Correction Appended: May 24, 2012
NATO Meets Under a Cloud
1 | U.S.
As thousands of protesters marched in the streets of Chicago, the North Atlantic Treaty Organization held its largest summit ever, drawing leaders from 28 member countries, including U.S. President Barack Obama and U.K. Prime Minister David Cameron as well as delegations from some 30 other partner states. The hottest topic: NATO's Afghanistan exit strategy. With European nations facing shrinking budgets and war-weary publics at home, Obama and his NATO counterparts confirmed their intent to wrap up the decade-long mission by the end of 2014. Confounded by the stubbornness of the Taliban insurgency and Pakistan's complex game in the region, NATO talked up the steady transition of security responsibilities to Afghanistan's once woefully unready army. The alliance also committed to supporting the Afghan government for at least a decade after 2014, to the tune of $4 billion--plus in annual aid. Taken together, though, it's hardly a resounding declaration of victory in Afghanistan. Many no longer care: the protesters outside the summit called for an end to military adventures abroad at a time of increasing hardship and inequality at home. Scuffles and clashes with police led to nearly 100 arrests.
Will They or Won't They?
2 | GREECE
From now until June 17, when Greece holds general elections, all euro-zone eyes will be on the struggling nation, whose future with the monetary union--voluntary exit? stay? forced removal?--could affect the entire global economy. For the time being, it's unclear which path Greeks will choose: while most favor the euro, they still oppose austerity terms. Here's how some possible moves could play out.
[The following text appears within a chart. Please see hardcopy or PDF for actual chart.]
GREECE KEEPS THE EURO
STAY THE COURSE
March austerity deal remains intact
Greek citizens unhappy; social unrest deepens
Greek economy dips, but global impact is minimal, amounting to less than 1% of world GDP
European markets stabilize; reforms continue
Euro zone saved
New government negotiates new bailout with troika of E.U., ECB and IMF
Portugal and Ireland demand similar concessions; reforms undermined in Spain and Italy
Borrowing costs for those nations rise
Panic spreads; global credit markets freeze and transatlantic banking crisis begins
Possible double dip in the U.S.
Euro zone collapses
GREECE LEAVES THE EURO
ECB has time to lend to other struggling euro-zone countries to stem panic
Germany, France and others work together on a short-term rescue plan
Banking crises are prevented from spreading through Europe; regional investment continues
Greece rejects austerity measures and defaults
Greece creates new currency, which declines immediately
The drachma is cheap; tourism spikes; Greek economy gets stronger
Inflation spikes; unemployment rises; social unrest is rampant