January 10, 2011 View this newsletter as a web page on CFR's website. EXECUTIVE SUMMARY - Millions Vote in Sudan Referendum - Clinton Says Iran Sanctions 'Working' - China Agrees to More Military Dialogue - Pakistan Blasphemy Law Upheld Top of the Agenda: Millions Vote in Sudan Referendum In the second day of a week-long voting process, millions of South Sudanese took part in a historic referendum (DailyNation) that most observers agree will partition Africa's largest country into north and south. The international community is closely monitoring the situation (BBC) and U.S. President Barack Obama, who pushed hard for a timely vote, said it represented a "new chapter in history." The long-awaited referendum is part of a 2005 peace agreement that ended two decades of conflict between the primarily Arab and Muslim north and the Christian south. Experts hope the peaceful democratic experience could serve as a model for other African nations where secession battles (WSJ) have been fought, such as in Somalia and Morocco. If the referendum passes, the two new states will still have to confront several major issues that hold the potential for friction, including the delineation of an official border, the development of an equitable oil revenue-sharing agreement, and a resolution to the disputed area of Abyei (WashPost). Sudanese President Omar al-Bashir says he will respect the outcome of the vote (al-Jazeera), but warned that the south would struggle as independent nation. Analysis: The secession referendum is expected to go smoothly, but some experts caution that disputes over oil and land, and the south's volatility, could mean a violent transition. This editorial from the Boston Globe suggests that, following the referendum, the United States should help relieve Sudan's "crushing debt burden" and ensure the peaceful compliance of al-Bashir. Background: These BBC maps show the extent to which Sudan is already two nations--a richer, Arabic-speaking, Muslim north and a poorer south devastated by years of conflict and neglect. This CFR Contingency Planning Memo presents the likely triggers of renewed civil war in Sudan and discusses the U.S. policy options for preventing it from happening and mitigating its consequences in the event that it does. MIDDLE EAST: Clinton Says Iran Sanctions 'Working' Secretary of State Hilary Clinton says sanctions have hindered Iran's ability to produce a nuclear weapon (NYT). The statements are similar to those made by Israeli officials, which suggested 2015 as the earliest date Iran would become a nuclear state. Israel: An EU diplomatic report criticizes Israeli action in East Jerusalem (Haaretz) and recommends several punitive measures including a boycott of Israeli products from the area. The report also recommends East Jerusalem as the capital of a future Palestinian state. PACIFIC RIM: China Agrees to More Military Dialogue In meetings to reestablish formal "military-to-military exchanges," the United States and China agreed to create a "working group to talk about future talks." Despite the announcement, China warned that future U.S. arms sales to Taiwan (NYT) would disrupt relations. China: China's trade surplus fell far short of analysts' predictions, as export growth dropped and imports rose for the month of December. Experts suggest the announcement will alleviate some of the international pressure directed at China's controversial currency policy (FT). SOUTH AND CENTRAL ASIA: Pakistan Blasphemy Law Upheld Pakistani Prime Minister Yousaf Raza Gilani said he has "no intention" of changing the country's blasphemy law (al-Jazeera) that warrants the death penalty for anyone who slanders the prophet Mohammed. The controversial law has been linked to the recent assassination of Salman Taseer, a moderate official critical of the policy. The killing of Punjab governor Taseer was symptomatic of widespread religious intolerance and fanaticism in Pakistan, says CFR's Ed Husain. India: According to Indian media reports, Chinese soldiers entered Indian territory and threatened construction workers in a disputed border region (AP). Similar incursions have happened before, and Indian military officials downplayed the incident, suggesting it might have stemmed from "a difference in perception." AFRICA: Algeria Tries to Stem Food Riots The Algerian government will reduce taxes on some staples in an effort to prevent the type of violent protests seen in neighboring Tunisia that left fourteen dead. Rising global food prices (WSJ) have caused alarm among economists and development experts who worry they could inspire unrest similar to that of 2008. AMERICAS: Brazil Warns of Trade War Citing exchange rate manipulation by the U.S. and China, Brazil's finance minister warned of the destabilizing effects of an international "currency war" (FT). The Brazilian real has increased thirty-nine percent against the dollar since in the last two years. Venezuela: Venezuelan President Hugo Chavez chastised the Organization of American States (BBC) for its criticism of a law that gives the president power to pass laws without the support of parliament for eighteen months. United States: Jared Lee Loughner, the twenty-two-year-old gunman responsible for Saturday's rampage that left six dead and critically injured U.S. Congresswoman Gabrielle Giffords, was formally charged with five federal counts including attempted assassination (LATimes). EUROPE: Iceland Ire at U.S. WikiLeaks Query The Icelandic government is protesting U.S. demands for personal information of an Icelandic elected official who assisted WikiLeaks in the release of controversial video footage. The diplomatic row marks the first significant international pushback against U.S. efforts to build a legal case against WikiLeaks founder Julian Assange (FT). WikiLeaks' publication of classified foreign policy cables highlights the continued power of traditional news media and the challenges journalists face from online groups that do not share their views on transparency, says media expert C.W. Anderson. Germany: Germany's agriculture minister vowed tough punishment for those responsible for the recent dioxin scare (DeutscheWelle) that forced the closure of 4,700 German farms. Several countries banned imports of German farm products, but the European Commission has said there are no grounds for such action.

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