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Expect Stand Down or Turkey-Syria Shootdown

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China-North Korea: According to South Korean press, last month Chinese officials told North Korean leaders that China is reconsidering the development project on North Korea's Hwanggeumpyeong Island, which is a special economic zone located on the border between China and northwestern North Korea.

North Korea promised to lease the island to China for 50 years in return for Chinese business development, including information technology, tourism, light industry and modern agriculture. In return for investments by China's Liaoning Province and Dandong City, North Korea allowed China access to its Najin port which leads to the East Sea.

According to the Chinese government, Liaoning Province and Dandong City will no longer take part in the project and the investment plans will be revised by the central government. In response, North Korea began rice planting on the island earlier last month.

Comment: There appear to be multiple reasons for the Chinese decision. Most immediate is it found the project had "no business value." The South Korean press speculated that another reason was to punish North Korea for trying to launch a missile and not providing a satisfactory response.

China's economic slowdown almost certainly had a bearing on any decision to revise development projects. For example, this suggests that the national plan for developing northeast China probably has been scaled back for now. If so, similar retrenchment should be expected in Chinese projects in Africa.

For North Korea, China is the only source of significant outside investment and modernization. Any loss of Chinese support directly reduces North Korea's economic outlook.

Turkey-Syria: The government in Ankara called a meeting of NATO member states to discuss its response to the downing of one of its warplanes by Syria. However, Turkey has no intention of going to war in response to its F-4 Phantom jet being shot down by Syria on 22 June, according to Turkish Deputy Prime Minister Bulent Arinc on the 25th. Arinc added that whatever Turkey's response, it would be within the framework of international law.

During this Watch, Turkish press reported that Turkey was considering suspending electric power supplies to Syria. US media also reported for the first time that the Phantom was a reconnaissance aircraft and presumably on a reconnaissance mission.

Comment: This will not escalate militarily.

Jordan: For the record. An unidentified Jordanian security source told the press that Jordan has granted refuge to several defecting Syrian air force pilots over the past two months, including three in the past two days. The pilots entered by land, he said.

Comment: Jordan apparently is encouraging and helping arrange defections.

Egypt: On 24 June Egypt's election commission declared Mohammed Mursi of the Muslim Brotherhood the winner of Egypt's first free elections. The commission said Mursi won with 51.7 percent of the vote versus 48.3 for Shafiq. The news was followed by demonstrations and counterdemonstrations but no significant violence.

President-elect Mohammed Mursi told Iran's Fars News Agency he wants to expand ties with Iran to create a regional strategic balance. Better relations with Tehran will create a balance of pressure in the region, Mursi said. His first international visits have yet to be scheduled, he said.

Comment: The big winner in the election result is short term stability in Egypt. With Mursi's announcement, the salafists should be less inclined to rock Egypt in paroxysms of political protests for a time. Their restraint could actually help Mursi by providing conditions in which the economy can stabilize.

Longer term stability is likely to be more elusive. Mursi has no mandate. Most Egyptians did not vote. Power struggles among president, army and parliament remain unsettled. The economy is a shambles.

His initial public statements made all the right noises - barring the premature overture to Iran by a man not yet sworn to office. However, a simple time comparison shows he was implacably hostile to the US and Israel and pro-Shari and Hamas for decades, and a moderate only in the last few years. In the statement to FARS, he made clear his intention to balance Egypt's foreign policy, which raises reasonable suspicions about his intentions. The leadership of the Brotherhood-dominated parliament made an almost identical overture to Iran.

The future of Egypt hinges largely on whether the Egyptian army can control the Brotherhood. It already controls Mursi, extending to him the authority and the responsibility to fix a declining economy, shortages, lack of jobs and high prices while denying him access to the most powerful ministries. However, there remain the tasks of writing a new constitution and restoring a parliament. The Brotherhood already showed it can win elections beyond the ability of the army to control.

Farther afield, jihadists all over the world will be encouraged by this election result, but probably not to pursue power through the ballot box. More likely, they will interpret Mursi's victory as a sign of Allah's power even over democracy and of the rightness of their cause.

The pending operations against Hamas in Gaza, long time allies of the Egyptian Muslim Brotherhood, may represent Israel's initial unofficial reaction and a warning to the new president-elect.

End of NightWatch

NightWatch is brought to readers of Townhall Finance by Kforce Government Solutions, Inc. (KGS), a leader in government problem-solving, Data Confidence® and intelligence. Views and opinions expressed in NightWatch are solely those of the author, and do not necessarily represent those of KGS, its management, or affiliates.


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