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*Regional and International Affairs:

Political Headlines:

1.   Yemen Opposition Forms Council to Oust President

2.   Beyond Greece, Europe Fears Financial Contagion in Italy and Spain

3.   Clinton Urges India to Expand Influence

4.   Gaddafi Could Stay in Libya-France's Juppe Says

5.   UN declares famine in Somalia

6.        Lashkar Gah: Nato hands over volatile Afghan city

7.   Iran says shot down a U.S. spy plane over nuclear site

 *Regional and International Affairs:

Political Headlines:

1.   Yemen Opposition Forms Council to Oust President

Yemen's mainstream opposition coalition said on Tuesday it would set up a "National Council for the Forces of the Revolution" to lead efforts to oust President Ali Abdullah Saleh and end months of violence.

The Joint Meeting Parties (JMP) made the decision just days after youth groups and activists who have been at the forefront of six months of pro-democracy protests formed their own 17-member "transitional council" in a bid to force out Saleh.

The formation of two interim councils could further splinter Yemen's opposition in the fractious Arabian Peninsula country where Saleh, who survived a bomb attack in June, is clinging to 33 years of power.

A popular uprising against 69-year-old Saleh began in January and fighting between government forces and opposition supporters has taken place in a number of parts of the country, including the capital Sanaa.

The unrest in Yemen is being closely watched by global powers because the country borders the world's biggest oil exporter Saudi Arabia.

Mohammed al-Sabri, a JMP spokesman, said members of the national council would be announced within two weeks.

http://www.nytimes.com/reuters/2011/07/19/world/middleeast/international-us-yemen.html?gwh=5B830F11532CCEB7FE2C29B37B297735&ref=world&pagewanted=print

2.   Beyond Greece, Europe Fears Financial Contagion in Italy and Spain

As European leaders prepare to convene on Thursday in another emergency summit meeting, a new awareness is growing: Greece is effectively insolvent, contagion is spreading to Italy and Spain, and time is running out to shore up confidence in the euro.

Hopes that pledges of new austerity would turn sentiment toward Greece around have proved illusory, and more officials are acknowledging that Greece has to cut its debt, meaning losses for those who hold Greek bonds. But the way forward is immensely complicated, partly because European leaders cannot agree on how much pain to inflict on private-sector bond holders, especially big European banks.

Meanwhile, the European Central Bank continues to demand a response that will not be considered by ratings agencies to be the first default among countries that use the euro, which the bank fears could reduce confidence in the currency’s stability.

It amounts to a game of political and financial chicken, and the markets are becoming fed up with the uncertainty. Investors are now demanding sharply higher interest rates to buy the debt of Italy and Spain — the third- and fourth-largest economies in the euro zone.

http://www.nytimes.com/2011/07/20/world/europe/20europe.html?pagewanted=print

3.   Clinton Urges India to Expand Influence

U.S. Secretary of State Hillary Rodham Clinton is urging India to expand its traditional sphere of interest beyond South Asia to compete with China's increasing assertiveness around the continent.

Clinton sought Wednesday to nudge India to project its influence eastward toward China's backyard in Southeast Asia and the Pacific Rim, as well as boost its engagement in Central Asia, on China's western flank. She says the U.S. and India share values that make them natural collaborators in promoting security, democracy and development in the two regions.

Clinton delivered the message in a speech in India's southeastern port of Chennai, which U.S. officials see as a jumping-off point for a greater Indian role in east Asia and the Pacific.

http://www.nytimes.com/aponline/2011/07/20/world/asia/AP-AS-Clinton.html?gwh=F8050AE3C50A100CC483B7262572BBE6&ref=world&pagewanted=print

4.   Gaddafi Could Stay in Libya-France's Juppe Says

Muammar Gaddafi could remain in Libya if he relinquishes power, French Foreign Minister Alain Juppe said on Wednesday, in what appeared to be a fresh drive to find a political solution to the dragging conflict.

Juppe, asked during an interview on LCI television whether countries involved in the Libyan crisis could consider letting Gaddafi remain as part of a way out of the crisis, replied:

"One of the scenarios effectively envisaged is that he stays in Libya on one condition which I repeat -- that he very clearly steps aside from Libyan political life."

"A cease-fire depends on Gaddafi committing clearly and formally to surrender his military and civilian roles," said Juppe.

http://www.nytimes.com/reuters/2011/07/20/world/africa/international-us-libya-france.html?gwh=5C544004BE13BFC75826AFF966353AD0&ref=world&pagewanted=print

5.   UN declares famine in Somalia

The UN has officially declared two parts of Somalia to be in famine amid the worst drought in east Africa for 60 years.

Mark Bowden, humanitarian co-ordinator for Somalia, said on Wednesday that famine conditions now existed in the Bakool and Lower Shabelle regions of the country.

He warned: "If we don't act now, famine will spread to all eight regions of southern Somalia within two months, due to poor harvests and infectious disease outbreaks.

"We still do not have all the resources for food, clean water, shelter and health services to save the lives of hundreds of thousands of Somalis in desperate need."

He added that the lack of resources is alarming. "Every day of delay in assistance is literally a matter of life or death for children and their families in the famine-affected areas."

http://www.guardian.co.uk/global-development/2011/jul/20/un-declares-famine-somalia

6.        Lashkar Gah: Nato hands over volatile Afghan city

British troops in Afghanistan's volatile Helmand province have handed control of the city of Lashkar Gah to Afghan security forces.

In recent days Nato handed over the relatively peaceful province of Bamiyan and the eastern town of Mehter Lam.

But correspondents say that maintaining stability in Lashkar Gah will be the sternest test yet for local forces.

The handover is seen as a critical step in a transition of power before foreign troops end combat operations in 2014.

A handover ceremony took place at the governor's palace in Lashkar Gah.

Afghan Minister of Defence Gen Abdul Rahim Wardak carried out an inspection of Afghan forces, before a handshake between the provincial Governor Mangal and the Isaf commander of south-west Afghanistan, General Toolan.

http://www.bbc.co.uk/news/world-south-asia-14206060

7.   Iran says shot down a U.S. spy plane over nuclear site

Iran has shot down an unmanned U.S. spy plane over its Fordu nuclear site, a state-run website reported Wednesday, a day after it confirmed it was installing a new generation of advanced uranium enrichment centrifuges.

"An unmanned U.S. spy plane flying over the holy city of Qom near the uranium enrichment Fordu site was shot down by the Revolutionary Guards' air defense units," MP Ali Aghazadeh Dafsari was quoted as saying by the Youth Journalists Club, affiliated to Iran's state TV.

"The plane ... was trying to collect information about the site's location ," he said, without giving details. He did not say when the incident happened.

http://www.reuters.com/article/2011/07/20/us-iran-usa-plane-idUSTRE76J1WP20110720

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