Political situation remains highly unstable. President Hugo Chavez challenged validity of opposition signatures submitted to new National Electoral Council (CNE) to force referendum on his mandate. Chavez reaction raised tensions after Supreme Court naming of CNE had appeared to defuse potential for violence. Push by opposition groups for referendum on Chavez’s mandate continues. CNE meeting non-stop to consider petitions.

International Atomic Energy Agency (IAEA) found traces of highly enriched uranium at Iranian nuclear plant, but cautioned there are number of ways uranium could have got there. Iran’s nuclear energy program drawing increasing concern from international observers. U.S. also concerned about perceived Iranian interference in Iraq. Reformist coalition led by President Mohammed Khatami struggling to hold together until next spring’s parliamentary elections.

Ceasefire called off by Hamas and Islamic Jihad after Israel killed senior Hamas leader in retaliation for suicide bombing in Jerusalem that killed 20 and injured 100. Israel has killed 10 Hamas members since bombing, and has vowed to continue targeting group’s leaders. Arafat appointed new national security adviser in apparent bid to reassert control over Palestinian security forces and undermine Prime Minister Mahmoud Abbas and his security chief Mohammed Dahlan. U.S. announced freeze on assets of 6 Hamas leaders as well as several charities alleged to have supported Hamas.

Islamic Action Front, political arm of Muslim Brotherhood movement, returned to Jordanian parliament after six-year absence, winning 17 of 110 seats in June legislative elections. In municipal elections, however, Front boycotted all municipalities but Amman, and accused government of cheating.

Hizbollah fired shells into Israel on 10 August killing one person and wounding 5 others; attack came in wake of killing of Hizbollah leader in Beirut and days after group exchanged artillery fire with Israel for first time in 8 months. Violence erupted despite signs that Hizbollah being forced to rein in military activities because of intense U.S. pressure on Syria and Iran, group’s main backers. More anti-aircraft rounds fired on 31 August when Israeli planes entered Lebanese airspace.

Tension between Washington and Damascus remains high. Syria facing strong pressure from U.S. to expel members of radical Palestinian groups and restrain militant Hizbollah organisation. Syria also accused by U.S. of allowing anti-Coalition fighters to cross into Iraq.