Pilgrims undeterred by bombers' carnage

reuters
More than a million Shiite Muslim pilgrims have poured into Iraq's holy city of Karbala, defying sectarian attacks that have killed about 200 people in two days of bloodshed.

A suicide bomber killed at least 26 people in a cafe north of Baghdad in Diyala province, which has seen frequent sectarian violence.

The bomber targeted a neighbourhood in the town of Balad Ruz where Shiite Kurds live.

And at least 25 Shiite pilgrims were killed as they streamed into Karbala, including 10 by a car bomb in southern Baghdad that also left 12 Iraqi police dead.

The fresh violence, in the face of tight security, came a day after some 140 pilgrims died in suicide bombings and shootings.

Despite the carnage, Shiites, who were oppressed under Saddam Hussein but now dominate politics, vowed not be deterred by attacks they blame on Sunni Arab militants.

"These acts will not stop us," said Jabar Ali, who walked for eight days from the southern city of Basra to Karbala for Shiite mourning ceremonies.

Shiite Prime Minister Nouri Maliki launched a United States-backed security crackdown last month that has had some success in reducing death squad killings blamed on Shiite militias. But there has been no let-up in bombings, many of which target Shiite communities who say they need the militias to protect them from Sunni Arab insurgents.

US Defence Secretary Robert Gates said yesterday that 2200 military police would be sent over to deal with detainees picked up as part of the new Baghdad security plan.

Maliki has called a weekend meeting with Iraq's neighbours and world powers - including the US and its foes Iran and Syria - to enlist their support in stopping the violence.

Shiites are commemorating Arbain, the end of 40 days of mourning since Ashura, which marks the death of Prophet Muhammad's grandson in 680 AD.

Under Saddam, they were banned from making the pilgrimage.

Around 1.5 million pilgrims were in Karbala yesterday. About 10,000 police and soldiers were deployed in and around the city. Sixty checkpoints had been set up and vehicles were banned from the city centre.

- REUTERS

IAEA Freezes Assistance Programs to Iran

AP
VIENNA, Austria — Delegates to a 35-nation meeting of the International Atomic Energy Agency on Thursday approved the suspension of nearly two dozen nuclear technical aid programs to Iran as part of U.N. sanctions imposed because its nuclear defiance.

A defiant Tehran said it would not bow to pressure on its nuclear program.

The decision to deprive Iran of 22 projects was taken by consensus and was expected. Even nations on the IAEA board normally supportive of Iran backed it because it was recommended by agency chief Mohamed ElBaradei, on authority of the U.N. Security Council.

"I have not heard anyone express dissatisfaction" with ElBaradei's recommendations, said Ramzy Ezzeidin Ramzy, Egypt's chief IAEA representative, before the decision, reflecting the meeting's widespread unanimity on the issue.

Chief Iranian delegate Ali Ashgar Soltanieh dismissed the decision, along with other international moves to pressure his country to suspend uranium enrichment, as the work of a "few countries ... to deprive Iran from its inalienable rights for (the) peaceful use of nuclear energy."

The "Iranian nation is a peace-loving nation but will never tolerate any pressure or intimidation," he told the meeting.

He also said Israel's undeclared nuclear program endangers "both regional peace and security."

Those comments were in response to a letter from 17 Arab nations plus Palestinian authorities that called for Israel to be put under agency inspections. The letter asserted that Prime Minister Ehud Olmert last year acknowledged that his country had nuclear weapons — something Olmert has denied doing.

Israel, in a brief statement, said it had no plans to change its nuclear policies, said an IAEA official who was inside the closed meeting and spoke on condition of anonymity because he was not authorized to talk to the media.

The suspensions of technical cooperation fell under the provision of U.N. Security Council sanctions agreed Dec. 23 to punish Iran for defying a council demand that it freeze its uranium enrichment activities. The five permanent council members now are consulting on additional sanctions after Tehran ignored a new ultimatum to stop enrichment last month.

Council diplomats in New York said these could include a travel ban, an expanded list of people and companies subject to an asset freeze, an arms embargo and trade restrictions, but they cautioned that differences remained.

While Iran says it has the legal right to develop an enrichment program to generate nuclear power, the Security Council has called on it to end such activities because of fears it could misuse the process to produce fissile material for warheads.

Before the decision on technical aid, Soltanieh accused the United States and Israel of threatening military attacks on its nuclear facilities and said Security Council sanctions against his country were illegal.

Washington in turn criticized Tehran for ignoring Security Council demands to freeze enrichment and said Iranian "intransigence" in answering questions about its nuclear program raises the level of concern that it might be seeking to make atomic arms.

Those comments, inside and on the sidelines of the meeting, came as part of a review of a report by ElBaradei that confirmed Iran had defied a Security Council deadline on enrichment last month.

Soltanieh accused the U.S. and Israel of "continuing to make threats against Iran's ... (nuclear) facilities." But he suggested that Tehran's nuclear program would survive any aggression, citing ElBaradei in declaring that nuclear "knowledge cannot be bombed."

While not directly threatening attacks, both Israel and the U.S. have not ruled out any option in trying to stop what they say is an Iranian nuclear weapons program.

Soltanieh denied such aims, saying: "Weapons of mass destruction have no place in the Islamic Republic of Iran's defense doctrine." Iran steadfastly insists it is not interested in nuclear arms and wants to enrich uranium not to create the fissile core of warheads but to generate energy.

Outside the meeting, he attributed international pressure on Iran to give up enrichment to "the poisonous food served up by a few (IAEA) members and sent to New York," to the Security Council.

Reflecting the U.S. stance, chief delegate Gregory L. Schulte accused Iran of ignoring "the serious international concerns expressed by the Security Council" in demanding a freeze of enrichment.

Schulte also criticized Iran for continuing to build facilities that will produce plutonium — another possible pathway to nuclear arms — and thus again ignoring a Security Council demand. He cited ElBaradei in saying that his agency cannot conclude that Iran's program is peaceful unless Tehran stops stonewalling on questions posed by his agency. And he urged Tehran to reverse a ban on 38 IAEA inspectors, all from countries that back Security Council action against the Islamic republic.

On North Korea, Japan and other nations urged Pyongyang to honor its commitments under a six-nation deal that ultimately commits it to scrap its nuclear weapons program. ElBaradei plans to go to the communist nation March 13 as part of the agreement, a possible prelude to the return of IAEA monitors after a more than four-year hiatus.

Missing words on new $1 coins mystify U.S. Mint

WASHINGTON (Reuters) - In God We Trust. In machines? Not so much.

An unknown number of new U.S. $1 coins bearing the image of George Washington are missing the words "In God We Trust" and other lettering along the edges, the U.S. Mint said on Wednesday.

The Mint released more than 300 million gold-colored, George Washington $1 coins last month, but it recently discovered a problem. The coins, made by the Philadelphia Mint, were supposed to have the inscriptions "In God We Trust," "E Pluribus Unum," the date and the mint mark around the edge.

It is unclear how the mistake occurred or how many of the coins are in circulation, according to the Mint statement. The Mint said it would make necessary technical adjustments in the manufacturing to eliminate the defect.

"The United States Mint understands the importance of the inscriptions 'In God We Trust' and 'E Pluribus Unum' as well as the mint mark and year on U.S. coinage. We take this matter seriously," the statement said.

"We also consider quality control a high priority. We are looking into the matter to determine a possible cause in the manufacturing process."

Robert Hoge, curator of North American coins and currency for the American Numismatic Society, said that collectors find coins with a mistake like this, known as a Mint error, desirable when a relatively small number are in circulation.

"Since it was an accident, there is no count of how many were created. That's always the question with a mint error and it's difficult to tell how many there might be," he said.

On the auction Web site eBay, one of the coins sold for

$405.

One of the most famous Mint errors in the United States occurred in 1922. That year, "through carelessness or overzealousness," Hoge said, a defective die for the obverse, or head, side of the 1-cent piece failed to show the "D" mark indicating it was struck at the Denver Mint. One of those coins in mint condition would fetch upwards of $10,000, Hoge said.

/////////
So we care about our money having the words "in god we trust" but we don't care if it says "federal reserve note" instead of "silver certificate". I guess, we need "In god we trust" on all our money, right where God would want it.

U.S.: Iraqi insurgent attacks intensifying

chron
BAGHDAD, Iraq — Military force alone is "not sufficient" to end the violence in Iraq and political talks must eventually include some militant groups now opposing the U.S.-backed government, the new commander of U.S. forces in Iraq said Thursday.

"This is critical," U.S. Gen. David Petraeus said in his first news conference since taking over command last month. He noted that such political negotiations "will determine in the long run the success of this effort."

American troops have stepped up efforts to clear and secure major highways around the capital as part of the Baghdad security crackdown, which began last month. The Pentagon has pledged 17,500 combat troops for the capital.

Petraeus said Thursday "it was very likely" that additional U.S. forces will be sent to areas outside the capital where militant groups are regrouping, including the Diyala province northeast of Baghdad.

The region has become an increasingly important staging ground for groups including al-Qaida in Iraq. Meanwhile, many Sunni extremists apparently have shifted to Diyala to escape the Baghdad clampdown.

Petraeus declined to predict the size of the expected Diyala reinforcements.

One of Iraq's most expansive militias — the Mahdi Army of radical Shiite cleric Muqtada al-Sadr — appears to have set aside its weapons under intense government pressure to lend support to the Baghdad security plan.

Mahdi militiamen also have allowed Iraqi authorities to try to protect at least 1 million pilgrims heading to Karbala, about 50 miles south of Baghdad.

Many are making the traditional trek on foot for rituals beginning Friday to mark the end of a 40-day mourning period for Imam Hussein, grandson of the Prophet Muhammad. Hussein's death in a 7th-century battle near Karbala cemented the schism between Sunnis and Shiites.

The processions have proved to be vulnerable targets, with attacks killing more than 170 people this week.

Al-Sadr issued a statement urging pilgrims to join in chants denouncing the attackers. "I ask almighty God to protect you from the sectarian sedition," said the message.

Petraeus denounced the "thugs with no soul" who have targeted Shiite pilgrims. "We share the horror" of witnessing the suicide bombings and shootings, he said.

He said U.S. forces are ready to help provide additional security for the pilgrims if asked by Iraqi authorities.

"It is an enormous task to protect all of them and there is a point at which if someone is willing to blow up himself ... the problem becomes very, very difficult indeed," he said.

Security forces in Karbala have taken unprecedented measures, including checkpoints for top-to-bottom searches and a six-ring cordon around the two main Shiite shrines. At least 10,000 policemen have been placed on round-the-clock patrols.

"All the city's entrances have been secured, and I call upon the pilgrims to follow the instructions of the security forces and let them do the necessary searches," Iraq's minister of state for national security, Sherwan al-Waili, said in Karbala.

In Baghdad, a mortar attack shattered some windows at the Iraqi Airways office on the airport compound, but the shells landed hundreds of yards from the passenger terminal and caused no serious flight disruptions.

Such attacks, however, send chills through Iraqi officials preparing to host an international conference Saturday on ways to help rebuild and stabilize the country.

The meeting will bring Iran and the United States to the same table for the first time in more than two years. Washington cut diplomatic ties with Tehran after the takeover of the U.S. Embassy by radicals in the wake the 1979 Islamic Revolution.

The United States has accused Iran of backing anti-American Shiite militants in Iraq, has detained Iranian officials there and has angered Tehran by beefing up its military presence in the Persian Gulf. Washington is also pushing for new sanctions on Iran over its nuclear program.

Iranian Foreign Minister Manouchehr Mottaki said Wednesday that his country hoped "the conference will bring forward the end of the presence of foreign forces" in Iraq — reiterating Tehran's stance that U.S. troops should withdraw.

Pentagon OKs addition of 2,200 MPs for Baghdad

AP
WASHINGTON — The Pentagon has approved a request by the new U.S. commander in Iraq for an extra 2,200 Military Police personnel to help deal with an anticipated increase in detainees during the Baghdad security crackdown, Defense Secretary Robert M. Gates said Wednesday.

Gates said the request is in addition to the 21,500 combat troops that President Bush is sending for the crackdown, along with 2,400 support troops.

“That’s a new requirement by a new commander,” Gates said of the request for more MPs by Gen. David H. Petraeus, who assumed command in Baghdad last month. He added that the Pentagon was still considering other troop requests.

Lt. Gen. Raymond T. Odierno, the dayto- day commander of U.S. troops in Iraq, has recommended that the higher troop level be maintained until next February, the New York Times reported on its Web site Wednesday night. Odierno said the extra troops are needed to support a sustained effort to win over the Iraqi populace.

Odierno made the recommendation to Petraeus, but Petraeus has not yet acted on it, the report said.

House Democratic leaders intend to propose legislation that would require withdrawal of U.S. combat troops from Iraq by the fall of 2008, and even earlier if the Iraqi government fails to meet security and other goals, Democratic officials said.

The conditions would be added to legislation that would provide nearly $100 billion the Bush administration has requested for fighting in Iraq and Afghanistan, the officials said. The legislation is expected on the floor of the House later this month.

In Iraq, a suicide attacker blew himself up in a cafe northeast of the capital Wednesday, killing 30 people as a wave of violence left 90 dead across the country.

The bloodshed persisted as Iraqi security forces struggled to protect more than a million Shiite pilgrims streaming toward the holy city of Karbala for annual religious rituals that begin Friday. The pilgrims are facing a string of attacks along the way that have claimed at least 174 lives in two days.

The victims included 22 people — 12 police commandos and 10 civilians — who died Wednesday in a car bombing at a checkpoint in southern Baghdad set up to protect pilgrims, the U.S. military said.

Just north of Baghdad, a powerful bomb killed three American soldiers trying to clear explosives from a major highway, the U.S. military said, raising the U.S. toll to 3,188 since the war started in March 2003.

U.S. troops have stepped up efforts to clear and secure major highways around the capital as part of the Baghdad security crackdown, which began last month.

But the operation has so far failed to intimidate Sunni insurgents, who have retaliated with attacks outside the city — including those against Shiite pilgrims.

In northern Iraq, insurgents raided a prison near Mosul on Tuesday and freed a nephew of Saddam Hussein whose father was recently executed, a member of the Ninewa provincial council said Wednesday.

Hisham al-Hendawi said Mohammed Barzan, son of Barzan al-Tikriti, Saddam’s intelligence chief, who was decapitated in a botched hanging Jan. 15, was among 140 prisoners who escaped when gunmen overwhelmed guards at the Badoosh prison. The Islamic State of Iraq, a Sunni insurgent group, claimed responsibility for the raid.

Commander: Taliban ready to battle NATO

chron
KANDAHAR, Afghanistan — A top Taliban commander said Wednesday the group has 4,000 fighters bracing to rebuff NATO's largest-ever offensive in northern Afghanistan, now in its second day.

Suicide bombers are ready, land mines have been planted and helicopters will be targeted, Mullah Abdul Qassim, the top Taliban commander in Helmand province told The Associated Press.

NATO, meanwhile, announced the capture of a senior Taliban fighter who had eluded authorities by wearing a woman's burqa. Mullah Mahmood, who is accused of helping Taliban fighters rig suicide bomb attacks, was seized by Afghan soldiers at a checkpoint near Kandahar, the alliance said.

Speaking by satellite telephone from an undisclosed location, Qassim said the Taliban has 8,000 to 9,000 fighters in Helmand province, including some 4,000 in the north, where NATO launched its largest-ever offensive Tuesday. He said all the fighters were Afghan, denying reports of hundreds of foreign fighters in the region.

"All of them are well-equipped and we have the weapons to target helicopters," Qassim said. "The Taliban are able to fight for 15 or 20 years against NATO and the Americans."

New mines have been planted, and suicide bombers — a growing threat in Afghanistan — are ready to attack, said Qassim, whose voice was recognized by an AP reporter who has spoken with him before.

Operation Achilles, comprising some 4,500 NATO and 1,000 Afghan troops, is focused on securing lawless regions of northern Helmand — the world's biggest poppy-growing region.

The offensive follows a mission last fall that wiped out hundreds of militants who fought in formation in neighboring Kandahar province, prompting NATO spokesman Col. Tom Collins to say this week the military would welcome a repeat of those tactics.

Qassim said the Taliban would adapt to conditions on the ground this time around.

"The Taliban know traditional fighting," he said. "If we need to fight in a group, we will. If we need a suicide attack, we will do that. If we need ambushes and guerrilla fighting, we will do that."

Collins said Wednesday that NATO was confident it would succeed in helping the government move into the region, though he said it would "take a while to get there."

"We've established a presence and in some areas it's a heavy presence, and we're trying to disrupt the Taliban's senior leadership in the area and try to separate them from trying to rally" the Taliban's locally recruited soldiers, said Collins.

One British soldier and four Taliban fighters were killed during operations on Tuesday. NATO said it had no updates on the fighting late Wednesday.

Helmand is the world's largest poppy-growing region, and U.N. officials say the Taliban derives tens — if not hundreds — of millions of dollars from the crop. NATO also says the Taliban is deeply involved in the drug trade, though Qassim denied that, saying the Taliban had eradicated opium poppies when it ruled Afghanistan from 1996-2001.

The Taliban leader said the militants control all of Helmand, and said the provincial governor hasn't been to the region in weeks, instead choosing to operate from Kabul, the capital.

"Every day we have been firing rockets at the British bases, but soldiers are not coming out," he said. "They're not fighting with us. We are ready, but they are staying inside."

Mahmood — the Taliban commander caught wearing the burqa — was trying to leave the Panjwayi area of Kandahar province — site of the large NATO battle last fall where hundreds of Taliban fighters were killed.

"Alert (Afghan) soldiers at this checkpoint spotted the oddity and quickly arrested him," NATO said.

"The capture of this senior Taliban extremist is another indicator that a more normal life is returning to the Zhari and Panjwayi districts and a testament to the great work the (Afghan army) is achieving," said Maj. Gen. Ton van Loon, the southern commander of NATO-led troops.

In eastern Afghanistan, Afghan and U.S.-led coalition forces arrested a suspected al-Qaida bomb expert and five other terrorist suspects Wednesday.

The U.S.-led coalition had information indicating "a suspected terrorist with strong ties to al-Qaida" and to a group that helped militants along Afghanistan's border region was inside an eastern Afghan compound near Jalalabad, it said.

"The suspected terrorist was a (bomb-making) expert and logistics officer for the Tora Bora front, which facilitates the movement of fighters from Pakistan to Afghanistan," the U.S. said. No shots were fired and no one was hurt during the raid.

Separately, U.S.-led coalition troops detained five men suspected of involvement in anti-government activities and "known terrorist groups," in the eastern city of Khost, the coalition said.

The troops uncovered a cache of grenades and armor-piercing rounds during their search, the statement said. No injuries occurred during the raid.

Real ID program postponed

los angeles times
Under siege from states and angry lawmakers, the White House moved back a deadline Thursday to implement national driver's license standards known as Real ID.

The announcement that states have an extra 20 months, until the end of 2009, to meet the requirements of the Real ID Act did little to ease criticism of the law from privacy advocates, motor vehicle departments and lawmakers. Almost two dozen states, including New Hampshire, are weighing legislation to oppose Real ID.

The resistance to a policy the administration calls an essential weapon in the war on terror reflects a shift from the almost total support the administration initially enjoyed for its national security agenda after the terrorist attacks of Sept. 11, 2001.

"In the months after Sept. 11, we adopted a 'do anything, do everything' mode," said Jim Harper, a public policy expert at the libertarian Cato Institute who advises the Department of Homeland Security and opposes the act. "Here with five-plus years behind us, now it's time to look at what does work and what doesn't and lift the veil of secrecy."

Delayed implementation would not resolve the privacy and security concerns that Real ID raises, said Tim Sparapani, legislative counsel at the American Civil Liberties Union.

"Essentially, we've just kicked the can down the road another two years," he said.
The 2005 law requires new tamper-proof security features on licenses issued only to people who can prove citizenship or legal status; their personal data would be kept in a database that would be accessible by motor vehicle departments nationwide. All Americans would be required to renew their licenses by 2013. Those without one would be barred from federal buildings or airplanes unless they could show a passport or another form of federally approved identification with a photo.

The National Conference of State Legislatures and the National Governors Association were not happy with the program, noting that the federal government has not moved to offset the cost to states. They have estimated the cost at $11 billion, while the Department of Homeland Security puts it at $14.6 billion.

Last year, the federal government offered New Hampshire $3 million to test Real ID. An effort to oppose the program failed in the Legislature, but Rep. Neal Kurk, a Weare Republican and privacy advocate, is sponsoring another measure to defeat it this year.

Many states are concerned about longer lines, higher fees and fewer Department of Motor Vehicles centers, because they will have to meet stringent new security standards. Civil-rights advocates wonder about people who do not have birth certificates or other ID needed to get a Real ID license.

And privacy advocates worry about the linked databases, warning of the creation of a de facto national ID card and the increased possibility of identity theft without any added protection against fraud.

Sen. Lamar Alexander, a Tennessee Republican, was among a group of senators who said they would use the two-year delay to re-examine Real ID.

"It's not insignificant that there are privacy concerns," he said. "Big Brother government is a big problem."

Washington Softens Tone on North Korea Uranium-Enrichment

voanews


The crisis over North Korea's nuclear weapons programs was initiated in 2002, when U.S. officials said North Korea had admitted violating a previous agreement by pursuing a nuclear weapons program based on enriched uranium. Now that six-nation talks may be producing progress in eliminating Pyongyang's far more advanced plutonium-based program, Washington has softened its tone about uranium enrichment. VOA's Kurt Achin reports from Seoul.

It was in October 2002 in Pyongyang that an eight-year-old U.S.-North Korea nuclear agreement known as the "Agreed Framework" screeched to a halt. U.S. officials presented North Korean negotiators with evidence that Pyongyang was violating the deal by undertaking a secret program to produce highly enriched uranium - HEU - presumably for use in nuclear weapons.

Tong Kim, then a high-level interpreter for the U.S. State Department, was in the room.

"What we said then was, we have convincing evidence. We said they were pursuing it. We didn't say how far they went, we didn't say they are producing HEU bombs," Kim said.

Kim, now an international relations professor here in Seoul, says North Korean officials acknowledged the program - something they have never done publicly, and which they now deny. He believes Pyongyang thought, erroneously, the acknowledgment would enhance their bargaining leverage with the United States.

Instead, it had the opposite effect. Washington halted fuel oil shipments to the North. Pyongyang ejected international nuclear inspectors in return, pulled out of the global nuclear Non-proliferation Treaty, and restarted the plutonium-producing reactor that had been shut down under the Agreed Framework.

China, Russia, the United States, South Korea and Japan subsequently initiated negotiations with North Korea - known as the six-party talks - to find a diplomatic end to the North's nuclear programs.

Since last month, when North Korea pledged to seal its main plutonium reactor once again, U.S. officials have indicated that Washington was reconsidering the HEU accusation that started the crisis.

The chief U.S. nuclear negotiator, Assistant Secretary of State Christopher Hill, told a Washington audience last month that the North will still have to answer for its purchase in the 1990's of uranium-related centrifuges from the network of Pakistani nuclear pioneer A.Q. Khan.

However, Hill implied that Washington might now be willing to accept that the centrifuges, and related aluminum tubes purchased from Germany, were not part of an HEU program at all.

"At some point we need to see what's happened to this equipment," Hill said. "If the tubes did not go into a highly enriched uranium program, maybe they went somewhere else - fine. We can have a discussion about where they are and where they've gone."

Hill says the United States simply isn't sure how far the North might have developed a uranium program.

"It's a complex program," he noted. "It would require a lot more equipment than we know that they have actually purchased. It requires some considerable production techniques, that, we're not sure they've mastered those."

Several weeks after Hill's comments, the main U.S. intelligence official dealing with North Korea, Joseph DeTrani, told the U.S. senate that Washington's confidence in the existence of a North Korean HEU program has decreased since 2002.

"The assessment was with high confidence that indeed, they [North Korea] were making acquisitions necessary for, if you will, a production-scale [uranium] program," he said. "And we still have confidence the program is in existence, at the mid-confidence level."

South Korea, too, believes the North has been working on an HEU program, but it, too, has no evidence that such a program is advanced. Last month, ending years of official silence on the issue, the South's chief nuclear negotiator, Chun Yung-woo, provided Seoul's first public assessment of the situation.

"We do not have full information where the program itself stands now." Chun said. "Nobody seems to believe that they have an enrichment plant up and running, but I cannot tell you how far North Korea's enrichment program has evolved."

Experts say there are several reasons for the apparent softening of the U.S. position.

First, U.S. intelligence suffered a major setback in Saddam Hussein's Iraq, where no weapons of mass destruction were found despite highly confident U.S. assurances. It is thought intelligence officials have decided to be more cautious in their conclusions.

Peter Beck, North Asia Director for the International Crisis Group, suspects North Korea's test of a plutonium-derived nuclear weapon last October also helped focus the minds of U.S. policymakers.

"After the nuclear test last October, they realized that the HEU program probably hasn't gone anywhere from when it was detected in 2002, and the plutonium program most certainly has," he said.

Experts like Beck say February's deal in Beijing is the outcome of a more pragmatic, plutonium-focused approach by Washington to the nuclear talks. The deal was signed only after intensive one-on-one discussions between the U.S. and North Korea in Berlin several months earlier.

Tong Kim, the former State Department interpreter, calls the HEU program accusations a "self-inflicted sticking point" by the United States. He says Washington is hoping to receive some form of explanation from North Korea, so the diplomatic process can move forward.

"What I would expect would be that North Koreans somehow would come up with an explanation of what they have bought and what they did with them - again, claiming that those materials, or their plan, had nothing to do with a weapons program," Kim said.

The International Crisis Group's Peter Beck says North Korea's uranium-related purchases are probably "sitting in a cave somewhere, gathering dust." He notes that the North must disclose details of all nuclear activities in the second phase of February's six-party agreement - although he predicts it will be reluctant to provide the kind of specificity the U.S. and its partners are looking for.

"Now, I'm not expecting the North to show up to a working group with a laundry list of their facilities, because that would essentially be handing over a target list to the Bush administration," Beck said. "So, how we get to that next step of coming clean is not going to be just a problem for HEU, but for all their other nuclear activities - and that's going to be a real challenge."

The deadline for implementation of the February agreement's first phase is mid-April. Talks on a second phase, which will include North Korea's promised nuclear declaration, are expected to begin shortly after that.

Northwest pilot from rural Glyndon alleges 9/11 cover-up

west central tribune
Field McConnell is convinced the 9/11 terrorist attacks are being covered up.

The Northwest Airlines pilot from rural Glyndon, Minn., said a second attack is imminent and conspirators already have aborted their plan once this year.
Those beliefs prompted him to begin writing for a Web site where like-minded people gather and to file a lawsuit in Fargo's federal court to expose an alleged conspiracy.

The lawsuit, filed last week, claims Boeing Co. and the Air Line Pilots Association (ALPA) can't assure him that B747-400 planes are safe. McConnell, who is the process of seeking an early retirement from Northwest, claims the planes are rigged by Boeing and can be remotely detonated.

“We do not believe in any way, shape or form that that is true,” said Pete Janhunen, a spokesman for ALPA, the world's largest pilot's union.

“Our senior lawyer and senior engineer both said that on its face, it's an insane complaint. … It sounds like he's a troubled guy.”

McConnell, a rural Glyndon rancher, has been a Northwest Airlines pilot for more than 28 years. He graduated from the U.S. Naval Academy in 1971 and flew planes in the military, including with Fargo's Happy Hooligans, for 22 years.

“I am obligated under company procedures and FAA regulation not to operate an aircraft if I suspect it is unsafe,” McConnell, 57, states in his handwritten claim.

Janhunen dismisses the claim.

“We take every threat to airline security and safety very seriously,” he said. “In this case, we do not believe there's any shred of evidence that the allegations about these Boeing airplanes are true, and the case should be immediately dismissed.”

Many of McConnell's allegations are outlined in Internet postings on www.hawkscafe.com, which its creators say provide an analysis of the weapons and motives behind 9/11. The group claims to have more than 4 million members worldwide.

“I think this lawsuit is opening a Pandora's box,” McConnell said. “It will turn into a legal case that solves 9/11.”

He claims to know the true conspirators behind the 9/11 attacks and that radical Muslims served as a masquerade.

“If you want to know why I'm doing it, it is to make aviation safer,” McConnell said.

Boeing spokesman Tim Neale said each of its planes exceeds federal standards and undergoes rigorous certification before taking to the air.

“It's (safety) something we take very, very seriously,” Neale said. “There are no safety issues that go ignored. There's just too much at stake.”

Northwest Airlines denied comment. In the lawsuit, McConnell said the company and pilots union “have suggested that I am crazy.”

The lawsuit was filed on behalf of those working with the Web site, said McConnell, who previously filed for bankruptcy and seeks $4.5 million from Boeing and ALPA.

“I'm trying to retire early so I can do something more important than hauling 400 people to Hawaii,” said McConnell, who added that he wants to move to a warmer climate.

White House panel OKs surveillance plans

AP

WARRANTLESS EAVESDROPPING, FINANCIAL MONITORING UPHOLD RIGHTS, IT SAYS

WASHINGTON - A White House privacy board is giving its stamp of approval to two of the Bush administration's surveillance programs -- electronic eavesdropping and financial tracking -- and says they do not violate citizens' civil liberties.

Democrats newly in charge of Congress quickly criticized the findings, which they said were questionable given some of the board members' close ties with the Bush administration.

``Their current findings and any additional conclusions they reach will be taken with a grain of salt until they become fully independent,'' said Rep. Bennie Thompson, D-Miss., who chairs the House Homeland Security Committee.

Work in secrecy

After operating mostly in secret for a year, the five-member Privacy and Civil Liberties Board is preparing to release its first report to Congress next week.

The report finds that the National Security Agency's warrantless-eavesdropping program and the Treasury Department's monitoring of international banking transactions have sufficient privacy protections, three board members told the Associated Press in telephone interviews.

The programs have multiple layers of review before sensitive information is accessed, they said.

``We looked at the program, we visited NSA and met with the top people all the way down to those doing the hands-on work,'' said Carol Dinkins, a Houston attorney and former Reagan administration assistant attorney general who chairs the board.

``The program is structured and implemented in a way that is properly protective and attentive to civil liberties,'' she said.

Some board members were troubled by the Homeland Security Department's error-ridden no-fly lists, which critics say use subjective or inconclusive data to flag suspect travelers.

Anti-terror screening

One area the board will focus on in its report is the computerized anti-terrorism screening system recently announced by DHS and used for years without travelers' knowledge to assign risk assessments to millions of Americans who fly abroad.

``That's a place where there's a lot of opportunity for improvement,'' Dinkins said.

Lanny Davis, a former Clinton White House counsel and the lone Democrat on the panel, described the board's first report to Congress as modest. He said most of the work in the past year was spent being briefed on the administration's surveillance programs.

``We felt reassured regarding the checks-and-balance concerns,'' Davis said. He said that after several classified briefings, members were impressed by the multiple layers of review, which included audit trails to track whoever has access to the data.

Still, Davis said he anticipated the board will continue to monitor the program as needed.

The board's initial findings come as Congress is moving forward on measures to give the board more authority and make it more independent of the president. Created in late 2004, the panel was established as a compromise between Congress and the White House after a recommendation by the Sept. 11 commission.

Sick people used like laboratory rats in GM trials

independent news
Genetically modified potatoes developed by Monsanto, the multinational biotech company, have been fed to sick patients in an experiment. Rats that ate similar potatoes in the research suffered reductions in the weight of their hearts and prostate glands.

Dr Michael Antoniou, reader in molecular genetics at Guy's, King's and St Thomas' School of Medicine, said use of humans was "irresponsible and totally unethical, especially when already ill subjects were enrolled. These people truly were guinea pigs." Other scientists said the trials were too short, on too few people, to give meaningful results of long-term effects.

Monsanto said the vegetables were safe, and the researchers conducting the experiment said effects on the rats were within "permissible" limits.

The experiment is described in a hitherto unpublished report by the Nutrition Institute of the Russian Academy of Medical Science, done "by agreement with Monsanto Company" in 1998.

The report says "10 patients suffering from hypertensive disease and ischemic heart disease" were fed a pound of the Russet Burbank potatoes - modified to resist Colorado beetles - every day for three weeks, and monitored.

It goes on: "A certain risk of GM food products for human health does exist, as there can be by-effects of inserted genes besides the designed ones." The report describes the patients as "volunteers" and says they liked the GM potato so much they all "expressed their intention to consume it at home".

After comparing them with 10 other patients fed conventional potatoes, the report concludes: "The genetically modified potato provided by Monsanto did not reveal toxic, mutagenic, immune modulating and allergic effects within the examined parameters of the present experiment".

It recommended the GM potatoes "can be used for human nutrition purposes in further epidemiological research". The report says the rats, tested over six months, suffered "increases of kidneys' absolute weight" when compared to ones fed conventional potatoes but that all changes were "within permissible physiological fluctuation".

But Dr Irina Ermakova, of the Russian Academy of Science, calls the GM potatoes "dangerous" for rats, adding: "On this evidence, they cannot be used in the nourishment of people".

Tony Coombs from Monsanto UK said in a statement: "Potatoes genetically improved to prevent Colorado beetle destroying the crop have already been consumed, as safely as conventional or organic ones, in North America for years."

Timeline of Lewis 'Scooter' Libby Case

FOX NEWS
2003:

—Jan. 28: President Bush asserts in his State of the Union address: "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

—May 6: New York Times columnist Nicholas D. Kristof reports that a former ambassador, whom he does not name, had been sent to Niger in 2002 to investigate the uranium report. The column says the ex-ambassador reported to the CIA and State Department well before Bush's speech that the uranium story was unequivocally wrong and was based on obviously forged documents.

—May 29: Libby asks Marc Grossman, an undersecretary of state, for information about the ambassador's travel to Niger. Grossman later tells Libby that Joseph Wilson was the former ambassador.

—June 11 or 12: Grossman tells Libby that Wilson's wife works at the CIA and that State Department personnel are saying Wilson's wife was involved in planning the trip. A senior CIA officer gives him similar information.

—June 12: Cheney advises Libby that Wilson's wife works at the CIA.

—June 14: Libby meets with a CIA briefer and discusses "Joe Wilson" and his wife, "Valerie Wilson."

—June 23: Libby meets with Times reporter Judith Miller. During the meeting he tells Miller that Wilson's wife might work at a bureau of the CIA.

—July 6: The Times publishes an opinion piece by Wilson titled "What I Didn't Find in Africa" and he appears on NBC's "Meet the Press." Wilson said he doubted Iraq had obtained uranium from Niger recently and thought Cheney's office was told of the results of his trip.

—July 7: Libby meets with then-White House Press Secretary Ari Fleischer. Libby notes that Wilson's wife works at the CIA and that the information is not widely known.

—July 8: Libby meets with Miller again and tells her that he believes Wilson's wife works for the CIA.

—July 12: Libby speaks to Time magazine's Matthew Cooper and confirms to him that he has heard that Wilson's wife was involved in sending Wilson on the trip. Libby also speaks to Miller and discusses Wilson's wife and says that she works at the CIA.

—July 14: Syndicated columnist Robert Novak reports that Wilson's wife is a CIA operative on weapons of mass destruction and that two senior administration officials, whom Novak did not name, said she suggested sending her husband to Niger to investigate the uranium story.

—Sept. 26: A criminal investigation is authorized to determine who leaked Plame's identity to reporters. Disclosing the identity of CIA operatives is illegal.

—Oct. 14 and Nov. 26: Libby is interviewed by FBI agents.

—Dec. 30: U.S. Attorney Patrick J. Fitzgerald in Chicago, a tough and aggressive career prosecutor, is named to head the leak investigation after then-Attorney General John Ashcroft takes himself out of the case to avoid the appearance of a conflict of interest.

2004:

—January: A grand jury begins investigating possible violations of federal criminal laws.

—March 5 and March 24: Libby testifies before the grand jury.

2005:

—Oct. 28: Libby is indicted on five counts: obstruction of justice and two counts each of false statement and perjury.

2006:

—Sept. 7: Former Deputy Secretary of State Richard Armitage admits he leaked Plame's identity to Novak and to Bob Woodward of The Washington Post. Armitage says he did not realize Plame's job was covert. Woodward taped his June 13, 2003, interview with Armitage.

2007:

—Jan. 16: Libby's trial begins in U.S. District Court.

US Army hospital problems feared widespread

smh
PROBLEMS with the treatment of wounded soldiers that created a scandal at the top US military veterans' hospital are prevalent throughout the army's health-care system, legislators say.

The Vice-President, Dick Cheney, vowed to fix the substandard conditions at Walter Reed hospital, which have dealt yet another blow to an administration reeling from public anger over the wars in Iraq and Afghanistan.

Two weeks after The Washington Post reported that soldiers at Walter Reed were recuperating in rodent-infested quarters and trapped in a bureaucratic limbo, army brass apologised at a US House of Representatives hearing on Monday.

John Tierney, a Democrat who chairs the House oversight and government reform committee's national security subcommittee, said the problems did not stop with the hospital in Washington.

"I also, unfortunately, feel that these problems go well beyond the walls of Walter Reed, and that they are problems systemic throughout the military health-care system," he said.

"Is this just another horrific consequence of the terrible planning that went into our invasion of Iraq?" In any case, he warned, the problems were now likely to get worse with the decision of the President, George Bush, to send more US troops to Iraq.

The Army Secretary, Francis Harvey, resigned last week over the scandal. The general in charge of the hospital, Major-General George Weightman, was replaced.

Mr Bush has ordered a wide-ranging review of all US veterans' facilities. Mr Cheney said on Monday that they wanted to "find out whether similar problems have occurred at other military and VA [Department of Veterans Affairs] hospitals."

The Washington Post revelations were particularly embarrassing in Washington because Mr Bush, senior Pentagon officials and legislators have often visited people in the hospital injured in Iraq and Afghanistan.

"These problems are not unique to Walter Reed," said Tom Davis, a Republican.

"The crushing complexity and glacial pace of outpatient procedures in medical evaluation boards are army-wide problems."

NATO launches offensive against Taliban

CHRON.COM
KABUL, Afghanistan — NATO-led troops launched their largest offensive yet against Taliban militants, focusing on the same southern region where U.S.-led forces carried out an even bigger operation less than a year ago.

Some 4,500 NATO troops and 1,000 Afghan soldiers were headed to volatile Helmand province, where hundreds militant fighters have amassed. They included some 1,500 U.S. troops.

NATO said Operation Achilles initially would focus on improving security, but that its "overarching purpose" was to enable the Afghan government to begin reconstruction and economic development of the region.

The offensive "is focused on improving security in areas where Taliban extremists, narco-traffickers and foreign terrorists are currently operating," said Col. Tom Collins, the spokesman for NATO's International Security Assistance Force. "Once the security situation is improved, we will begin short- and long-term reconstruction projects."

He was optimistic about their chances for success, even though they were returning to a region U.S.-led troops tried to subdue nine months ago in Mountain Thrust, an operation involving 11,000 troops, twice as many as in the current offensive.

The situation was "fundamentally different" this year, Collins said, adding that NATO had a much better opportunity to succeed because there were now more troops in the country overall.

British, Canadian, Dutch and Afghan forces are also taking part in the offensive, which began Monday and will focus on a northern section of the province.

An ISAF statement said that one soldier died Tuesday in the south during combat operations, but it gave no further details about the soldier's death or where it happened. Collins said he didn't know if the death was due to the new operation.

Also Tuesday, the British Embassy was looking into reports that a British man has been kidnapped in southern Afghanistan, an official said. A Taliban spokesman claimed the hardline militia had detained the Briton — whom he did not name but said had claimed to be a journalist — and two Afghans as they traveled together by vehicle Monday in Helmand province.

Afghan officials had no immediate information on the reported kidnapping.

The government has little control over many parts of northern Helmand, and the British troops stationed there fight almost daily battles with militants. U.S. intelligence officials say Taliban fighters have flooded into Helmand the last several months, and that there are now more fighters there than any other part of the country.

The militants overran Musa Qala, in northern Helmand province, on Feb. 1 after defying a peace deal between the government and elders reached last fall that capped weeks of fighting. The Taliban still control the town more than a month after the initial attack. Collins said forces would not move into the village until given approval by the government.

British troops have also been battling militants in the nearby district of Kajaki to enable repair work on a hydroelectric damn there, which supplies close to 2 million Afghans with electricity.

"Strategically, our goal is to enable the Afghan government to begin the Kajaki project," said Maj. Gen. Ton van Loon, ISAF's southern commander. "This long-term initiative is a huge undertaking and the eventual rehabilitation of the Kajaki multipurpose dam and power house will improve the water supply for local communities, rehabilitate irrigation systems for farmlands and provide sufficient electrical power for residents, industries and commerce," he said.

Helmand is the world's biggest producer of opium, and a new U.N. drug assessment indicates this year's poppy harvest could be higher than last year's record output. The U.N. says Taliban fighters protect poppy farmers and tax the crop, deriving much-needed income for their insurgency.

Meanwhile, a remote-control bomb targeting a police vehicle on Tuesday killed one policeman and wounded another in Murja district, also in Helmand, said Ghulam Nabi Mulakhail, the province's police chief.

The blast also wounded six Afghan civilians nearby, said Abdul Basir, a police officer in the district.

BBC NEWS | Europe | Litvinenko supporter shot in US

BBC NEWS | Europe | Litvinenko supporter shot in US

Litvinenko supporter shot in US
The FBI and US police are investigating the shooting of a Russian intelligence analyst, days after he said Moscow was involved in a former KGB agent's death.

Paul Joyal, 53, was shot several times as he returned to his home in the suburbs of Washington DC on Thursday.

Reports say Mr Joyal, an American, had items stolen in an attack that appeared to be a random robbery.

But the timing has raised concern that he was targeted for expressing his views on the Alexander Litvinenko case.

Mr Litvinenko, a critic of Russian President Vladimir Putin and the Russian security services, died in November in London after being poisoned by radioactive substance polonium-210.

He and his associates accused Russia of carrying out the poisoning because of his fierce opposition to Mr Putin, who has denied any involvement.

Hospital officials said Mr Joyal was in a critical condition.

'We will silence you'

Four days before he was shot, Mr Joyal told NBC's Dateline television programme that he had struck up a friendship with the former agent during trips to London.

In his interview, Mr Joyal said: "A message has been communicated to anyone who wants to speak out against the Kremlin - 'if you do, no matter who you are, where you are, we will find you and we will silence you - in the most horrible way possible'."

The FBI told the BBC that it was helping the Prince George's County police department in the investigation, but had not opened its own inquiry.

Mr Joyal - a former police officer - runs a consultancy specialising in intelligence information for companies wishing to invest in the former Soviet republics.

Mr Litvinenko was granted asylum in the UK in 2000.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/6418977.stm

Published: 2007/03/05 11:32:25 GMT

BBC NEWS | Middle East | Report warns against Iran attack

BBC NEWS | Middle East | Report warns against Iran attack

Report warns against Iran attack
Military strikes against Iran could speed Tehran's development of nuclear weapons, according to a UK think tank.

A report by the Oxford Research Group says military action could lead Iran to change the nature of its programme and quickly build a few nuclear arms.

Iran denies Western claims it is trying to build weapons, saying its nuclear programme is entirely peaceful.

The study comes as the UN nuclear watchdog is set to discuss the nuclear programmes of Iran and North Korea.

In February, Iran ignored a deadline set by the UN Security Council to stop enriching uranium.

A report by the International Atomic Energy Agency (IAEA) said Iran was instead expanding the programme.

Far from setting back Iran's nuclear programme , a military attack might create the political conditions in which Iran could accelerate its nuclear weapons programme
Oxford Research Group report

Enriched uranium is used as fuel for nuclear reactors, but highly enriched uranium can be used to make nuclear bombs.

Western powers have threatened to expand sanctions on Iran. These could include travel bans on Iranian officials associated with nuclear and missile programmes.

The US has not ruled out using force but says it wants to give diplomacy a chance.

'Fast-track programme'

The Oxford Research Group report is written by nuclear scientist and arms expert Frank Barnaby.

"If Iran is moving towards a nuclear weapons capacity it is doing so relatively slowly, most estimates put it at least five years away," he says.


POSSIBLE NEXT STEPS
New UN resolution on tougher economic sanctions, tabled by US or European allies
US pressure on Europeans to step up bilateral sanctions
New initiative to get Iran back to talks

Mr Barnaby adds that an attack on Iranian nuclear facilities "would almost certainly lead to a fast-track programme to develop a small number of nuclear devices as quickly as possible".

He says it "would be a bit like deciding to build a car from spare parts instead of building the entire car factory".

The BBC's diplomatic correspondent Jonathan Marcus says that with two US navy aircraft carrier strike groups in the Gulf region and US spokesmen refusing to rule out force, this study is timely and highlights what most air power experts have been saying for some time.

IAEA meeting

An operation to destroy Iran's nuclear facilities would be neither brief nor limited in scope, our correspondent says. Multiple targets would have to be hit, and the outcome would be far from clear, especially if Iran has hidden facilities unknown to US intelligence.

But he points out that this is not a military study - written by a noted atomic scientist and peace campaigner, it looks more at the aftermath of a potential US attack and questions the central rationale for any military operation.

On Monday the IAEA board of governors is due to discuss both Iran and North Korea.

The BBC's Bethany Bell in Vienna says that while there is little progress on the Iranian nuclear file there has been movement on North Korea.

Last month Pyongyang agreed to take the first steps towards nuclear disarmament, as part of a deal reached during talks in Beijing.

Under the agreement, North Korea promised to shut down its main nuclear reactor in return for fuel aid.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/middle_east/6418049.stm

Published: 2007/03/05 00:05:23 GMT

© BBC MMVII

BBC NEWS | South Asia | US 'erased Afghan attack footage'

BBC NEWS | South Asia | US 'erased Afghan attack footage'

US 'erased Afghan attack footage'
The Associated Press is to complain to the US military after journalists said US soldiers deleted footage of the aftermath of an attack in Afghanistan.

President Hamid Karzai said 10 people died when coalition forces opened fire on civilians after a suicide attack in eastern Nangarhar province on Sunday.

Journalists working for AP said US troops erased images of a vehicle in which three people had been shot dead.

The US military said it could not confirm its troops had seized any film.

'Co-ordinated attack'

The Americans say the fighting started when a convoy of marines was attacked by a suicide bomber and came under co-ordinated small-arms fire.

Two soldiers with a translator came and said, 'Why are you taking pictures? You don't have permission'
Photographer Rahmat Gul

They say their soldiers returned fire, and acknowledge that at least eight Afghan civilians were killed, with a further 35 injured.

Thousands of local people took to the streets on Sunday to protest against what happened. The Afghan authorities have launched an investigation into the circumstances of the militant attack.

'You will face problems'

In a report from Kabul, the Associated Press (AP) said it "plans to lodge a protest with the American military".

A freelance photographer working for AP and a cameraman working for AP Television News say they arrived at the site about half an hour after the suicide bombing.

Witnesses at the scene said three civilians in the four-wheel drive vehicle had been killed by US forces fleeing the attack, the journalists said.

"When I went near the four-wheel drive, I saw the Americans taking pictures of the same car, so I started taking pictures," photographer Rahmat Gul said.

"Two soldiers with a translator came and said, 'Why are you taking pictures? You don't have permission.'"

Mr Gul said troops took his camera, deleted his photos and returned it to him.

His APTN colleague, who did not want to be named, said he was told he could film the scene - but when he did so a US soldier got very angry and deleted any footage that included the Americans.

Khanwali Kamran, a reporter for the Afghan channel Ariana Television, said the American soldiers also deleted his footage, AP reported.

"They warned me that if it is aired ... then, 'You will face problems,'" Mr Kamran was quoted by the news agency as saying.

Reporters Without Borders condemned the alleged actions of the US forces, saying they dealt with the media poorly.

"Why did the soldiers do it if they don't have anything to hide?" said Jean-Francois Julliard, a spokesman for the Paris-based group.

US military spokesman Lt Col David Accetta said he did not have any confirmed reports that coalition forces "have been involved in confiscating cameras or deleting images".
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/south_asia/6419235.stm

Published: 2007/03/05 12:20:22 GMT

© BBC MMVII

Paulson Says Foreign Treasuries Holdings Not Threat

March 4 (Bloomberg) -- Treasury Secretary Henry Paulson said foreign holdings of U.S. government debt pose no threat to the economy, countering comments made by leading Democrats including Senator Hillary Clinton.

``It's a positive that foreign investors want to own our Treasuries,'' Paulson said in an interview with ABC News today. ``Interest rates are lower -- it's helping our economic growth in this country.''

Paulson reiterated that the U.S. economy is ``healthy'' and downplayed last week's slump in stocks, the biggest in four years. Financial markets don't move ``in any direction in a straight line forever,'' he said. ``And so I look at it and put it in perspective and say, over the last year, the Dow's up almost 11 percent, the S&P's up 9 percent, and I'll take it.''

Clinton, a New York senator running for the Democratic nomination for president, said last week the global market sell- off was a ``wake-up call'' for addressing international holdings of Treasuries. Representative Charles Rangel, a New York Democrat who chairs the House Ways and Means Committee, said ``the slide shows that we are vulnerable.''

Treasuries posted their biggest weekly rally since September last week as investors sought a haven from the decline in shares. Yields on benchmark 10-year notes dropped 17 basis points, or 0.17 percentage point, to 4.50 percent. The Dow Jones Industrial Average lost 4.2 percent to close at 12114.10 on March 2. The Standard & Poor's 500 index slumped 4.4 percent to 1387.17.

International Holdings

Investors abroad hold more than half of the $4.3 trillion of debt outstanding. China is the second-largest owner after Japan, with $349.6 billion in December, Treasury data show. The slump in American stocks last week was spurred in part by the biggest slump in Chinese shares in a decade, traders said.

``The move suggests that the money we owe to China is not a healthy thing,'' Rangel said in an interview on Fox television earlier today.

Clinton wrote a letter last week to Paulson and Federal Reserve Chairman Ben S. Bernanke saying the amount of U.S. debt held by investors abroad was a ``source of vulnerability'' for the economy. ``We can too easily be held hostage to the economic decisions being made in Beijing, Shanghai and Tokyo,'' she wrote.

Both Paulson and Bernanke have repeatedly told lawmakers in hearings this year that foreign holdings of Treasuries are a statement of confidence in the American economy.

Paulson, the former head of Goldman Sachs Group Inc., said that the $1 trillion of U.S. debt held by China and Japan amounts to just two days of trading in Treasuries.

Bernanke's View

Bernanke said in a hearing at the House Budget Committee Feb. 28 that it wasn't in the interest of foreigners to dump their Treasuries. A sell-off ``would be disruptive in the debt markets in the short run. It would cause, for example, an increase in interest rates.''

``In the longer term, the effects would be somewhat less,'' Bernanke said. ``It should be noted that the Federal Reserve could be of assistance in that situation if interest rates went up and slowed U.S. economic growth. For example, the Federal Reserve could respond by using monetary policy, and that would have some benefits.''

Paulson today reiterated his view that the U.S. economic outlook is unshaken by the decline in stocks. ``The consumer's strong,'' he said. Exports are ``adding to our growth'' and ``inflation appears to be contained.''

The Treasury chief conducted the interview before his departure for a trip to Japan, South Korea and China. Paulson is seeking to persuade China to reduce its reliance on exports for growth. Lawmakers from both parties say the nation artificially holds down its exchange rate to spur exports and charge China with violating intellectual property rights.

Resist Protectionism

Paulson said that while the U.S. should continue to pressure China, the country should resist protectionism. ``Being open to trade and foreign investment has been one of the pillars -- and competition that's made this economy great.''

In his interview today, Rangel warned that patience was running thin on Capitol Hill with China. ``Congress, Democrats and Republicans are going to start to get tough with China.'' He said that China needed to move more quickly to improve mechanisms to protect intellectual property.

Fed must pay ‘greater attention’ to global forces

The Financial Times
Increasing integration of financial markets means the Federal Reserve has to pay much greater attention to global forces when setting monetary policy, Ben Bernanke said late on Friday.

The Federal Reserve chairman focused on long-range issues, and did not refer to recent market turmoil or make any comments on the state of the US economy.

Mr Bernanke said international factors, such as the so-called “global savings glut” played an increasingly prominent role in determining long-term interest rates in the US, and helped explain why rates have remained low in recent years.

To understand and evaluate conditions in the bond market, he said, “the Fed must take into account the various effects of foreign capital flows on US yields and asset prices, a task that can be quite challenging.”

But Mr Bernanke insisted the Federal Reserve has not lost control of the key levers it needs to shape monetary conditions in the US economy.

He said the Fed still has direct control over short-term interest rates, and retains considerable influence over long-term rates as well through its ability to shape expectations of where short term rates will be in the future.

Indeed, Mr Bernanke said empirical evidence suggests US monetary policy has greater influence on monetary conditions abroad than the other way around.

The Fed chairman also discussed the relationship between globalisation and inflation, concluding that while global factors “do seem to influence inflation” the net effect in recent years was not obviously to reduce the rate of price increases.

“When the offsetting effects of globalisation on the prices of manufactured imports and on energy and commodity prices are considered together there seems to be little basis for concluding that globalisation overall has significantly reduced inflation in the US in recent years,” he said.

“Indeed the opposite may be true.”

Mr Bernanke said the idea that US inflation was influenced by the global balance of supply and demand, as well as the domestic balance, was “intriguing” but that the evidence so far was “inconclusive.”

Bernanke Trying To Fill Greenspan's Shoes

How Did Federal Reserve Chairman Ben Bernanke Do During Wall Street Scare?

cbs
When Wall Street went on a wild ride this week and stocks started to plummet, with just a few words, Federal Reserve Chairman Ben Bernanke was able to calm our fears.

“There is really no material change in our expectations for the U.S. economy," he said.

Tapped by President Bush to take over as fed chairman just over a year ago, Bernanke succeeded a man who spent 18 years on the job.

"Ben will replace a legend, Alan Greenspan,” said President Bush back when he appointed Bernanke. "He has dominated his age like no central banker in history."

And despite Bernanke's credentials as a Princeton professor and Fed Governor, many business leaders were concerned about the transition.

"No one is irreplaceable,” said Jack Welch, former CEO of General Electric, back in January of 2006. “But Alan Greenspan will leave a big hole that this guy will have to work like hell to fill."

Ironically, it was Greenspan's own words this week that helped add fuel to the market's fire, when he warned that the U.S. economy could be headed toward a recession.

"Greenspan is worth reporting, even if he wasn't the former Fed chairman he'd be worth reporting because he's very smart and understands the economy," says Irwin Stelzer, director of economic policy studies at the Hudson Institute.

Quietly, Bernanke has tried to put his own imprint on the economy and the Federal Reserve. But his tenure got off to a shaky start when he made an off-hand remark about interest rates, which sent stocks plummeting.

"So he made a few gaffes but basically he is a very smart guy," says Stelzer.

And Wall Street generally gives him high marks for keeping the economy on track even as it slows down. There are still challenges ahead. New home sales fell more than 16 percent in January, the steepest monthly drop in 13 years.

“I think we'll look back in history ... at an environment where Bernanke probably became as important and as noted as Alan Greenspan,” says Liz Ann Sonders, chief investment strategist, at Charles Schwab.

If Bernanke is able to manage the slowdown he'll begin to move out of Greenspan's shadow.