Asia This Day:Bernanke Succession;Syrian Framework

Asian markets were cheered by developments in the US and Geneva Monday morning,sending the MSCI Asia Pacific index up 0.55%.The withdrawal of former US Treasury Secretary Larry Summers from consideration to head the Federal Reserve is being seen as a definite plus by Asia,as it will supposedly make the tapering of supportive Fed policies a little less severe.
We're seeing the rally as being based on Summers being a litle more agressive on tapering,said Philip McNicholas,ASEAN economist at BNP Paribas.Broadly speaking,we do see down side risks to the region with this tapering.We actually think Malaysia is more sensitive.Malaysian markets are closed for a national holiday today.
In the Philippines,the government is being more effective in its spending.That process is still ongoing and showing improvement.Overall,the fundamental story is still there.In Indonesia,the government was able to implement fuel price reform in June.We do think that Thailand can ride this out.
Markets are expecting the Federal Reserve to make an announcement on tapering this week.Mr.Summers' prospective nomination to be Fed Chairman had become highly politicised,and even Democrats opposed him in an open letter supporting the nomination of Janet Yellen,who has become the consensus candidate.
Bill Gross of PIMCO tweeted that Summers' exit makes Monday a huge day for the risk-on trade,i.e.,the buying of equities.
Another positive influence on world markets is the agreement in Geneva on Saturday of a framework for Syrian chemical weapons disarmament by the US and Russia.This will now go to the UN for the final formulation of a Security Council resolution spelling out the details.The framework gives Syria one week to provide a complete inventory of its stockpile;stipulates the first inspection of the weapon sites in November;and the destruction of all the weapons by mid-2014.
US forces will remain on standby in the region to back the agreement up with military action.

The Russian Proposal:Real or Smokescreen

Even as the entire US Senate was in a classified briefing by the president's national security team,the talk in Washington and the news media swirled around a Russian proposal,welcomed by Syria,that the Assad regime's chemical weapons be placed under international control.It is being taken so seriously that a procedural vote in the Senate on military action against Syria slated for Thursday was postponed while the proposal is checked out.
Experts pointed out that reliably emptying Syria of its vast stockpile of chemical weapons would require a ceasefire in the civil war,and a long period for inspectors to go in and document the weapons and remove them.
Deputy National Security Adviser Tony Blinken said we'll talk to the Russians about it and see where it goes.Former Speaker of the House Newt Gingrich said this is a shaky moment,and a fascinating moment about how this turns out.The challenge for the president is,the American people aren't there.
President Barack Obama himself said we're gonna run this to ground to see if we can arrive at something that is enforceable and serious.We don't want just a stalling and delaying tactic.It may be Assad is under pressure from his allies.If we don't maintain a credible threat,I don't think we will get the type of agreement we want to see,Mr.Obama warned.
Senator Bob Corker,R-Tennessee,said if it's real,and if Syria is willing to make immediate concrete steps,that's certainly worth looking at.But it's very difficult to tell if it's that,or just a way of creating a fog around the whole issue.
That view was echoed by Senator Lindsey Graham,R-South Carolina.
The Russians know that their proposal will at least slow down the decision-making process in Washington,giving Syria extra time to prepare for an attack;they also know that,at the most,it could sap the will of Congress to endorse the president's mililtary action plan;and if the Russian proposal were accepted,the Syrians could drag their feet the whole way,while squirreling away a significant part of their stockpile.

Syria:What the President Must Do

A new report coming out of Syria says that the Bashar al-Assad regime dropped an incendiary bomb such as napalm on a school playground,inflicting more horrible injuries on its own people.The focus of the international community,however,remains on its alleged chemical weapons attack of August 21,which killed up to a thousand Syrians.A team of UN inspectors remains in Syria tonight,collecting blood samples from the victims and interviewing them.They are planning to leave on Saturday and deliver their report next week.*At the same time,the US government will be releasing its own report based on the intelligence it has been gathering about the attack-probably on Friday.Reportedly this includes intercepts of conversations about the chemical weapons attack.We don't have the crib notes of Assad to his commanders,said Congressman Mike Rogers,R-Michagan,Chairman of the House Intelligence Committee,but when you put it all together,it is very clear that Assad was responsible.We know how the command and control works in these units.It was clear there was some degree of command and control being exercised.Looking at all the levels and the different pieces,the answer is definitely yes.*Under the War Powers Act,I don't believe there has to be a vote on military action,but you have to have these discussions with Congress.You have to bring the members in.I think the administration is obligated to do that,Congressman Rogers indicated.The president does not have to get Congress' approval for miltary action,added Senator John McCain,R-Arizona,an elder statesman on national security issues,but he is required to consult with Congress,and it would be in his best interest to conslut with Congress,rather than act in a unilateral fashion,the senator advised.*In that spirit,the Obama administration held a 90 minute conference call with members of Congress Thursday evening.Partcipating were Secretary of State John Kerry;Defense Secretary Chuck Hagel;National Security Advisor Susan Rice;and Director of National Intelligence James R.Clapper.According to a member of Congress on the call,the admisitration said it has no doubt the Syrian government was behind the attack,but no decision has been made on military action,and there is no timetable.They have a broad range of options.Both action and inaction on Syria carry risk and consequence,Defense Secretary Chuck Hagel reportedly said on the conference call.