Al Jazeera English - Americas

Chavez and Iran unveil anti-US fund - Al Jazeera

The presidents of Iran and Venezuela have agreed to spend billions of dollars to help other countries free themselves from what they describe as US domination.

Hugo Chavez announced the plan in a speech on Saturday with Mahmoud Ahmadinejad.

The two also called for Opec to cut oil production to support falling crude prices.

They had previously announced plans to establish a joint $2bn fund for projects in Venezuela and Iran but on Saturday they said that the money would also be used to help friendly third countries.

"This fund, my brother," Chavez said, "will become a mechanism for liberation."


Chavez said the fund "will permit us to underpin investments ... above all in those countries whose governments are making efforts to liberate themselves from the [US] imperialist yoke ... Death to US imperialism."

Ahmadinejad, who is on a tour of Latin America, said that Tehran and Caracas had the task of "promoting revolutionary thought in the world".

"The reason for all the current problems is the erroneous direction of the powerful countries, where there is poverty, hate, enmity and war," he added.

Oil agreement

The two presidents announced that they would make a joint effort to obtain new oil production cuts.

"Today we know that there is too much crude in the market, that's why we support ... the decisions that have been taken to reduce production and protect the price of oil," Chavez said.

He emphasised that he was sending the message "to all the heads of state in the Opec countries to continue to strengthen our organisation in this direction".

Members of the 11-nation Organisation of Petroleum Exporting Countries (Opec) have expressed concern about the falling price of oil, which has slid 14 per cent since the start of the year.

Ahmadinejad has praised Chavez for his outspoken support of Iran's nuclear programme, which the US and European governments say may be part of a project to build atomic weapons.

Vocal supporter

Facing the threat of international isolation and sanctions imposed by the UN Security Council over its uranium enrichment work, Iran is keen to demonstrate it has backing among a number of leaders in Latin America.

Chavez is the most vocal supporter in Latin America for Iran and its president, with both men calling each other "brother" and relishing their status as fierce opponents of Washington's influence.

"Hugo is my brother," Ahmadinejad said during his last visit to Venezuela in September. "Hugo is the champion of the fight against imperialism."

In September 2005, Venezuela was alone in opposing a resolution at the International Atomic Energy Agency (IAEA) that found Iran in violation of nuclear safeguards. Chavez has since backed Iran's right to enrich uranium.

Iran and Venezuela are both important players in Opec and have signed numerous co-operation agreements in the energy sector and other fields.

During a visit to Iran last September, Chavez came out in support of Iran's nuclear programme, as well as denouncing Israeli military operations in Lebanon.

The two presidents also signed deals covering iron and steel production, petrochemicals, pharmaceuticals and health care equipment and munitions.

Cultivating allies

While Ahmadinejad seeks to cultivate Latin American allies, Condoleezza Rice, the US secretary of state, is in the Middle East to rally Arab support for a new US strategy in Iraq and counter Iran's alleged "interference" in Iraq

Ahmadinejad arrived in Nicaragua late on Saturday, where Daniel Ortega has just returned to power. The Iranian president was met at the airport by the new Nicaraguan president.

On Monday, Ahmadinejad will take part in the swearing-in ceremony of Ecuador's new president Rafael Correa, who has vowed to forge stronger ties with Venezuela and not to renew a lease for a US military air base on the country's Pacific coast.

The Iranian president will also hold meetings with other South American presidents including Bolivia's Evo Morales on the sidelines of the ceremony in Ecuador, before finishing his tour on Tuesday.

Gates to consider more troops for Afghanistan

reuters

Defense Secretary Robert Gates said on Wednesday he would consider sending more troops to Afghanistan where U.S. commanders say they expect the Taliban to step up attacks from Pakistani sanctuaries.

Gates, in Afghanistan to ensure commanders have the resources to counter an expected Taliban offensive in the spring, said it was very important the United States and its allies did not let the success achieved in Afghanistan slip away.

Violence in Afghanistan intensified last year to its bloodiest since U.S.-led forces overthrew the Taliban in 2001.

U.S. military commanders said attacks from Pakistan into Afghanistan had surged, several-fold in some areas, and the violence was expected to increase in the spring and summer.

Gates said he had discussed the situation with the commander of Afghanistan’s NATO force, General David Richards, and others.

Asked if the commanders had made a case for more troops, he said: “Yes”.

“They’ve indicated what they can do with different force levels,” Gates told reporters at the main U.S. base in Afghanistan, at Bagram, north of Kabul, adding he would take the those ideas back to the U.S. joint chiefs of staff for study.

“At that point I’ll make a recommendation to the president.”

Asked how many more troops might be sent, he said: “It depends on different scenarios and those are the kinds of decisions that we’re going to have to look at.”

There are more than 40,000 foreign troops in Afghanistan, the highest level since 2001, about 22,000 of them American.

Gates arrived in Afghanistan late on Monday on his first trip to the country since taking over as defense secretary.

PAKISTANI SANCTUARIES

The surge of violence last year and fears of more when the weather gets warmer this year have thrown the spotlight on infiltration from Pakistan and Pakistan’s efforts to stop it.

Gates said on Tuesday cross-border attacks from Pakistan were increasing.

U.S. military officials in Kabul told reporters command and control of the Afghan insurgency came from the Pakistani side of the border, where Pakistani forces have also been battling militants.

Training, financing, recruitment, indoctrination, regeneration and other support activities were also taking place in Pakistan, a U.S. military intelligence official said.

U.S. intelligence chief John Negroponte said last week it would be necessary to eliminate the Taliban safe havens in Pakistan’s tribal areas to end the Afghan insurgency.

Pakistan was the main backer of the Taliban during the 1990s but officially stopped helping the hardline Islamists after the September 11 attacks, when it joined the U.S.-led war on terrorism.

But while Pakistan has arrested or killed hundreds of al Qaeda members, including several major figures, Afghanistan and some of its allies say it has failed to take effective action against Taliban leaders, their networks and sanctuaries.

Despite such doubts about Pakistani efforts, a NATO spokesman said on Wednesday efforts were being made to coordinate operations with Pakistan and the killing of a top Taliban commander in a U.S. air strike last month was an example of that.

The Taliban commander killed in the December 19 air strike in the southern Afghan province of Helmand, Akhtar Mohammad Osmani, was the most senior Taliban leader killed by U.S. forces since 2001. “The Pakistanis shared intelligence with us that led to the successful attack on Osmani,” NATO spokesman Brigadier Richard Nugee told a news conference in Kabul.

He did not elaborate but also cited a Pakistani attack on a militant camp in its South Waziristan tribal region on Tuesday as an example of efforts to coordinate with Pakistan.

Gates said Pakistan was “an extraordinarily strong ally” of the United States in the war on terrorism but militancy on the Pakistani side of the border would have to be dealt with.

What $1.2 Trillion Can Buy

newyork times

The human mind isn’t very well equipped to make sense of a figure like $1.2 trillion. We don’t deal with a trillion of anything in our daily lives, and so when we come across such a big number, it is hard to distinguish it from any other big number. Millions, billions, a trillion — they all start to sound the same.

The way to come to grips with $1.2 trillion is to forget about the number itself and think instead about what you could buy with the money. When you do that, a trillion stops sounding anything like millions or billions.

For starters, $1.2 trillion would pay for an unprecedented public health campaign — a doubling of cancer research funding, treatment for every American whose diabetes or heart disease is now going unmanaged and a global immunization campaign to save millions of children’s lives.

Combined, the cost of running those programs for a decade wouldn’t use up even half our money pot. So we could then turn to poverty and education, starting with universal preschool for every 3- and 4-year-old child across the country. The city of New Orleans could also receive a huge increase in reconstruction funds.

The final big chunk of the money could go to national security. The recommendations of the 9/11 Commission that have not been put in place — better baggage and cargo screening, stronger measures against nuclear proliferation — could be enacted. Financing for the war in Afghanistan could be increased to beat back the Taliban’s recent gains, and a peacekeeping force could put a stop to the genocide in Darfur.

All that would be one way to spend $1.2 trillion. Here would be another:

The war in Iraq.

In the days before the war almost five years ago, the Pentagon estimated that it would cost about $50 billion. Democratic staff members in Congress largely agreed. Lawrence Lindsey, a White House economic adviser, was a bit more realistic, predicting that the cost could go as high as $200 billion, but President Bush fired him in part for saying so.

These estimates probably would have turned out to be too optimistic even if the war had gone well. Throughout history, people have typically underestimated the cost of war, as William Nordhaus, a Yale economist, has pointed out.

But the deteriorating situation in Iraq has caused the initial predictions to be off the mark by a scale that is difficult to fathom. The operation itself — the helicopters, the tanks, the fuel needed to run them, the combat pay for enlisted troops, the salaries of reservists and contractors, the rebuilding of Iraq — is costing more than $300 million a day, estimates Scott Wallsten, an economist in Washington.

That translates into a couple of billion dollars a week and, over the full course of the war, an eventual total of $700 billion in direct spending.

The two best-known analyses of the war’s costs agree on this figure, but they diverge from there. Linda Bilmes, at the Kennedy School of Government at Harvard, and Joseph Stiglitz, a Nobel laureate and former Clinton administration adviser, put a total price tag of more than $2 trillion on the war. They include a number of indirect costs, like the economic stimulus that the war funds would have provided if they had been spent in this country.

Mr. Wallsten, who worked with Katrina Kosec, another economist, argues for a figure closer to $1 trillion in today’s dollars. My own estimate falls on the conservative side, largely because it focuses on the actual money that Americans would have been able to spend in the absence of a war. I didn’t even attempt to put a monetary value on the more than 3,000 American deaths in the war.

Besides the direct military spending, I’m including the gas tax that the war has effectively imposed on American families (to the benefit of oil-producing countries like Iran, Russia and Saudi Arabia). At the start of 2003, a barrel of oil was selling for $30. Since then, the average price has been about $50. Attributing even $5 of this difference to the conflict adds another $150 billion to the war’s price tag, Ms. Bilmes and Mr. Stiglitz say.

The war has also guaranteed some big future expenses. Replacing the hardware used in Iraq and otherwise getting the United States military back into its prewar fighting shape could cost $100 billion. And if this war’s veterans receive disability payments and medical care at the same rate as veterans of the first gulf war, their health costs will add up to $250 billion. If the disability rate matches Vietnam’s, the number climbs higher. Either way, Ms. Bilmes says, “It’s like a miniature Medicare.”

In economic terms, you can think of these medical costs as the difference between how productive the soldiers would have been as, say, computer programmers or firefighters and how productive they will be as wounded veterans. In human terms, you can think of soldiers like Jason Poole, a young corporal profiled in The New York Times last year. Before the war, he had planned to be a teacher. After being hit by a roadside bomb in 2004, he spent hundreds of hours learning to walk and talk again, and he now splits his time between a community college and a hospital in Northern California.

Whatever number you use for the war’s total cost, it will tower over costs that normally seem prohibitive. Right now, including everything, the war is costing about $200 billion a year.

Treating heart disease and diabetes, by contrast, would probably cost about $50 billion a year. The remaining 9/11 Commission recommendations — held up in Congress partly because of their cost — might cost somewhat less. Universal preschool would be $35 billion. In Afghanistan, $10 billion could make a real difference. At the National Cancer Institute, annual budget is about $6 billion.

“This war has skewed our thinking about resources,” said Mr. Wallsten, a senior fellow at the Progress and Freedom Foundation, a conservative-leaning research group. “In the context of the war, $20 billion is nothing.”

As it happens, $20 billion is not a bad ballpark estimate for the added cost of Mr. Bush’s planned surge in troops. By itself, of course, that price tag doesn’t mean the surge is a bad idea. If it offers the best chance to stabilize Iraq, then it may well be the right option.

But the standard shouldn’t simply be whether a surge is better than the most popular alternative — a far-less-expensive political strategy that includes getting tough with the Iraqi government. The standard should be whether the surge would be better than the political strategy plus whatever else might be accomplished with the $20 billion.

This time, it would be nice to have that discussion before the troops reach Iraq.

Microchips for mentally ill planned in shake-up

LONDON TELEGRAPH

Radical measures for tackling crime - ranging from monitoring the behaviour of the mentally ill with radio chips to hormone injections for sex offenders — are to be considered by the Government in a wide-ranging policy review ordered by Tony Blair.

The Prime Minister said yesterday that Labour had to renew its sense of leadership and energy as voters were getting bored with the party after 10 years in power.

He disclosed that he intended to stay in power until at least June to oversee a policy review aimed at ensuring that a "new New Labour" agenda would take the Government into the next election after he had left No 10.

The Cabinet Office published four policy review documents outlining the "big questions and choices" facing society in the next decade.

Cabinet ministers, civil servants and the public, through so-called citizen forums, will be asked to express a view.

Mr Blair asserted his grip on the Government's forward policy agenda as his most likely successor, Gordon Brown, flew to India for an official visit.

The Chancellor has indicated that he will not be bound by the reviews and has blocked Mr Blair's attempts to extend them to his own area of economic policy.

Mr Brown clearly wants a decisive break with the Blair legacy and has already started setting out his priorities, including spending more on education, a less overbearing state and a different style of government.

The policy review programme, which Mr Blair told his monthly Downing Street press conference had generated "real enthusiasm" across government, will be seen as his attempt to ensure that Mr Brown does not backtrack when he takes over.

The Prime Minister dismissed calls from some senior Labour figures to speed up his departure to allow Mr Brown to revitalise the Government before important elections in Scotland and Wales and English councils in May.

He gave the strongest indications yet that he intends to stay in office until the summer.

Asked whether he would be at a summit of European Union heads of government in Brussels on June 21, he responded without hesitation: "Of course."

His comments came after David Miliband, the Environment Secretary, told The Daily Telegraph that Labour would have to "defy political gravity" to win a fourth successive election and urged Mr Brown to adopt a "bold" agenda.

Mr Blair said he agreed with Mr Miliband's stark analysis of Labour's mid-term difficulties. But provide the Government did not retreat, "we will

come through this and come through it with the renewed sense of leadership and energy".

The options explored in the four documents dealing with public services, the role of the State, energy and the environment, and crime, justice and cohesion, are not Government policy but are intended to "facilitate discussion".

They show how the Government is thinking and its readiness to look at contentious and radical policies that have been tried abroad.

The most controversial paper dealing with law and order acknowledges that there will have to be "trade-offs" between liberty and security as technology and profiling are used to reduce crime.

It acknowledged that two thirds of the public believe crime is rising. People were less confident in the criminal justice system after experiencing it, while re-offending rates remained "stubbornly high".

While burglary had fallen, mugging had risen with the expansion of portable high-tech gadgets, and new crime opportunities such as identity theft and internet crime.

The policy paper confirmed the Government's objective of creating a surveillance society despite Mr Blair's denials of a "Big Brother" state. It said new anti-crime measures include face and voice recognition, a DNA database, identity cards, microchip monitoring and satellite surveillance — and confirmed that Britain has the most public CCTV systems in Europe.

It highlighted ways other countries have intervened to tackle crime and drug addiction — though it stresses such ideas "are not presently policies under consideration by the UK Government".

America is said to be "favourably disposed" towards preventing drug addiction through heroin and cocaine vaccination. It is also considering "more sophisticated" monitoring techniques, including a trial of "radio frequency identification chips" for the mentally ill.

Options for regulating behaviour include the use of legal restrictions on television beer adverts in use in over half of Europe. In Denmark, sex offenders are given hormone injections, while Dutch police recently sent text messages to warn citizens of an escaped paedophile.

Public sector unions are likely to be alarmed by suggestions of private and voluntary sectors playing an increasing role — such as the 14,000 bail bondsmen and thousands of bounty hunters who ensure defendants get to court.

AP: Iran gets army gear in Pentagon sale

AP

Fighter jet parts and other sensitive U.S. military gear seized from front companies for Iran and brokers for China have been traced in criminal cases to a surprising source: the Pentagon.

In one case, federal investigators said, contraband purchased in Defense Department surplus auctions was delivered to Iran, a country President Bush has branded part of an "axis of evil."

In that instance, a Pakistani arms broker convicted of exporting U.S. missile parts to Iran resumed business after his release from prison. He purchased Chinook helicopter engine parts for Iran from a U.S. company that had bought them in a Pentagon surplus sale. Immigration and Customs Enforcement agents say those parts did make it to Iran.

Sensitive military surplus items are supposed to be demilitarized or "de-milled" — rendered useless for military purposes — or, if auctioned, sold only to buyers who promise to obey U.S. arms embargoes, export controls and other laws.

Yet the surplus sales can operate like a supermarket for arms dealers.

"Right Item, Right Time, Right Place, Right Price, Every Time. Best Value Solutions for America's Warfighters," the Defense Reutilization and Marketing Service says on its Web site, calling itself "the place to obtain original U.S. Government surplus property."

Federal investigators are increasingly anxious that Iran is within easy reach of a top priority on its shopping list: parts for the precious fleet of F-14 "Tomcat" fighter jets the United States let Iran buy in the 1970s when it was an ally.

In one case, convicted middlemen for Iran bought Tomcat parts from the Defense Department's surplus division. Customs agents confiscated them and returned them to the Pentagon, which sold them again — customs evidence tags still attached — to another buyer, a suspected broker for Iran.

"That would be evidence of a significant breakdown, in my view, in controls and processes," said Greg Kutz, the Government Accountability Office's head of special investigations. "It shouldn't happen the first time, let alone the second time."

A Defense Department official, Fred Baillie, said his agency followed procedures.

"The fact that those individuals chose to violate the law and the fact that the customs people caught them really indicates that the process is working," said Baillie, the Defense Logistics Agency's executive director of distribution. "Customs is supposed to check all exports to make sure that all the appropriate certifications and licenses had been granted."

The Pentagon recently retired its Tomcats and is shipping tens of thousands of spare parts to its surplus office — the Defense Reutilization and Marketing Service — where they could be sold in public auctions. Iran is the only other country flying F-14s.

"It stands to reason Iran will be even more aggressive in seeking F-14 parts," said Stephen Bogni, head of Immigration and Customs Enforcement's arms export investigations. Iran can produce only about 15 percent of the parts itself, he said.

The GAO, the investigative arm of Congress, found it alarmingly easy to acquire sensitive surplus. Last year, its agents bought $1.1 million worth — including rocket launchers, body armor and surveillance antennas — by driving onto a base and posing as defense contractors.

"They helped us load our van," Kutz said. Investigators used a fake identity to access a surplus Web site operated by a Pentagon contractor and bought still more, including a dozen microcircuits used on F-14 fighters.

The undercover buyers received phone calls from the Defense Department asking why they had no Social Security number or credit history, but they deflected the questions by presenting a phony utility bill and claiming to be an identity theft victim.

The Pentagon's public surplus sales took in $57 million in fiscal 2005. The agency also moves extra supplies around within the government and gives surplus military gear such as weapons, armored personnel carriers and aircraft to state and local law enforcement.

Investigators have found the Pentagon's inventory and sales controls rife with errors. They say sales are closely watched by friends and foes of the United States.

Among cases in which U.S. military technology made its way from surplus auctions to brokers for Iran, China and others:

_Items seized in December 2000 at a Bakersfield, Calif., warehouse that belonged to Multicore, described by U.S. prosecutors as a front company for Iran. Among the weaponry it acquired were fighter jet and missile components, including F-14 parts from Pentagon surplus sales, customs agents said. The surplus purchases were returned after two Multicore officers were sentenced to prison for weapons export violations. London-based Multicore is now out of business, but customs continues to investigate whether U.S. companies sold it military equipment illegally.

In 2005, customs agents came upon the same surplus F-14 parts with the evidence labels still attached while investigating a different company suspected of serving as an Iranian front. They seized the items again. They declined to provide details because the investigation is still under way.

_Arif Ali Durrani, a Pakistani, was convicted last year in California in the illegal export of weapons components to the United Arab Emirates, Malaysia and Belgium in 2004 and 2005 and sentenced to just over 12 years in prison. Customs investigators say the items included Chinook helicopter engine parts for Iran that he bought from a U.S. company that acquired them from a Pentagon surplus sale, and that those parts made it to Iran via Malaysia. Durrani is appealing his conviction.

An accomplice, former Naval intelligence officer George Budenz, pleaded guilty and was sentenced in July to a year in prison. Durrani's prison term is his second; he was convicted in 1987 of illegally exporting U.S. missile parts to Iran.

_State Metal Industries, a Camden, N.J., company convicted in June of violating export laws over a shipment of AIM-7 Sparrow missile guidance parts it bought from Pentagon surplus in 2003 and sold to an entity partly owned by the Chinese government. The company pleaded guilty, was fined $250,000 and placed on probation for three years. Customs and Border Protection inspectors seized the parts — nearly 200 pieces of the guidance system for the Sparrow missile system — while inspecting cargo at a New Jersey port.

"Our mistake was selling it for export," said William Robertson, State Metal's attorney. He said the company knew the material was going to China but didn't know the Chinese government partially owned the buyer.

_In October, Ronald Wiseman, a longtime Pentagon surplus employee in the Middle East, pleaded guilty and was sentenced to 18 months in prison for stealing surplus military Humvees and selling them to a customer in Saudi Arabia from 1999 to 2002. An accomplice, fellow surplus employee Gayden Woodson, will be sentenced this month.

The Humvees were equipped for combat zones and some weren't recovered, Assistant U.S. Attorney Laura Ingersoll said.

_A California company, All Ports, shipped hundreds of containers of U.S. military technology to China between 1994 and 1999, much of it acquired in Pentagon surplus sales, court documents show. Customs agents discovered the sales in May 1999 when All Ports tried to ship to China components for guided missiles, bombs, the B-1 bomber and underwater mines. The company and its owners were convicted in 2000; an appeals court upheld the conviction in 2002.

Rep. Christopher Shays (news, bio, voting record), R-Conn., called the cases "a huge breakdown, an absolute, huge breakdown."

"The military should not sell or give away any sensitive military equipment. If we no longer need it, it needs to be destroyed — totally destroyed," said Shays, until this month the chairman of a House panel on national security. "The Department of Defense should not be supplying sensitive military equipment to our adversaries, our enemies, terrorists."

It's no secret to defense experts that valuable technology can be found amid surplus scrap.

On a visit to a Defense Department surplus site about five years ago, defense consultant Randall Sweeney literally stumbled upon some that shouldn't have been up for sale.

"I was walking through a pile of supposedly de-milled electrical items and found a heat-seeking missile warhead intact," Sweeney said, declining to identify the surplus location for security reasons. "I carried it over and showed them. I said, 'This shouldn't be in here.'"

Sweeney, president of Defense and Aerospace International in West Palm Beach, Fla., sees human error as a big problem. Surplus items are numbered, and an error of a single digit can make sensitive technology available, he said. Knowledgeable buyers could easily spot a valuable item, he added: "I'm not the only sophisticated eye in the world."

Baillie said the Pentagon is working to tighten security. Steps include setting up property centers to better identify surplus parts and employing people skilled at spotting sensitive items. If there is uncertainty about an item, he said, it is destroyed.

Of the 76,000 parts for the F-14, 60 percent are "general hardware" such as nuts and bolts and can be sold to the public without restriction, Baillie said. About 10,000 are unique to Tomcats and will be destroyed.

An additional 23,000 parts are valuable for military and commercial use and are being studied to see whether they can be sold, Baillie said.

Asked why the Pentagon would sell any F-14 parts, given their value to Iran, Baillie said: "Our first priority truly is national security, and we take that very seriously. However, we have to balance that with our other requirement to be good stewards of the taxpayers' money."

Kutz, the government investigator, said surplus F-14 parts shouldn't be sold. He believes Iran already has Tomcat parts from Pentagon surplus sales: "The key now is, going forward, to shut that down and not let it happen again."

___

On the Net:

Pentagon surplus: http://www.drms.dla.mil/

Immigration and Customs Enforcement: http://www.ice.gov/

Government Accountability Office: http://www.gao.gov/

Merkel warns on EU constitution

cnn

STRASBOURG, France (Reuters) -- German Chancellor Angela Merkel, whose country wants to revive the European Union's stalled constitution, warned on Wednesday of the risk of a "historic failure" to end the stalemate on the charter.

Merkel said Germany would aim by the end of its six-month presidency of the 27-nation bloc in June to offer a plan to resolve a deadlock over a constitution which supporters say is vital to the functioning of an enlarged EU.

"It is in the interest of Europe, its member states and its citizens, to bring this process to a successful conclusion by the next European Parliament elections in early 2009," Merkel told the assembly in Strasbourg.

"A collapse (of that process) would be a historic failure," she said of efforts to break a stalemate created in 2005 when French and Dutch voters rejected the proposed charter in referendums.

Merkel has sought to play down expectations for Germany's presidency, aware that her ability to relaunch a Union in the political doldrums may hinge on factors beyond her control.

With French President Jacques Chirac and British Prime Minister Tony Blair set to leave office this year, Merkel has emerged as Europe's most influential leader.

But German officials say what she can achieve depends on who is elected French president on May 6, almost two years after French and Dutch voters stopped EU institutional reform in its tracks by rejecting the draft constitution in referendums.

Analysts and politicians said at the time the "No" vote, particularly in France, partly stemmed from concerns migrants from the new member states of the east would take away jobs in western Europe.

Merkel also signalled that efforts to reconcile the EU need to guarantee its energy supplies with policies to tackle global warming would be at the heart of Germany's presidency, and issued a call to Washington to help the EU begin work on a new international accord on climate change.

"The EU needs the United States...to lay the foundations for a post-Kyoto agreement on climate change," she said of an envisaged new accord to apply from 2012.

The EU executive Commission last week laid out a new energy strategy, in which it announced what it said were the world's most ambitious goals for fighting climate change, targeting a cut of greenhouse gases by at least 20 percent by 2020.

Merkel reiterated her calls for closer trade and investment ties with the United States, saying Brussels and Washington should continue to cut barriers in areas such as patent rights, industry standards and in stock market access.

"A common transatlantic market is of the utmost European interest," she said in the speech.

EU trade officials have previously said they and U.S. counterparts are already working on harmonising regulations to make it easier to do business across the Atlantic but creating a full free trade area would be fraught with difficulties.

Aside from difficulties with France and the Netherlands, Germany also faces an uphill struggle convincing governments elsewhere in the bloc to back its efforts on the constitution.

Britain, Poland and the Czech Republic, which promised referendums but never held them after the French and Dutch said no, have got cold feet about the treaty, diplomats say.

Behind the scenes, Germany is sounding them out on what would have to be removed from the treaty ratified by 18 member states so far to enable the remaining countries to endorse it, preferably without holding referendums, the diplomats say.

The aim is to agree in June on a timetable for producing an amended treaty with possibly some political guidelines on its content, which may entail dropping the word "constitution."

IRAN ‘SHOOTS DOWN’ U.S. SPY DRONE

THE MEDIA LINE

The Iranian army has shot down an American spy drone, according to a member of Iran’s parliament.

The drone, said to belong to the United States army, was downed while crossing the border into the country, MP Seyed Nezam Mola Hoveizeh told the Iranian Fars News Agency.

It was downed “during the last few days,” he said.

He pointed out this was not the first time the Americans had sent a spy drone to the region.

The report comes amid heightened tension between Iran and the U.S. over Tehran’s controversial nuclear program.

The United States Navy is denying the claim. "There has been no loss of any of our drones or UAVs and as a result, the claim that the Iranian government is making is false," said the Dubai-based U.S. Central Command spokesman, Capt. Frank Pascual.

Members of Iran’s parliamentary National Security and Foreign Policy Committee said more regional diplomatic efforts should be exerted to force American warships out of the Persian Gulf, according to the Iranian daily Siyasat-e Ruz.

Iran is concerned that the U.S. is beefing up forces in the region for a possible military attack.

Their unease was increased after the U.S. sent a second aircraft carrier to the Persian Gulf this week.

The USS John C. Stennis, with its 3,200 sailors, left the U.S. on Tuesday and is expected to arrive in the Middle East in a matter of weeks.

This is the first time two U.S. aircraft carriers will be stationed in the Persian Gulf since the war on Iraq began in 2003. The carrier will significantly boost the U.S.’s airpower in the region.

Meanwhile, Afghanistan has said it will not allow the U.S. to wage military attacks on Iran. Afghani Foreign Minister Rengin Dadavar Sabanta said there was a “friendly and historical relationship” between Iran and Afghanistan.

Iran is helping rebuild Afghanistan and there are no disagreements between the two countries, he told the London-based A-Sharq Al-Awsat.

Washington is concerned that Iran intends to manufacture a nuclear weapon, while Tehran insists its nuclear program is for peaceful purposes.

Tehran is denying reports that the head of its Supreme National Security Council ‘Ali Larijani has requested Saudi Arabia’s help to defuse tension between Iran and the U.S.