Greece is planning to pursue a long-dormant claim for reparations from Germany over World War Two, a further strain on relations with Berlin, which foots most of the bill for its 240-billion euro rescue.

The Finance Ministry has compiled a report that takes stock of all relating available documents spanning more than six decades, Greek Foreign Minister Dimitris Avramopoulos told parliament on Wednesday.

It will be submitted to Greece’s legal advisers and then Athens will decide how to officially press its claim, he said.

Avramopoulos did not say how much would be sought. >> Read More

Outlining the reasons for sending back to India the two marines accused of killing Indian fishermen, Italy’s outgoing Prime Minister Mario Monti said Rome faced serious risk of being isolated internationally and could have opened a crisis of “serious proportions” with New Delhi.

Monti also said that his Foreign Minister Giulio Terzi had resigned with motives not just limited to the marines issue.

The premier, who himself was sworn in to replace Terzi as interim foreign minister, gave more details behind the tangled diplomatic row, which Monti said risked ruining relations with key trade allies in the developing world but denied that economics was a factor in the decision-making process.

Monti said he was “stunned” by Terzi’s decision to step down, adding that his former chief diplomat gave no warning he would quit on Tuesday, and that his real aim was “to achieve another end that may become clearer in the near future,” avoiding a more direct accusation, Italian news agency INSA said. >> Read More

In the aftermath of yesterday’s surprising attack by Israel on Syrian soil, an act which any prior justification notwithstanding is a clear act of war sovereign aggression, it was only a matter of time before Syria responded, at least diplomatically at first. And as we also noted yesterday that “Iran has previously warned that any attack on Syria is the same as an attack on Iran” it was safe to assume that Iran would have a thing or two to say in response as well. Earlier today they did just that, with Syria warning that a “surprise” response to the Israel attack is forthcoming, while the “Iranian deputy foreign minister Hossein Amir Abdullahian said the attack “demonstrates the shared goals of terrorists and the Zionist regime… It is necessary for the sides which take tough stances on Syria to now take serious steps and decisive stances against this aggression by Tel Aviv and uphold criteria for security in the region.” Finally yesterday we wondered “how Russia and/or China which have made clear that Syria is a strategic geopolitical center for both in the past will react”, and today we know: “Russia, which has blocked Western efforts to put pressure on Syria at the United Nations, said that any Israeli air strike would amount to unacceptable military interference.” So far nothing from China, which has in the past let Russia be its proxy on Syrian matters.

And while the rhetoric has soared on all sides, it remains to be seen if Syria will indeed challenge Israel or if it will retain its bluster, an act which will simply invite Bibi to launch ever more offensive sorties until one day something finally does snap. >> Read More

German Foreign Minister Guido Westerwelle on Monday urged Italy to continue on its reform path despite the surprise announcement by Prime Minister Mario Monti over the weekend that he would step down from office once the budget bill had been passed by parliament.

“Italy must not pause after two thirds of the reform process,”Westerwelle told the internet media Spiegel Online. “This would not only bring Italy into new turbulence but all of Europe as well.”Monti announced his intention to resign after the PDL party of former prime minister Silvio Berlusconi withdrew its parliamentary support for his technocrat government. Berlusconi declared over the weekend that he would run for office again next year.

Iran claimed on Tuesday that it has captured an unmanned US drone after the aircraft entered Iranian airspace, underscoring the increasing tensions between the two countries.

Rear Admiral Ali Fadavi, commander of the Revolutionary Guards marine forces, told state media on Tuesday that the drone, which was “patrolling Persian Gulf in recent days to conduct reconnaissance operations and collect information was captured and brought down immediately . . . after it had entered Iran’s territory”.

He told the semi-official Fars news agency, which is close to the Revolutionary Guards, that the drone was a ScanEagle, which are usually launched from large warships. Iran’s state television said the US had a “network of drones” in the Gulf region.

A US navy spokesman told the Associated Press that there were no US drones missing in the Middle East. >> Read More

Following this morning’s reported shelling of a Turkish town (from Syrian lands):

• *NINE INJURED AS SHELL FROM SYRIA LANDS IN TURKISH TOWN: NTV

The Turkish foreign ministry has held emergency talks and, according to Zaman, Turkey has now begun firing ‘warning’ shots into Syria and ‘the bombardment continues to be heavy’.

• *TURKISH ARTILLERY BOMBARDS SYRIA IN WARNING, ZAMAN REPORTS

And it would appear things are escalating:

• *TURKISH FOREIGN MINISTER CALLS NATO AFTER SYRIA BORDER SHELLING

On the earlier Syrian shelling of Turkey…

Via Reuters: Mortar from Syria kills five family members in Turkey

 AKCAKALE, Turkey, Oct 3 (Reuters) – A mortar bomb fired from Syria landed in a residential district of the southeastern Turkish town of Akcakale on Wednesday, killing a woman and four children from the same family and wounding at least eight other people. 

A cloud of dust and smoke rose up over low-rise buildings as residents ran to help the wounded. Others, infuriated by the increasing spillover of violence from Syria’s civil war, took to the streets shouting protests against the local authorities.

Foreign Minister Ahmet Davutoglu phoned U.N. Secretary General Ban Ki-moon to brief him about the incident and also spoke with senior military officials and Syria crisis mediator Lakhdar Brahimi, his ministry said in a statement.

Davutoglu signalled over the weekend that Turkey would take action if there was a repeat of a mortar strike which damaged homes and workplaces in Akcakale last Friday. >> Read More

French President Francois Hollande said on Tuesday that a Greek request for a two-year extension to its fiscal adjustment period could be granted if the country’s foreign creditors issue a positive report on Athens’s attempted economic overhaul, while German Finance Minister Wolfgang Schaeuble struck a sterner tone, noting that the priority was for Greece to implement promised reforms.

In a welcome lift for Greece, Hollande repeated an earlier-stated conviction that the two-year extension sought by Athens for the implementation of austerity measures could be granted as long as this does not oblige eurozone countries to shell out more loans.

In a joint press conference with Italian Prime Minister Mario Monti in Rome, Hollande said the green light for an extension would depend on a positive report. “Then, without giving any more money, we can reimplement the program and keep Greece in the eurozone,” he said.

The mood in Berlin was more skeptical. Stournaras set out Greece’s positions to Schaeuble, presenting the government’s draft proposal for 11.5 billion euros in cuts for 2013 and 2014. “Most important is that Greece fully implement its obligations. Finance Minister Schaeuble pointed this out to his colleague once again,” the German Finance Ministry said, adding that a report by Greece’s “troika” of foreign lenders — the European Commission, European Central Bank and International Monetary Fund — was due in October. Stournaras and Schaeuble reportedly discussed Greek efforts to hammer out a new austerity package, the impact of an ever-deepening recession and the request for a two-year extension.

Stournaras, who also met with German Foreign Minister Guido Westerwelle, has reportedly set up a working group to conduct a study into the viability of Greece’s debt. >> Read More

Politicians in Germany‘s ruling centre-right coalition have expressed renewed concerns about an increased role for the euro zone’s permanent bailout fund, which is at the centre of a court case after the German parliament approved it in basic form.

German Foreign Minister Guido Westerwelle told Germany’s weekly Focus magazine he was opposed both to broadening the European Stability Mechanism (ESM), the euro zone‘s permanent bailout mechanism, and to stepping up purchases of European sovereign bonds.

“I can’t imagine the Bundestag lower house of parliament would give a majority to a policy of unlimited joint liability for Germany. As an MP I certainly couldn’t agree to that,” he said in an advance copy of the article due to appear on Sunday.

The European Central Bank indicated on Thursday it may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs, but any move would not come before September – and only if governments activated the euro zone’s bail-out funds to join the ECB in buying bonds. >> Read More