Wednesday, September 1, 2010

Bernanke testifying to crisis inquiry panel AP

WASHINGTON Federal Reserve Chairman Ben Bernanke is set to appear before a panel investigating the financial crisis to give his take on the meltdown and his views on potential systemwide risks posed by large financial institutions.

Bernanke led the economy through the tumultuous months of the most severe recession since the 1930s, as the Federal Reserve took extraordinary measures to inject hundreds of billions into the battered financial system.

And he said last week the central bank is prepared to make a major new investment in government debt or mortgage securities if the economy worsened significantly or if the Fed detected deflation � a prolonged drop in prices of wages, goods and assets like homes and stocks.

Bernankes scheduled appearance Thursday at a hearing by the Financial Crisis Inquiry Commission comes as the congressionally appointed panel approaches the end of its yearlong investigation of the roots of the economic disaster. Sheila Bair, the chairman of the Federal Deposit Insurance Corp., also is testifying before the panel.

At a session Wednesday the commission examined the danger of having banks deemed "too big to fail" and their potential to topple the financial system. The former chief of Lehman Brothers, Richard S. Fuld Jr., testified that the Wall Street titan could have been rescued in the fall of 2008, but federal regulators refused to help � even though they later bailed out other big banks.

Panel chairman Phil Angelides said there appeared to be "a conscious policy decision" by the regulators not to rescue Lehman.

Under the landmark financial overhaul law enacted in July, regulators are empowered to shut down financial institutions whose collapse could threaten the system.

Bernanke has said that a key lesson learned from the crisis is that the Fed cant focus solely on the soundness of individual banks, and must cast a watchful eye on the health of the financial system as a whole. The central bank already has moved to conduct bank examinations that take a broader-picture approach, he says.

Bernanke could be asked by panel members about the Feds handling of the Lehman Brothers episode and Fulds accusations. Thomas Baxter, general counsel of the New York Fed, insisted at Wednesdays hearing that the Fed lacked the legal authority to provide a government guarantee of Lehmans obligations to its trading partners or other aid the firm sought. Hundreds of billions worth of collateral would have been needed to secure a guarantee of that magnitude, and Lehman didnt have it, Baxter said.

Bair, the FDIC chief, has been one of the most vocal critics of the "too big to fail" approach that brought the government rushing in to bail out big banks in the crisis.

"Never again should taxpayers be asked to bail out a failing financial firm," Bair told community bankers in a speech in March. "Its time that the big players understand that they sink or swim on their own."

Bair took on a high profile and gained popularity outside Washington early in the crisis, as she pressed for more government intervention to help struggling homeowners. That opened a rift with then-President George W. Bushs treasury secretary, Henry Paulson.



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Calderon: Mexico shows gains in security, economy AP

MEXICO CITY President Felipe Calderon delivered his latest "state of the nation" report to Congress on Wednesday, saying Mexico has made gains in security and is enjoying its strongest economic growth in a dozen years.

The report came days after Calderon conceded there has been a surge in drug-related violence and said he was willing to discuss changes in his strategy for fighting the countrys brutal drug cartels.

He planned to deliver an address on the report Thursday.

"There is still room for improvement, but the indicator shows a positive trend in recent years," the document said.

Discussing security matters, the report said police and troops killed two dangerous drug lords and arrested five others in the past 12 months. The most recent came this week, when federal police captured U.S.-born Edgar Valdez Villarreal, an alleged drug hit man who prosecutors say became a major trafficker.

Calderons report also said authorities made 34,515 drug-related arrests in the past year and confiscated more than 34,000 weapons, 2.7 million bullets, 2,500 grenades, 12,000 vehicles, 60 boats, 76 aircraft and $72 million and 133 million pesos in cash.

It added that 12 billion doses of drugs had been captured, "representing more than 2,517 million dollars in losses for the drug cartels."

Calderons report said the economy has returned "to the path of growth," with the gross domestic product growing at an annual rate of 4.3 percent in the first quarter of 2010 and 7.6 percent in the second quarter � the highest in the 12 years.

Foreign direct investment totaled $12.2 billion during the first half of 2010, a gain of 23 percent from the same period in 2009.

This version CORRECTS value of captured drugs to 2,517 million dollars, instead of 2.517 million.



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Government controls message on rescue timeline AP

SAN JOSE MINE, Chile Chilean President Sebastian Pinera said Wednesday he hopes 33 miners trapped nearly a half-mile underground will be home by Christmas � a lengthy rescue timeline that doesnt square with experts shorter estimates but could reflect a political strategy aimed at avoiding unmet expectations.

The mine disaster, which began with an underground collapse Aug. 5 and captured the worlds attention when the men were found alive 17 days later, presents both huge opportunities and risks for the billionaire-turned-politician who took office earlier this year.

"Pinera is gambling his presidency on this accident," said Patricio Navia, a professor of Latin American studies at New York University. "Of course, he has to get them out now. It would be impossible for him to govern if the rescue operation fails."

Officials at all levels, from the mining minister to Pinera, have vigorously rejected shorter rescue timelines. But when discussing their own projections, they add that they also are "exploring other options," an apparent acknowledgment it could happen faster than they are saying.

In his speech Wednesday, Pinera said there is no chance the miners will be freed by Chiles independence day celebrations, which begin Sept. 18, but added that the government is doing all it can "so we can celebrate Christmas and New Years" with them.

While no one claims the men could be rescued in weeks, the governments timeline is extremely conservative � twice as long as it should take, experts say.

"Four months? Never," Eduardo Hurtado, a geologist on the team that drilled the first bore hole to make contact with the miners, told The Associated Press in a telephone interview. "If there are no major mechanical problems, this can be done in two months, three at the most."

The deep-drilling teams recent experience carving a total of three bore holes to communicate with and deliver food to the miners will give it a head start, while any mechanical problems that come up with the drills can probably be solved in six hours or less, Hurtado said. The government has said its working 24 hours a day.

Pineras handling of the rescue timeline is in step with his emerging form of governance: Manage expectations, stay in front of the issues � and cameras � and control the message.

Pineras team even managed the stunning news that the miners had been found alive Aug. 22.

After rescuers first made contact with the miners, word quickly spread to their waiting families, who were seen on live television cheering, crying and hugging each other. Then a mining ministry official appeared, telling them it wasnt official � they would have to wait for confirmation. Minutes went by until Pinera arrived from the capital to personally read the miners thrilling note before the cameras: "We are all well in the shelter, the 33."

Constanza Cea, a top Pinera adviser, said there are no political motives behind the governments rescue estimates.

"We havent promised any particular date in consideration of the effect that this could have on the miners and their families," Cea said. "There has been no manipulation of dates."

Thus far, Chileans appear to agree with Pineras handling of the mining catastrophe.

Fifty-six percent of Chileans approved of Pineras government in August, according to an Adimark poll released Wednesday, up from 46 percent in July. The approval rating jumped to 65 percent when the independent polling company only took into account those interviews done after the miners were discovered to be alive. Pollsters interviewed 1,315 Chileans by phone. The margin of error was plus or minus 3 percentage points.

If officials estimate four months for the rescue and it only takes two, its a major win for a government that has already been criticized for apparent lax safety regulations in mines. Pinera fired top mine regulators and launched a commission to investigate the Aug. 5 collapse.

Conversely, if the government estimated a two-month timeframe and it took longer, it could be a blow to Pineras image of efficiency, a central pillar of his campaign last year.

The Chilean leader may have learned something from President Barack Obama, who expressed optimistic timelines for plugging a broken oil well in the Gulf of Mexico only to see them unmet.

Workers with Chiles state-owned Codelco mining company began heavy drilling Tuesday, and the Strata 950 drill they are using clearly has the capacity to do the job faster.

The drill, owned by South African engineering company Murray & Roberts, is capable of advancing about 100 feet 30 meters a day during the drilling of an initial "pilot" hole, Murray & Roberts spokesman Eduard Jardim told the AP in an e-mail.

When it is time to widen the pilot hole, the drill will slow down to about 33 to 50 feet 10 to 15 meters a day, Jardim said.

According to those estimates, it would take from about 10 weeks to three months to get the miners out, not taking into account any possible technical problems.

A potentially faster method is "Plan B," which calls for using a huge Schramm T-130 drill to enlarge one of the three bore holes that already have been opened.

First the hole would have to be widened from about 6 inches to 12 inches 15 to 30 centimeters, a two-week process. A second round of drilling could enlarge it to more than 28 inches 70 centimeters needed to pull the miners out one by one.

Walter Herrera, a top official at Geotec, the Chilean company providing the Schramm T-130, told reporters that the work could be done in two months, a timeline later rejected by Mining Minister Laurence Golborne.

On Tuesday, a Geotec official told the AP that the Chilean government had asked the company not to make statements to the news media, and referred queries to the mining ministry.

Even the geologists who have offered faster rescue timelines acknowledge that technical problems with either drill could slow the process: breaking drill bits, hitting water, running into areas of extremely strong rock.

Indeed, La Tercera newspaper reported late Wednesday that the dtill had to temporarily stop because of technical problems related to the walls of the hole its carving. The problems began about 66 feet 20 meters down and would likely sideline the drill for at least a few hours, the paper said.

"In reality, nobody can say exactly how long it will take," said Walter Veliz Araya, the geologist in charge of drilling the first three bore holes. "As the drilling proceeds, theyll be better able to estimate."

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Associated Press Writer Eva Vergara contributed to this report.



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US forces still in fight at end of combat mission AP

HAWIJA, Iraq Even as President Barack Obama was announcing the end of combat in Iraq, American soldiers were sealing off a northern village early Wednesday as their Iraqi partners raided houses and arrested dozens of suspected insurgents.

While the Obama administration has dramatically reduced the number of troops and rebranded the mission, the operation in Hawija was a reminder that U.S. forces are still engaged in hunting down and killing al-Qaida militants � and could still have to defend themselves against attacks.

That reality was front and center at a change-of-command ceremony in one of Saddam Husseins former palaces outside Baghdad that the American military now uses as its headquarters. Officials warned of a tough road ahead as the U.S. moves into the final phase of the 7 1/2-year war.

Of paramount concern is Iraqi leaders continued bickering, six months after parliamentary elections, over forming a new government � a political impasse that could further endanger stability and fuel a diminished but still dangerous insurgency.

"Iraq still faces a hostile enemy who is determined to hinder progress," Gen. Lloyd Austin, the newly installed commander of the just under 50,000 U.S. troops still in Iraq, told the swelling crowd that was clad in military fatigues and political suits. "Make no mistake, our military forces here and those of the Iraqi nation remain committed to ensuring that our friends in Iraq succeed."

Vice President Joe Biden presided over the gathering at al-Faw palace, Saddams gaudy former hunting lodge replete with fake marble walls and a huge chandelier made of recycled plastic.

The remaining U.S. forces in Iraq would be "as combat ready, if need be, as any in our military," Biden said, flanked by Defense Secretary Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen for the 75-minute ceremony, which also changed the U.S. missions name from "Operation Iraqi Freedom" to "Operation New Dawn."

Three years ago, about 170,000 U.S. troops were in Iraq. Of those who remain, fewer than 10 percent � or 4,500 � are special forces who will regularly go on raids and capture terrorists, albeit alongside Iraqi troops.

Obama ordered the end of combat missions by Aug. 31 in a step toward a full withdrawal of American forces by the end of next year that was mandated in a U.S.-Iraqi security agreement.

Violence also has declined dramatically since early 2007, when the Pentagon poured tens of thousands more troops into Iraq over a matter of months to quell a Sunni insurgency that had lured the country to the brink of civil war. Additionally, a Sunni revolt against al-Qaida in Iraq and a Shiite militia cease-fire have helped tamp down attacks, although bombings and shootings across Iraq continue on a near-daily basis.

But Iraqi forces are heavily dependent on U.S. firepower, along with helicopters, spy data and other key tools for combating terrorists that they wont be able to supply on their own for years to come.

"Every soldier I have knows that fighting is not over because there are groups here that still want to hurt us," Maj. Gen. Tony Cucolo, commander of U.S. troops in Iraqs volatile north, told The Associated Press recently. "But clearly combat operations is not in our mission statement."

In Hawija, once a hub for Sunni militants and Saddams disaffected allies located 150 miles north of Baghdad, roughly 80 U.S. soldiers teamed up with more than 1,000 Iraqis to arrest about 60 terror suspects in the early morning raid Wednesday.

From checkpoints and command centers to helicopters hovering overhead, the Americans were on hand at the request of Iraqi police. But it was the Iraqis who went into houses and arrested suspected insurgents � including two considered high-value targets � while the U.S. watched the operation from afar.

Hours before the raids, Lt. Col. Andy Ulrich gave his soldiers a pep talk to counter concerns they werent on a worthwhile mission.

"You all are combat troops not doing a combat mission, although it looks smells and feels and hurts a lot like combat," Ulrich said.

"Dont worry about what the politicians are saying because we have a mission," he added. "The bad part is, we cant go kicking the doors ourselves and get these guys. Weve got to kind of convince Iraqis to do it, but the good part is, theyre kind of willing to do it."

Iraqi forces across Baghdad appeared to be on heightened alert, aiming to reassure the populace and ward off insurgent attacks to coincide with the change in command.

Intelligence officials had warned al-Qaida in Iraq might use the U.S. militarys shifting mission to launch suicide bombings around the capital in the days leading up to Wednesdays ceremony. However, the day was relatively quiet, except for a roadside bomb in eastern Baghdad that police said killed one person.

At the Baghdad ceremony, Gen. Ray Odierno, the outgoing commander, formally ended his nearly five-year tour in Iraq on a reflective note.

"This period in Iraqs history will probably be remembered for sacrifice, resilience and change," Odierno said. "However, I remember it as a time in which the Iraqi people stood up against tyranny, terrorism and extremism, and decided to determine their own destiny as a people and as a democratic state."

Then, wistfully using his military call sign one last time, Odierno ended his remarks: "Lion 6 � out."

Obama ordered the refocusing of the U.S. mission last year to fulfill a campaign promise of ending what he once termed "a dumb war" and one that Gates acknowledged Wednesday was launched without justification. In an address Tuesday night Obama announced the end of American combat, but made clear that this was no victory celebration.

"Of course, violence will not end with our combat mission," the president said.

Defining the front lines in a war where soldiers who are attacked while delivering supplies could just as easily return fire as Marines while on a raid to round up suspected insurgents has never been easy. Some of the key ongoing threats to the safety of American forces are the same as theyve always been: rockets, mortars and roadside bombs.

U.S. military officials have said Iranian-backed militias are stepping up their attacks against targets in Baghdad, trying to make it look like theyre driving out the Americans. Since arriving in Iraq, the battalion taking part in the Hawija raids has been hit by rocket and grenade attacks on their patrols and on their base almost every other day.

In the western Iraqi city of Ramadi before the ceremony, Gates told reporters the U.S. would consider keeping some military forces in place past next year, if the Iraqi government requests it.

Asked whether the U.S. was still at war in Iraq, Gates answered succinctly, "I would say we are not."

He was less definitive about whether the 7 1/2-year war was worthwhile. More than 4,400 American troops and an estimated 100,000 Iraqis have been killed since the 2003 invasion, and billions of dollars have been poured into the war effort.

Claiming that Saddam had weapons of mass destruction, then-President George W. Bush ordered the invasion with approval of a Congress still reeling from the 9/11 attacks. Bushs claims were based on faulty intelligence, and the weapons were never found.

"The problem with this war, I think, for many Americans, is that the premise on which we justified going to war turned out not to be valid," Gates said. "Even if the outcome is a good one from the standpoint of the United States, itll always be clouded by how it began."

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Jakes reported from Baghdad and Alleruzzo from Hawija. AP National Security Correspondent Anne Gearan in Ramadi and AP writers Barbara Surk and Rebecca Santana in Baghdad contributed to this report.



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China requires ID to buy mobile phone numbers AP

BEIJING China wants people who buy new cell phone numbers to register their personal details, joining many European and Asian countries in curbing the anonymous use of mobile technology.

Most countries that have such rules say they prevent the use of unregistered phones in terror attacks or drug crimes. In China, authorities say they have their sights on rampant junk messages � but some believe the government will use the new tool for monitoring its citizens.

The regulation was "the latest campaign by the government to curb the global scourge of spam, pornographic messages and fraud on cellular phones," the China Daily newspaper reported. The rules that started Wednesday apply to everyone, including foreigners on short visits.

Similar rules have been implemented in several Asian, European and Latin American countries, often after phones were used to detonate bombs, organize terrorist attacks or conduct criminal activities. Federal legislation has been introduced in the United States, where prepaid phones have long been used by drug dealers. In many places, however, the rules are easily skirted with fake IDs or false names.

But human rights advocates say China might be looking for a way to track people who spontaneously join protests. Users could previously buy low-cost mobile phone SIM cards anonymously with cash at convenience stores and newspaper stands and use them right away.

"I think the government has an eye on Iran where protests were fueled by text messages and Twitter and they are doing this for social stability reasons," said Wang Songlian, research coordinator with the Hong Kong-based Chinese Human Rights Defenders.

She added that the new requirement fits a pattern of tightening government control over new communication technologies.

China censors Internet content it deems politically sensitive and blocks many websites, including Twitter, Facebook and YouTube. Following ethnic riots in far western Chinas Xinjiang region, international phone service and the Internet in the region were suspended for months.

The new regulation probably wont impact Chinese dissidents, many of whom already have their phones closely monitored, but it could help police track down ordinary people who take part in protests, Wang said. China has seen a growing number of protests sparked by labor disagreements, anger over pollution or other issues.

The ID requirement is also raising new privacy concerns and will likely upset some customers unwilling to give personal information to vendors and telecom companies for fear it will be resold, said Duncan Clark, managing director of BDA China Ltd., a technology market research firm.

China has more than 800 million mobile phone numbers already in use. The Global Times newspaper reported Wednesday that about 320 million of those were purchased without real-name registration. They will have to be reregistered by 2013 or could be suspended, it said.

China Unicom, one of the countrys three major state-owned phone carriers, issued a notice on its website on Aug. 20 saying that the Ministry of Industry and Information Technology had informed them that real-name registration would be required for all new telephone number purchases starting Sept. 1.

China Mobile � the worlds biggest phone carrier by subscribers � was also complying with the directive, said a customer service representative who would only give his surname, Zhang.

The Ministry of Industry and Information Technology did not respond to questions about the new rules and a man who answered the phone at the ministrys press office refused to comment.

At a newspaper stand in downtown Beijing where SIM cards are sold, a 24-year-old officer worker said she read about the new regulations Wednesday morning on her mobile phone and supports the move.

"I hope it will help crack down on spam," Wu Xi said. "It wont be a problem if I have to show my ID."

Chen Haimin, the owner of a Beijing convenience store, said he was still selling cards without personal information and he was doubtful that the new scheme would put an end to junk mail.

"How do you know if people are even showing their real ID?" he said. "People who want to send spam can always come up with ideas to get around the regulations. Besides, its not hard to get a fake ID."

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Associated Press researchers Yu Bing, Xi Yue and Zhao Liang contributed to this report.



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Afghan refugees forced to start over after floods AP

AZAKHEL, Pakistan After fleeing the Soviet invasion of his country with nothing, Afghan refugee Ziarat Gul spent three decades building a new life in neighboring Pakistan.

After the devastating floods that rolled across Pakistan last month, he is back to nothing.

Gul and tens of thousands of other Afghan refugees here are struggling to recover from a double tragedy, seeing their homes across the border engulfed by war and then their refugee camps here demolished by floods.

"Again, I am left with only the clothes I am wearing," the 60-year-old said.

The floods, which swamped wide swathes of the country and left 8 million people in need of aid, will hammer Pakistans economy and lead to "massive" job losses, Prime Minister Yousuf Raza Gilani said Wednesday, predicting a grim couple of years for the already fragile country.

One-fifth of the countrys irrigation infrastructure, livestock and crops were destroyed, and the reduction in agriculture will snowball into other parts of the economy, he told his Cabinet. Economic growth would drop to 2.5 percent in 2011 down from a predicted 4.5 percent this year, and inflation predicted to hit 9.5 percent next year would likely be in the range of 15 percent to 20 percent instead, he said.

The situation is particularly grim for Gul and the 23,000 other residents of the Azakhel refugee camp, 95 miles 150 kilometers from the capital, Islamabad.

All of their homes, made of mud and loose brick, are gone. Unable to open bank accounts because of their refugee status, they kept their cash savings in their houses. Much of that disappeared as well, with the refugees accusing neighboring villagers of looting it.

Gul, who lived with his extended family of 22 people, kept 200,000 rupees $2,300 as well as jewelry in a wooden box in a cupboard. Now, he cant even find the cupboard.

"Everything vanished," he said.

Gul originally came here 33 years ago, walking for 24 hours over the mountains with 10,000 others to flee the Soviets who invaded his village in Logar province. He worked as a scrap dealer until he was forced to retire six years ago after a car accident.

Now, his life savings is the 200 rupees he was given by a local charity. A tarp stretched between trees is his home.

Nearly 70,000 Afghan refugees in 13 camps were affected by the floods, said Ariane Rummery, a spokeswoman for the U.N. refugee agency. Many refugees complain that they have not yet received any aid; Rummery said the agency has sent tents, tarps and mosquito nets to the refugees, but has yet to reach everyone.

The scene in Azakhel, the largest of the destroyed camps, is a testament to the ferocity of the floodwaters that overflowed the rivers rushing down from the mountainous northwest last month.

A brick frame and its wooden door stand alone as the only remnant of one house. A man points underfoot to where a mud and straw roof has melted into the earth. Mounds of crushed bricks and twisted steel are strewn everywhere, along with bundles of matted hay that had been intended to feed the refugees now dead livestock. The thick smell of rot, mold and sewage sticks in the hot, humid air.

Only the mosques, made of concrete, stand undamaged.

The refugee agency is looking to move the residents to other camps while they rebuild the homes, roads, drainage systems, schools and health centers, Rummery said.

"It needs to be rehabilitated and weve had our engineers there looking at what needs to be done," she said.

In the meantime, the residents have found refuge in nearby schools, been taken in by local Pakistanis or are living out in the open. The few who have managed to scrape together some money, like Umer Khan, 45, are able to rent rooms.

Khan, who fled Afghanistan as a child, managed to turn a job selling fruit off a cart into a thriving grocery store.

"We were a well-to-do family here," he said.

The flood destroyed 300,000 rupees worth of mangoes, rice and flour from his shop, one of the few structures left standing amid the rubble and craters of what was once the village bazaar. He lost another 400,000 rupees in jewelry and cash from his home, he said.

"My 32 years of hard work vanished in two hours," he said.

He has managed to recover some money by selling three freezers and a refrigerator destroyed in the flood for scrap.

Other residents gather here everyday to sift through the remnants of their lives for rusted metal to sell to scrap dealers, who have hung scales from trees outside the camp.

"Now, we are back where we were when we left Afghanistan," said Lal Marjan, a 44-year-old brick kiln worker. "We dont have any home, we dont have any jobs, we dont have any money. I dont have any resources to rebuild a home. Its all up to the government."

Amid the flood devastation, more than 200 families from the camp have returned to Afghanistan, Rummery said.

Marjan said he had no choice but to stay.

"What can I do there? I dont have money to buy land in my country. Whatever we had there was gone," he said.



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Official: 3 bombs kill 25 at Pakistan Shiite march AP

LAHORE, Pakistan Three bombs ripped through a Shiite Muslim religious procession in the eastern Pakistani city of Lahore on Wednesday, killing 25 people and wounding about 150 others, officials said.

The explosions appeared to be the latest in a string of attacks by Sunni extremists against the minority Shiites they consider infidels. Allied with al-Qaida and the Taliban, the bombers are also seeking to destabilize Pakistans U.S.-backed government.

The blasts were the first major attacks since Pakistan was hit by devastating floods more than a month ago. Lahore, the countrys political capital and home to much of its military elite, has been regularly targeted by militants over the past two years.

The bombs exploded at three separate sites Wednesday evening as 35,000 Shiites marched through the streets of Lahore in their traditional mourning procession for the caliph Ali, one of Shiite Islams most respected holy men.

Prime Minister Yousuf Raza Gilani condemned the blasts in a statement and said the attackers would not escape justice.

After the blasts, the marchers erupted in fury, setting fire to a police station, another police facility, two police cars and three motorcycles, said Zulfiqar Hameed, a senior police officer. Police lobbed tear gas canisters at the crowd and fired shots in the air to disperse the assailants, he said.

The first blast was a time bomb that exploded in the street near a well-known Shiite building, Hameed said. Footage of that explosion shown on Geo television showed a small blast erupting amid a crowd of people on the street followed by a large plume of smoke. Hundreds of people fled from the blast, while others rushed to carry the wounded to safety.

Minutes later, with the streets in chaos, a male suicide bomber who appeared about 18 years old tried to force his way into an area where food was being prepared for the marchers to break the traditional Ramadan fast and exploded, Hameed said. Soon after, another suicide bomber detonated himself at an intersection near the end of the procession.

Abbas Kumaili, a prominent Shiite scholar as well as a senator, called for three days of mourning over the attack and lashed out at the bombers.

"They are our enemies, both Shiites and Sunnis should remain united and foil their evil designs," he said.

The blasts killed 25 people and wounded about 150 others, said Sajjad Bhutta, a top local government official.

Hours earlier, three people were wounded in a shooting near a similar Shiite procession in the southern city of Karachi, but senior police officer Iqbal Mahmood said the incident did not target the march.

Islamist extremists have a history of attacking Shiites, non-Muslims and others they deem unacceptable.

In July, twin suicide attacks at Pakistans most popular Sufi shrine killed 42 people. Another suicide bomber wounded eight worshippers at a Shiite mosque in eastern Pakistan.

Meanwhile, a bomb exploded near a police vehicle in the town of Shabqadar in northwest Pakistan, killing one passer-by and wounding 15 people including one police officer, police officer Nisar Khan said.

The bombings came after Pakistan army jets and helicopters targeted militant hide-outs near the Afghan border, killing 60 people identified as insurgents or their family members, including children, said security officials and a witness.

The attacks occurred Tuesday and Wednesday in different parts of the region.

There was no independent confirmation of the casualty figures because the area is too dangerous for outsiders to visit.

The raids Tuesday took place in several villages in Teerah Valley in the Khyber region and killed 45 people, the officials said. One official said some vehicles rigged with explosives had also been destroyed. He could not say how many.

He described the dead as insurgents, but said it was possible that people living with them could also have been killed. Separately, an intelligence officer said some women and children had been killed in the attacks.

Jihad Gul, who lives near one of the villages, said he had seen the bodies of at least 20 women and children.

Army spokesman Maj. Gen. Athar Abbas said reports of civilian casualties were unconfirmed.

The security officials spoke on condition of anonymity because they were not authorized to speak to the media.

An air attack Wednesday in the adjoining district of Orakzai killed 15 suspected militants and wounded 10 others, according to local government official Jamil Khan and a brief army statement.

Pakistans army has been fighting Islamist militants in different parts of the northwest for more than two years.

Militants who fled major operations in the South Waziristan and Orakzai tribal regions are believed to have set up new bases in Khyber, about 60 miles 100 kilometers northwest of the main city in the region, Peshawar.

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Associated Press Writers Hussain Afzal in Parachinar and Riaz Khan in Peshawar contributed to this report.



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Mexico confirms 2nd migrant survived massacre AP

MEXICO CITY A second migrant survived the massacre of 72 Central and South Americans near the border with the U.S., Mexican authorities confirmed Wednesday, and they said he has given information that helped their investigation.

Authorities had kept secret the information about the other survivor, a Honduran, to protect him, said a spokesman for the Attorney Generals Office, Ricardo Najera.

As of Tuesday, the only survivor known publicly was Luis Freddy Lala Pomavilla, an 18-year-old Ecuadorean who escaped and alerted Mexican marines. They found the bodies Aug. 24 on a ranch in Tamaulipas state just about 100 miles 161 kilometers from the Texas border.

But Ecuadorean President Rafael Correa said Tuesday that Lala told authorities there was another survivor. Lala returned to his country over the weekend and is in a witness protection program.

Lala, who was wounded in the neck, told Mexican investigators the migrants were detained by people who identified themselves as Zetas, a drug gang that dominates parts of Tamaulipas. The victims in what could be Mexicos biggest drug-related massacre were apprehended while crossing some of the countrys most dangerous territory on the way to the U.S.

Authorities suspect the Zetas drug gang killed the migrants after they refused to smuggle drugs.

Najera said the second survivor was uninjured, is in the custody of authorities and has offered "important information" about the massacre. Najera did not say how the witness escaped the massacre or where he is.

The Mexican foreign ministry also said Wednesday that the bodies of 16 Hondurans killed in the massacre had been returned to their home country � the first remains to be repatriated.

Besides the Hondurans, authorities so far have identified 13 Salvadorans, five Guatemalans and a Brazilian among the massacre victims.

Meanwhile, Honduran Foreign Minister Mario Canahuati called Correa "irresponsible" Wednesday for revealing there was another survivor.

"His situation is extremely delicate," Canahuati said of the Honduran. "Weve spoken to him ... he says he is at great risk and in fear of his life.

"We regret the president of Ecuador gave out this information irresponsibly and didnt take into account the risk to the Hondurans life."

Meanwhile, a truck carrying the bodies of the 56 unidentified victims from Tamaulipcas to Mexico City for further forensic tests crashed into a parked car Wednesday just before it reached the capitals morgue, the Attorney Generals Office said.

A pedestrian who got trapped between the two vehicles was injured, but the remains were not damaged and were delivered to the morgue, the agency said.

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Associated Press Writer Freddy Cuevas in Tegucigalpa, Honduras, contributed to this report.



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Obama cautiously hopeful as Mideast talks begin AP

WASHINGTON President Barack Obama convened the first direct Israeli-Palestinian talks in two years Wednesday, challenging Mideast leaders to seize a fleeting opportunity to settle their differences and deliver peace to a region haunted by decades of hostility.

"I am hopeful, cautiously hopeful, but hopeful," Obama said with the leaders of Jordan, Egypt, Israel and the Palestinians beside him in the crowded East Room of the White House. Earlier Obama had met with each individually, and they gathered afterward for dinner.

Shadowed by fresh violence in the region, the leaders solemnly commenced the talks aimed at creating a sovereign Palestinian state beside a secure Israel.

"Do we have the wisdom and the courage to walk the path of peace?" Obama asked.

In turn, each of the leaders answered positively but with qualifications. And they spoke of hopes for a breakthrough within the one-year timeframe prescribed by Obama.

Israeli Prime Minister Benjamin Netanyahu said his nation desires a lasting peace, not an interlude between wars. He called Palestinian President Mahmoud Abbas "my partner in peace," and said, "Everybody loses if there is no peace."

Abbas urged Israel to freeze settlement construction in areas the Palestinians want as part of their new state, and to end its blockade of Gaza, which is controlled by the militant Hamas movement. The settlements issue is a central obstacle to achieving a permanent peace.

"We will spare no effort and we will work diligently and tirelessly to ensure these negotiations achieve their cause," Abbas said, as translated into English.

With the Israelis and Palestinians far apart on key issues, expectations for the Washington talks are low, yet the stakes are high.

The Israeli-Palestinian conflict is a constant source of grievance and unrest in the Muslim world. The failure of past peace efforts has left both sides with rigid demands and public ambivalence about the value of a negotiated settlement.

American officials are hopeful they can at least get the two sides this week to agree to a second round of talks, likely to be held in the second week of September. That could be followed by another meeting between Obama, Netanyahu and Abbas on the sidelines of the U.N. General Assembly near the end of the month in New York.

Said Jordans King Abdullah II: "Mr. President, we need your support as a mediator, honest broker and a partner. If hopes are disappointed again, the price of failure will be too high for all."

Each of the leaders pledged to work diligently toward peace, but they also made plain that their own national interests must be satisfied.

"We do not seek a temporary respite between outbursts of terror," said Netanyahu. And he stressed the central importance of security assurances for the Jewish state as part of any land-for-peace agreement with the Palestinians.

"We left Lebanon, we got terror. We left Gaza, we got terror. We want to ensure that territory we concede will not be turned into a third Iranian-sponsored terror enclave aimed at the heart of Israel," Netanyahu said. Peace, he added, must "end the conflict between us once and for all."



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Police kill gunman who held 3 at Discovery Channel AP

SILVER SPRING, Md. A man who railed against the Discovery Channels environmental programming for years burst into the companys headquarters with at least one explosive device strapped to his body Wednesday and took three people hostage at gunpoint before police shot him to death, officials said.

The hostages � two Discovery Communications employees and a security guard � were unhurt after the four-hour standoff. Montgomery County Police Chief Thomas Manger said tactical officers moved in after officers monitoring Lee on building security cameras saw him pull out a handgun and point it at a hostage.

An explosive device on the gunmans body detonated when police shot him, Manger said. Police were trying to determine whether two boxes and two backpacks the gunman had also contained explosives.

A law enforcement official speaking on condition of anonymity because the investigation was ongoing said authorities had identified James J. Lee as the likely suspect.

NBC News reported that after its producers called Discoverys general number, a man identifying himself as James J. Lee got on the phone and said he had a gun and several bombs.

"I have several bombs strapped to my body ready to go off. I have a device that if I drop it, if I drop it, it will ... explode," the man told NBC.

He said he built the bombs in about three weeks. "I did a lot of research. I had to experiment," he said.

Manger said the suspect held the hostages in the lobby area of the first floor. Authorities said they will methodically go through the building and identify any suspicious items.

The "building is still a crime scene," Manger said. "We still have work to do."

Manger said police spent several hours negotiating with the armed man after he entered the suburban Washington building about 1 p.m. None of the 1,900 people who work in the building were hurt, and most made it out before the standoff ended.

Lee was convicted of disorderly conduct for a protest he organized outside Discoverys offices in February 2008. According to court records, he paid homeless people to carry signs and set off a scramble for money when he threw fistfuls of cash into the air, calling it "just trash."

Lee served two weeks in jail. County States Attorney John McCarthy said Lee was ordered to stay 500 feet away from Discovery headquarters as part of his probation, which ended two weeks ago. A magistrate ordered a doctors evaluation, but the result was not immediately available Wednesday.

"The Discovery Channel produces many so-called Environmental Programs supposedly there to save the planet," Lee said in an ad he took out in a Washington newspaper to promote the protest. "But the truth is things are getting WORSE Their programs are causing more harm than good."

In court and online, Lee faulted the Discovery Channel for shows as varied as "Future Weapons," "It Takes a Thief" and "Planet Green."

A lengthy posting that could be seen Wednesday on a website registered to Lee said Discovery and its affiliates should stop "encouraging the birth of any more parasitic human infants," a possible reference to shows like "Kate Plus 8" and "19 Kids and Counting." Instead, he said, the network should air "programs encouraging human sterilization and infertility."

Discovery Communications Inc. operates U.S. cable and satellite networks including The Discovery Channel, TLC and Animal Planet. Discovery shows include "Cash Cab" and "Man vs. Wild," and TLC airs "American Chopper" and "Kate Plus 8."

David Leavy, Discoverys executive vice president for corporate affairs, said all employees had been accounted for. "Were relieved that it ended without any harm to our employees," he said.

Melissa Shepard, 32, of Peterborough, N.H., a consultant who works in the building, said she was on the third floor with several other workers when someone announced over a loudspeaker that there was a situation in the lobby and people should stay at their desks.

After some time, they were told to move to the other end of the building. She said she was among a dozen workers who went into an office, shut the door and turned off the lights.

Then she said someone knocked on the door and told them to leave the building. She said there was some confusion as they were told to go to an upper floor or down the stairs.

"Finally, I screamed, Tell us where we need to go ... I just want to get out of there," she said. "I was shaking. ... I was like, What do we do? What do we do?"

Adam Dolan, a sales director in Discoverys education division, said that when he got to the bottom floor he saw shattered glass near the companys day-care center and suspected it was broken to get the children out. He later got an e-mail saying the children were safe and had been taken to a McDonalds.

Dolan said the company has unarmed security guards who wont let anyone into the building without a badge.

Leavy said Discovery hopes and expects to be open Thursday. "The priority is going to be nurturing and responding to employee needs over the coming days as this is a scary event," he said.

Discovery officials are familiar with the suspect and his past protest at the building, Leavy said.

At Lees trial, The Gazette of Montgomery County reported, Lee said he began working to save the planet after being laid off from his job in San Diego.

He said he was inspired by "Ishmael," a novel by environmentalist Daniel Quinn, and by former Vice President Al Gores documentary "An Inconvenient Truth."

Quinn told The Associated Press from his home in Houston that he found out about the standoff in Maryland from the media. Just a few hours later, he said he was feeling "a bit ragged" after getting calls from reporters across the country.

He said he had never heard of Lee and was stunned that Lees manifesto advocated things like human sterilization and an end to farming, ideas Quinn said he would never support.

"He wants to get more exposure ... and he thinks that he can get it ... by occupying Discovery," Quinn said. He added that if he could talk to Lee, he would tell him "hes giving a bad name to the ideas that hes trying to espouse."

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Associated Press Writers Kathleen Miller in Silver Spring; Matthew Barakat in Rockville, Md.; Matt Apuzzo, Eileen Sullivan and Nafeesa Syeed in Washington; Ben Nuckols in Baltimore; Ramit Plushnick-Masti in Houston; and Jacob Jordan in Atlanta contributed to this report.



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Island evacuations start as Earl nears East Coast AP

NAGS HEAD, N.C. Hurricane Earl steamed toward the Eastern Seaboard on Wednesday as communities from North Carolina to New England kept a close eye on the forecast, worried that even a slight shift in the storms predicted offshore track could put millions of people in the most densely populated part of the country in harms way.

Vacationers along North Carolinas dangerously exposed Outer Banks took advantage of the typical picture-perfect day just before a hurricane arrives to pack their cars and flee inland, cutting short their summer just before Labor Day weekend.

The governors of North Carolina, Virginia and Maryland declared states of emergency, sea turtle nests on one beach were scooped up and moved to safety, and the crew of the Navys USS Cole rushed to get home to Norfolk, Va., on Wednesday ahead of the bad weather. The destroyer was supposed to return later this week from a seven-month assignment fighting piracy off Somalia.

Farther up the East Coast, emergency officials urged people to have disaster plans and supplies ready and weighed whether to order evacuations as they watched the latest maps from the National Hurricane Center � namely, the "cone of uncertainty" showing the broad path the storm could take.

Earl was expected to reach the North Carolina coast late Thursday and wheel to the northeast, staying offshore while making its way up the Eastern Seaboard. But forecasters said it could move in closer, perhaps coming ashore in North Carolina, crossing New Yorks Long Island and passing over the Boston metropolitan area and Cape Cod.

That could make the difference between modestly wet and blustery weather on the one hand, and dangerous storm surge, heavy rain and hurricane-force winds on the other.

"Everyone is poised and ready to pull the trigger if Earl turns west, but our hope is that this thing goes out to sea and were all golfing this weekend," said Peter Judge, a spokesman for the Massachusetts Emergency Management Agency.

As of Wednesday afternoon, Earl was a powerful Category 4 hurricane centered more than 680 miles southeast of Cape Hatteras, N.C., with winds of 135 mph.

The only mandatory evacuations were for 30,000 people ordered to leave Hatteras Island on the Outer Banks. Dare County spokeswoman Dorothy Toolan said there was no official notification of the evacuation order, and many residents didnt appear worried.

Nancy Scarborough, who manages the Hatteras Cabanas, said locals are ready to help each other and ride out a hurricane, even if they are cut off from the mainland for days.

"I worry about not being able to get back here" she said. "Id rather be stuck on this side than that side."

About 5,000 tourists were ordered to leave Ocracoke Island to the south, and officials in Carteret County were evacuating low-lying areas. The North Carolina National Guard also is deploying 80 troops to help.

Just a light breeze was stirring and there wasnt a cloud in the sky along the Outer Banks � a ribbon of barrier islands a dozen miles or more off the mainland, connected to the rest of the world by a couple of bridges and a ferry. Along the lone highway, hundreds of cars backed up at one of the bridges.

Brittany Grippaldi and her family took advantage of the good weather to pack up their Ford Explorer in Hatteras and head home to New Jersey.

"Its sad because reality hasnt really set in because it is so beautiful out. Its like, `Oh, I dont want to leave this, but its like the calm before the storm," said Grippaldi, who hoped to beat the traffic.

Chuck Costas also wasnt taking any chances, interrupting his two-week vacation to move inland from the cottage he rented on Nags Head on the Outer Banks. Large waves already crashing ashore uncomfortably close to the home.

"It is what it is," he said. "We have no control over it. If we lose a couple days, its not a huge loss."

Hurricane warnings were posted for most of the North Carolina coast, with a hurricane watch extending to Delaware and part of Massachusetts.

In Virginia, Gov. Bob McDonnell activated the National Guard and sent 200 troops to the Hampton Roads area on Chesapeake Bay. The area was not expected to get the brunt of Earl, but many remember the surprise fury of Hurricane Isabel, which killed 33 people and caused $1.6 billion in damage in September 2003.

"Id rather be safe and get our troops and state police in place by Thursday night," the governor said.

Red Cross officials in New York prepared to open as many as 50 shelters on Long Island that could house up to 60,000 people in an emergency. No evacuations were issued, but officials were going to re-examine the situation Thursday morning.

Emergency officials on Cape Cod braced for their first major storm since Hurricane Bob brought winds of up to 100 mph to coastal New England in August 1991. Marinas encouraged people to take their boats out of the water now instead of waiting for Labor Day.

Also on Wednesday, the seventh tropical storm of the season formed far out in the Atlantic. Tropical Storm Gaston had sustained winds of 40 mph and is expected to strengthen into a hurricane this weekend as it moves toward the Leeward Islands.

Tropical Storm Fiona remained north of the Caribbean with winds of 60 mph and is expected to move toward Bermuda over the next several days.

___

Associated Press Video Journalist Mark Carlson in Hatteras, N.C., along with AP writers Martha Waggoner and Emery Dalesio in Raleigh, N.C.; Tom Breen in Morehead City, N.C.; Bruce Smith in Wilmington, N.C.; Jack Jones and Jeffrey Collins in Columbia, S.C.; Suzette Laboy in Miami; Bob Lewis in Bristol, Va.; Mark Pratt in Boston; Frank Eltman in Southampton, N.Y.; and Bruce Shipkowski in Trenton, N.J., contributed to this report.



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Australian lawmakers reveal $9.7 B hole in pledges AP

CANBERRA, Australia Australias opposition Liberal Party had overstated national savings from their election promises by up to 10.6 billion Australian dollars $9.7 billion, according to official figures released Wednesday by independent lawmakers who are likely to decide which political party forms the next government.

The figures are a major blow to Liberal leader Tony Abbotts bid to become prime minister of Australias first minority government since World War II after Aug. 21 elections failed to deliver any party a majority.

The Liberal Party represents the conservative spectrum in Australian politics, despite its name, and vies for power against the Labor Party.

The three kingmaker nonaligned legislators had requested briefings from Treasury and Finance Ministry bureaucrats on confidential estimates of competing election pledges.

They said the questions of which party had the best economic blueprint, and which might have misled voters were key factors in deciding whether to back a Liberal Party-led coalition or Labor Party government.

The trio released Treasury documents late Wednesday that contradicted Abbotts claim that Australias bottom line would be AU$11.5 billion $10.5 billion better under his conservative coalition.

Treasury found that the improvement could be as little as AU$900 million $820 million.

Independent Tony Windsor said on Thursday he would ask coalition lawmakers to explain the discrepancy before commenting on how it would effect the choice he will make as early as Friday.

"Its not a good thing for the coalition," Windsor told Australian Broadcasting Corp. radio. "Theyre enormous numbers."

The coalition released a statement saying it stood by its projected savings and saying that in government, the coalition could change the way Treasury made its calculations.

Prime Minister Julia Gillard had urged the independents to make public the costings of the coalition and her own Labor Party which has governed for the past three years.

Treasury found that Labor had understated the improvement to the budget position under Labors policies by AU$62 million $56 million.

Deputy Labor leader Wayne Swan told ABC the coalition costings were "either deliberate dishonesty, incompetence or both."

Greens party lawmaker Adam Bandt on Wednesday became the first of five lawmakers from outside the major parties to announce which side he will back.

His support gives the center-left Labor Party control of 73 seats in the 150-seat House of Representatives, the same as the conservative coalition.

Labor remains in charge of the caretaker government until Gillard or Abbott can strike a deal with independents to command 76 seats. If neither leader can command a majority, new elections will be called.



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Ponzi scheme shakes West African nation of Benin AP

COTONOU, Benin More than a hundred thousand people in the tiny West African nation of Benin have lost their savings in a Ponzi scheme run by a now-defunct company that appeared to be publicly endorsed by the countrys president.

The government said in a statement last month that more than 130,000 people gave their savings to Investment Consultancy and Computering Services. Together they lost more than $130 million, the statement said.

The corporation was registered as a nonprofit computer service company and was operating illegally as a banking institution. ICC was forced to close July 1, and more than a dozen of its employees were jailed.

But the reverberations have echoed to the top of Benins power pyramid and now threaten President Boni Yayi, who appeared on television with ICC managers.

Television news shows showed Yayi and other top government officials posing alongside the managers of the investment firm. The images were reproduced on T-shirts. While investors interpreted Yayis presence as an endorsement, the president did not officially speak in favor of ICC during the appearances.

In this country of 8.7 million people, the average yearly income hovers at $750. Many lost months to years of savings in the scam.

Electrician Lambert Saizonou, 40, planned to use his investment earnings to buy his first house. Now he has lost all of his savings. Jobs are scarce, and Saizonou worries it will take years to save to buy a home for his family.

"They promised me an interest rate of 200 percent," he said. "Now I must start saving again, little by little."

Herman Menton, a 32-year-old company manager, lost nearly $1,500 after investing in ICC for a year. Like many of ICCs investors, Menton was referred to the company by friends who had already invested and lured him with the promise of high interest rates.

Perhaps the greatest swindle, some say, is the governments role in the investment company. Many victims say the sight of government officials in the ads reassured them their money would be safe.

"We saw them on television," said Pierre Dossa, a mechanic who lost his savings. "How could we not believe in it?"

Since the announcement that ICCs activities were fraudulent, Yayi has swept his administration of those associated with the company. In July, he fired Armand Zinzindohoue, the minister of the interior, and Chief Prosecutor Georges Constant Amoussou.

More than a dozen individuals connected to ICC have been jailed, including the presidents cousin and two of the companys top managers.

But some members of Benins National Assembly say these measures do not go far enough. They accuse Yayi of being complicit in ICCs corrupt activities, and they have called for his impeachment.

Adrien Houngbedji, Yayis opponent in the 2006 presidential election and a vocal critic of the administration, says Yayi failed to exercise moral caution.

"He met with ICC managers in public, on television, and on the radio. This could only reassure investors," he said.

Houngbedji claims Yayi has failed in his official responsibilities.

"We have elected a chief of state to protect the people," he said. "He has betrayed the confidence placed in him by the people, and he should be prosecuted before the high court of justice."

But the government of Benin denies any wrongdoing. "This is a private affair between a business and its clients," said spokesman Candide Azanai. "Because the people have been robbed, the government is intervening for the security of its citizens."

An investigative commission has been established, and the government is seeking to retrieve funds from ICC, even seizing personal items such as cars and villas from the companys managers. Victims will be reimbursed according to how much money is recovered, according to Azanai.

ICC managers could not be reached for comment, as the company no longer exists and many executives are in jail.

The handling of the ICC scandal will be an important bellwether for the West African nation, says Africa expert J. Peter Pham.

Since the adoption of democratic elections in 1991, Benin has enjoyed a stable political environment. Its unclear if the scam could lead to civil unrest � or if voters will instead wait until 2011 to express their discontent at the polls.

"This will be a test of the maturity of the constitutional system and the democracy that has taken root in the last 20 years," says Pham, senior vice president of the National Committee on American Foreign Policy who has written extensively on emerging democracies in Africa. "Do you vote the rogues out of office or engage in mob mentality?"

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Associated Press Writer Artis Henderson reported from Dakar, Senegal.

This version CORRECTS Corrects graphs 4 and 5 to delete mention of president appearing in radio adds; also corrects to say that president appeared in television shows, not adds, with ICC officials.



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Police: Gunman holds hostage in Discovery building AP

SILVER SPRING, Md. Police in a Washington, D.C., suburb say a gunman has taken at least one person hostage at the headquarters of Discovery Communications.

Montgomery County fire department spokesman Capt. Oscar Garcia says three bomb technicians responded to the scene in Silver Spring, Md., and several more are on their way.

Garcia says the initial report was of a suspicious package that was possibly explosive. He says nobody has been injured. Some employees have left the building.

Montgomery County Police Cpl. Dan Friz tells WJLA-TV that a gunman is in the building.

A person inside the building tells The Associated Press the man had something strapped to his chest and has hostages. The person asked not to be identified, saying people inside have been told not to speak to the media.

ATF and FBI officials say they are also responding.

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Associated Press Writer Terence Hunt in Washington contributed to this report.

This version CORRECTS spelling of suburb to Silver Spring instead of Silver Springs.



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Apple launches social network

Apple has launched a social network as part of its iTunes software.

Ping, as it is known, allows users to build networks of friends and musicians, in a similar way to services such as Twitter.

The service can also build playlists based on what members of those networks are listening to.

"Its a social network all about music," said Mr Jobs, launching the application at an event in San Francisco.

"We think this will be really popular very fast because 160 million people can switch it on today," he said.

The service will be accessible through iTunes software on Macs and PCs as well as through the iTunes application on iPhones and the iPod Touch.

Analysts at research firm CCS insight said it represented an "ambitious move" that would present a challenge to "ailing MySpace and other social networks".

Mr Jobs also used the event to introduce an updated version of its Apple TV, which can be plugged into a television set and used to stream movies and TV shows from iTunes.

The original product has been around since 2007, but has never been a success for Apple. Mr Jobs has in the past described it as a "hobby".

"Weve sold a lot of them, but its never been a huge hit," he said.

The new version will only allow people to rent content rather than buy it. All shows and movies will be high-definition.

Initially, it will only offer TV shows from two studios: Fox and ABC.

"We think the rest of the studios will see the light and get on board pretty fast with us," said Mr Jobs.

It would offer the "largest online library of movies to rent in the world", he added.

The box will also allow US users to stream films from rental services such as Netflix and access online services such as Flickr and YouTube.

It will also stream video from other devices, such as the iPad.

Although the box will be available in seven countries at launch, TV show rentals and Netflix connectivity will only be available in the US.

CCS Insight described it as an "attractive convergence device for Apple households."



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Roaming iPhone glitch continues

The mobile operator O2 says it is still investigating iPhone customer complaints that they have been wrongly charged for data roaming while abroad.

Customers have complained that the switch that deactivates data roaming doesnt work, a fault O2 was first made aware of in May.

Neither of the other UK networks that carry the iPhone, Orange and Vodafone, says it has been hit with the problem.

Apple forum posts suggest the problem may lie with O2s "visual voicemail".

The fault can cause big bills for customers who receive emails and web pages when they are overseas - even though they didnt choose to receive them.

The default setting on the iPhone should prevent data from loading up abroad. However, customers on the Apple and other forums are complaining that e-mails and web pages are sometimes downloading when they are abroad - even when the data roaming setting is off.

O2 says it is "investigating these reports with Apple".

Switching off

One recent post on an Apple online forum reported that: "Even with data roaming off, I received a visual voicemail message which appeared to then trigger the downloading of 25 e-mails and enabled selective web browsing and app activity. Im going to call my network operator O2 tomorrow, but others have complained about this bug that first appeared with the 3G iPhone and was fixed by an update."

An Apple spokesperson told BBC News that "we are aware that some O2 customers have reported receiving unexpected data roaming charges and are investigating. To avoid unexpected data roaming charges while traveling outside the UK, O2 customers can turn off Cellular Data in their iPhone settings."

Adrian Mars, an independent technology journalist, said he has some sympathy with the mobile operator.

"The big problem here is that Apple has a policy of not admitting to known faults in the phone so the operators are really stuck," he said

"They dont know whether there is a fault there."

O2 will be faced with a difficult choice in deciding whether to refund customers who complain they have been hit with undeserved data roaming charges, as Mars acknowledges.

"Its terrible. Looking at the bulletin boards, some have got their money back; some are saying they have.

"But until Apple holds up their hands and say these are the circumstances when it happens it will be very hard for them to know what to do."



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Sony rolls out rival to iTunes

Sony has launched a new music and video download service as it gears up to challenge Apples iTunes.

The announcement, made at the IFA technology fair in Berlin, was timed to coincide with an Apple media event in the US.

The cloud-based service will be available on PlayStation 3s, Bravia TVs, Blu-Ray players and Sonys personal computers.

Initially it will offer movies. Music will be added at the end of the year.

Sonys online services platform Qriocity has offered video-on-demand in the US since April this year but will now be available in Europe.

The Music Unlimited service, due at the end of the year, will give users access to millions of songs.

"Via Qriocity, Sony will deliver a variety of digital entertainment content and services... including video, music, game applications and e-books over time," said Fujio Nishida, president of Sony Europe.

It is not the first time that Sony has tried to break into the digital music market.

In 2004 it launched an online music download service in the US, called Connect.

It did not prove popular with consumers and Sony pulled the plug on it in 2007.

Commenting on the new service, Forrester analyst Mark Mulligan said it was a "necessary strategic move".

"It has done a wise thing launching a multi-media rather than just a music service. Apple has the glue of iTunes but Sony doesnt have this and it has recognised the need to join the dots between all its disparate devices," he said.

In Australia and New Zealand, Sony has been trialling another music service called bandit.fm, which allows users to stream unlimited music for a fixed cost.

It is rumoured that Amazon is also about to enter the movie and music streaming fray, with its own download service.

Details of Sonys latest service and the costs will be announced later.



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Dutch prosecutors say Yemenis likely to be freed AP

THE HAGUE, Netherlands Two Yemeni men arrested amid fears they were conducting a dry run for an airline terror attack almost certainly will be released soon in the Netherlands, a prosecution spokesman said Wednesday.

It is "99 percent certain" Ahmed Mohamed Nasser al-Soofi and Hezam al-Murisi will be freed without charge, national prosecutors office spokesman Ernst Koelman told The Associated Press in a phone interview.

"There is a big chance it will be soon," he added. He gave no more details, saying he was still awaiting official confirmation from prosecutors.

The men were arrested Monday in Amsterdam on a United Airlines flight from Chicago following a request from U.S. law enforcement officials. Under Dutch law, they can be held for up to three days and 15 hours before they must be brought before an investigating judge or released.

Al-Soofis Dutch lawyer Wouter Hendrickx said he had not yet had word from prosecutors that his client would be released. He told the AP earlier that al-Soofi insists he is innocent.

"He says I have no connections to terrorist activities whatsoever," Hendrickx said.

Hendrickx said al-Soofi was on his way to Yemen to visit his family when he was detained.

Al-Soofi and al-Murisi missed flights to Washington Dulles International Airport from Chicago, and United Airlines then booked them on the same flight to Amsterdam, a U.S. government official said. The men were sitting near each other on the flight, but not together.

Al-Soofi also raised suspicions in the United States on Sunday because he was carrying $7,000 in cash. An inspection of his checked luggage uncovered a cell phone taped to a small bottle, multiple cell phones and watches taped together, and a knife and box cutter, according to a U.S. official who had been briefed on the investigation.

None of the checked items violated U.S. security rules, so authorities allowed al-Soofi to fly. But his bags later were transferred to another flight and were not on the flight to Amsterdam, Dutch prosecutors said.

Al-Soofi and al-Murisi changed their travel plans at the last minute and took a direct flight to Amsterdam, raising suspicion among U.S. officials.

However, a U.S. law enforcement official said Tuesday that following FBI inquiries neither man is likely to be charged in the U.S.

Hendrickx said he has not yet received a case file from prosecutors so he could not discuss further details of the case.

He said the two men were being held in separate cells at a jail in the central Dutch town of Houten.



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Police: Bombs wound 20 at Shiite march in Pakistan AP

LAHORE, Pakistan Pakistani police say two time bombs have exploded during a Shiite religious procession in the eastern city of Lahore. At least 20 people were wounded in the blasts and a subsequent stampede.

The explosions took place in two separate sites amid a traditional mourning procession for one of Shiite Islams most respected holy men.

Senior police officer Zulfiqar Hameed said the blasts came from low-intensity time bombs.

Footage of the first explosion shown on Geo television showed a small blast erupting amid a crowd of people on the street followed by a large plume of smoke.

Sunni extremists have targeted Shiite Muslims in the past, arguing they are not true Muslims.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. APs earlier story is below.

LAHORE, Pakistan AP � Pakistani police say a time bomb exploded during a Shiite religious procession in the eastern city of Lahore. Seven people were wounded in the blast and a subsequent stampede.

The explosion took place amid a traditional mourning procession for one of Shiite Islams most respected holy men.

Senior police officer Zulfiqar Hameed said the blast came from a low intensity time bomb.

Footage of the explosion shown on Geo television showed a small blast erupting amid a crowd of people on the street followed by a large plume of smoke.

Sunni extremists have targeted Shiite Muslims in the past, arguing they are not true Muslims.



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Ferries take people off NC island ahead of Earl AP

OCRACOKE, N.C. Ferries are taking people off an island on North Carolinas Outer Banks as powerful Hurricane Earl heads toward the United States.

North Carolina Emergency Management Department officials say two ferries began making the 2 1/2-hour trip to the mainland shortly after 6 a.m. Wednesday.

Hyde County spokeswoman Jamie Tunnell says about 30 cars and trucks pulling campers were waiting in line for the first ferry before 6 a.m.

Emergency Services Director Lindsey Mooney says officials hope the 800 or so local residents will follow tourists off the island.

Megan Aldridge at the Ocracoke Harbor Inn says guests in eight rooms were leaving and she expected those in the other seven occupied rooms to leave as well.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. APs earlier story is below.

RALEIGH, N.C. AP � Tourists on a North Carolina vacation destination island were preparing to board the ferries and head for the mainland early Wednesday and more evacuations could be on the way as powerful Hurricane Earl threatened to sideswipe the East Coast.

Hyde County spokeswoman Jamie Tunnell, said about 30 cars, including trucks pulling campers, were lined up to board ferries that would begin leaving Ocracoke Island on the states Outer Banks for the 2 1/2-hour trip to shore.

"Ferries are the only way off unless you have a private plane or boat," Tunnell said.

The 800 or so year-round residents dont have to heed it, but Emergency Services Director Lindsey Mooney said officials hope theyll follow tourists and leave the island.

The last time the island was evacuated was in 2005 as Hurricane Ophelia approached, shortly after Hurricane Katrina devastated the Gulf Coast.

More evacuations along the Eastern Seaboard could follow, depending on the path taken by the storm, which weakened to a Category 3 hurricane early Wednesday as it whipped across the Caribbean with winds of 125 mph.

Earl was expected to remain over the open ocean before turning north and running parallel to the East Coast, bringing high winds and heavy rain to North Carolinas Outer Banks by late Thursday or early Friday. From there, forecasters said, it could curve away from the coast somewhat as it makes it way north, perhaps hitting Massachusetts Cape Cod and the Maine shoreline on Friday night and Saturday.

Forecasters cautioned that it was still too early to tell how close Earl might come to land. But not since Hurricane Bob in 1991 has such a powerful storm had such a large swath of the East Coast in its sights, said Dennis Feltgen, spokesman for the National Hurricane Center.

"A slight shift of that track to the west is going to impact a great deal of real estate with potential hurricane-force winds," Feltgen said.

Even if Earl stays well offshore, it will kick up rough surf and dangerous rip currents up and down the coast through the Labor Day weekend, a prime time for beach vacations, forecasters said. Virginias governor on Wednesday planned to declare an emergency, a preliminary step needed to muster emergency personnel should Earl hit the state.

The approaching storm troubled many East Coast beach towns that had hoped to capitalize on the BP oil spill and draw visitors who normally vacation on the Gulf Coast.

On Tuesday, gusty winds from Earls outer fringes whipped palm fronds and whistled through doors in the Turks and Caicos Islands as tied-down boats seesawed on white-crested surf.

Islanders gathered to watch big waves pound a Grand Turk shore as the wind sent sand and salt spray flying.

"We can hear the waves crashing against the reef really seriously," Kirk Graff, owner of the Captain Kirks Flamingo Cove Marina, said by telephone as he watched the darkening skies. "Anybody who hasnt secured their boats by now is going to regret it."

Carl Hanes of Newport News, Va., kept an eye on the weather report as he headed for the beach near his rented vacation home in Avon, N.C. He, his wife and their two teenage children were anticipating Earl might force them to leave on Thursday, a day ahead of schedule.

"Were trying not to let it bother us," Hanes said before enjoying the calm surf.

In Rehoboth Beach, Del., Judy Rice said she has no plans to leave the vacation home where she has spent most of the summer. In fact, the Oak Hill, Va., resident plans to walk around town in the rain if it comes.

"I kind of enjoy it actually. You know, its battling the elements," Rice said. "I have seen the rain go sideways, and, yeah, it can be scary, but I have an old house here in Rehoboth, so its probably more important that I am here during a storm than anywhere."

In the Florida Panhandle, which has struggled all summer to coax back tourists scared away by the Gulf oil spill, bookings were up 12 percent over last year at the Sandestin Golf and Beach Resort. The resort is nowhere near Earls projected path, and spokeswoman Laurie Hobbs said she suspects the increase in reservations was partly because of a discount the hotel is offering and partly because of the hurricane.

"Weather drives business," she said. "They go to where the weather is best."

If Earl brings rain farther inland, it could affect the U.S. Open tennis tournament, being played now through Sept. 12 in New York City.

"Were keeping our eye on it very closely," said United States Tennis Association spokesman Chris Widmaier.

___

Associated Press Writers Mike Baker and Emery Dalesio in Raleigh; Kathleen Miller in Washington; David Sharp in Portland, Maine; Suzette Laboy in Miami; Bob Lewis in Bristol, Va.; Vivian Tyson in Providenciales, Turks and Caicos; Ben Fox in Fajardo, Puerto Rico; Anika Kentish in St. Johns, Antigua; Judy Fitzpatrick in Philipsburg, St. Maarten; and David McFadden, Mike Melia and Danica Coto in San Juan contributed to this report.



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US enters final phase of Iraq war AP

BAGHDAD The U.S. marks on Wednesday the transition to the final phase of the Iraq war, shifting the focus of the remaining 50,000 American troops from combat operations to preparing Iraqi security forces to protect the country on their own.

President Barack Obama set the tone for changing the role without fanfare, making clear in a major speech on Iraq Tuesday that this was no victory celebration. A six-month stalemate over forming a new Iraqi government has raised concerns about the countrys stability and questions over whether the leadership can cope with a diminished but still dangerous insurgency.

Vice President Joe Biden, Defense Secretary Robert Gates, and Joint Chiefs Chairman Adm. Mike Mullen will preside over a military change-of-command ceremony in Baghdad that will signal the formal end of American combat operations in Iraq, 7 1/2 years after the March 2003 invasion that toppled dictator Saddam Hussein.

Iraqi Foreign Minister Hoshyar Zebari said his country appreciates what the Americans did, but it is now time for Iraqis to secure their own future.

"As an Iraqi and a victim of Saddam Hussein, I can say that the war was worth it because it ended one of the most brutal dictatorships in the world," Zebari told The Associated Press in a phone interview. "We appreciate the sacrifices the U.S. military and the American people made while standing with us in these very, very difficult times," he added.

"The war for Iraqs future is ongoing and it should be fought and won by the Iraqi people and their leaders," Zebari said. "Its more or less the same war Americans fought against terrorist and extreme elements who want to undermine the democratic government. But its our duty to fight it and win it."

Gates, visiting American troops in the city of Ramadi, said history will judge whether the fight was worth it for the United States.

"The problem with this war, I think, for many Americans, is that the premise on which we justified going to war turned out not to be valid," he said. "Even if the outcome is a good one from the standpoint of the United States, itll always be clouded by how it began."

Claiming that Saddam had weapons of mass destruction, then-President George W. Bush ordered the invasion with approval of a Congress that was still reeling from the 9/11 attacks. But Bushs claims were based on faulty intelligence, and the weapons were never found.

Obama declared an end to combat in an Oval Office speech Tuesday night and praised American forces for their work. He acknowledged the ambiguous nature of the war in which American forces quickly ousted Saddam but were never able to fully control the Sunni Muslim insurgency against the Shiite-dominated establishment that even now threatens to re-ignite.

Still, he said the time had come to close this divisive chapter in U.S. history.

"We have met our responsibility," Obama said. "Now it is time to turn the page."

Avoiding any hint of claiming victory in a war he once called a major mistake, the president recognized the sacrifices of Americas military. More than 4,400 American troops and an estimated 100,000 Iraqis were killed and it cost billions of dollars.

Iraqi Prime Minister Nouri al-Maliki, a Shiite, said Tuesday the end of combat operations as a return to sovereignty and independence for the hobbled country, and tried to reassure his people that their own security forces can defend them.

At a ceremony at the opulent al-Faw palace that was a former hunting lodge for Saddam, Gen. Ray Odierno will hand over power to a newly promoted Gen. Lloyd Austin, who most recently served in Iraq as commander of troop operations from 2008-09.

Iraqi forces on Wednesday appeared to be on heightened alert, spread out at checkpoints across the city intended to reassure the populace and ward off insurgent attacks.

Just under 50,000 U.S. troops remain in Iraq � down from a peak of about 170,000 at the height in 2007. Those forces will not be able to go on combat missions unless requested and accompanied by Iraqi forces. The last combat brigade left Iraq earlier this month and the remaining units are being called advise and assist brigades by the U.S. military.

But drawing a line between what is and is not combat may not be easy. All American forces carry weapons, can protect themselves and their bases and still come under attack from insurgents near daily. Earlier this month, for example, Sgt. Brandon E. Maggart, 24, of Kirksville, Mo. Was killed near the southern city of Basra on Aug. 22 � a few days after the last combat brigade rolled across the border into Kuwait.

Iraq is also far from the stable democracy once depicted by the Bush administration and hoped for by Obama when he laid out his timeline for withdrawing American troops shortly after he took office in 2009.

Half a year has passed since Iraqs March 7 elections which failed to produce a clear winner, and the countrys political leaders have so far failed to form a new government.

Anthony Cordesman, a former director of intelligence assessment in the Pentagon, warned in a new report that Iraq is at a critical time and its fate rests on a successful transition of power.

"The withdrawal is far from over, the Iraq War is not over, it is not won, and any form of stable end state in Iraq is probably impossible before 2020," Cordesman warned.

While Iraqis are generally happy to see the U.S. military pulling back, they also feel that the troop withdrawal is premature because security forces are a top target for militants. Iraqis also say they fear their country will revert to a dictatorship or split along religious and ethnic fault lines without U.S. military support.

"I hope that the American troops will leave Iraq, but not for the time being," Baghdad resident Fadhil Hashim said Wednesday.

___

AP National Security Correspondent Anne Gearan in Ramadi and AP Writer Barbara Surk in Baghdad contributed to this report.



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Rape probe against WikiLeaks founder reopened AP

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Wikileaks rape inquiry reopened

A senior Swedish prosecutor has ordered the reopening of a rape investigation into Wikileaks founder Julian Assange.

Public Prosecutions Director Marianne Ny said there was "reason to believe a crime has been committed" and the crime was classified as rape.

Last week prosecutors cancelled an arrest warrant for Mr Assange on accusations of rape and molestation, saying he was no longer suspected.

Mr Assange denies any wrongdoing saying the accusations are "without basis".

When the allegations first emerged, he said their appearance at a time when Wikileaks had been criticised for leaking Afghan war documents was "deeply disturbing".

In July, Wikileaks published more than 75,000 secret US military documents on the war in Afghanistan.

US authorities criticised the leak, saying it could put the lives of coalition soldiers and Afghans, especially informers, at risk.

The decision to reopen the case follows an appeal by a Swedish woman who has accused Mr Assange of raping her.



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Mozambique police fire at crowds protesting prices AP

MAPUTO, Mozambique Police opened fire Wednesday on stone-throwing crowds who were protesting rising prices in this impoverished country, said witnesses who described seeing one boy who appeared to have suffered a fatal head injury.

The mobs also threw stones, burned tires and ransacked shops in the capital, and police responded by firing shots into the crowds and the air.

An ambulance took the apparently lifeless body of the boy away. There has been no official report of casualties in Wednesdays rioting.

Police declared the marches illegal, saying no group had sought permission to hold them. Word had spread for days in this former Portuguese colony in southeast Africa that there would be demonstrations.

Thousands of protesters, most of them young men, lined the streets of Bagamoyo, a crowded, impoverished neighborhood just north of downtown Maputo. As they moved into the city center, they looted shops and warehouses.

Protests were also reported in other areas around Maputo. Police appealed for calm on state radio and TV and said they had made an unspecified number of arrests. Youths were blocking streets and ransacking property. Many public transport drivers have abandoned their vehicles in the streets.

Later Mozambiques state radio and television went off the air. Only one private television station is still broadcasting.

Mozambicans have seen the price of a loaf of bread rise by 25 percent, from four to five meticais from about 11 cents to about 13 U.S. cents in the past year. Fuel and water costs also have risen.

Violent protests over high costs erupted in Mozambique in 2008, when global food prices jumped. Factors cited included a drop in the U.S. wheat harvest and higher demand for crops to use in biofuels.

This time, dry weathers effect on harvests and the high fuel costs incurred when moving food from producers to consumers have been blamed. Some critics also say bad government decisions are making shortages worse and accuse producers of colluding to push up prices.



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