Is White House Blocking Search for Bin Laden?

Pentagon Would Use Special Forces to Nab Bin Laden in Pakistan, New York Times Says

By MARTHA RADDATZ
June 30, 2008 ABC News

The Pentagon has drafted a secret plan that would send U.S. special forces into the wild tribal regions of Pakistan to capture or kill Osama bin Laden and his top lieutenants, but the White House has balked at giving the mission a green light, The New York Times reported today.

New leaked reports have exposed U.S. covert operations in the Middle East.

The Bush administration, which has seven months left in its term, gave the go-ahead for the military to draw up the plan to take the war on terror across the Afghan border and into the mountains of Pakistan where bin Laden is believed to be hiding, according to the newspaper.

Intelligence reports have concluded that bin Laden has re-established a network of new training camps, and the number of recruits in those camps has risen to as many as 2,000 in recent months from 200 earlier this year.

Although the special forces attack plan was devised six months ago, infighting among U.S. intelligence agencies and among White House offices have blocked it from being implemented, the Times reported.

The Bush team would like to leave office next January having put bin Laden, the man behind the Sept. 11 attacks, behind bars or in his grave.

But sending U.S. forces into Pakistan would be controversial and risky. The rugged mountain area is populated by bin Laden sympathizers, hurting the chances that such a raid could succeed. It would also trigger a diplomatic outcry from the Pakistani government.

The United States has conducted a series of aerial drone attacks on Taliban and al Qaeda leaders in Pakistan, killing several key Qaeda figures and narrowly missing bin Laden's deputy, Ayman Zawahiri, in one strike. But an attack earlier this month killed several Pakistani border guards instead and has made Pakistan less willing to allow U.S. strikes on its territory.

The Taliban of Pakistan, who are close al Qaeda allies, have grown alarmingly stronger in Pakistan's lawless border areas and threatened the regional capital of Peshawar last week.

Pakistan's new coalition government, which has made a series of truces with the militants in recent months, was forced over the weekend to launch an offensive to push the militants back from the outskirts of Peshawar.

Pakistan called the operation a success, even though none of the heavily armed militants in the area were reported killed.

Pakistan announced Sunday that Bush had invited Pakistani Prime Minister Yousaf Raza Gilani to Washington next month. High on that visit's agenda is the question of whether Pakistan can restrain the Taliban by itself or whether the United States could decide to take action in the tribal areas.

A separate report said the Bush administration has also begun a "major escalation of covert operations against Iran ... to destabilize the country's religious leadership."

The charge was made by veteran journalist Seymour Hersh in the current issue of The New Yorker magazine.

World needs tough monetary policy to tackle inflation

By David Milliken Reuters

BASEL (Reuters) - The world needs higher interest rates to tackle a clear inflation threat, even though economic growth is likely to be hit harder than most observers expect, the Bank for International Settlements said on Monday.

The Swiss-based BIS -- a meeting place and think tank for the world's central banks -- gave a gloomy outlook for both inflation and growth in its annual report, published after a three-day meeting of central bankers from over 100 countries.

BIS General Manager Malcolm Knight said central banks faced their greatest challenge in years, with growth slowing even as inflation pressures intensified.

"Clearly, the downside risks for future growth complicate the task of monetary policy," he said in a speech to the BIS annual meeting. "But there must in the end be a forceful response to confront the danger that inflation expectations could rise appreciably, with all the attendant problems that would bring."

The tone of the annual report was darker than last year after what the BIS described as the worst financial market turmoil since World War Two, and the bank saw a "significant risk" of recession in the United States, the world's biggest economy.

But this did not mean central banks should abandon their focus on fighting inflation, even if the BIS was concerned to point out that there was no single solution for all banks.

"With inflation a clear and present threat, and with real policy rates in most countries low by historical standards, a global bias towards monetary tightening would seem appropriate. That said, the circumstances of different countries, both actual and prospective, currently rule out a 'one-size-fits-all' approach," the BIS said.

"Moreover, should the global economy slow sharply and inflationary pressures recede, the bias to tightening would evidently also be reduced," it added.

The BIS said the financial market turmoil which spread from the U.S. subprime mortgage market in the middle of last year was the consequence of a classic unsustainable credit boom, and that disruption to the banking system limited the potential of interest rate cuts to boost demand.

Tax cuts and more government spending might have some merit, but the countries whose government finances were solid enough to afford that tended to be those less affected by the turmoil, the BIS added.

"In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation," it said.

"Their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect. At the same time, inflationary forces, particularly in emerging market economies, could also prove unexpectedly strong and persistent."

Knight, who leaves the BIS in September, said forecasts that current high inflation in industrialized countries was a temporary blip could not be fully trusted because of a significant rise in consumers' inflation expectations and past failures in accurately predicting rising commodity prices.

"It would seem imprudent from an inflationary perspective to rely heavily at this stage on such an outcome," he said.

U.S., EURO ZONE, JAPAN

The BIS was most pessimistic about the U.S. economy, saying that as well as the housing downturn there was a danger that consumption would take a further hit from people trying to rebuild savings depleted by past over-borrowing.

A bright spot for the United States was exports, helped by a weak dollar and the fact that other economies seemed to be less affected by its slowdown than in previous downturns -- though Britain appeared to be suffering a similar property-led malaise.

Strong business investment and falling unemployment meant prospects for domestic demand were good in the euro zone, especially Germany, though France, Spain and Ireland would have to cope with the end of house price booms.

Prospects were not so good in Japan, where weak wage growth and narrow profit margins in small firms meant demand from consumers and many businesses was vulnerable to rising prices.

Then there was the general fallout from the credit squeeze and rising oil and commodity prices, the BIS added.

"Fears are building that the global economy might be at some kind of tipping point. These fears are not groundless," the BIS said.

CENTRAL BANK REACTION

Analyzing how central banks had reacted to the crisis, the BIS said that most -- including the European Central Bank, Bank of Japan and Bank of England -- appeared to have set rates on the same criteria as before the crisis.

But the U.S. Fed had cut rates more rapidly, and the Reserve Bank of Australia raised rates faster than past behavior would have suggested.

"For these central banks, it appears that something not present in the equations, perhaps a shift in the economic outlook not present or reflected in the contemporaneous output gaps and rates of inflation, must have influenced policy in a decisive way," the BIS said.

The BIS repeated its call that central banks and regulators should do more to curtail future credit booms.

"It would have been better to avoid the build-up of credit excesses in the first place. In future, this could be done through the establishment of a new macrofinancial stability framework which would call for both monetary and macroprudential policies to 'lean against the wind' of the credit cycle."

* For a copy of the report and Knight's speech, go to www.bis.org