Hungary and Poland moved to block the European Union’s budget and pandemic stimulus package, triggering an institutional crisis (Politico). The two countries object to the inclusion of a mechanism allowing the EU to cut off funds to countries that violate the rule of law.

After a marathon summit (BBC) in July, EU countries agreed to a seven-year budget and a COVID-19 economic recovery fund totaling nearly two trillion euros combined. But the rule-of-law clause threatens billions of euros in funding for Hungary and Poland, both of which the bloc is investigating for undermining the independence of courts, the media, and nongovernmental organizations. The impasse comes as Europe grapples with a devastating resurgence (NYT) of the coronavirus. EU leaders will attempt to end the standoff when they convene again on Thursday. A compromise will be difficult to reach in part because the European Parliament, which must approve the budget, fought hard for the rule-of-law provision.

Australia and Japan have reached a broad agreement to deepen their defense cooperation (Reuters) by allowing troops to visit each other’s countries for training and holding more joint operations and exercises, Japanese Prime Minister Yoshihide Suga said today. It is Japan’s first agreement allowing a foreign military in its territory since its pact with the United States in 1960.

Thailand: Lawmakers are considering proposals to amend the country’s constitution (AP), a core demand of pro-democracy protesters who have taken to the streets in recent months. Meanwhile, police fired water cannons at protesters gathered outside parliament. 

In CFR’s Asia Unbound blog, Pavin Chachavalpongpun and CFR’s Joshua Kurlantzick discuss the Thai protests.

U.S. President Donald J. Trump is preparing to withdraw thousands of troops from Afghanistan, Iraq, and Somalia, the New York Times reports, citing unnamed officials. The number of troops in Afghanistan, currently 4,500, would be reduced by half, according to a draft order circulated yesterday. North Atlantic Treaty Organization (NATO) Secretary-General Jens Stoltenberg warned of serious consequences (AP) if troops withdraw from Afghanistan too quickly.

Pakistan: A far-right religious party made a deal with the government (Al Jazeera) to call off a protest in Islamabad in exchange for the government considering reduced diplomatic ties with France over the publication of cartoons depicting the Prophet Mohammed. The group said the government agreed to consider expelling the French ambassador and boycotting French goods.

President Trump asked top advisors what options he had to attack Iran’s main nuclear site, the New York Times and the Wall Street Journal reported, citing unnamed officials. The advisors reportedly dissuaded him from taking military action, which could have sparked a war in the last weeks of his administration.

Libya: The country’s rival factions agreed to cooperate to protect oil facilities (Al Jazeera) following UN-brokered talks. Oil production, Libya’s main source of revenue, halted for nine months this year due to the country’s civil war.

Russia plans to build its first African naval base (FT) on Sudan’s Red Sea coast as it seeks to expand its presence on the continent. It will be the second Russian naval facility outside of the former Soviet Union.

Ethiopia: Prime Minister Abiy Ahmed warned that he would soon launch a “final and crucial” (Al Jazeera) military operation in Ethiopia’s northern region of Tigray after a deadline for regional forces to surrender lapsed today. The United Nations’ refugee agency said that a “full-scale humanitarian crisis” is unfolding in Ethiopia due to the conflict.

CFR’s Michelle Gavin explains the conflict in Tigray.

Armenian President Armen Sarkissian called for early parliamentary elections (RFE/RL) to resolve a political crisis triggered by a deal to end the conflict with Azerbaijan over the disputed region of Nagorno-Karabakh. Prime Minister Nikol Pashinyan fired Armenia’s foreign minister yesterday amid calls to resign over the Russia-brokered truce, which ceded Armenian territory.

CFR’s Global Conflict Tracker looks at the conflict over Nagorno-Karabakh.

Peru’s Congress chose Francisco Sagasti (WSJ), a centrist, technocratic lawmaker, as the country’s caretaker president. Sagasti will be the third president to take office in two weeks, following the impeachment of former President Martin Vizcarra and the resignation of interim President Manuel Merino. Sagasti will lead a transitional government until elections are held in April.

Nicaragua: Hurricane Iota made landfall (WaPo) as a Category 4 storm late yesterday, battering the country just weeks after Hurricane Eta. Iota is the strongest storm ever recorded in the Atlantic this late in the year.

In an interview with the Washington Post, Georgia Secretary of State Brad Raffensperger said fellow Republicans have pressured him to find ways to exclude legally cast ballots and reverse Trump’s electoral loss in Georgia as a recount proceeds. Raffensperger also pushed back on Trump’s claims of voter fraud in the state and said the recount would “affirm” the initial result.