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THE INDEX – June 14, 2010

 Prime Minister George Papandreou says Greek finances are on the mend while Moody’s downgrades Greece’s debt to junk status.

At a convention on Friday of the Institute for International Finance (IFF) in Vienna, Greek Prime Minister Papandreou hailed Greece’s austerity measures as having helped the debt-racked nation “turn the corner” towards fiscal balance. Greece was narrowly saved from default by a massive €110 billion loan from the EU and the IMF last month. But according to Papandreou, the nation’s deficit was down 40 percent in the first quarter of 2010 compared with the same period last year.

"We are still on the very start of our three-year economic program, yet we are very far from our initial point eight months ago," he said, likening the program to a "complete reorientation" of the Greek economy, adding, "This— let me stress again—is no free money. It is loans to be paid back with substantial interest and it is a package to support change in Greece, not to return to negative practices.”

However, this was apparently not convincing as Moody’s Investors Service downgraded Greece’s credit rating to junk on Monday. The cut reflects concern on Greece’s ability to service its debt and make obligatory budget cuts. Standard & Poor’s similarly downgraded Greece in late April, for the same reasons. Uncertainty, implementation risks, and limited international support for a total restructuring of the Greek economy and future growth merited the junk, or Ba1, rating Moody’s said in a statement.

A EU/IMF delegation is currently in Athens to review the multi-national loan and reforms to the Greek social system and overall budget.

                                                                                                                      –Nestor Bailly

Tension is escalating in East Asia after both South and North Korea have been flexing their verbal muscles over the sinking of a South Korean ship, the Cheonan

"If we fail to sternly respond to North Korea's wrongdoing in cooperation with the international community and build up solid military readiness, a second and third provocation like the Cheonanincident can occur anytime," South Korean President Lee Myung-bak said in a speech

In response to South Korean loudspeakers on the border separating the two nations, North Korea threatened to turn Seoul into a "sea of flames." The loudspeakers also broadcast propaganda and psychological warfare against the North. 

Pyongyang has denied any involvement in the sinking of the Cheonan, in which 46 South Korean sailors were killed. 

On Monday, the People's Solidarity for Participatory Democracy (PSPD) said that Seoul's report arguing North Korean fault for the Cheonanhad "many loopholes" and "lacks convincing rationale." 

The PSPD condemnation is a serious blow for South Korean officials looking for international and UN support on the issue. 

Al-Jazeera reported that in addition to the North Koreans being at fault, Lee said "he would hold some South Korean naval officers responsible for the sinking of the Cheonan.”                                                                                       

                                                                                                                        -Seth Walder

Two blasts left six Kenyans dead at a political rally opposing their nation’s proposed new constitution Sunday.

The proposed new constitution Kenyans are set to vote on this August is already a contentious and divisive issue. Both Kenya’s president, Mwai Kibaki, and prime minister, Raila Odinga, support the current draft, but an opposition campaign led by church groups objects to a clause that legalize abortion if a mother’s life is in jeopardy and another that legitimates Islamic family courts and is thus calling for amendments to be added to the new constitution before it goes to a national vote.

On Sunday, Christian leaders held an opposition rally in Nairobi’s Uhuru Park. The rally had proceeded peacefully and was drawing to a close when the first explosion occurred, wounding at least one member of the audience. From the podium, pastor James Ng’ang’ga encouraged the crowd to remain and continued to conduct closing prayers, but when the second explosion went off half an hour later, panic struck and a stampede ensued.  Six attendees were killed and over 70 wounded in the incident.

At present, it is not clear who was responsible.  The National Council of Churches of Kenya and other opposition groups have released a statement, saying: "Having been informed over and over that the passage of the new constitution during the referendum is a government project, we are left in no doubt that the government, either directly or indirectly, had a hand in this attack. Who else in this country holds explosive devices?"  However, law enforcement officials described the explosives as homemade devices, and President Kibaki has spoken out to condemn the incident.

                                                                                                            –Caroline Soussloff

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