This morning’s key headlines from GenerationalDynamics.com.

* Greece’s Papandreou cancels U.S. visit, but fails to take new austerity decisions

Merkel’s ‘euro-skepticism’ defeated in German election

Pakistan seeks to improve relations with the U.S.

Fears of Yemen civil war rise as violence suddenly increases

Obama administration will not sell F-16s to Taiwan

Taiwan says that China could defeat Taiwan in days, not weeks

China warns of severe consequences from arms sale to Taiwan

Greece’s Papandreou cancels U.S. visit, but fails to take new austerity decisions

Evangelos Venizelos, Greek finance minister (Kathimerini)

Greece’s Prime Minister George Papandreou had been scheduled to visit the United States and the United Nations this week, but canceled the meeting to chair a lengthy cabinet meeting on Sunday. On Monday, EU and IMF inspectors will be demanding to know what further austerity measures Greece will take, in order to qualify for the next tranche of its bailout at the end of this month. Unfortunately, the lengthy cabinet meeting did not yield any agreement. Papandreou’s cancellation of his U.S. visit has given rise to additional rumors that a Greek default is imminent, but that has been denied by Finance Minister Evangelos Venizelos. Kathimerini

Merkel’s ‘euro-skepticism’ defeated in German election

German Chancellor Angela Merkel’s party was defeated in a Berlin state election and her coalition ally lost all its seats after turning skepticism over euro-area bailouts into a campaign theme, stoking government infighting over the debt crisis. The results in Berlin cap a year in which voters punished Merkel’s coalition over its handling of the debt crisis and adds to her pressure as she struggles to balance domestic fatigue over shouldering euro-region rescues with international calls that she do more to stem the contagion. That’s widening fissures in her government as the three-way coalition descends into open conflict over the euro’s future and financial aid for Greece. Bloomberg

Pakistan seeks to improve relations with the U.S.

U.S.-Pakistan relationships suffered another blow recently when American ambassador Cameron Munter accused Pakistan’s Inter-Services Intelligence (ISI) agency of having close ties with the Haqqani network of Afghan Taliban, who were blamed for a recent major terrorist attack in Kabul. Pakistan Sunday called for extensive dialogue with the United States to strengthen bilateral ties ahead of crucial meeting between their foreign ministers in New York. “There was no need for such remarks by Ambassador Munter,” according to Pakistan Foreign Ministry sources. The sources said that Washington was trying to blame Pakistan to cover up its own failure in Afghanistan. They questioned the intentions and capability of the US-led multinational forces in securing Kabul even after decade-long presence in Afghanistan – the country the Americans had come to defend. The Nation (Pakistan)

Fears of Yemen civil war rise as violence suddenly increases

Anti-government protests in Yemen (EPA)

The “Arab Revolution” in Yemen has been simmering for months, with regular demonstrations in Sanaa, the capital city, with protesters demanding the removal of President Ali Abdullah Saleh. But the level of violence increased substantially on Sunday, as more than 100,000 protesters suddenly began to march toward the nearby presidential palace. Yemeni forces opened fire with anti-aircraft guns and automatic weapons. Snipers fired from rooftops, and plainclothes Saleh supporters armed with automatic rifles, swords and batons attacked the protesters. 26 protesters were killed. Saleh himself is still in Saudi Arabia recuperating from a terrorist bomb attack on June 3. AP

Obama administration will not sell F-16s to Taiwan

The Obama administration has decided to upgrade Taiwan’s existing fleet of F-16 fighter jets but not sell it the new planes it also wants. The decision represents a compromise aimed at improving Taiwan’s ability to defend itself, while not angering the Chinese more than necessary. AP

Taiwan says that China could defeat Taiwan in days, not weeks

According to a Taiwanese analysis, the arms deal will not materially affect the the substantial military advantage that China has over Taiwan. (See “New Pentagon report outlines China’s military buildup”) The duration of any potential conflict between China and Taiwan will be a matter of days, not weeks or months. China continues its massive military buildup, while the U.S. is cutting back on arms sales to Taiwan. According to one analyst, “Coupled with limitations on US weapons sales, Taiwan is falling behind. Worse, the steady modernization of the PLA has not been matched by Taiwan.” Taipei Times

China warns of severe consequences from arms sale to Taiwan

China is warning of severe consequences if the arms package sale goes ahead. Zhou Tienong, vice-chairman of China’s top legislature, said on Saturday that an arms sale to Taiwan will hurt not only Sino-US relations and cross-Straits ties but also the interests of the American people. Beijing broke off military ties in January last year in protest against a $6.4 billion US arms sale to Taiwan which included Patriot missiles, Black Hawk helicopters and equipment for Taiwan’s existing F-16 fleet. China rejected a proposal for a visit by US Defense Secretary Robert Gates in June 2010. It was not until the end of 2010 that military-to-military exchanges resumed. China Daily