FPI Overnight Brief: July 1, 2011

Rebels in Libya's western Nafusa mountain range were less than 50 miles from the nation's capital Thursday and edging closer to their first significant victory outside their mountain stronghold, pounding the small town of Bir Ghanam with artillery and rockets. – Los Angeles Times
 
In the last week, hundreds of families fleeing Tripoli have arrived at a rebel checkpoint here in the middle of a winding mountain road, exhausted, relieved and willing to share their stories of a silenced city. Their numbers — more than a hundred families on a recent day alone — suggest a quickening exodus from the capital, fueled by a growing sense of dread, rebels say, and a willingness to brave a dangerous road in order to flee. – New York Times
 
Prominent American and European investment funds managed hundreds of millions of dollars in Qaddafi regime assets poorly, charging tens of millions of dollars in fees and producing low returns, according to a document obtained by the advocacy group Global Witness. The banks appeared to have taken advantage of a Libyan investment fund that was poorly managed and "a mess," according to a western official who spoke on condition of anonymity. – New York Times
 
International bankers flocked to Libya in recent years to advise the country on how to invest its oil riches. Now, a previously undisclosed audit of the country's investment fund depicts a portfolio in chaos. – Wall Street Journal (subscription required)
 
Britain is providing limited assistance to the Libyan rebels fighting the forces of Col. Muammar el-Qaddafi, including protective clothing for police officers, Foreign Secretary William Hague said on Thursday, a day after France acknowledged providing light weapons to the rebels. – New York Times
 
U.S. Air Force and Navy aircraft are still flying hundreds of strike missions over Libya despite the Obama administration's claim that American forces are playing only a limited support role in the NATO operation. – Defense News
 
Sophisticated Libyan army weapons are being trafficked and possibly sold to al-Qaida's affiliate in North Africa, giving the group the potential to increase instability in a key part of the continent, Spain's interior minister said Thursday. – Associated Press
 
Libya is involved in direct and indirect talks with rebels trying to overthrow Muammar Gaddafi, the Libyan leader's daughter said, although the Benghazi-based opposition has ruled out further contact with Tripoli. - Reuters
 
A protracted struggle for Libya could leave it in the hands of extremists instead of the liberal economic technocrats who now lead its rebel movement, the World Bank's representative for Libya said on Thursday. - Reuters
 
Russia accused France on Thursday of committing a "crude violation" of a U.N. weapons embargo by arming Libyan rebels, while Washington said it was acting legally, creating a new diplomatic dispute over the Western air war. - Reuters
 
NATO has all the resources and assets to successfully complete its operations in Libya, the military alliance's Secretary General Anders Fogh Rasmussen said on Wednesday. - Reuters
 
Editorial: Four months into the NATO air campaign, Col. Muammar el-Qaddafi is still in power, protected by loyalists and mercenaries. Americans are weary of war, and patience in Europe is also wearing thin. But NATO must not give up. – New York Times

An opposition drawing its strength from Syria’s restive streets has begun to emerge as a pivotal force in the country’s once-dormant politics, organizing across disparate regions through the Internet, reaching out to fearful religious minorities and earning the respect of more recognized, but long divided dissidents. – New York Times
 
Around 100 peaceful protesters calling for freedom were met with police and baton-wielding security forces Thursday at Damascus University. – Washington Post
 
Europe and the United States heaped criticism on Syria at the United Nations on Thursday after failing to persuade Russia to support condemning Damascus for its crackdown on anti-government protesters. - Reuters
 
Nazir al-Abdo writes: All we want is our freedom. We know the cost, but we are ready to pay the price. With 1,300 dead already, we cannot give up now, because their deaths would have been in vain. In the room with me watching my brother confess to crimes he didn't commit were two fellow activists whose brothers have already been killed, shot dead while protesting. They are carrying on the struggle their brothers started. I will do the same, continuing Bashir's peaceful struggle with the courage he taught me. – Los Angeles Times

The U.S. government has decided to expand contacts with Egypt’s Muslim Brotherhood, officials said Thursday, a shift that reflects the Islamist group’s growing role since the pro-democracy uprising in the key Arab country. – Washington Post
 
Analysis: A U.S. decision to resume contact with the Muslim Brotherhood is a pragmatic move that recognizes its popular appeal in post-revolution Egypt and may also help Washington deal with other Islamist movements in the region. - Reuters

Yemen's President Ali Abdullah Saleh was so severely injured in an assassination attempt that it is uncertain when he will return to the country, Yemen Vice President Abd-Rabbu Mansour Hadi has said. - Reuters
 
Analysis: Even if Ali Abdullah Saleh wants to cling to power in Yemen, experts say an assassination bid may not have killed him but has succeeded in preventing him from resuming the presidency because of the wounds he has sustained. - Reuters

Moroccans voted on Friday in a referendum on a revised constitution offered by King Mohammed to placate "Arab Spring" street protesters, with the "yes" camp tipped to win despite boycott calls by opponents. - Reuters

The international committee investigating violent protests in Bahrain this year will be given access to official files and be able to meet witnesses in secret, the panel's chair said on Thursday. - Reuters

Abdullah, who has ruled since 1999, has opted for timid steps toward democracy in response to regional turmoil, constrained by a tribal power base which sees reforms as a threat to political privileges and economic benefits. Palace insiders say that more than ever during his reign, the monarch has been frustrated by the efforts of an old guard -- entrenched in the state bureaucracy and intelligence apparatus -- to block reforms. - Reuters

While many Arab nations have relied on force to try to crush popular aspirations for change, Kuwait, like other oil-rich kingdoms of the Persian Gulf, has instead tried to spend its way to stability. – New York Times

A United Nations-backed tribunal issued a long-anticipated indictment Thursday in the 2005 truck-bomb assassination of former Lebanese Prime Minister Rafik Hariri, a killing that stoked sectarian tensions in the region. – Los Angeles Times
 
Editorial: Perhaps the details of the indictment will reveal more on this subject in due course. But the fact that the indictments rose no higher than these four characters indicates how badly the overall enterprise—which so far has cost some $200 million and counting—has failed. All of which means that if the interests of justice in Hariri's case are ever to be served, it will happen on account of the courage of Syrian demonstrators squaring off against their brutal regime, and perhaps of Iranians rising again against theirs. An international community that really cares about bringing Hariri's killers to book will be better served promoting regime change in Damascus and Tehran instead of bankrolling an endless proceeding at the Hague. – Wall Street Journal (subscription required)
 
John Hannah writes: For better or worse, the Iranian-Syrian-Hezbollah power play in Beirut is viewed as very much part and parcel of a much larger regional struggle, yet another test of U.S. resolve and credibility where the Obama administration is in danger of being found wanting. Certainly, history has shown that what happens in Lebanon, especially when engineered by those who would do the United States and its allies great harm, rarely stays in Lebanon for long. The U.S. would be well advised to take note and act accordingly. – Shadow Government

A U. S. government agency on Thursday reported it hasn't found any government-contracted information technology companies selling censoring gear to Iran—illustrating the difficulties in identifying vendors of online repression. – Wall Street Journal

Three U.S. soldiers were killed this week in a rocket attack at a U.S. base near the Iranian border, the military said Thursday, bringing June’s death toll to 15 and marking the bloodiest month for U.S. troops in Iraq in two years. – Washington Post
 
Shiite militias backed by Iran have ramped up attacks on U.S. troops in Iraq, making June the deadliest month in two years for American forces. The militiamen’s goal is to prevent the U.S. military from extending its presence in the country past the end of this year. – Associated Press

His nation on the verge of shrinking, and trouble unfolding in every direction, Sudanese President Omar Hassan Ahmed Bashir is playing warrior and diplomat in efforts to keep his supporters loyal and his economy from collapsing under huge debt. – Los Angeles Times
 
Despite an agreement signed only days ago to bring peace to this part of central Sudan, it seems to be sliding inexorably toward war – New York Times
 
Sudan's government is allowing limited U.N. access to Kadugli, capital of a tense border state where fighting and looting has taken place ahead of southern secession, a U.N. spokesman said on Thursday. - Reuters

Organizers of a flotilla seeking to break Israel’s naval blockade of the Gaza Strip said Thursday that another of their boats had been damaged in port, and they accused Israel of sabotage. It was the second boat reported damaged in recent days, setting back plans by the pro-Palestinian activists to sail this week. – Washington Post

The Turkish economy grew by 11% in the first quarter, outstripping China and confirming Turkey as Eurasia's rising tiger. Thursday's official growth figure, compared with the year-earlier period, easily beat market expectations, at a time when many of Turkey's neighbors in the Middle East and Europe struggle with political turmoil and bailouts. – Wall Street Journal (subscription required)

Afghan authorities announced Thursday that they had detained the former chairman and chief executive of the scandal-plagued Kabul Bank, marking the first arrests in a case that nearly collapsed the country’s largest private bank and still jeopardizes tens of millions of dollars in foreign credit to Afghanistan. – Washington Post
 
An airstrike in southeastern Afghanistan killed an insurgent leader who was involved in organizing the suicide assault on the Intercontinental Hotel here Tuesday, NATO officials said. – New York Times
 
Two journalists who had been held by the Taliban for more than a year arrived in France on Thursday, visibly relaxed and in good health. – New York Times
 
One of the key strategies for stabilizing Afghanistan is to let people elect district councils and have a voice in local affairs. But if the strategy, backed by the United States and Britain, is seen as a good way to give people a greater connection to the government and isolate insurgents, the obstacles the councils face are formidable. – Radio Free Europe/Radio Liberty
 
The U.S.-led coalition on Thursday blamed an al-Qaida affiliated network working jointly with Taliban fighters for a deadly attack on a luxury hotel in Kabul — an assault that raised doubts about the ability of Afghan forces to handle security as foreign troops withdraw. – Associated Press
 
Thirteen Afghan civilians, including children, were killed and 33 wounded when their passenger bus was hit by a roadside bomb late on Thursday in western Afghanistan, police said on Friday. - Reuters
 
Afghanistan's government and its international backers need urgently to put Afghans in charge of security and governance by a 2014 deadline, one of the officials in charge of the protracted handover said on Thursday. - Reuters
 
Video: The Institute for the Study of War hosted an event, yesterday, with Sens. John McCain (R-AZ), Joe Lieberman (ID-CT), and Gen. Jack Keane (USA, ret.) regarding the President’s drawdown decision. – Institute for the Study of War

Pakistani security forces have killed at least 40 militants in a tribal area near the Afghan border over the last three days, a spokesman for a paramilitary force said on Thursday. - Reuters
 
Zalmay Khalilzad writes: To preclude Pakistan from manipulating different departments and senior officials, the Obama administration, as a united front, should offer a stark set of positive and negative inducements. A clear choice will clarify whether Pakistan’s intentions in Afghanistan are principally guided by fear or by ambition. – Washington Post

Eager to bolster its legitimacy in the eyes of an increasingly restive and Internet-savvy society, China's Communist Party is marking its 90th anniversary Friday with a no-holds-barred campaign to reassert its airbrushed version of modern history. – Wall Street Journal
 
In a paper released earlier this week, analysts at China Signpost argue that the Chinese are on the verge of making a breakthrough in jet engine technology, traditionally one of that nation's weak points in developing modern fighters. – Defense News
 
China's ruling Communist Party must ensure economic growth and its iron grip on stability do not slacken, President Hu Jintao said on Friday, using the party's 90th anniversary as a show of unity ahead of a tricky leadership succession. - Reuters
 
Minxin Pei writes: Now that the Chinese Communist Party has been in power for 62 years, its leaders might also want to note that the record for one-party rule is 74 years, held by the Soviet party, followed by the 71-year rein of Mexico’s Institutional Revolutionary Party. So when Chinese leaders toast their party’s 90th birthday, they should harbor no illusions that the party can beat history’s odds forever. – International Herald Tribune
 
Michael Auslin writes: More broadly, Washington's goal, executed through Hawaii-based Pacific Command, should be to create a more active maritime community of interests in the Indo-Pacific arc and to counter Chinese moves where they occur. Greater sharing of intelligence resources, joint training, coordinated (if not joint) patrols and the like will provide the measure of security necessary to ensure smaller nations that their international rights are being protected. U.S. and allied ships should have no compunction about shadowing Chinese naval vessels when they start to approach contested territory. – Wall Street Journal (subscription required)

Taiwan's Air Force took delivery of the first six upgraded F-CK-1 A/B Indigenous Defense Fighters (IDF) in a ceremony presided over by President Ma Ying-jeou at the state-run Aerospace Industrial Development Corp. (AIDC) here June 30. – Defense News

South Korea is closely watching North Korea's military after it warned of "merciless" retaliation for anti-Pyongyang slogans displayed by Seoul's frontline troops, the defense ministry said June 30. - AFP

Russia will deliver a nuclear submarine to India by the end of the year, Russia's navy chief was quoted as saying on Friday by state news agency RIA. - Reuters

Myanmar's pro-democracy leader Aung San Suu Kyi will next week travel outside her home city for the first time since her release from a seven-year stint of house arrest last November, a spokesman for her former party said. - Reuters

Indonesian President Susilo Bambang Yudhoyono appointed his brother-in-law - who rights groups say may have been responsible for abuses in East Timor in 1999 - as the nation's new army chief June 30. - AFP

Russian Prime Minister Vladimir Putin warned on Thursday that the March 2012 presidential election campaign would be dirty, but stopped short of saying whether he would seek another stint as Kremlin chief. - Reuters
 
Editorial: But true political competition will come when the regime agrees to allow movements it does not create or control to operate freely, to assemble without being assaulted by security forces, to have access to television and to register for elections. The State Department rightly objected when the Party of People’s Freedom — the real opposition — was denied registration. It is on seeking space for such groups, and not Mr. Medvedev’s Potemkin initiative, that the focus of U.S. policy should remain. – Washington Post
 
David Satter writes: Russian leaders have described their system as “managed democracy,” or “sovereign democracy,” but it is really the façade of democracy behind which is a singular determination by a kleptocratic oligarchy to preserve its hold on power. No one can be sure what will be required for the present regime to maintain itself, but there is every reason to fear that the bleak situation of human rights in Russia will get even worse, threatening not only the freedoms of Russians but world stability as well. – Journal of International Security Affairs

Courts in Minsk and other cities have been passing sentences on some of the more than 150 people detained during demonstrations on June 29. – Radio Free Europe/Radio Liberty

Secretary of State Hillary Rodham Clinton expressed concern Thursday that Hungary is backsliding on democracy by enacting laws that curb freedom of the press and extend executive power. – Washington Times

After centuries as Europe's stomping ground and years as its prickly gadfly, Poland is now poised to lead the continent. Poland, a member since 2004, takes over the European Union's six-month rotating presidency amid high hopes. – Radio Free Europe/Radio Liberty
 
Poland will emphasize development of the EU's Common Security and Defence Policy (CSDP) in cooperation with Catherine Ashton, the EU's high representative for foreign and security policy, when Poland takes over the EU's rotating presidency for six months beginning July 1. – Defense News

The U.N. envoy to Ivory Coast urged the government Thursday to restore law and order by deploying police and sending former rebels who helped President Alassane Ouattara seize power back to their barracks. - Reuters

The Justice Department on Thursday closed a second review into whether CIA interrogators mistreated detainees and recommended a criminal probe of the deaths of two captives under CIA custody. – Washington Times
 
Sen. Ron Johnson objected – again. The rookie Republican from Wisconsin on Thursday blocked Senate Majority Leader Harry Reid from setting a vote next week on whether to authorize military action in Libya. The move will force Reid to hold a procedural vote first. – Politico

State elections this weekend in Mexico are shaping up as a revealing test of whether the once-dominant Institutional Revolutionary Party, on a steady march to retake the presidential palace, has changed its old autocratic ways. – Los Angeles Times

Venezuelan President Hugo Chavez told his countrymen Thursday night that he underwent a “major” operation in Cuba to remove a cancerous tumor. – Washington Post

There is nothing that concentrates the mind like the prospect of a hanging. This quip came to mind for U.S. Deputy Secretary of Defense William Lynn when asked whether the Lockheed Martin F-35B was still on “probation.” – Aviation Week
 
Vice Adm. William McRaven – commander of the operation to kill Osama bin Laden and the man nominated to replace Adm. Eric Olson as chief of the U.S. Special Operations Command – is calling on Congress to provide more airlift and intelligence, surveillance and reconnaissance (ISR) assets for the nation’s Special Operations Forces (SOF). – Aviation Week
 
The powerful chairman of the influential Senate Appropriations Committee said Thursday that cutting federal spending will not be enough by itself to solve the nation’s budget problems and warned against deep cuts in the defense budget. – Military Times
 
Defense cuts proposed by the White House are unlikely to keep a debt-ceiling deal from passing Congress, sources say. As few as 30 House Republicans would likely consider voting against a debt-ceiling deal that cuts $300 billion from security spending, according to a GOP aide. – The Hill
 
Military spending is not the cause of the $1.4 trillion U.S. budget deficit, and even a “disastrous” 10 percent cut would only reduce the budget shortfall by some $50 billion—about 4 percent, Defense Secretary Robert Gates says. - Reuters
 
Incoming U.S. Defense Secretary Leon Panetta is determined to avoid gutting the American military despite the prospect of difficult budget decisions looming, a Pentagon spokesman said June 30. - AFP
 
Donald Rumsfeld writes: While there are substantial savings to be found in the defense budget, hundreds of billions cannot be cut without impairing our security…Our country has taken an ax to our national security budget—both the Defense Department and the intelligence community—after every war of the 20th century. And every time we later regretted it. After years of grinding conflict, it can be easy to fall prey to the comfortable fiction that the ugly business of conflict is over and that the U.S. can reduce its military and intelligence capabilities. If we revert to the pennywise policies of the 1990s, we are certain to have to once again scramble to rebuild our defenses in the future. – Wall Street Journal

Cyberspace is a battleground in the new U.S. strategy for taking on al-Qaida released on Wednesday, but officials provided few details about online tactics that might be used. – National Journal
 
A popular jihadist Internet forum has been knocked off the Internet, and counterterrorism experts say it appears it was hacked. – Associated Press

President Obama surprised Defense Secretary Robert M. Gates on Thursday with the Presidential Medal of Freedom, paying tribute to his four decades of public service at a regal farewell ceremony outside the Pentagon. – Washington Post
 
In another solid endorsement of President Obama’s new national-security team, the Senate on Thursday voted 94-0 to approve Gen. David Petraeus to be the next director of the CIA. – National Journal