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World leaders pledge financial reform as gloom deepens

AFP, Beijing

World leaders have vowed to overhaul the global financial system in the face of recession fears, but US President George W. Bush urged nations to "recommit" to free markets despite economic turmoil.

After a week of growing economic gloom and plunging stock markets, Asian and European leaders meeting in Beijing promised Saturday wide-ranging reforms while UN Secretary General Ban Ki-moon also called for quick change.

"Leaders pledged to undertake effective and comprehensive reform of the international monetary and financial systems," the 40-member Asia Europe Meeting (ASEM) said in a statement released late Friday.

"They agreed to take quickly appropriate initiatives in this respect, in consultation with all stakeholders and the relevant international financial institutions."

China's Premier Wen Jiabao called for more regulation of the world's financial system , saying after the summit "we need to draw lessons from this crisis."

"We need financial innovation to serve the economy better, however we need even more financial regulation to ensure financial safety."

Wen confirmed China's participation in a crucial summit in the United States on November 15 aimed at tackling the financial meltdown, without specifying which Chinese leader would attend the meeting of 20 industrialised and emerging powers.

The economic turmoil has led to growing criticism of US-style free market capitalism, with French President Nicolas Sarkozy earlier this week saying "the ideology of the dictatorship of the markett is dead."

But Bush on Saturday, moving to set an agenda for the upcoming international economic summit, said its participants must "recommit" to the principles of free enterprise and free trade.

"As we focus on responses to our short-term challenges, our nations must also recommit to the fundamentals of long-term economic growth-free markets, free enterprise, and free trade," Bush said in his weekly radio address.

The US president, who leaves office in January, added that "open market policies have lifted standards of living and helped millions of people around the world escape the grip of poverty."

Ban said the Washington meet must address the need for change and joined chief executives of key UN institutions in calling for considered but large-scale reforms.

"The market and regulatory failures that have led to this crisis must be addressed as a matter of urgency," a joint statement said.

"We reaffirm the need for meaningful, comprehensive and well-coordinated reform of the international financial system and pledge our support to this end."

But next month's Washington summit came in for criticism at an African summit Saturday by Benin's President Boni Yayi for excluding poor countries, which he described as "the main victims" of the meltdown.

On the heels of Beijing's meet, South American finance officials gathered Saturday to exchange views on how to keep the effects of the crisis at bay in the region, but host Brazil struck a somber tone.

"No one has an immediate solution. We are under no illusion that we will resolve all the problems," Brazil's Foreign Minister Celso Amorim told an emergency meeting of regional trade bloc Mercosur.

Stock markets provided a grim backdrop to the Beijing meeting, plummeting Friday after a raft of pessimistic corporate and economic news. Tokyo's dizzying 9.6 percent slump spilt over into Europe, where London's FTSE plunged 5.0 percent.

The Dow Jones Industrial Average slid 3.59 percent, capping a week when the US blue-chip index dropped more than five percent.

The Saudi stock market, the largest in the Arab world, began its trading week on Saturday with a nine percent plunge to sink to its lowest point in four years.

Giants of the auto, airline and technology industries took emergency action on Friday.

France's PSA Peugeot-Citroen and Renault ordered huge production cuts, while Japan's electronics giant Sony Corp. and Europe's biggest airline Air France-KLM issued profits warnings.

Chrysler LLC, the number three US automaker, said it would cut up to 5,000 white-collar jobs by the end of the year as prospects in the sector grow dimmer.

Britain's economy shrank by 0.5 percent in the three months to September compared with the previous quarter, official figures showed, marking the first contraction since 1992.

German Finance Minister Peer Steinbrueck predicted the financial crisis would last until late 2009 in an interview to be published Sunday.

"The risk of collapse is far from over," he told the Bild am Sonntag weekly.

Obama widens lead over McCain in nation, key states

Agencies

Democrat Barack Obama widened his lead over Republican John McCain in most national polls and surveys of key states as the U.S. election contest heads into its final full week.

The Illinois senator was up 8 points over presidential rival McCain in an average of 16 polls taken during the last week, according to RealClearPolitics.com. Last week, Obama was up about 6 points. Obama also has built leads in so-called battleground states including Pennsylvania and Ohio and he has an edge over McCain in some states that were Republican strongholds, such as Virginia and North Carolina.

"He had a great week," said Peter Brown, assistant director of the Quinnipiac University Polling Institute in Hamden, Connecticut. Speaking of McCain, he said, "No one has come from this far back in this little time." The Gallup Daily election tracking poll shows Obama up 7 points in its national survey. The CBS/New York Times and ABC/Washington Post polls put Obama up 13 points and 9 points respectively, while the latest Newsweek poll shows Obama leading McCain by 12 points.

In North Carolina, which has voted for the Republican candidate in nine of the last 10 elections, Obama and McCain are in a virtual dead heat, according to a poll by Rasmussen Reports that has McCain ahead by 2 percentage points and another by Charlotte television station WSOC that has Obama in front by the same margin. In Virginia, four recent polls put Obama in the lead, by an average margin of 7 points.

In Colorado, which went to Republican President George W. Bush in 2004, Obama has taken a 12-point lead over McCain, according to a Rocky Mountain News/CBS4 News poll released late yesterday. The RealClearPolitics.com average of four Colorado polls shows Obama ahead by 7 points.

The Illinois senator has solidified support in the upper Midwest states of Minnesota, Wisconsin and Michigan that reliably voted for Democratic presidential candidates, while tying McCain in Indiana, a state that hasn't favored a Democrat since 1964.

Because of Obama's strength in states won by Bush in 2004, McCain now must focus on a limited number of contests for a victory, said Whit Ayres, a Republican pollster based in Virginia. "It just makes it more challenging," he said, comparing it to trying to draw an inside straight in poker.

Israeli PM-designate wants early elections

AP, Jerusalem

Israeli Prime Minister-designate Tzipi Livni says she has given up her attempts to form a new government.

Livni's office says she told the Israeli Cabinet on Sunday that her potential coalition partners have made unrealistic demands.

She says there "is a limit" to how much she can give in to these demands and that she will recommend to President Shimon Peres to call new elections.

Livni has been trying to put together a coalition government since she took over as head of the ruling Kadima Party last month.But partners in the current coalition used the changing of the guard to press new demands.

New elections are likely to freeze already struggling peace talks with the Palestinians.

Multiple crises send Pakistan to the brink

AFP, Islamabad

Pakistan faces a "perfect storm" of crises, with its US-backed fight against Al-Qaeda and the Taliban faltering and the country lurching towards bankruptcy, analysts and opposition figures say.

Dramatic developments over the past week on both the security and economic fronts underscored more clearly than ever the massive challenges facing the fragile government of the world's only nuclear-armed Islamic nation.

First the International Monetary Fund announced on Wednesday that Islamabad had sought a politically unpopular rescue package to give the country the four billion dollars it needs to avoid defaulting on its foreign debts. Parliament meanwhile ended a historic two-week session by passing a unanimous resolution that called for an "urgent review" of Pakistan's role in the "war on terror" and for fresh talks with militant leaders. "Pakistan is truly at a crossroads," Talat Masood, a leading security analyst and retired Pakistan army general, told AFP.

"If the economic situation continues to decline it will reinforce militancy and make it more difficult for the government to tackle. They need to do better than the past six or seven months," Masood said.

If local media dubbed the slaying of Benazir Bhutto as Pakistan's 9/11 and JFK rolled into one, the crisis now faced by President Asif Ali Zardari, her widower, is arguably even greater. His government faces US pressure to crush militant safe havens in its tribal belt bordering Afghanistan, where Al-Qaeda and Taliban rebels have formed new alliances seven years after fleeing the US-led invasion of Afghanistan.

The army said Saturday it had turned a corner with the capture of a strategic town in the tribal zone of Bajaur after a two-month offensive. It has also hailed the formation of tribal militias opposed to the Taliban.

But in an apparent sign of US frustration, suspected US missile strikes on insurgent targets in Pakistan have soared in recent weeks. Eleven people were killed in an attack on a centre run by a leading Taliban commander on Thursday.

Prime Minister Yousuf Raza Gilani admitted the problems the government faces in a statement earlier this week, saying that the "very stability and survival of Pakistan is at stake."

"Our resources are over-stretched and our economy is severely impacted by each bomb blast and each suicide attack," he said.

Iraqi party suspends ties with US over raid

Reuters, Baghdad

Iraq's biggest Sunni Arab political party suspended all dealings with U.S. civilian and military personnel on Saturday after U.S. and Iraqi forces carried out a raid in which a man was killed.

The incident could increase tension in a part of Iraq that was once the heartland of the insurgency against U.S. forces but has become among the quietest parts of the country over the past two years.

U.S. forces said one man had been arrested and one had been killed in a joint U.S.-Iraqi raid against a suspected militant on Friday in the town of Falluja.

The Iraqi Islamic Party, headed by Vice President Tareq al-Hashemi, said the targets of the raid were senior party officials. Five people had been detained and one killed "in his bed," it said in a statement.

A Reuters reporter in Falluja said several hundred supporters of the Islamic Party demonstrated against the raid on Saturday.

Falluja, in Anbar province west of the capital, was the scene of the war's two heaviest battles between U.S. forces and Sunni insurgents in 2004, but has become quiet after tribes began cooperating with American troops in late 2006.

The Islamic Party said it would suspend all communication with U.S. personnel until it got "a convincing explanation of what happened, accompanied by an official apology stressing that those who committed these attacks are turned over to justice."

Hashemi, Iraq's most senior Sunni Arab official, sent a letter to the dead man's tribe condemning the raid.

Christians face attacks in eastern India

AP, Tikkaballi

They still worship in what remains of the little Baptist church not far from this forest town. The church is empty except for the rubble swept neatly into the corners. The sun comes through ragged holes where the mob smashed in the window frames.

On the roof, the crucifix is just twisted metal and broken concrete. It's barely recognizable, and you have to ask to make sure that's what it once was.

Here, prayers are said only in secret.

"We do it without making any noise," said Subhash Digal, holding his four-month-old son on his hip as he stood outside the church, where the smell of burned timber lingered on a warm autumn afternoon. "We don't want these people to know we are inside."

In this corner of the eastern state of Orissa, it's hard to find a Christian who isn't afraid.

Bloody anti-Christian riots broke out here in late August, rampages by Hindu hard-liners that since then have left at least 38 people dead, as many as 30,000 homeless and dozen of churches destroyed. The worst of the violence ended after a week or so, when authorities finally deployed soldiers to set up checkpoints and relief camps.

Asia, Europe join calls for freedom in Myanmar

AFP, Beijing

Asian and European leaders urged Myanmar's ruling junta on Saturday to release detained opposition members and implement democracy in the poverty-stricken Southeast Asian nation.

The appeal followed heavy lobbying for the Asia-Europe Meeting here, chaired by Myanmar's ally China and attended by leaders from more than 40 countries, to come out strongly in support of democratic freedoms in the country. "(Leaders) encouraged the Myanmar government to engage all stakeholders in an inclusive political process in order to achieve national reconciliation and economic and social development," they said in a joint statement.

"In this regard, they called for the lifting of restrictions placed on political parties and early further release of those under detention."

The call marked the latest pressure applied to the junta, which has ruled the country since 1962 and crushed large-scale democracy protests led by Buddhist monks in September last year.

European Commission President Jose Manuel Barroso told AFP in an interview the mention of Myanmar in the joint statement showed progress on the issue.

"It's important to note, there is a clear reference for the need to release political prisoners, which was accepted by the Asian side," he said.

The European Parliament on Thursday passed a resolution calling on the summit to jointly appeal to the junta to release political prisoners.

Nearly quarter of Beijing infants fed tainted milk

AFP, Beijing

Nearly one quarter of Beijing families have fed their children milk contaminated with the industrial chemical melamine, state press reported Sunday.

In an indication of the scale of the tainted milk scandal that has rocked the country, more than 74,000 of nearly 308,000 households questioned in the capital said their children were fed the products before they were taken off the shelves, the Beijing News reported. So far at least four infants have died in China, and 53,000 sickened across the country, from drinking milk tainted with melamine. Normally used in making plastics and glue, melamine was added to baby milk formula and other dairy products to make them appear richer in protein. The paper did not say how many-if any-of the fatalities occurred in Beijing.

The scandal broke in early September and has badly tarnished the image of Chinese dairy products, with countries around the world banning or curtailing imports.

Although at least one Chinese dairy firm knew of the problem for months, it did not immediately report it to local government officials. They in turn delayed passing on the news for nearly a month until after the August Beijing Olympics.

According to the Beijing News, hospitals in the capital have reported that 3,458 infants have been hospitalised with kidney stones, the main symptom of ingesting the melamine.

More than 211,000 children have had urinary tract examinations at Beijing hospitals and medical clinics since the scandal broke, it added.

China's parliament is currently considering a draft food safety law that aims to prevent any cover-ups by health authorities while making them directly responsible for approving additives in processed foods, Xinhua news agency reported.