The New Nation - Internet Edition

Europe falls into recession, US in pain

Reuters, New York

Europe officially fell into recession on Friday and the U.S. economy suffered thousands more layoffs and the biggest retail sales dip on record as world leaders met in Washington to address the worst financial crisis in 80 years.

Leaders of the Group of 20 advanced and emerging economies said they were working on plans to counter the growing economic threat and prevent future crises, but big breakthroughs were not expected at their meeting in the U.S. capital, given the absence of U.S. President-elect Barack Obama, whose involvement will be key to any global initiatives.

The financial crisis continues to wreak havoc on the world's major economies, with official data showing the 15-nation euro zone economy had shrunk by 0.2 percent for the second quarter in a row, meaning it is technically in recession.

The United States is probably already in recession, most economists agree, but official data showing that will not come out until January.

"Frankly, we at Dow are looking at an '09 that looks like a pretty protracted global recession, probably going into 2010," Andrew Liveris, the chief executive of Dow Chemical Co, the largest U.S. chemical maker, told Reuters.

Signs for the U.S. economy worsened on Friday. Retail sales fell 2.8 percent in October, according to government data, the biggest decline since comparable numbers were first collected in 1992.

Citigroup Inc, one of the hardest-hit financial companies, will soon announce job cuts of up to 10 percent of its staff, according to a source familiar with the matter. That could affect more than 30,000 employees.

Sun Microsystems Inc said it would slash up to 6,000 jobs, or 18 percent of its workforce, as it looks to save money while demand wanes for its high-end business computers.

Fidelity Investments, the world's biggest mutual fund company, told employees it will cut a further 1,700 jobs on top of 1,300 already announced.

Freddie Mac, the second-largest provider of U.S. home loan financing, reported a $25 billion quarterly loss as the housing slump worsened, forcing it to draw on a $100 billion Treasury Department lifeline.

Meanwhile, approval of a bailout for the big U.S. automakers was in doubt, increasing the possibility of a wave of mass layoffs at General Motors Corp, Ford Motor Co and Chrysler LLC.

The U.S. Senate plans on Monday to take up a bill that would provide emergency aid to automakers, but it remained unclear if there was enough support for it to pass.

The only glimmer of optimism was that U.S. consumer sentiment rose slightly, helped by lower gasoline prices.

Confidence might be raised further by moves to reduce skyrocketing home foreclosures by modifying borrowers' loans, but a proposal along those lines by the Federal Deposit Insurance Corp met opposition from the U.S. Treasury and the White House.

More help is on the way for ailing banks. Friday was the deadline for public banks to apply for funds under a U.S. capital injection program that is part of the $700 billion bailout plan passed by Congress last month.

Treasury expects to approve federal funds for another 20 banks, an official told a U.S. House of Representatives committee.

U.S. stocks closed lower, the Dow losing nearly 4 percent after flirting briefly with positive territory following Thursday's strong gains and a winning session in European and Asian stock markets. Oil fell below $57 a barrel.

U.S. Federal Reserve Chairman Ben Bernanke said central banks worldwide were ready to do more to support faltering growth and European Central Bank policy-makers signaled further interest-rate cuts were likely.

"Policy-makers will remain in close contact, monitor developments closely, and stand ready to take additional steps should conditions warrant," Bernanke said at an ECB conference in Frankfurt.

With Europe as well as parts of Asia and North America suffering, leaders of the G20 nations opened a two-day summit with a dinner at the White House in a search for ways to resolve the crisis, started by a U.S. housing market crash, and avoid another one.

But agreement among the G20, which represents 85 percent of the world's economy and two-thirds of its population, may be elusive amid divisions over whether more regulation of markets can protect consumers, savers and companies from the fallout.

The administration of U.S. President George W. Bush says there should be no return to greater state control of financial markets. Much of Europe says that without greater regulation, a repeat of the last year's turmoil is inevitable.

Muqtada al-Sadr renews threats to attack US

AP, Baghdad

Shiite leader Muqtada al-Sadr on Friday renewed threats to resume attacks on U.S. forces, and the country's top Shiite cleric was quoted as saying he would intervene if a proposed U.S.-Iraqi security pact infringed on Iraqi sovereignty.

The statements deepened unease over the deal, which would allow American troops to stay in Iraq for three more years after their U.N. mandate expires Dec. 31. Iraqi officials say they will seek a renewal of the mandate if the pact is not signed by then.

Al-Sadr's threat came in a statement by the Iran-based cleric that was read to supporters gathered for Friday prayers in Baghdad's Shiite Sadr City enclave and the city of Kufa, south of Baghdad.

"I repeat my call on the occupier to get out from the land of our beloved Iraq, without retaining bases or signing agreements," al-Sadr said. "If they do stay, I urge the honorable resistance fighters t to direct their weapons exclusively against the occupier."

The statement did not say exactly when and under what conditions such attacks might resume.

In the holy city of Najaf, an official close to Grand Ayatollah Ali al-Sistani said the Iranian-born cleric has vowed to "directly intervene" if the final version of the agreement breached the country's sovereignty. The official spoke to The Associated Press on condition of anonymity because he is not authorized to speak to the media.

Al-Sistani wields vast influence among Iraq's majority Shiites, and the agreement will virtually have no chance of being passed by parliament if he publicly states his opposition to it.

He has in the past forced the United States to scrap or revise political blueprints for Iraq, sending hundreds of thousands of supporters to the streets in 2004 to back his demand for a general election. The vote was held in January 2005.

NKorea snubs South’s proposal for talks

AFP, Seoul

North Korea on Saturday rejected South Korea's proposal for talks as mere "wordplay" and insisted Seoul should first scrap military exercises.

South Korea called this week for talks with North Korea to ease worsening tensions after the North ratcheted up the pressure on Seoul with a vow to close their common border.

The proposal for dialogue is "nothing more than wordplay" to avoid responsibility for aggravating relations, Rodong Sinmun, the North's ruling party newspaper, said in a commentary.

South Korea should first stop its "provocative" war games, which aggravated inter-Korean relations and hurt "the mood of dialogue and peace," it said.

It accused US and South Korean troops of staging joint military exercises on the Korean peninsula in preparation for an invasion.

After months of frosty relations, the North this week announced it would shut the border from December 1 in protest at what it called Seoul's policy of confrontation.

A total border closure would cripple the Seoul-funded Kaesong industrial complex, a joint project built in the North as a symbol of reconciliation.

10 militants killed in eastern Afghanistan

AP, Kabul

A strike by coalition troops against a bomb-making cell in eastern Afghanistan killed 10 militants, the U.S. military said Saturday.

The troops were targeting several key figures in a network run by Jalaluddin Haqqani, a militant leader believed to operate out of Pakistan, the military said in a statement.

Several groups of armed militants fired on the coalition troops during the operation Friday, according to the statement. The coalition forces returned fire, killing their attackers and destroying a weapons cache.

Separately, Afghan police said two national intelligence agents and one police officer were killed late Friday in a bomb attack on their vehicle south of Kabul.

The three were killed while responding to an earlier bomb attack that injured three police officers, said Regional Police Commander Gen. Zalmai Oryakhail.

The U.S. military said those killed in eastern Paktya province were Haqqani militants and foreign fighters known to have planned and conducted bomb attacks on civilians and coalition forces, and to coordinate suicide bombings.

The military has not yet determined whether any of the targeted leaders were among those killed, said U.S. Army spokeswoman Master Sgt. Melissa Rolan.

The United States once considered Jalaluddin Haqqani a "freedom fighter" against the former Soviet Union but he and his son Sirajuddin are now seen as closely associated with the Taliban.

Suicide attacks have been one of the Taliban's preferred tactics in their attacks against Afghan and foreign troops. Most of the victims of such attacks have been civilians.

On Friday, an Afghan official said suspected Taliban militants had killed a religious leader in the west after he criticized the use of suicide attacks.

Shamsudin Agha was kidnapped Tuesday, days after he condemned the use of suicide attacks, provincial police chief Abdul Ghafar Watandar said. Authorities recovered his body Wednesday.

Sri Lanka army seizes entire west coast

Reuters, Colombo

Sri Lanka's military said troops seized the entire western coast of the Indian Ocean island Saturday, capturing the key Pooneryn area where Tamil Tiger rebel artillery had kept soldiers at bay since 1993.

With the military controlling Pooneryn, a strategic spit of land that runs parallel to the neck of the northern Jaffna Peninsula across a narrow lagoon, it will be in a position to strike the rebel capital of Kilinochchi from three sides. In one of Asia's longest-running insurgencies, at least 70,000 people have been killed in Sri Lanka since 1983.

"We have completely taken over Pooneryn. We have gone up to the town, and control the roads from Pooneryn to Paranthan," military spokesman Brigadier Udaya Nanayakkara said.

The Defense Ministry said troops had encountered stiff resistance as they fought through marshlands south of Pooneryn and across the Paranthan junction overnight.

The Liberation Tigers of Tamil Eelam (LTTE) had no immediate comment.

Previously, the LTTE had used heavy artillery to prevent two army divisions garrisoned on Jaffna, in army hands since 1995, from moving south to Kilinochchi.

"We didn't find any artillery, because they must have taken those pieces away or hidden them," Nanayakkara said. Saturday's capture came after months of heavy fighting on the west coast.

The announcement also coincided with the second reading of Rajapaksa's proposed 2009 budget in parliament, which includes record defense spending of 177.06 billion rupees ($1.61 billion).

Control of Pooneryn means that, for the first time since 1993, the government controls a land route all the way to a ferry that can easily bring supplies to Jaffna.

It will also ease military supply lines while cutting off the Tigers, Colombo-based defense analyst Iqbal Athas said.

"From their secret bases in Tamil Nadu, the Tigers will not be able to bring war material into the western coast," Athas said, referring to the nearby Tamil-majority state across the Palk Strait in India.

Athas said it foreshadowed a brutal battle for Kilinochchi, the capture of which would give the military strategic and morale gains while energizing Rajapaksa's political base.

"Capturing Pooneryn is very significant, but now they have a more responsible task of securing the areas captured," he said. "The rebels are throwing all they have to secure Kilinochchi."

Sarkozy urges US, Russian missile freeze

Reuters, Nice

French President Nicolas Sarkozy said he won Russian backing on Friday for talks on security in Europe next year and urged a freeze in missile deployments by Moscow and the United States until then.

His call was immediately questioned by the Czech Republic, which is due to host a tracking radar as part of a U.S. missile shield in eastern Europe that has angered Moscow. It said he had no mandate to make such remarks.

Speaking after an EU-Russia summit, Sarkozy said he voiced concerns about Russian President Dmitry Medvedev's threat to deploy missiles in an enclave near Poland in response to U.S. plans for an anti-missile shield in Europe. "I indicated to President Medvedev how concerned we were about this declaration and how there should be no deployment in any enclave until we have discussed new geopolitical conditions for pan-European security," Sarkozy told a news conference. "As president of the European Union, I proposed that in mid-2009 we meet t to lay down the foundation for what could be the future of European security," he said.

Space shuttle Endeavour races toward space station

Agency

Space shuttle Endeavour raced toward the international space station on Saturday for a home makeover job after a brilliant moonlit launch that had NASA managers in awe.

The shuttle and its seven astronauts blasted into orbit Friday night on a mission to redo the insides of the space station, adding some extra bedrooms and a spare bathroom and kitchenette.

"It's our turn to take home improvement to a new level after 10 years of international space station construction," commander Christopher Ferguson called out.

Ferguson and his crew will double as plumbers and installers once they arrive at the 220-mile-high space station Sunday, hooking up extra cooking and sleeping equipment as well as a new water recycling system so the station's crew can expand next year.

The work will keep the astronauts up over Thanksgiving; NASA expects to add a 16th day to the mission, thanks to the on-time launch.

"Very few things that we do beat a night launch like you saw tonight," said LeRoy Cain, chairman of the mission management team. "We're off to a great start on what's going to be an extremely exciting, very complex and challenging mission."

NASA almost delayed the launch because of a door frame left loose at the pad by a worker who promptly admitted his mistake. Launch controllers determined the flapping frame would not hit the shuttle.