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North Korea-China: International news media reported a North Korean patrol boat seized three Chinese fishing boats with 29 Chinese fishermen on board.  The naval command has demanded a ransom of 1.2 million yuan ($190,000) for their release, Chinese media reported Thursday.

Comment:  North Korean naval commands are expected to earn a significant portion of their operating expenses on their own. Their two main income earning activities are fishing and seizing Chinese or South Korean fishing boats caught poaching in North Korean claimed waters and holding them for ransom. These practices have been routine, seasonally, since the Korean War.   The practice annoys the Chinese, but the almost always pay.

Pakistan: Prime Minister Gilani confirmed today that the final decision on reopening NATO supply lines through Pakistan has not been made. He said the decision would depend on the outcome of ongoing talks among different ministries and officials.

Comment: The main issue in dispute is the money. In other words, NATO use of Pakistani roads with no guarantees of security or trafficability is available for the right price.

Bahrain-Iran: Bahrain on Thursday warned Iran to stop interfering in its internal affairs while affirming its support for a union between the six nations of the Gulf Cooperation Council. Foreign Minister Sheikh Khaled bin Ahmad Al-Khalifa made the remarks a day after Iran called on its people to protest on Friday against the union that Gulf officials say will start with Bahrain and Saudi Arabia.

Comment: The propaganda war was not helped this week by Iranian parliament speaker Larijani's comment that Bahrain should unite with Iran if it unites with any nation.

In fact, most other GCC leaders have decided to defer consideration of union with Saudi Arabia at this time. The main reason is the Arab leaders do not trust each other, even though they despise the Iranians and cannot defend themselves alone.

Syria: The opposition Syrian National Council (SNC) head Burhan Ghalioun said he will resign as soon as a replacement is found via elections or a consensus.

Comment: The opposition's so-called leadership council lacks cohesion or even agreement on the basic principles that should guide the movement. The issues dividing the council are those reported earlier this year. Some council members think the council has become as autocratic, secretive and arbitrary as the al Asad government. This dispute over policy and style is less important than the fact that the opposition leaders control no fighters and the fighters hold no ground.

Greece: For the record. Fitch downgraded Greece's credit rating again because of the failure to form a government and the "increased risk" that Greece will exit the eurozone.

Comment: The justification for the Fitch action based on the political stalemate is driven by real evidence, but it is a bit specious. Greece will form a government eventually.

The justification based on increased risk of Greece withdrawing from the eurozone is not evidence based. Risk is always a hypothetical threat - a worry - of the bankers, but the evidence shows that Greek authorities are not moving to exit the eurozone.

The Greek commentaries during the past week do not advocate incurring the large costs of exiting the eurozone and switching back to the drachma. The risk that outside parties will decide to expel Greece appears greater than that Greek leaders will decide to exit the eurozone.

Italy: Authorities increased security Thursday at 14,000 sites, and assigned bodyguards to protect 550 individuals after a nuclear energy company official was shot and letter bombs were directed to the tax collection agency. Under the enhanced measures, Interior Minister Anna Maria Cancellieri deployed 20,000 law enforcement officers to protect individuals and sensitive sites.

Comment: A radical group has threatened to kill multiple government leaders, including the Prime Minister, over the austerity program. Authorities are being proactive in trying to prevent the return of political violence.

Spain: For the record. Credit agencies downgraded Spanish banks and the credit worthiness of four of the 17 regions of Spain.

Comment: This is like downgrading the credit of a state government in the US. As in the US in 2008, the actions of the credit agencies are worsening the erosion of public confidence in south European government institutions. Once again, they are part of the problem.

End of NightWatch

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