Key Political Issue Key Economic Issue North American Review South American Review

1. Key Political Issue Key Economic Issue North American Review South American Review West European Review Central and East European Review Middle East and North African Review Sub-Saharan African Review Central and South Asian Review East Asia and Pacific Review Statistics in Focus Contents: The ISA Global Update Issue #484 29th of May 2013 Published by ISA (International Strategic Analysis) www.isa-world.com

2. Key Political Issue: The Arms Race in Syria Summary - While the civil war in Syria has grown steadily more deadly, the potential for the level of violence to escalate even further has risen as more countries are planning to ship arms to the two sides battling for control of Syria. On one hand, President Bashar al-Assad’s government has been receiving a steady flow of arms from backers such as Iran and Hezbollah and is now about to receive sophisticated anti-aircraft missiles from Russia. Meanwhile, rebel groups have received significant amounts of arms from Saudi Arabia and Qatar, and the European Union has just lifted its arms embargo on the rebels. • Arming Assad • For the Syrian government, the steady flow of arms from its allies, not to mention its own large stockpiles of weapons, has allowed it to recover from setbacks in 2012 to retake some of the territories that it had lost to the rebels. • Moreover, the government has strengthened its grip on what it sees as its core territory stretching from Damascus in the south to the Alawite heartland in the northwest. • In the meantime, shipments of advanced missiles from Russia and Iran will allow the Syrian government to deter direct foreign intervention in the conflict while being able to threaten any of its neighbors such as Turkey or Israel, where there have been clashes along their borders with Syria in recent months. • Arming the Rebels • For the rebels, the European Union’s decision to drop its arms embargo on them is a very welcome sign as there have been many reports which suggested that the rebels’ main backers, Saudi Arabia and Qatar had cut back on arms shipments to the rebels in recent months. • However, while the rebels may be able to gain access to more advanced weaponry, there is a growing sense that the rebels are anything but a cohesive group. • Furthermore, as Syria’s civil war has dragged on, more radical rebel groups, including some with ties to al-Qaeda, have grown in strength and importance. • As a result, a new influx of arms to the rebels could have last repercussions for the security of the entire region. • What to Watch For: • Turkey, due to its location and military strength, continues to have the greatest ability to back the rebels in Syria.

3. Key Economic Issue: Latin America’s Ambitious New Trade Bloc Summary - Free trade agreements in Latin America have often failed to live up to their hype, but the new Pacific Alliance may be the region’s trade bloc that transforms trade and investment in Latin America. With a combined population of nearly 220 million people and a total GDP of almost $2 trillion, the Pacific Alliance has the potential to become a serious trade bloc with a global reach. Moreover, each member of the Pacific Alliance has a wealth of natural resources that will continue to attract foreign investors to these countries in the years to come. • Four Growth-Oriented Economies • At present, the Pacific Alliance consists of four Latin American countries (Mexico, Colombia, Peru and Chile) that have two things in common. • First, all four countries have coastlines on the Pacific Ocean that have enabled them to develop stronger trade ties with the dynamic economies of Asia. • Second, all four countries have governments that have opened their economies to trade and investment, enabling them to record some of the highest rates of economic growth in the region. • These commonalities have allowed the four member states to set an ambitious agenda for the Pacific Alliance. • Beating the Competition • The potential for the Pacific Alliance to transform Latin American trade and investment can be seen in the list of countries that have recently expressed their interest in joining this newest trade bloc. • On one hand, the Pacific Alliance is likely to reach trade deals with the United States and Canada in the years ahead, significantly boosting its members trade and investment growth potential. • Furthermore, the dynamism of the Pacific Alliance stands in stark contrast to the failures of the region’s other main trade blocs, particularly the increasing leftist Mercosur bloc. • What to Watch For: • The Pacific Alliance has the potential to transform the political landscape in Latin America by potentially entrenching the deep right-left split in the region’s politics, a development that could see a divergence in economic growth across the region.

4. Regional Overview: North America Regional Summary: The United States government unveiled changes to its use of drone aircraft. The two largest street gangs in Honduras declared a truce this week. • US Drone Policy: • Last week, United States President Barack Obama unveiled his government’s new policies on the use of unmanned drone aircraft. • While the president defended the use of drones in combatting terrorist groups in the Middle East, Africa and Central Asia, he also announced that the US would continue to lessen their use. • In addition, President Obama announced that the use of drone aircraft would be managed by the US’ armed forces, rather than the CIA. • Street Gang Truce in Honduras: • This week, the two largest street gangs in Honduras (the Mara Salvatrucha and the Mara 18 Street gangs) declared a truce and vowed to prevent their members from committing any crimes or violent acts. • This truce is believed to be the first step towards the establishment of a formal peace deal between the two street gangs. • Honduras has some of the highest rates of violent crime in the world, due in large part to crimes committed by the country’s street gangs. • A Look Ahead: • Key Issues or Events in the Next Seven Days: • Canada announced that it is interested in joining the Pacific Alliance trade bloc that currently consists of four Latin American countries. • Regional Risk Factors to Watch: • Drug trafficking via the Caribbean Sea is once again on the rise, threatening to destabilize many islands in that region.

5. Regional Overview: South America Regional Summary: The four countries of the Pacific Alliance agreed to drop tariffs on goods traded within that bloc. A deal on the issue of land reform was reached in Colombia this week. • The Ambitious Pacific Alliance: • The leaders of the four-country Pacific Alliance (Mexico, Colombia, Peru and Chile) met last week to deepen the trade ties between the four like-minded countries in Latin America. • Moreover, the members of the Pacific Alliance announced plans to orient their economies more towards Asia in order to take advantage of the rapidly rising export demand in that region. • Meanwhile, Costa Rica was invited to become the fifth member of the Pacific Alliance, while Guatemala is considering joining as well. • Land Reform Deal in Colombia: • This week, the Colombian government and the far-left FARC rebel group reached a deal on land reform, one of the key sticking points in the peace talks that the two sides have been engaged in for the past six months. • According to the terms of the deal, the government will establish a number of social and economic programs for rural areas and will provide land for poor farmers. • While this was a major breakthrough in these peace talks, there are still many issues that remain unresolved, including disarming the rebels, drug trafficking and victims rights. • A Look Ahead: • Key Elections in the Next Seven Days: • Rio de Janeiro’s Maracana stadium will host its first football (soccer) match since its massive refurbishment. • Regional Risk Factors to Watch: • Colombia’s peace talks are still a long way from reaching an end to that country’s long-running FARC insurgency.

6. Regional Overview: West Europe Regional Summary: The European Union lifted its arms embargo on Syria’s rebel forces. Large-scale rioting took place around Stockholm in recent days. • EU Lifts Arms Embargo on Syrian Rebels: • This week, European Union foreign ministers agreed to lift the EU’s arms embargo on Syrian rebel forces that are battling to overthrow the government of President Bashar al-Assad. • The push to lift the arms embargo was led by Britain and France and overcame objections from some smaller countries that were concerned that this move would lead to a proliferation of arms in Syria. • This move could offset what has been a decline in arms shipments to the rebels from countries such as Saudi Arabia and Qatar. • Riots in Sweden: • A wave or rioting took place in and around the Swedish capital Stockholm over the past week, bringing rare unrest to that normally quiet country. • The rioting took place largely in suburbs of Stockholm that are populated by immigrants from the Middle East and Africa and was triggered by the shooting death of a man at the hands of the police. • This rioting highlights the growing ethnic tensions in Sweden that have been stoked by the fact that the country’s growing non-Swedish population has never really been integrated into Swedish society. • A Look Ahead: • Key Issues or Events in the Next Seven Days: • China’s free-trade deal with Switzerland could pave the way for other such deals by China in Europe. • Regional Risk Factors to Watch: • Europe’s recession is likely to continue into early 2014 as recent economic data shows a continued decline in output across the region.

7. Regional Overview: Central and East Europe Regional Summary: Russia stepped up its efforts to support Syria’s embattled government. A proposed new anti-racism law is dividing Greece’s coalition government. • Russia Backs Syria: • While the European Union was lifting its arms embargo on Syria’s rebel forces, Russia’s government was increasing its support for Syria’s government. • This week, the Russian government announced that it would proceed with the delivery of S-300 anti-aircraft missiles to Syria in a bid to deter foreign powers entering the conflict on the side of the rebels. • Moreover, Russia warned that the EU’s lifting of its arms embargo could jeopardized the planned peace talks on Syria that had been agreed upon by the United States and Russia. • Racism Debate in Greece: • As the number of attacks on foreigners living in Greece has continued to increase in the recent months, the country’s coalition government has struggled to find a way to reduce anti-foreigner sentiment. • This week, a junior member of the coalition government, the center-left PASOK party, wanted to introduce an anti-racism law that would allow the government to curtail the activities of the far-right Golden Dawn party. • However, the center-right New Democracy party that leads the coalition government refused to back this idea, claiming that existing laws were enough to prevent racism from spreading further in Greece. • A Look Ahead: • Key Elections in the Next Seven Days: • The United Nations Security Council will meet this week in New York to discuss the possibilities for the reunification of the island of Cyprus. • Regional Risk Factors to Watch: • Ethnic tensions are rising in many areas of Central and Southeastern Europe as those regions’ economies struggle to grow.

8. Regional Overview: Middle East and North Africa Regional Summary: An international conference on the Syrian Civil War will take place next month in Switzerland. Sectarian violence continues to intensify in Iraq. • Plans for a Syrian Peace Conference: • The United States and Russia announced plans for an international conference to discuss the situation in Syria that will take place next month in Geneva, Switzerland. • Moreover, the Russian government announced that the Syrian government had agreed to take part in this conference, although it remains to be seen if any of Syria’s leading rebel groups will do likewise. • The push for such a conference to take place has intensified as the civil war in Syria continues to grow more violent and as the humanitarian situation inside Syria continues to deteriorate. • Iraq on the Brink: • When the United States and its allies withdrew their last armed forces from Iraq, it was hoped that stability would gradually take hold in that country. • However, the withdrawal of foreign forces and the overall rising of political tensions across the Middle East is resulting in a dangerous increase in sectarian violence in Iraq. • The death toll from sectarian violence in Iraq has been steadily rising this year, as evidenced by the more than 100 deaths in sectarian attacks in recent days in that country. • A Look Ahead: • Key Elections in the Next Seven Days: • Iran is hosting a summit of the “Friends of Syria” this week in Tehran. • Regional Risk Factors to Watch: • The flow of new arms into Syria could eventually lead to weapons spreading around the eastern Mediterranean, much as they did in North and West Africa after the end of Libya’s civil war.

9. Regional Overview: Sub-Saharan Africa Regional Summary: Militants attacked a uranium mine and a military base in Niger last week. French forces accelerated their withdrawal from Mali • Attack in Niger: • Last week, two suicide bombers struck a French-run uranium mine and a militant base in northwestern Niger, killing 20 people. • Afterwards, it was reported that the militant leader Mokhtar Belmokhtar was behind these attacks. • Mr. Belmokhtar was also behind this year’s attack on a natural gas plant in southern Algeria, and he announced that he intended to carry out other such attacks across the Sahara Desert and the Sahel. • French targets have been attacked across northern Africa since France’s intervention in the war in Mali. • France Begins Mali Withdrawal: • French forces began to withdraw from Mali over the past week, four months after they entered that country to help to defeat Islamist militants that had seized the northern half of that country. • Efforts to defeat the Islamists will now be led by Mali’s armed forces as well as a United Nations military force that will largely consist of troops from other African countries. • At present, there are 3,800 French troops in Mali and this number of expected to fall to 1,000 by the end of this year. • A Look Ahead: • Key Issues or Events in the Next Seven Days: • Sudan’s recent deal with South Sudan to restart the flow of oil from South Sudan to pipelines in Sudan already appears to be in jeopardy. • Regional Risk Factors to Watch: • The recent attacks in Niger highlighted the significant danger posed by militant groups operating in the Sahara Desert and the Sahel.

10. Regional Overview: Central and South Asia Regional Summary: Maoist rebels carried out an audacious attack in India last weekend, India’s prime minister travelled to Japan this week. • Big Maoist Attack in India: • Last weekend, far-left Maoist rebels ambushed a group of officials from India’s ruling Congress party in the state of Chhattisgarh, killing at least 24 people in the process. • Among the dead was the leader of the Congress party in the state of Chhattisgarh, Nandkumar Karma, who was killed when a group of around 200 Maoist insurgents attacked a convoy that he was part of. • India’s Maoist insurgency has spread in recent years and is now impacting wide areas of eastern and central India, despite government efforts to eradicate the rebels. • India-Japan Ties: • This week, Indian Prime Minister Manmohan Singh travelled to Japan as bilateral ties between India and Japan continued to be cultivated by both sides. • For India’s prime minister, the primary aim of his trip to Japan was to secure more Japanese investment in India, including investments in Indian infrastructure. • Meanwhile, defense ties between the two countries are on the rise as both countries are currently embroiled in territorial disputes with China. • A Look Ahead: • Key Issues or Events in the Next Seven Days: • There are widespread calls in India for the Indian government to do more to crack down on the Maoist insurgency there in the wake of the attack in Chhattisgarh. • Regional Risk Factors to Watch: • Political and sectarian violence in Pakistan’s largest city, Karachi, shows no signs of abating.

11. Regional Overview: East Asia and Pacific Regional Summary: Ethnic and religious unrest is threatening Myanmar’s stability. Malaysia’s economy slowed in the first three months of 2013. • Myanmar’s Sectarian Violence: • Sectarian violence has been a major threat to Myanmar’s security in recent decades and the country’s political and economic reforms may actually be raising the threat of higher levels of sectarian violence. • Traditionally, the greatest threats to Myanmar’s stability were posed by ethnic groups living in border regions of Myanmar that waged insurgencies against the government for much of Myanmar’s history. • In recent months, religious unrest has risen as a threat to the country’s stability, with hard-line Buddhists carrying out a series of attacks on the country’s Muslim minority. • Malaysia Slows: • Malaysia’s economy, like many other economies in Southeast Asia, experienced a slowdown in the first quarter of 2013, growing by 4.1% on an annualized basis during the first three months of the year. • This was the slowest pace of economic growth in Malaysia since 2009. • Domestic consumer demand weakened in the first quarter of 2013, as did export demand in a number of Malaysia’s key export markets. • Only a surge in public sector spending prevented Malaysia’s economy from slowing further. • A Look Ahead: • Key Issues or Events in the Next Seven Days: • Japan is actively cultivating Myanmar as a friend, something that will cause alarm in China. • Regional Risk Factors to Watch: • The recent tensions between the Philippines and Taiwan over the shooting of a Taiwanese fisherman show that there are maritime disputes in the waters off of East Asia that don’t involve China.

12. Statistics in Focus: Wine Production by Country While the demand for wine in traditional wine-drinking countries has been stagnant or declining in recent decades, demand for wine is growing rapidly in many countries where wine drinking was not as popular in the past.