The New Nation - Internet Edition

Bush doesn’t rule out using force against Iran

AFP, Meseberg

US President George W. Bush on Wednesday backed Europe-led diplomacy to convince Iran to abandon its suspect nuclear drive but warned he has not ruled out using force.

"My first choice of course is to solve this diplomatically. All options are all the table, but the first choice is to solve this problem by working closely together," said Bush after talks with German Chancellor Angela Merkel.

He expressed support for a European package of diplomatic and economic rewards-put together by Berlin, London, and Paris-if Iran's leaders halt uranium enrichment, which can be a key step towards making atomic weapons. "We'll see what choice they make," he said, one day after the European Union agreed to crack down on Iranian banks.

"We'll give diplomacy a chance to work." Merkel said diplomatic pressure had already shown signs of paying off, highlighted international cooperation in squeezing the Islamic republic and warned Tehran would face more sanctions if it rejects the incentives.

"If Iran does not meet its commitments, further sanctions will have to follow," she said. Iranian President Mahmoud Ahmadinejad appeared unswayed. "We will not trade our dignity with anything," the ISNA news agency quoted Ahmadinejad as saying, referring to the package. "If they want to give us something, then they should sell it and we will buy it."

EU foreign policy chief Javier Solana is to visit Tehran Saturday and Sunday in an effort to convince Iran to suspend its uranium enrichment activities. Iran denies its nuclear programme hides an atomic weapons push and has made its own diplomatic overture-which does not include halting uranium enrichment. Bush met Merkel as part of his last tour of Europe before he steps down in January, a voyage that began in Slovenia Monday and takes him to Italy, the Vatican, France, and Britain. The US president is still widely unpopular over the Iraq war that Germany, France and Russia fiercely opposed, as well as his resistance to European-favoured strategies for battling climate change.

"I hope that with regard to climate change we will take constructive steps forward in Japan" where the Group of Eight industrialized nations will meet in July, Merkel said after hosting Bush at a palace in Meseberg, a village north of Berlin. Last year Merkel was credited with winning concessions from Bush on climate change at a G8 summit in Germany-albeit non-binding pledges on the reduction of greenhouse gas emissions on which he has been accused of reneging.

Bush urged Germany to step up its commitments in Afghanistan, and said there was little he would have done differently in Iraq.

The unpopular president predicted that Washington and Baghdad would strike a deal on the long term presence of US forces in Iraq after the UN mandate lapses at the end of 2008.

But he angrily denounced "erroneous" news reports that he seeks permanent US military bases. The White House has said it does not consider any US military bases in the world, except perhaps Guantanamo Bay, as permanent, because host countries could ask US forces to leave.

The talks came with much of Europe is waiting to see who takes over from Bush in January.

There were no anti-Bush demonstrations in Germany but several political officials in Berlin, including leading figures from Merkel's own conservative party, said he would not be missed.

"The disaster after the war in Iraq caused serious damage to the image of the United States, and not just in Germany," the foreign policy spokesman for the Christian Union's parliamentary group, Eckart von Klaeden, said.

In 2006, Bush and Merkel bonded over pickled herring and barbecued boar on Germany's Baltic coast and the chancellor has tried to strike a balance between rebuilding ties to Washington and reserving the right to criticise US policy.

This time Merkel, Bush and their spouses dined on asparagus and schnitzel with strawberries for dessert, and strolled together in the gardens of Meseberg Palace, an 18th-century baroque residence turned government guest house.

2 US soldiers among 9 killed in Iraq bomb attacks

AP, Baghdad

The U.S. military on Thursday blamed Shiite militia fighters for a bombing the day before that killed six Iraqi civilians and wounded nine other people, including two American soldiers in Baghdad.

The blast occurred at about 9:45 a.m. Wednesday when an armor-piercing roadside bomb targeted an American convoy in a northern section of the capital, the military said.

The statement, which gave the casualty toll, said the bomb was an explosively formed penetrator, or EFP, a signature weapon of Shiite militias that the U.S. alleges comes from Iran. At least 15 pounds of explosives were used, it said.

"These special groups criminals continue to indiscriminately attack, kill and injure innocent Iraqi civilians who are just trying to live their daily lives," said Lt. Col. Steve Stover, a spokesman for U.S. forces in Baghdad.

The U.S. military uses the term "special groups criminals" to refer to what it says are Iranian-backed militia factions refusing to follow a cease-fire order by anti-U.S. cleric Muqtada al-Sadr. Iraqi police said the explosion occurred near a bridge and those killed included a woman and a 7-year-old boy.

The attack came as the U.S. and Iraqi militaries press forward with operations targeting the Shiite militia fighters. Many of them are believed to have fled a crackdown in Baghdad's main Shiite stronghold of Sadr City. Tensions have been heightened with growing opposition to a proposed long-term security agreement under negotiation between the United States and the Iraqi government.

The Sadrists have led the protests against the deal, which could lay the groundwork for a long-term U.S. military presence in Iraq.

It also is opposed by Iran, which fears the agreement would solidify U.S. influence in Iraq and give American forces a launching pad for military action against the Islamic Republic.

Elsewhere in Baghdad on Thursday, a roadside bomb targeted an Interior Ministry official's convoy as it was en route to pick him up at home, wounding three guards, a police official said, speaking on condition of anonymity because he wasn't authorized to release the information.

Attackers also tossed a grenade at a checkpoint in the capital, wounding three Iraqi soldiers, one policeman and one member of a U.S.-allied group that has turned against al-Qaida in Iraq.

Israel wants truce with Hamas

AFP, Jerusalem

Israel threw its weight on Wednesday behind Egyptian efforts to broker a truce with Hamas in and around Gaza but at the same time ordered its armed forces to prepare for a possible offensive against the Palestinian territory.

The Islamist movement which has controlled the Gaza Strip since its deadly takeover last June mocked Israel for talking of further ceasefire negotiations while still threatening military action.

A senior Israeli government official said that while there was little hope the talks would bear fruit, "for the time being we decided to give them a chance". "The security cabinet decided this morning to support Egyptian efforts to achieve calm in the south and end the daily targeting of Israeli civilians by the terrorists in Gaza," Prime Minister Ehud Olmert's spokesman Mark Regev said.

"In parallel the security cabinet instructed the military to continue its preparations in the unfortunate event that the Egyptian track should prove to be unsuccessful," he added.

The government made it clear its agreement to a truce remains conditional on making progress towards the release of a 21-year-old soldier held by Hamas for the past two years-a condition the Islamists have previously rejected. Regev said the "framework" of the talks must include "advancing the release of Corporal Gilad Shalit." Hamas was dismissive of the Israeli announcement. "The Israeli occupation itself says it is preparing a large operation in Gaza, which demonstrates that its declarations on a truce are neither realistic nor serious," Hamas spokesman Sami Abu Zuhri told AFP.

Palestinian president Mahmud Abbas, whose forces were ousted from Gaza in last June's Hamas takeover, expressed the hope that the Israeli military "escalation will not continue".

"At the same time we hope the rocket fire will stop," he said after talks with King Abdullah II in Amman. The Jordanian monarch warned that "the escalation in Gaza and indications of a large-scale military operation in the territoryt constitute a grave danger for the security of the region and harm peace efforts," a palace statement said.

Israel's decision followed two days of meetings to consider options for a major ground offensive in the besieged territory in a bid to halt persistent rocket and mortar fire against southern Israel.

But even as the meeting was under way the violence continued, with four Palestinians killed in Gaza and one Israeli wounded by mortar fire. Three Hamas militants were also killed on Tuesday.

One of Wednesday's dead was a 10-year-old girl, Hadeel al-Smeiri. She died when a tank shell hit a house east of the south Gaza city of Khan Yunis. Two of her relatives were wounded.

A member of Hamas's armed wing and another Palestinian were killed in the same area, and a fourth Palestinian was killed in an Israeli air raid on the north of the impoverished sliver of land.

The latest bloodshed came four days before the first anniversary of the Islamists' bloody seizure of Gaza.

Pak defence spending up nearly 7 per cent

Reuters, Islamabad

Pakistan increased defence spending by nearly 7 percent on Wednesday, to 296.07 billion rupees ($4.4 billion), for the 2008-09 fiscal year starting on July 1.

In the preceding year ending on June 30, Pakistan spent 277.26 billion rupees on defence, according to budget documents presented in parliament by acting Finance Minister Naveed Qamar.

Prime Minister Yousaf Raza Gilani said this week the budget allocation for defence had gone down in real terms because of inflation, and in dollar terms. Gilani said he hoped to see a reciprocal gesture from neighbour India. India increased its defence spending by 10 percent to $26.5 billion in its budget for 2008-09, announced in February.

Pakistan has fought three wars with India since their independence from Britain in 1947.

The two rivals became nuclear armed in 1998, but their ties have improved since they launched a peace process in 2004, having gone to the brink of war in 2002.

Despite better relations, they have continued to focus on building up and modernising their military forces.

Besides the annual budget allocation, Pakistan has received more than $10 billion since it joined the U.S.-led war on terrorism in 2001. Most of this aid has been for the military.

Gaddafi slams Obama over Jerusalem remarks

AFP, Triupoli

Libyan leader Moamer Gaddafi on Wednesday criticised Democratic White House candidate Barack Obama for saying that Jerusalem should remain the undivided capital of Israel and said he hoped the next US president will be a man of peace.

Gaddafi, whose country is Africa's number two oil producer, also blamed US foreign policies and a weak dollar for skyrocketing oil prices, during a speech to mark the 38th anniversary of US evacuation of bases in Libya.

"The statements of our Kenyan brother of American nationality Obama on Jerusalemt show that he either ignores international politics and did not study the Middle East conflict or that it is a campaign lie," Gaddafi said.

Obama who "chose change as the theme of his campaign should have proposed real change in US policies" towards the Arabs, he said.

Obama sparked outrage among Palestinians earlier this month when he told a Jewish group in Washington that Jerusalem must remain the "undivided" capital of Israel.

He also pledged his "unshakeable commitment to Israel's security" if he is elected president in November

Kadhafi insisted in the speech marking the US pullout of bases after the 1970 Libyan revolution, that "peace will protect Israel in the region, not arms and nuclear weapons."

"We are praying that the (next) US president will be a man of peace," he added.

Kadhafi has toned down anti-US rhetoric since his country normalised ties with Washington in 2006, two years after they were restored following a 25-year-break.

Washington renewed diplomatic links with Tripoli after Kadhafi announced in 2004 was abandoning efforts to acquire weapons of mass destruction.

Kadhafi said the past conflict with Washington was due "to bad management" from both sides.

"The United States have learned their lessons and so have we," he said.

But he charged that US foreign policy, namely the US-led wars in Iraq and Afghanistan, and a weak dollar are behind skyrocketing oil prices.

The United States "complain of the high cost of oil at a time but they are the guilty ones," Kadhafi said as oil prices jumped above 135 dollars a barrel on Wednesday.

Oil represents 95 percent of Libyan exports and accounts for 70 percent of gross national product.

Thanks to high prices, OPEC member Libya-with a current output of 1.8 million barrels per day-netted almost 40 billion dollars in oil revenue last year.

UK official suspended over lost Iraq/al Qaeda file

Reuters, London

The British government said on Thursday it had suspended a senior intelligence official who left a file with top secret documents about Iraq and al Qaeda on a train and MPs called for an independent inquiry.

A passenger found the orange folder on a London commuter train and handed it over to the BBC, which said it contained top secret documents on Iraq's security forces and the government's latest assessment of al Qaeda.

The sensitive papers were with an unnamed official who worked in the Cabinet Office, the central government department that supports the work of Prime Minister Gordon Brown.

The Cabinet Office said the official was authorized to take the seven-page file out of the office providing strict security guidelines were adhered to.

"I can confirm that he has been suspended," a Cabinet Office spokesman said of the intelligence official.

The spokesman would not give details of the mislaid documents but did confirm that they were secret.

Police officers from London's Counter Terrorism Command have begun an investigation into the incident while the Cabinet Office has launched its own internal inquiry.

Home Office (interior ministry) minister Tony McNulty told BBC TV it was a "very, very serious matter" and lessons needed to be learned.

However, the opposition Conservative Party has demanded an independent probe, saying it was the latest in a series of serious security blunders by Brown's Labour government.

"The government must make an immediate statement to parliament and an inquiry must be launched," said the party's security spokesman, Baroness Pauline Neville-Jones.

The BBC said the papers were assessments made by the British government's Joint Intelligence Committee.

"It reveals what the government knows about al Qaeda's capabilities, and more importantly, its vulnerabilities," said the corporation's Security Correspondent Frank Gardner, who said he had read the documents.

The BBC has now handed the file over to police.

Government sources suggested that the incident was embarrassing but would not actually hurt Britain's security.

But the news will hurt Brown, who has already been stung by accusations of lax security after a civil servant lost computer discs containing the names, addresses and bank details of 25 million people in the mail last year.

In January, the Ministry of Defence reported it had lost a laptop containing personal data on 600,000 recruits.

Obama opens race with edge over McCain: Poll

Reuters, Washington

Presumptive Democratic presidential nominee Barack Obama has opened the general election campaign with a six-point lead over Republican John McCain, according to an NBC News/Wall Street Journal poll released on Wednesday.

Obama, an Illinois senator, leads McCain among registered voters, 47 to 41 percent. In the previous NBC/Journal poll in late April, Obama was leading the Arizona senator by three points, 46 percent to 43 percent. Among respondents who said they voted for Sen. Hillary Clinton in the Democratic primaries, 61 percent favored Obama and 19 percent said they preferred McCain.

The poll found Obama leading McCain among African Americans, Hispanics, women and blue-collar workers.

Among white men, who made up 36 percent of the electorate in the 2004 presidential election, McCain has a 20-point lead over Obama, 55 percent to 35 percent, NBC reported.

Obama's lead over McCain expands when New York Sen. Hillary Clinton is added as Obama's running mate, the poll found. An Obama-Clinton ticket would defeat a Republican one of McCain and former Massachusetts Gov. Mitt Romney by nine points, 51 percent to 42 percent, NBC said.

Both presidential candidates are in the process of selecting a running mate.

Both Obama and McCain have promised "change" if they are elected to succeed U.S. President George W. Bush in the November 4 presidential election. In the poll, 54 percent of respondents said they were looking for a president who would bring greater changes to current policies, even if that person is less experienced and tested, NBC reported. Forty-two percent said they preferred a more experienced and tested person become president, even it means fewer changes.

The NBC/Journal poll of 1,000 voters was conducted from Friday through Monday. Clinton ended her bid for the White House on Saturday. The survey has a margin of error of 3.1 percentage points.

Another report adds: Democrat Barack Obama was roiled by another campaign scandal Wednesday when a key advisor resigned amid damaging reports that he had received preferential home loans.

Although Jim Johnson, who has been leading the hunt for a vice presidential candidate, denies any favorable treatment, the accusations could dent Obama's image as an untarnished newcomer who has vowed to clean up Washington politics.

Johnson, a former chief executive of mortgage giant Fannie Mae, resigned just hours after Obama took part in a round table in Chicago highlighting the impact of predatory lending on Americans.

Millions have lost their homes over the past two years, unable to keep up with soaring mortgage payments. Some 1.5 million foreclosures were initiated in 2007, marking a 53 percent spike from the prior year, according to the Federal Reserve. Johnson has denied a weekend Wall Street Journal report that he may have received favorable treatment from Countrywide Financial-a bank Obama has sharply criticized for its role in the subprime lending crisis-while he was at Fannie Mae.

But the Washington Post further alleged Wednesday that Johnson benefited from an earnings manipulation in 1998 which allowed the company's executives to earn large bonuses, pocketing some 1.9 million dollars. Obama said in a statement that Johnson had resigned because he "did not want to distract in any way from the very important task of gathering information about my vice presidential nominee."

The 46-year-old Obama, who has campaigned with a call to change, has vowed to reject all contributions from lobbyists and to rid politics of corruption and self-interest.

His Republican rival John McCain, who regularly vows to get rid of "pork barrel" spending in Washington, has been criticized for giving lobbyists key positions in his campaign.

McCain has lost five advisors in recent weeks, two of whom had lobbied for the Myanmar junta while others had lobbied on behalf of Saudi Arabia or Russia.

In the ethics war, McCain's campaign jumped on reports of Johnson's alleged conflict of interest to accuse Obama of hypocrisy and poor judgment.

"The American people have reason to question the judgment of a candidate who has shown he will only make the right call when under pressure from the news media," McCain spokesman Tucker Bounds said in a statement.

Israel, Syria set for more indirect talks

AFP, Jerusalem

Israel and Syria were set to hold a new round of indirect peace talks next week, officials said on Wednesday, three weeks after the two neighbours announced the Turkish-mediated negotiations.

"We will stand by our declaration to have ongoing talks. I expect their resumption shortly," Israeli Prime Minister Ehud Olmert's spokesman Mark Regev told AFP.

A government official, speaking on condition of anonymity, said Olmert's top aides Shalom Turgeman and Yoram Turbowitz would return to Turkey next week to continue the talks.

Both officials, nevertheless, declined to disclose any further details on the nature of the talks, which were simultaneously announced by Israel, Syria and Turkey on May 21, after an eight-year freeze.

Syrian President Bashar al-Assad said earlier this month that direct peace talks with Israel were unlikely before 2009, and added that they also depended on the fate of Olmert, who has been dogged by calls for his resignation over a graft scandal.

Myanmar says detention of democracy leader legal

AP, Yangon

A state-controlled newspaper said Wednesday that Myanmar's military rulers were breaking no laws by holding pro-democracy leader Aung San Suu Kyi under house arrest for a sixth straight year.

The junta's recent decision to extend Suu Kyi's detention by one year sparked international outrage, with the Nobel Peace laureate's party and foreign defense lawyers arguing the junta could legally only hold her for five years.

But a commentary in the New Light of Myanmar newspaper said detentions are permissible for as long as six years under a 1975 "Law Safeguarding the State from Dangers of Subversive Elements."

Yearly extensions must be approved by the Council of Ministers and then by the Central Body, which includes the home, defense and foreign affairs ministers, the newspaper said.

The military regime extended Suu Kyi's house arrest May 27, despite international pressure to set her free. She has been detained for more than 12 of the last 18 years at her home in Myanmar, also known as Burma.

Suu Kyi's National League for Democracy party denounced the extension as illegal and urged the regime to open a public hearing on the case.

Party spokesman Nyan Win said he usually doesn't comment on articles published in state-run newspapers, which constantly attack the country's pro-democracy movement without allowing a response.

But he said the article's explanation of how it was not illegal to hold Suu Kyi for another year "is legally wrong. The law says that detention period should be a total of five years."

India PM calls for end to opposition to US nuclear pact

AFP, New Delhi

Indian Premier Manmohan Singh Wednesday made a fresh appeal to his government's left-wing allies and the opposition to drop objections to an endangered nuclear energy pact with Washington.

Singh, who has been pushing the deal that would allow India to buy technology and power plants without signing global non-proliferation pacts, said he was hopeful it would be finalised soon, the Press Trust of India news agency reported.

Wednesday's appeal is being seen as a last ditch effort by Singh to get the deal through before US President George W Bush, a staunch supporter of the pact, leaves office at the end of the year and India holds national polls by May 2009 at the latest.

"Our domestic politics has prevented us from going ahead. I will still continue to hope that we will make progress in the months ahead," the agency quoted Singh as saying.

The pact, which has to be passed by the US Congress before the November presidential polls, would end India's three-decade long exclusion from global nuclear commerce, Singh said.

"This agreement, if it materialises, if sees the light of the day, will open new possibilities of cooperation not only with the US but also with other nuclear powers like Russia and France," he said.

Happiness, caution in Nepal as ousted king leaves palace

Reuters, Kathmandu

Nepalis greeted the king's departure with joy on Thursday but cautioned the country's new rulers must now deliver the goods. A day after deposed King Gyanendra quit the main palace to live like a common citizen, the streets of Kathmandu buzzed with discussions about his departure. But there were no public celebrations.

Police in blue camouflage took over security at the Narayanhiti palace from the army. The palace is to be turned into a museum.

"Finally he has left. I am very happy," said 28-year-old restaurant worker, Devendra Shrestha. "Why do we need the feudal monarchy in a new Nepal of the 21st century?" A specially elected assembly overwhelmingly voted last month to turn Nepal into a republic, ending the 239-year-old monarchy.

The government has allowed Gyanendra to live in one of his former hunting lodges outside the capital until he makes his own living arrangements.

Gyanendra left the massive palace complex in the heart of the capital late on Wednesday saying he would not flee Nepal and vowing to work for its people.

Thousands of Nepalis cheered and danced outside the gate of the heavily-guarded palace as he drove out in a black limousine.

"Farewell to monarchy," said a banner headline in the Kantipur daily.

But public euphoria was mixed with caution.

"The change will be meaningless if the style and attitude of the new rulers don't change," said 22-year-old plumber, Chandra Rai.

"Politicians who are going to lead the new republic of Nepal must address poverty, hunger and disease facing the people," he said. "If they don't do that it will make no difference to us, the poor people."

The end of the monarchy was key to a 2006 peace deal with Maoist rebels who ended their decade-long civil war. They emerged the biggest political party in the April elections for a constituent assembly and are expected to form a new government.

Taiwan, China agree to exchange offices

AP, Beijing

Taiwan and China agreed Thursday for the first time ever to set up permanent offices in each others' territories as the two sides met for their first formal talks in more than a decade, an official with one of the delegations said.

The agreement to set up the offices, which will coordinate continuing contacts, was reached during talks Thursday morning in Beijing, a spokeswoman for Taiwan's Straits Exchange Foundation said, speaking on routine condition of anonymity.

She said a formal announcement would be made later. The agreement came on the first day of meetings between the foundation and its mainland counterpart, the first formal talks between the sides since 1999. Foundation Deputy Secretary-General Pang Chien-kuo told China's official Xinhua News Agency the offices would "facilitate people's exchanges and traveling across the Strait."

The announcement injected a whiff of drama into an otherwise relatively mundane talks agenda that seeks mainly to finalize agreements on charter flights and tourism to build confidence between the long-estranged rivals.

The talks seek mainly to finalize agreements on charter flights and tourism to build confidence between the long-estranged rivals.

Taiwan's delegation also planned to discuss what additional help the island could provide for China's earthquake relief efforts. The talks are scheduled to run through Friday at a state guesthouse in western Beijing.

The 19-member Taiwanese team is being led by Chiang Pin-kung, chairman of the quasi-governmental Straits Exchange Foundation, and includes two vice Cabinet ministers - the highest-ranking Taiwanese officials ever to participate in bilateral talks.

The negotiations should lay the foundation for "a long-term peaceful relationship between the two sides," Chiang said as the talks opened. "The two sides have t established mutual trust."

His counterpart, Chen Yunlin, head of Beijing's semiofficial Association for Relations Across the Taiwan Strait, said the public on both sides was counting on the talks to produce results and alter the often combative tone between the two governments.

Iranian president calls Bush a 'wicked man’

AP, Shahr-E-Kord

Iranian leader Mahmoud Ahmadinejad called President Bush a "wicked man" Wednesday. Addressing thousands of people in this central city, he said Bush had set out to damage Iran but failed to halt its nuclear program and would not succeed in his goal of attacking the Islamic republic.

"This wicked man desires to harm the Iranian nation. (Bush) made plans, moved into Afghanistan and then Iraq, and announced that Iran was the third target," Ahmadinejad said.

"I tell him t your era has come to an end. With the grace of God, you won't be able to harm even one centimeter of the sacred land of Iran." Bush on Wednesday repeated his stance that no options were ruled out in trying to get Iran to drop its nuclear ambitions. At a joint news conference with German Chancellor Angela Merkel, he said: "My first choice is to solve this diplomatically, but all options are on the table."

Bush, who has seven months left in office, said he won promises from fellow leaders in the European Union to tighten pressure on Tehran with more U.N. sanctions and possibly other penalties.

Ahmadinejad said coercive measures won't force Iran to suspend uranium enrichment.

"In the past two, three years, they employed all their might, resorted to propaganda t and sanctions. If the enemy thinks they can break the Iranian nation with pressure, they are wrong t With God's help, today we have achieved victory and the enemies cannot do a damned thing," he said.

The U.S. and some of its allies accuse Iran of trying to develop nuclear weapons. Iran denies that, saying its atomic program is aimed at using nuclear reactors to generate electricity.

The U.N. Security Council has imposed three sets of limited sanctions against Iran for refusing to halt uranium enrichment, a technology that can both produce nuclear fuel and turn out the material needed for nuclear warheads.

Unpopular Japan PM wins parliament confidence vote

Reuters, Tokyo

In a stark reflection of Japan's political stalemate, parliament's lower house approved a motion of confidence in Prime Minister Yasuo Fukuda on Thursday, a day after the upper chamber adopted an unprecedented, but non-binding, censure of the unpopular leader.

The opposition Democratic Party and smaller allies pushed through the upper house censure motion on Wednesday, the first against a prime minister under the current 1947 constitution, in an effort to build momentum for an early lower house election.

But Fukuda said he had no plan to call a poll for the powerful lower chamber within the year. "The Fukuda Cabinet has been working with all its strength to stabilize citizens' lives, to realize national interests and to contribute to the international community," ruling Liberal Democratic Party (LD) policy chief Sadakazu Tanigaki told the lower house. Most opposition lawmakers boycotted the session.

Political analysts said Fukuda was unlikely to resign or call a snap election before hosting a July 7-9 Group of Eight summit in northern Japan, but speculation persists that his party might replace him after that with a potentially more popular rival.

An election is unlikely because the ruling bloc is reluctant to risk losing its two-thirds majority in the lower house, which allows it to override the opposition-controlled upper house in most matters.

Prospects the political stalemate would drag on are beginning to weigh on some Tokyo stock market players' minds.

"The reasons to buy Japan have diminished. When it comes to this point, it (politics) becomes a factor," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

"Basically, they can't conduct business."

Ruling and opposition camps will be vying for public support over the next month as Fukuda seeks to bolster support levels that had fallen below 20 percent in some polls with a display of diplomacy before and during the G8 summit, while opposition parties remind voters of his shortcomings.

"The key point is, in what direction does public opinion move," said Keio University's Yasunori Sone.

Opposition lawmakers on Thursday kept up calls for an early poll, a stance echoed by some mainstream media, although the opposition came in for its share of the blame for the stalemate.

Dalai Lama hopes China talks will resume in July

Reuters, Sydney

The Dalai Lama hopes postponed talks between China and his envoys will resume next month, he said on Thursday, adding he supported China's desire for stability but that it must come "from the heart not the gun."

The talks aim to mend fences with the Tibetan spiritual leader, who fled into exile in 1959 after an abortive uprising against Chinese rule in Tibet. The Dalai Lama says he wants autonomy for the strategic Himalayan region, but Beijing brands him a "splittist" or separatist. Asked in Australia when the talks would resume, the Dalai Lama told a news conference: "Maybe next month."

Chinese officials met the Dalai Lama's representatives for talks on May 4, but further talks originally set to start on Wednesday were postponed after an earthquake in China in May killed or left missing nearly 87,000 people. "President Hu Jintao very much emphasizes t harmonious society," the Dalai Lama told the news conference. "We fully support that. It is wonderful to have stability and unity. Stability and unity must come from heart not gun."

Chinese Foreign Ministry spokesman Qin Gang, speaking at a regular news conference in Beijing, said a resumption of talks was still being negotiated. "The timeframe is still under discussion," he said.

China blames a "Dalai Lama clique" for violence in Tibet in March and protests that disrupted the Olympic torch relay in several countries.

Beijing has called on the Dalai Lama and his supporters to halt Tibet protests and attempts to "ruin the Olympics" in August in order to create the conditions for future roundtable talks.

The team of two Tibetan envoys said during the May talks that events in Tibet were "a clear symptom of deeply felt grievances and resentment of the Tibetans" towards Chinese government policies going back decades.

"There is some resentment, some dissatisfaction in the minds of Tibetans. From grandparent to parent, from parent to children, children to grandchildren, continuously, this is the problem," said the Dalai Lama, who is in Australia on a five-day visit.

"Give Tibetans meaningful autonomy, that will satisfy Tibetans," he said.