Night Watch

China-North Korea: South Korean media reported that Chinese regulators have warned and ordered four North Korean banks operating in China -- Tanchon Commercial Bank, Korea Kwangson Banking Corp., Korea Daesong Bank and Golden Triangle Bank -- to stay within the limits of their permitted operations or risk penalties.

Comment: This report reinforces earlier information that China is enforcing existing trade and finance laws more strictly. Stricter enforcement constitutes a de facto crackdown without appearing to be punitive.

Reports from the China-North Korean border state that smuggling cash in suitcases has increased because North Korean banks are under UN sanctions. All four are under sanctions and two are blacklisted by the US Treasury for financing arms proliferation sales.

Several western news outlets report that sanctions are not affecting the North Korea elite. Trade in cell phones, plasma TVs and other technology items and household appliances between China and North Korean reportedly have increased in anticipation of a crackdown later. Those items are not defined as luxury goods in the resolution and are not banned.

Unconfirmed reports state China has sent aircraft and ground forces to reinforce its border with North Korea since the UN sanctions were announced on 7 March and placed border forces on increased alert. The extent of the reinforcement is not clear, but the reports indicate China has taken some extra security precautions against the ripple effects of an armed provocation.

Syria: A Syrian Foreign Ministry source today said that reports that Syrian warplanes bombed territory inside Lebanon are false, according to a report in the Syrian state-run news agency, Sana.

Comment: A new report from Lebanon said that the four rockets landed in a farmer's field. No one was hurt. This so-called escalation looks like an accident.

Chemical weapon use accusations. The Syrian state news agency accused rebel fighters on19 March of using chemical weapons while carrying out an attack in Aleppo province in which, according to the report, 15 people were killed. Rebels accused the Syrian government forces of using a chemical weapon that killed at least 25 people.

Ahmet Uzumcu, Director General of the Organization for the Prohibition of Chemical Weapons (OPCW), said his organization was trying "to identify the symptoms which may be detected" in order to make an assessment. It has not confirmed chemical use. (Note: OPCW is the body established by the Chemical Warfare Convention conference of signatories to promote and verify adherence to the Convention. Membership includes 188 states, but Egypt, Israel, Syria and North Korea are not members. OPCW is not a UN agency though it cooperates with the UN.)

Comment: Use of chemicals remains unconfirmed during this Watch.

Egypt: The Minister of Supplies announced Egypt will begin to ration subsidized bread and cooking gas using smart cards in two months.

Comment: Egypt is almost broke. Changes in the price, composition, quality and availability of bread and cooking fuel are two of the daily living essentials that spark riots that have led to most government overthrows since World War II. Shortages of both, along with jobs and gasoline, were among the initial causal factors that led to large demonstrations seeking the overthrow of Ben Ali in Tunisia and Mubarak in Egypt.

The start of rationing means that Egypt's daily living conditions are sliding backwards from where they were when Mubarak was in power two years ago.

Cyprus: For the record. Cypriot lawmakers 19 March overwhelmingly rejected an EU bailout proposal that would have required a tax on deposits in the country's banks. Thousands of demonstrators burst into cheers and applause as their MPs on Tuesday voted down the EU bailout plan aimed at rescuing Cyprus from bankruptcy.

The Finance Minister flew to Moscow to seek Russian assistance to prevent insolvency by Cypriot banks. EU officials reportedly are stunned that the EU bailout scheme was rejected because it would have been paid mainly by Russian depositors in Cypriot banks.

Comment: The action of parliament averted widespread street disorders, at least for now. The Russians or Russian firms have several options for recapitalizing Cyprus as a banking center. If they decline, however, Cypriot banks would not be able to cover deposits, according to analysis in the Financial Times. Cyprus might eventually become the first EU member to be ejected, but for now Nicosia is not burning.

Meanwhile leaders in other European states with weak economies reassured bank depositors that they deposits were "sacred."

End of NightWatch

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Night Watch

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