FP’s Situation Report, presented by Lockheed Martin: More than 100 dead in Taliban attack at Pakistan school; U.S. doubts Iraqi PM’s commitment to reconciliation; Obama says the Islamic State has lost momentum; and much more.

By David Francis and Sabine Muscat

More than 100 die in Taliban attack at a school in Pakistan. In one of the bloodiest attacks in years, Taliban gunmen stormed a school in the northwestern city of Peshawar, killing as many as 100 students and teachers and wounding at least 80, according to initial reports. The attack occurred around 10 a.m. this morning at a military high school. Five to six gunmen fired indiscriminately; now, dozens are being held hostage.

The New York Times’ Salman Masood: “A spokesman for the Pakistani Taliban claimed responsibility for the attack and said that it was in retaliation to the military’s offensive against militant hide-outs in the North Waziristan tribal region. The Pakistani military carried out an offensive, known as Operation Zarb-e-Azb, in June and has claimed to have cleared 90 percent of the restive region that has long been a redoubt of local and foreign militants.” More here.

More on Pakistan and Afghanistan below.

Concerns grow about Iraqi Prime Minister Haider al-Abadi’s commitment to reconcile with his country’s Sunni minority. One of the primary grievances of the Islamic State is the political persecution of Sunnis by former Prime Minister Nouri al-Maliki, a Shiite. Abadi pledged to reconcile with the minority group, a key part of the U.S. strategy to defeat the Islamic State. Now, after a visit from Defense Secretary Chuck Hagel, there are growing concerns that Abadi won’t follow through on his promises.

FP’s Gopal Ratnam with exclusive details on Hagel’s trip: “Abadi not only pressed Hagel to supply more American weapons and increase the tempo of U.S.-led airstrikes on the Islamic State — taking the Pentagon chief by surprise — but also expressed doubts about normalizing relations in the long term with Iraq’s Sunnis, according to two senior American officials. Leaders of the Sunni tribal groups in Anbar province that the United States wants to organize and equip into national guard brigades to take on the Islamic State are not trustworthy, Abadi, a Shiite, told Hagel in a Dec. 9 meeting in Baghdad, according to the two U.S. officials and a European official whose country is involved in the coalition against the Islamic State.” More here.

President Barack Obama claims the Islamic State has lost momentum in Iraq and Syria. Speaking to U.S. troops in New Jersey yesterday, Obama said that several months of fighting had blunted the momentum of the Islamic State. However, he acknowledged that the fight was far from over, and that it would take years to defeat the group. His progress report comes as U.S. airstrikes have been increasingly effective after missteps in the early part of the air campaign against the Islamic State.

The New York Times’ Eric Schmitt: “In the initial weeks of an air campaign that started in August, Iraq’s troops were tentative. Fighters from the Islamic State, also called ISIS or ISIL, quickly learned not to move in large numbers to avoid being struck. Three out of every four missions still return with their bombs for lack of approved targets. But in recent days, the Iraqis have been advancing, forcing ISIS to fight more in the open. The airstrikes are severing the militants’ supply lines, killing some top leaders and crimping their ability to pump and ship the oil that they control.” More here.

More on the Islamic State below.

Welcome to Tuesday’s edition of the Situation Report.

If you’d like to be one of our subscribers, we’d love to have you. Send me a note at david.francis@foreignpolicy.com and I’ll sign you up. Like what you see? Tell a friend. Don’t like what you see? Tell me. And if you have a report you want teased, a piece of news, or a good tidbit, send it to me early. Follow me: @davidcfrancis.

Due to a technical glitch, some of you might have received last Friday’s Situation Report yesterday. I apologize for any confusion.

Who’s Where When Today

Secretary of State John Kerry meets chief Palestinian negotiator Saeb Erekat in London.

U.S.-China Joint Commission on Commerce and Trade meets in Chicago.

9:00 a.m. Brookings hosts a discussion on “Shared Challenges and Cooperation for Korea, China and the U.S.” 12:00 p.m. The Stimson Center hosts a discussion with Ryan C. Crocker, former U.S. ambassador to Afghanistan and Iraq. 1:00 p.m. CSIS hosts a discussion on “The Army and a Complex Future.”

What’s Moving Markets

Defense News’ Paul McLeary and Bradley Peniston on Congress and DoD’s budget: “Congressional committees tweaked nearly 10 percent of the money that the Pentagon requested for its fiscal year 2015 appropriations accounts before the ‘cromnibus’ spending bill was passed on Dec. 11 — resulting in $4.4 billion in additional procurement and research and development projects.” More here.

Reuters’s Olga Tanas and Anna Andrianova on Russia’s economy under siege: “[T]he Russian central bank said it would raise its key interest rate to 17 percent from 10.5 percent, effective [yesterday]. The move was the largest single increase since 1998, when Russian rates soared past 100 percent and the government defaulted on debt.” More here.

Defense News’ Gerard O’Dwyer on declining defense sales: “Sales of arms and military services by the world’s 100 largest arms-producing companies declined for a third consecutive year to $402 billion in 2013.” More here. 

Pakistan and Afghanistan

The Washington Post’s Tim Craig with more on the attack in Pakistan: “More than three hours after the siege began at mid-day at an army-run high school on a Pakistan military installation in Peshawar, explosions and gunfire continued to be heard coming from the school.” More here.

The Wall Street Journal’s Qasim Nauman, Saeed Shah, and Safdar Dawar: “Pakistani officials long feared that the North Waziristan operation, launched in June, would unleash revenge attacks by militants across the country. However, until Tuesday’s assault, the blowback had been relatively muted. Since the army’s offensive began, there had been no major Taliban attacks in Khyber-Pakhtunkhwa, the province that borders the tribal areas and is often on the front line of the violence.” More here.

The New York Times’ Benjamin Weiser on evidence from the Osama bin Laden raid: “In the year before Osama bin Laden was killed by United States forces, letters from a Libyan man described as a loyal follower made their way to the Qaeda leader’s hiding place in Abbottabad, Pakistan.” More here. 

Islamic State

The Washington Post’s Thomas Gibbons-Neff on an al Qaeda faction and U.S. weapons: “As extremist rebels in Syria lay claim to fresh weapons, a new video circulating online purports to show an al-Qaeda-linked group fielding U.S.-supplied anti-tank weapons that may have been intended for more moderate factions in the conflict.” More here.

Deutsche Welle on gains by the Al-Nusra Front: “Al-Nusra Front, an affiliate of al Qaeda in Syria, captured the Wadi Deif base some 80 kilometers (50 miles) south of Aleppo on Monday, the Syrian Observatory for Human Rights said. Another hardline Islamist group, Ahrar al-Sham, had is reported to have taken the nearby Hamadiyah base.” More here.

Sydney

The Wall Street Journal’s Daniel Stacey on Man Haron Monis, the man behind the Sydney attacks: “Muslim leaders and antiterror experts said Mr. Haron was likely acting alone, and using global movements such as Islamic State as a cloak for his own grievances. Such attacks are worrying governments because they can be hard to track and prevent.” More here.

The Washington Post’s Peter Holley with more details on the gunman: “The Iranian refugee identified as the man who held 17 people hostage in a Sydney cafe during a nearly 16-hour standoff was no stranger to Australian authorities.” More here.

The Sydney Morning Herald’s Patrick Begley: “​The women speak quickly as they relay the demands of the gunman in videos posted to social media.” More here.

FP’s Elias Groll on Twitter’s response to Sydney: “In the last 24 hours, the hashtag #illridewithyou has taken off in Australia as a way to show solidarity with Muslims who might feel unsafe now.” More here.

Torture Report

The Washington Post’s Aaron Blake on an unmoved American public: “The poll shows people says 51-29 percent than the CIA’s methods were justified and 56-28 percent that the information gleaned helped prevent terror attacks.” More here.

Carnegie Europe’s Judy Dempsey on Europe’s responsibility to come clean about their own role in facilitating the CIA’s torture practices: “If the European countries involved in so-called extraordinary renditions refuse to break their wall of silence, the credibility of the European Union as the upholder of human rights will be completely undermined.” More here.

The Guardian’s Patrick Wintour on U.K. Deputy Prime Minister Nick Clegg calling for an investigation of the last Labor government’s complicity in torture: “Nick Clegg has said senior figures in the last Labour government should give evidence to parliament’s intelligence and security committee (ISC) on what they knew about torture conducted by UK or US intelligence agencies in Iraq or Afghanistan.” More here.

In an interview with Deutsche Welle, Wolfgang Büttner, spokesperson of the German chapter of Human Rights Watch, calls on the German government to take a strong stand against CIA torture. More here.  

Russia and Ukraine

FP’s David Francis on Obama holding off on new penalties: “President Barack Obama has yet to decide whether he will sign legislation passed by Congress last week that would allow him to provide weapons to Ukraine’s ramshackle military and increase the penalties on Russia’s energy sector, setting up a confrontation with the GOP-held Congress in the new year.” More here.

Stars and Stripes’ John Vandiver on Ukraine’s push for NATO membership: “Ukraine’s prime minister on Monday called for more NATO support to reform its military as the country’s crisis with Russia has given new life to a once abandoned effort to eventually join the U.S.-led alliance.” More here.

Financial Times‘ Roman Olearchyk on Chevron’s decision to pull out of a $10 billion shale gas project in Ukraine: “Chevron’s decision is another blow for a Ukrainian leadership that rose to power through last winter’s Maidan revolution on promises to break from Moscow and integrate more closely with the EU.” More here.

The Wall Street Journal‘s Nick Shchetko and Laurence Norman on Russia threatening to increase its economic pressure on Ukraine: “Russian Prime Minister Dmitry Medvedev revived threats of higher tariffs on goods from Ukraine, tougher rules on migrant workers and reduced Russian financial support if Ukraine implements a trade-and-political deal with the European Union.” More here.

Iran

Writing for Foreign Policy, William Tobey asks if Iran is already cheating on a nuclear deal. “Just before Labor Day weekend, the State and Treasury Departments sanctioned several individuals and organizations ‘providing support to illicit Iranian nuclear activities.’” More here.

The New York Times’ Thomas Erdbrink on Iranian President Hassan Rouhani: “Risking his political standing, Iran’s president stressed on Monday that he was determined to cinch a nuclear deal and prepared to take on the conservative forces who would prefer not to see an agreement with the West, even if that means continued economic sanctions on Iran.” More here.

Climate Talks

The Guardian’s Suzanne Goldenberg on U.S. and India’s plans to announce joint climate action during Obama’s planned visit to India next month: “Obama’s visit — on the back of the United Nations talks in Lima — is seen as a key moment to persuade one of the world’s biggest carbon polluters to step up its efforts to fight climate change.” More here.

Grist’s Ben Jervey reports on disappointment with the weak climate deal in Lima among environmental activists. More here.

Israel

Writing for Foreign Policy, Aaron David Miller on Kerry’s Christmas wish: “[G]iven how much Kerry cares about and wants to achieve an Israeli-Palestinian breakthrough (possibly more than anything else on the U.S. diplomatic front), what Kerry really wants for Christmas is Bibi gone and Tzipi Livni — his real peace partner — back on top if not as prime minister then as key negotiator.” More here.

Africa

Writing for Foreign Policy, U.N. Secretary-General Ban Ki-moon on how to save South Sudan: “The United Nations has done much for the people of South Sudan and to promote peace. But it is now up to the country’s leaders. I call on South Sudan’s leaders to uphold their responsibilities towards their people and avoid any further bloodshed.” More here.

The Associated Press on violence in South Sudan: “One year after mass violence broke out in South Sudan, battles between government forces and rebels continued, and aid officials said that international assistance was needed to help residents stave off mass hunger.” More here.

Asian Pacific

Defense One’s Adam Tiffen on Ashton Carter and the pivot to Asia: “Carter … knows Asia. He has been an advocate for the prioritization of Asia since the late 1990s. He wrote a proposal with former Defense Secretary Bill Perry, under President Clinton, that advocated the United States develop strategic military relationships in places like Asia to prevent future regional conflicts. Make no mistake: The Department of Defense is already taking notice.” More here.

Christian Science Monitor’s Howard LaFranchi on how a murder charge could complicate the pivot: “Filipino prosecutors on Monday charged the Marine, Pfc. Joseph Scott Pemberton, with murder in the October death of Jennifer Laude, a transgender woman formerly known as Jeffrey. Officials contend Private First Class Pemberton became enraged when he discovered Ms. Laude was transgender.” More here.

Guantánamo

The National Journal’s Jordain Carney on the GOP and Guantánamo: “With Republicans poised to take over the Senate next month, President Obama is going to have to work with some of his harshest critics if he wants to fulfill his pledge to close Guantanamo Bay before he leaves office. But a few top Republicans are willing to help him try.” More here.

Think Tanks

The Project on Government Oversight publishes a new report on how the Foreign Agents Registration Act falls short. More here.

And finally, FP’s Isaac Stone Fish reports that North Korean refugees are excited about The Interview. More here.