August 2 — North America: UNITED STATES
After a last-minute compromise deal in the United States Congress, President Barack Obama signs legislation that raises the federal debt limit by $2.4 trillion. Legislators risked the U.S. going into a full-scale default, but come to a deal just hours before the deadline. (August 6): One of the world’s main credit rating agencies, Standard & Poor’s, downgrades the United States’ AAA rating to AA+ for the first time ever, saying that the Congress-approved deficit reduction plan was insufficient and it took too long to come to an agreement. The downgrade could erode investors’ confidence in the U.S. economy and raise the cost of borrowing for the U.S. However, other rating agencies, such as Moody’s and Fitch do not follow S&P. The critics say the S&P’s calculations were wrong.
August 3 — Africa: SOUTH AFRICA/SWAZILAND
South Africa conditionally agrees to loan Swaziland, its eastern neighbor, $355 million to help its financial crisis and ensure the country’s stability. The condition is that Swaziland, a small absolute kingdom, implements political and economic reforms. Swaziland has been hit by protests after it failed to pay public employees.
August 12 — Europe: ITALY
Italian Prime Minister Silvio Berlusconi announces a plan to balance Italy’s budget. The move involves $64 billion in spending cuts and imposing new taxes. The European Union welcomes the plan, but the Italy’s main union rejects it and calls for strikes.
August 16 — Europe: GERMANY/FRANCE/EUROPEAN UNION
After a meeting in the wake of the eurozone debt crisis, the German Chancellor Angela Merkel and French President Nicolas Sarkozy call for closer economic policy between the eurozone countries. To increase tax revenue, they propose to harmonize corporate tax rates. They also suggest that the requirement of balancing budgets should be included in each member state’s constitution by mid-2012. They reject, however, the idea of issuing the eurobonds, promoted by the Italian finance minister, who argues that they would provide cheap financing to struggling economies.
August 24 — Former Soviet Union/Europe: UKRAINE
Thousands of demonstrators in Ukraine come out into the streets to protest the trial and detention of Yulia Tymoshenko, former Prime Minister and one of the leaders of the Orange Revolution. Tymoshenko is accused of abuse of office by making an illegal deal with a Russian gas company while in office. Her supporters, however, say the charges are politically motivated.
August 25 — Africa: LIBYA
Libyan rebel forces take most of the country’s capital, Tripoli, including Colonel Muammar Gaddafi’s compound. They now proceed towards his hometown of Sirte, despite fierce resistance from forces loyal to Gaddafi. (August 29): Gaddafi’s family flees to Algeria; Gaddafi himself, however, goes into hiding. The Libyan National Transitional Council (NTC) uncovers four mass graves of civilians massacred by Gaddafi’s forces.
August 29 — South Asia: NEPAL
Nepalese parliament elects a Maoist Baburam Bhattarai new prime minister after the resignation of Jhalnath Khanal who failed to reach an agreement with the opposition on a new constitution and how to integrate about 20,000 of former Maoist fighters. Bhattarai vows to reach a consensus within six months. Since the end of the Maoist insurgency in 2006, Nepal has lacked an effective government.
August 31 — Europe: PORTUGAL
The Portuguese government plans to implement drastic spending cuts agreed during the bailout negotiations with the European Union and the International Monetary Fund, aiming at reducing the country’s debt. The cuts will be the biggest in 50 years. The public continues to protest the cuts.