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from MacroScope:

Jaw jaw and war war

An Ukrainian serviceman is seen next to a sight for a gun near the eastern Ukrainian town of Luhansk

Pro-Russia separatists at talks with representatives from Moscow and the OSCE in Minsk said they would be prepared to stay part of Ukraine if they were granted "special status", which is unlikely to be acceptable to Kiev.

The talks will continue later in the week and come as the Ukrainian military faced a run of reverses on the battlefield which Kiev says have been engineered by the intervention of at least 1,600 Russian combat troops.

In the latest in a string of setbacks, Ukraine's military said it had pulled back from defending a vital airport near the city of Luhansk, where troops had been battling a Russian tank battalion. Ukrainian President Petro Poroshenko accused Russia of "direct and undisguised aggression" which he said had radically changed the battlefield balance. Moscow denies it is involved.

All that means the United States and EU must surely toughen their sanctions on Russia although several EU countries heavily dependent on Russian gas, including the Czech Republic, Slovakia and Austria, are opposed to new measures, which require unanimous agreement.

from Full Focus:

Inside Hamas tunnels

Reuters gets an exclusive look at Hamas' network of tunnels in Gaza. A rare tour that Hamas granted to a Reuters reporter, photographer and cameraman appeared to be an attempt to dispute Israel's claim that it had demolished all of the Islamist group's border infiltration tunnels in the Gaza war. Read the story.

from The Great Debate:

Peace may be the true threat to Hamas, Israel’s leaders

Relatives of a Palestinian woman, who medics said was killed in an Israeli air strike, mourn during her funeral in Khan Younis

It’s time to wonder whether Israel and Palestine will ever be able to move out of the moral abyss into which they’ve plunged themselves, and address the threat of peace.

“Threat” is the right term. Because peace is dangerous for leaders in the Middle East.

from MacroScope:

Euro zone recovery snuffed out

A BMW logo is seen the wheel of a car in Mexico City

A glut of euro zone GDP data is landing confirming a markedly poor second quarter for the currency area.

The mighty German economy has shrunk by 0.2 percent on the quarter, undercutting the Bundesbank’s forecast of stagnation. Foreign trade and investment were notable weak spots and the signs are they may not improve soon.

from MacroScope:

All eyes on Putin

Russia's President Vladimir Putin talks to reporters during a meeting in Brasilia

Russian President Vladimir Putin will meet his top security officials prior to visiting annexed Crimea on Thursday with members of his government.

One way or another, with Ukrainian government forces encircling the main pro-Russian rebel stronghold of Donetsk, matters are coming to a head. Putin must decide whether to up his support for the separatists in east Ukraine or back off.

from MacroScope:

Moment of truth in Ukraine

A Ukrainian serviceman guards a checkpoint near Donetsk

Financial markets perked up on Monday after Russia called off military exercises near the Ukraine border but was the confidence well founded?

NATO’s chief told Reuters there was a "high probability" Russia could launch an invasion of Ukraine where the government said it was in the "final stages" of recapturing Donetsk, the main city held by pro-Russian rebels, a battle that could be a decisive turning point in the biggest confrontation between Russia and the West since the Cold War.

from MacroScope:

End game in east Ukraine?

A Ukrainian serviceman sits on a military armoured vehicle near Donetsk

Ukrainian government forces say they are preparing for the final stage of recapturing the city of Donetsk from pro-Russian separatist rebels after shelling its outskirts and making significant gains over the weekend.

The city faces increasing shortages of food, water and electricity. Vladimir Putin must now decide whether to leave the rebels to their fate or step up his support.  Kiev said on Saturday it had headed off an attempt by Russia to send troops into Ukraine under the guise of peacekeepers accompanying a humanitarian convoy sanctioned by the Red Cross. Moscow dismissed the allegation as a "fairy tale".

from Photographers' Blog:

Beneath the rubble

Rafah, Gaza

By Ibraheem Abu Mustafa

I was at a house with my colleagues monitoring the situation in Rafah, when I heard two huge explosions. The shout went up: "A hit by Israeli F16!"

Police sources determined the location of the incident and reported that the airstrike had targeted a house belonging to the al-Ghol family. I rushed to the scene immediately.

from MacroScope:

When Mario met Jean-Claude

European Central Bank President Draghi and Eurogroup President -Juncker talk during a news conference in Nicosia, Cyprus

A day before the European Central Bank’s monthly policy meeting, ECB President Mario Draghi will travel to Luxembourg for talks with incoming European Commission president Jean-Claude Juncker. Oh to be a fly on the wall.

Some in the ECB are concerned that ultra-low sovereign borrowing costs and Draghi’s “whatever it takes” promise has relieved pressure on euro zone governments to carry on with structural economic reforms.
Juncker has signalled he is comfortable with a Franco-Italian drive to focus on growth and job creation rather than cutting debt.

from Full Focus:

Gaza in ruins

A half-million Gaza residents have been displaced by the violence.

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