions, but there is no evidence Iranians disagree with Iran's foreign, nuclear and arms policy. Even Sunnis will appreciate an Islamic state, even a Shiite state, standing up to the non-Muslim world.

Italy: For the first time, one of Italy's five publicly traded banks, UniCredit, advised investors to guard against the breakup of the euro zone. The advice was not a prediction, but rather a warning to factor the risk of breakup into investment decisions. The bank's warnings to investors also included the potential deterioration of access to liquidity and the impact of interest rate swings.

Comment: The start of professional warnings about a euro breakup from institutions that have much to lose converts the possibility of a euro zone breakup from a risk to a threat. It means that the prospect of the collapse of the euro zone is now considered worth taking into consideration. A week ago this was not the case.

End of NightWatch for 5 January.

NightWatch is brought to you by Kforce Government Solutions, Inc. (KGS), a leader in government problem-solving, Data Confidence® and intelligence. Views and opinions expressed in NightWatch are solely those of the author, and do not necessarily represent those of KGS, its management, or affiliates.

KGS Logo

www.kforcegov.com

A Member of AFCEA International

AFCEA Logo

www.afcea.org

Back to NightWatch List
.