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« Reply #3030 on: Nov 15, 2012, 07:29 AM »

Germany to sign new benefits accord for Nazi victims

By Agence France-Presse
Thursday, November 15, 2012 7:22 EST

German Finance Minister Wolfgang Schaeuble said a new agreement he will sign Thursday with the Jewish Claims Conference will help Holocaust survivors who had never received compensation.

Schaeuble and JCC chief Julius Berman are to mark the 60th anniversary of the signing of the Luxembourg Agreement in which West Germany assumed responsibility for the Holocaust and paid reparations to Jewish survivors.

The ceremony at Berlin’s Jewish Museum will see them seal a new accord widening the group of people eligible for payments and tailoring compensation to elderly recipients’ needs.

“In eastern Europe and the former Soviet Union there are still people who were not entitled to make claims,” he told Berlin public broadcaster rbb-inforadio.

“And because those people who were entitled were identified, we said they should also receive (payments).”

Schaeuble noted that the task of ensuring reparations to all victims of the Nazis was complicated by the unfathomable dimensions of the Holocaust, in which six million Jews were murdered.

“The crime of the Holocaust was so unimaginably huge that we don’t know the names of all of those killed, nor of all those who are entitled to make claims and that is why we have to keep making adjustments,” he said.

The JCC has worked to ensure compensation for Jewish victims of Nazi persecution since 1951 and fights for the return of Jewish property stolen during the Holocaust. It says there are 500,000 Holocaust survivors still alive today.

It wrapped up negotiations with German officials in Washington in June to ensure that another 80,000 Holocaust survivors in eastern Europe would receive compensation.

In addition, about 100,000 ageing Jewish victims of the Nazis will receive home care services.

The JCC estimates the accord will cost Berlin about $300 million.
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« Reply #3031 on: Nov 15, 2012, 07:33 AM »

Hamas says ‘gates of hell opened’ as Israel kills military leader in Gaza

By Harriet Sherwood, The Guardian
Wednesday, November 14, 2012 20:23 EST

Israel launched a military operation to eliminate militants and weapon sites in the Gaza Strip , killing the commander of Hamas’s military wing, in a move with potentially serious repercussions beyond its borders.

The assassination of Ahmed al-Jabari in a missile strike in Gaza City was the “start of a broader operation”, according to the Israel Defence Forces, which it named Operation Pillar of Defence.

Ground forces were on standby, the IDF said. The Israeli prime minister, Binyamin Netanyahu, warned that the military was “prepared to expand” its Gaza operation.

A cabinet communique said the IDF would “continue vigorous action against the terrorist infrastructures operating from the Gaza Strip against the civilian population in Israel”. It would, “to the best of its ability, work to avoid harming civilians”.

In a statement on Twitter, the IDF said: “All options are on the table. If necessary, the IDF is ready to initiate a ground operation in Gaza.” The Israeli navy also confirmed that its gunships had fired shells into the Gaza Strip, and there were unconfirmed reports of an incursion in the south of the Gaza Strip late on Wednesday.

As Hamas’s armed wing warned that Jabari’s assassination “had opened the gates of hell”, Israel was braced for a surge in rocket fire from Gaza aimed at communities in the south of the country. Residents in towns in southern Israel were ordered to stay in bomb shelters, and schools in a 40km radius closed.

The conflict could fracture Israel’s shaky relations with the post-revolution government in Egypt, which has strong ties with Hamas. Since Egypt’s former president and ally Hosni Mubarak was ousted February last year, Israel has feared for the durability of the peace treaty between the two countries.

Following the launch of the operation, Egypt recalled its ambassador to Israel, and Israel’s envoy to Cairo was also preparing to leave the country.

Solidarity attacks from Islamic jihadist groups, which Israel says are operating in Egypt’s Sinai peninsula to the south, and from Hezbollah in Lebanon, which Israel believes has thousands of rockets ready to fire over the northern border, could not be ruled out.

Dan Harel, a former deputy army chief of staff, said: “It might draw them in. There was a volley of fire this morning from the south. We don’t know yet if it came from the Sinai … Hopefully Hezbollah will keep themselves out of the engagement.”

Hamas and other militant organisations could deploy longer-range missiles in its arsenals, some of which can reach densely populated cities such as Tel Aviv and Jerusalem. The IDF claimed multiple air strikes had hit more than 20 underground rocket launchers belonging to Hamas and Islamic Jihad. It said it was targeting long-range rockets, such as the Fajr-5, which has a range of up to 75km.

Jabari, head of Hamas’s military wing, the Izz ad-Din al-Qassam, died when his car was struck in Gaza City by a missile following almost a week of rocket fire from Gaza. Palestinian reports said 10 people died in airstrikes, including two children.

Sami Abu Salem, a local journalist, said civilian cars were bringing the wounded to the Shifa hospital in Gaza City. “I saw women and children bleeding from their heads and necks, and a baby who was burned.” Gazans were stocking up on emergency supplies of canned food in preparation for war, he added.

Jabari is the most senior Hamas operative to be killed by Israel for almost four years, since Operation Cast Lead, its three-week assault on the Gaza Strip during the winter of 2008-09 that left about 1,400 Palestinians dead.

The IDF said Jabari was “a senior Hamas operative who served in the upper echelon of the Hamas command and was directly responsible for executing terror attacks against the state of Israel”.

Its operation was intended “to severely impair the command and control chain of the Hamas leadership, as well as its terrorist infrastructure. This was a surgical operation in co-operation with the Israeli security agency, that was implemented on the basis of concrete intelligence and using advanced capabilities”.

According to Reuters, calls for revenge were broadcast in Gaza after the air strikes. “Israel has declared war on Gaza and they will bear the responsibility for the consequences,” Islamic Jihad said.

The Associated Press reported that “plumes of black smoke wafted into Gaza City’s skies following at least five airstrikes, in an atmosphere reminiscent of Israel’s large-scale 2008-09 attack on Gaza … Outside the hospital [where Jabari's body was taken], thousands of angry Gazans chanted ‘retaliation’ and ‘we want you to hit Tel Aviv tonight’.”

Israel had warned for several days that it may launch an offensive in Gaza after more than 130 rockets were fired by militants in recent days. On Tuesday, Netanyahu said he would choose “the right time to exact the heaviest price … Whoever thinks that they can damage the daily lives of residents of the south, and that they won’t pay a heavy price for this … they are mistaken”.

The Obama administration backed the Israeli airstrikes. In a statement, State Department spokesman Mark Toner denounced Hamas militants and others in Gaza for a barrage of rocket fired into southern Israel. And he said the US supported Israel’s right to self-defence.

Toner also urged Israel to make every effort to avoid civilian casualties.

Most political figures in Israel endorsed the operation. The Labour leader, Shelly Yachimovich, said Israel was “united in its war against terrorism”. But Dov Hanin, of the leftwing Hadash party, condemned the killing . “In place of the leaders killed, others will grow, and we will only get another cycle of fire and blood,” he said.

Egypt’s foreign ministry condemned the operation and urged Israel to halt targeted killings. The Freedom and Justice party, the Muslim Brotherhood’s political arm, called the assassination a “crime that requires a quick Arab and international response to stem these massacres against the besieged Palestinian people in the Gaza Strip”.

A spokesman for the Iranian foreign ministry also criticised the killing. The UN secretary general, Ban Ki-moon, called for “an immediate de-escalation of tensions”, and the Palestinian president, Mahmoud Abbas, was reported to have called for an urgent Arab league meeting.

guardian.co.uk © Guardian News and Media 2012

**************

November 14, 2012

Israel Heightens Warnings Over Palestinians’ U.N. Bid

By ISABEL KERSHNER
IHT

JERUSALEM — Israel’s Foreign Ministry has warned foreign governments that a successful Palestinian bid for enhanced status at the United Nations this month could lead Israel to cancel the Oslo peace accords and, possibly, to oust President Mahmoud Abbas and dismantle his Palestinian Authority, according to official documents made available to reporters on Wednesday.

The threats reflect the last-minute brinkmanship under way as the Palestinians forge ahead with plans for a vote on Nov. 29 in the United Nations General Assembly, having rejected a personal plea to hold off from President Obama as they and the Israelis focus their final lobbying efforts on a divided Europe.

Last week, the Palestinians distributed a draft resolution to the 193 member states in the first practical step of the campaign for international recognition of a future state in the West Bank, Gaza and East Jerusalem. They also seek to upgrade their status to that of a nonmember observer state in the United Nations system.

There is little doubt that a vote will pass; the Palestinians are expected to win a majority of the member votes in the General Assembly. But both they and the Israelis are placing great importance on gaining the support of what they call a “moral majority” of important Western nations.

Israel is vehemently opposed to the United Nations bid, arguing that it is a unilateral measure that violates the peace accords and will make future negotiations with the Palestinians all the more difficult.

“We are ready for Palestinian statehood in the framework of peace and reconciliation,” said Mark Regev, an Israeli government spokesman. But a United Nations vote, he said, “will fundamentally undermine the chances of a negotiated solution.”

The resolution calls for a Palestinian state “on the basis of the pre-1967 borders,” referring to the territories that Israel conquered in the 1967 Arab-Israeli war, and the Palestinians say this will serve as clear terms of reference for future negotiations — terms that the Israeli government rejects.

Israel also says it fears that the Palestinians will use their enhanced status to try to gain entry to the International Criminal Court, where it could seek to prosecute Israel for its actions in those territories, like the building of Jewish settlements.

The peace process has been stalled for years. Israel says it is ready for negotiations without any preconditions; the Palestinians say they will not negotiate so long as Israel refuses to freeze construction in the settlements.

Muhammad Shtayyeh, the Palestinian special envoy for the United Nations bid, told reporters in the West Bank city of Ramallah this week that the main intention was “to preserve the two-state solution” and to give it “legitimacy.”

One of the Israeli documents released on Wednesday was a list of talking points sent to Israel’s ambassadors abroad. They were instructed to communicate the Israeli position to the governments of the countries where they are serving.

“The adoption of the decision will in our view represent a violation of the agreements between Israel and the Palestine Liberation Organization” and “will give Israel the right to review and consider the full or partial cancellation of the agreements,” it stated. It added that a General Assembly decision would have “grave consequences” and that Israel could respond with “unilateral measures,” without elaborating.

A second document, an internal paper labeled “draft” and written by staff members of Israel’s hard-line foreign minister, Avigdor Lieberman, was more explicit. It described Mr. Abbas as an unpopular, weakened leader who had grown rich from leading a corrupt authority and was heading to the United Nations in a last-ditch effort to remain in power.

A recognition of Palestinian statehood by the United Nations, it stated, would leave Israel no alternative but to topple “the government of Abu Mazen,” referring to Mr. Abbas by his nickname. Any softer reaction would be interpreted as “raising a white flag,” it said.

Both documents emphasized that all Israeli efforts for now were focused on deterring Mr. Abbas from going to the United Nations. Were Mr. Abbas to back down from the United Nations move, the draft paper recommended, Israel should then reach an agreement with the Palestinian Authority for a Palestinian state in temporary borders for a transition period of unspecified length — a proposal that the Palestinian leadership has rejected outright many times in the past.

Reflecting the ideas in the position paper, Mr. Lieberman told Israel Radio on Wednesday that Mr. Abbas had looked around and seen the fate that befell Arab leaders who were ousted in recent uprisings.

“This is a personal initiative of Abu Mazen’s,” Mr. Lieberman said of the United Nations bid, “the sole goal of which is to save himself.”

Israel’s top ministers have been weighing possible responses to the Palestinian move. The finance minister has threatened to withhold tax revenues that the Israelis collect on behalf of the Palestinian Authority, and there have been calls to accelerate settlement construction and even to annex some West Bank territory.

But Israeli government officials said on Wednesday that nothing had been decided yet.

Mr. Shtayyeh, the Palestinian envoy, said he considered Israeli warnings about the collapse of the Palestinian Authority as “empty threats.”

“Israel has a vested interest in maintaining the status of the Palestinian Authority as it is today,” he said, noting that the Palestinian security forces helped to protect Israel.

The Palestinian Authority, a self-rule body, has limited powers in parts of the West Bank and is already suffering from a financial crisis.

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« Reply #3032 on: Nov 15, 2012, 07:39 AM »

November 14, 2012

Syria Orders More Airstrikes and Calls French Recognition of Rebels ‘Immoral’

By ALAN COWELL
IHT

PARIS — The Syrian authorities on Wednesday ordered airstrikes close to the tense Turkish border for the third consecutive day, and said a French decision to recognize and consider arming a newly formed coalition of Syrian government opponents was an “immoral” act “encouraging the destruction of Syria.”

“This is an immoral position because it allows the killing of Syrians,” said Faisal al-Miqdad, Syria’s deputy foreign minister, according to Agence France-Presse. “They are supporting killers, terrorists, and they are encouraging the destruction of Syria.”

On Tuesday, France became the first Western nation to fully embrace the new umbrella organization, the National Coalition of Syrian Revolutionary and Opposition Forces, which came together last weekend under Western pressure after days of difficult negotiations in Doha, Qatar.

On Wednesday, President François Hollande of France invited the leader of the group, Sheik Ahmad Moaz al-Khatib, to Paris for talks, Reuters reported.

Mr. Miqdad was harshly critical of the coalition, saying its plans for Syria amounted to a declaration of war. He faulted the group for rejecting dialogue and the mechanisms of the United Nations to solve the problem.

The Syrian president, Bashar al-Assad, has said he is committed to a United Nations’ cease-fire plan, but his forces have violated it repeatedly.

The six Arab countries of the Gulf Cooperation Council, including the opposition supporters Qatar and Saudi Arabia, recognized the rebel coalition on Monday as the legitimate Syrian government.

The United States, however, has withheld that level of recognition.

In a news conference on Wednesday, President Obama said, “I’m encouraged to see that the Syrian opposition created an umbrella group that may have more cohesion than they’ve had in the past.”

“We consider them a legitimate representative of the aspirations of the Syrian people,” he added. “We’re not yet prepared to recognize them as some sort of government in exile, but we do think that it is a broad-based representative group.”

He said that two crucial issues for the United States were “making sure that that opposition is committed to a democratic Syria, an inclusive Syria, a moderate Syria,” and keeping any flow of arms from reaching extremist elements “who would do Americans harm, or do Israelis harm, or otherwise engage in actions that are detrimental to our national security.”

In Perth, Australia, Secretary of State Hillary Rodham Clinton announced $30 million in American humanitarian aid to feed Syrians affected by the civil war, bringing the total American assistance to almost $200 million.

The airstrikes on Wednesday underscored the urgency of diplomatic maneuvers. Journalists near the Turkish border town of Ceylanpinar said they had witnessed a Syrian airstrike in the adjacent Syrian town of Ras al-Ain, where rebels say they have ousted troops loyal to Mr. Assad. It was the third such strike there in the last three days.

In response, Reuters reported, Turkey scrambled fighter jets to its southeastern border with Syria, underlining Turkey’s insistence that it will not refrain from a tougher reaction.

The fighting has also pressed against the Israeli border, near the Golan Heights. Israel has fired twice into Syria in recent days after taking Syrian mortar fire, claiming a direct hit on Syrian artillery units on Monday.

On Wednesday, Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak of Israel visited the Golan Heights, according to The Associated Press, and Mr. Barak said most of the Syrian villages near the border were under rebel control. “The Syrian Army is displaying ever-diminishing efficiency,” The A.P. quoted Mr. Barak as saying.

The Russian foreign minister, Sergey V. Lavrov, met in Riyadh, Saudi Arabia, with his counterparts from the six Gulf Cooperation Council nations, but failed to agree on an approach to end the violence. Russia has blocked repeated Security Council efforts to pressure the Syrian government to halt its bloody crackdown as a conflict that began peacefully in early 2011 has deteriorated into civil war, with a death toll of roughly 40,000.

At a news conference in Riyadh, Mr. Lavrov condemned the bloodshed as “outrageous,” Reuters reported, but criticized the new opposition coalition as failing to include the opposition within the country. “Without attracting the internal opposition,” Reuters quoted him as saying, “it is hard to believe that this process is inclusive.”

Neil MacFarquhar contributed reporting from Beirut, Lebanon.

**************

November 14, 2012

Along Syrian Border, Lives Defined by War

By TIM ARANGO
IHT

KILIS, Turkey — It was midday, overcast, as a Turkish man backed up his truck to the front of a beige one-story farmhouse here. It was loaded with enough fertilizer to blow up a city block.

“Whatever they ask me, I do,” said the man, who did not want to give his name but was happy to talk about his willingness to help the Syrian rebels. “I don’t say no.”

He pulled a receipt from a pocket of his jacket to show how much money he had spent on his haul: about $2,500, to be reimbursed by his Syrian paymasters.

His truck was packed with the two tons of nitrate-based fertilizer — the same chemicals and almost the same amount as Timothy McVeigh used to blow up a federal building in Oklahoma City in 1995 — that he had bought at a wholesale farm supply store in Antakya, a two-hour drive west.

Another Turkish man, Ahmed Helo, helped unload the cargo, bag after bag, until the front room of the farmhouse, whose owner collects a storage fee from the men, was filled with the bags of fertilizer, as well as a single barrel of sulfur. The plan was to wait until nightfall to smuggle everything into Syria and to give it to fighters to make bombs.

Mr. Helo uttered an expletive to describe President Bashar al-Assad of Syria and then said, “We just want to get rid of him.”

“Since the beginning of the revolution, I have helped,” said Mr. Helo, a former soldier in the Turkish Army who has relatives in Aleppo, Syria’s largest city, and often travels inside Syria to help rebels build explosive devices. Sometimes, he said, he joins the fight.

Nothing about what the men are doing seems secretive, nor do they take measures of concealment. A Turkish military vehicle drove on by, and an official border crossing was just a few hundred yards down the road.

“It’s not a secret,” said the Syrian man in charge of the fertilizer deal, a rebel commander who gave his name as Abu Mohammed. “It’s not prohibited. It’s fertilizer.”

It has now been about 20 months since Syria’s uprising began, and the civil war has become the defining feature of life along this long border, shaping the days’ rhythms and conversations and commerce. The Syrians are trying to change their lives, and the Turks are trying to hold on to theirs, and both are struggling to coexist. Everyone, it seems, either wants in on the action or just wants it all to go away. And with little political or military unity to the revolutionary efforts so far, and no defined strategy for how to topple the government, nor a vision for what comes when the fighting stops, everyone is left to project hopes and fears onto the cause.

“We cannot define what we want,” Abu Mohammed said. “We just want the regime to fall.”

Abu Mohammed, like many of the men involved in the war effort, spoke in contradictions. He described himself as just a simple house painter in Syria before the revolution, but then he said he was one of the many foreign fighters who had flocked to Iraq to fight the Americans because “they are nonbelievers.” Then he said, “I’m not very attached to religion.”

Without a strong guiding hand from the international community, particularly from the United States, whose influence these men seem both to crave and to resent, nearly all agree that the influence of foreign religious extremists on Syria’s battlefields has grown in recent months.

“Thanks to God, it is increasing,” Abu Mohammed said. “Whoever is helping us, why not?”

More pointedly, religion is becoming a stronger force in shaping the lives of Syrians. Many formerly secular Syrians who may have prayed but whose lives were focused on the prosaic — feeding their families and spending time with friends — are growing beards, forgoing alcohol and, in some communities under rebel control, establishing courts under Shariah, or Islamic law.

“Some people used to drink, and now they have stopped,” Abu Mohammed said. “They don’t want to sin. Religious commitment is increasing. If they see all this killing, it’s natural that they become more religious.”

Saiid al-Assi, who has let his beard grow and is now dedicated to his prayers, sat last week in a hotel in Antakya. Mr. Assi, a former farmer who raised and sold sheep and grew almonds, said many Syrian men were now like him. “Most of the men, they are becoming more religious,” he said. “Why? Because all of the world has left them.”

He added, “Al Qaeda is helping us, but the Europeans are not.”

On the night before the American presidential election, a rebel commander who moves between Syria and Turkey and gave only his first name, Maysara, sat in a cafe in Antakya and drank tea and smoked hand-rolled cigarettes. “I used to drink, but not today,” he said. “Because now I might die anytime.”

Like many others, he was a farmer before the war, and not much concerned with religion. But as the war has dragged on, its cruelties have begun to shape the sensibilities of men like Maysara in a way that provides an ominous foreshadowing of the type of society that may emerge after the war. He favors the harsh justice of the Shariah courts that have sprouted in communities held by the rebels. He explained the recent kidnapping of Kurds by fighters aligned with the Free Syrian Army, after clashes between the two groups, by saying, “It was a message: We can kill you at any time.”

And about the recent coldblooded killings of detained government soldiers, captured in a harrowing video and denounced by the United Nations as a possible war crime, he had this to say: “In my opinion, the only mistake they made was to take the pictures.”

Later in the week, as the concluded American presidential election prompted reports of renewed international efforts to persuade Mr. Assad to leave Syria in exchange for assurances of his safety, another rebel, Abdul Zaki, sat in the same cafe. That morning, Mr. Assad was giving an interview to a Russian television channel in which he vowed to “live and die in Syria.”

As Mr. Assad’s comments filtered through Twitter, Mr. Zaki offered a rebuttal with the bravado of a young man who has taken up arms.

“For sure, he will die in Syria,” he said. “We will make sure of it.”

Hwaida Saad contributed reporting.

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« Reply #3033 on: Nov 15, 2012, 07:41 AM »

November 14, 2012

U.S. Navy Rushes Robotic Tools to Clear Mines to Persian Gulf

By THOM SHANKER
IHT

WASHINGTON — The United States Navy is rushing more of the newest unmanned mine-clearing technology to the Persian Gulf while creating two new sets of crews to operate minesweepers in the region, Navy officials said Wednesday. The effort is intended to balance a renewed American emphasis on the Asia-Pacific region while sustaining a military presence in the Middle East to deter Iran.

The Navy says it has come up with plans to increase its deployments of the latest generation of robotic equipment that can detect and remotely detonate mines as a way to help guarantee a continued — and credible — countermine ability in waters off Iran into next year and beyond, when the number of minesweeping ships on patrol may be reduced.

Two new crews will join the 10 that now rotate duty on the eight minesweepers in the Persian Gulf region. Those additional crews entering the deployment cycle should help relieve the stress on the sailors and their families, while sustaining a high tempo of mine-clearing missions, Navy officers said.

Four of the minesweepers now on patrol in the Middle East are permanently based in Bahrain, home of the Fifth Fleet.

But four others, sent to the region during the summer as tensions with Iran escalated, may be ordered back to their home port in San Diego next year if the situation in the region allows. The Navy wants those vessels back in the Pacific Ocean to meet requirements of President Obama’s rebalancing of a military and diplomatic focus on Asia.

Defense Secretary Leon E. Panetta has declared that any action by Iran to block free transit of oil and other commerce in the Persian Gulf and the Arabian Sea would be a “red line,” meaning an unacceptable action that would be countered with an American response.

But Pentagon and Navy officials are well aware that Washington’s ability to affect Iran’s behavior is based in part on Tehran’s assessments of American military ability. Defense Department officials are concerned that the Iranian leadership may view American military might as strictly a numbers game, counting only the warships on patrol.

To counter that potential perception, Navy officers have highlighted the effectiveness of the expanded presence of new robotic mine countermeasures being deployed by helicopters and aboard ships.

“We are getting precise tools that effectively, surgically, counter these mines, that map potential mine danger areas and then put our forces on them to kill them,” said Rear Adm. Frank A. Morneau, the Navy’s deputy director for expeditionary warfare.

“We hope to have capabilities even better than eight ships in the gulf,” he added. “We can really reduce the anti-access, area-denial capability of the mine. We are making it impotent.”

Pentagon officials — in views affirmed by academic national security analysts — say that while Iran might be able to close the Strait of Hormuz with mines, the effort would not be effective at halting traffic for more than a few days, given American and allied abilities.

In September, the United States and 29 other nations conducted the largest minesweeping exercise ever in the Persian Gulf region, a two-week drill that was also intended as a signal to Iran that the American military is not the only one working to ensure the flow of oil supplies.

In addition to the current technologies aboard mine-clearing ships and sonar sleds hauled through the water below MH-53 helicopters, the Navy is increasing the number of unmanned, remotely piloted systems deployed in the region.

Among them are the MK 18 underwater vehicle, which is a remotely piloted, torpedo-shaped vessel that searches for and identifies mines. Another new technology to be increased in the Persian Gulf is the SeaFox mine neutralization system, a relatively inexpensive and expendable underwater drone that can approach a mine and detonate.
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« Reply #3034 on: Nov 15, 2012, 07:43 AM »

Germany: Goodbye euro, hello recession

14 November 2012
Die Zeit Hamburg   

The 18th century architect Balthasar Neumann, once portrayed on German 50 mark notes, surrounded by characters from other former national currencies.

The 18th century architect Balthasar Neumann, once portrayed on German 50 mark notes, surrounded by characters from other former national currencies.
Antonio

What would happen if Germany left the euro? Economist Gustav Horn of the Hans-Böckler Foundation, which has close ties to trade unions, speculates on what would happen in the days following a German exit from the euro – and on what Germany's most popular euro-critic, Thilo Sarrazin, might also say.

Excerpts.
Gustav Horn

A what-if: What would happen if Germany were to leave the euro, as the investor George Soros is calling for?

Let’s say that, by a two-thirds majority, the German Parliament votes to leave the euro and reintroduce the German mark. Only the Greens vote against it. The exchange rate is set at one to one. The Bundesbank president leaves the ECB’s Governing Council with immediate effect.

The financial and foreign exchange markets are the first to react to Germany’s decampment. From the remainder of the monetary union, a great amount of liquidity flows into Germany. The new currency abruptly appreciates by 50 percent against the euro, and one mark now costs 1.50 euros.

The assets invested in Germany lose – in euro terms – much of their value. At the same time, the value of German state guarantees for the euro rescue fund sharply decreases. Initially, the risks to the public finances recede.

Around 200 German economists celebrate Germany's regained freedom. Thilo Sarrazin goes on a popular TV political talk show hosted by Günther Jauch to explain that Germany does not need the euro.

In the rest of the eurozone, the financial market are rocked by turmoil. The ECB, which has relocated its headquarters from Frankfurt to Paris immediately after Germany’s withdrawal, announces unlimited bond purchases, which allows the ECB bankers swiftly to reassure the stock markets.

German cars become too expensive

At the same time, they will pay back Germany’s deposits in the ESM with printed euros. Calculated in marks, these meanwhile have lost a third of their value. The Bundesbank therefore takes some hefty losses, and German government debt balloons accordingly.

After a few weeks of relief over the escape from the crisis, several major car manufacturers declare that their sales figures in the new eurozone have nose-dived. German cars have become too expensive for the other Europeans. The automakers bring in short-time work and cut jobs.

A little later, the Confederation of Employers declares that Germany's economy is no longer competitive and urges wage restraint on the German unions. After one quarter, the Federal Statistical Office announces that Germany's current balance of payments surplus has halved because exports to the remaining eurozone have plunged. Thilo Sarrazin goes on the popular TV political talk show hosted by Anne Will to say: “Germany is doing well even without the euro. Its revenues have not dropped.”

In the rest of the eurozone, the countries in crisis gain more time to build up their savings. The other countries also increase their deposits in the ESM bailout fund to compensate for the absence of Germany.

Sharp rise in unemployment

The fiscal pact is suspended and replaced by a stability pact. This commits the countries to comply with an inflation target in order to avoid current account imbalances. The ESM is transformed into a European Monetary Fund (EMF). Countries that record large current account surpluses or deficits must cede a portion of their income tax revenue to the EMF.

Germany's current account balance has now evened out, thanks to the sharp decline in exports. Germany's economy is going through a sharp slump. The export industry finds itself in recession and pushes though sweeping job cuts. Domestically, the economy, hit by higher interest rates, also begins to lose momentum. In the remainder of the eurozone, however, the economic situation gradually stabilises. Thilo Sarrazin goes on the political talk show hosted by Frank Plasberg to say: “That has nothing to do with the euro.”

Volkswagen announces that it is shifting much of its car production to the remainder of the eurozone, saying “The German market is too small for our production, and we need greater exchange-rate security.” The value of VW stock jumps steeply. BMW and Daimler confirm similar plans.  Against a backdrop of falling tax revenues, the debt brake forces job cuts in the public sector. Wage negotiations lead to an increase of just half a percent.

A year after leaving the euro, Germany has landed in a deep recession with a sharp rise in unemployment. Meanwhile, domestic demand is plummeting, as the low wage increases and the job cuts are now pushing down consumption. At the same time, more and more companies are announcing job relocations to the eurozone, the U.S. or Asia.

Greece and Spain are on the go

The Frankfurt Stock Exchange has lost much of its significance; the Paris Stock Exchange, in contrast, has gained in influence. Financial capital is flowing out of Germany. The rise in the value of the mark has come to a standstill.

The eurozone has now stabilised and shows at least weak economic growth. In particular, exports from the crisis countries – to Germany, above all – have risen. VW is planning to expand its facilities in Spain and is contemplating building another plant in Greece.

After two years, the growth in the remaining eurozone is once again significantly higher than two percent. The economic output in Germany, however, has stagnated, and unemployment stays high.

Around 200 German economists publish a dramatic appeal for Germany to increase its competitiveness. The German labour market is too inflexible, the wages too high and the benefits far too lavish. Two years after exiting from the euro, write the economists, Greece and Spain are on the go, while the German economy is limping.

Thilo Sarrazin goes on the TV political show hosted by Maybrit Illner to explain, “I never recommended getting out of the eurozone, but you will allow that I did have the right to say that we do not need the euro.”
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« Reply #3035 on: Nov 15, 2012, 07:44 AM »

 SPIEGEL ONLINE
11/14/2012 04:52 PM

Beyond Regulators' Grasp: How Shadow Banks Rule the World

By Martin Hesse and Anne Seith

Beyond the banking world, a parallel universe of shadow banks has grown in the form of hedge funds and money market funds. They're outside the reach of conventional financial regulation, prompting authorities to plan introducing new rules to prevent the obscure sector from triggering a new financial crisis. But in doing so they risk drying up an important source of funding to banks and firms.

In the financial world, there is a narrow divide between heaven and hell. Frenchman Loïc Féry realized this when he was 33. He was a rising star in the banking world, managing the trade in complex loan packages for an investment bank. According to his business card, he was the bank's "global head of credit markets." But then one of his employees gambled away about €250 million ($317 million), and suddenly Féry was without a job.

That was in 2007. A number of investment bankers experienced a similarly precipitous fall in the turbulent years of the financial crisis. But, like Féry, many reappeared before long and became more successful than ever, in the world of the so-called shadow banks. These are companies that engage in business similar to that of ordinary banks, but without being subject to the same strict regulation.

Féry launched a hedge fund in London. These notorious investment firms collect money from customers and speculate with a wide range of securities. Today Féry makes the kinds of investments that are too risky for his former colleagues. He lends the money of his customers to companies whose creditworthiness isn't good enough to qualify for loans from ordinary banks, and he also buys especially risky loan packages from lenders. As a result, he is able to achieve double-digit returns in the midst of a crisis.

But the Frenchman, who has become so successful that he was able to buy a first-division football club, FC Lorient, insists that companies like his make "a positive contribution to the real economy," because they manage risks professionally.

Growing Concern About Lack of Regulation

But banks, regulators, politicians and economists are worried about the parallel universe that has developed beyond the major banks. Until the 2007 financial crisis, shadow banks grew at a pace similar to that of ordinary financial institutions. Hedge funds, special-purpose entities and money market funds benefited from the low interest rates offered by central banks. Banks increasingly used outside companies to handle all the deals that were too risky for them, so that they wouldn't appear on their books. In this manner, shadow banks and regular banks collaborated to build a castle in the air made up of loans.

Within a few years, the volume of financial transactions in the world of shadow banks grew from $27 trillion to $60 trillion today. Now regulators finally want to clamp down and set up a regulatory framework that has so far been conspicuous by its absence for this sector.

After the financial crisis of 2008, German Chancellor Angela Merkel, of the center-right Christian Democratic Union (CDU), said that there could be no "blind spots" on the map of financial market regulation. But while more and more laws were passed to control banks, regulation of the shadow banks is only just beginning.

The man who is supposed to bring about the necessary change works in an office tower far away from major financial centers. When Svein Andresen broods over how he can best go about taming the wild masters of money, he sees the Black Forest through his office window. The level-headed Norwegian is the secretary general of the Financial Stability Board (FSB), which is housed at the Bank for International Settlements in Basel, Switzerland, the umbrella organization of the world's central banks.

The FSB is intended to avert a repeat of disasters like the 2008 crisis. "For years, governments and regulatory agencies paid too little attention to financial institutions outside the world of banking," says Andresen. Now he wants to bring order to the chaotic world of shadow banks. But it's a slow process.

Scant Information Poses Dilemma

In a few days, Andresen and his colleagues will present their proposals for new laws which they hope will be enacted worldwide. But then the political discussions will begin anew, and it will take until at least September 2013 before the new rules are in place.

At the moment, very little is known about many of the shadow companies. Precisely because they remained largely unregulated for so long, there is no government agency that could order them to provide information. "It's a classic chicken-and-egg problem," says Andresen. Without regulation there can be no data, and without data there can be no regulation.

Even the question of who should handle data collection in the future has triggered a dispute between politicians and regulators. It isn't easy to bring together opinions from the 20 countries whose governments meet regularly at the G-20 summits of leading industrial and emerging economies. To get the mammoth problem under control, FSB staff members have compiled a "world map of shadow banks," as Andresen calls the puzzle-like project.

Fifty different types of companies have been identified, and the FSB now intends to focus on the roughly 10 most common types. Regulators suspect that these companies alone have assets totalling $20 trillion.

But the more detailed the research is, the more difficult it gets. For instance, Germany's financial regulator BaFin called for the broad documentation and regulation of hedge funds, only to be blocked by Great Britain and the United States -- not surprisingly, given that many of these funds are headquartered in London and New York. Now only hedge funds that engage in real credit transactions will be subject to greater scrutiny in the future, a group that makes up less than a third of the industry.

Hedge fund manager Féry's business would likely be included. The Frenchman vehemently rejects being branded a reckless gambler, and he is not entirely wrong.

Shadow Banks Have Benefits

Unlike other hedge funds, says Féry, he works without outside credit. If money is lost, he explains, "only our reputation as manager and our end investors -- who know the risk we are taking -- are affected."

Even a regulator quietly admits that the most dangerous loan packages, which Féry buys from banks, among others, are in better hands at a hedge fund, because the deposits of bank customers are not being put at risk. "Those are the good sides of the shadow banking system." Féry also believes that small- and mid-sized companies in particular depend on his services because the banking crisis has forced them to "struggle for financing."

Using similar arguments, lobbyists from other areas of finance have already managed to keep their customers largely out of the discussion. For example, the FSB is not treating so-called private equity firms as shadow banks yet. Their classic business consists of borrowing money from banks and taking over companies, and then burdening those companies with the debt.

That doesn't threaten the stability of the entire financial system. However giants like the Blackstone Group, founded by billionaire Stephen Schwarzman, have long since turned into asset management companies, investing in almost anything available on the financial markets.

Paul Schott Stevens, too, would prefer to keep his clientele away from the scrutiny of regulatory authorities. The 59-year-old descendant of a family of butchers from the southwestern state of Baden-Württemberg is the top representative of an industry that is as powerful as it is obscure. He is the president of the Investment Company Institute (ICI), which represents money market funds.

The funds collect money from conservative investors, including pension funds, insurance companies and ordinary savers. This money is lent for very short periods -- weeks or months at the most -- to banks, municipalities or companies. The lending takes the form of purchases of short-term bonds.

Most money market funds, which control almost $5 trillion in investment capital, are headquartered in the United States. In 2008, they put the fear of God into regulators and politicians when one of the companies, the $62 billion Primary Reserve Fund, bought up large quantities of short-term debt securities from Lehman Brothers. After the investment bank went bankrupt, the fund had to be liquidated.

The Illusion of Security

It came as a shock to customers in the industry because money market funds had long been viewed as a safe investment, precisely because, on the surface, they are often very similar to banks. They even issue credit cards and checkbooks in the United States.

When it became clear that security is an illusion, the one thing happened that regulators in the financial world fear most: Investors went into a panic and emptied their accounts. The government was forced to issue a guarantee for the money market funds. If it hadn't done so, it is quite possible that the next worldwide financial quake would have been triggered. This is because the industry is a major financier of banks, including European banks.

US money market funds sent the financial world into turmoil once again in 2011, when they withdrew billions of euros from French banks that had become the subject of market speculation in the euro crisis. This time it was the international central banks that came to the rescue, providing the banks with a fresh injection of dollars. French banks, in particular, were dependent on the steady flow of short-term capital from the money market funds. In many cases, the banks would turn around and relend the money for long-term purposes, such as aircraft leases.

Regulator Andresen wants to put a stop to such events. "If the money market funds run into problems, they immediately transfer the risks to the banks -- and vice-versa," he says.

There are plenty of proposals for stricter controls. Since 2010, the US money market funds have at least had to disclose more details about where they invest. They are also required to have more cash reserves on hand in case large numbers of customers suddenly want to withdraw their deposits. Andresen would also like to install thicker security buffers or water down the value guarantee that money market funds give their investors.

Money Market Funds Are Needed

The crazy thing is that Andresen's efforts could bring about precisely the opposite of what he wants to achieve. Because of low interest rates on the bond markets in which money market funds invest, profit margins are already extremely slim. "The business isn't profitable at the moment," industry representative Stevens says emphatically. Stricter rules would cost even more money, and Stevens predicts that many fund managers would quit the business for good.

That too is a nightmare scenario because it would mean that not only many banks, but also companies and even a number of US municipalities would lose an important source of funding. Money market funds buy two thirds of the short-term debt securities issued by American municipalities. Companies that need fresh money to run their daily operations also regularly resort to the shadow lenders of the financial industry.

"The world would be a very, very dark place without money market funds," says Alice Joe of the US Chamber of Commerce. That's because many companies need millions from one day to the next, she explains. All it takes is a call in the morning to the right dealer, "and they'll have the money in their account that afternoon." The same process would take three days with banks.

Even giants like the EADS Group often rely on short-term funds because aircraft production is expensive. If something goes wrong in the production chain, the group's financial managers need to come up with giant short-term loans within hours. When EADS issued €300 million in new bonds a few weeks ago, "they were placed within 15 minutes," says Jörg Weber, who handles the group's dealings with money market funds. It cannot be in the interest of regulators to see such an important industry fall apart, says US lobbyist Stevens.

It's because of concerns like this that the realm of the shadow banks will likely continue to grow. The stricter the regulations for normal banks, the more money migrates to the unregulated parts of the financial world. FSB Secretary General Andresen fears that investors will soon forget the potential consequences of risky deals with shadow banks. "And if regulations aren't in place by then, we could easily experience something similar to what happened in 2008."

Translated from the German by Christopher Sultan
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« Reply #3036 on: Nov 15, 2012, 07:45 AM »

 SPIEGEL ONLINE
11/14/2012 11:11 AM

Tango with the Tax Man: Multinationals Find Loopholes Galore in Europe

Large multinationals, many of them based in the United States, are masters at avoiding taxes on profits made abroad. Apple, for example, paid just $100 million in taxes in 2010 on overseas profits of $13 billion. But Germany would like to put a stop to the practice, and is finding some influential support. By SPIEGEL Staff

Johannes Teyssen sees himself as a manager with a global outlook. The CEO of Düsseldorf-based energy giant E.on is proud of the fact that two-thirds of his revenues come from abroad. He also takes a global perspective when it comes to solving the major issues facing the future of his industry, from Germany's shift to renewal energy to climate change. "Anyone who thinks in national terms is thinking too narrowly," says Teyssen.

But now that his company is also seeing lower profits, it makes sense that Teyssen is trying to improve E.on's bottom line with international help. The energy giant is making the final preparations to transform itself into a European stock corporation (SE) next year. What is now a German joint-stock company is to become a European corporation. The transformation will provide the group with new options, and the advantages are not just limited to escaping Germany's rigid rules granting employees a say in company management.

The new designation will allow E.on to move its headquarters abroad, making it easier for the company to circumvent national and international fiscal authorities. In the jargon of tax experts, E.on is providing itself with new "options for fiscal optimization." It's completely legal, but it comes at the expense of the treasury.

The switch to SE will also allow the corporation, intentionally or unintentionally, the opportunity to catch up in a discipline where German competitors have lagged behind an elite league of multinational corporations: that of raking in billions while paying almost no taxes at all.

Corporations like Pepsi, Starbucks and Intel sell their products around the world, and seek to establish reputations for being environmentally conscious, progressive and socially responsible. But when it comes to allowing the government to collect a suitable portion of their corporate profits, the icons of global capitalism prove to be antisocial in the extreme.

How to Look Poor

According to data compiled by independent tax experts, US technology giant Apple paid a paltry $130 million (€102 million) in taxes on foreign earnings of about $13 billion in 2010. Microsoft paid only $1.7 billion on $15 billion in foreign earnings, while software giant Cisco paid a tax bill of $400 million on foreign earnings of more than $8 billion.

The operations corporations launch to optimize their tax bill go by various names, including "Double Irish" and "Dutch Sandwich," but the principle is always the same. In a confusing network of parent companies and subsidiaries, foreign branches and holding companies, sales, earnings and costs are shifted back and forth so many times that the companies end up looking poor wherever tax rates are high. The remaining earnings are generated primarily in low-tax countries.

Years ago, the Organization for Economic Cooperation and Development (OECD) estimated that 60 percent of all international trade happens within multi-national corporations. Following the letter of the law, they do business with themselves, taking advantage of tax laws in different countries to minimize their burdens.

This has disastrous consequences for governments, whose financial clout is compromised by the corporations' fiscal tricks. Government budgets become tighter as a result and pressure on those companies and employees who are unable to circumvent taxation is increased.

But now there is growing opposition to these practices among policymakers. German Finance Minister Wolfgang Schäuble has joined forces with his counterparts in Paris and London -- and a few weeks ago, he also wrote to US Treasury Secretary Timothy Geithner to gain his support for his cause. Schäuble's project is directed in part against his counterparts in European countries like Ireland and the Netherlands, whose business model consists primarily of enticing foreign companies with tax benefits.

Particularly Glaring

For years, a task force at the Paris-based OECD, the club of the world's most important industrialized nations, has been studying the methods of excessive tax structuring and the ways countries can defend themselves. Its work illustrates just how much corporations can benefit from these practices. The experts see Apple and Google as particularly glaring cases.

Google, the highly profitable company based in Mountain View, California, managed to reduced its tax burden in the United States to 21 percent, even though the nominal tax rate in California is actually 41 percent.

According to its annual report, Google paid less than $2.6 billion in taxes on income of $12.3 billion in 2011. There is nothing illegal about this. The earnings from its US business are taxed according to the law. Rather, the company's low overall tax burden is the result of its earnings being taxed at much lower rates abroad.

This is how the Google system works: All earnings achieved in Europe are posted to Google Ireland Ltd., headquartered in the Irish capital Dublin. German fiscal authorities have no access to these revenues and profits, because the company does not maintain any places of business in the classic sense in Germany.

Google Ireland reported revenues of €10.1 billion in 2010, but they were almost completely consumed by advertising expenses and personnel costs for the company's 2,000 employees. The largest expense, about €7.2 billion, consisted of licensing fees that Google Ireland paid to another Google subsidiary in the Netherlands. In this manner, almost all of the income was sucked away from Dublin. The Irish state was left with only €16.8 million in revenues subject to corporate income tax, as well as the taxes on employee wages.

Google Netherlands Holdings B.V. in Amsterdam, which collected the licensing fees from Dublin, is a company without employees. It paid only €2.7 million in corporate income tax in the Netherlands. That's because the Dutch company funneled the lion's share of its revenues from Ireland back to the Emerald Isle, in the form of a licensing fee to Google Ireland Holdings.

The Bermuda Treasure Chest

Shuffling billions back and forth may seem absurd to the uninitiated, but it's worthwhile. Google Ireland Holdings is in fact domiciled in two places. It was established under Irish law, but its administrative headquarters are in Bermuda. The benefit for Google is that there's no corporate income tax in Bermuda.

The operation is complicated, but it's extremely lucrative. It allows Google to move its earnings, which consist mainly of advertising revenues, out of Europe while paying almost no taxes there, depositing them in a tax haven to which the US Treasury has no access. The US authorities would be able to tax these earnings only if they were later distributed to the US parent company, but that seems unlikely at this point. Google has amassed some $24.8 billion in largely tax-free income in its Bermuda treasure chest.

The American Internet giant isn't the only company that has discovered the varying European regulations on the taxation of license fees as a way to boost its earnings. Swedish home furnishings giant Ikea uses the same method to make itself more profitable. In return for using the company's name, Ikea's German subsidiary pays a portion of its sales revenue to a company in the Netherlands. Tax law expert Lorenz Jarass estimates that the German treasury loses out on dozens of millions of euros every year as a result. Meanwhile, Ikea pays almost no taxes in the Netherlands.

License fees aren't the only way to easily move money around within a company. Trademark rights and patents can also be readily shifted around. A no less lucrative method consists of endowing corporations in tax havens with large amounts of capital, so that the money can be invested almost tax-free in the international financial markets.

In the end, the parent companies borrow the money back at high interest rates, which they can then claim in their home countries as operating expenses, reducing profits and, by extension, their tax liability.

Sometimes these tax oases really do look like the palm-tree paradises from travel brochures. They exist in the Caribbean and in Asia, but also in places where palm trees don't grow: in the middle of Europe, supposedly a region of high taxes.

Outsmarting Countries

Belgium, for example, has one of the highest corporate income tax rates in the world: 33.99 percent. In practice, however, the debt-ridden country collects far less from companies, thanks to loopholes in its tax laws. The average tax burden of the 50 most ingenious companies, with total earnings of €27 billion in 2010, was a paltry 1.04 percent.

This may be enough in good times, but in crisis the cash-strapped country is forced to do without billions in tax revenues. Indeed, Prime Minister Elio di Rupo is now seeking to introduce a minimum tax of 12.5 percent on corporate earnings. But the Belgians are hesitant, fearing that the tax could prompt capital to migrate to other European tax havens.

An international treaty could prevent corporations from outsmarting countries. But so far not even the European Union has been able to harmonize the rules of its member states. On the contrary: Countries including Ireland, Bulgaria, Slovakia and Cyprus reject any standardization, because it would jeopardize their business model as low-tax countries.

Such opposition led the European Commission to long ago abandon the idea of harmonizing tax rates throughout Europe. It does, however, want to create uniform standards for the treatment of interest and license fees, as well as other cost factors relevant to corporate income tax.

Two guidelines to this effect have already been presented and, with minor changes, accepted by the members of the European Parliament. But little has happened since. All tax-related measures must be approved unanimously by the 27 EU member states. The Cypriots currently hold the rotating presidency of the Council of the European Union, and next year the Irish will take the helm for six months. Neither country is particularly eager to change the status quo.

US on Board?

Nevertheless, German Finance Minister Schäuble is determined to make another attempt. To apply the necessary pressure, he has enlisted the help of his counterparts from Great Britain and France, George Osborne and Pierre Moscovici, and he brought up the issue at the most recent meeting of G-20 finance ministers in Mexico. An initial package of measures to stem the exodus of tax revenues is expected to be ready by the time the group meets again in St. Petersburg next February.

In a recent letter to US Treasury Secretary Geithner, Schäuble proposed increasing the pressure on tax havens around the world. It is an "unacceptable state of affairs" that places like Bermuda levy no corporate income taxes, Schäuble wrote. "The non-taxation distorts international competition and reduces government revenues." For this reason, Schäuble noted, industrialized countries must cooperate more effectively, especially with regard to the taxation of intangible assets like patents and licenses.

It isn't clear that Schäuble's effort will succeed. When it comes to tax issues, the US government has a history of siding with US corporations. But that might be changing now that Washington is searching for new revenue streams to combat its massive budget deficit. Many US politicians are no longer willing to accept the fact that companies are stashing away billions in tax havens to circumvent taxation at home.

The US government could certainly use the money. In a recent inquiry, a US Senate committee found that about 1,000 US companies have moved substantial assets abroad -- assets valued at roughly $1.5 trillion, or one tenth of the country's national debt.

BY SVEN BÖLL, MARKUS DETTMER, FRANK DOHMEN, CHRISTOPH PAULY, and CHRISTIAN REIERMANN

Translated from the German by Christopher Sultan
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« Reply #3037 on: Nov 15, 2012, 07:47 AM »

November 14, 2012

Greece Examines a Debt Buyback as One Way to Reduce Its Burden

By LANDON THOMAS Jr.
NYT

LONDON — As Greece’s creditors bicker over the terms of its bailout, the government is examining a more radical approach that could reduce the country’s escalating debt pile in one fell swoop.

Essentially, Greece would propose that its private sector bondholders sell back their sovereign debt holdings for a small profit, but at a price favorable to Greece. The move takes a page from the playbook Greece used earlier this year in which the government pressured banks and other private holders to take a loss on their sovereign bonds so Greece could ease its debt load. This time, they would not be forced to take a haircut, but some would most likely balk at being forced to accept a new deal.

The aim is to further reduce an ever-increasing sovereign debt burden that is fast approaching 200 percent of gross domestic product, far beyond Europe’s ideal of 60 percent or less.

Many different strategies about how to address Greece’s debt load are being discussed by its creditors, with the buyback option being just one of several. The government this month narrowly secured parliamentary approval for yet another round of spending cuts and tax increases, putting Greece on the verge of receiving 31 billion euros, or $39 billion, in desperately needed bailout loans. The euro zone is also weighing measures — like extending loan maturities and paring interest rates — that would further ease the country’s financial burden.

While the most pressing need is securing the 31 billion euros Greece needs to survive, arriving at a long-term solution for its bloated sovereign debt is also seen as crucial, given that the economy continues to shrink. An estimate released Wednesday showed Greece’s economy contracted by 7 percent in the third quarter — which makes the debt relative to economic output all the more onerous.

 To that end, a small circle of lawyers and bankers are suggesting that Greece offer to buy back its deeply discounted debt at a price of 27 to 33 euro cents, compared to the 25-cent level where it currently trades. If investors hold out for a higher price, the government could invoke collective action clauses (C.A.C.’s) in the bond contracts that, in theory, would prevent a bidding war, thus allowing the country to retire as much as 40 billion euros of its 340 billion euros in debt.

For example, the 62 billion euros’ worth of new bonds that Greece issued as part of its landmark debt restructuring deal reached with private bondholders in March are now valued at about 15 billion euros, or $19 billion. If Greece were to borrow the money to buy back this debt, it could retire 30 billion to 40 billion euros’ worth of its obligations, depending on the ultimate price it pays.

While borrowing such an amount would be a challenge, Germany — the biggest euro zone economy and thus the biggest contributor to the Greek bailout — could take the view that this would be a better way to reduce Greek debt than to ask taxpayers to swallow a loss via a write-down of public sector bailout loans.

Unlike the last time around, when the protracted wrangling between the Greek government and private bondholders centered on banks, hedge funds and other investors’ accepting a reduction in the bonds’ value, they will not have to suffer a large loss on their bond holdings. Depending on the price, however, they may have to forgo some further upside if the bonds continue to rally after the buyback.

If successful, the debt buyback could significantly reduce Greece’s debt and afford the country a realistic chance of meeting the target of a debt ratio of 120 percent of G.D.P. by 2020 that the International Monetary Fund has set as a condition for it to lend more money. European leaders have said that this benchmark is too stringent and needs to be relaxed.

Of course, the idea has infuriated the many hedge funds that in past months have scooped up more than 22 billion euros’ worth of Greek bonds at rock-bottom prices. With many sitting on big profits after the recent market rally, they are in no mood to sell out cheaply, especially if Greece resorts to wielding a legal cudgel to complete the deal.

“It’s really the dumbest thing that Greece can do right now,” said Hans Humes of Greylock Capital, who has been one of the more aggressive investors in terms of accumulating discounted Greek bonds.

Collective action clauses are legal riders in bond contracts that can make it easier for a debtor country to restructure its loans by forcing holdouts to accept the country’s proposal for a bond swap if a certain majority of creditors agree to it. They were used to great effect during the 100 billion euro restructuring of Greece’s private sector debt earlier this year.

With Greece needing to sell more than 50 billion euros’ worth of state-owned assets in the coming years, it doesn’t want to alienate foreign investors who are just now overcoming their fear that the country will be forced to leave the euro. For example, one of the larger holders of Greek debt is Third Point, the New York-based hedge fund. Third Point has also shown interest in bidding for the state’s stake in the OPAP betting company, whose sale the government is hoping will jump-start the so-far moribund privatization process.

To date, Europe and the European Central Bank have rejected suggestions from the International Monetary Fund that they write down their share of Greece’s debt — about 63 percent in total. The only other way to secure an immediate reduction in the debt stock is to look again to private sector institutions, even though they hold just 18 percent of Greece’s debt and have already gone through a painful restructuring.

Both Wolfgang Schäuble, Germany’s powerful finance minister, and Jörg Asmussen, who sits on the executive board of the European Central Bank, have spoken favorably about a buyback option, although they have not addressed the possibility of using collective action clauses to secure the best possible outcome.

Still, sovereign debt experts point out that for the C.A.C.’s on the restructured bonds to take effect, 75 percent of the holders must accept the government’s offer — and there is little chance of that if Greece tries to make a lowball bid. If, however, Greece offered a significant enough premium to today’s market price of around 25 cents, there is a strong possibility that investors might bite, although in such a case the cost would be higher and the debt reduction lower.

The government need not bother making an offer of a premium of 25 to 30 cents, said one hedge fund investor who owns Greek bonds. “But 35 cents would attract interest and you may not find many people who want to hold at that level,” said this person, who requested anonymity because he was not authorized to speak publicly.

Such an attitude, in fact, illustrates one of the main criticisms of debt buyback strategies, which were frequently used during the Latin American debt crisis in the 1980s. Once investors realize a buyback is being considered, they start accumulating the once-scorned bonds, thus forcing the government to spend — or in the case of Greece, borrow — an even larger sum of money to retire a smaller portion of its debt.

And who are the winners? Vulture and distressed-debt investors as well as opportunistic hedge funds that hold out for the highest price possible and then walk away with a rich return.

“It is a boondoggle,” said Gabriel Sterne, a sovereign debt expert at Exotix, an investment bank based in London.

For that reason, bankers and lawyers advising the Greek government are pushing the notion of using the C.A.C. as a form of leverage that might persuade investors to accept a lower price. For now, it is unclear if the Greek government will take such a step.

Charles Dallara, who as head of the Institute of International Finance represented the major banks during the debt talks earlier this year, opposes the concept. It is not the debt itself that is the issue, he argues, but Greece’s inability to dig itself out of a near depression.

“We have already seen a massive reduction in debt,” he said. “It has nothing to do with the debt dynamic — it is the lack of a growth dynamic that is the problem.”
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« Reply #3038 on: Nov 15, 2012, 07:49 AM »

 SPIEGEL ONLINE
11/14/2012 12:28 PM

Closing the Gender Gap: European Commission Calls for Quotas

The European Commission has agreed to a gender quota for the boards of corporations across the Continent. The proposal faces a tough approval process in Brussels, but should it pass, 5,000 publicly traded companies would have to guarantee that 40 percent of their non-executive board posts be filled by women by 2020.

Following weeks of dispute, the European Commission on Wednesday proposed a gender quota for non-executive directors of companies that are listed on the stock markets in the 27 member states. The Commission approved a draft law that has long been championed by European Justice Commissioner Viviane Reding.

The new regulations, if approved, would stipulate that women occupy 40 percent of the seats on the non-executive boards of Europe's roughly 5,000 publicly traded companies. In instances where candidates' professional qualifications were the same, women would also be given preference, should they be under-represented in that company. Companies that did not adhere to the rules could be sanctioned.

"It's done," Reding tweeted on Wednesday morning. "The Commission has adopted my proposal for a European law so that women represent 40 percent of company board members by 2020."

In a Wednesday press release, the European Commission noted that men currently occupy some 85 percent of the positions on non-executive boards in publicly listed European companies. For executive boards, which are not affected by the new draft law, that number is even higher at 91.1 percent.

"Today, we are asking large listed companies across Europe to show that they are serious when it comes to gender equality in economic decision-making," European Commission President José Manuel Barroso said in a statement.

The proposal must still be approved by the European Parliament and the European Council, the powerful EU body that includes the leaders of the 27 member states. A few countries, including Germany, are opposed to a legally binding gender quota, and it remains an open question whether it will be approved. Nine countries, led by Britain, have already expressed their reservations about the proposal in a letter to the Commission.

German Opposition

In Germany, large parts of the parties in Chancellor Angela Merkel's government coalition, including her conservative Christian Democratic Union (CDU), the Bavarian Christian Social Democrats and the business-friendly Free Democratic Party, are opposed to the initiative. Reding has one prominent supporter in Berlin in the form of Labor Minister Ursula von der Leyen of the CDU, long a champion of a 30 percent quota for women on the boards of German corporations. Family Minister Kristina Schröder, whose portfolio includes women's issues, on the other hand, has called for voluntary regulation within the corporate sector, with a non-binding, "flexi-quota."

Even if Reding will face an uphill battle in getting the quota approved, it nevertheless represents a success for Luxembourg's representative on the Commission. Only three weeks ago, Reding's colleagues on the Commission blocked her first effort to push it through. The Commission had been unable to agree on the language of a draft law. "I won't give up," Reding said at the time.

Reding's proposal is worded to ensure that men are likewise not negatively affected by gender imbalance. It would introduce reporting requirements for any company in which fewer than two out of five posts on the corporate board were held by women or men. In those cases, the companies would have to prove candidates for board positions had been chosen solely on the basis of experience. In situations where finalists had the same level of experience, the post would have to go to the candidate from the gender underrepresented on the board -- in most cases to a woman.

Sanctions Would Be Determined by Member States

Companies would also be required to explain to rejected candidates why and based on what criteria they made the decision to go with the other candidate. The burden of proof would lie with the companies themselves. European Commission sources say that companies that do not adhere to the rules could face punitive measures starting in 2016 if they have not correctly changed their selection processes and by 2020 if they fail to meet the 40 percent limit for female posts on their management board.

However, the punitive measures are reportedly far less stringent than Reding originally proposed. The justice commissioner had previously sought to impose fines, the withdrawal of state subsidies or even excluding companies from public contracts as possible sanctions, but facing resistance from the EU member states, she had to backpedal. The Commission's legal service reportedly determined that Brussels did not have the right to immediately impose such sanctions. Under the revised proposal, it would now be left to the member state governments to determine which punitive measures could be imposed as they implement the regulation as a part of national law.

Across Europe, women are strongly underrepresented on corporate boards. European Commission statistics show that they occupy just 13.5 percent of such seats. In Germany, 15.6 percent of supervisory board posts are held by women. On more powerful executive boards, the figure is even lower, a paltry 4.2 percent.
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« Reply #3039 on: Nov 15, 2012, 07:52 AM »

 SPIEGEL ONLINE
11/15/2012 11:21 AM

Romania's Forgotten Holocaust: Filmmaker Confronts Leaders Over Silence

By Keno Verseck

In a new documentary film, director Florin Iepan confronts Romania's leaders over their ongoing silence about the country's role in the Holocaust. But in a place where war criminals are still lauded as national heroes, his aim of getting them to acknowledge the past remains a daunting task.

"Hello, Mr. President," filmmaker Florin Iepan shouts. "I would like to introduce you to somebody." The man he is speaking to is Romania's former President Emil Constantinescu, who was in office from 1996 to 2000. He's wearing an elegant white suit and leaving a conference room. "I know what this is about," he says reluctantly. "But I have already expressed my regrets publicly."

"But perhaps you can say something to this man personally," Iepan says. "He came from Odessa just for this." Constantinescu looks at the old man with sympathy and then quickly turns away. "Perhaps another time," he says.

The man is 87-year-old Michail Zaslawski, the sole survivor of one of the biggest crimes committed by Romania during World War II -- the Odessa, Ukraine massacre of Oct. 22-24, 1941. In this short stretch of time, the Romanian army, which was occupying the area as an ally of Nazi Germany, rounded up some 23,000 Jews from around the city and killed them, shooting many and burning others alive in warehouses. Soldiers lobbed grenades at people who tried to flee.

Zaslawski's parents, three sisters and brother -- his entire family -- were murdered. The massacre was in reprisal for a bomb attack by Soviets on the Romanian military headquarters, and was personally ordered by the then pro-fascist dictator Ion Antonescu.

The scene where former Romanian President Constantinescu declines to express his sympathies or even offer his hand to Zaslawski for his loss took place in Bucharest in October 2011, around the time of the 70th anniversary of the massacre. It is one among many such moments in Iepan's documentary film "Odessa," which explores how Romania's political and intellectual elite refuse to address their country's involvement in the Holocaust, not to mention engage in a public debate about who was responsible and how it ought to be remembered.

'A Taboo in Society'

"Odessa" is less of a classic documentary than the documentation of the political campaign that its director has been leading from the western Romanian city of Timisoara for the last three years. In the film, Iepan pointedly confronts his country's political and intellectual leaders, along with the public, about the country's silence about the anti-Semitic crimes of Romania during WWII -- and films their reactions. He confronts politicians in public spaces, disturbs intellectuals at their homes, events or receptions -- and asks them uncomfortable questions about the Odessa massacre. The film also contains footage of multiple radio and television appearances made by the director. Last autumn, he invited Zaslawski to share his story with him during a one-week stay in Bucharest and filmed most of the discussions.

Out of this collection of uncomfortable moments Iepan has created a 1.5-hour film he hopes to show at events and festivals across Romania, where he also plans to record their reactions for a follow-up film. A shorter version of the original film for an international audience will air early next year on German public broadcaster MDR, which helped finance the project along with arts funding from the German state of Hesse.

In Romania, "Odessa" is a unique attempt to come to terms with the past -- with pre-programmed controversies. "The Odessa massacre and similar crimes, which the so-called 'heroic Romanian army' committed in World War II, are still essentially a taboo in society -- also among historians," says historian and Holocaust researcher Lucian Natasa of the University of Cluj. His colleague Victor Eskenasy, who now lives in Frankfurt and works as a journalist, goes even further: "Ever since Romania was admitted to NATO and the European Union, its politicians have been returning to their old traditions, attitudes and convictions. Denial of the Holocaust is once again back in style."

Iepan says up until just a few years ago, he himself knew almost nothing about the Holocaust in Romania. That changed by coincidence: In 2006, public television TVR broadcast the history-themed show "Great Romania." Viewers had the chance to vote on the 10 most consequential Romanian figures in the country's history. Dictator Ion Antonescu placed was on the list of nominees -- without editorial reservations. The show hired Iepan to produce a short film profile on Antonescu.

War Criminals Still Regarded as National Heroes

While doing research for the TVR program, Iepan for the first time read details about the crimes Antonescu's dictatorship committed -- including the Odessa massacre. He learned that Antonescu's Romania was the only country other than Nazi Germany that operated its own concentration camps, in Transnistria. According to the US Holocaust Memorial Museum, between 150,000 and 250,000 Romanian and Ukrainian Jews died at the hands of Romanian and German authorities. It was because of those deaths and other reasons that Antonescu stood trial in 1946 for war crimes and was subsequently convicted and executed.

Iepan's short film painted a negative portrait of the dictator, yet at the end of the TV program he was still voted No. Six on the list of the greatest Romanians. It's no wonder, either: Under the country's last Communist leader, Nicolae Ceausescu, the regime undertook a cautious rehabilitation of Antonescu's image. After 1989, he was temporarily exalted as an official national hero. Parliament honored him in 1991 with a moment of silence. Later streets, plazas and cemeteries were named after Antonescu, and memorials were built for the dictator, although such practices have since been banned by the government. It wasn't until 2004, after the release of a report by a presidential commission of historians that the Romanian state first officially admitted to its role in the Holocaust. And yet many still see Antonescu as a hero.

Iepan was appalled by the results of the TV show, and he couldn't let the issue go. At first he wanted to make a conventional documentary film about the Odessa massacre, but as his work progressed he came up with a new plan. "It became clear to me that interest in such documentary films in current Romanian society is very limited, that I'd be relegated to a broadcast time in the middle of the night and my film would have had no resonance. That's why I decided to go in front of the camera myself."

Apology Unlikely

Iepan was still careful to avoid the image of presenting himself as some self-righteous hero out to expose historical wrongdoings. "It's not me who is important," he says, "but rather the way it came about. I want to tell the story of the massacre and of Michael Zaslawski in public and continue filming reactions as long as it takes for the word 'Odessa' to remain in the public consciousness as a synonym for the anti-Semitic crimes committed in Romania."

"And I would like a Romanian head of state to go to Odessa, take Michael Zaslawski's hand and in the name of our people ask for forgiveness."

But the chances that the 87 year old will ever experience that apology are slim. Romania's current president, Traian Basescu, has so far refused to make any statements on the issue. One of his former advisors, Hungarian-Jewish politician and human rights attorney Peter Eckstein-Kovacs sought in vain to convince Basescu to make some kind of gesture towards Zaslawski. "For Romania, Odessa and the history of the massacre is unfortunately very, very far removed," says Eckstein-Kovacs.

Zaslwaski himself doesn't believe he will ever receive an apology from Romania. "People there try to keep questions about the Holocaust under wraps," he says, describing the impression he got from his visit to Bucharest one year ago. Today, he lives in modest surroudnings in Odessa, where he spent his entire life working in a mill. The trip he took to Romania was his first to the country whose army had murdered his family.

"When I was in Bucharest, I was told, that a Romanian president had already once apologized to the Jewish people for the crimes," he says. "It sounded so incidental. That really hurt my feelings."

With additional reporting by Katja und Viktor Schulmann


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« Reply #3040 on: Nov 15, 2012, 08:07 AM »

In the USA...

November 14, 2012

Health Law Has States Feeling Tense Over Deadline

By ABBY GOODNOUGH and MICHAEL COOPER
NYT

DES MOINES — The days since President Obama won re-election have been marked by tension and angst in Republican-led states like Iowa, where Gov. Terry Branstad has waited until the last minute to decide whether to create a crucial tool for people to get medical coverage under Mr. Obama’s health care law.

“There has been a total blackout of information,” said State Senator Jack Hatch, a Democrat who vented his frustration at a news conference here this week. “We’re behind schedule, we’re at a disadvantage, and I don’t know what our governor’s plan is to reposition Iowa.”

States are supposed to tell the Obama administration by Friday whether they want to create their own health insurance exchange — a deadline that many had bet might never come to pass, choosing to sit on their hands for months in the hope that Mitt Romney would win the presidency and the health care law would be repealed.

On Wednesday, they dug in their heels a little more. Leaders of the Republican Governors Association, gathering in Las Vegas for their annual meeting, wrote a letter to Mr. Obama requesting more time, more guidance and a meeting where the president and governors could talk.

“States are struggling with many unanswered questions and are not able to make comprehensive, far-reaching decisions prudently,” Gov. Bob McDonnell of Virginia, the chairman of the association, and Gov. Bobby Jindal of Louisiana, its next chairman, wrote.

Insurance exchanges — basically online markets where the uninsured can shop for private health insurance, often with federal subsidies to help pay — are considered critical to making the health care law work. So far, 17 states, most led by Democrats, and the District of Columbia have indicated they will create their own state-run exchanges.

The other options are setting up an exchange in partnership with the federal government, or simply letting the federal government do it.

Every state is supposed to have an exchange by Jan. 1, 2014, when the health care law will require most Americans to have insurance. The exchanges are supposed to be ready to start enrolling people in October 2013.

Despite the unhappiness, there are indications that some Republican governors may be softening their opposition to the law. Gov. Rick Scott of Florida, a Republican who had been one of its toughest critics, signaled this week that he would be open to compromising.

“The election is over, and President Obama won,” Mr. Scott told The Associated Press. “If I can get to yes, I want to get to yes.”

And Governor McDonnell of Virginia — like Florida, a state Mr. Obama carried — noted that while his state had been the first to file suit seeking to block the law, it would comply with it.

But he said that the complexity of the law, and the lack of details from Washington, meant that “my best experts in Virginia, my doctors and others that are advising me on what to do, say they still can’t make a prudent call between a state or federal exchange because we don’t have all the answers.”

Others are facing intense, sometimes conflicting pressures from state legislators and interest groups. In Wisconsin, health care providers and business groups are lobbying Gov. Scott Walker to create a state exchange, while Tea Party groups are warning him not to.

At the Republican governors meeting in Las Vegas, Mr. Walker said in an interview that he would prefer a state-based program, but that he doubted that the federal government would allow him to shape it as he saw fit.

“I’d much prefer control at the state level,” Mr. Walker said, “but the problem is, I don’t think they are really state-run.”

He said that he would not disclose his decision until Friday, but added, “Why do I want to take on the potential risk to my taxpayers if I don’t really have any true authority about what’s going to happen?”

Republicans who support state-run exchanges say they are embracing a fundamental conservative belief: that states should make their own decisions rather than cede control to the federal government. But others argue that deferring to the federal government is a shrewder move; that way, they say, it will not be their fault if anything goes wrong.

“It’s a federal program, it’s primarily designed to give federal premium tax subsidies, and it’s all tied up in federal regulations,” said Tony Keck, director of the Department of Health and Human Services in South Carolina, which has rejected the idea of running its own exchange. “So to ask states to get involved is like asking states to run the post office. It doesn’t make sense.”

Setting up an insurance exchange is no simple task. Among other things, states have to set up a governance board, decide what kinds of health plans to offer through the exchange and build sophisticated information technology systems.

Although many Republican governors delayed planning, some have quietly prepared. Gov. Brian Sandoval of Nevada and Gov. Susana Martinez of New Mexico have spent months laying the groundwork for exchanges; so has Mike Chaney, the Mississippi insurance commissioner.

Creating a state-based exchange will “allow us to retain some flexibility,” said Matt Kennicott, a spokesman for the New Mexico Human Services Department, and allow people there to buy insurance in an exchange “developed by New Mexicans, for New Mexicans.”

Other states, like Alaska, South Carolina, South Dakota and Texas, had already decided to let the federal government run an insurance exchange for them instead of building one themselves. A handful of additional states — Alabama, Kansas, Ohio, Wyoming and Missouri, whose governor, Jay Nixon, is a Democrat — announced this week that they, too, would opt for a federally run exchange.

But most Republican-led states are somewhere in the middle — still vexing over whether to build an exchange on their own, do it in partnership with the federal government or let the federal government do it for them. In Iowa, Mr. Branstad has been consulting with officials from his administration on how to move forward, his spokesman said.

But their discussions have been private, and unlike some other governors, Mr. Branstad has not held public hearings or meetings to gather opinions. A coalition of health care advocacy groups circulated a list of “principles for success” for a state-run exchange and sent e-mails to Mr. Branstad’s staff in the days after the election, pleading for clarity.

The best response they got was at a health care conference in Des Moines on Tuesday, when several state officials said they were trying their best to prepare but were hampered by a lack of guidance. Asked by an audience member about “the current thought in Iowa on the health exchange,” Jennifer Vermeer, the state’s Medicaid director, paused for several long seconds before saying state officials had been “focusing our energies” on planning a partnership exchange.

Even if Iowa opts for a partnership with the federal government, it will be “without a totally clear understanding of who needs to do what,” said Charles M. Palmer, director of the state’s Department of Human Services.

Walking down a hallway during the Republican governors meeting on Wednesday, Mr. Branstad said that Iowa was working on its letter to send the administration by the Friday deadline, but that officials did not feel they had gotten all the information they needed from the federal government.

“There’s a whole lot of questions we have,” he said. “We have a whole lot of questions.”

Abby Goodnough reported from Des Moines, and Michael Cooper from Las Vegas. Jeff Zeleny contributed reporting from Las Vegas and Jess Bidgood from Boston.

***************

November 14, 2012

Obama Details Lines of Battle in Budget Plan, and on Libya

By MARK LANDLER
NYT

WASHINGTON — President Obama, riding the winds of re-election, signaled Wednesday that he was prepared to battle with Republicans over budget negotiations and his national security team’s handling of the deadly attack on an American mission in Libya.

Displaying a mix of resolve and restraint, Mr. Obama flatly rejected any budget deal that did not raise tax rates on income above $250,000 a year, even if it meant driving the economy into a recession. But he did not rule out a compromise that could leave the top tax rates lower than their levels during the Clinton administration, presumably combined with a restriction on some tax breaks for top earners.

For a president fresh off a hard-fought victory, Mr. Obama projected little of the triumphalism of other newly re-elected leaders like Ronald Reagan and George W. Bush, who boasted in 2004 that he had amassed political capital and planned “to spend it.”

Mr. Obama instead cloaked his tough stance in the language of compromise, saying he was “familiar with all the literature about presidential overreach in second terms,” and that his re-election was not a mandate to ram his proposals through Congress without any concessions.

In his first formal news conference in eight months, which was meant to position Mr. Obama for the coming fiscal battles but ended up including a C.I.A. scandal and a vitriolic fight over who is to blame for the attack on the American diplomatic mission in Benghazi, Libya, the president saved his most fiery words to defend his ambassador to the United Nations, Susan E. Rice. Ms. Rice, a candidate for secretary of state, has come under withering attack from Senator John McCain and other Republicans for suggesting that the siege in Benghazi that killed four Americans was a spontaneous protest rather than a premeditated terrorist attack.

“For them to go after the U.N. ambassador, who had nothing to do with Benghazi and was simply making a presentation based on the intelligence that she had received, and to besmirch her reputation, is outrageous,” Mr. Obama said, his eyes flashing with anger.

Describing Ms. Rice’s conduct as “exemplary,” he warned that her critics have “got a problem with me.” Almost daring them to a confirmation battle, he vowed to nominate Ms. Rice if he determined that she was the right person for secretary of state.

Mr. Obama’s remarks drew an equally angry response from Senators McCain and Lindsey Graham. In a statement issued after the news conference, Mr. Graham reiterated that he would oppose “anyone who is up to their eyeballs in the Benghazi debacle.”

By contrast, the president struck an almost elegiac tone in discussing the sex scandal that forced the resignation of David H. Petraeus as director of the Central Intelligence Agency. Mr. Petraeus, he said, told him that he did not meet his own standards for holding the job.

But, Mr. Obama added, “We are safer because of the work Dave Petraeus has done,” voicing hope that the scandal would end up as a “single side note on what has otherwise been an extraordinary career.”

Mr. Obama was cautious in responding to questions about whether he should have been told earlier about the investigation into the relationship between Mr. Petraeus and his biographer, Paula Broadwell, with the president saying that he would leave it to the F.B.I. to explain its “protocols.” But while he offered no criticism of the investigation, he appeared to leave himself room to do so in the future, should new information emerge.

“I am withholding judgment with respect to how the entire process surrounding General Petraeus came up,” he said.

In laying out his position on the budget, Mr. Obama emphasized that debate over taxes had been central to the election he just won and reprised many of the themes he had struck on the campaign trail. The president urged Republicans to go along with his proposal to extend the Bush-era tax cuts on all personal income up to $250,000 a year, noting that people who made more than that amount would also benefit from such an extension.

“But when it comes to the top 2 percent, what I’m not going to do is extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars,” Mr. Obama said.

While he insisted that the tax cuts for income above $250,000 must expire, Mr. Obama did not stipulate that the top rate would revert to 39.6 percent, as it was in the Clinton administration. Mr. Bush signed a bill a decade ago reducing it to 35 percent, where it has remained.

Mr. Obama’s stance appeared to leave room for the White House and Republicans to negotiate a tax rate somewhere in between and then raise additional revenue by restricting tax deductions and credits on high incomes. “I don’t expect Republicans simply to adopt my budget,” he said. “That’s not realistic. So I recognize that we’re going to have to compromise.”

Still, Mr. Obama said he could envision a situation in which there was no agreement and all the tax cuts expired. Such an outcome would be a “rude shock” for middle-class people, he said, and could set off a recession.

“It would be a bad thing,” he said. “It is not necessary.”

By suggesting he was willing to accept failed negotiations, Mr. Obama was in part trying to give himself more leverage than in 2010, when fears about the economy and its impact on his political standing caused him to reverse course and accept an extension of all the Bush tax cuts in exchange for additional stimulus. This time, however, the economy is somewhat stronger, Mr. Obama has no more elections in front of him — as he pointed out on Wednesday — and the package of budget changes set to take effect on Jan. 1 includes both tax increases and military cuts that Republicans generally oppose.

Speaker John A. Boehner, the effective leader of the Republican Party, said Republicans were not ready to accept Mr. Obama’s proposal because it would “hurt our economy and make job creation more difficult.” But he added that there was a “spirit of cooperation” that had infused Washington and that gave him optimism that some sort of deal would eventually come to pass.

Republicans say they will find a way to raise enough money to reduce the deficit without lifting the top rates. Back-of-the-envelope math suggests that eliminating all tax breaks for the top 2 percent of households would raise about $2 trillion over 10 years, more than the $1.6 trillion that the White House demands, as part of a $3 trillion deficit-reduction package over 10 years. But having all of the additional tax revenue come from the restriction of tax breaks would require getting rid of virtually every such provision, like the home-mortgage deduction, in the tax code on top incomes.

“The math tends not to work,” Mr. Obama said.

Allowing tax rates to rise on the wealthy — to the Clinton-era levels, or a few percentage points below them — puts much more money on the table and would allow more moderate changes to deductions, Democrats argue.

Looking beyond the immediate fiscal challenges, Mr. Obama expressed optimism about one major goal — immigration legislation — and caution about another, climate change.

The president said he intended to pursue comprehensive immigration legislation, and noted that the election had prompted reflection among Republicans about their opposition to such an effort. Even as he criticized Mr. McCain on Benghazi, he cited his support for an overhaul of immigration law as an indication that it could pass.

On climate change, Mr. Obama played down expectations for any major initiative. He spoke of holding a conversation with scientists and engineers about fresh ideas, but said more ambitious legislation would come only after the economy strengthened.

“We’re still trying to debate whether we can just make sure that middle-class families don’t get a tax hike,” he said. “That should be easy. This one’s hard.”

Annie Lowrey and Jennifer Steinhauer contributed reporting.

**************

Obama vows action on climate change for ‘future generations’

By Agence France-Presse
Wednesday, November 14, 2012 18:41 EST

WASHINGTON — President Barack Obama on Wednesday vowed a new push for action on climate change, saying the United States had a duty to come together to curb emissions in the wake of megastorm Sandy.

In his first news conference since his decisive re-election on November 6, Obama said he planned a “conversation across the country” in the coming months to find common ground after a failed effort on climate change at the start of his term.

“I am a firm believer that climate change is real, that it is impacted by human behavior and carbon emissions. And as a consequence, I think we’ve got an obligation to future generations to do something about it,” Obama said.

Obama acknowledged that his stance on climate change would require an “education process” and “tough political choices” but insisted that his push was compatible with efforts to bring more jobs to the still-wobbly US economy.

If “we can shape an agenda that says we can create jobs, advance growth and make a serious dent in climate change and be an international leader, I think that’s something that the American people would support,” Obama said.

“You can expect that you’ll hear more from me in the coming months and years about how we can shape an agenda that garners bipartisan support and helps move this agenda forward,” he said.

After Obama’s first election, much of the rival Republican Party adamantly opposed proposals on climate change, saying they would hurt the economy.

Some lawmakers took issue with the view of most scientists that industrial emissions of carbon dioxide and other greenhouse gases are causing the planet to warm.

Climate change played little role in the election campaign until days before the vote, when massive storm Sandy tore through the East Coast and the Caribbean, killing more than 110 people in the United States alone.

New York Mayor Michael Bloomberg, an independent, made a last-minute endorsement of Obama due to his stance on climate change. Obama’s Republican rival, Mitt Romney, had earlier mocked Obama for trying to “heal the planet.”

Obama declined to attribute Sandy to climate change, but noted that average temperatures were rising and Arctic ice was melting at rates that are even faster than predicted in recent years.

“There have been an extraordinarily large number of severe weather events here in North America, but also around the globe,” Obama said.

Obama’s top allies in Congress have backed calls on climate change.

Nancy Pelosi, the top Democrat in the House of Representatives, on Wednesday welcomed statements by Obama and called climate “a priority for me.”

With Democrats in control in 2009, the House approved the first nationwide “cap-and-trade” plan that, similar to a system in place in Europe and recently launched in California, would restrict carbon emissions and offer a market incentive for cuts.

But the plan died in the Senate, even with Democrats in charge.

Obama, who also vowed to fight climate change in his Election Day victory rally in Chicago, has not made clear his future initiatives.

After the defeat of cap-and-trade, the Obama administration used regulatory power to tighten standards for power plants and vehicles, leading the White House to insist that the United States is on track to meet its pledges to a UN body to cut emissions by 17 percent by 2020 from 2005 levels.

One proposal that has gained traction in think tank circles is to set an outright tax on carbon, which could also assist the United States find a solution in a politically charged dispute over its debt.

Mark Muro and Jonathan Rothwell of the Brookings Institution recently proposed a $20-per-ton tax on carbon emissions — slightly less than a tax recently adopted in Australia — that would raise an estimated $150 billion annually over 10 years.

Of the revenue, the government would invest $30 billion each year to green energy and development, with the rest going to tax cuts, deficit reduction and rebates to low-income people most affected by potentially higher energy bills.

While conventional wisdom has long held that new taxes would be political suicide in Washington, the conservative American Enterprise Institute held an event Tuesday on the idea and called for more discussion, with one speaker arguing that a carbon tax could reduce corporate taxes elsewhere.

*************

November 14, 2012

Terrorist Attack on Power Grid Could Cause Broad Hardship, Report Says

By MATTHEW L. WALD
NYT

WASHINGTON — Terrorists could black out large segments of the United States for weeks or months by attacking the power grid and damaging hard-to-replace components that are crucial to making it work, the National Academy of Sciences said in a report released Wednesday.

By blowing up substations or transmission lines with explosives or by firing projectiles at them from a distance, the report said, terrorists could cause cascading failures and damage parts that would take months to repair or replace. In the meantime, it warned, people could die from the cold or the excessive heat, and the economy could suffer hundreds of billions of dollars in damage.

While the report is the most authoritative yet on the subject, the grid’s vulnerability has long been obvious to independent engineers and to the electric industry itself, which has intermittently tried, in collaboration with the Department of Homeland Security, to rehearse responses.

Of particular concern are giant custom-built transformers that increase the voltage of electricity to levels suited for bulk transmission and then reduce voltage for distribution to customers. Very few of those transformers are manufactured in the United States, and replacing them can take many months.

In a preparedness drill in March, technicians shipped three specially designed transformers from St. Louis to Houston and rapidly installed them in a marathon effort. The transformers were the electrical equivalent of a Swiss Army knife, with multiple attachments so that they can be used in a variety of jobs.

They are functioning well, said one of the experiment’s supervisors, Richard J. Lordan, a senior technical expert at the Electric Power Research Institute, a nonprofit consortium based in Palo Alto, Calif. But follow-up steps — like figuring out how many such transformers should be stockpiled as well as developing storage depots, financing purchases of the equipment and planning how to allocate it in an emergency — have yet to be taken.

Changes in the electric industry have made the grid more vulnerable in recent years, experts say. The grid was mostly built to serve the needs of individual utilities, but regulators have cut the generation companies loose from the companies that transport and distribute power to foster a competitive market. That has resulted in far more electricity being shipped much greater distances and in difficulty winning consensus to build new lines. Meanwhile, the Sept. 11 attacks and weather catastrophes like Hurricane Sandy have underlined the need for ever more vigilant monitoring and technological improvements.

“I don’t think we pay quite enough attention to the technology fixes that would allow us to make the power system more resilient,” said Clark W. Gellings, a researcher at the Electric Power Research Institute who is one of the report’s authors.

For example, the report broaches the development of submersible electric switches that could be operated after a hurricane. Some of the other technologies that have been suggested, like more sensors to help operators determine the status of transformers and transmission lines, would also help the grid on an average summer day.

The report urges that cheaper ways be found to put power lines underground, which would protect them from some effects of storms, and also calls for changes in infrastructure that would reduce the kind of mutual dependencies that result in wider blackouts. For example, more traffic lights could run on high-efficiency L.E.D. lamps and be equipped with batteries, and small generators could be placed in spots where power is needed for pumping water. The natural gas system could be equipped with pumps that run on natural gas instead of electricity so that the system would survive an extended blackout.

The notion of a looming attack on the grid has recently gained a conservative political following, with Newt Gingrich, who sought the 2012 Republican presidential nomination, championing a novel that imagines the crippling of the nation and the starvation of millions by unidentified enemies using high-tech methods to fry components of the grid with an electromagnetic pulse. The report does not discuss that possibility, but the appendix does include “electromagnetic pulse” among other technical terms.

The National Academy of Sciences report mainly refers to less sophisticated attacks but also warns of cyberattacks or infiltration of the grid’s transmission operators. “Even a few pernicious people in the wrong place are a potential source of vulnerability,” it said.

The report was completed in 2007, and after reviewing it, the Department of Homeland Security decided to classify its contents. The version released on Wednesday is redacted to avoid handing terrorists a “cookbook” on how to disrupt the grid, the report said.

Mr. Gellings, the researcher, said that despite the delay, most of the points it makes are still valid, although a chapter on cyberattacks is out of date.

**************

Congress slams health officials over tainted drugs linked to meningitis outbreak

By Agence France-Presse
Wednesday, November 14, 2012 18:43 EST

WASHINGTON — US lawmakers slammed federal and state health officials Wednesday for failing to properly police a pharmacy whose tainted drugs caused a deadly fungal meningitis outbreak.

“This tragedy could have been avoided,” said Congressman Cliff Stearns, who chairs the Energy and Commerce Committee’s oversight and investigations panel.

The Florida Republican cited a litany of complaints against the New England Compounding Center and problems found during inspections over the past decade that were insufficiently investigated.

One such incident was when the Food and Drug Administration received reports in 2002 that patients receiving NECC steroid injections had experienced “adverse events,” including “meningitis-like” symptoms.

“The product in question was the very same product connected to the current outbreak. In that case, the NECC drug was contaminated with bacteria,” Stearns said.

While the FDA inspected NECC’s Massachusetts facility in response to the complaints, that did not prevent more patients from getting sick from the same drugs six months later.

At a 2003 meeting with Massachusetts health officials — who hold primary responsibility for regulating pharmacies in their state — Stearns said the FDA made a “prophetic statement.”

“The FDA stated that there was the potential for serious public health consequences if NECC’s compounding practices, in particular those relating to sterile products, are not improved,” Stearns said.

Some 461 people have been sickened — and 32 of them have died — after receiving injections of NECC’s tainted steroids, according to the latest tally by the Centers for Disease Control and Prevention.

The outbreak has led to calls for tighter regulation of the loosely controlled pharmaceutical compounding industry. Federal investigators have launched a criminal probe into the case.

“Even though FDA was clearly aware of the risks posed by NECC’s compounding practices, the agency was slow to act,” Stearns said.

It took the agency four years to issue a warning letter based on problems it found with NECC’s sterility practices in 2002 and two more years for the FDA to respond to the company’s claims challenging the report.

“When FDA finally responded in 2008 — six years after the agency first inspected the NECC — it directed the company to correct the violations and warned that it would follow-up with future inspections. But FDA never did,” Stearns said.

The FDA also failed to follow up after it received notification from the Colorado State Board of Pharmacy in 2011 that NECC was again violating the rules by sending its drugs to out-of-state hospitals without first receiving patient prescriptions.

And the Massachusetts Board of Pharmacy failed to correct problems at NECC despite receiving at least 12 separate complaints.

Critics say drug manufacturers have found a way to sidestep costly and strict oversight by classifying themselves as pharmacies, which are given freer rein to mix drug compounds for patients.

FDA Commissioner Margaret Hamburg told lawmakers that the agency lacked sufficient authority to regulate pharmacies that cross the line into mass production.

“FDA’s ability to take action against compounding that exceeds the bounds of traditional pharmacy compounding and poses risks to patients has been hampered by gaps and ambiguities in the law,” said Hamburg, who has led the agency since 2009.

These gaps in legal authority “have led to legal challenges to FDA’s authority to inspect pharmacies and take appropriate enforcement actions,” she told the panel.

NECC president Barry Cadden invoked the constitutional right to refuse to implicate himself as he declined to answer questions from the subcommittee, which did however hear testimony from a widow of one of the victims.

****************

Atheist group sues IRS for failing to enforce church electioneering ban

By Eric W. Dolan
Wednesday, November 14, 2012 22:08 EST

The Wisconsin-based Freedom From Religion Foundation on Wednesday filed a lawsuit against the IRS for failing to audit thousand of churches that allegedly violated federal tax law by engaging in partisan advocacy.

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« Reply #3041 on: Nov 16, 2012, 07:37 AM »

November 16, 2012

Egypt Sends Prime Minister to Gaza in Show of Solidarity

By JODI RUDOREN, ISABEL KERSHNER and ALAN COWELL
IHT

GAZA CITY — Egypt launched a remarkable diplomatic initiative on Friday after a night of ferocious Israeli airstrikes in Gaza and militant rocket fire toward Israel, sending its prime minister to show support for Palestinians in the beleaguered enclave and to try to end the hostilities.

But the intervention was soon overtaken as air-raid sirens wailed for the second successive day over Tel Aviv, the police said, and at least one explosion was heard, apparently from a rocket fired toward the city from Gaza. Hamas said it fired a single “homemade” projectile at the city.

The rocket may have landed offshore or in an open area, the Israeli police said. But, like a pair of rockets fired on Thursday into Tel Aviv, the projectiles did not land in the city itself.

Earlier, as Prime Minister Hesham Kandil of Egypt prepared to travel to Gaza, Israel agreed to a temporary cease-fire for the visit, even as it sent armed vehicles toward Gaza and called up reservists for a possible invasion. But the truce never took root.

Israel Radio said Palestinian militants fired 25 rockets into southern Israel, with one of them striking a house. There were no immediate reports of casualties.

What sounded like airstrikes by Israeli F-16s were also audible in Gaza City. The Israeli military said no such strikes had taken place, but the Hamas health ministry reported that two people, including a child, were killed in the north of Gaza City while the Egyptian delegation was on the ground, pushing the Palestinian death toll in three days of aerial bombardment to 21.

Three Israelis were killed in a rocket attack on Thursday in Kiryat Malachi, a small town in southern Israel, when a rocket fired from Gaza struck their apartment house.

Mr. Kandil’s visit produced dramatic imagery to underpin Cairo’s support for Hamas, which Israel, the United States and much of the West consider to be a terrorist organization.

Mr. Kandil and Ismail Haniya, his Hamas equivalent, visited the Al Shifa hospital amid a huge scrum of bodyguards and journalists, saying they had carried the body of Mohammed Yasser, one of eight children who Palestinian health officials say have been killed in the surge of violence since a top Hamas commander was killed in an Israeli airstrike on Wednesday.

“This is the blood of our children on our clothes,” Mr. Haniya said as he showed spatters on his clothing, “These are the Egyptian and the Palestinian blood united together.”

Like President Mohamed Morsi of Egypt on Thursday, Mr. Kandil walked a delicate line between support for Hamas, condemnation of Israel and a quest for calm in a region increasingly threatened by the spillovers from Syria’s civil war into neighboring countries, as well as by the long-festering impasse between Israelis and Palestinians.

“The aim of this visit is not only to show political support but to support the Palestinian people on the ground,” Mr. Kandil said, noting that he had brought with him a delegation from the Egyptian Health Ministry. He said a cease-fire between Gaza and Israel was “the only way to achieve stability in the region” and also called on the Palestinians to repair the rift between Hamas in Gaza and the Fatah group that dominates the Palestinian Authority in the West Bank. “We call on the Palestinian people to unite because their power and strength is in their unity,” Mr. Kandil said. “That’s the only way to liberate Palestine.”

The visit was the first of such a high-ranking Egyptian official to this coastal enclave since the militant Hamas faction gained control in 2007 and offered a potent sign of how Egypt’s revolution and new Islamist leadership since the overthrow of President Hosni Mubarak last year has shifted the geopolitics of the Israeli-Palestinian conflict.

Egypt, Mr. Kandil said, will “save nothing to stop the aggression and achieve a continuous cease-fire on the way to having a Palestinian state with Jerusalem as its capital.”

The display of support — improbable throughout the Mubarak era — emboldened the Hamas leadership.

“The time in which the Israeli occupation does whatever it wants in Gaza is gone,” Mr. Haniya said. “Egypt cannot accept the aggression as before. I welcome Egypt for this historical visit that comes in harmony with the will of the free Egypt.”

Before the visit, residents in Gaza said the night was filled with the boom and crash of airstrikes, with loud explosions at dawn on Friday, a day after Israel and the Hamas rulers of Gaza brushed aside international calls for restraint and escalated their lethal conflict. In Gaza, Palestinian militants launched hundreds of rockets into Israeli territory on Thursday, targeting Tel Aviv for the first time, and Israel intensified its aerial assaults.

Defense Minister Ehud Barak of Israel, expressing outrage over two long-range Palestinian rockets that whizzed toward Tel Aviv and set off the first air-raid warning in the Israeli metropolis since it was threatened by Iraqi Scud missiles in the Persian Gulf war of 1991, said, “There will be a price for that escalation that the other side will have to pay.”

Within hours of the Tel Aviv air-raid warning, the Israeli Defense Forces said that they had attacked 70 underground rocket-launching sites in Gaza and that “direct hits were confirmed.” There were also unconfirmed reports that Israeli rockets had struck near Gaza’s Rafah crossing into Egypt, forcing the Egyptians to close it.

Early on Friday, the Israeli military said it had called up 16,000 army reservists, as preparations continued for a possible ground invasion for the second time in four years. Mr. Barak had authorized the call-up of 30,000 reservists, if needed, to move against what it considers an unacceptable security threat from smuggled rockets amassed by Hamas, the militant Islamist group that governs Gaza and does not recognize Israel’s right to exist.

It was not clear whether the show of Israeli force on the ground in fact portended an invasion or was meant as more of an intimidation tactic to further pressure Hamas leaders, who had all been forced into hiding on Wednesday after the Israelis killed the group’s military chief, Ahmed al-Jabari, in a pinpoint aerial bombing. At the same time, Israel signaled its concern to preserve its so-called cold peace with Egypt, with Prime Minister Benjamin Netanyahu agreeing to the temporary cease-fire during the visit of Prime Minister Kandil, who also met briefly with the Hamas cabinet. Mr. Haniya’s public appearance on Friday was the first since Wednesday, when Israel bluntly warned Hamas leaders to stay hidden.

An official in Mr. Netanyahu’s office said by telephone that Israel had told Egypt that the cease-fire would hold as long as “there would not be hostile fire from the Gaza Strip into Israel.”

“Prime Minister Netanyahu is committed to the peace treaty with Egypt,” the official said. “That peace serves the strategic interests of both countries.” There was no suggestion that the Israelis were considering a more permanent cease-fire at this stage.

Overnight, Israel said it launched 150 airstrikes while Palestinians fired a dozen rockets into Israel — far fewer than the hundreds that have hurtled toward Israel in the past two days.

Military officials said Israel’s aerial assaults had hit more than 450 sites in Gaza by early Friday. The officials also said that militants in Gaza had fired more than 300 rockets into southern Israel since Wednesday and that at least 130 more had been intercepted by Israel’s Iron Dome antimissile defense system.

In Tel Aviv on Thursday, one rocket crashed into the sea off its coast and another apparently fell short. But the ability of militants 40 miles away to fire those weapons at the city of 400,000 underscored, in the Israeli government’s view, the justification for the intensive aerial assaults on hundreds of suspected rocket storage sites and other targets in Gaza.

In Washington, Obama administration officials said they had asked friendly Arab countries with ties to Hamas to use their influence to seek a way to defuse the hostilities. At the same time, however, a State Department spokesman, Mark C. Toner, reiterated to reporters the American position that Israel had a right to defend itself from the rocket fire and that the “onus was on Hamas” to stop it.

There was no sign that either side was prepared, at least not yet, to restore fully the uneasy truce that was forged the last time the Israelis invaded Gaza in the winter of 2008-09, a three-week war that left 1,400 Palestinians dead and drew widespread international condemnation.

Denunciations of Israel for what critics called a renewal of its aggressive and disproportionate attacks spread quickly on the second day of the aerial assaults. For his part, Mr. Netanyahu accused Hamas of placing thousands of smuggled rockets into civilian areas, including near schools and hospitals, and firing them randomly into Israel without regard to where they landed. “In the past 24 hours Israel has made it clear that it will not tolerate rocket and missile attacks on its civilians,” he said in a statement. “I hope that Hamas and the other terror organizations in Gaza got the message.”

In Gaza, health officials said, those who died Thursday included a 2-year-old boy who had been struck on Wednesday in the southern town of Khan Yunis, a 10-month-old girl wounded on Wednesday in the Zeitoun area and a child in the northern border town of Beit Hanoun. Southern Israel had been the target of more than 750 rockets fired from Gaza this year that hit homes and caused injuries.

Jodi Rudoren reported from Gaza City, Isabel Kershner from Jerusalem, and Alan Cowell from Paris. Reporting was contributed by Fares Akram from Gaza, Rick Gladstone from New York, Rina Castelnuovo from Kiryat Malachi, Israel, Mayy El Sheikh and David D. Kirkpatrick from Cairo, Gabby Sobelman from Jerusalem, and Elisabeth Bumiller from Bangkok.

*****************

November 15, 2012

With Gaza Attacks, Egypt’s President Balances Hamas Against Israeli Peace

By DAVID D. KIRKPATRICK and MAYY EL SHEIKH
IHT

CAIRO — The escalating conflict in Gaza has confronted President Mohamed Morsi of Egypt with a wrenching test of his commitments — to his fellow Islamists of the militant group Hamas and to Egypt’s landmark peace agreement with Israel.

Over two days, Mr. Morsi, a former leader of the Muslim Brotherhood who has denounced Israelis as “vampires” for the killing of Palestinian civilians, seemed to reach for every diplomatic gesture he could make without jeopardizing the treaty.

“The Egyptian people, the Egyptian leadership, Egyptian government and all of Egypt is standing with all its resources to stop this assault, to prevent the killing and bloodshed of the Palestinians,” Mr. Morsi declared on Thursday in a televised address. “Israelis must recognize that we do not accept this aggression.”

But with Israel and Hamas increasing their attacks and a possible Israeli ground assault looming, Mr. Morsi finds himself in a tighter bind. As Egypt’s first freely elected president, he faces popular demands for a radical break with former President Hosni Mubarak’s perceived acquiescence during an Israeli assault against the Palestinians in 2009. But at the same time, Mr. Morsi desperately needs to preserve the stability of the cold peace with Israel in order to secure Western aid and jump-start his moribund economy.

Aware of his divided loyalties, both sides appear to be testing him. Hamas, the Islamist Palestinian offshoot of Egypt’s Muslim Brotherhood, is pushing to see how much support it can draw from its ideological big brother now that it governs the largest Arab state. And Israel’s hawkish leadership seems determined to probe the depth of Mr. Morsi’s stated commitment to the peace treaty as well.

“We are testing the Egyptians,” said Professor Efraim Inbar, director of the Begin-Sadat Center for Strategic Studies at Bar Ilan University. “The Americans are with us on Hamas. Obviously Morsi supports Hamas and not us.”

Mr. Morsi has so far taken diplomatic steps to signal his displeasure with Israel. He recalled Egypt’s ambassador to Tel Aviv and dispatched his prime minister on a solidarity mission to Gaza. He appealed to President Obama, the United Nations, the European Union and the Arab League to try to stop the violence.

Mr. Morsi also opened Egypt’s borders and hospitals to Gaza residents injured in the clashes and offered military helicopters to transport them. He met with top generals, and Egyptian state media reported that they were inspecting air bases and preparing land defenses near the Gaza border. He has not, however, threatened to provide military support to Hamas or direct action against Israel.

Inside Egypt, the alacrity of Mr. Morsi’s response so far appears to have rallied the public behind him. Opposition to Israel’s occupation of the Palestinian territories and treatment of their residents may be the only cause binding together Islamists, their secular critics and even the leadership of Egypt’s Coptic Christian church. Some of Mr. Morsi’s rivals, including the former presidential candidate Amr Moussa, have commended his actions.

“He is doing everything he can within the legal obligations of Egypt’s relationship with Israel,” said Emad Shahin, a political scientist at the American University of Cairo, arguing that Mr. Morsi’s swift action would enable him to hold at bay the inevitable calls for Egypt to go further.

Still, popular anger and demands for more action could grow, especially if Israel initiates a ground invasion of Gaza. The Muslim Brotherhood, which backed Mr. Morsi for president, issued a statement denouncing “the criminal aggression” and blaming Arab states for “watching the shedding of Palestinian blood without moving a muscle.”

“We think the least that could be done is to sever diplomatic and commercial relations with this cruel entity,” the Brotherhood statement added, referring to Israel. “The Egyptian government has to be the first to do this in order to set an example for Arabs and Muslims.”

The ultraconservative Islamists of the Al Nour party charged that Mr. Morsi’s steps “weren’t enough” and that “additional steps are necessary to deter the perpetrator and to legally pursue the criminals until revenge is exacted against them.”

In the streets, protesters burned an Israeli flag outside the Arab League off Tahrir Square in Cairo. Leaders of the ministry that oversees mosques and religious institutions, unmuzzled by Mr. Mubarak’s ouster, called on Muslim preachers at Friday prayers to rally support for Gaza.

Since the Brotherhood won leadership of the Egyptian Parliament and Hamas broke with its former sponsor Syria, the relationship between the two groups has become both closer and more complicated. The Brotherhood has welcomed a parade of Hamas leaders in Cairo, but it has also urged the group to maintain tranquil relations with Israel so that Hamas can try to steer Egypt through its difficult political transition, for the long-term well-being of both Islamist groups, their leaders have said.

Leaders of the Brotherhood’s Freedom and Justice Party have said they planned to step back from Hamas to try to broker a reconciliation between the group and its Western-backed rival faction, Fatah, which controls the Palestinian Authority in the West Bank. Hamas has not recognized Israel, but the Brotherhood long ago came to support a two-state solution as envisioned by the Camp David accords.

In some ways, Mr. Morsi may have disappointed Hamas. He has not opened Egypt’s border to Gaza. In fact, he has moved more aggressively than Mr. Mubarak to try to shut down or blow up smuggling tunnels from the Egyptian Sinai long used by Hamas to circumvent an Israeli boycott, contending that they pose a security risk to Egypt.

But on Thursday, Hamas leaders basked in Mr. Morsi’s public support. “The popularly elected Egyptian leadership is giving everyone a lesson,” Hamas’s leader, Khaled Mashaal, told an Islamist conference in Khartoum, Sudan. “The Egyptian leadership has shown that it is taking a new course and adopting a new vision. The era when Israel did what it pleased is over.”

In Gaza, Ismail Haniyeh, the Hamas prime minister, said in a televised address that “the Arab and Muslim cities were all in silence, but we found a quick response from the Egyptian leadership.” He added: “Leaders can no longer sit on their hands while seeing our people preyed on.”

************

November 15, 2012

Bolder Hamas Tests Alliances in a Shifting Arab World

By JODI RUDOREN and FARES AKRAM
IHT

GAZA CITY — Instead of the wedding drums that typically provide the evening soundtrack in this forlorn coastal strip, the black, still air was pierced by gunshots on Thursday, as citizens fired celebratory rounds after the ruling Hamas faction announced that one of its rockets had hit an Israeli aircraft.

The Israel Defense Forces denied the hit, though footage on Hamas television and YouTube appeared convincing. Either way, the reaction was nonetheless emblematic of the latest lopsided battle between this impoverished, intensely crowded and hemmed-in enclave and its militarily mighty neighbor to the north — as was the rat-tat-tat of gunshots being quickly overtaken by the thunder of F-16 strikes across the city.

“The mood of the people is high despite the siege, despite the Israeli aggression,” said Dr. Hassan Khalaf, director of Al Shifa Hospital here, where many of the Palestinian dead and wounded were taken.

“To be killed while smiling or while confident or not confident, the final outcome is death,” Dr. Khalaf added. “At least now we feel like we can injure the Israelis while they try to harm us.”

Nearly four years after Israel’s Operation Cast Lead killed about 1,400 Gazans in three weeks of air and ground assaults in response to repeated rocket fire, this new conflict has a decidedly different feel, and not just because Israel has said that it has tried to limit its attacks to precision strikes.

This time, Israeli forces are fighting a newly emboldened Hamas, supported by the regional powerhouses of Qatar, Turkey and Egypt, and demonstrating its strength compared with a weak and crisis-laden Palestinian Authority.

After months of mostly holding its fire as it struggled to stop other militant factions from shooting rockets across the border, Hamas has responded forcefully to Israel’s killing on Wednesday of its top military commander, Ahmed al-Jabari. It sent more than 300 rockets into Israel over 24 hours, with several penetrating the heart of Israel’s population center around Tel Aviv; three civilians were killed in an apartment building about 15 miles north of Gaza, and three soldiers were wounded in a separate strike.

For Hamas, the goal is not necessarily a military victory, but a diplomatic one, as it tests its growing alliance with the new Islamist leadership of Egypt and other relationships in the Arab world and beyond.

“The conflict shows how much the region has changed since the Arab uprisings began,” said Nathan Thrall, who researches Israel and the Palestinian territories for the International Crisis Group, which works to prevent conflict. “Now when Gaza is under fire, the loudest voices come not from the so-called Axis of Resistance — Iran, Syria and Hezbollah — but from U.S. allies like Egypt and Qatar.”

One possible way out of the crisis, Mr. Thrall suggested, would be a three-party deal in which Hamas vows to contain Gaza’s more extreme elements in exchange for improved trade through Rafah, the border crossing controlled by Egypt, as well as Kerem Shalom, the commercial crossing managed by Israel.

“The new X-factor is that Egypt is now part of that mix,” said David Makovsky of the Washington Institute for Near East Policy. Hamas, he said, hopes the message to Israel will be: “You don’t want to mess with us in Gaza because you’ll hurt your relationship with Cairo.”

President Mohamed Morsi of Egypt has so far rallied to Hamas’s side: he not only recalled his ambassador from Israel but is sending his prime minster, Hesham Kandil, here on to “confirm Egypt’s solidarity with the people of Gaza in the face of the wanton Israeli aggression,” according to a statement from his spokesman on Thursday.

Ismail Haniyeh, the Hamas prime minister, thanked Mr. Morsi in a televised speech on Thursday night “for the quick and brave decisions he made,” adding, “Today’s Egypt is unlike that of yesterday.”

Coming weeks after the emir of Qatar became the first head of state to step foot in Gaza since Hamas took control in 2007, the visit of such a high-ranking Egyptian creates a dilemma for Israel. Intense bombing during or before Mr. Kandil’s visit could be a public relations disaster internationally, but agreeing to a cease-fire without responding harshly to the rocket fire near Tel Aviv and the three civilian deaths near Gaza would be difficult for those at home to swallow.

“If this had happened before, there would have been more pressure on the Palestinians,” said Waleed al-Modallal, a political science professor at the Islamic University of Gaza. “Now the resistance is working freely.”

Not entirely freely. Mourners broke into a jog on Thursday morning as they accompanied Mr. Jabari’s remains from his home to a mosque for his funeral because Israeli planes were dropping bombs nearby. High-ranking Hamas officials were not among the crowds, heeding Israel’s warning to stay out of sight or risk the same fate.

Among the Palestinian fatalities were five children, two men over 55 and a pregnant 19-year-old, according to relatives and Gaza health officials.

“We heard an explosion that shook the house, and in a moment a shell hit the house,” said Um Jihad, the mother-in-law of the pregnant woman, Heba Al-Mash’harawi, and grandmother of one of the babies, 11-month-old Omar.

Furniture and curtains were ablaze in seconds, and the baby suffocated from smoke, family members said.

As bombing continued — a dozen an hour, according to an Israeli military spokesman — schools were closed and most Gazans huddled indoors, some fleeing the harder-hit outskirts of the cities for relatives’ homes in more populated areas.

Amnah Hassan, 53, said 25 people from three generations crowded into the center of the ground floor of their home, away from windows and only venturing out in the late afternoon to buy a battery-operated radio to monitor news when electricity went out.

Israel dropped leaflets warning Gazans to stay away from facilities used by Hamas to store weapons and accused Hamas of using civilians as human shields by setting up such storehouses in residential neighborhoods.

“Their father was killed in Cast Lead, so they are more terrified,” Ms. Hassan said of three of her grandchildren. “In Cast Lead the bombings did not stop. Here, it becomes quiet for a while, then we think it’s going to be quiet, then suddenly the airstrikes resume. We don’t know what’s going to happen later.”

Thursday was the Islamic New Year, but there were no parties here. Normally traffic-clogged boulevards were mostly empty, and marketplaces had shuttered shops instead of shoppers.

“Who will think of eating sweets in these bitter circumstances?” asked Mohammed Elmzaner outside his bakery.

Mayy El Sheikh contributed reporting from Cairo.

***********

Hamas not respecting lull as Egypt PM visits: Israel

By Agence France-Presse
Friday, November 16, 2012 7:04 EST

Hamas militants are not respecting a temporary lull in the fighting around Gaza which was agreed to by Israel on Friday for the duration of a brief visit by the Egyptian prime minister, an Israeli official said.

“Hamas does not respect the Egyptian PM’s visit to Gaza and violates the temporary cease fire that Israel agreed to during the visit,” said Ofir Gendelman, spokesman for Israeli Prime Minister Benjamin Netanyahu.




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« Reply #3042 on: Nov 16, 2012, 07:49 AM »

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11/15/2012 04:42 PM

Israeli Offensive in Gaza: Netanyahu's Extremely Risky Gamble

By Ulrike Putz in Beirut

Israeli Prime Minister Benjamin Netanyahu is hoping the offensive in the Gaza Strip wins his Likud party more votes in January's election. But the move is extremely risky. Skirmishes could escalate into a full-blown war that might weaken Hamas but shift Palestinian support behind even more radical groups.

Just a few hours before the launch of the deadly offensive against military targets and Hamas leaders in the Gaza Strip, Israeli Prime Minister Benjamin Netanyahu was in his favorite place: in front of live television cameras. On Wednesday evening, he addressed the Israeli people with direct, aggressive words. "Today, we relayed a clear message to the Hamas organization and other terrorist organizations," he said. "If there is a need, the military is prepared to expand the operation." Defense Minister Ehud Barak also addressed reporters, saying that Hamas' "consistent provocation in recent weeks … forced our hand into acting with both precision and decisiveness."

The dual appearance seems to betray the motives behind the most recent attacks. "When the cannons roar, we see only Netanyahu and Barak on the screen, and all the other politicians have to applaud them," wrote the daily Haaretz in a commentary published Thursday. "The assassination of (Hamas' top military commander Ahmed) Jabari will go down in history as another showy military action initiated by an outgoing government on the eve of an election."

Indeed, one can conclude that the most recent offensive against militants in the Hamas-ruled Gaza Strip -- which started Wednesday with the killing of Jabari -- has been conceived as more of a show fight for the Israeli public than the beginning of a decisive battle.

Dangerous Gambling

Both Netanyahu and Barak would have good reasons for wanting to use a successful mini-campaign to score points before parliamentary elections are held on Jan. 22. Netanyahu is undoubtedly afraid that ex-Prime Minister Ehud Olmert could snatch votes away from his Likud party if he decides to throw his hat in the ring. In fact, there are rumors that Olmert was planning to announce his candidacy precisely on Wednesday evening. But the military action codenamed "Pillar of Defense" upset his plans.

Defense Minister Barak can also no longer assume that his "Independence" party, which broke off from the Labor Party in January 2011, will win enough votes to keep seats in the country's parliament, the Knesset. However, a successful offensive could boost its waning popularity enough to guarantee it some parliamentary seats. An offensive that gets the population to close ranks behind the military would also divert attention away from pressing social problems in Israel. Doing so would take the wind out of the sails of groups such as the Labor Party and cost them votes, thereby helping Netanyahu's and Barak's respective parties.

Still, even if the offensive might give the two some political advantages, it also entails massive risks. If the violence gets out of hand and the conflict between Israel and Hamas escalates into something like the three-week war that broke out between the two in December 2008, it could have drastic consequences for the men who orchestrated it.

The Israeli public is extremely sensitive to casualties. Sentiments could swiftly turn in the event of a few more of incidents like the Thursday attack that saw a rocket slam into an apartment building in the southern Israeli town of Kiryat Malachi, killing two men and a woman. Likewise, should the Israeli government respond to a constant barrage of rockets launched from the Gaza Strip by ordering ground troops to advance into the coastal area, it could spell even more casualties and even more public opposition to the leaders who launched "Pillar of Defense."

A Dangerous Balancing Act on Both Sides

Netanyahu's government hopes the offensive will usher in the status quo ante. Israel would like to re-establish the cease-fire that it hammered out with Hamas in January 2009, at the end of the war in Gaza. Though it was a fragile peace, for the most part, it was respected. But Hamas has been emboldened by the recent election victory in Egypt of the Muslim Brotherhood, Hamas' political parent organization. Just a few months ago, Hamas started to seriously jeopardize the peace by beginning to launch rockets into Israeli territory and attacking Israeli border patrols.

Internal political calculus was also behind the Palestinians' decision to increase the number of attacks during the late summer: Hamas' power base is crumbling. Many Gaza Strip residents believe the organization is too weak and view the cease-fire with Israel as a betrayal. In recent years, the support of these disenchanted residents has migrated to considerably more radical groups. By making itself appear more bellicose, Hamas hopes to win back these former supporters.

Indeed, more than anything, it is the presence of these ultra-radical groups in the Gaza Strip that could turn Israel's current offensive into an adventure that spirals out of control. Goaded by Israeli airstrikes and shelling from tanks and naval gunboats, these extremists will be even less inclined to agree to a new cease-fire. Their supporters expect them to take a tough stance and reject all compromises.

These groups are affiliated with terror cells based in the Sinai Peninsula, and some of them have ties to al-Qaida. In the past, they have already blocked the attempts of Egyptian intermediaries to broker a cease-fire. In the days to come, Israel could face a situation in which Hamas becomes incapable of imposing one even if it wants to.

Should that happen, the Israeli government would have no choice but to take over the entire Gaza Strip. However, doing so could weaken Hamas so much that the ultra-extremist Palestinian groups could simply push it aside.

For this reason, it is paradoxically in Israel's interest not to allow the ongoing offensive to severely batter Hamas and thereby imperil its grip on power.

Netanyahu and Barak are now walking a perilous tightrope -- and one of their own making.

*************

November 15, 2012

In Israeli Border Town, Rubble and Blood

By ISABEL KERSHNER
IHT

KIRYAT MALACHI, Israel — An open tub of chocolate spread sat on the counter; pots on the stove were filled with shards of glass. Tiny shoes were scattered in the narrow hallway, its walls spattered with blood.

It was just after 8 a.m. when the sirens went off in this largely blue-collar town of about 20,000 in southern Israel. Kiryat Malachi, which means the City of Angels, had not suffered a direct hit by rockets from Gaza before.

One of the top-floor apartment of this rundown four-story building was home to the Scharf family, a couple in their 20s with a boy, 4, and a girl of 8 months. Neighbors said they had recently come from India, where they were emissaries for the Chabad-Lubavitch organization of Hasidic Jews. At the incoming rocket alert they did not rush for the relative safety of the stairwell as many of the neighbors did; perhaps they did not know the drill.

In the apartment next door, Yitzhak Amsalem, also in his 20s, ignored his mother’s pleas to take shelter. Instead he and Aharon Smadja, a rabbi and a friend, stood by the window, eager to photograph “the fireworks,” neighbors said.

When the rocket crashed into the top of building, it took the first Israeli casualties in this round of violence: Mr. Amsalem and Mr. Smadja, and Mira Scharf, the mother of two.

On Thursday, Kiryat Malachi, Rishon Lezion and Tel Aviv to the north all joined the circle of Israeli population centers vulnerable to the rockets being fired from Gaza, whose longer range threaten hundreds of thousands more Israelis.

The Israeli assault on Gaza that began a day earlier has focused on taking out the militant groups’ stockpiles of the more powerful rockets. But the deadly attack on Kiryat Malachi in the morning and the rockets fired at Tel Aviv after dark only underscored the seemingly Sisyphean nature of the task at hand. More than 14,000 rockets and mortar shells have slammed into southern Israeli over the last 11 years, according to the Defense Ministry. There have been more than 750 this year.

Israel’s devastating three-week offensive against the militant groups in Gaza in the winter of 2008-09 brought quiet for a while. But this year, the lulls between the bouts of cross-border fire had gotten shorter and the range of the militant weapons grew longer. In the absence of a more radical strategy, Israeli experts said, there was a need to go in again and restore deterrence. In the local jargon, it is called “cutting the grass.”

The recently deployed Iron Dome antirocket missile system has given Israel some protection. At least 100 rockets headed for populous Israeli cities were intercepted high above the ground in the first 24 hours of the Israeli operation, minimizing the damage. But there were no Iron Dome batteries protecting Kiryat Malachi on Thursday, and many here said they had nowhere really safe to run.

Nava Chayoun, 40, who lives on the second floor, said her husband, Yitzhak, ran up the stairs immediately after the rocket struck and saw Mrs. Scharf lying under rubble on the floor. He rescued the two children, who were badly wounded. The father had already run down the stairs, she said, in shock and covered in blood. Afterward, she said, she and her children huddled together and “read psalms.”

Among the rubble in the Amsalems’ apartment were two hand-shaped wall ornaments bearing Hebrew blessings for the home, like a charm.

Despite the deaths, neighbors expressed support for the Israeli offensive and anger against Hamas, the Islamic group that controls the Palestinian coastal enclave.

“The Gaza people chose Hamas,” said Gadi Mamon, 37, a teacher who lives in a building nearby. “They are not innocent. We are the innocents. They are strong enough to hit a baby but not soldiers.”

In Sderot, the rocket-battered town closest to the Gaza border, Itzik Biton, who runs a falafel stand, felt emboldened by the military action.

“We are with our prime minister,” he said. The Hamas leaders “all run into bunkers, a sign of weakness,” he said between incoming rocket alerts, crouching at the back of the store by a refrigerator of soft drinks as rockets slammed into the town. “We do not show weakness.”


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November 15, 2012

Turks Grant Recognition to Coalition of Syrians

By SEBNEM ARSU and TIM ARANGO
IHT

ISTANBUL — Turkey made it clear on Thursday that it officially recognized a newly formed rebel coalition as the legitimate leader of the Syrian people, an important step in the group’s effort to attract legitimacy and, it hopes, more weapons to bring about the end of President Bashar al-Assad’s rule.

Turkey “once again reiterates its recognition of the Syrian national coalition as the legitimate representative of the Syrian people,” Turkey’s foreign minister, Ahmet Davutoglu, said in a speech at an Organization of Islamic Cooperation meeting in Djibouti, the tiny country on the Horn of Africa.

The announcement by Turkey, Syria’s northern neighbor and a haven for thousands of Syrian refugees and rebel fighters, was the third significant recognition of the new group this week.

On Monday, members of the Gulf Cooperation Council — Saudi Arabia, Bahrain, the United Arab Emirates, Oman, Qatar and Kuwait — recognized the group, known as the National Coalition of Syrian Revolutionary and Opposition Forces.

On Tuesday, France became the first Western country to do so, and it said it was considering providing arms to the insurgent groups within Syria that have been engaged in a 20-month-long war with the government that has claimed nearly 40,000 lives.

Mr. Davutoglu’s comments on Thursday followed a statement by Turkey’s Foreign Ministry earlier in the week in which it urged other nations to recognize the coalition.

That statement was meant to convey that Turkey itself recognized the new group, but it was not widely reported that way.

Turkey, along with Arab and Western countries, had pressured the Syrian political opposition, which had been seen as fractious and ineffectual, to realign itself as a broader coalition that included more officials from within Syria, which it did on Sunday after several days of wrangling in Doha, Qatar.

The previous group, the Syrian National Council, had been nurtured by Turkey and was based in Istanbul, but it came to be seen as a failure whose lack of credibility among the rebel fighting groups, loosely aligned under the banner of the Free Syrian Army, was an impediment to more aggressive involvement by other Arab and Western nations.

In his speech, Mr. Davutoglu cited the staggering human toll of Syria’s uprising, which began as peaceful protests in March 2011. He said more than 39,000 people had been killed, 2.5 million people had been displaced within Syria, and hundreds of thousands of refugees had fled to neighboring countries, including Turkey, Jordan, Lebanon and Iraq.

In Turkey alone, he said, 120,000 Syrians are residing in camps, and nearly 70,000 others are living elsewhere in the country.

Mr. Davutoglu also reiterated Turkey’s contention that Mr. Assad, once a close friend of Turkey’s, had lost all credibility and legitimacy because of his government’s repression of the opposition.

“The reason behind the ongoing tragedy is the Syrian regime that has refused to acknowledge the legitimate demands of the Syrians and has chosen to try to rule its people by brutal force,” he said.

Turkey has been perhaps the most vocal and aggressive supporter of the Syrian opposition, and it has long pushed for more international engagement in the conflict, which could be forthcoming as the new opposition coalition continues to gain legitimacy. On Thursday, according to The Associated Press, France’s foreign minister suggested that “defensive weapons” be provided to the rebels, and that the European Union should reconsider its arms embargo against Syria.

As the war has dragged on, Turkey’s support for the Syrian rebels has become a domestic issue for the government of Prime Minister Recep Tayyip Erdogan, which is facing a backlash from its own public over the mounting toll of the war because the fighting has brought cross-border trade to a halt and the influx of refugees has raised tensions in border communities.

This article has been revised to reflect the following correction:

Correction: November 16, 2012

A picture caption with an earlier version of this story misstated the town whose takeover Syrian rebels were seen celebrating. It was Ras al-Ain, a border town in Syria, not Ceylanpinar, a town in Turkey.

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November 15, 2012

Protests in Jordan Continue, With Calls for Ending the King’s Rule

By DAVID D. KIRKPATRICK
IHT

IRBID, Jordan — Thousands of young men poured into the streets of Jordan’s cities and towns for a third night of scattered protests against King Abdullah II, as the United States expressed support for the monarch.

Thursday’s protests around the country, most of which involved exchanges of rocks and tear gas, were set off this week by anger at a reduction in public fuel subsidies. Unlike previous demonstrations here, this week’s protests for the first time have also called for ending the rule of King Abdullah II.

Crowds have borrowed the signature chant of the Arab Spring revolts — “The people want the fall of the regime!” — and added their own dances and rhymes comparing the king to Ali Baba, the legendary thief. In this affluent northern city, usually a bulwark of support for the king, some demonstrators spoke openly of demands for democracy.

“Our ambition is to get our rights,” said Ali Ababene, a young man warming himself by a burning tire before dashing away ahead of the next volley of tear gas. “Our problem is not the high prices. It is the audaciousness of the corruption.” He added, “It is about democracy, freedom and social justice.”

The protests here turned notably violent on Wednesday night, after the police shot and killed Qasi Omari, 22, now described in local graffiti as “the martyr of the price hike.”

The Jordanian government said he was killed in a shootout with a group of armed men who assaulted a police station here on Wednesday night. But on Thursday, two members of his family and a witness to the killing said that he was unarmed, part of a group of about 30 unarmed men who walked to the police station to complain about abusive language they said officers had used while breaking up an earlier protest.

One of those men, Firas Sultan el Azzam, 28, said they had asked the police through a sliding front door, “We want to know who gave you the right to curse us?” He and Mr. Omari’s family said the police then opened fire, killing Mr. Omari and wounding three others. Angry crowds then set fire to several government cars and burned down a municipal building, where a heavy contingent of plainclothes police officers was watching children play on Thursday.

The protests are expected to escalate after midday prayers across the country on Friday, and the family plans a funeral that day for Mr. Omari as well.

Established by the British after World War I, Jordan’s monarchy is one of the few Western-backed Arab governments to remain in place through decades of coups and revolts. Jordan is also a pivotal United States ally, occupying a strategic location between Israel, Iraq and Syria, and it is one of the few Arab countries to have signed a peace treaty with Israel.

Asked about the protests, a State Department spokesman, Mark C. Toner, urged protesters to remain peaceful and expressed support for the reforms led by the king.

“We support King Abdullah II’s road map for reform and the aspirations of the Jordanian people,” Mr. Toner said, “to foster a more inclusive political process that will promote security, stability, as well as economic development.”
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