FP’s Situation Report: Jordan calls the Islamic State’s bluff; Hezbollah retaliates against Israel; Democrats jump ship on Iran sanctions; and much more from around the world.

By David Francis with Sabine Muscat

Jordan knows when to hold ’em. Jordanian officials agreed to the release of Sajida al-Rishawi, imprisoned for plotting attacks in 2005, in exchange for the release of Jordanian pilot Moaz al-Kasasbeh and Japanese journalist Kenji Goto. Early Thursday, their fates are still unknown. FP’s Elias Groll reports Jordan is testing the Islamic State’s good faith. Meanwhile, FP’s Keith Johnson describes the dangerous downside of low oil prices: Declining oil revenues mean Iraq doesn’t have the money to take on the Islamic State.

More on the Islamic State below.

Hezbollah takes revenge. Hezbollah anti-tank missiles killed two Israeli soldiers along the Lebanese border in retaliation for Israeli airstrikes that took out six Hezbollah fighters and an Iranian general last week. This marks the worst escalation of hostilities since 2006 but reports indicate tensions have eased. The New York Times’ Jodi Rudoren: “Israel’s defense minister said on Thursday that his country had received messages through United Nations channels that Hezbollah did not plan any further action after its missile strike the previous day.”

More on Israel below.

Democrats pump the brakes on Iran sanctions. Democrats are bailing on a re-introduced Senate bill containing additional punishments for Iran. This saves President Barack Obama from having to veto a bill that garnered support from some within his party and helps clear the way to a nuclear deal with Tehran, reports FP’s John Hudson. Meanwhile, FP’s Colum Lynch has details of a diplomatic breakthrough with the appointment of Gholamali Khoshroo as Iran’s new U.N. ambassador: “Wednesday’s announcement signaled Iran’s intention to move beyond its diplomatic dust-up with the United States over Washington’s denial of a visa to Iran’s initial pick for the U.N. job, Hamid Aboutalebi.”

More on Iran below.

PRESS PACK: EUROPE’S BIG FAT GREEK HEADACHE

The BBC on new Greek Prime Minister Alexis Tsipras vowing that his country will not default: “Addressing his first cabinet meeting since Sunday’s victory, Mr Tsipras said he would negotiate with creditors over the [$270 billion] bailout.”

The New York Times’ Jim Yardley on Greece and Russian sanctions: “Having a Greek prime minister with a strongly dissenting view on Russian sanctions could greatly complicate European Union foreign policy, which has benefited from a German-led unanimity among heads of state on confronting Mr. Putin.”

Writing for the Globalist, Berenberg Bank’s Chief Economist Holger Schmieding on Greece’s flirt with Russia: “Greece needs fresh money and a reliable backstop. It can get that only from Europe and the IMF.”

Business Insider’s Mike Bird on a horrible day for Greek banks Wednesday: “Each of Greece’s four biggest dropped by at least 20 percent. One, Bank of Piraeus, dropped by 30 percent, the maximum limit for Greek stocks.”

The Guardian’s Larry Elliott on the Bank of England’s governor attacking the eurozone: “Speaking in Dublin, Carney said the eurozone needed to ease its hardline budgetary policies and make rapid progress towards a fiscal union that would transfer resources from rich to poor countries.”

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WHO’S WHERE WHEN TODAY

8:00 a.m. Center for Strategic and International Studies’ experts release “Asia Pacific Forecast 2015.” 9:30 a.m. Senate Armed Services Committee holds a hearing on U.S. national security strategy. 10:00 a.m. Senate Banking, Housing, and Urban Affairs Committee holds a hearing on Iran sanctions. 12:15 p.m. New America Foundation hosts a panel on “Interrogation in the 21st Century.” 4:30 p.m. Vice President Joe Biden meets with European foreign ministers and senior officials.

WHAT’S MOVING MARKETS

The Global Times’ Bai Tiantian on China’s fear of losing a port project in Greece: “We cannot fully rule out the possibility that the freeze is careful political positioning to cater to some European politicians’ uncomfortable feeling with China’s growing investment.”

The Wall Street Journal’s Alexander Kolyandr and Andrey Ostroukh on Russia’s $35 billion anti-crisis package: “The measures include state support of auto makers, imports substitution and the recapitalization of the banking system.”

The New York Times’ Paul Mozur on China upsetting Western tech companies: “The Chinese government has adopted new regulations requiring companies that sell computer equipment to Chinese banks to turn over secret source code, submit to invasive audits and build so-called back doors into hardware and software.”

The Financial Times’ Simeon Kerr on low oil prices causing trouble in the Gulf States: “Economists warn that the region will slip further into a hole of oil dependence unless rationalised spending combines with measures to boost private sector productivity.”

ISLAMIC STATE: Families of Islamic State militants demonstrate the group’s regional reach; coalition airstrikes clear out remaining militants in Kobani.

The Washington Post’s Hugh Naylor and Suzan Haidamous: “The families of Syrian and Iraqi militants are quietly settling in Lebanon, hiding in refu­gee camps and the occasional Christian village.”

Reuters: “The strikes around Kobani hit 12 ISIS tactical units and a vehicle, and destroyed nine fighting positions, a staging area and three buildings.”

ISRAEL: Tensions could subside even though the Obama administration is unhappy with its ally over a planned speech to Congress.

Middle East Eye’s Alex MacDonald: “[D]espite heightened rhetoric, the measured military responses on both sides suggest that elevated tensions have likely reached their apex – largely, say analysts, because neither side wants a repeat of the 2006 war.”

The New York Times’ Julie Hirschfeld Davis: “The outrage the episode has incited within President Obama’s inner circle became clear in unusually sharp criticism by a senior administration official who said that the Israeli ambassador, Ron Dermer, who helped orchestrate the invitation, had repeatedly placed Mr. Netanyahu’s political fortunes above the relationship between Israel and the United States.”

IRAN: Democrats might have bailed on additional sanctions. The GOP has not.

Bloomberg’s Josh Rogin: “[S]ome Republican senators are set to try and make the legislation’s sanctions tougher.”

UKRAINE CONFLICT: The United States is trying to shore up Ukraine’s finances before Kiev goes belly up amid a push to stop Russian troops from crossing the border.

The Wall Street Journal’s Nick Schetko on a possible $3 billion U.S. loan-guarantee package for Ukraine: “The U.S. assistance is part of a broader Western financing package that could be worth more than the $17 billion Kiev received from the West last year, officials have said.”

The New York Times’ Rick Lyman and Andrew E. Kramer: “After the Ukrainian government put in place new border restrictions in recent days — requiring a special pass that can be difficult, if not impossible, to obtain — a policy of isolating and frustrating rebel-held regions has taken a major and maddening turn.”

RUSSIAN SPOOKS IN LONDON: The spy who drugged me.

The Times of London’s Deborah Haynes on the hearing over the death of a former K.G.B. whistleblower: “One of the prime suspects in the murder of Alexander Litvinenko had been looking for a chef in London to lace the Russian dissident’s food and drink with an ‘expensive poison,’ an inquiry was told yesterday.”

CHARLIE HEBDO AFTERMATH: The French government gets gruesome as Germany’s anti-immigrant movement begins to stall.

The New York Times’ Dan Bilefsky and Maïa de La Baume on France’s Clockwork Orange-style reform video: “[The] French government on Wednesday released a graphic two-minute video showing clips of executions, wounded children and crucifixions that tells potential recruits that the glory promised to them is a lie.”

The Associated Press on problems at the top of Germany’s anti-immigrant movement: “The PEGIDA organization said on its Facebook page Wednesday that spokeswoman Kathrin Oertel has resigned after receiving threats, while board member Thomas Tallacker has stepped down for work reasons.”

The Washington Post’s Michael Birnbaum reports French prisons are a hotbed of radical Islam.

AFGHANISTAN AND PAKISTAN: Pakistan is warming up to Russia as the Afghan government takes shape. Meanwhile, U.S. support of Afghan forces falters.

The Washington Post’s Tim Craig on a budding friendship between Moscow and Islamabad: “Pakistan is now hoping to finalize plans to buy three dozen Russian Mi-35 helicopters and more closely coordinate efforts to counter terrorism and narcotics. Pakistan also wants Russian assistance to stabilize chronic energy shortages.”

The Wall Street Journal’s Margherita Stancati on the makings of a new government in Kabul: “The Afghan parliament on Wednesday approved the appointments of several key ministers, lifting an important obstacle to President Ashraf Ghani’s ambitious plans to overhaul his country’s government.”

The New York Times’ Matthew Rosenberg: “[A]s of this month, ask a question as seemingly straightforward as the number of Afghan soldiers and police officers in uniform, and the military coalition offers a singularly unrevealing answer: The information is now considered classified.”

NORTH KOREA: Pakistan’s not the only one making friends in Moscow.

The New York Times’ Andrew Roth on the Kremlin’s announcement Kim Jong-Un will visit Russia in May: “North Korea is depending on Russia and China to fight off efforts at the United Nations Security Council to recommend that the International Criminal Court examine North Korea’s human rights abuses. And although China is the major investor in the North, Russia has also has invested in the country’s weak economy.”

The Associated Press’s Foster Klug: “North Korea may be attempting to restart its main nuclear bomb fuel reactor after a five-month shutdown, a U.S. research institute said Thursday.”

CUBA: Castro wants GITMO back.

The Associated Press’s Javier Cordoba and Michael Weissenstein: Raul “Castro told a summit of the Community of Latin American and Caribbean States that Cuba and the U.S. are working toward full diplomatic relations but ‘if these problems aren’t resolved, this diplomatic rapprochement wouldn’t make any sense.’”

REVOLVING DOOR

Handelsblatt’s Markus Fasse, Thomas Hanke, and Till Hoppe on changes at Airbus: “The European aviation giant is planning a management shake-up at its military unit after delaying again the delivery of 53 new troop transport planes to Germany.”

FP’s David Francis on a long shadow: “Attorney general nominee Loretta Lynch issued dire warnings about the explosion of cybercrime and the risks of homegrown jihadis Wednesday on Capitol Hill. But lawmakers were much more interested in bashing Eric Holder.”

The State Department has named Tony Pipa as special coordinator for the post-2015 development agenda and to “lead U.S. engagement and negotiations during the intergovernmental process at the United Nations.”

The Washington Post’s Dan Lamothe with outgoing Defense Secretary Chuck Hagel’s last message to troops: Safeguard the military’s reputation.

AND FINALLY, FP’s Alexa Olesen on the best destinations around the globe for Chinese men to find spouses.