As Sir John Major wrote this morning in the FT, this does not solve EMU’s fundamental problem, which is the 30pc gap in competitiveness between North and South, and Germany’s colossal intra-EMU trade surplus at the expense of Club Med deficit states.

It is therefore unlikely to succeed. It means that Italy, Spain, Portugal, et al must close the gap with Germany by austerity alone, risking a Fisherite debt deflation spiral. As I have written many times, this is a destructive and intellectually incoherent policy, akin to the 1930s Gold Standard. It risks conjuring the very demons that Mrs Merkel warns against.

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France is moving towards a moment of truth. The euro crisis, an unpopular president, rivalries within the Socialist party and a flatlining economy are forcing into question the balancing act performed by successive leaders for the past three decades. Abroad, the nation of Louis XIV, Napoleon Bonaparte and Charles de Gaulle likes to think of itself as Europe’s leader. This perception is now under threat. Meanwhile, at home, the very nature of the Fifth Republic is increasingly under question. Half a century after the general saved his country from disintegration and gave it a strong executive system of government, opinion polls suggest that an incumbent president could be defeated for the first time in 30 years.

Things will come to a head as France moves to its next presidential election starting in April 2012 against the backdrop of the European sovereign debt crisis, which began in Greece but has raised systemic political issues that France would rather avoid. Long gone are the balmy days of the 1980s when François Mitterrand, the former French president, and Helmut Kohl, erstwhile German chancellor, held hands at the first world war battleground of Verdun to symbolise the reconciliation between the two major protagonists of Europe’s 75-year civil war. Today, President Nicolas Sarkozy and Chancellor Angela Merkel peck one another on the cheek when they meet but, reflecting their nations, they are poles apart in temperament and mindset as they approach Europe’s existential challenges. While the Germans put their faith in rule-based systems, the French prefer to bank on their ability to conjure a solution out of adversity.

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European leaders have reached a “three-pronged” agreement described as vital to solve the region’s huge debt crisis.

They said banks holding Greek debt accepted a 50% loss, the eurozone bailout fund will be boosted and banks will have to raise more capital.

Shares on European markets rose sharply on news of the deal.

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The 14th crisis summit in 21 months starts with a meeting of all 27 European Union leaders at 6 p.m. The real business gets under way at 7:15 p.m. when chiefs of the 10 non-euro nations depart, leaving the rest to hash out a strategy that they already say requires more work.

The cancellation of a finance ministers’ meeting to precede the summit underscored the holes in the plan. The finance chiefs will now meet at an as-yet undetermined time after the summit to complete its main elements, including safeguarding banks and writing down Greek debt, according to an EU official.

Global exasperation with Europe’s response is deepening, with politicians from Australia to North America prodding the euro area to get ahead of the crisis before it infects the world economy.

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Pope Benedict XVI has named Italian Archbishop Carlo Maria Vigano as the Vatican’s next ambassador to the United States.

The widely expected appointment was announced on Wednesday (Oct. 19).

Vigano, 70, has served since July 2009 as the No. 2 official at the Governorate of Vatican City State, which oversees the 108-acre sovereign territory with 1,900 employees and an annual budget of $350 million.

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Italian Prime Minister Silvio Berlusconi was put on the defensive at a crisis summit over the country’s finances and appointments at the European Central Bank.

Before the leaders convened yesterday in Brussels, Berlusconi held face-to-face talks yesterday with European Union President Herman Van Rompuy and European Commission President Jose Barroso and then with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

“I never flunked” an exam in my life, Berlusconi told reporters when asked if he was concerned over the push to cut Italy’s debt load, the biggest in the world after the U.S. and Japan.

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The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.

Assumptions that the Great Republic must inevitably spiral into economic and strategic decline – so like the chatter of the late 1980s, when Japan was in vogue – will seem wildly off the mark by then.
Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia….

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Just when the eurozone governments thought it could not get worse for Europe’s single currency, it did.

Shell-shocked EU finance ministers meeting in Brussels on Saturday were already reeling from the worst Franco-German rift for over 20 years and a fractious failure to resolve the problems that have brought Greece, and the euro, close to the brink.

But then a new bombshell hit as a joint report by the EU and the International Monetary Fund (IMF) warned that, without a default, the Greek debt crisis alone could swallow the eurozone’s entire €440 billion bailout fund – leaving nothing to spare to help the affected banks of Italy, Spain or France….

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EU ministers were wrangling on Saturday over bolstering their banks, with some officials saying broad agreement was nearing but others warning that Spain, Italy and Portugal were objecting because of concerns over the costs involved.

“There is 24 against three – Italy, Spain and Portugal,” said one euro zone diplomat. “They think it’s too expensive. They don’t want to pay it.”

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On the Sabbath morning of Nov. 5, less than three weeks after the release of Sgt. First Class Gilad Shalit in a prisoner exchange between Israel and Hamas, Jews in synagogues throughout the world will read a Torah portion concerning Abraham’s early journeys. The text recounts how invaders conquered the city of Sodom, taking Abraham’s nephew Lot as a captive, and the way Abraham raised an army to rescue him.

The timing of this Torah reading is an absolute coincidence, an unplanned synchronicity between the religious calendar and breaking news. Yet the passage also offers an essential explanation, one almost entirely ignored in coverage of the Shalit deal, for Israel’s anguished decision to pay a ransom in the form of more than a thousand Palestinian prisoners, including the perpetrators of terrorist attacks on civilians.

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Catholic leaders said they could not rejoice at the death of Libyan dictator Moammar Gadhafi, but they recalled some of his more brutal moments and speculated on the future of Christians in the region.

“Gadhafi brutalized people for 42 years. He lived by the sword and, therefore, it’s not surprising that he would die by the sword,” said Habib Malik, associate professor of history at the Lebanese American University, Byblos campus.

“The manner of his death was gruesome and, no matter how evil a person might have been, such an ending is never something to rejoice about; however, he is now dead and his people are justifiably relieved and hopeful about starting a new chapter in their history,” he said.

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Expectations remained high on Friday that European leaders were trying to craft a bolder solution to the region’s financial crisis, despite clear signals from French and German officials that they have sharp differences heading into an important weekend summit in Brussels.

As ever, the focus is on Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who have made a habit of cobbling together deals to present to their European Union colleagues. But forging an agreement now is harder than before, as Paris and Berlin face core differences over how to maximize the euro zone’s financial rescue fund and how far the European Central Bank should intervene in the bond markets, either on its own or through the bailout fund.

Already the two leaders have announced that Sunday’s summit, which had already been delayed to allow more time for negotiations, would be followed by another summit meeting as early as Wednesday. That announcement, paradoxically, seemed to buoy stock and bond markets, apparently because the Europeans at least appeared to be focusing intensely on resolving the crisis.

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The current crisis over the euro has deep roots in the imbalances between north and south, rich and poor, export-led and service-driven economies, tied together by a currency but few rules, and those rarely enforced.

A fix will require fundamental changes in the functioning of the bloc, with more interference in the workings of sovereign states. There would need to be a fiscal union, with a treasury and a finance minister capable of intervening in national budgets, and more unified tax and pension policies. But it is far from clear that the European Union can gather itself to take these fateful steps away from nationalist identities to a truly European model.

“We are today confronted by the greatest challenge our union has known in its entire history,” said José Manuel Barroso, the head of the European Commission. “It is a financial, economic and social crisis. But also a crisis of confidence ”” in our leadership, in Europe itself, in our capacity to find solutions.”

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Two Pittsburgh religious leaders said they felt joy and relief when they learned an Israeli soldier held captive for five years by Hamas had been freed.

“I’m thrilled that that’s happened for the family, but I certainly hope and pray not just for his welfare, but that we don’t have to face this situation again,” said Bishop David Zubik of the Pittsburgh Catholic Diocese.

Zubik and Aaron Bisno, senior rabbi of Rodef Shalom Congregation in Shadyside, discussed their reactions on Tuesday after Israel exchanged more than 1,000 Palestinian prisoners for Gilad Schalit, 25, an Israeli soldier held captive since 2006.

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US forces are massing on the Pakistan border in eastern Afghanistan amid reports of an imminent drone missile offensive against fighters from the feared Haqqani Network, a Taliban faction which operates from safe havens in Pakistan’s North Waziristan Agency, Pakistan Army sources have confirmed.

The scale of the American build-up, including helicopter gunships, heavy artillery and hundreds of American and Afghan troops, caused panic in north Waziristan where tribal militias who feared they could be targeted gathered in the capital Miranshah to coordinate their response.

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Just before the American-led strikes against Libya in March, the Obama administration intensely debated whether to open the mission with a new kind of warfare: a cyberoffensive to disrupt and even disable the Qaddafi government’s air-defense system, which threatened allied warplanes.

While the exact techniques under consideration remain classified, the goal would have been to break through the firewalls of the Libyan government’s computer networks to sever military communications links and prevent the early-warning radars from gathering information and relaying it to missile batteries aiming at NATO warplanes.

But administration officials and even some military officers balked, fearing that it might set a precedent for other nations, in particular Russia or China, to carry out such offensives of their own, and questioning whether the attack could be mounted on such short notice.

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The chairwoman of the Senate Intelligence Committee says the thwarted Iranian plot to assassinate the Saudi ambassador to the United States shows the “collision course” that awaits unless Iran changes directions.

“To cross to the other side of the world and try and attack in this country is an escalation,” Sen. Dianne Feinstein (D-Calif.) said on “Fox News Sunday.” “And that’s what concerns us.”

U.S. officials revealed last week that two men have been charged in New York federal court with conspiring to kill the Saudi diplomat, Adel Al-Jubeir. Sunni Saudi Arabia and Shiite are Islamic rivals in the Middle East.

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In recent years, with countries such as China, India, and Brazil taking their rightful place on the international scene, the G-7 has given way to the G-20. Likewise, an ambitious reform of the International Monetary Fund was adopted in 2010 to reflect changes in the global distribution of power.

But this change in global governance must not be limited to economic policymaking. After all, globalization has brought many overall benefits, but also less friendly aspects, such as the ones dealing with global security. Despite our growing interconnectedness, the UN Security Council has not yet been unable to achieve sufficient consensus to resolve pressing matters such as Syria.

Nobody ever said that the road to stronger global governance would be straight or simple to navigate. But there are no detours: without effective structures of power and a genuine commitment from all players, the future does not look promising for global stability and prosperity.

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Islamic hard-liners have attacked about a half-dozen shrines in and around Tripoli belonging to Muslim sects whose practices they see as sacrilegious, raising religious tensions as Libya struggles to define its identity after Moammar Gadhafi’s ouster.

The vandalism has drawn concern at the highest levels as Libya’s new rulers seek to reassure the international community that extremists will not gain influence in the North African nation.

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THE Archbishop of Canterbury, Rowan Williams, and Bishops of the Anglican Province of Central Africa on Monday submitted a dossier to President Robert Mugabe detailing the alleged abuse of Zimbabwe’s Anglicans over the past four years at the hands of the excommunicated former Bishop of Harare, Nolbert Kunonga.

The bishops asked Mugabe to use his powers as head of state to guarantee the security of those who worship with the Anglican Church and put an end to all unacceptable and illegal behaviour. Kunonga has denied all the allegations labelled against him. Below is an edited version of the dossier presented to Mugabe….

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The Anglican Archbishop of Cape Town, the Most Revd Dr Thabo Makgoba, said today that the dispute within the Anglican Church in Zimbabwe was “a result not of schism but of thuggery.”

In a statement issued after visiting Zimbabwe with Archbishop Rowan Williams of Canterbury at the weekend, Archbishop Makgoba said members of a pro-Mugabe breakaway faction of the church under deposed bishop Nolbert Kunonga were being “helped to steal church property without recourse.”

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U.S. officials on Tuesday said that they had foiled an elaborate terrorist plot backed by factions of the Iranian government aimed at assassinating the Saudi ambassador to Washington.

At a news conference, Attorney General Eric H. Holder Jr. said two Iranians have been charged with conspiracy to murder a foreign official and conspiracy to commit an act of international terrorism, among other charges. One of the suspects, an Iranian with U.S. citizenship, was arrested in New York last month; the other, an Iranian, remains at large.

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U.S. officials have scrambled this past week to redraw a 2012 military training plan after Iraqi leaders announced they would not grant immunity to troops who remain past the Dec. 31 deadline for withdrawal.

Since Tuesday, when Iraqi leaders formally requested that U.S. military training continue into next year, military and diplomatic officials in Washington and Baghdad have been sketching alternative proposals that could place training in the hands of private security contractors or NATO, entities that can be legally covered some other way.

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The Archbishop of Canterbury Rowan Williams Sunday issued a strong criticism of the government of Robert Mugabe and told thousands of cheering Anglican members in Harare not to retaliate against attacks on the church in Zimbabwe.

Williams’ comments risk angering the Zimbabwean president who has not yet confirmed whether he would meet the Anglican archbishop, on a rare visit to Zimbabwe.

Williams, who travelled with police escort, was greeted by thousands of singing and cheering Anglican members at an indoor sports centre in Harare where he delivered a sermon attended by bishops from South Africa, Zambia, Bostwana and Tanzania.

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They were the first Americans into Afghanistan after the Sept. 11 attacks and will probably be the last U.S. forces to leave.

As most American troops prepare to withdraw in 2014, the CIA and military special operations forces to be left behind are girding for the next great pivot of the campaign, one that could stretch their war up to another decade.

The war’s 10th anniversary Friday recalled the beginnings of a conflict that drove the Taliban from power and lasted far longer than was imagined.

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As the United States draws down its forces in Iraq, fears abound that Iran will simply move into the vacuum and extend its already substantial political influence more deeply through the soft powers of culture and commerce. But here, in this region that is a center of Shiite Islam, some officials say that Iran wore out its welcome long ago.

Surely, Iran has emerged empowered in Iraq over the last eight years, and it has a sympathetic Shiite-dominated government to show for it, as well as close ties to the anti-American cleric Moktada al-Sadr. But for what so far are rather obscure reasons ”” perhaps the struggling Iranian economy and mistrust toward Iranians that has been nurtured for centuries ”” it has been unable to extend its reach.

In fact, a host of countries led by Turkey ”” but not including the United States ”” have made the biggest inroads, much to the chagrin of people here in Najaf like the governor.

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An Anglican priest here says he’s working with the U.S. Embassy to persuade the handful of Jews who still live in Baghdad to leave because their names have appeared in cables published last month by WikiLeaks.

The Rev. Canon Andrew White said he first approached members of the Jewish community about what he felt was the danger they faced after a news story was published last month that made reference to the cables.

“The U.S. Embassy is desperately trying to get them out,” White said. So far, however, only one, a regular confidante of the U.S. Embassy, according to the cables, had expressed interest in emigrating to the United States.

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the Archbishop of Canterbury flew out to Africa on Wednesday evening to begin a week-long pastoral visit to the Church of the Province of Central Africa. He has requested a meeting with the President of Zimbabwe, Robert Mugabe, on Monday, when he visits the country.

The 48 hours that Dr Williams spends in Zimbabwe will be the most sensitive. It is thought likely that, if the meeting with President Mugabe goes ahead, the deposed Bishop of Harare, Nolbert Kunonga, will be in attendance. Dr Williams will wish to protest at the expul-sion of Anglican congregations from their churches by Kunonga

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Dr Rowan Williams will become the first senior British dignitary to visit Mr Mugabe in Zimbabwe since Baroness Amos travelled to the country in 2001 to check on his pledge to halt violent land reforms.

Dr Williams is expected to urge the 87-year-old leader to rein in his renegade bishop Nolbert Kunonga, who split with the Anglican Province of Central Africa in 2008 over the ordination of homosexuals and has since, with the backing of Mr Mugabe’s security forces, seized 40 per cent of church property.

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The Harper government is looking to attach some heft to an international religious freedom watchdog that it’s installing within the Department of Foreign Affairs.

But it’s still pondering how to build sufficient independence into the DNA of this new Office of Religious Freedom, a promise from the 2011 election campaign.

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