1. The US embassy in Yemen came under small arms attack Tuesday, three are detained. Development comes amid reports that al-Qaeda on the Arabian Peninsula and al-Qaeda in Yemen have merged. Meanwhile, Yemen still expects 94 Gitmo detainees to be freed and repatriated back to Yemen within next 3 months.

2. Hamas and Fatah have been holding meetings in Egypt on forming a unity government, a move which will accelerate Hamas' terrorist recovery while at same time drawing Fatah farther from Israel.

3. While President Obama said Iran should talk 'with an unclenched fist' on al-Arabiyah television, the German government has decided to crack down on trade with Iran.

4. While the Pakistani Interior Ministry advisor maintains that slow progress is being made in Swat district, a major political party there (ANP) has openly admitted that the government has lost its writ there. The Taliban wield the power, according to the secular ANP.

GUANTANAMO BAY PRISON
Guantanamo's manipulators leading the new Jihad - Counterterrorism Blog
Saudi Arabia re-arrests ex-Gitmo inmates - Arab News (Saudi Arabia)
RELATED: See YEMEN section below.

ICELAND
Iceland's government collapses under strain of financial crisis - Telegraph

IRAN
German Government to Crack Down on Business with Iran - Deutsche Welle
Obama to Iran: Unclench fist - Straits Times

ISRAEL
Diplomatic effort stymies French push to lift Hamas boycott - Ha'aretz
Mitchell sent to Mideast to 'listen' - Washington Post

LEBANON
Officials: Riot at Tripoli prison over - International Herald Tribune

PAKISTAN
Awami Nationalist Party admits gov't has lost its writ in Swat - Daily Times (Pak)
Heated debate in National Assembly over govt's progress claims on Swat - DAWN (Pak)
PM Gilani says Taliban courts unacceptable - Daily Times (Pak)
Sectarian attacks spark violent protests in Quetta - Adnkronos (Italy)

PALESTINIAN TERRITORIES
Fatah and Hamas hold talks in Egypt on unity government - ABC (Australia)
Fatah, Hamas disagree on reopening Gaza border crossings, but after unity government - AFP

SRI LANKA
Tamil Tiger rebels 'to fight on' - BBC

YEMEN
Arabian Peninsula al Qaeda groups merge - Long War Journal
Gunmen open fire outside US embassy in Yemen - Telegraph
Yemen says 94 Guantanamo inmates home within three months - AFP