Federal Reserve chief says protectionism would harm U.S. economy

Xinhua
A retreat into protectionism and isolationism would be self-defeating and harm U.S. economy, Federal Reserve Chairman Ben Bernanke said Tuesday.

"Restricting trade by imposing tariffs, quotas, or other barriers is exactly the wrong thing to do," said the Federal Reserve chief in a speech addressing the Montana Economic Development summit 2007.

"Such solutions might temporarily slow job loss in affected industries, but the benefits would be outweighed, typically many times over, by the costs, which would include higher prices for consumers and increased costs, and thus reduced competitiveness for U.S. firms," said Bernanke.

He said the better approach to mitigating the disruptive effects of trade is to adopt policies and programs aimed at easing the transition of displaced workers into new jobs and increasing the adaptability and skills of the labor force more generally.

Bernanke also noted the global trade would bring benefit to U.S. and the world consumers.

"Exports are important, but so are imports. Without trade, some goods would be extremely expensive or not available at all, such as the Valentine's Day roses of my earlier example or out-of- season fruits and vegetables," he said.

"One of the great attractions of globalization is that it brings to consumers the best of many cultures. And of course, global trade allows many types of goods, especially consumer goods, to be purchased at lower prices," he added.

"In the long run, economic isolationism and retreat from international competition would inexorably lead to lower productivity for U.S. firms and lower living standards for U.S. consumers," he said.

The real reason for the U.S. trade deficit was that Americans save less and spend more, while some countries like China save too more and spend less, he said.

Priest removed for violating vows

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DURHAM -- A priest at the Holy Cross Catholic Church in Durham has been removed from duty after admitting to sexual misconduct more than 25 years ago.

The Rev. Stephen Garrity left North Carolina over the weekend for a weeklong evaluation at a treatment center.

Garrity admitted last week to having inappropriate sexual contact with five adults -- ages 18 to 23 -- 25 to 30 years ago while assigned in Baltimore and Philadelphia. While Garrity is not suspected of any criminal activity, the allegations are in violation of his vows of celibacy.

Church officials must now determine whether Garrity can continue in the ministry. He has served at Holy Cross since 2001.

Chavez pulls out of IMF and World Bank

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Venezuela's leader Hugo Chavez has underlined his intention to develop an alternative economic vision for Latin America by pulling his country from the World Bank and the International Monetary Fund - organisations that have long had a controversial role in the region.

He is also to nationalise operational control of four oil field projects currently run by foreign companies.

Though Venezuela has paid off its loans to the two international lending organisations, Mr Chavez's announcement that he intends to quit the organisations is powerfully symbolic. It is likely to lead to other smaller nations to question their membership and demand a greater say in the organisations' policies.

"We will no longer have to go to Washington, nor to the IMF, nor to the World Bank, not to anyone," said Mr Chavez. "I want to formalise our exit from the World Bank and the IMF."

Despite Venezuela's close trading relationship with the US over oil - it is the fourth largest supplier of crude in the United States - Mr Chavez has long been critical of US interference in Latin America, be it political, military or economic. He has long derided the IMF and the World Bank for being controlled by US and Western interests and has said their policies of tight budget controls, privatisation and open markets have benefited foreign companies while leaving much of Latin America in grinding poverty.

Venezuela recently repaid its remaining debts to the World Bank five years ahead of schedule and paid off its debts to the IMF shortly after Mr Chavez first took office in 1999. He has steadily worked to provide alternative forms of credit and financial support for countries in the region, backed up by Venezuela's oil wealth. He has referred to such a project as the "Bank of the South". He has also invested millions of dollars on social programmes inside Venezuela that have reduced poverty and increased access to education and healthcare.

Mark Weisbrot, director of the Washington-based Centre for Economic Policy Research, which studied Venezuela's economy, said Mr Chavez was likely driven by several factors, one of which was the IMF's support of those involved in a 2002 coup which briefly led to his ousting. "The IMF is not really an independent actor," said Mr Weisbrot. "I don't think there's anyone in this town who would tell you with a straight face that it is not controlled by the US Treasury. There was no reason for Venezuela to remain a member... I think it's possible that other countries will pull out."

Mr Chavez made his announcement on Monday, a day after criticising the lending organisations during a meeting with leaders from Bolivia, Nicaragua, Cuba and Haiti. He predicted that "sooner or later, those institutions will fall due to their own weight".

On Monday, Mr Chavez announced that some of the world's largest oil companies would lose operational control over projects in the Orinoco Belt reserve in Venezuela. Britain's BP, the United States' ConocoPhillips, Chevron and Exxon Mobil, Norway's Statoil and France's Total agreed to obey a decree to transfer operational control. The move came a year after the Bolivian President Evo Morales took control of his country's gas fields.

"President Chavez has ordered us to take full control over the sovereignty of our oil, and we are doing that today," said Venezuela's Oil Minister Rafael Ramirez.

Key players meet in Egypt to stabilise war-torn Iraq

SHARM EL-SHEIKH, Egypt, May 2 (Reuters) - Leaders from countries bordering Iraq and with a stake in its future meet in Egypt Thursday and Friday in an attempt to contain the conflict in Iraq and prevent the violence sucking in its neighbours.

While diplomats are sceptical security can be improved inside Iraq in the short term, some hope that the meeting will bring pressure to end external support for different factions and instead emphasise programmes to help rebuild the stricken country.

The highlight of the two days of talks would be a meeting on the sidelines between U.S. Secretary of State Condoleezza Rice and Iranian Foreign Minister Manouchehr Mottaki -- a first at this level since the Bush administration took office in 2001.

Arab diplomatic sources said Rice would definitely have talks with Syrian Foreign Minister Walid al-Moualem, another first, but the United States has not confirmed that.

Those meetings would mark a reversal of policy by the Bush administration, which rejected last year a high-level commission's recommendation that it open a dialogue with the two governments for the sake of relief in Iraq.

But the United States has ruled out what Rice called "full-scale negotiations" with Iran, widely seen as the neighbouring country most able to influence events inside Iraq, where scores of people a day die in political violence.

"I don't expect big things from this meeting. There should be a strong and sincere dialogue between the United States and Iran and Syria, but I don't have the impression that the current American administration is really willing to do that," said Hassan Nafaa, a political scientist at Cairo University. Even the United States, which has tended to pin high hopes on what Iraq's neighbours can do to help Washington with its predicament in Iraq, is playing down expectations.

"Let's not have overreaching expectations (about the meeting). It will take some time to overcome suspicions in the region," Rice told reporters en route to Sharm el-Sheikh talks.

IRAQI COMPACT

Asked what would make for success, U.S. ambassador to Iraq Ryan Crocker said getting Iraq's neighbours in the same room at ministerial level was an important development in itself.

"I would not expect this to produce a specific result where we can say 'Wow, that really succeeded'," he told Washington reporters on Tuesday via a conference call from Baghdad.

A senior Arab diplomat agreed, saying the most the world should anticipate from the meetings is a series of messages, such as a message to Iraqi leaders that they must amend the constitution for the sake of national reconciliation.

"There will also be a message that the international community is ready to help Iraq, but what may matter most is the discussions on the side," added the diplomat.

The first day of talks will look at a project dubbed the Iraqi Compact -- a five-year plan offering Iraq financial, political and technical support in return for various reforms.

The key reforms, which U.S. officials want passed soon, are a revenue-sharing oil law, a law to allow members of the old ruling Baath party back into public life, and a governorate elections law that will set a date for provincial polls.

The United States hopes that these benchmarks will promote reconciliation and draw minority Sunni Arabs away from the insurgency and back into the political process.

The second day will bring together Iraq and its immediate neighbours -- Iran, Turkey, Syria, Jordan, Saudi Arabia and Kuwait, together with Egypt as host.

Previous meetings of the neighbours have focused on border security and the smuggling of arms and personnel into Iraq in support of the mainly Sunni Muslim insurgency led by al-Qaeda.

But analysts say there are limits to what the neighbours can do to reduce the violence in Iraq, which has a dynamic of its own, driven in part by indigenous Iraqi opposition to the U.S. and British military presence in their country.

Iraqi Deputy Prime Minister Barham Saleh told Reuters in an interview that the neighbours should remember that instability in Iraq will damage them as well as Iraq.

"The time has come for our neighbours to be more serious and more effective in helping the government of Iraq and people of Iraq to take on the extremists and to take on the al-Qaeda organisation," he said. (Additional reporting by Sue Pleming in Washington and Jonathan Wright in Cairo)

Time Warner Profit Falls Less Than Estimates on Cable

May 2 (Bloomberg) -- Time Warner Inc., the world's largest media company, posted first-quarter profit that fell less than analysts estimated and raised its 2007 forecast as earnings from cable-television jumped.

Net income declined 18 percent to $1.2 billion, or 31 cents a share, from $1.46 billion, or 32 cents, a year earlier, New- York based Time Warner said today in a statement. Sales rose 9.2 percent to $11.2 billion.

Profit was dragged down by a 27 percent decline at the film division, which failed to produce a hit to beat last year's ``Harry Potter'' DVD release. Cable profit rose 54 percent after the purchase of Adelphia Communications Corp. AOL gained 27 percent as advertising revenue increased, a sign that Chief Executive Officer Richard Parsons may be succeeding in his effort to revive the Internet unit.

``The key takeaway is the company seems to be on the right track,'' said Tuna Amobi, an equity analyst at Standard & Poor's. ``The highlights of the quarter were the cable unit and AOL.''

Excluding one-time items, profit of 22 cents beat the 21- cent average of 17 analyst estimates compiled by Bloomberg.

Time Warner raised its 2007 forecast for earnings before one-time items to $1.05 a share, from $1 on Jan. 31.

Shares of Time Warner, which also owns CNN and Fortune magazine, rose 43 cents, or 2 percent, to $21.02 at 9:35 a.m. in New York Stock Exchange composite trading. They have fallen 5.5 percent this year. Time Warner Cable Inc. fell 69 cents to $36.91.

Phone, Web Service

Earnings were buoyed by a $670 million gain on the sale of AOL's Web access division in Germany and $146 million from investments related to cable assets in Kansas City. Excluding one-time items, profit a year ago was 26 cents a share.

Time Warner Cable, the second-largest U.S. cable company, began trading publicly in January, as part of the parent company's purchase of cable franchises from bankrupt Adelphia.

The Stamford, Connecticut-based cable division, 84 percent owned by Time Warner, benefited from demand for packages of phone, digital cable and Internet services. The unit reiterated today sales and earnings will rise more than 30 percent in 2007.

Revenue rose 61 percent to $3.85 billion, making it the fastest-growing Time Warner division for the 14th straight quarter.

Comcast Corp., the industry leader, said yesterday its cable revenue will increase 12 percent a year through 2009. The company last week posted an 80 percent jump in first-quarter net income, as revenue rose 32 percent.

AOL Gains

AOL profit rose to $542 million as ad revenue rose 40 percent. The growth in ad sales beat the 28 percent estimate by Spencer Wang, an analyst at Bear Stearns Cos. in New York.

Sales dropped 25 percent after AOL started offering its e- mail and software for free to broadband users last year to attract Web surfers and advertisers. Its Web access division lost 1.2 million subscribers in the quarter.

Parsons, 59, hired TV veteran Randy Falco in November to run AOL and implement the new strategy.

Profit at the film division fell 27 percent to $332 million. Revenue declined 1.3 percent to $2.7 billion.

DVD sales of ``The Departed'' and ``Happy Feet,'' at $132 million and $198 million, respectively, failed to match the $209 million and $290 million turned in last year by the ``Wedding Crashers'' and ``Harry Potter,'' according to Goldman Sachs Group Inc. analyst Anthony Noto.

The unexpected theatrical success of ``300,'' an epic about Spartan warriors battling a larger Persian army, wasn't enough to lift earnings. The film took in $207 million in North American box office receipts, according to Box Office Mojo.

Warner Bros. will release ``Harry Potter and the Order of the Phoenix'' in theaters in July.

Publishing Cuts

At the cable-networks unit, including HBO, CNN and TNT, operating profit rose 6 percent to $937 million.

Publishing profit fell 28 percent to $84 million.

The unit cut 290 jobs in January, or 2.8 percent its workforce, to reduce expenses. The publisher of People and In Style eliminated 600 positions in 2006 as advertising sales declined. The unit also closed Life magazine, less than three years after restarting the title as a weekly.

Fortune's ad sales fell 5.4 percent in the first quarter, according to data from Publishers Information Bureau. Sports Illustrated, People and In Style gained 6.7 percent, 8.2 percent and 1.5 percent respectively in the period.

Rough ride for FISA update law

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WASHINGTON, DC, United States (UPI) -- Senior Bush administration intelligence officials face tough questions Tuesday when they take their proposal for modernizing U.S. surveillance legislation before skeptical senators.

Recent poll data shows the U.S. public supports the idea that officials should always have to get a warrant before eavesdropping on Americans -- something that would not be necessary under certain circumstances if the administration`s planned changes to the 1978 Foreign Intelligence Surveillance Act are passed into law.

A United Press International/Zogby poll of nearly 6,000 representative Americans found that 61 percent agreed or strongly agreed that the government should always have to get a warrant before monitoring the phone calls or e-mails of U.S. citizens and legal immigrants. Only 36 percent disagreed.

Director of National Intelligence Michael McConnell, Director of the National Security Agency Lt. Gen. Keith Alexander and Assistant Attorney General for National Security Kenneth Wainstein were scheduled to present their plan for a modernization of FISA to the Senate Select Committee on Intelligence Tuesday afternoon. They will face lawmakers angry at the administration`s documented abuse of some of the new investigative powers Congress gave them in the wake of the Sept. 11, 2001, terrorist attacks.

'They`ll get some tough questions,' predicted a senior committee staffer. 'There are people who are skeptical about this proposal.'

He said it was by no means sure whether committee Chairman Jay Rockefeller, D-W.Va., would back an overhaul of the law. 'He has called this hearing to hear the case' officials want to make, the staffer said.

The staffer added officials would be questioned 'about how they`ve used other powers Congress gave them,' a reference to a recent Department of Justice inspector general`s report that found widespread abuse by the FBI of so-called National Security Letters -- a form of administrative subpoena that the bureau was given much broader authority to issue in the suite of hurriedly passed anti-terror laws called the 2001 USA Patriot Act.

Other congressional staff said the administration`s task in pushing the overhaul is further complicated by the fact that a competing bill is being considered by the Senate Judiciary Committee.

That bill, say its Senate backers -- ranking member Arlen Specter, R-Pa., and Dianne Feinstein, D-Calif. -- clarifies and strengthens the role of FISA as the sole basis of legal authority for electronic surveillance of Americans in their own country.

The bill is designed to end any ambiguity about the intent of Congress, which some say the administration exploited in claiming the president`s inherent constitutional authority to order foreign intelligence wiretaps as the justification for warrantless monitoring of overseas communications by Americans under Bush`s Terrorist Surveillance Program.

Feinstein`s 'concern has always been that FISA should be the exclusive (source of) authority for wiretapping U.S. persons on U.S. soil for foreign intelligence purposes,' said her spokesman, Scott Gerber.

Feinstein is one of a handful of senators who are members of both the Intelligence and Judiciary committees and she planned to attend Tuesday`s hearing, according to Gerber.

The two committees share jurisdiction over FISA, said the intelligence staffer, and would have to work together on any proposal. 'If we decide to move ahead with (a bill), they get a go at (amending) it, and if they move this one, then we get a crack at (amending) that.'

Officials argue that FISA, nearly 30 years old, is an outdated law that has been rendered archaic by changes in communications technology and practices.

The argument is laid out in an analysis of the proposed changes submitted along with them by their administration authors to Congress.

The law`s original drafters 'used language that was technology dependent and related specifically to the telecommunications systems that existed at that time,' reads the analysis, explaining why officials want to change the definition of electronic surveillance the law employs.

'As a result of revolutions in communications technology since 1978, and not any considered judgment of Congress, the current definition of `electronic surveillance` sweeps in surveillance activities that Congress intended to exclude from FISA`s scope.'

For instance, officials have said that FISA covers many conversations between foreign nationals outside of the United States simply because the calls are routed through U.S. telecommunications hubs.

The proposed change, according to the analysis, 'provides a new, technologically neutral definition of `electronic surveillance` focused on the core question of who is the subject of the surveillance rather than on how or where the communication is intercepted.'

But critics say that, under the guise of updating the law, the administration is seeking a massive expansion in its authorities to eavesdrop on Americans.

'This isn`t a modernization bill, it`s a freedom to snoop law,' said Tim Sparapani, legislative counsel for the American Civil Liberties Union, which has been lobbying staff and senators against the proposals that it says are a 'power grab' by the administration.

One of the changes in the definition of 'electronic surveillance' would mean that the collection of so-called metadata -- information about the origin, destination and duration of calls and e-mails, but not their content -- from purely domestic communications would no longer be covered, and therefore would no longer require a warrant.

The National Security Agency is believed to have the capacity to vacuum up and analyze such data, looking for patterns and connections that might reveal terrorists or their activities.

'It is incredible,' said Sparapani, 'under the guise of modernization, they want to turn this huge vacuum cleaner on the American people.'

He said the distinctions in the 1978 legislation reflected the different expectations of privacy that users of different technologies had, and the administration was seeking to blur those important distinctions.

'This is not a slippery slope, so much as a waterfall,' he said. 'You step over it and you are gone.'

Other critics acknowledge the legislation does need updating, but the UPI/Zogby poll shows little appetite for any diminution of the principle that the government should get a warrant before wiretapping Americans.

Republicans were the most amenable to the idea, with only 31 percent agreeing that authorities 'should always be required to get a warrant.' Sixty-seven percent disagreed, compared with just 36 percent in the general population.

But among key swing constituencies, like self-described moderates, support for always requiring a warrant was stronger than in the general population -- 72 percent compared to 61 percent.

The poll administered online to 5,932 adults April 13-16 has a margin of error of 1.3 percentage points.

Sunni Tribal Official Provides Details of Al Masri's Death, But Not Body

fox news
A senior Interior Ministry official said Wednesday that officials were trying to gain custody of Abu Ayyub al-Masri's body amid widespread skepticism over claims that the leader of Al Qaeda in Iraq had been killed.

Meanwhile, a police official in Anbar province said al-Masri died when his explosives belt detonated during fighting but security forces could not retrieve the body because it was in a part of the desert controlled by the terror group.

U.S. authorities urged caution about the reports, saying they had not been confirmed and warning that even if the claim were true, the death of the shadowy Egyptian militant likely would not spell the end of the terror movement in Iraq.

"We still don't know what the status is," U.S. military spokesman Rear Adm. Mark Fox said Wednesday, adding the U.S. military was not involved in the operation that purportedly killed al-Masri.

"I haven't seen any reports that we have any bodies, or that we took custody, or that we had any participation there," he said at a news conference in Baghdad, adding there were no American forces in the area where it was said to have occurred.

Reports of al-Masri's death first emerged Tuesday from the Interior Ministry, which said the al-Qaida leader was gunned down by rivals in his movement Tuesday at a bridge near Lake Tharthar just north of Baghdad, where the U.S. military believes Al Qaeda operates training camps.

In a series of conflicting statements, Iraqi officials later said al-Masri's death had not been confirmed, although they believed they had strong intelligence that it was true.

Senior Interior Ministry official Maj. Gen. Hussein Kamal said Wednesday that officials were trying to gain custody of the body, but he declined to comment further.

Iraqi officials have released similar reports about the killing or capture of top insurgent figures, only to acknowledge later that the claims were inaccurate.

An Al Qaeda front organization denied that al-Masri, who also is known as Abu Hamza al-Muhajer and has a $1 million bounty on his head, had been killed. The Islamic State of Iraq said in a Web statement that al-Masri was "alive and still fighting the enemy of God."

But the statement, posted on an extremist Web site, offered no evidence to support the claim. Al-Masri assumed leadership of Al Qaeda after his charismatic predecessor, Abu Musab al-Zarqawi, was killed in a U.S. airstrike last June.

Late Tuesday, the leader of a Sunni Arab group in opposed to Al Qaeda told Iraqi television that his fighters tracked down and killed al-Masri along with seven of his aides, two of them Saudis.

"Eyewitnesses confirmed his death and their corpses are still at the scene," said Abdul-Sattar al-Rishawi, head of the Anbar Salvation Council in the vast insurgent stronghold.

Citing information from informants, police Lt. Col. Jabbar Rashid al-Dulaimi, who is a member the Salvation Council, said Wednesday that al-Masri had been killed along with two aides the day before when an explosives belt he was wearing detonated during fighting in the desert northwest of Baghdad. He identified the aides as Mullah Qahtan al-Marawi and Ismail al-Iraqi.

He said Iraqi authorities had not been able to retrieve the body because it was in an area controlled by Al Qaeda fighters but insisted they were "100 percent certain" al-Masri had been killed.

The report of al-Masri's death occurred at a time when Al Qaeda is locked in a violent power struggle with other Sunni insurgents angry over its effort to dominate the movement and over the role of foreigners in the terror network.

More than 200 Sunni sheiks in Anbar province have decided to form a political party to oppose al-Qaida.

American officials advised caution.

"We've heard the report on al-Masri," Defense Secretary Robert Gates said. "We're trying with the Iraqis to confirm whether or not it's true. I think we don't know the answer to that at this point."

U.S. Ambassador Ryan Crocker said al-Masri's death would be a positive development, but he played down suggestions it would spell the end of the terror threat in Iraq.

"Clearly taking a major terrorist off the battlefield is an important thing and if we can confirm it, if this did happen, without question it would be a significant and positive development," Crocker told reporters in Washington via a teleconference.

"That said, I would not expect it to in any way bring to an end Al Qaeda's activities in Iraq," he added. "My sense is that it is now a very decentralized terrorist effort, so while removing its current head would be a good and positive thing, I think we have to expect that we will need to continue dealing with further Al Qaeda attacks."

Clashes have erupted between Al Qaeda and other insurgent groups, notably the nationalist 1920 Revolution Brigades and the Islamic Army in Iraq, in at least three provinces, U.S. officers say.

The decision to declare the Islamic State of Iraq under the leadership of Abu Omar al-Baghdadi was widely seen as an effort by Al Qaeda to put an Iraqi face on the movement. Al-Masri is the "war minister" of the self-declared state.

At the same time, the U.S. military has stepped up covert operations to disrupt the terror network. Last Friday, the Pentagon announced the arrest of veteran jihadist Abdul al-Hadi al-Iraqi, an associate of Al Qaeda leader Usama bin Laden.

The Pentagon did not say where al-Iraqi was arrested but said he was allegedly trying to return to his native Iraq.

According to associates in Afghanistan, al-Masri has been involved in Islamic extremist movements since 1982, when he joined Islamic Jihad, a terror group led by Ayman al-Zawahiri, who became bin Laden's chief deputy.

Al-Masri fought with Muslim rebels against the Soviets in Afghanistan in the 1980s and later ran Al Qaeda training camps there.