President Hassan said Transitional National Government will remain in power until a new government is formed, despite expiry of its mandate on 13 August. TNG controls small area of Mogadishu. Peace talks continue in Kenya, though some key parties, including TNG and Somaliland, refusing to attend. UN Security Council expressed concern over "persistent flow of weapons and ammunitions" to Somalia.

Peace talks in Kenya between Sudanese Government and rebel Sudan People's Liberation Army at critical stage. Postponed to 10 September, as Government initially refused to negotiate on basis of draft framework agreement prepared by mediators, while SPLA demanded that framework document be sole basis for discussion. Deal making behind scenes may produce agreement. Uganda claims Sudan is arming Lord’s Resistance Army rebels in Uganda.

Fighting continues between Ugandan armed forces and Lord’s Resistance Army rebels in the north.

President Levy Mwanawasa defeated parliamentary move to impeach him. 120,000 civil servants went on strike over unpaid allowances. Former President Chiluba charged with theft of U.S.$49 million.

Economy continues to deteriorate. Inflation hit 399% in July. Severe currency shortage. On 16 August law passed prohibiting hoarding of cash. Government has also moved to take control of food aid distribution, directing UN and international charities to hand food over to local officials for distribution. 3.5m currently receiving food aid, expected to increase to 5.5m by December. Opposition accused Government of rigging 30 August council elections.

Armed attacks by extremist groups against U.S. forces, government troops and aid workers continued in southeast border regions. More than 60 people killed on 13 August (including two Red Crescent workers, 15 Afghan civilians and six government soldiers), bloodiest day in over a year. Battles between local commanders in the north continue to cause displacement and civilian casualties. NATO took command of International Security Assistance Force (ISAF) on 11 August. Continuing need to expand international security umbrella outside Kabul. Subject to parliamentary approval, 250 German troops will be deployed to northern city of Kunduz. UN approval sought to send troops under ISAF umbrella; otherwise troops will operate under “Enduring Freedom” U.S. command. U.S. and Afghan soldiers began week-long campaign of bombing and intense ground battles on 25 August, hitting Taliban camps and killing dozens; 2 U.S. soldiers killed.

Over 50 people killed in two bomb blasts in Mumbai on 25 August. Government blames Pakistan- based Kashmiri militants, Lashkar-e-Taiba and affiliated Indian Islamic students’ association. Police seized 21kg of explosives and other weapons; killed 2 members of Kashmiri militant group, Jaish-e-Mohammed in gun battle. 34 civilians and 6 tribal separatists killed in attacks in Tripura and Manipur on 14 August as rebels sought to enforce boycott of independence day celebrations. Government and Naga separatists agreed on 5 August to extend ceasefire for another year.

Despite continued violence, including bomb explosion in Srinagar shortly before Indian PM Vajpayee arrived on 27 August, Indo-Pakistani relations have improved in recent months. Initial responses to Mumbai bombings on both sides confirmed improvement. Echoing Vajpayee’s April offer, Pakistani President Musharraf called on 11 August for talks about ceasefire along Line of Control. However, both sides continue to attach unrealistic preconditions to talks. Ghazi Baba, Commander in Chief of Jaish-e-Mohammed and alleged architect of December 2001 attack on Indian parliament, killed in gun battle in Srinagar on 30 August.

Car bomb exploded outside Jakarta’s Marriott hotel on 5 August, killing 12 and injuring over 150. Indonesian police named 5 suspects - all members of Jemaah Islamiyah (JI) - on 19 August. JI operational chief Hambali, alleged mastermind of the October 2002 Bali bombing, captured in joint operation between Thai authorities and CIA on 12 August. Government suspended plan to divide province of Papua after violence broke out killing 4 between 23 - 28 August. Christian-Muslim tensions simmer in Poso after series of violent incidents in June and July. Military operation against separatist Free Aceh Movement (GAM) - launched mid-May after peace negotiations broke down - looks likely to continue. Current military methods appear likely to generate more support for GAM.

After intense activity in August, underlying situation neither better nor worse: next period has both high risk and high peace opportunity. Tensions escalating since October 2002 when North Korea admitted to secret nuclear arms program. Six-way multilateral talks between U.S., North Korea, South Korea, Japan, China, Russia in Beijing on 27-28 August. North Korea announced intention to become nuclear power; plan to test atomic bomb in near future. Having agreed on 28 August on new round within two months, Pyongyang announced on 30 August it saw no value in further talks. U.S. and others declined to take at face value. Japan announced plans for new missile defence system.