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NightWatch 20121003

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NightWatch

For the night of 3 October 2012

China-Japan: Update. The Japanese coast guard reported that three Chinese civilian fisheries patrol ships patrolled near the disputed Senkaku Islands for a second day in a row. Yesterday, four ships patrolled near the island.

As a result of the tension with Japan over conflicting sovereignty claims, Chinese banks have declined to attend International Monetary Fund and World Bank meetings in Tokyo.

Comment: Neither country is backing off its claims but neither has escalated to shooting … yet.

Iran: Riot police clashed with a small number of protesters in Tehran over the 40% collapse in the value of the rial, the national currency, this week. Against the US$, the rial now trades at an all time low. It is essentially worthless in international trade.

Police used tear gas and batons to disperse demonstrators, some of whom set fire to tires and rubbish bins.

Eyewitnesses told the BBC that scores of people gathered outside the central bank, calling for the governor to stand down, chanting anti-government slogans. The government responded with force against the protestors, shut down black market traders in Tehran and arrested hundreds of protestors.

Comment and note to analysts: Today's protests are the first to turn violent in several years. The protestors were primarily money changers and traders, but news services reported the central market in Tehran closed. These are the first public demonstrations since the enforcement of Western sanctions.

The protests are a product of economic hardship which the protestors blamed on the mismanagement and inept policies of President Ahmadi-Nejad and his government. They did not blame Western sanctions, curiously.

The appropriate response to economic protests is promises of economic changes or reforms. Ahmadi-Nejad responded with a police crackdown. This mistaken identification of cause and effect is certain to lead to additional public disorders as sanctions bite more deeply.

An inappropriate response to economic grievances is police violence, which means the government is misinterpreting complaints about economic hardship as challenges to government authority. Governments are prone to make such mistakes when they have no economic resources or strategies for easing economic stress in daily life. Such mistakes contributed to the fall of the Ben Ali government in Tunis and of the Mubarak government in Egypt.

In responding with violence to economic complaints, the government escalated the economic complaints, which are fundamentally non-violent in nature. The lines are drawn. Economic protests will now be treated as political challenges, going forward.

The Iranian rial collapsed this week as a medium of exchange and a holder of value for Iranian international merchants. Today's violence means that the effects of international sanctions are now reaching the domestic economy. US and Western policy makers need to start making contingency plans for a more conciliatory ayatollah-led government as well as for its replacement..

Turkey-Syria: A Turkish woman and her three children were among the five persons killed by a Syrian mortar shell that hit the town on Akcakale in Turkey.

Turkey responded with artillery fire against Syrian military installations in northeastern Syria. This was the first time Turkey has fired into Syria during the 18-month-long uprising against President Bashar al-Asad.

In a statement, the office of Turkey's Prime Minister Erdogan said, "Our armed forces in the border region responded immediately to this abominable attack in line with their rules of engagement ….Turkey will never leave unanswered such kinds of provocation by the Syrian regime against our national security."

Syria said it was looking into the origin of the cross-border shelling that hit Akcakale. Syrian Information Minister Omran Zoabi said, "Syria offers its sincere condolences to the families of the victims and to our friends the Turkish people."

Comment: Turkey is looking for a reason to create a safehaven for Syrian refuges inside Syrian, rather than Turkey. Today's minor exchange of fire provides a justification for Turkey to create a buffer zone, ostensibly to protect Turkey, but actually to help the Syrian opposition, which has shown repeatedly that it cannot hold ground. With Turkish artillery cover, it might be able to create a secure base near the border town of Idlib…maybe.

End of NightWatch for 3 October.

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