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NightWatch 20120508

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For the night of 8 May 2012

China-Philippines: China is not optimistic about the naval, diplomatic and political standoff over the Scarborough Shoal (the Chinese name is Huangyan Island) and is prepared to respond to any Philippine escalation, Vice Foreign Minister Fu Ying said in remarks to Alex Chua, charge d'affaires of the Philippine Embassy in China, according to an 8 May Foreign Ministry statement.

A spokesman of the Chinese Foreign Ministry said, "Huangyan Island is an inalienable part of China's territory. We demand the Philippines refrain from any more actions that will complicate, amplify or internationalize the situation."

Comment: After three weeks, the standoff continues. Both sides continue to send ships to the island. Chinese government officials cannot back down with subjecting themselves to criminal charges for violating the Anti-Secession law of 2005 which prescribes that no territory claimed by China may be alienated in any fashion by anyone. Chinese diplomats only have flexibility in negotiating the terms of usage under Chinese sovereignty.

In passing  the 2005 Anti-Secession law, the Chinese communist leaders deliberately decided to remove any room for discretion in any negotiations about Chinese sovereignty over claimed territories, including Taiwan and all of the Chinese-claimed islands in the South China Sea and the west Pacific.

The Chinese cannot and will not back down and will never surrender their claims of sovereignty.  That puts the burden of compromise on the Philippines and the US to decide whether to continue the confrontation.

Egypt: Egyptian security forces launched an operation to combat the rising violence in Sinai, with raids resulting in the arrest of Egyptians and Palestinians linked to Hamas' armed wing, according to Egyptian press. The operations, which included military and Interior Ministry forces, were in response to recent attacks on Egyptian security patrols in the peninsula.

Comment: The timing of this operation suggests it is a response to last week's Israeli call-up of six reserve infantry battalions, at least one of which was designated for deployment to the border of Sinai. Feedback from a Brilliant and attentive reader pointed out that terrorists, including Hezbollah groups, are operating in Sinai with the protection of the Bedouin.

The presence of terrorists in Sinai, operating in support of Hamas and against Israel, has been reported since at least 2009. The number of terrorists is not known in open sources, but they have been as vicious against Egyptian Army soldiers as against Israel Defense Forces. The periodicity of their attacks is about one every ten days and serves as a baseline for measuring trends, going forward.

Syria: UN-Arab League envoy Kofi Anan told the security council that his plan is the last chance to avoid civil war in Syria.

Comment: Kofi Anan sounds like he is looking for an extension of his job. There is no chance of a civil war in the conventional understanding of that term in Syria because the Syrian state has not fragmented territorially, as did Libya.

Opposition groups dominate neighborhoods only at the sufferance of the government. They have no territorial base that they can defend and the government beats them down wherever they form a center of mass. Anan's comments are self-serving.

Greece: Update. Two attempts to form a coalition government have failed. The leftists will get their chance on the 9th, but the most likely path ahead is appointment of an interim government that will oversee preparations for another election in 30 days.

Comment: Even if the leftists manage to form a coalition, Greece has no hope of stabilizing its recorded economy while it remains in the eurozone. The grey economy - informal, unrecorded and untaxed -- is sustaining the people. The pool of legitimate workers is shrinking and will never be able to support the pool of pensioners in the style to which they have become accustomed.

These are conditions that make extreme solutions attractive, reflected in the electoral vote in favor of the communists and the national socialists - neo-Nazis.

Europe: For the record. German Chancellor Merkel and the European Council have changed in the last 48 hours from emphasizing austerity and the importance of adhering to agreements and goals to focusing on growth.

The two economic ideas are not mutually exclusive. Nevertheless, the growth has not been discussed in connection with south European sovereign debt. The rise of the socialists in France and the rejectionists in Greece seems to jolted the European bankers to consider potentially more innovative ideas about continental economic health besides "pay what you owe" policies.

The window of innovation will not last long because the debt exceeds the capacity to pay it down. The demographics of up to 50% unemployment among the most able cohorts of the work forces in Mediterranean European states defeat growth without statism. This is the threat.

End of NightWatch for 8 May.

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