FPI Overnight Brief: September 3, 2010

China

Japanese Foreign Minister Katsuya Okada warned Thursday China risks losing foreign investments unless it introduces more transparency and consistency into its business rules, including its legal framework to deal with labor issues. – Wall Street Journal (subscription required)

U.S. National Economic Council Director Lawrence Summers and Deputy National Security Adviser Thomas Donilon will travel to Beijing this weekend for high-level talks, as the U.S. and China work to iron out tensions on issues ranging from currency policy to military ties to Iran. – Wall Street Journal

Southeast Asia

Malaysia's reputation as a moderate, progressive Muslim nation has been sullied by a string of embarrassing news stories involving church burnings, pig heads dumped in mosques, Muslim girls caned for premarital sex and an interminable sodomy trial of a senior political figure.  The government's response? "Rebrand" Malaysia. – Los Angeles Times

Thailand's monarch confirmed a hawkish general as the country's next army chief Thursday, a move that means the army is likely to act more decisively to prevent any repeat of demonstrations by supporters of former Thai leader Thaksin Shinawatra that transfixed Bangkok in April and May this year. – Wall Street Journal (subscription required)

Iran

Iranian security forces patrolled central Tehran on Thursday and the home of a reformist leader reportedly remained under siege by pro-government militiamen in what appeared to be attempts to intimidate the political opposition ahead of rallies planned for Friday. – Los Angeles Times

A record boom in Tehran's stock market will end in a spectacular crash that could trigger a prolonged depression producing multiple bankruptcies, mass unemployment, and acute economic hardship, analysts say. – Radio Free Europe/Radio Liberty

Nasrin Sotoudeh has made a career fighting the good fight, defending numerous rights activists and others facing trumped-up charges by the Iranian regime. Now the prominent Iranian lawyer finds herself in a similar situation. Following raids on her home and office over the weekend of August 28-29, she has been charged by the judiciary with undermining national security and disseminating propaganda against the Islamic establishment – Radio Free Europe/Radio Liberty

Hardline members of the Islamist Basij militia surrounded the home of the opposition Iranian leader Mehdi Karroubi, pelting the building with rocks to prevent him from attending a rally scheduled for [today], his website said. – The National

Friedrik Stanton writes: Iran’s march toward nuclear weapons may seem inevitable, but history teaches us it is possible to pressure an adversary to change course on nuclear weapons — and points to what might work.  - Politico

Afghanistan

A top shareholder in Afghanistan's largest bank called on the U.S. to shore up the lender after depositors withdrew about a third of its cash reserves in two days, while the country sought to avert a destabilizing crisis at a crucial moment in the fight against the Taliban. – Wall Street Journal

One of the principal owners of the Afghan bank at the center of an accelerating financial crisis here said depositors had withdrawn $180 million in the past two days. He predicted a “revolution” in the country’s financial system unless the Afghan government and the United States moved quickly to help stabilize the bank. – New York Times

The International Security Assistance Force killed a senior commander of the Islamic Movement of Uzbekistan who also serves as the Taliban's shadow governor in the northern province of Takhar. – Long War Journal

US and Afghan troops have beaten back another attempt by the Haqqani Network to overrun a US base in eastern Afghanistan. More than 20 members of the Haqqani Network were killed after launching an early morning attack today on Combat Outpost Margah in the Bermel district of Paktika province. – Long War Journal

General David Petraeus, the head of US and Nato forces in Afghanistan, defended Hamid Karzai, the country’s president, on Thursday after controversy over Kabul’s stance on corruption. Speaking to the media at his base in Camp Eggers, near Kabul, Gen Petraeus acknowledged, however, that concerns over sleaze were hindering a counter-insurgency drive in Kandahar and that Nato’s showpiece push in Marjah district faced tough obstacles – Financial Times

The United States will start preliminary talks with its allies in Afghanistan soon on next year's planned "transition," expected to include withdrawal of some U.S. forces, the top NATO commander in the country said on Thursday. - Reuters

Defense Secretary Robert Gates arrived in Afghanistan's capital Thursday for meetings with President Hamid Karzai and top NATO commander Gen. David Petraeus. – Associated Press

The top U.S. military commander in Afghanistan said Thursday that the sometimes strained relationship between the United States and Afghan President Hamid Karzai is solid – Associated Press

A smooth electoral process is unlikely. The electoral register is still hopelessly flawed, with an estimated 5m of its 17m voters thought to be fraudulently listed or duplicates. Yet the poll is unlikely to be quite as bad as in 2009. Representatives of international election-monitoring groups say that some lessons have been learnt. -  Economist

The U.S. military's effort in Afghanistan has been hampered by a poor understanding of individual tribes and local leaders, Gen. David A. Petraeus said Thursday. – Wall Street Journal

Afghan President Hamid Karzai spoke out angrily Thursday against the arrest of one of his closest aides this summer on corruption charges, saying that the detention was conducted in a manner "exactly reminiscent of the Soviet presence in Afghanistan" and that the investigation was illegally run by "foreign elements." – Washington Post

North Korea

Kim Jong-il, the North Korean leader, is expected to convene a rare congress of the ruling Workers’ Party in coming days to pave the way for his son to succeed him, a feat of political engineering that would be a first in the Communist world: extending dynastic rule to a third generation. – New York Times

Russia

This week, Putin delivered his latest macho stunt -- a 2,000-kilometer drive across Siberia in a canary-yellow Lada Kalina, intended to boost Russia's flailing car industry and his own ratings ahead of a possible presidential comeback…But it wasn't an altogether smooth ride… An amateur video of Putin's ride featuring not one but three identical Lada Kalinas, one of them on a tow truck, is making the rounds on the Internet. – Radio Free Europe/Radio Liberty

Human rights veteran Lyudmila Alexeyeva said Thursday that she would stop attending opposition rallies because of her age and poor health, as Washington criticized a police crackdown on a rally near Moscow's Triumfalnaya Ploshchad this week. – Moscow Times

Senior Moscow official Oleg Mitvol has asked the pro-Kremlin Nashi youth group to vacate its headquarters in a building meant to house a kindergarten, in what analysts called a sign that Nashi was losing its clout – Moscow Times

Armed and masked Russian police raided an opposition magazine on Thursday, pressing journalists to hand over interview recordings used in reports on alleged abuse of authority by the much-feared OMON riot police. - Reuters

Mexico

President Felipe Calderon acknowledged Thursday that an increasingly bloody war with powerful drug trafficking organizations continues to pose "the central threat" to Mexico. – Washington Post

A shootout between soldiers and purported drug cartel gunmen killed 25 suspects Thursday in northern Tamaulipas state, near Mexico's border with Texas, the military said. – Associated Press

Armed men abducted and held the cousin of the owner of Mexico’s top broadcaster, Televisa, for four hours on Thursday in one of the hotspots of the country's drug war, local media reported - Reuters

Fresh off this week's capture of a notorious drug lord, Mexican President Felipe Calderon declared Wednesday that his sustained assault on organized crime and efforts to clean up the police were paying off. – Los Angeles Times

Pakistan

The government of Pakistan has been accused of hijacking relief efforts for political ends after it unveiled plans to name new towns built for flood victims "Benazirabad", after the country's former Prime Minister, Benazir Bhutto. - Telegraph

Pakistan's Taliban on Friday took responsibility for triple bombings at a Shi'ite Muslim procession this week, challenging the civilian government further as it struggles with a flood crisis - Reuters

Militants operating out of safe havens in Pakistan remain a major threat to Afghanistan but cooperation between NATO-led forces and the Pakistani military is increasing, U.S. Defense Secretary Robert Gates said on Friday - Reuters

The International Monetary Fund will give Pakistan $450 million in emergency flood aid, providing some relief for a government overwhelmed by the disaster and facing renewed militant violence. - Reuters

Charlie Szrom writes:  In the future, the State Department should not be caught flat-footed in its response to attacks from terrorist groups that have previously not directly targeted the United States. The department should state clearly that any group that is part of the network led by al-Qaeda is an enemy of the U.S. and thus an FTO. Such a designation would increase the cost of affiliating with al-Qaeda for groups and individuals abroad and would illuminate the enemy for the American public. Clarification of the enemy would serve as a building block for a (currently nonexistent) comprehensive strategy to roll back the al-Qaeda network writ large. – The Corner

Israel

The Obama administration moved to fast-track the Middle East peace process, gaining Arab and Israeli support for twice-monthly negotiations aimed at establishing an independent Palestinian state within a year. – Wall Street Journal

The fate of the U.S.-sponsored peace talks launched Thursday in Washington could hinge in part on how things play out in [the] hotly disputed West Bank city [of Hebron], where extremists on opposite sides suddenly find they share a common purpose: to sabotage the process. – Los Angeles Times

[O]n a richly choreographed day of diplomacy, filled with solemn promises to tackle the tough issues dividing them, the Israeli and Palestinian leaders did not confront the one issue that could sink these talks in three weeks: whether Prime Minister Benjamin Netanyahu will extend a moratorium on the construction of Jewish settlements in the West Bank. – New York Times

The Palestinian group Hamas took credit Thursday for a second West Bank shooting attack in as many days and vowed more attacks were to come, a claim that raised questions about the group's ultimate motives – Wall Street Journal

Israeli army warned yesterday that the renewed peace talks may prompt a possible wave of attacks by Palestinian militants against Israelis in the West Bank following two drive-by shootings in 24 hours. – The National

The head of the U.N. nuclear watchdog has invited Israel to consider joining a global anti-nuclear arms pact and to place all its atomic facilities under his agency's inspections, an IAEA report said on Friday. - Reuters

Sen. Scott Brown (R-MA) writes: While we should encourage the Israelis and Palestinians as they return to the negotiating table, let's not lose sight of the real threat to peace in the Middle East: Iran, the leading state sponsor of terror in the world, armed with a nuclear weapon. – Wall Street Journal (subscription required)

Venezuela

Venezuelan President Hugo Chavez defended his socialist government's security record on Thursday, rejecting pre-election claims by the opposition that crime had risen sharply during his 11 years in power. - Reuters

Western Europe

British and French officials engaged in high-level defense talks have denied reports the two countries are considering sharing aircraft carriers, but are paving the way for unprecedented military co-operation, according to sources on both sides of the Channel. - Guardian

Turkey

Just a few months ago, Turkey shocked the West when it appeared to stand shoulder to shoulder with Iran in the row surrounding Tehran’s nuclear programme. But now, the end of the US mission in Iraq is exposing major differences between Ankara and Tehran, analysts say. – The National

Australia

One of three independent MPs needed by Australia's Prime Minister Julia Gillard to form a minority government hinted on Friday he could negotiate on Labor's mining profits tax he has previously opposed - Reuters

Africa

The number of rape victims from a four-day rebel attack in eastern Congo a month ago has risen to more than 240 and will likely go higher, aid officials said Thursday – New York Times

Pressure grew on the UN over its peacekeeping mission in the Democratic Republic of the Congo yesterday after claims that it ignored appeals for protection just days before more than 240 villagers were raped by rebel forces. - Guardian

A report detailing hundreds of gruesome attacks against civilians in Congo over a 10-year period won't be released until October, the U.N.'s top human rights official said Thursday, after Rwanda angrily protested the findings in a draft version – Associated Press

Ivory Coast's electoral commission said Thursday it had produced a final voter list for the first time, raising the chance that an election which has been delayed six times in five years might go ahead - Reuters

Syria

Syria always feared that the White House of George W Bush and Dick Cheney would invade Damascus once it had dispatched with Baghdad in 2003 and, in his newly released memoirs, the former British prime minister Tony Blair confirmed those fears were well founded. – The National

Defense

U.S. Air Force Gen. Robert Kehler was nominated Sept. 2 to lead the nation's nuclear forces as commander of U.S. Strategic Command. – Defense News

Julian Assange, the founder of the Wikileaks whistleblower website, admitted that he had sexual relations with one of two Swedish women who accused him of sex crimes. - Telegraph

India

The Indian government has approved spending $6.5 billion to build four stealth destroyers for the Navy under Project-15B. – Defense News

Middle East

The holy month of Ramadan has erupted into a nightly routine of violence in Bahrain, where the Sunni monarchy of King Hamad bin Isa Al-Khalifa rules a Shia majority…The rising tension comes ahead of parliamentary elections on October 23, the third such contest since King Hamad took the throne in 1999 and sought reconciliation with Shia opposition groups – Financial Times

Central Asia

Tajik officials say a suicide car bomber blew himself up at a police station in northern Tajikistan, with at least one person reported killed and 25 injured in the blast.  Interior Ministry officials blamed the attack on the banned Islamic Movement of Uzbekistan. If confirmed, it would be the first suicide bombing in the Central Asian country. – Radio Free Europe/Radio Liberty

Tajikistan's president fired almost the entire leadership of his security services Thursday as the first of 25 Islamist militants was recaptured more than a week after an armed jailbreak in the country. - Reuters

Egypt

David Schenker writes: This week, Egyptian president Hosni Mubarak brought his son Gamal to Washington to attend the kick-off of renewed Israeli-Palestinian peace talks. Back in Cairo, the unprecedented family visit will no doubt reinforce the widespread belief that Mubarak is planning a hereditary succession in the Arab republic. It will also confirm, for many, the rampant speculation that Egypt’s president of nearly 30-years is gravely ill. – Weekly Standard Blog

Obama Administration

Charles Krauthammer writes: Unfortunately, what for Obama is a distraction is life or death for U.S. troops now on patrol in Kandahar province. Some presidents may not like being wartime leaders. But they don't get to decide. History does. Obama needs to accept the role. It's not just the U.S. military, as Baker reports, that is "worried he is not fully invested in the cause." Our allies, too, are experiencing doubt. And our enemies are drawing sustenance. – Washington Post

Southern Africa

A strike by 1.3 million South African public servants threatened Thursday to drag on for a third week as unions signaled that they would reject the government's latest compromise offer, a wage hike that would be more than double the rate of inflation. – Los Angeles Times