News Corp. offers to buy Dow Jones - U.S. Business - MSNBC.com

News Corp. offers to buy Dow Jones - U.S. Business - MSNBC.com

News Corp. offers to buy Dow Jones
Newspaper company bid is unsolicited; share price surges
BREAKING NEWS
Reuters
Updated: 11:56 a.m. ET May 1, 2007
NEW YORK - Media company News Corp. has made an unsolicited $60 a share cash bid for newspaper company Dow Jones & Co. Inc., owner of the Wall Street Journal, CNBC reported on Tuesday.

Shares of Dow Jones surged nearly 58 percent on the news before trade was halted. Shortly before noon ET, Dow Jones confirmed the News Corp. offer and said it is evaluating the proposal.

CNBC said News Corp sent a letter to Dow Jones’ board of directors two weeks ago and that the Bancroft family, which controls a majority of Dow Jones’ shares, is currently deciding whether it will consider a sale. It has hired financial advisers, CNBC said.

Copyright 2007 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.
URL: http://www.msnbc.msn.com/id/18417054/

Al-Qaida-tied group denies al-Masri dead - Conflict in Iraq - MSNBC.com

Al-Qaida-tied group denies al-Masri dead - Conflict in Iraq - MSNBC.com

Al-Qaida-tied group denies al-Masri dead
Self-styled organization refutes claims that al-Masri died in insurgent battle
MSNBC News Services
Updated: 11:33 a.m. ET May 1, 2007
DUBAI - The self-styled Islamic State in Iraq denied the leader of al-Qaida in Iraq, Abu Ayyub al-Masri, also known as Abu Hamza al-Muhajer, was killed on Tuesday.

"The Islamic State in Iraq assures the Islamic nation about the safety of Sheikh Abu Hamza al-Muhajer, may God save him, and that he is still fighting the enemies," said the al-Qaida-linked group in a statement posted on a Web site used by militants.

A spokesman for Iraq's interior ministry said earlier on Tuesday that the militant leader was killed in an internal fight between militants north of Baghdad. but U.S. military officials appeared to cast doubt on the report.

The Ministry spokesman also told NBC News that al-Masri was killed Tuesday in an "internal" fight between insurgents. "We have intelligence reports that confirm he was killed," Brig. Gen. Abdul Kareem Khalaf said.

Internal friction grows
There has been growing friction between Sunni Islamist al-Qaida and other Sunni Arab insurgent groups over al-Qaida's indiscriminate killing of civilians and its imposition of an austere brand of Islam in the areas where it holds sway.

If true, al-Masri's killing would signal a deepening split at a time when the Shiite-led government is trying to woo some insurgent groups into the political process.

Interior Ministry spokesman Khalaf and another Interior Ministry source told Reuters that the Iraqi authorities did not have al-Masri's body, but the source added that “our people had seen the body.”

The U.S. military, for its part, was checking the reports, said Lt. Col. Christopher Garver, a spokesman.

“We are in discussions with the Iraqis over how they obtained this intelligence. If we do have a body, we are going to conduct DNA tests, and that will take several days. If there is no body, that makes it harder,” Garver said.

Separately, U.S. Ambassador to Iraq Ryan Crocker said U.S. officials were still checking the details with Iraqi leaders.

Crocker added that if confirmed, "clearly taking a major terrorist off the battlefield is an important thing" and a "significant and positive development."

Previous reports in error
In February, Interior Ministry sources said al-Masri had been wounded in a gunbattle north of Baghdad, but those reports turned out not to be true. There were also reports in October that he had been killed, which again were incorrect.

Al-Masri, believed to be Egyptian and who is also known as Abu Hamza al-Muhajir, assumed the leadership of al-Qaida in Iraq after Jordanian militant Abu Musab al-Zarqawi was killed in a U.S. air strike in June 2006.

Officials had hoped the demise of Zarqawi might have weakened al-Qaida, but he was quickly replaced by Masri and the group’s attacks continued unabated, pushing Iraq closer to full-scale sectarian civil war.

The United States has a $5 million bounty on al-Masri's head.

Sunni threat
On the political front, Iraq’s main Sunni bloc is considering quitting the Shiite-led government because it believes the concerns of Sunnis are not being addressed, members of the bloc including the vice president said on Tuesday.

Some members of the Sunni Accordance Front have been urging the bloc for several months to pull out of Shiite Prime Minister Nouri al-Maliki’s cabinet, partly over accusations that reconciliation with minority Sunni Arabs has moved too slowly.

The bloc has six ministers in the government and a withdrawal would be a blow to Maliki and raise questions about how representative his administration would remain.

A pullout would not be enough to topple al-Maliki, as he would still have a majority in parliament through his ruling Shiite Alliance and a coalition of Kurdish parties. The Accordance Front has 44 seats in the 275-member parliament.

“We are serious in withdrawing if nothing new happens with progress in the political process,” Adnan al-Dulaimi, head of the Sunni bloc, said in Amman where he was on a visit.

Vice President Tariq al-Hashemi, a senior member of the bloc, said the Front would make its position known soon.

Maliki, a Shiite Islamist, insists the government is making progress toward reconciliation between majority Shiites and Sunni Arabs who were dominant under Saddam Hussein.


© 2007 MSNBC InteractiveReuters contributed to this report.
URL: http://www.msnbc.msn.com/id/18410713/

Chavez: Venezuela to exit IMF, World Bank - Focus on Venezuela - MSNBC.com

Chavez: Venezuela to exit IMF, World Bank - Focus on Venezuela - MSNBC.com

Chavez: Venezuela to exit IMF, World Bank
Move is largely symbolic since nation has canceled debts to institutions
The Associated Press
Updated: 9:04 a.m. ET May 1, 2007
CARACAS, Venezuela - President Hugo Chavez announced Monday he would pull Venezuela out of the World Bank and the International Monetary Fund, a largely symbolic move because the nation has already paid off its debts to the lending institutions.

“We will no longer have to go to Washington nor to the IMF nor to the World Bank, not to anyone,” said the leftist leader, who has long railed against the Washington-based lending institutions.

Venezuela, one of the world’s top oil exporters, recently repaid its debts to the World Bank five years ahead of schedule, saving $8 million. It paid off all its debts to the IMF shortly after Chavez first took office in 1999. The IMF closed its offices in Venezuela late last year.

Chavez, who says he wants to steer Venezuela toward socialism, made the announcement a day after telling a meeting of allied leaders that Latin America would be better off without the U.S.-backed World Bank or IMF. He has often blamed their lending policies for perpetuating poverty.

New lender?
Chavez wants to set up a new lender run by Latin American nations and has pledged to support it with Venezuela’s booming oil revenues. The regional lender, which he has called “Bank of the South,” would dole out financing for state projects across Latin America.

Chavez has criticized past Venezuelan governments for signing agreements with the IMF to restructure the economy — plans blamed for contributing to racing inflation.

Under former President Carlos Andres Perez in 1989, violent protests broke out in Caracas in response to IMF austerity measures that brought a hike in subsidized gasoline prices and public transport fares.

Enraged people took the streets in violence that killed at least 300 people — and possibly many more. The riots came to be known as the “Caracazo,” and Chavez often refers to it as a rebellion against the status quo.

During Sunday’s talks with leaders from Bolivia, Nicaragua, Cuba and Haiti, Chavez predicted that “sooner or later, those institutions will fall due to their own weight.”

“They will wear away — the International Monetary Fund, the World Bank and all those institutions,” Chavez said.

Bolivian President Evo Morales raised complaints about a World Bank body that mediates disputes between governments and foreign investors. He said governments never seem to win their disputes against transnational companies at the World Bank’s International Center for Settlement of Investment Disputes.

Chavez suggested that Latin countries could instead create their own arbitration body for disputes with big companies.

‘That prison’
Venezuela is not the only country in the region distancing itself from international lenders.

Nicaraguan President Daniel Ortega said Sunday that he hopes to “get out of that prison” of IMF debt and that “we are negotiating with the Fund to leave the Fund.”

Ecuador’s leftist president, Rafael Correa, recently asked the World Bank’s representative there to leave and said the country paid off its debt to the IMF. Argentina also has paid back billions of dollars to the IMF.


© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/18406119/

Sharp rise in terrorist attacks in 2006 - International Terrorism - MSNBC.com

Sharp rise in terrorist attacks in 2006 - International Terrorism - MSNBC.com

Sharp rise in terrorist attacks in 2006
State Department says most attacks in Iraq, Afghanistan
The Associated Press
Updated: 4:18 p.m. ET April 30, 2007
WASHINGTON - Terrorist attacks worldwide shot up 25 percent last year, particularly in Iraq where extremists used chemical weapons and suicide bombers to target crowds, according to a new State Department report.

Among countries, Iran remains the biggest supporter of terrorism, with elements of its government backing groups throughout the Middle East, particularly in Iraq, giving material support and guidance to Shiite insurgent groups that have attacked Sunnis, U.S. and Iraqi forces, the report said.

In its annual global survey of terrorism to be released Monday, the State Department says about 14,000 attacks took place in 2006, mainly in Iraq and Afghanistan. These strikes claimed more than 20,000 lives — two-thirds in Iraq. That is 3,000 more attacks than in 2005 and 5,800 more deaths.

Altogether, 40 percent more people were killed by increasingly lethal means around the globe.

The report partly attributes the higher casualty figures to a 25-percent jump in the number of nonvehicular suicide bombings targeting large crowds. That overwhelmed a 12-percent dip in suicide attacks involving vehicles.

Chemical use marks ‘dangerous’ shift
In Iraq, the use of chemical weapons, seen for the first time in a November 23, 2006 attack in Sadr City, also “signaled a dangerous strategic shift in tactics,” it says.

With the rise in fatalities, the number of injuries from terrorist attacks also rose, by 54 percent, between 2005 and 2006, with a doubling in the number wounded in Iraq over the period, according to the department’s Country Reports on Terrorism 2006.

The numbers were compiled by the National Counterterrorism Center and refer to deaths and injuries sustained by “noncombatants,” with significant increases in attacks targeting children, educators and journalists.

“By far the largest number of reported terrorist incidents occurred in the Near East and South Asia,” says the 335-page report, referring to the regions where Iraq and Afghanistan are located.

“These two regions also were the locations for 90 percent of all the 290 high-casualty attacks that killed 10 or more people,” says the report, a copy of which was obtained by The Associated Press ahead of its official release.

Almost half in Iraq
The report says 6,600, or 45 percent, of the attacks took place in Iraq, killing about 13,000 people, or 65 percent of the worldwide total of terrorist-related deaths in 2006. Kidnappings by terrorists soared 300 percent in Iraq over 2005.

Afghanistan had 749 strikes in 2006, a 50-percent rise from 2005 when 491 attacks were tallied, according to the report.

However, it also details a surge in Africa, where 65 percent more attacks, 420 compared to 253 in 2005, were counted last year, largely due to turmoil in or near Sudan, including Darfur, and Nigeria where oil facilities and workers have been targeted.


Iran gets top billing
As in previous years, the 2006 report identifies Iran as the “most active state sponsor” of terror, accusing the Islamic republic of helping plan and foment attacks to destabilize Iraq and derail Israeli-Palestinian peace efforts.

Iran’s Revolutionary Guard has been “linked to armor-piercing explosives that resulted in the deaths of coalition forces” and has helped, along with Lebanon’s radical Hezbollah movement, train Iraqi extremists to build bombs, the report says.

Although the designation of Iran is not new, it appears in the report that is being released as Secretary of State Condoleezza Rice prepares to attend a conference of Iraq’s neighbors, at which she has not ruled out a meeting with Iran’s foreign minister.

The report says that terrorists continue to rely mainly on conventional weapons in their attacks, but noted no let up in an alarming trend toward more sophisticated and better planned and coordinated strikes.

Deaths, injuries rise sharply
For instance, while the number of bombings increased by 30 percent between 2005 and 2006, the death tolls from these incidents rose by 39 percent and the number of injuries rose by 45 percent, it says.

The report attributes the higher casualty figures to a 25-percent jump in the number of non-vehicular suicide bombings targeting large crowds that more than made up for a slight 12-percent dip in suicide attacks involving vehicles.

Of the 58,000 people killed or wounded in terrorist attacks around the world in 2006, more than 50 percent were Muslims, the report, says with government officials, police and security guards accounting for a large proportion, the report says.

The number of child casualties from terrorist attacks soared by more than 80 percent between 2005 and 2006 to more than 1,800, while incidents involving educators were up more than 45 percent and those involving journalists up 20 percent, the report says.

Twenty-eight U.S. citizens were killed and 27 wounded in terrorist incidents in 2006, most of them in Iraq, where eight of the 12 Americans kidnapped by terrorists last year were taken captive, it says.


© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/18399660/


--------------------------------------------------------------------------------

Trial by jury on verge of extinction, democracy at risk

raw story
According to a story in tomorrow's New York Times (reg. req.), trials by jury are "on the verge of extinction" and are being "replaced by settlements and plea deals, by mediations and arbitrations and by decisions from judges." In fact, "only 1.3 percent of federal civil cases ended in trials last year, down from 11.5 percent in 1962."

The Times points out in particular that "in criminal cases, the vast majority of prosecutions end in plea bargains" and quotes a judge as complaining that defendents "who have the temerity to 'request the jury trial guaranteed them under the U.S. Constitution' ... face 'savage sentences' that can be five times as long as those meted out to defendants who plead guilty and cooperate with the government."

Excerpts:

The trends in criminal cases and in the state courts are broadly similar, though not always quite as striking. But it is beyond dispute that even as the number of lawyers has grown twice as fast as the population and even as the number of lawsuits has exploded, actual trials have become quite rare.

Instead of hearing testimony, ruling on objections and instructing jurors on the law, judges spend most of their time supervising the exchange of information, deciding pretrial motions and dealing with settlements and plea bargains.

...

The movement away from jury trials is not just a societal reallocation of resources or a policy choice. Rather, as Young put it, it represents a disavowal of "the most stunning and successful experiment in direct popular sovereignty in all history."

Indeed, juries were central to the framers of the Constitution, who guaranteed the right to a jury trial in criminal cases, and to the drafters of the Bill of Rights, who referred to juries in the Fifth, Sixth and Seventh Amendments. Jury trials may be expensive and time-consuming, but the jury, local and populist, is a counterweight to central authority and is as important an element in the constitutional balance as the two houses of Congress, the three branches of government and the federal system itself.

Ex-CIA analyst: Forged 'yellowcake' memo 'leads right back to' Cheney

raw story
A former CIA analyst claims that falsified documents which were meant to show that Iraq's Saddam Hussein regime had been trying to procure yellowcake uranium from Niger can be traced back to Vice President Dick Cheney.

Appearing on MSNBC's Tucker Carlson Show, Ray McGovern who served in the CIA for twenty-seven years, said, "the [forged] memo leads right back to the doorstep of the Vice President of the United States."

According to McGovern, former CIA Director George Tenet told his "coterie of malleable managers" at the CIA to create a National Intelligence Estimate "to the terms of reference of Dick Cheney's speech of August 26, 2002, where Dick Cheney said for the first time Saddam Hussein could have a nuclear weapon in a year, he's got all kinds of chemical, he's got all kinds of biological weapons."

McGovern, who at one time chaired National Intelligence Estimates and prepared the President's Daily Brief, also claimed to have evidence that the memo leads back to Cheney, but he would not say what it was, except that the names of the people involved were "in the public domain."

In an op-ed posted at Buzzflash, McGovern argues, "If any good can come out of the intelligence/policy debacle regarding Iraq, it would be the clear lesson that intelligence crafted to dovetail with the predilections of policymakers can bring disaster. The role that Tenet, McLaughlin, and their small coterie of malleable managers played as willing accomplices in the corruption of intelligence has made a mockery of the verse chiseled into the marble at the entrance to CIA headquarters: 'You will know the truth, and the truth will set you free.'"

McGovern also calls Tenet a "pathetic figure" who is trying to "justify himself for unjustifiable activity." Tenet, in his new book, claims that the Bush administration distorted his use of the term "slam dunk" in reference to intelligence that ultimately led to the Iraq war (RAW STORY's coverage is here ).

Cops Admit To Planting Marijuana on 92 Year Old Woman Killed in Botched Drug Raid

AP
ATLANTA — Two police officers pleaded guilty Thursday to manslaughter in the shooting death of a 92-year-old woman during a botched drug raid last fall. A third officer still faces charges.

Officer J.R. Smith told a state judge Thursday that he regretted what had happened.

"I'm sorry," the 35-year-old said, his voice barely audible. He pleaded guilty to manslaughter, violation of oath, criminal solicitation, making false statements and perjury, which was based on claims in a warrant.

Former Officer Gregg Junnier, 40, who retired from the Atlanta police in January, pleaded guilty to manslaughter, violation of oath, criminal solicitation and making false statements. Both men are expected to face more than 10 years in prison.

In a hearing later in federal court, both pleaded guilty to a single charge of conspiracy to violate a person's civil rights, resulting in death. Their state and federal sentences would run concurrently.

The charges followed a Nov. 21 "no-knock" drug raid on the home of Kathryn Johnston, 92. An informant had described buying drugs from a dealer there, police said. When the officers burst in without warning, Johnston fired at them, and they fired back, killing her.

Fulton County prosecutor Peter Johnson said that the officers involved in Johnston's death fired 39 shots, striking her five or six times, including a fatal blow to the chest.

He said Johnston fired only once through her door and didn't hit any of the officers. That means the officers who were wounded likely were hit by their own colleagues, he said.

Junnier and Smith, who is on administrative leave, had been charged in an indictment unsealed earlier Thursday with felony murder, violation of oath by a public officer, criminal solicitation, burglary, aggravated assault with a deadly weapon, and making false statements.

The third officer, Arthur Tesler, also on administrative leave, was charged with violation of oath by a public officer, making false statements and false imprisonment under color of legal process. His attorney, William McKenney, said Tesler expects to go to trial.

Tesler, 40, is "very relieved" not to face murder charges, McKenney said, "but we're concerned about the three charges."

Both men could have faced up to life in prison had they been convicted of murder. Instead, Junnier will face 10 years and one month and Smith 12 years and seven months. No sentencing date was immediately set, and the sentences are contingent on the men cooperating with the government.

The deadly drug raid had been set up after narcotics officers said an informant had claimed there was cocaine in the home.

When the plainclothes officers burst in without notice, police said, Johnston fired at them, and they fired back.

Assistant U.S. Attorney Yonette Sam-Buchanan said Thursday that although the officers found no drugs in Johnston's home, Smith planted three bags of marijuana in the home as part of a cover story.

The case raised serious questions about no-knock warrants and whether the officers followed proper procedures.

Atlanta Police Chief Richard Pennington asked the FBI to lead a multi-agency probe. He also announced policy changes to require the department to drug-test its nearly 1,800 officers and require top supervisors to sign off on narcotics operations and no-knock warrants.

To get the warrant, officers told a magistrate judge that an undercover informant had told them Johnston's home had surveillance cameras monitored carefully by a drug dealer named Sam.

After the shooting, a man claiming to be the informant told a television station that he had never purchased drugs there, leading Pennington to admit he was uncertain whether the suspected drug dealer actually existed.

The Rev. Markel Hutchins, a civil rights activist who serves as a spokesman for Johnston's family, said the family was satisfied with Thursday's developments.

"They have never sought vengeance. They have only sought justice," he said.

Hutchins said the family is considering civil action against the police department.

"I think what happened today makes it very clear that Ms. Johnston was violated, that her civil rights were violated," he said.

Associated Press writer Jason Bronis in Atlanta contributed to this report.

How MI5 let bombers through net

news.com.au
MOHAMED Sidique Khan's name featured twice in MI5 anti-terrorist operations more than a year before he went on to lead the 7/7 suicide attacks on London that killed 52 people in 2005.

*video bomb plot
*bombers lost links to 7/7
*Al-Qa'ida will strike again
*Meeting of murderous minds in Lahore

The full extent of the missed opportunities that allowed the July 7 London bombers to slip through the net can be reported for the first time after the conviction of Omar Khyam, a close associate of Khan, for plotting to build a 600kg ammonium nitrate fertiliser bomb to blow up a crowded nightclub or shopping centre in London.

Far from being a "clean skin", Khan had been photographed, followed and bugged by intelligence officers more than a year before the July 2005 bombings, which ranked as Britain's worst act of mass murder.

Security sources said they had identified a Sidique Khan in 2004 as the owner of a mobile phone called by an alleged al-Qa'ida financier and of a Honda car that was tailed by investigators.

Despite those leads, which placed Khan in the company of high-priority terrorist suspects, he was not investigated further.

The disclosures fuelled demands for a public inquiry into 7/7 and raised doubts about the accuracy of assertions by Home Secretary John Reid in the Commons that none of the bombers' identities was known to the security services before July 7.

Mr Reid was speaking after Khyam and four other men received life sentences at the end of a year-long terrorist trial that cost an estimated pound stg. 50 million ($120 million) and had a jury deliberating for a record 27 days before delivering its verdicts.

Trial judge Michael Astill told the five they had "betrayed the country that has given you every advantage in life".

The jury was not told that two men who had met Khyam four times when he was under surveillance in early 2004 were Khan and Shehzad Tanweer, his right-hand man in the 7/7 cell. About 16 months later Khan, Tanweer and two other men detonated suicide devices on three Tube trains - at Edgware Road, Aldgate and King's Cross - and on a London bus. Nor did the jurors know that Khan joined Khyam and other members of his bombing team at an al-Qa'ida training camp in Pakistan in July 2003.

The two men were part of a group of young Britons who trained under and took orders from Abd al-Hadi al-Iraqi, the al-Qa'ida leader who was transferred to Guantanamo Bay last week after being caught by US forces in Iraq.

Police believe another associate of the group tried to buy surface-to-air missiles to bring down a passenger jet. Kazi Rahman, 29, pleaded guilty last year to trying to buy terrorist weaponry and was jailed for nine years but his conviction can only be reported now.

Pakistani intelligence sources said that agents had monitored the group of "English boys" and alerted British agencies that they were planning to strike in Britain. A high-ranking official said: "There is no question that 7/7 could have and should have been stopped. British agencies did not follow some of the information we gave to them."

The connection between the convicted bomb plotters - who were caught in a huge investigation codenamed Operation Crevice - and the 7/7 bombers led to a growing clamour for a public inquiry.

Rachel North, who survived the King's Cross blast, said she had been appalled to learn that Khan and Tanweer were associates of known terrorists. "I remember that (former home secretary) Charles Clarke came out and said 'these bombings came out of the blue, these men are clean skins'," Ms North said.

"It was tempting to believe that these guys had never been known to the police or the security services, that they had somehow managed to make these bombs and drive down to London and get on Tube trains and a bus, and that it was a terrible tragedy and there was nothing anybody could have done to stop them.

"When it transpired that was not the case, it was devastating. This has fuelled my desire for an independent inquiry because it appears we have not been told the truth about what we knew about these bombers prior to 7/7."

A group of survivors will deliver a solicitor's letter to the Home Office overnight demanding "an independent and impartial public inquiry" that would produce "a comprehensive, accurate and definitive factual account" of the events of 7/7.

The Conservatives and Liberal Democrats also called for an independent inquiry into the bombings and the suggestion that MI5 missed vital opportunities to prevent them. But Mr Reid rejected the call for a public inquiry, which he said would divert resources from the front-line fight against terrorism.

He told the Conservatives' spokesman for home security, David Davis, that he was wrong to claim that the identities of any of the bombers had been known before 7/7.

"They were not known to the security services until after 7/7," insisted Mr Reid, who praised the police and security services for their work in foiling the bomb plot. Mr Davis said last night that the Home Secretary's position was indefensible.

He said: "The Home Secretary continues to block an independent inquiry into a major security failure that left 52 dead and 700 injured on the grounds that it is a waste of time. At the time of 7/7, we were told the suicide bombers were unknown to the authorities. This is plainly not true."

Mr Reid told parliament that MI5 had taken the unprecedented step of publishing a list of questions and answers about 7/7 on its website.

In its statement, MI5 said: "Even with the benefit of hind-sight, it would have been impossible from the available intelligence to conclude that either Khan or Tanweer posed a terrorist threat to the public."

Peter Clarke, head of the Counter-Terrorism Command at Scotland Yard, said the conviction of Khyam and four of his accomplices marked a new understanding of the al-Qa'ida threat to Britain.

Mr Clarke said: "The investigation showed the links that these men had with al-Qa'ida in Pakistan. Most of them had attended a terrorist training camp in Pakistan in 2003, and were taught how to make explosives; some had been involved in extremism as far back as 2001. This was not a group of youthful idealists. They were trained, dedicated, ruthless terrorists who were obviously planning to carry out an attack against the British public."

Mr Clarke said it was now known that Khan and Tanweer had met the Operation Crevice suspects but that they were judged at the time not to pose a threat to public safety.

He added: "It is a grave disappointment and a matter of great regret to everyone involved in counter-terrorism that we were not able to prevent the attack on July 7, 2005."

Is al Qaeda in Iraq fighting a Sunni backlash?

cnn

• Report of al Qaeda in Iraq leader's death may hint at insurgent rifts
• Analyst: Anbar fighters trying to exclude foreign militants from public role
• Some indigenous Iraqi insurgents say killing civilians is counterproductive
• Regional anti-al Qaeda group has emerged and is working with U.S. forces

BAGHDAD, Iraq (CNN) -- Reports of fighting between al Qaeda in Iraq and Sunni militants surfaced Tuesday, the latest hints of rising tensions between the two allied groups.

Other reports have emerged this year of tensions between Sunni fighters and the Sunni-dominated al Qaeda in Iraq, particularly from Anbar province, long a favored turf for indigenous Sunni insurgents and foreign fighters infiltrating Iraq from Syria.

The unconfirmed reports from tribal leaders to Iraqi government officials indicate that Abu Ayyub al-Masri, the leader of al Qaeda in Iraq, was killed Tuesday in fighting between al Qaeda militants and Sunni tribal fighters from Abu Ghraib and Falluja.

If Sunni militants had information that led to al-Masri's death, it's a sign of possible rifts among Sunni militants in Iraq, according to CNN terrorism analyst Peter Bergen.

Militant groups in the region "have been trying to put a more Iraqi face" on their movement and have been trying to "exclude the foreign militants from a public role," Bergen said.

Al-Masri is Egyptian and many suicide attacks are carried out under al Qaeda's direction by other foreigners such as Saudis and North Africans.

There has been talk among indigenous Iraqi insurgents that such attacks, which claim civilian lives, are counterproductive.

In addition, Bergen notes that the leader of the Islamic State of Iraq has adopted an alias that reflects his Iraqi roots: Abu Omar al-Baghdadi.

Also, a regional anti-al Qaeda group, the Anbar Salvation Council has emerged which is a coalition touted by the United States and Iraq as a positive development in the war against al Qaeda in Iraq.

Hints of rifts among Sunni-allied insurgents emerged April 12 when two claims of responsibility were announced by Islamic State of Iraq after the deadly attack on Iraqi parliament. (Read more about the attack that claimed eight lives)

While the differing claims used similar and noncontradictory concepts, two claims could indicate differences in the movement, which has about six groups.

Arab media reports hint at rift

More evidence of disunity recently popped up in the Arab media.

Al-Jazeera, the Arabic-language news network, reported last month that Ibrahim al-Shammari, a spokesman for the Islamic Army in Iraq, said his group -- also in the Islamic State of Iraq -- does not plan to work with al Qaeda in Iraq.

Among the reasons, he said, are that al Qaeda has targeted Islamic Army of Iraq members and that their goals are divergent, with the Islamic Army in Iraq being more willing, in some circumstances, to deal with the United States instead of al Qaeda.

Gen. David Petraeus, the top U.S. commander in Iraq, addressed the Sunni backlash against al Qaeda at a news conference last week in Washington.

"Sunni insurgents and the so-called Sunni resistance are still forces that must be reckoned with, as well," Petraeus said. "However, while we continue to battle a number of such groups, we are seeing some others joining Sunni Arab tribes in turning against al Qaeda in Iraq and helping transform Anbar province and other areas from being assessed as lost as little as six months ago to being relatively heartening."

Petraeus said the United States "will continue to engage with Sunni tribal sheikhs and former insurgent leaders to support the newfound opposition of some to al Qaeda, ensuring that their fighters join legitimate Iraqi security force elements to become part of the fight against extremists."

He said it is part of the effort to "reach out to moderate members of all sects and ethnic groups to try to drive a wedge between the irreconcilables and the reconcilables, and help the latter become part of the solution instead of part of the problem."

U.S. working with Salvation Council

CNN's Michael Ware reported in March that the United States is giving local Sunni leaders from the Anbar Salvation Council free rein as long as the insurgents in the group root out and kill al Qaeda.

One Iraqi villager, Abu Miriam, told CNN that locals have tired of al Qaeda. He says his people began fighting U.S. forces, but foreigners infiltrated their ranks.

"If you talk against them, they let you go at first, then come back and behead you later," he said.

Asked what would become of him if al Qaeda knew he was talking, Abu Miriam replied, "I will be killed. In fact, slaughtered, slaughtered with a knife."

These tensions provoke the tribes' Salvation Council to work alongside U.S. Marines and soldiers. Its members carry weapons, launch operations against targets they select, make arrests and conduct interrogations.

"The tribes effectively sought out and killed on a repeated basis elements infiltrating from Syria as well as local elements trying to re-establish," a U.S. official said.

Asked if there had been an assassination program backed by U.S. forces, Zalmay Khalilzad, then-U.S. ambassador to Iraq, said, "We lose no sleep over the struggle against al Qaeda and the killing of al Qaeda people."

The Salvation Council says the United States has given it rifle ammunition, a claim the U.S. military does not dispute, and the Iraqi government has provided 30 vehicles.

"We are not looking for bloodshed. We minimize it," a senior Salvation Council member says. "If a suspect is peaceful, we arrest and hand him to the authorities, but if he resists, there will be no other way than to shoot him."

Al Qaeda has hit back hard at the tribes in recent weeks, sending chlorine bombs, car bombs and suicide bombers in explosive chest vests against their leaders.

Rice will talk to Iran if seen as useful

WASHINGTON, April 30 (Reuters) - U.S. Secretary of State Condoleezza Rice is ready to talk with Iran on the sidelines of meetings on Iraq this week but only if such contact is deemed useful, senior U.S. officials said on Monday.

A formal meeting has not been set up between Rice and Iranian Foreign Minister Manouchehr Mottaki when they are in the Egyptian resort of Sharm el-Sheikh to discuss Iraq, but the top U.S. diplomat has made clear she would not avoid it.

"We are obviously prepared for whatever may emerge in terms of useful dialogue on Iraq," the State Department's Iraq coordinator, David Satterfield, told reporters.

The United States has accused Iran of fomenting violence in Iraq and if Rice meets Mottaki she will call for an end to the flow of arms and foreign fighters into Iraq as well as training of insurgents. Tehran rejects claims of interference in Iraq.

"We would certainly hope to see from Iran, generally speaking, the kind of supportive steps which would match Iran's rhetorical position on Iraq. Iran declares it wants to see a stable, peaceful Iraq, sovereign within its borders," said Satterfield.

Another senior U.S. official, who asked not to be named because the issue is sensitive, said if the Iranians challenged Rice in a multilateral meeting about Iraqi border security, for example, she could at that point request private talks.

But he stressed the United States was not pushing Iran for bilateral talks and would not discuss Iran's nuclear dossier, which is being handled by the European Union's Javier Solana.

"We'll stop (the meeting) ... there is no doubt about it," said the official. "We would be undercutting our own position which is that we are willing to discuss all these things but only in the context of a suspension of uranium enrichment."

FIRM BUT POLITE

The United States accuses Iran of pursuing nuclear weapons. Iran says its nuclear program is to generate electricity and it has so far refused a Western offer of incentives and broad negotiations if it suspends its sensitive enrichment work.

President George W. Bush said if Rice bumped into her Iranian counterpart she would be polite but firm.

"She'll also be firm in reminding the representative of the Iranian government that there's a better way forward for the Iranian people than isolation," Bush said.

There will be two Iraq meetings in Sharm el-Sheikh -- one on Thursday to endorse the International Compact with Iraq, a five-year plan offering Iraq financial and political support in return for reforms.

Satterfield urged Iraq to agree on an oil-revenue sharing law that has been held up for months, saying this would help encourage foreign investment.

On Friday, Iraq's neighbors -- including Iran and Syria -- as well as ministers from the Group of Eight nations and the European Union will discuss how to stabilize Iraq, where sectarian violence has plunged the country into chaos.

The United States hopes Arab nations will be more supportive of Iraq's government, particularly Saudi Arabia which has been most resistant, said the senior U.S. official.

Saudi King Abdullah refused to meet Iraqi Prime Minister Nuri al-Maliki before the Iraq meetings, but U.S. officials sought to play this down, pointing to Saudi plans to offer debt relief to Iraq.

"These are all tangible demonstrations of Saudi support for Iraq," said State Department spokesman Sean McCormack.

Egypt, as host of the meetings, has sought not to play up expectations about their outcome. "This is not a conference that will end up resolving all the problems of Iraq or provide a magic formula," said Egypt's ambassador to the United States, Nabil Fahmy.

War in Lebanon was 'severe failure' for Israel

telegraph
Ehud Olmert, the Israeli prime minister, defied calls for his resignation last night after a government report accused him of committing a series of errors in his handling of the war in Lebanon last summer.

The Israeli premier was left clinging on to power after being accused of "severe failure" in his prosecution of the conflict with Hizbollah. During the conflict, which saw intense bombing of the Shia group's infrastructure in Lebanon, thousands of missiles rained down on northern and central Israel as Hizbollah responded.

The long-awaited official investigation into the conflict - which broke out after Hizbollah guerrillas killed three soldiers and captured two others in a cross-border raid - dealt a harsh blow that further weakened the embattled prime minister.

The report said Mr Olmert acted hastily in leading the country to war on July 12 without having a comprehensive plan. He was criticised for not asking for a detailed plan from his generals, and failing to consult experts outside the military despite his relative inexperience in defence issues.

Mr Olmert was also faulted for setting unrealistic goals - the return of the hostages and the elimination of the Hizbollah missile threat - and failing to revise the targets once it became clear the war was not going as planned.

"The prime minister bears supreme and comprehensive responsibility for the decisions of 'his' government and the operations of the army," the report said.

"The prime minister made up his mind hastily, despite the fact that no detailed military plan was submitted to him and without asking for one. Also, his decision was made without close study of the complex features of the Lebanon front and of the military, political and diplomatic options available to Israel."

The report said that Mr Olmert's response to the crisis exhibited a "lack of judgment, responsibility and caution".

After receiving a copy of the findings of the investigative panel, Mr Olmert said that the "failures will be remedied".

Israel Maimon, Mr Olmert's cabinet secretary, said the prime minister "is not considering resignation".

He added: "It is right to state as clearly as possible: the report lists difficulties, failures and mistakes by all the leaders, including the prime minister. The question is what do we do now."

The commission, appointed immediately after the end of the war in response to public uproar at the army's inability to stop Hizbollah, also had scathing criticism for two other wartime leaders, Amir Peretz, the defence minister, and Gen Dan Halutz, the former chief of staff.

The panel criticised Mr Peretz for lacking the basic knowledge to make decisions on the war effort and failing to develop a strategic approach to battle.

But it was Mr Olmert, who faced calls for his resignation before the publication of the report, who took the brunt of the criticism from the panel led by Eliyahu Winograd, a retired judge.

Amnon Abramovitch, a political commentator, told Israeli television that the report had stopped short of what would have been its most crushing verdict.

"Only one sentence is missing: 'This being the case, he cannot continue in his post'," he said.

McCain Favors a 'League of Democracies'

WASHINGTON POST -- Republican presidential candidate John McCain envisions a "League of Democracies" as part of a more cooperative foreign policy with U.S. allies.

The Arizona senator will call for such an organization to be "the core of an international order of peace based on freedom" in a speech Tuesday at the Hoover Institution at Stanford University in Palo Alto, Calif.

We Americans must be willing to listen to the views and respect the collective will of our democratic allies," McCain says, according to excerpts his campaign provided. "Our great power does not mean we can do whatever we want whenever we want, nor should we assume we have all the wisdom, knowledge and resources necessary to succeed."

"To be a good leader, America must be a good ally," he adds in the speech, another in a series of policy addresses as he seeks the Republican presidential nomination.

Such comments offer a contrast to President Bush, who critics contend has employed a stubborn, go-it-alone foreign policy that has dramatically damaged the U.S. image abroad.

McCain is careful to note that his proposed multinational organization would not be like Woodrow Wilson's failed "League of Nations." Rather, McCain says the organization would be far more similar to what Theodore Roosevelt favored _ a group of "like-minded nations working together in the cause of peace."

"It could act where the U.N. fails to act," McCain says.

Such a new body, he says, could help relieve suffering in Darfur, fight the AIDS epidemic in Africa, develop better environmental policies, and provide "unimpeded market access" to countries sharing "the values of economic and political freedom."

And, McCain adds, an organization of democracies could pressure tyrants "with or without Moscow's and Beijing's approval" and could "impose sanctions on Iran and thwart its nuclear ambitions" while helping struggling democracies succeed.

Recalling Harry S. Truman's actions during the Cold War, McCain also urges a similar "massive overhaul of the nation's foreign policy, defense and intelligence agencies" to meet the world's current challenges. He says details will come later.

(This version CORRECTS Corrects in graf 2 that Hoover Institution is at Stanford University in Palo Alto, Calif.)

Chief WTO farm mediator says US, EU must move

GENEVA (Reuters) - The chief mediator in troubled World Trade Organisation (WTO) farm talks on Monday said the United States would have to offer at least another 14 percent cut in subsidies to get a deal.

The European Union, also under pressure to make concessions in the WTO negotiations, would have to improve its offer on lowering import tariffs on farm goods, another politically highly sensitive part of the agenda, New Zealand's ambassador Crawford Falconer said.

Falconer, chairman of the WTO's agricultural negotiations, issued a 28-page report highlighting where the main divisions were in the farm talks and suggesting some possible solutions for closing the gaps.

Major WTO states have set themselves an end-year deadline for wrapping up the long-stalled Doha free trade round, but such a timetable requires an accord on a blueprint before the WTO begins its summer break at the end of July.

"Now is the time for honest talk, for telling it how one sees it in the hope ... (to) facilitate the decision-making we so desperately need now," Falconer said in his introduction.

The ambassador said that the current U.S. offer to cut farm subsidies to some $22 billion a year was not enough, but that it was unlikely that Washington would be willing to go to the "low teens" demanded by some of its trading partners, who say subsidies distort world trade.

"The centre of gravity for what is in play here for the U.S. is certainly below 19 and somewhere above the low teens," he said.

The EU, the world's largest users of farm subsidies, would also have to cut its farm supports by between 75-80 percent from the very high numbers that it was permitted under the last world trade deal, the Uruguay Round, which concluded in 1994.

Cuts on the currently highest farm tariffs would have to be somewhere between the 60 percent offered by the EU and the 85 percent sought by the United States, he added.

The number of so-called "sensitive products" -- farm goods that the EU and other major importers want to shield from the deepest tariff cuts -- would have to be limited to between 1 and 5 percent of tariff lines, below the 8 officially sought by Brussels, Falconer said.

Developing countries would have to contribute by doing some "two-thirds" of what the richer states were willing to do, he said.

Falconer rejected an argument put forward by some developing countries that farm products they are allowed to designate as "special" because of their importance to subsistence farmers could be excluded from tariff cuts altogether.

Dollar in free fall, and this time it is different from ’04

Reuters
NEW YORK, APRIL 29: The last time the US dollar slid to a record low against the euro it quickly recovered, but this time may be different. The dollar slid to a new record low against the euro on Friday, with the euro quoted above $1.3680, the highest since the currency’s launch in 1999.

When the euro climbed above $1.36 in 2004, it satyed at that level for five days, and then embarked on a year-long decline. But unlike late 2004, when the Federal Reserve was in the early stages of a two-year rate rising cycle which provided some support for the dollar against the euro, US economic growth is now slowing and the Fed may even cut interest rates later this year.

At the same time, economies in the Europe and Asia seem to be weathering the US slowdown well, suggesting that interest rates in those regions may continue to move higher, drawing yield-hungry investors away from the dollar.

“I think we’re going to see $1.38 (euro/dollar) without too much trouble here,” said Joseph Trevisani, chief market analyst at FX Solutions, an online currency dealing platform based New Jersey.

The immediate trigger for the dollar’s fall on Friday was a report showing that the US economy grew at its most sluggish pace in four years during the first quarter.

By contrast back in late 2004, differentials were actually widening in the dollar’s favour as yields on euro-zone debt were falling on worries that the strong euro would strangle the European economy.

This week the dollar fell to its lowest level ever against a basket of major currencies tracked by the Fed since 1973.

Afghan protestors accuse US soldiers of killing civilians

forbes

SHINDAND, Afghanistan (Thomson Financial) - Hundreds of Afghans have taken to the streets in western Afghanistan, accusing US soldiers of killing scores of civilians in fighting the coalition said killed 136 Taliban fighters.

The protest started in Zerkoh Valley in Herat province, where US Special Forces and Afghan police said they killed the fighters, and moved to the town of Shindand about 13 miles away, police said.

Locals stoned and torched the offices of the Shindand district governor and police chief in an angry demonstration that lasted several hours.

'More than 1,000 people (took part) in the demonstration,' Herat police chief Mohammad Shafiq Fazli said. 'Now the situation is under the control of the national army and police.'

A member of a tribal council in the area, Lal Mohammad, said there were no Taliban insurgents among the dead whom he said included children, women and old men.

Many were killed in bombing raids, he said, adding people were also angry that American troops had searched their houses at night.

'The people they have killed are not Taliban, they are civilians. They have killed civilians, including children,' another demonstrator said, without giving his name. 'We don't want the Americans in our area.'

Chants of 'Death to America' could be heard in the background.

Fazli said police had not yet established how many people were killed and who they were.

The US-led coalition said its special forces, accompanied by police and other coalition members, attacked Taliban fighting positions in the valley on Sunday with mortars, small arms and rocket-propelled grenades.

Coalition aircraft dropped 'multiple munitions on several identified enemy locations'. An AC-130 gunship killed 26 fighters on both sides of the valley, it said in a statement.

'A total of seven enemy positions were destroyed, and 87 Taliban fighters were killed during the 14-hour engagement,' it added.

Two days earlier, more than 70 fighters had attacked a US Special Forces and Afghan police unit on a night-time patrol in the area.

The security forces retaliated with ground and air fire, killing 49 Taliban, it said. A US soldier was also killed.

'Every precaution was taken to prevent injury to innocent Afghan civilians during the two battles, and there were no civilian injuries reported,' the statement said.

There have been several cases of civilians being killed in military action targeted at insurgents trying to bring down Afghanistan's Western-backed government, and of communities making claims -- sometimes rejected by authorities -- of civilian casualties.

In eastern Afghanistan, the coalition said on Sunday it killed four militants in a raid on a suspected suicide bombing cell, with two civilians killed in the crossfire. Locals said all the dead were civilians.

The raid took place in an area of Nangarhar province where US Marines were accused of opening fire on civilians after a March 4 ambush, killing about a dozen.

The Taliban-led insurgency was at its deadliest last year with more than 4,000 people killed, about a quarter of whom were civilians.

Muslim Men Convicted in London of U.K. Terrorism Plot

April 30 (Bloomberg) -- Five British Muslims were convicted today of plotting to carry out a deadly bombing spree across the U.K., ending the country's longest terrorism trial.

Omar Khyam, the ringleader of the group, and four other men were found guilty on the London jury's 27th day of deliberations. The men were all given life sentences by Justice Michael Astill.

``You have betrayed the country that has given you every advantage in life,'' Judge Astill said during sentencing.

The defendants, who have been on trial since March 2006, were charged with planning to use homemade fertilizer bombs on targets including London nightclubs, trains, and the gas and power network. Some of the suspects had close links with two of the four suicide bombers that killed 52 people in London on July 7, 2005, a fact that news organizations were barred by court order from reporting until today's verdicts.

Khyam, 25, Waheed Mahmood, 35, Jawad Akbar, 23, Anthony Garcia, 25, and Salahuddin Amin, 32, were convicted at London's Central Criminal Court, known as the Old Bailey, of conspiring to cause explosions likely to endanger life. None of the men will be considered for parole before they have served at least 17 1/2 years in jail and may never be released, Justice Astill said.

Khyam's brother Shujah Mahmood, 20, and Nabeel Hussain, 21, were acquitted.

`Relieved'

Hussain's lawyer, Imran Khan, said his client was ``relieved'' by the verdict. Hussain has ``never been an extremist or believed in extremism,'' Khan said.

``He's lost three years of his life and he'll never get them back,'' Khan said in an interview televised on Sky News.

The trial was the first involving what prosecutors and police described as a ``homegrown'' Muslim terror cell plotting to carry out mass murder in the U.K. Several of the men were linked with al-Qaeda and other terrorist networks. All of them denied the charges against them.

Even with the convictions, the case may prompt an inquiry into Britain's counter-terrorism efforts. Under rules designed to ensure a fair trial, news organizations were barred from reporting the links between the Khyam terror cell and Mohammed Siddique Khan and Shehzad Tanweer, who took part in the July 7 attacks.

Inquiry

Police were monitoring meetings between Khyam, Khan and Tanweer as early as February 2004, 16 months before the July 7 bombings. Police have said they believed Khan and Tanweer were focused on financial crime, to raise money for jihadi causes, and didn't pose an immediate threat. The jury was never told of the connections between the two terrorist cells to prevent prejudicing their deliberations.

``Deliberately or not, the government have not told the British public the whole truth about the circumstances and mistakes leading up to the July 7 attacks,'' David Davis, the home affairs spokesman for the main opposition Conservative party, said in an e-mailed statement. ``As a result, after nearly two years and five government reports, we still don't know the truth.''

U.K. Home Secretary John Reid declined to answer questions on the connection between the defendants in today's trial and the July 7 bombers during a televised news conference. He said the government will respond later.

No Guarantee

``The government has invested heavily in counter-terrorism over the last five years,'' Reid said in a statement. ``It is important to remember that 100 percent commitment can never guarantee 100 percent success.''

Most of the seven men on trial admitted supporting jihad ``holy war'' in places like Afghanistan, Chechnya and Kashmir. Radicalized by extremist Islamic preachers, several had traveled repeatedly to Pakistan for military-style training in weapons and explosives. One of the men, Salahuddin Amin, had links to senior al-Qaeda figures and at one stage made inquiries about buying a radioactive ``dirty bomb'' from the Russian mafia, prosecutors claimed.

While police say the group hadn't settled on a definite target, sites discussed included London nightclub the Ministry of Sound and Bluewater, a 330-store shopping complex southeast of London.

The men were arrested during overnight raids in March 2004, following one of British anti-terrorist forces' biggest investigations, known as ``Operation Crevice.''

Biggest Investigation

U.K. intelligence officials have said they are monitoring 1,600 other individuals and as many as 30 possible terror plots aimed at causing death and damage to the British economy. Six men are on trial for allegedly plotting to carry out a series of deadly explosions on London's public transit network, two weeks to the day after the July 7 attacks.

``This case marked a new stage in our understanding of the threat posed by al-Qaeda in this country,'' Peter Clarke, head of the Metropolitan Police Service's counter-terrorism group, said in a statement.

``This was not a group of youthful idealists. They were trained, dedicated, ruthless terrorists who were obviously probably planning to carry out an attack against the British public,'' Clarke said.

Much of the case against the seven Crevice defendants centered on the testimony of Mohammed Babar, a U.S. citizen who has already pleaded guilty in New York to terrorism-related offences, including conspiring to provide material support to the U.K. bomb plot.

Babar Testimony

During 17 days on the witness stand, Babar provided a detailed account of the group's activities, from their military training in Pakistan to efforts to obtain fertilizer and detonators for explosives. Aluminum powder for the bombs' ignition was eventually found in a cookie tin, stashed away in a disused gardening shed in the back of one of the group's homes.

Khyam, a cricket enthusiast from Crawley, south of London, organized military exercises around the Afghan border to teach the group what he'd learned, the jury was told. Another suspect, Waheed Mahmood, obtained detailed plans of the U.K.'s gas and electricity network while working for a contractor for utility National Grid Transco.

At one point during the trial, prosecutors played a taped conversation between Jaward Akbar and Khyam, where they discussed targeting a popular London nightspot.

``No one can turn around and say they were innocent, those slags dancing around,'' Akbar says on the recording.

C.I.A. Closes Unit Focused on Capture of bin Laden - New York Times

C.I.A. Closes Unit Focused on Capture of bin Laden - New York Times

July 4, 2006
C.I.A. Closes Unit Focused on Capture of bin Laden
By MARK MAZZETTI

WASHINGTON, July 3 — The Central Intelligence Agency has closed a unit that for a decade had the mission of hunting Osama bin Laden and his top lieutenants, intelligence officials confirmed Monday.

The unit, known as Alec Station, was disbanded late last year and its analysts reassigned within the C.I.A. Counterterrorist Center, the officials said.

The decision is a milestone for the agency, which formed the unit before Osama bin Laden became a household name and bolstered its ranks after the Sept. 11 attacks, when President Bush pledged to bring Mr. bin Laden to justice "dead or alive."

The realignment reflects a view that Al Qaeda is no longer as hierarchical as it once was, intelligence officials said, and a growing concern about Qaeda-inspired groups that have begun carrying out attacks independent of Mr. bin Laden and his top deputy, Ayman al-Zawahiri.

Agency officials said that tracking Mr. bin Laden and his deputies remained a high priority, and that the decision to disband the unit was not a sign that the effort had slackened. Instead, the officials said, it reflects a belief that the agency can better deal with high-level threats by focusing on regional trends rather than on specific organizations or individuals.

"The efforts to find Osama bin Laden are as strong as ever," said Jennifer Millerwise Dyck, a C.I.A. spokeswoman. "This is an agile agency, and the decision was made to ensure greater reach and focus."

The decision to close the unit was first reported Monday by National Public Radio.

Michael Scheuer, a former senior C.I.A. official who was the first head of the unit, said the move reflected a view within the agency that Mr. bin Laden was no longer the threat he once was.

Mr. Scheuer said that view was mistaken.

"This will clearly denigrate our operations against Al Qaeda," he said. "These days at the agency, bin Laden and Al Qaeda appear to be treated merely as first among equals."

In recent years, the war in Iraq has stretched the resources of the intelligence agencies and the Pentagon, generating new priorities for American officials. For instance, much of the military's counterterrorism units, like the Army's Delta Force, had been redirected from the hunt for Mr. bin Laden to the search for Abu Musab al-Zarqawi, who was killed last month in Iraq.

An intelligence official who was granted anonymity to discuss classified information said the closing of the bin Laden unit reflected a greater grasp of the organization. "Our understanding of Al Qaeda has greatly evolved from where it was in the late 1990's," the official said, but added, "There are still people who wake up every day with the job of trying to find bin Laden."

Established in 1996, when Mr. bin Laden's calls for global jihad were a source of increasing concern for officials in Washington, Alec Station operated in a similar fashion to that of other agency stations around the globe.

The two dozen staff members who worked at the station, which was named after Mr. Scheuer's son and was housed in leased offices near agency headquarters in northern Virginia, issued regular cables to the agency about Mr. bin Laden's growing abilities and his desire to strike American targets throughout the world.

In his book "Ghost Wars," which chronicles the agency's efforts to hunt Mr. bin Laden in the years before the Sept. 11 attacks, Steve Coll wrote that some inside the agency likened Alec Station to a cult that became obsessed with Al Qaeda.

"The bin Laden unit's analysts were so intense about their work that they made some of their C.I.A. colleagues uncomfortable," Mr. Coll wrote. Members of Alec Station "called themselves 'the Manson Family' because they had acquired a reputation for crazed alarmism about the rising Al Qaeda threat."

Intelligence officials said Alec Station was disbanded after Robert Grenier, who until February was in charge of the Counterterrorist Center, decided the agency needed to reorganize to better address constant changes in terrorist organizations.

Slow economy raises recession fears

Wire Report

WASHINGTON - The worst economic growth in four years is raising concern that troubles in the U.S. housing market will spread and throw the country into a recession before the year is out.

The economy practically crawled at a 1.3 percent pace in the opening quarter of 2007, the Commerce Department reported Friday. That was even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.

The main culprit in the slowdown: the housing slump, which made some businesses act cautiously. The bloated trade deficit also played a role.

Consumers largely carried the economy in the first quarter. But will they stay resilient in light of the troubled housing market, fallout from risky mortgages and rising energy prices?

"The No. 1 question is can the consumer continue to play Atlas while the housing market crumbles around him?" said Richard Yamarone, economist at Argus Research. Others worry about businesses' appetite to spend and invest - also important ingredients for a healthy economy.

Friday's report brought some of these uncertainties to the fore. For now, though, economists believe the risk of a recession is low. Former Federal Reserve Chairman Alan Greenspan has put the chance of a recession this year at one in three.

Federal Reserve Chairman Ben Bernanke, however, has said he doesn't believe the economic expansion, now in its sixth year, is in danger of fizzling out. Neither does the Bush administration.

Many analysts, including those at the Federal Reserve, forecast the economy to perk up enough to grow at a modest pace through the rest of the year without tipping into a recession. But at the same time, they see rising risks that the economy will deteriorate further, perhaps into a prolonged period of high inflation and weak growth.

"It was a quarter that was beset by the worst of both worlds, more inflation and less economic growth," said Stuart Hoffman, chief economist at PNC Financial Services, who called the combination "a hint of stagflation-lite."

Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Thursday night that "economic growth has unexpectedly slowed from 'middling' to a crawl," and that she sees "significantly increased risks to the outlook, for both growth and inflation."

The reading on gross domestic product in the first quarter was the weakest since a 1.2 percent pace in the opening quarter of 2003. GDP measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

The performance was even weaker than the 1.8 percent economists had forecast.

"The economy went through a very soggy period," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "The biggest risk to the economy is if the housing market doesn't stabilize. That could force consumers and businesses to cut back sharply in spending. Those risks seem to be limited at this juncture," she said.

The stock market, which rallied earlier in the week on a series of strong corporate profit reports, showed little reaction Friday to the economic figures. The Dow Jones industrials rose 15.44 points to 13,120.94, the third record close in as many days. But the market's enthusiasm could ebb if economic growth remains modest and earnings weaken.

Analysts worry most about the strength of consumer spending, which accounts for 70 percent of the economy and which kept the economy afloat by rising at a robust 3.8 percent annual rate in the first quarter.

Forecasters expect unemployment to edge higher this year from a low 4.4 percent rate in March. Analysts also note that American households are coping with heavy debt service, softening home values and rising gasoline prices.

If consumer spending falters, the economy could stall or even contract, some observers said.

"If energy and food prices continue on their recent upward path, then it is very likely that the economy will be facing a recession before the end of the year," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Although the economy slowed in the first quarter, inflation picked up. That could complicate the Fed's work of keeping the economy and inflation on an even keel.

"This is a knife's edge scenario," observed John Silvia, chief economist at Wachovia Economics Group.

An inflation gauge tied to the GDP report and closely watched by the Fed showed that core prices - excluding food and energy - rose at a rate of 2.2 percent in the first quarter, up from 1.8 percent in the fourth quarter.

Republicans and Democrats had divergent views of the GDP report.

"We knew that the housing market would go through an adjustment. The positive news here is that our economy has been able to grow in spite of that very sharp reduction," Commerce Secretary Carlos Gutierrez said in an interview with The Associated Press.

But Sen. Charles Schumer, D-N.Y., called the sick housing market and the swollen trade deficit - which played in the first-quarter's slowdown - "body blows" to the economy that "must be countered by sound economic policy from the Bush administration."

The biggest factor behind the first quarter slowdown was the crumbling housing market. Investment in home building was cut by 17 percent on an annualized basis. Such investment had been slashed at an even deeper 19.8 percent pace in the fourth quarter.

"The report tells me housing is probably going to be in a more prolonged and deeper recession," said Stuart Hoffman, chief economist at PNC Financial Services Group.

Weak investment by businesses in inventories also held back GDP. So did the trade deficit, shaving 0.52 percentage point off GDP.

Another negative factor was a 6.6 percent drop, on an annualized basis, in federal defense spending.

However, consumers whose shopping is indispensable to a booming economy boosted their spending at a 3.8 percent pace. That was a solid showing although it was slightly weaker than the 4.2 percent rate in the fourth quarter.

A key reason consumers have remained resilient, even in the face of the painful housing slump, is that the jobs markets has managed to stay in good shape.

The nation's unemployment rate dropped in March to 4.4 percent, matching a five-year low. However, economists predict that rate will climb - perhaps to close to 5 percent by the end of this year - as economic activity cools.

In other economic news, employers' costs to hire and retain workers grew 0.8 percent in the first quarter, down slightly from a 0.9 percent increase in the fourth quarter, the Labor Department reported.

Wages and salaries went up 1.1 percent, a figure that hasn't been higher since 2001. That's good news for workers and should support consumer spending. Benefit costs, however, edged up just 0.1 percent, the least since the first quarter of 1999.

The IMF Fiddles while the Dollar Burns

AEI
Among the more surrealistic spectacles of the IMF's recently concluded Spring Meetings was the IMF, the supposed guardian of the international financial system, assuring the world that there was little to fear from today's unparalleled global payment imbalances. For the IMF made this assurance at the very time that the dollar's decline appears to be gathering pace, as suggested by its plumbing almost daily new lows against the Australian dollar, the British pound, and the Euro. It also made these assurances at the same time that the key global surplus countries, China and Japan, show no sign of adjusting policies to share at least some of the burden of the dollar's decline.

The IMF's apparent equanimity about global payment imbalances is rooted in its remarkably sanguine world economic outlook. For notwithstanding the gathering clouds in the US housing market, the IMF persists in the view that the US will have the softest of soft landings. In the face of all historic evidence to the contrary, the IMF also takes the view that, even were there to be a hard US economic landing, the rest of the world would somehow make up for any lost momentum in the US economy.

The most immediate risk to the IMF's rosy global economic outlook is that the US housing market is far from bottoming out and that falling home prices will prove to be a continuing drag on the US economy. After all, between 2000 and 2006, US home prices were supported by a host of unusually accommodating factors that fueled a spectacular and unprecedented 80 percent increase in home prices at the national level. This rise in housing prices, coupled with a veritable explosion in Mortgage Equity Withdrawals, provided the underpinning for US households to run down their saving rate from 7 percent of household income in 2000 to virtually zero today.

The IMF now chooses to turn a blind eye to the growing evidence that the US housing market bubble has burst and that housing prices have started to fall. It also chooses to overlook the growing evidence that the factors that had earlier fueled that bubble are now beginning to work in reverse. Indeed, the IMF seems oblivious to the fact that the Federal Reserve has now normalized interest rates after a long period of unusually accommodative interest rates and that the orgy of sub-prime mortgage lending has been stopped in its tracks. Compounding the housing market's present sea of troubles, overall mortgage lending standards are being tightened, while the resetting of Adjustable Rate Mortgages threatens to further crimp housing demand.

A significant US housing-led economic slowdown must carry the threat that the pace of the dollar's decline accelerates, especially given the United States' record need for foreign financing. For a start, the relative interest rate differential that presently favors the US dollar will be eroded as the Federal Reserve is forced to cut interest rates to support a flagging US economy. More important still, the dollar would be hit by the fact that, in any housing-led downturn, US financial assets, including equities and mortgage backed securities, would likely lose their appeal to foreign investors.

Any disorderly decline in the US dollar could intensify protectionist pressures and could pose a serious threat to global financial markets by disrupting the US bond market. This would be all the more so the case should the Asian countries continue to shirk from bearing their share of the burden of a falling dollar and should that burden continue to fall disproportionately on regions like Australia, the Euro area, and the United Kingdom.

Seemingly oblivious to the mounting risks of a disorderly unwinding of global payment imbalances, the IMF had little to offer at its Spring Meetings by way of leadership towards a coordinated policy response to those risks. In its supposed exercise of multilateral exchange rate surveillance, the IMF cobbled together well-worn policy plans from its bilateral consultations over the past year with the United States, Europe, Japan, China and Saudi Arabia. Aside from being at the most general of levels, those policy plans offered virtually nothing new by the way of policy initiatives.

Equally disconcerting is the IMF's virtual silence on the exchange rate manipulation that is so much in evidence in Asia's major economies. Judging by today's Asian economies, it would seem as if each country is free to do as it likes with its exchange rate without raising real objections from the IMF. Indeed, China massively and persistently intervenes in its exchange market to the tune of US$250 billion a year to prevent any meaningful appreciation of its currency. And it does so without incurring the IMF's wrath. For its part, Japan persists with a policy mix of a tightening fiscal policy and extraordinarily low interest rates that ensures a continued weakening in the Japanese yen.

This all has to leave one wondering how far the IMF has strayed from its original mandate as the guardian of the international exchange rate system. It also has to leave one wondering whether the IMF's periodic gatherings still serve much purpose.

Saudi says Qaeda threat not over despite arrests

RIYADH, April 28 (Reuters) - The arrest of 172 suspected militants did not end the al Qaeda-linked threat in Saudi Arabia, the interior minister was quoted on Saturday as saying.

Prince Nayef told the Arabic-language al-Riyadh daily a Saudi man was held on suspicion of being the spiritual leader of the largest of the seven cells which were smashed, foiling a plot to attack oil facilities and military bases.

"We cannot say that we are finished from these deviants," Prince Nayef said. "But efforts will continue. The eyes...are wide open and efforts are under way to purify our country from every evil."

The Interior Ministry said on Friday it had foiled an al Qaeda-linked plot to attack oil facilities, military bases and public figures, arresting 172 people, including some who it said had trained to use aircraft for suicide attacks.

Most of those arrested were Saudis, and security sources said others were from Yemen, Nigeria and other countries. Police seized weapons, computers and more than 20 million riyals ($5 million) in cash.

Islamist militants swearing allegiance to al Qaeda launched a violent campaign to topple the U.S.-allied Saudi monarchy in 2003, carrying out suicide bomb attacks on foreigners and government installations, including the oil industry.

Saudi Arabia is the world's top oil exporter, supplying about 7 million barrels a day to world markets. It holds nearly a quarter of the world's oil reserves.

SCEPTICISM

Thomas Hegghammer, a Norway-based counter-terrorism expert, said the men were arrested over a period of nine months.

"I don't see it as one big plot... These guys were picked up over a period of nine months, and I suspect they include many different groups involved in a variety of activities," he said.

Such activities might include recruiting militants for Iraq and Internet propaganda, he said.

The last announced break-up of a major cell was in December.

"We're seeing a new communication strategy from the Interior Ministry. Instead of announcing arrests as they happen -- which projects an image of continuous instability -- they save them up and present them in bulk," Hegghammer said.

One Western diplomat has suggested that the authorities, who have not yet provided names and other details of the detainees, were trying to play up their anti-terrorism efforts before the West and emphasise the militant danger to the Saudi public.

Most of the 19 al Qaeda militants who commandeered hijacked planes in the Sept. 11 attack on the United States were Saudis.

Prince Nayef said members of the largest cell swore allegiance to their leader at the Kaaba, a sacred site inside the Grand Mosque in Mecca, Islam's holiest city.

"Unfortunately, he is a Saudi. He was arrested along with the group," he said, without giving further details.

LOYALTY VIOLATED

Saudi Arabia's top official cleric, Grand Mufti Sheikh Abdel-aziz Al al-Sheikh said in a statement the oath was a violation of the principle of loyalty to the Saudi royal family.

"Their brazen oath to their leader and preparations involving arming themselves is a revolt against the ruler," he said, describing this as "the most grave of sins".