Russia bans all gambling and shuts casinos

MOSCOW (Reuters) - Russia closed down its casinos overnight as gambling was banned nationwide, a move the industry says could throw a third of a million people out of work.

The July 1 ban shut gaming halls, from gaudy casinos crowned by extravagant neon structures to dingy dwellings containing a handful of slot machines.

"I feel terrible. We just let 1,000 people go," said Yuri Boyev, general director at Metelitsa, an upmarket casino where billionaires rolled the dice and Russia's gas giant Gazprom held a lavish Christmas party.

Vladimir Putin, now prime minister, came up with the idea in 2006 when he was president after the Interior Ministry linked several gaming operations in Moscow to Georgian organized crime.

The Kremlin plans to restrict gambling to Las Vegas-style gaming zones in four rarely visited regions deemed to need investment, including one near the North Korea border, but nothing has been built and critics say the zones will fail.

Though gaming establishments knew the shutdown date for at least a year, few thought the government would go through with it, but officials moved in overnight to close them down.

The industry says the ban will axe at least 300,000 jobs but officials in Moscow put the national figure at only 11,500.

Rows of slot machines, usually blinking around the clock in smoky, crowded halls, lay dormant and wrapped in cellophane.

Moscow deputy mayor Sergei Baidakov, watching men dismantle poker tables and lay roulette wheels on the floor, said the state was ready to thwart any big to move gambling underground.

"We are confident we will control the situation," he said.

He said the ban was to protect the health of society. Many critics in the gambling industry say it has more to do with Russia's poor ties with Georgia. Georgians are thought to run many Russian gaming halls.

City police stood on guard in case of protests by disgruntled former workers in the popular gaming halls that have sprouted since the Soviet Union collapsed in 1991 and now pepper Russia's cities.

A hotline was set up Wednesday to report on those suspected of operating illegal gambling, Itar-Tass reported.

Moscow had around 550 gambling places, including 30 casinos in prime spots, symbolizing the capital's love of excess.

Midnight on Novy Arbat street, the heart of the gambling scene, was muted as its flashing lights and loud music were turned off for the first time in over a decade.

"I'm upset but I guess I'll have a little rest and re-visit my job situation in August," said Elena, a slot machine operator who has worked in the gaming business for five years.

Each year gaming brought in up to $7 billion and paid $1 billion in tax, a gap the industry says will cause the state a budget headache.

The development replacement zones -- in southern Krasnodar, the Baltic enclave of Kaliningrad, east Siberia's Altai region and the Far East -- require investment of up to $40 billion and have not been built.

"The zones have no roads, water or electricity. We fulfilled the law by shutting, the government did not fulfill it as the zones are not ready yet," said casino director Boyev.

The industry has raised eyebrows at government guarantees of work in restaurants and shopping centers that are to replace casinos when unemployment in Russia has hit an eight-year high.

But some addicted gamblers thought the ban might help them.

"Maybe this is all a good thing. I'm a family man and I come here every day and lose all my money. I'll be happy to see them go," said a 40-year-old Muscovite near the flashy Shangri-La casino in the city center.

ECB Noyer:Must Avoid Excessive Accumulation Of Forex Reserves

AIX-EN-PROVENCE, France -(Dow Jones)- European Central Bank board member Christian Noyer Sunday called for for more stability in the global currency market and for action to avoid some countries setting aside excessive currency reserves.

"We must ensure a bigger stability between currencies in the coming months," Noyer said at an economist conference in southern France. "We must avoid...the piling up of currency reserves," and find more efficient ways of financing global trade, he added.

"We must ensure a bigger stability between currencies in the coming months," Noyer said at an economist conference in southern France. "We must avoid...the piling up of currency reserves...we need mechanisms of financing world trade."

Global world trade imbalances have contributed to the build up of massive currency reserves in exporting countries, such as China and Japan, and of huge deficits in importing countries, such as the U.S.

The Organization for Economic Cooperation and Development forecasts world trade will shrink 16% this year.

An increase in transactions denominated in non-convertible currencies, such as the Chinese yuan, suggest world trade is going back to bilateral exchanges, Noyer said.

"When you take a look at the number of swaps with currencies that aren't convertible or transferable, in a certain way this means that we're going back to bilateralism in international trade," he said.

Noyer also warned against ballooning budget deficits, as countries channel money into stimulus plans to fight off the downturn.

This year, budget deficits are likely to reach record levels in the world's largest economies. The U.S. expects a budget deficit of 13.2% of gross domestic product, and the euro-zone's budget deficit is heading toward 5.9% of GDP.

Economists see this as a dangerous pattern, as they fear rating agencies may strip some countries of their investment-grade rating, making financing much more expensive.

"The debt-to-gross domestic product ratio has increased in all countries - it's normal and inevitable. But (once the crisis is over) a reduction...is necessary," Noyer said. "Indebted countries are weak, especially vis-a-vis the markets."

"We don't need another crisis of sovereign debt...We need strong states, we need sound public finances," Noyer said.

The Bank of France governor also urged moderation in regulatory competition among states, arguing it could result in a dangerous race to the bottom.

"Excessive regulatory competition isn't a good thing," Noyer said. "In the future, we'll need to find a balance between the need for worldwide regulation and the market."

"In fact, regulated players are the ones that took on the largest amount of risk...that stems from regulatory arbitrage" on the part of players trying to find regulated markets with the loosest regulatory standards, he said.

Powell says Iraq surge should have come earlier

WASHINGTON – Colin Powell says the U.S. took too long to strengthen its forces in Iraq after Baghdad fell early in the war.

Powell, the nation's top military officer under President George H.W. Bush and secretary of state for President George W. Bush, said the decision to use a lighter force to defeat the Iraqi army was correct. But he said in a television interview broadcast Sunday that the younger Bush's administration should have realized the initial success in 2003 was only the start of a longer fight.

"Unfortunately, the war wasn't over" after Baghdad fell and Saddam Hussein was ousted, Powell said. "The war was just beginning. And then it took us, in my judgment, too long to recognize that we needed to put more force in.

"I think we would have been in a much different place if we had surged in the fall of 2003, rather than many years later," he said on "State of the Union," on CNN.

In January, 2007, President George W. Bush announced he was sending 21,500 Army and Marine reinforcements as part of a revamped military strategy to counter sectarian violence in Iraq.

Powell, chairman of the Joint Chiefs of Staff chairman during the Gulf War in 1991, also said the term "Powell Doctrine" — often referred to as use of overwhelming military force — was "an invention of a reporter."

"But it essentially says have a clear political goal and then apply decisive force, is the term I prefer rather than overwhelming, because it doesn't always have to be huge," Powell said.

Iraqi forces assumed formal control of Baghdad and other cities just on June 30 after American troops handed over security in urban areas. About 130,000 American troops remain in Iraq, with U.S. forces to be withdrawn by Dec. 31, 2011.

Asked whether the war was worth a $700 billion cost and more than 4,300 American lives, Powell responded, "Well, that's a judgment history will have to make. You never know what these costs will be."

But Powell listed favorable results that would go into such an assessment. "A dictator is gone. A despicable regime is gone. And the Iraqi people have been given a chance to have a representative form of government, living in peace with its neighbors."

Discussing the war in Afghanistan, Powell said he agrees with President Barack Obama's national security adviser, James Jones, that military force alone won't bring victory. "All the troops in the world are not going to make this better," Powell said, unless the Afghan people see economic development and a responsible government that is not corrupt.

Powell, a former chairman of the joint chiefs of staff, said the "Don't Ask, Don't Tell" law governing gays in the military should be reviewed. But he declined to make any recommendation.

He said the law, prohibiting gays from serving openly, was correct when it began in 1993 but that 16 years have passed and "I think a lot has changed with respect to attitudes within our country."

Powell suggested that military commanders and the defense secretary should make recommendations to the president and Congress should hold hearings before any changes are made.

Obama has criticized the law, saying it "doesn't contribute to our national security."

Defense Secretary Robert Gates said he wants to make the law "more humane" until Congress eventually repeals it. He said he has lawyers studying ways the law might be selectively enforced.

Palestinian football team to play in Iraq

RAMALLAH, West Bank (AFP) – The Palestinian national football team will travel to Iraq this week for a friendly, the first international match staged in the war-torn country since 2003, officials said on Sunday.

"The match comes in a political and sports context, and is an expression of the Palestinian commitment to breaking the siege of Iraq and to celebrating with Iraqis the departure of American forces from Iraqi cities," Jibril Rajub, head of the Palestinian football association told reporters in Ramallah.

The two teams will meet on Friday in the northern city of Arbil in the autonomous Kurdish region of Iraq and hope to schedule a second match in Baghdad, Rajub said.

The Asian Football Confederation and FIFA, football's world governing body, have given their approval for the Arbil match, according to Najih Hmud, vice-president of the Iraqi football association.

"This match is the first step towards ending the ban imposed by FIFA on international matches in Iraq because of the situation our country was going through."

The Iraqi national team won the Asian Cup in 2007 but last month, under new Serbian coach Bora Milutinovic, they crashed out of the Confederations Cup in South Africa without scoring a single goal.

After visiting Iraq the Palestinian team will head to China for a friendly on July 18.

Rajub said the Palestinian side's new coach Musa Bazaz, 52, a French citizen of Algerian descent, would arrive in the West Bank on Monday.

Rajub, who gained a reputation for toughness as chief of the Palestinian Authority's feared preventive security agency, has been actively promoting football since becoming federation head in May 2008.

Last year under his leadership the federation financed the construction of a stadium in the West Bank town of Al-Ram outside Jerusalem and the team played its first ever home match against Jordan in October.

Palestine has been affiliated to FIFA since 1998, even though the Israeli-occupied West Bank and the Gaza Strip do not have statehood. Games are broadcast to the Arab world by the Saudi-owned ART television network.

In Iraq, Biden Paints a Holiday Ceremony With Colorful Talk

By SHERYL GAY STOLBERG

BAGHDAD — Back home, Vice President Joseph R. Biden Jr. prides himself on being a plainspoken guy, the kind who says whatever is on his mind. And on the Fourth of July in Iraq, he did not disappoint.

Mr. Biden spent Saturday morning presiding over a naturalization ceremony for 237 soldiers, sailors, Marines and airmen — including 12 from Iraq — who became American citizens. He had come here, just days after American combat troops withdrew from cities, on a diplomatic mission. But Independence Day is about patriotism more than diplomacy, and the vice president struck a down-home theme.

“As corny as it sounds,” Mr. Biden declared, “damn, I’m proud to be an American.”

Mr. Biden, along with President Obama, campaigned on a platform of ending the Iraq war. He said Saturday that the United States was “on track” to leave Iraq by the end of 2011, as Mr. Obama has promised. He made note of the cost of the war: 4,322 troops killed, more than 30,000 wounded, 17,000 critically injured. Yet despite the plans for withdrawal, the setting for the ceremony was a reminder of how much the United States remained an occupying force.

The swearing-in took place in the soaring rotunda of Al Faw Palace, one of Saddam Hussein’s more glorious marble monuments to himself. Its crystal chandelier alone is a sight to behold — a giant sparkling orb, surrounded by 16 smaller chandeliers, evoking the image of planets circling the sun. Sixteen dark stone columns reach toward the ornate painted ceiling. One of Mr. Hussein’s thrones sits on the side of the room.

On Saturday, a 50-foot-long American flag served a backdrop as the soldiers, dressed in camouflage, their weapons tucked neatly under their chairs, swore to renounce all allegiance to “any foreign prince, potentate, state or sovereign.” The vice president remarked that he was reminded of the founding fathers — “and yes, they’re your founding fathers, so get used to it.”

Later, Mr. Biden visited troops from Delaware, the 261st Theater Tactical Signal Brigade, whose members include his son Beau. He recounted the story of the swearing-in.

“We did it in Saddam’s palace, and I can think of nothing better,” the vice president declared, his blunt side resurfacing. “That S.O.B. is rolling over in his grave right now.”

Weather Woes

When you are vice president of the United States, you can control a lot of things. One thing you cannot control, as Mr. Biden learned here, is the weather.

A hot wind kicked up severe sandstorms throughout Mr. Biden’s visit, covering Baghdad in a thick, brown blanket of dust. The storms played havoc with Mr. Biden’s plans, grounding flights, upending meetings and creating a delicate diplomatic situation for the vice president, whose mission included fostering better ties between Washington and Baghdad.

On Saturday, the vice president planned to make a secret trip to Erbil, a major city in Iraqi Kurdistan, to see President Jalal Talabani of Iraq and Massoud Barzani, president of the Kurdish regional government. But the trip was canceled because the air was too thick with sand even for a C-17 military jet to fly.

A day earlier, Mr. Biden’s helicopter was grounded, forcing his security detail to face a thorny question: would it be safe for him to take a motorcade across town from Camp Victory through Baghdad’s “red zone” — now devoid of American combat troops — to the heavily fortified Green Zone, home to the American Embassy and Iraqi government buildings?

The decision, in the end, was to take the chance and meet some Iraqis. Mr. Biden’s breakfast at the American Embassy was canceled Friday morning when he could not take his helicopter there; he tried, but Gen. Ray Odierno, the top American commander here, ordered the pilot to turn back. Instead, Ambassador Christopher R. Hill traveled to General Odierno’s home, tucked safely inside Camp Victory, for the breakfast session.

But asking Iraqi leaders to come to Camp Victory was a diplomatic sticky wicket. True, Prime Minister Nuri Kamal al-Maliki made the trip to Camp Victory when Mr. Obama was in Baghdad. But Mr. Biden’s mission, in his own words, was to “re-establish contact” between White House and Baghdad. It might have been an insult to insist the Iraqis see him on American military turf, just as Iraq is celebrating its transition away from dependence on Americans.

So the vice president’s entourage donned flak jackets and helmets, and made their drive — safely — into the Green Zone.

Paying a Media ‘Tax’

Mr. Biden and Mr. Maliki may have had their disagreements. But one thing they agreed on was the importance of freedom of the press — so long as it does not involve pesky reporters asking questions.

The two met Friday evening at the prime minister’s ceremonial residence, the site of the infamous shoe-throwing news conference, in which an Iraqi journalist hurled his footwear at President George W. Bush in December. When Mr. Biden showed up, a horde of American photographers and reporters rushed in after him.

Mr. Biden, making small talk, explained through an interpreter the American concept of the “pool spray”— journalistic lingo for the moment, typically at the beginning or end of some official meeting, when the press pool photographs the leaders shaking hands or engaging in chitchat.

Mr. Maliki understood and referred to it as a “tax” that all leaders must pay.

“It’s a good tax, though,” Mr. Biden replied, adding, “You can’t do anything without them writing about it.”

Mr. Maliki continued, offering an expansive assessment of the rights of the Fourth Estate, “This is their right, Mr. Vice President, and they are welcome here.”

To which Mr. Biden, even more graciously, rejoined: “It’s their right, and it’s our necessity. Who would listen to us?”

But as the pair was about to emerge, Iraqi and American officials issued the assembled press corps a warning: the leaders would read from prepared statements and take no questions.

Israel stands firm on West Bank settlements

JERUSALEM (AFP) – Israel will not bow to pressure from Washington to halt settlement activity in the West Bank even for a temporary period, a minister from the governing Likud party said on Sunday.

"The prime minister made it clear in our meeting that there are no understandings and no commitments on the issue of a freeze of construction in the West Bank, not even a temporary one," Yuli Edelstein told AFP.

"We must not reach such a situation," the minister for information and diaspora affairs from Prime Minister Benjamin Netanyahu's right-wing Likud party added ahead of a weekly cabinet meeting.

The remarks came a day before a meeting in London between Israeli Defence Minister Ehud Barak and US Middle East envoy George Mitchell amid friction over the settlement issue between the two close allies.

The White House has repeatedly demanded that Israel halt all settlement activity in the occupied West Bank in order to relaunch peace talks with the Palestinians, who have refused to meet Netanyahu without a complete freeze.

Netanyahu has said his government will not allow new settlements to be built but that the "natural growth" of existing settlements will continue.

The roadmap agreement, adopted by world powers in 2003 and to which Israel is a signatory, requires a complete freeze of all settlement activity, including natural growth, and the dismantling of all settlements built after March 2001.

Barak said he and Mitchell would explore "how to translate the roadmap, which Israel has adopted with some reservations and understandings, into a common way that is agreed upon by us, the United States and other sides."

The presence of 470,000 Jewish settlers in more than 120 settlements scattered across the West Bank, 190,000 of them in annexed Arab east Jerusalem, has long been seen as a major obstacle to the peace process and the creation of a viable Palestinian state.

The international community views all settlements in lands occupied during the 1967 Six Day war as illegal and the Middle East Quartet -- made up of the European Union, Russia, the United Nations and the United States -- has called for a complete freeze.

Israel's Barak seeks peace 'understanding' with US

By MATTI FRIEDMAN

JERUSALEM – Israel's defense minister said Sunday he hopes to reach a "wider understanding" on regional peace when he meets Washington's Mideast envoy this week, but gave no indication the sides have resolved a dispute over settlement construction in the West Bank.

Defense Minister Ehud Barak, Israel's point man on settlements, is heading to London on Monday in hopes of breaking the impasse marring Israel's relations with its most important ally. It will be Barak's second meeting with U.S. envoy George Mitchell in less than a week.

Barak said the goal of his meeting will be "to work toward a wider understanding between us and the U.S. ... and translate it into a shared path acceptable to us, to the U.S. and to the other sides, to make progress on the diplomatic process with the Palestinians, and to opening a door to further moves."

Barak, however, made no mention of the dispute over settlement construction, the issue that is expected to dominate Monday's discussions.

The Obama administration says Israel must halt all construction on lands captured by Israel in the 1967 Mideast war and claimed by the Palestinians for a future independent state. Israel wants to keep building in existing settlements to accommodate what it calls "natural growth" in the settler population.

Nearly 300,000 Israelis live in settlements in the West Bank, among some 2.5 million Palestinians, in addition to 180,00 Israelis living in Jewish neighborhoods in east Jerusalem. The Palestinians want their state to include the West Bank and Gaza Strip, with east Jerusalem as their capital. Israel captured all three areas in the 1967 war, though it withdrew all troops and settlers from Gaza in 2005.

Last month, in a move at least partly aimed at easing tensions with Washington, Prime Minister Benjamin Netanyahu expressed support for the first time for the creation of a Palestinian state in a policy speech. He said the Palestinian state would have to be demilitarized and recognize Israel as the state of the Jewish people.

On Sunday, Netanyahu said at the weekly meeting of his Cabinet summing up his government's first 100 days, that he had created a "national consensus around the term 'two states for two peoples.'"

The Palestinians have rejected Netanyahu's conditions. They say recognizing Israel as a Jewish state would compromise Israel's one-fifth Arab minority and undermine the claims of Palestinian refugees who lost their homes when Israel was created in 1948.

In the West Bank city of Ramallah, Palestinian President Mahmoud Abbas said the fate of Palestinian refugees and millions of their descendants should be the subject of negotiations. "When the Israelis say that the refugee issue is nonnegotiable it means they don't want to discuss the final status issues," he said.

He also called for a full settlement freeze. "We see the continuous settlement expansion as illegal and it must be stopped," he said.

Also Sunday, Israel announced an indictment against a Gaza militant arrested on June 1 after infiltrating from the blockaded Palestinian territory into southern Israel via Egypt.

The man "admitted to having undergone extensive military training in the Gaza Strip ... in order to establish a terrorism infrastructure inside Israel," the Prime Minister's office said.

The statement identified the man as a member of the Popular Resistance Committees, a Gaza militant group. The group's spokesman, Abu Mujahid, said he was looking into the Israeli claim.

Israel arrests alleged Gaza 'terror' infiltrator

JERUSALEM (AFP) – Israel has arrested a Palestinian who it claims infiltrated the country from Gaza with the aim of setting up armed cells in the occupied West Bank, the government said on Sunday.

Abdelrahman Talalkeh was indicted by a court in Beersheva in southern Israel after being netted in a joint operation between police and security services on June 1, a spokesman said in a statement.

The 25-year-old resident of the Nuseirat refugee camp in Gaza was scooped up in the Negev desert after having entered Israel via Egypt's Sinai Peninsula.

Israel claims the Popular Resistance Committees (PRC), a Palestinian militant group in the Gaza Strip, dispatched Talalkeh "to establish a terrorism infrastructure inside Israel".

"He admitted to having undergone extensive military training in the Gaza Strip," the government said.

Israel says Talalkeh trained in the use of small arms and in preparing chemicals, car-bombs and explosive belts, hoping to transfer his knowledge to fellow Palestinians in the Israeli-occupied West Bank.

Talalkeh also planned to train militants in the use of GPS devices, map-reading, and intelligence gathering for operations including "suicide attacks and the abduction and murder of soldiers," the government said.

The PRC was one of three groups, including the much larger Islamist Hamas movement ruling Gaza, that jointly claimed responsibility for the capture of the Israeli soldier Gilad Shalit in 2006 in a deadly cross-border raid.

Biden: US not stand in Israel's way on Iran

WASHINGTON – Vice President Joe Biden seemed to give Israel a green light for military action to eliminate Iran's nuclear threat, saying the U.S. "cannot dictate to another sovereign nation what they can and cannot do."

Israel considers Iran its most dangerous adversary and is wary of hard-line Iranian President Mahmoud Ahmadinejad, who just won a disputed re-election. He repeatedly has called for Israel to be wiped off the map and contends the Holocaust is a "myth."

Israel and the U.S. accuse Iran of seeking to develop weapons under the cover of a nuclear power program. Iran denies that.

"Israel can determine for itself — it's a sovereign nation — what's in their interest and what they decide to do relative to Iran and anyone else," Biden told ABC's "This Week" in an interview broadcast Sunday.

"Whether we agree or not. They're entitled to do that. Any sovereign nation is entitled to do that. But there is no pressure from any nation that's going to alter our behavior as to how to proceed," Biden said.

The government of Prime Minister Benjamin Netanyahu says it prefers to see Iran's nuclear program stopped through diplomacy but has not ruled out a military strike.

"If the Netanyahu government decides to take a course of action different than the one being pursued now, that is their sovereign right to do that. That is not our choice," Biden said.

The Israeli government had no immediate comment on Biden's remarks, but said a statement might come later.

Asked about Biden's comments, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, said Sunday that the U.S. position on Iran and a military strike involves a "political decision."

"I have been, for some time, concerned about any strike on Iran. I worry about it being very destabilizing, not just in and of itself but unintended consequences of a strike like that," Mullen said on CBS' "Face the Nation."

"At the same time, I'm one that thinks Iran should not have nuclear weapons. I think that is very destabilizing," he said.

While most experts are in agreement that there's a good chance Iran could have a usable nuclear bomb sometime during his presidency, President Barack Obama told The Associated Press in an interview Thursday, "I'm not reconciled with that."

A nuclear-armed Iran, Obama said, probably would lead to an arms race in the volatile Mideast and that would be "a recipe for potential disaster." He said opposing a nuclear weapons capacity for Iran was more than just "a U.S. position" and that "the biggest concern is not simply that Iran can threaten us or our allies, like Israel or its neighbors."

Israel is also concerned about Iran's close support for two of its most committed enemies, Hezbollah guerrillas in Lebanon and Hamas militants in the Gaza Strip.

Obama said in May, after his first meeting with Netanyahu at the White House, that the Iranians had until year's end to get serious about international talks on curbing their nuclear ambitions. "We're not going to have talks forever," he said.

But Obama sees movement on Israeli-Palestinian peace as key to building a moderate Arab coalition against Iran, while Netanyahu says dealing with the Iranian threat must take precedence over peacemaking with the Palestinians.

Most experts believe that wiping out the Iranian nuclear program is beyond the ability of Israel's military. In 1982 the Israeli air force destroyed Iraq's nuclear reactor in a lightning strike. But Iran's facilities are scattered around the country, some of them underground.

Biden was asked in the interview that if the Israelis decide they need to try to take out Iran's nuclear program, would the U.S. stand in the way militarily?

"We cannot dictate to another sovereign nation what they can and cannot do," the vice president replied. "Israel has a right to determine what's in its interests, and we have a right and we will determine what's in our interests."

Biden: Israel free to set own course on Iran

WASHINGTON – Vice President Joe Biden signaled that the Obama administration would not stand in the way if Israel chose to attack Iran's nuclear facilities, even as the top U.S. military officer said any attack on Iran would be destabilizing.

Biden's remarks suggested a tougher U.S. stance against Iran's nuclear ambitions. Nonetheless, administration officials insisted his televised remarks Sunday reflected the U.S. view that Israel has a right to defend itself and make its own decisions on national security.

In an interview on ABC's "This Week," Biden also said the U.S. offer to negotiate with Tehran on its nuclear program still stands. Some thought the administration's approach might change in light of the Iranian government's harsh crackdown on protesters after the June 12 presidential election. Opponents of the ruling authorities claimed the vote was rigged against them.

"If the Iranians respond to the offer of engagement, we will engage," Biden said.

It was after meeting Israeli Prime Minister Benjamin Netanyahu at the White House on May 18 that President Barack Obama said it should be clear by year's end whether Iran was open to direct negotiations. Obama told The Associated Press last Thursday that persuading Iran to forego nuclear weapons has been made more difficult by the crackdown after the disputed re-election of President Mahmoud Ahmadinejad.

Biden was asked whether Netanyahu was taking the right approach by indicating that Israel would take matters into its own hands if Iran did not show a willingness to negotiate by the end of the year.

"Look, Israel can determine for itself — it's a sovereign nation — what's in their interest and what they decide to do relative to Iran and anyone else," Biden replied. He added that this was the case, "whether we agree or not" with the Israeli view.

Biden was then asked more pointedly whether the U.S. would stand in the way if the Israelis, viewing the prospect of an Iranian nuclear bomb as a threat to the existence of the Jewish state, decided to launch a military attack against Iranian nuclear facilities.

"Look, we cannot dictate to another sovereign nation what they can and cannot do," he said.

Pressed further on this point with a reminder that the U.S. could impede an Israeli strike on Iran by prohibiting it from using Iraqi air space, Biden said he was "not going to speculate" beyond saying that Israel, like the U.S., has a right to "determine what is in its interests."

Navy Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said Sunday that he has been concerned "for some time concerned about any strike on Iran." He also said military action should not be ruled out and that a nuclear-armed Iran is a highly troubling prospect.

In Jerusalem, the Israeli government had no comment on Biden's remarks.

White House spokesman Tommy Vietor said Biden was not signaling any change of approach on Iran or Israel.

"The vice president refused to engage hypotheticals, and he made clear that our policy has not changed," Vietor said. "Our friends and allies, including Israel, know that the president believes that now is the time to explore direct diplomatic options."

The Netanyahu government says it prefers to see Iran's nuclear program stopped through diplomacy but has not ruled out a military strike. Israel, within easy range of an Iranian ballistic missile, has been skeptical of the administration's aim of engaging in dialogue with Iran rather than threatening sanctions and military action.

The New York Times reported in January, shortly before Obama took office, that President George W. Bush had deflected an Israeli request in 2008 for specialized U.S. bombs that it would use for an airstrike on Iran's main nuclear complex at Natanz. And it reported that Bush was persuaded by aides, including his defense chief, Robert Gates, that a U.S. strike on Iran would probably be ineffective.

Obama retained Gates as his defense secretary.

Iran insists that its nuclear program is only for peaceful purposes.

There are many reasons for Washington to oppose an Israeli attack on Iran now, including the presence in neighboring Iraq of about 130,000 American troops, who could become targets for Iranian retaliation. The security consequences could be much broader.

Mullen, who as Joint Chiefs chairman is the top military adviser to Obama and Gates, said he worries about unpredictable consequences of an attack on Iran.

"I worry about it being very destabilizing not just in and of itself but the unintended consequences of a strike like that," he told CBS's "Face the Nation." "At the same time, I'm one that thinks Iran should not have nuclear weapons. I think that's very destabilizing."

Mullen said he worries that, in the event Iran were to obtain a nuclear weapon, other countries in the Middle East would feel compelled to follow suit. That would open a door to a proliferation of nuclear technology that would be destabilizing, Mullen said, adding that this is a subject he discusses regularly with his Israeli counterpart.

The prospect of a regional nuclear arms race was raised by Obama in an AP interview Thursday.

"The biggest concern is not simply that Iran can threaten us or our allies like Israel or its neighbors in the region," Obama said. "A very real concern is, is that Iran possessing a nuclear weapon triggers an arms race in the region and suddenly countries like Egypt and Saudi Arabia and Turkey all feel obliged to get nuclear weapons. And if you've got the most volatile region in the world and everybody armed to the teeth with nuclear weapons, you've got a recipe for potential disaster."

Most experts believe that wiping out the Iranian nuclear program is beyond the ability of Israel's military. In 1981 the Israeli air force destroyed Iraq's nuclear reactor in a lightning strike. But Iran's facilities are scattered around the country, some of them underground.

Bad news on the European job front

The unemployment rate in the 16-nation Eurozone has hit its highest level since the euro currency was introduced ten years ago. That is to say 9.5 percent or just over 15 million people.

The figure for May was up 0.2 percent on the previous month. In the 12 months leading up to May, 3.4 million jobs were lost in the Eurozone.

Europe’s worst hit job market is in Spain, where the unemployment rate is above 18 percent. But the number of people out of work there fell in both May and June, with a public works programme providing hundreds of thousands of temporary jobs.

Spain’s prime minister seized on this silver lining. José Luis Rodriguez Zapatero said:

“We must be prudent but it means that the measures adopted by the government are starting to have positive effects and that some indexes show the economic situation in the second quarter is better than in the first quarter.”

However the Europe-wide rise in unemployment has dampened hopes anyone might have had of a quick recovery from recession.

Signs of an upturn will take time to have an effect on the job market and the number of people out of work is expected to keep rising until next year.

Wind turbine blows in good fortune

A group of Scottish villagers are harnessing the power of the wind to turn their community green.

When a 14-turbine windfarm was built near Fintry, in 2006, the locals didn’t complain, but decided to buy an extra turbine just for them.

Now they are using the cash it generates investing in local green projects.

Gordon Cowtan represents the villagers and manages the income of the turbine. He said: “This is the 15th turbine, this one here, it is the one that was put up for the village of Fintry, it’s a
2.5 MW turbine, like all the rest of ones are in the development, and it produces somewhere around 7.000 MW/h each year. That elecricity is sold into the national grid.

“In the first year we earned for the village somewhere around 140 thousand pounds, and that’s the net value as well of pay back the loan and pay the shared maintenace.”

Fintry’s turbine became fully operational in December 2007.

When the 2.8 million euros loan is paid off, in 14 years, the annual income for the village will be around 456.000 euros per year.

This money will be invested in the aim of making Fintry a carbon neutral village.

Fintry is not on the gas mains so residents have to rely on oil or electric storage heaters.

This is why the first big project paid by the turbine has been an insulation project for the whole village, to cut the amount of energy used.

Cowtan added: “If their house type was appropriate, then the householder got free cavity wall insulation and roofing insulation as well. We put insulation in about 50% of the houses in the village and that was completely free to the householders”.

Jim Milne is among residents who benefited from the insulation project and among the 150 members of the Fintry Development Trust that bought the turbine.

The Trust says households that received insulation would save up to 700 euros per year.

Milne said: “All the village got the opportunity to get a benefit from it. And as much the organisers decided they could not distribute free electricity to everybody. Tax lawyers apparently put a stop to that, so instead of trying to give you free elecriticy, what they are trying to do is cut down the amount of electricity we need to heat our houses”.

He added: “It’s a deal which is not a one off, it continues on into the future, which means it’s not just myself here for the moment but those coming in afterwards, will get some benefits, it’s a continuing benefit to the community”.

Fintry’s eco-dwellers are looking at other green projects to be financed by the community’s own turbine.

It will help introduce sustainable energy forms of heating and possibly, in the future, eco-friendly transportation for the village.

Zero waste in Tuscany

In Italy, in the small town of Capannori in Tuscany they have adopted a “zero waste” policy. Through door-to-door rubbish collection and a range of rubbish reduction policies, the authorities have achieved a record-breaking recycling rate of 82%. By the year 2020 they’re hoping for a rate of 100%.

43,000 out of a population of 46,000 people participate in the recycling scheme and a free kit to explain how to sort household rubbish helps people not to make mistakes.

Thanks to sorting and recycling, nearly 100,000 trees, and the emission of 9,100 tons of CO2 were saved in 2008. Better still, Capannori earned 340,000 euros from paper recycling.

A green challenge in the Red Sea

In the Gulf of Aqaba on the Jordanian coast, the tourist industry has boomed. The coastline of Jordan is only 27 kilometers long, and it is crammed with ports, industrial sites, hotels, and factories. All this development however is damaging the marine environment which is why the Royal Marine Conservation Society are working to protect it. They are trying to reach an agreement with tourists, with dive centres, with authorities in Aqaba, in order to keep the sea as clean and healthy as possible.”

Regular clean-up dives use professional divers, assisted by people from dive centres and students who are trained in schools. They literally dive down to the seabed, collect all the rubbish they find there and put it into nets so it can be hauled ashore.

The aim is also to raise awareness.

Last year in just one clean-up dive around half a tonne of rubbish was collected in 30 minutes. Experts are monitoring the quantities and types of rubbish collected.

The Gulf of Aqaba is a fragile ecosystem, home to about 500 species of coral. One of the ways of preventing further damage is planting marine coral in man-made coral beds. The coral is propagated in coral nurseries and then planted out into manmade reefs made of variously-shaped cement blocks. The aim is to create new coral gardens which will reduce pressure on natural reefs from tourism, industry and shipping. But coral grows at a rate of around 1 centimetre a year so this is a long term project.

Balancing the needs of the environment with the need to develop tourism and other industries in the area is not easy. But it is vital – for everyone’s benefit.

German bad banks plan approved in Budesrat

Germany’s lower house of parliament today approved the country’s “bad banks” plan in a bid to end the worst German recession since the second world war.

The plan will allow banks to shed their rotten assets and place them in state-supported special purpose vehicles, which can allow for their quiet disposal over a number of years, and even in some cases allow bad assets to be restored to health.

Germany’s finance minister also wants to hunt down the crooks;

“In the situation we are in right now it is
important that wide sections of the population don’t think that we treat tax evasion and tax fraud as a simple misdemenour; it is criminal. It is damaging to Germany as a business location,” said Peer Steinbrück.

Many institutions in Germany’s complicated network of national and state banks are sitting on bad assets, and they are all eligible to take part in the scheme.

But the bill’s clauses on tax evasion also spells the end of Germans hiding money in secret accounts abroad, as they will now have to inform the authorites if they use tax haven facilities. However some are saying throwing so much money at the banks nine months after the crisis broke, and when liquidity seems less of a problem, is a case of too much, too late.

Comoros crash: black-box signals detected

Rescuers searching for the Yemenia Airbus, that crashed in the Indian Ocean, have said they have detected signals from the jet’s black-box flight recorders.


They have been scouring the seas around the Comoros archipelago since the plane from the Yemeni capital Sanaa ditched before landing at Moroni almost a week ago.


The 19-year-old A310-300 was on the second leg of a flight that originated in Paris. Only one of the 153 people on board, a 12-year-old girl, survived. 66 of the passengers were French.


Search and rescue teams have commented on the lack of floating debris, speculating that those who died are probably still trapoped inside the fuselage.


Flight data recorders normally reveal vital details of the last moments of a crashed aircraft. French air accident investigators hope the information they contain could help reveal why the Airbus crashed.

Honduras on alert for Zelaya return

Security forces in Honduras are on full alert ahead of the anticipated return of ousted President Manuel Zelaya. He has threatened to fly back today, to reclaim the presidency he lost in an army coup last week. Thousands of Zelaya supporters are at the airport to welcome him, but Honduras’ new leaders say they will not let Zelaya’s plane land. Some fellow-leftist Central American leaders said they may accompany him, and the interim government warned there was a danger someone might be hurt.

The Organisation of American States has demanded his reinstatement. Yesterday in Washington they voted unanimously to suspend Honduras from the group, only the second time such a thing has happened following Cuba’s expulsion in 1962.

Zelaya had alienated Honduras’ judiciary, the army and the wealthy elite by proposing constitutional changes give him a second term in office. The coup was the first in Central America since the Cold War.

Five dead in Philippines blast

Five people, including a three-year old boy, were killed when a bomb exploded outside a church in the southern Philippines. The bomb went off as an army truck passed by; a soldier was among the victims, as was a woman selling food from a road-side stall.

The attack in Cotabato City on Mindanao island is the latest by Muslim rebels fighting for independence. Violence has soared in recent weeks.

Police said the crude bomb was made from a mortar and was detonated by mobile phone. It was placed across the street from a church and exploded during mass. Local Archbishop Orlando Quevedo denounced the attack as sacrilege.

Mindanao is believed to be sitting on top of valuable oil and gas reserves. But the island remains impoverished with the violence scaring away potential investors.

US/Russia new START hopes hit snag

Moscow is preparing to welcome the US President to Russia on his first visit, but the two sides still are still struggling to reach agreement on how to cut their Cold War arsenals of nuclear weapons.

There is little doubt that the summit comes at a time of renewed harmony between the two superpowers, after relations hit a low under Obama’s predecessor not seen since the Cold War.

But nonetheless the pair still have major hurdles to overcome if they are to find a replacement for the 1991 Strategic Arms Reduction Treaty – or START – that expires in December.

Russia’s President Medvedev has said America must compromise on its planned missile shield in eastern Europe if a new START deal is to materialise. America says it is to guard against what it calls ‘rogue states’ particularly Iran. But Moscow feels threatened.

Obama told a Russian newspaper that the US has not yet decided its missile defence configuration in Europe, and added that he hoped Russia will be a partner in that project.

The framework on Strategic nuclear weapons was supposed to be the centrepiece of the Moscow summit. But negotiators have their work cut out to have a document ready in time.

Exit polls give Bulgarian election to opposition

Bulgaria’s opposition conservatives look set to throw the ruling socialists out of power according to exit polls at the general election. The former bodyguard and current Mayor of Sofia, Boiko Borisov, promised to clean up corruption and put the economy right. Bulgaria has been described as the most corrupt and the poorest country in the EU.

The exit polls show it is increasingly likely that the socialist Sergei Stanishev has lost his job as Prime Minister. He might have taken the country into the European Union, but under his rule Brussels blocked more than half a billion euros in aid because of rampant fraud.

First indications give Borisov’s GERB party around 40 per cent of the vote – that translates into about 115 seats – still not enough for an outright majority in the 240-strong chamber. The socialists are given less than half that.

Borisov appears to have captured the imagination of Bulgarian voters, who have become disillusioned by a government that appears to have done little to bring an end to the country’s climate of impunity for politicians and leaders of organised crime.

A new administration will have to act quickly to avoid more EU restrictions on financial aid.

British spy chief tagged on Facebook.

Personal details of the new head of Britain’s foreign intelligence service, MI6, have had to be removed from social networking site, Facebook.

They had been posted there by his wife and included photos and information on family members, where they live and take their holidays.

Some members of the press and parliament have expressed outrage that Sir John Sawers’ safety has been compromised.

But Foreign Secretary David Miliband played down the report in a Sunday newspaper, saying it was “no state secret” that Sawers “wears Speedo swimming trunks.”

The former UK ambassador to the UN is to take up his post as the head of MI6 in November. Some security analysts say he and his family will have to be re-housed and given greater protection as a result of the details coming out in public.

G8 in ‘shock’ L’Aquila meeting

The world’s eight richest nations meet in Italy this week, at an earthquake-hit venue whose experience could be seen as a metaphor for the financial shocks still battering the global economy.
The G8 summit was moved to the city of L’Aquila after April’s devastating quake, with Italian host Silvio Berlusconi keen to draw attention to his re-building efforts.

Berlusconi: “I, as prime minister, besides all the appointments with the guests, will have various bilateral meetings with colleagues from the other countries and will take some important leaders to visit places damaged by the earthquake.”

But despite Berlusconi’s fine words, many in L’Aquila are losing patience. Three months after the quake, money was made available to prepare the G8 venue, but little seems to have been done to rebuild the medieval city.

300 died in the quake, and 60,000 people made homeless. They’re still living under canvas, at the height of an Italian summer. The G8 leaders will discuss spending trillions to rebuild the world’s finances, but the people of L’Aquila would just like a little spent on them.

China says dollar to remain leading world currency

(AFX UK Focus) 2009-07-05 19:58
UPDATE 1-China says dollar to remain leading world currency

ROME, July 5 (Reuters) - Chinese Vice Foreign Minister He Yafei said on Sunday the U.S. dollar would continue to be the world's leading reserve currency for years to come.

"The U.S. dollar is still the most important and major reserve currency of the day, and we believe that that situation will continue for many years to come," He told a news briefing in Rome before this week's Group of Eight summit.

Beijing has floated the idea of an alternative to the dollar as global reserve currency and wants the topic broached at the summit starting in Italy on Wednesday.
The vice minister said Chinese officials had voiced concern about the safety of the country's dollar-denominated assets. "That is natural," he said.

He said many other countries over the years had been calling for the stability of the U.S. dollar. "We appreciate the efforts made by the U.S. government in that direction," he said, adding that it was the responsibility of the government issuing the reserve currency to maintain its stability.

He said discussion about reserve currencies had intensified since the outbreak of the global financial crisis, which he said had revealed "many shortcomings in the international monetary system".

However, he described this as an intellectual debate.

"You may have heard comments, opinions from academic circles about the idea of establishing a super sovereign currency. This is all, I believe, now a discussion among academics. It is not the position of the Chinese government."

Zhou Xiaochuan, head of the Chinese central bank, launched the reserve currency debate last March when he said the SDR, the International Monetary Fund's unit of account, might one day displace the dollar.

Some diplomats and bankers suggest Zhou's primary aim was to highlight attention on concern expressed by Premier Wen Jiabao about the safety of China's huge dollar holdings -- at risk if U.S. policy turns to greater tolerance of inflation.

Bankers reckon China holds perhaps 70 percent of its $1.95 trillion in official currency reserves in the dollar.