Home construction jumps 10.5 pct in August (AP)

WASHINGTON � Home construction increased last month and applications for building permits also grew. But the gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.

Construction of new homes and apartments rose 10.5 percent in August from a month earlier to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That's the highest level since April.

Pulling the figures up was a 32 percent monthly increase in the condominium and apartment market, a small portion of the market. Single-family homes, which represent about 80 percent of the market, grew more than 4 percent.

Housing starts are up 25 percent from their bottom in April 2009, but are still down 74 percent from their peak in January 2006.

Building permit applications, a sign of future activity, grew by nearly 2 percent to an annual rate of 569,000.

Builders are struggling with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. They had benefited in the spring from federal tax credits, but those expired in April.

Lennar Corp., a major builder based in Miami, said Monday the number of buyers signing agreements to purchase its homes fell 15 percent from a year ago in the three months ended August 31.

"It's been a tough summer," said Stuart Miller, Lennar's chief executive. on a conference call with investors Monday. "As we've gone into September, we're seeing a little bit of pickup in our traffic, but that shouldn't be cause to have a sigh of relief at this point."

Construction activity rose 34 percent in the West and was up 22 percent in the Midwest and 7 percent in the South. However, construction fell by 24 percent in the Northeast.

On Monday, the National Association of Home Builders said its monthly index of builders' sentiment was unchanged in September at 13. The index has now been at the lowest level since March 2009 for two straight months.

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APNewsBreak: Poles urged to probe CIA prison acts (AP)

WARSAW, Poland � A human rights organization and lawyers for a Saudi man accused in the 2000 bombing of the USS Cole demanded Tuesday that Polish prosecutors investigate the terror suspect's detention and treatment at a CIA prison once housed in Poland.

A Polish attorney working in conjunction with the Open Society Justice Initiative group filed a lengthy petition Tuesday in Warsaw with prosecutors.

Abd al-Rahim al-Nashiri is the first detainee subjected to the CIA's detention and interrogation program who has taken legal action in Poland, said Amrit Singh, the justice initiative's senior legal officer. Mikolaj Pietrzak, who represents al-Nashiri in Poland, told The Associated Press he filed the petition.

Polish prosecutors have already been examining the country's involvement in a now-shuttered U.S. system of secret prisons around the globe. Inside the so-called black sites, terror detainees were exposed to harsh interrogation methods such as the simulated drowning technique of waterboarding � a practice that critics have called torture.

Prosecutor Jerzy Mierzewski said Pietrzak's petition would likely be wrapped into his office's overall probe.

"It does not require the opening of a separate investigation," he said, adding that he still had to study the documents in detail.

The prosecutors are investigating possible abuse of power by Polish public officials in connection with the closed CIA black site near the secluded Szymany airport in northeast Poland. Flight logs trace several landings of planes linked to the CIA there. Prosecutors have been looking into the site since 2008 but have not yet filed charges.

Polish media have reported that prosecutors are considering war crimes charges against former President Aleksander Kwasniewski and two other officials in connection with the CIA prison site. Kwasniewski, Poland's president from 1995-2005, has said he was unaware of the CIA prison.

Following the AP's report earlier this month on al-Nashiri's treatment, Leszek Miller, Poland's prime minister at the time, flatly denied the existence of any such facility, saying there were "no secret CIA prisons in Poland."

On Tuesday, Miller told the AP in a telephone interview he had no comment on the petition or on whether Poland housed a CIA secret prison.

"Anybody can say what they want on the matter," Miller said.

According to several former U.S. intelligence officials, the CIA's prison in Poland � code-named "Quartz" � was shut down in late 2003. The officials spoke about the prison and al-Nashiri's case on condition of anonymity because details of the secret program remain classified.

Al-Nashiri is accused of masterminding the plot to bomb the US Navy destroyer, which was crippled on Oct. 12, 2000 by a blast detonated by a speedboat packed with explosives in the Yemeni port of Aden. The attack killed 17 American sailors and left 39 injured.

The former U.S. intelligence officials told the AP that Al-Nashiri was captured in Dubai in November 2002 and first taken to another CIA secret prison in Afghanistan known as the Salt Pit. After a brief stay, he was flown to a CIA prison in Thailand before being taken to Poland on Dec. 5, 2002, along with accused terrorist Abu Zubayda, the former officials said.

Details of the al-Nashiri petition to Polish prosecutors were not made public by the lawyers, but the move comes after a series of stories by the AP detailing new revelations about his four-year captivity and those of other terror suspects inside CIA black sites.

"The American justice system has failed Mr. al-Nashiri," said Nancy Hollander, his civilian lawyer in the United States. "The U.S. government has yet to provide any accountability for the illegal imprisonment or horrific torture to which U.S. agents have subjected him for almost a decade. Therefore, we are seeking to intervene in the investigation in Poland in the hopes that a court finally will recognize the injustice he has suffered."

According to the former intelligence officials and an internal CIA special review of the program, an agency officer named Albert revved a bitless power drill near the head of a naked and hooded al-Nashiri while he was held in the Polish prison. The CIA officer also took an unloaded semiautomatic handgun to the cell where al-Nashiri was shackled and racked the weapon's ammunition chamber once or twice next to his head, the review reported.

The Arabic-speaking Albert, who once worked for the FBI as a linguist, was not a trained interrogator or authorized to use enhanced interrogation techniques, the special review said.

A U.S. official said the special review, led by an inspector general, showed the agency had dealt with the reported abuses. "The fact that individuals inside the program surfaced these kinds of issues themselves with the inspector general speaks to a high level of rigor and concern about the care and treatment of detainees," said the official, who also spoke on condition of anonymity because details of the secret program remain classified.

During al-Nashiri's Poland detention, Albert also scoured him with a stiff brush and threatened his family, according to both former officials and the special review.

"We could get your mother in here," and "We can bring your family in here," Albert is quoted as saying in the CIA document. The stiff brush was "intended to induce pain on al-Nashiri," according to the special review.

The U.S. official said the use of the brush did not lead to injuries and had also been scrutinized by Justice prosecutors.

Albert and his superior in charge of the jail were both reprimanded. The CIA's inspector general referred the case to the Bush administration's Justice Department. Prosecutors declined in September 2003 to charge Albert with a crime but federal authorities are reviewing the case again. Albert has since returned to intelligence work as a contract employee.

Al-Nashiri was waterboarded in Thailand, according to previous accounts. The others subjected to the simulated drowning technique were Zubayda and Khalid Sheikh Mohammed, the accused overseer of the Sept. 11 terror attacks.

According to the former officials and flight records, al-Nashiri was moved from Poland to Rabat, Morocco, on June 6, 2003, where he stayed until Sept. 22, 2003 when he was flown to the Guantanamo Bay camp in Cuba. On March 27, 2004, he was flown from Guantanamo and back to Rabat. Eventually he was moved to another CIA prison in Bucharest, Romania, living with five other detainees before surfacing in Guantanamo again in September 2007.

Al-Nashiri's case is in limbo as the White House decides whether to prosecute him in a U.S. military or a federal civilian court. He is still detained in Guantanamo, his Polish lawyer says.

Efforts by human rights lawyers to learn more about the CIA secret prison network were set back earlier this month when the 9th U.S. Circuit Court of Appeals dismissed a lawsuit filed by five terrorism suspects against a Boeing Co. subsidiary.

The men said they were flown to secret prisons and tortured. They had sued the Jeppesen Dataplan aviation firm in 2007, claiming their flights amounted to illegal "forced disappearances," and the San Jose-based subsidiary conspired with the CIA to operate the program.

The legal moves in Poland could spur similar efforts elsewhere in Europe.

"We hope that the prosecutor will heed this call for a serious investigation into al-Nashiri's ill-treatment on Polish soil," Singh said. "The quest for accountability for the CIA's illegal rendition program must continue in Europe, especially as U.S. courts appear to be closing their doors to victims of this program."

Hollander said it was standard Polish procedure not to make the petition public but that could change.

"We are giving the prosecutor an opportunity to provide an initial response before making the petition public," she said.

________

Goldman reported from Washington.

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Somalia's prime minister resigns amid tensions (AP)

MOGADISHU, Somalia � Somalia's prime minister resigned Tuesday to prevent what he called political turmoil amid an impasse with the country's president.

Omar Abdirashid Ali Sharmarke told reporters he was resigning while standing alongside President Sheik Sharif Sheik Ahmed, who thanked the prime minister for what he called a "courageous decision."

"After seeing that the political turmoil between me and the president has caused security vulnerability, I have decided to resign to save the nation and give a chance to others," the prime minister said.

The resignation comes amid a rift between Sharmarke and Ahmed over a new draft constitution. The two have not gotten along for months, and a vote of confidence on the prime minister had been scheduled over the weekend, though it was postponed.

Ahmed called Sharmarke's decision "historic" because the impasse was settled among Somalis instead of seeking outside intervention. Sharmarke, who holds a Canadian passport, became prime minister in February 2009 after the government signed a deal with opposition groups led by Ahmed.

The prime minister appeared far from downcast as he announced his resignation. Sharmarke smiled and waved to reporters as he left the news conference, which was well-attended by members of parliament and Cabinet members. The current Cabinet will lose their posts with Sharmarke's resignation; the next prime minister will name a new Cabinet.

"Both men looked very happy. I was not expecting them to look so. There must be a hidden agenda they have agreed to," said Mowlid Maane, a parliamentarian, commenting on rumors swirling through Mogadishu that Sharmarke was paid to go away quietly.

The resignation won't have much practical effect on Somalia's weak government, which controls only a few blocks of Mogadishu. Somalia has not had an effective government for 19 years.

Ahmed said he will build a new government soon.

"Now the recent political turmoil has ended and the government is gone. Let us wait and see what is next. I hope an effective government that saves this nation," said Abdirashid Hidig, the state minister for domestic affairs.

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US hails Iran sanctions, but experts doubt results (AP)

WASHINGTON � The Obama administration says the latest round of sanctions appears to have succeeded in bringing additional pressure against Iran's nuclear program. But private experts question whether the penalties will achieve their goal of compelling Tehran to give up any nuclear ambitions.

In a speech Monday, the Treasury Department's point man on Iran sanctions, Stuart Levey, said U.S. and international sanctions are "dramatically isolating Iran financially and commercially."

And he asserted that this "can and will create leverage for our diplomacy" with Iran's leaders.

"Almost daily we receive reports of major firms around the world deciding to pull out of business dealings with Iran," Levey said at the Center for Strategic and International Studies. The number of companies that recently have curtailed or eliminated their ties to Iran is in the dozens, he added, including Toyota and oil giant Royal Dutch Shell.

Secretary of State Hillary Rodham Clinton has said the sanctions are "biting" Iran's economy.

Analysts generally agree sanctions are taking a toll. But will they stop Iran from getting the bomb?

Probably not, says Ray Takeyh, a Mideast expert at the Council on Foreign Relations and a former State Department adviser on Iran policy.

The policies of Iranian Supreme Leader Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad "are largely unaffected by mounting financial penalties imposed by the West," Takeyh wrote Sunday in an opinion piece in The Washington Post.

"Washington and its allies still fail to realize that they are not dealing with a conventional nation-state making subtle estimates of national interests," Takeyh wrote. Khamenei sees reconciliation with the U.S. as subversion that could undermine the pillars of the Islamic state, he added.

In an Associated Press interview in New York on Sunday, Ahmadinejad said sanctions are futile.

"If they were to be effective, I should not be sitting here right now," he told the AP.

Ahmadinejad also repeated Iran's assertion that it has no intention of building a nuclear weapon.

President Barack Obama entered the White House committed to offering Tehran a chance to negotiate over its nuclear program, but by late 2009 it was clear Iran had no interest in engagement.

So the administration turned to what it calls the "pressure track," and in June the U.N. Security Council passed a new sanctions resolution. On July 1 Obama signed unilateral U.S. sanctions legislation that he called the toughest Congress has ever imposed on Iran.

Sharing the U.S. concern about Iran potentially gaining nuclear weapons, the European Union, Australia, Canada, Japan and South Korea have imposed their own sanctions against Iran.

The sanctions have limited Iran's ability to attract foreign investment, pinched its ability to import gasoline, created a drag on its shipping business and hurt Iranian banking relationships worldwide. But it's not clear that these problems will translate to a shift in Iran's nuclear stance.

Even some Obama administration officials have conceded that sanctions may fall short of their goal, which is to convince Iran's leaders that the political costs of their continuing defiance on nuclear issues have reached an unacceptable level.

"Will it deter them from their ambitions with regard to nuclear capability? Probably not," CIA director Leon Panetta said June 27, while adding that Iran's true nuclear intentions are unclear.

Sami Alfaraj, an adviser to the Kuwaiti government on security and intelligence, said in an interview Monday that it's clear the sanctions are taking a toll on Iran's economy. Still, the pressure will fall short of compelling Iran to steer away from nuclear arms, he said.

"Sanctions alone cannot really work," Alfaraj said.

Former Secretary of State Colin Powell has come to a similar conclusion. "I think eventually we will have to deal with the reality that sanctions may not change the views of the Iranians on these issues" of a nuclear program, Powell said Sunday on NBC's "Meet the Press."

Levey, the Treasury official who is implementing the U.S. sanctions campaign, said he cannot accept the idea that sanctions have no chance. But he stopped short of predicting success.

"No one knows for sure the outcome," he said.

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NKorea to hold key party convention next week (AP)

SEOUL, South Korea � North Korea confirmed Tuesday that a major communist party convention will be held next week as observers speculated that the secretive' regime's aging leader was ready to give his son an important position to pave the way for his succession.

Kim Jong Il took control of North Korea in 1994 when his father died of heart failure in what was communism's first hereditary transfer of power. Now 68, and reportedly in poor health two years after suffering a stroke, Kim is believed to be prepping his third and youngest son, Kim Jong Un, for a similar transition by appointing him to top party posts at the Workers' Party convention.

Delegates will meet Sept. 28 to elect new party leaders, the official Korean Central News Agency reported Tuesday in a dispatch from Pyongyang.

The report did not explain why the meeting, initially set for "early September," had been postponed. North Korea has been struggling to cope with devastating flooding and a typhoon that killed dozens of people and destroyed roads, railways and homes earlier this month, according to state media.

Delegates across the country were appointed "against the background of a high-pitched drive for effecting a new great revolutionary surge now under way on all fronts for building a thriving nation with the historic conference," the KCNA report said.

The rhetoric has been building ahead of the conference, the first major Workers' Party gathering since the landmark 1980 congress where Kim Jong Il, then 38, made his political debut in an appearance seen as confirmation that he would eventually succeed his father, North Korea founder Kim Il Sung.

Tuesday's announcement could mean that the internal debate is over and that the regime has "reached a final conclusion" on the succession process, said Yang Moo-jin, a professor at the Seoul-based University of North Korean Studies. "I believe North Korea has decided to give the successor an official title but not to make it public to the outside world."

Succession speculation has intensified since Kim reportedly suffered a stroke in 2008, sparking concerns about instability in the nuclear-armed country if he were to die without anointing a successor. Kim is also said to be suffering from diabetes and a kidney ailment.

Little is known about the son widely believed to be his father's favorite. Kim Jong Un, said to be in his late 20s and schooled in Switzerland, has never been mentioned in state media, and there are no confirmed photos of him as an adult.

He has two older brothers, Jong Nam and Jong Chol. But Kenji Fujimoto, who says he was Kim Jong Il's sushi chef for more than 10 years, wrote in a memoir that it is the youngest who is most like his father, ruthless and competitive even as a child.

South Korean intelligence officers believe Pyongyang has launched a propaganda campaign promoting the son, including songs poems praising the junior Kim. He's already reportedly being hailed as the "Young General" and "Our Commander," with soldiers and workers pledging allegiance to the son on his birthday in January.

The process, however, is shrouded in secrecy, evidenced by the fact that South Korean officials didn't even know how to spell the son's name until last year.

Earlier this week, former U.S. President Jimmy Carter said Chinese Premier Wen Jiaobao told him that Kim disputed the prospective promotion of his youngest son as a "false rumor" � underscoring the difficulty of reading the isolated regime.

"I was amazed when he made that statement," Carter told The Associated Press in a phone interview Monday. "He said that Kim Jong Il made a flat statement that his succession story was a false Western rumor."

Carter made a rare trip to Pyongyang last month to secure the release of an imprisoned American but didn't meet Kim, who was in China at the time.

Next week, delegates are expected to elect new party leaders to fill spots left vacant for years. It's not clear which party position Kim Jong Un might take in what would be his first known official job.

Keen attention is also focused on Kim Jong Il's only sister, Kim Kyong Hui, who in the past two years has been a frequent companion to the leader on field trips to army bases and factories. She currently serves as the political party's department chief for light industry.

Her husband, Jang Song Thaek, has also been rising in stature. Jang was promoted in June to a vice chairman of the powerful National Defense Commission, making him the No. 2 official to Kim Jong Il on the regime's top state organ.

The conference is being held amid preparations for the milestone 65th anniversary of the founding of the Workers' Party on Oct. 10, improving relations with Seoul, and attempts by diplomats from neighboring nations to revive dormant six-nation disarmament negotiations on North Korea's nuclear weapons program.

North Korea walked away from the talks last year in protest over U.N. Security Council condemnation for launching a long-range rocket, widely seen as a test of its missile technology.

___

Associated Press writer Jean H. Lee in Seoul and Greg Bluestein in Atlanta contributed to this report.

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Military gay ban becomes election-year hot button (AP)

WASHINGTON � It's John McCain versus Lady Gaga on Tuesday as the Senate takes up the emotional issue of repealing the ban on gays serving openly in the military.

Senate Democrats have attached repeal of the 17-year-old "don't ask, don't tell" law to a bill authorizing $726 billion in military spending next year. The fate of the move appears uncertain, but whichever way the votes go, repeal seems destined to become a major issue in this fall's midterm elections.

The law is already under siege. A federal judge in California recently ruled the ban on gays was unconstitutional, polls suggest a majority of Americans oppose it and Lady Gaga has challenged it in a YouTube video.

Repeal advocates say the law deprives the military of capable soldiers and violates civil rights.

But McCain of Arizona and other prominent Republicans are fighting to keep the law in place, at least until the Pentagon completes a survey later this year on repeal's likely effect on troops. GOP critics say lifting the ban at a time when troops are fighting two wars would undermine morale.

"I regret to see that the long-respected and revered Senate Armed Services Committee has evolved into a forum for a social agenda of the liberal left of the Senate," McCain said last week on the Senate floor.

An estimated 13,000 people have been discharged under the law since its inception in 1993. Although most dismissals have resulted from gay service members outing themselves, gay rights' groups say it has been used by vindictive co-workers to drum out troops who never made their sexuality an issue.

Top defense leaders, including Secretary Robert Gates and Chairman of the Joint Chiefs of Staff Adm. Mike Mullen, have said they support a repeal but want to move slowly to ensure changes won't hurt morale.

Gates has asked Congress not to act until the military finishes a study, due Dec. 1, on how to lift the ban without causing problems.

He also has said he could live with the proposed legislation because it would postpone implementation until 60 days after the Pentagon completes its review and the president certifies that repeal won't hurt morale, recruiting or retention.

The provision is included in a broader defense policy bill that authorizes $726 billion in military spending for next year, including $159 billion for the wars in Iraq and Afghanistan and a 1.4 percent pay raise for the troops.

By reviving the issue just before the midterm Congressional elections, Democrats are trying to score points with their political base and portray Republicans as obstructionists willing to shoot down a bill that includes the pay raises.

According to a February 2010 poll by the Pew Research Center, 61 percent of Americans said they favor allowing gays to serve openly, while 27 percent said they are opposed.

"Don't ask, don't tell" has become a perennial battleground in America's ongoing culture wars. This time, though, the forces backing repeal seem closer to victory than ever because Democrats control both the White House and Congress.

The House has already passed similar legislation. More recently, a federal judge in Los Angeles sided with a gay rights group and ruled that the military's policy violates due-process and free-speech rights.

Pop star Lady Gaga led a political rally in favor of repeal in Maine on Monday. The state is home to the two Republican senators � Olympia Snowe and Susan Collins � seen as most likely to side with Democrats on the issue. Lady Gaga said it was unjust to have goodhearted gay soldiers booted from military service while straight soldiers who harbor hatred toward gays are allowed to fight for their country.

She suggested a new policy should target straight soldiers who are "uncomfortable" with gay soldiers in their midst.

"Our new law is called 'If you don't like it, go home!'" she said.

Collins and Snowe have not said how they will vote this week. While Collins sided with Democrats during committee deliberations on the bill, Snowe says she would prefer to keep the ban intact until the Pentagon completes its Dec. 1 study.

In a statement, Snowe also raised questions about procedural tactics being used by Democrats to limit debate on the bill by restricting the number of amendments to three.

Spokesman John Gentzel said Snowe was paying attention to the Lady Gaga rally. But he referred reporters to Snowe's statement that said the Senate needs more time.

It's not clear whether repeal will pass the Senate. Even if Democrats block McCain's proposal to strip the provision from the spending bill, final passage is likely to be complicated by other issues.

Republicans are also hotly contesting a separate provision that would lift a long-standing ban on abortions at military facilities.

And in yet another nod to election-year politics, Senate Majority Leader Harry Reid, D-Nev., wants to attach the DREAM Act to the bill. The provision would allow thousands of young illegal immigrants who attend college or join the military to become legal U.S. residents.

Democrats say the immigration measure would boost military recruitment while Republicans say it would unfairly reward illegal immigrants with amnesty.

Reid has said a final vote on the defense policy bill may have to wait until after the elections.

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AP Interview: Gul backs Mideast nuclear-free zone (AP)

UNITED NATIONS � Turkish President Abdullah Gul said he will call for a Middle East totally free of nuclear weapons when he addresses the U.N. General Assembly later this week.

"We would like to see our region free of nuclear weapons," Gul told The Associated Press in an interview on Monday. "The region should not be under such a threat."

Gul said he intends to raise the issue when he addresses the world body on Thursday.

Gul has called in the past for a nuclear-free zone in the Middle East, but his latest comments come amid deteriorating relations with Israel following the May 31 Israeli commando raid on a Turkish ferry that was part of an aid flotilla attempting to break the blockade of the Gaza Strip. Eight Turks and a Turkish-American were killed.

Israel is generally assumed to have assembled a sizable arsenal of nuclear warheads since the 1960s, but declines to discuss its status as a nuclear power.

Gul's remarks will likely antagonize the United States, because Washington sees any move to raise the issue of Israel's nuclear arsenal as potentially destabilizing at a time of renewed Israel-Palestinian peace talks.

Last week, the Obama administration warned Arab nations that they risk contributing to a failure of the Mideast talks if they continue to pressure Israel over its nuclear program. U.S. officials have asserted that it would be possible to have a nuclear-free zone in the Middle East even if Israel's arsenal remains intact.

Gul said Turkey, which currently holds the rotating presidency of the U.N. Security Council, only wants to ensure stability and security in the region.

The U.S. has been more concerned about the nuclear program in Iran, which is under four sets of Security Council sanctions for refusing to stop its uranium enrichment and ignoring other U.N. demands meant to ease global concerns that it is seeking to make atomic weapons.

Tehran maintains that all of its nuclear activities are for peaceful purposes. But the International Atomic Energy Agency says it cannot confirm that because Iran has only selectively cooperated with the U.N. watchdog agency and has rejected several nuclear inspectors.

"Iran must do what it has thus far failed to do � meet its obligations and ensure the rest of the world of the peaceful nature of its intentions," U.S. Energy Secretary Steven Chu told delegates in Vienna Monday for the IAEA'S General Conference.

Gul said Turkish officials do not assume that Iran has a fully peaceful nuclear program, but "of course we cannot accuse Iran" of pursuing nuclear weapons without evidence.

"We want Iran to be transparent" with the IAEA officials, he said. "We in Turkey would like to see a peaceful, a diplomatic solution to this problem."

Turkey has opposed sanctions against Iran as ineffective and damaging to its interests with an important neighbor. Instead, Turkey and Brazil, to Washington's annoyance, have tried to broker a deal under which Iran would send much of its low enriched uranium to Turkey in exchange for the higher enriched uranium it needs for a research reactor. However, the deal did not mandate a halt to Iran's enrichment process and fell short of U.N. demands.

Turkey, a member of the NATO alliance, has been governed by an Islamic-rooted party since 2002 that has tried to improve relations with Iran.

Gul said Israel's deadly attack on the flotilla attempting to breach the Israeli blockade of Gaza would be best handled under international law, but also suggested that Israel still needs to take public responsibility for the attack.

"It is not possible to act as though this incident did not take place," he said. "In the old world, in the old times, if such an incident were to take place, wars would follow. But in our world today, it is international law that has to be taken into consideration.

"It is up to Israel. They have to do what is necessary since they are the ones that created the incident," he said.

Earlier news reports had said that Gul and Israeli President Shimon Peres planned to meet in New York this week on the sidelines of the Clinton Global Initiative being held alongside the gathering of world leaders.

Gul told the AP that no such meeting had ever been scheduled. Peres said Monday that the planned meeting was scrapped because Turkey had set unacceptable conditions.

Turkey has repeatedly demanded that Israel apologize for the flotilla raid, and senior Israeli officials on Monday confirmed that Gul had made such an apology a condition for the meeting.

"I got some conditions which made this meeting in my judgment not a positive one," Peres told reporters as the U.N. General Assembly's Millennium Development Goals summit was getting under way.

Two international panels are looking into the flotilla attack: the U.N. Human Rights Council in Geneva, and a separate U.N. panel formed by Secretary-General Ban Ki-moon.

Israeli commandos said they opened fire in self-defense after encountering what they called unexpected resistance when they boarded the ferry carrying aid supplies to Gaza.

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AP Investigation: CalPERS bumped pay as fund dived (AP)

SACRAMENTO, Calif. � As its investment portfolio was losing nearly a quarter of its value, the country's largest public pension fund doled out six-figure bonuses and substantial raises to its top employees, an analysis by The Associated Press has found.

Board member Tony Olivera said the California Public Employees' Retirement System tried to reduce the bonuses but was under contractual obligations to pay them.

CalPERS' plunging value came as stock values tumbled around the world, the state's economy suffered its worst decline in decades and basic state services faced severe budget cuts.

Virtually all of CalPERS' investment managers were awarded bonuses of more than $10,000 each, with several earning bonuses of more than $100,000 during the 2008-09 fiscal year. The cash awards were distributed as the fund lost $59 billion.

Steve Deutsch, director of pensions and endowment at Morningstar Inc., said many public pension plans award performance bonuses, and called CalPERS' performance during 2008-09 "middle of the road."

"It's absolutely very widespread, but very low profile in terms of being acknowledged, discussed, or disclosed by the plans," Deutsch said.

CalPERS spokesman Brad Pacheco said bonuses are based on the fund's performance over five years, not just the year immediately preceding the bonus, in order to encourage managers to seek long-term investments rather than short-term gains. He said bonuses in the 2008-09 fiscal year were 50 percent lower than in 2006-07 and that the market declines will continue to dampen bonuses in future years.

"Incentives are part of total compensation and critical to the fund's long-term success as well as recruitment and retention of skilled investment professionals," Pacheco said in an e-mail.

Bonuses also were paid to employees who are not part of the fund's investment team, including a public affairs officer who received bonuses of nearly $19,000 a year two years in a row and a human resources executive who received bonuses topping $16,000 both years.

The number of CalPERS executives making $200,000 a year or more rose from 13 to 15 over the two-year period. Those employees received an average salary raise of 12 percent and an average bonus of $115,705 in the 2007-08 fiscal year and $63,311 in 2008-09, according to the AP's inquiry into CalPERS compensation.

Senior investment officers responsible for segments of the portfolio seeing the steepest declines were among those rewarded, due in large part to the fund's long-term bonus system.

Real estate was the hardest-hit investment category in the CalPERS portfolio during the 2008-09 fiscal year, suffering from the same property devaluations felt across the country. That portfolio lost 47.9 percent of its value over the fiscal year. CalPERS awarded the portfolio's senior investment manager, Ted Eliopoulos, a $93,941 bonus on top of his $333,124 salary, which was 8 percent higher than the previous year.

According to CalPERS' annual report, the global equity portfolio saw a 26 percent decline in U.S. stocks and a 32.4 percent drop in international stocks during 2008-09. Eric Baggesen, the senior investment officer for global equity, received a 6 percent raise, bumping his salary up from $300,000 to $318,000 in the 2008-09 year. He also received bonuses totaling $254,186 over the two-year period.

The AP obtained the data from CalPERS through a California Public Records Act request and analyzed the compensation of employees earning salaries of at least $90,000 per year in both fiscal years. CalPERS says bonuses for 2009-10 are being determined.

For the sake of consistency, employees who worked only one of the two fiscal years were not included in the AP's overall data analysis.

Like all state employees, those at CalPERS were subject to furloughs in the last half of the 2008-09 fiscal year, which amounted to a 9.2 percent temporary salary decrease over the final five months. Those furlough reductions were not taken into account in the analysis because they did not affect official salaries used to determine raises and pensions.

Employees of the pension fund are paid salaries and bonuses out of the fund's investment returns. The salaries are not paid directly by California taxpayers, but they come from the same pot as pension payments.

Taxpayers are on the hook to cover the deficit between returns generated by investments and what is owed to state retirees.

Earlier this year, the pension fund's board voted to take between $480 million and $600 million more from the state to make up for investment losses and the fact that retirees are living longer and receiving more pension payments. Part of that will come from the state's general fund, which faces a $19 billion deficit. CalPERS does not need legislative approval to enact an increase in the state's pension contribution rate.

CalPERS' board of directors recently voted to allow the board to defer, cut or eliminate performance awards if the fund's fiscal year absolute return is less than zero percent, or for any other reason, Pacheco said. He added that investment managers' salaries were frozen in the most recent fiscal year, 2009-10.

Board member Olivera said the CalPERS board tried to reduce bonuses for 2008-09 but was "contractually compelled" to honor them.

"But we have taken steps now to make sure that can't happen in the future," Olivera said.

However, the board voted Sept. 15 to give the chief investment officer and CEO authority to award bonuses of as much as 20 percent of salary to investment managers they're worried about losing to the private sector. Employees would have to return the bonuses if they leave CalPERS within two years.

"It's not that they're just piling on bonuses; this is key to retaining staff," Pacheco said in an interview.

Signs of trouble in the markets were apparent during the 2007-08 fiscal year, as the national recession began to deepen. The Standard & Poor's 500 index declined by 14.8 percent in 2007-08 and 28.2 percent in 2008-09, while CalPERS' overall value dropped by 5.1 percent and 24.8 percent respectively.

In the group the AP examined, base salaries in 2008-09 ranged from $94,056 to $349,610, with 15 earning more than $200,000. Bonuses ranged from $5,957 to $114,083, although bonuses were lower across the board in 2008. That meant the total compensation for most employees declined from the previous fiscal year.

The salaries and bonuses were awarded as public pension plans have come under increased scrutiny, especially for their growing unfunded liabilities � the difference between the current value of the investment portfolio and the dollar amount promised to state retirees.

CalPERS, which serves more than 1.6 million public employees, retirees and their families, estimated its unfunded liabilities at $38.6 billion on July 1, 2008, the most recent official estimate available. But a study commissioned by Gov. Arnold Schwarzenegger and released by Stanford University in April estimated CalPERS' unfunded pension liability at $239.7 billion. The two groups used different accounting standards to estimate the unfunded liabilities.

Schwarzenegger has said California's current pension system is unsustainable and has called for pension reforms, saying he will not sign a state budget this year without them.

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NATO says 9 service members killed in copter crash (AP)

KABUL, Afghanistan � Nine service members with the international coalition in Afghanistan died Tuesday after their helicopter crashed in the volatile south where troops are ramping up pressure on Taliban insurgents.

One other coalition service member, an Afghan National Army soldier and a U.S. civilian were injured and taken to a military medical center for treatment, NATO said.

Though helicopters more regularly crash because of mechanical issues in Afghanistan, some have been brought down by insurgent fire.

However, NATO said in a statement, "There are no reports of enemy fire in the area."

The deaths raise to 37 the number of international soldiers killed so far this month in Afghanistan, including at least 29 U.S. troops.

Choppers are used extensively by both NATO and the Afghan government forces to transport and supply troops spread out across a mountainous country with few roads. Losses have been relatively light, despite insurgent fire and difficult conditions, and most crashes have been accidents caused by maintenance problems or factors such as dust.

Tuesday's crash occurred in northwestern Zabul province, according to a NATO official, who spoke on condition of anonymity because he was not authorized to disclose the location of the crash. Mohammad Jan Rasoolyar, a spokesman for the provincial governor in Zabul, said the helicopter went down in Daychopan district.

It was the deadliest helicopter crash in Afghanistan in years.

A Chinook crashed in February 2007 in Zabul, killing eight U.S. personnel.

In May 2006, a Chinook crashed attempting a nighttime landing on a small mountaintop in eastern Kunar province, killing 10 U.S. soldiers. That followed on a 2005 crash in Kunar that killed 16 Americans.

The most recent helicopter crash before this one occurred in southern Kandahar province in August when a Canadian Chinook was shot down, injuring eight Canadians.

In July in southern Helmand province, a chopper crash killed two U.S. service members. The Taliban had claimed it had shot it down. NATO said at the time it was investigating.

___

Associated Press Writer Mirwais Khan in Kandahar contributed to this report.

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Cuba summons workers to explain coming layoffs (AP)

HAVANA � Cuba is calling workers across the island to special meetings so labor leaders can brief them on half a million government layoffs coming in the next six months and suggest ways that those fired can make a living.

The "workers' assemblies" that began on Sept. 15 include hundreds of meetings with state employees in union halls, government auditoriums and even basements or garages of state-run companies, according to reports Monday in the state-run labor union newspaper Trabajadores.

The proceedings are closed and attendees so far have been tight-lipped about what is being discussed. But Salvador Valdes Mesa, head of the nearly 3 million-member Cuban Workers Confederation, said they are designed to tell workers about "the labor policies that will govern the country in order to achieve the structural changes the economy needs."

"We are confronting the need to make our economy more efficient, better organize production, increase worker productivity and identify the reserves we have," Valdes Mesa was quoted as telling a weekend gathering of transportation and port employees.

Two separate stories in Trabajadores, or Workers, quoted Mesa Valdes at a conference in Havana as well as addressing a similar group of state employees in the eastern province of Holguin, making it tough to tell where exactly his quotes were made.

Cuba announced Sept. 13 that it would lay off 500,000 workers by March and loosen state controls on private enterprise so that many of those fired can find new jobs. It said it would also beef up the tax code and revamp state pay scales to better reward high job performance.

President Raul Castro warned in April that as many as 1 million Cuban state employees � a fifth of a total island work force of 5.1 million � may be superfluous. In a subsequent speech in August, he warned job cuts were coming.

Trabjadores quoted Valdes Mesa as saying that "a political process of reflection and analysis with the workers in the assemblies is already under way to study and debate" past Raul Castro speeches, including the one in August.

During such meetings, Cuban workers generally are asked to endorse what reforms the government plans � sometimes there are votes by cheers and sometimes by a show of hands.

For example, state employees gathered in special meetings in 2008 to discuss a parliamentary proposal to raise Cuba's retirement age, and officially 99.1 percent of attendees supported the measure.

In this case, employee layoffs will be supported by some of the very Cubans who may lose their jobs.

The president has not commented publicly since the reforms were announced, though he has said authorities have no intention of abandoning the socialist state they spent decades building.

Instead, preparing workers for what's to come has fallen to Valdes Mesa's union, which is allied with the Communist Party and the only one the government allows.

Some of the meetings include just a few employees from a single office. Others involve hundreds from a whole city neighborhood.

An internal Communist Party document detailing the unprecedented overhaul envisions a radically reshaped economy, freshly legalized private cooperatives and a state payroll trimmed of many idle or unproductive workers.

The document says many laid-off workers will be urged to form private cooperatives. Others will go to work for foreign-run companies or set up their own small businesses in fields such as transportation, food and house rental.

Already, 144,000 Cubans work for themselves and 823,000 overall are part of the private sector, though that includes vast farm cooperatives run in accord with state administrative decisions. The government still employs the other 84 percent of the official work force.

Government workers take home an average of about $20 per month, though the state provides free education and health care and subsidizes housing, utilities, transportation and food. The layoffs will affect all corners of the government except those considered "indispensable."

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