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Saturday, June 09, 2007

Big day of fundraisers for Obama

Big day of fundraisers for Obama
By John McCormick
Copyright © 2007, Chicago Tribune
Published June 8, 2007, 7:51 PM CDT

Picking up the pace of his fundraising as the end of the second quarter draws near, Sen. Barack Obama pulled in an estimated $1.5 to $2 million on Friday in Chicago.

The haul was made in less than 10 hours, with the presidential candidate making stops at four events here, a market that has easily proven to be his most lucrative.

"If we didn't have a strong base here, we couldn't do what we are doing in Iowa and New Hampshire," the Illinois Democrat said, as he and his wife entered the back door of Carnivale in the Fulton Market area.

Outside the restaurant, luxury cars were doubled-parked as the valets struggled to keep up with the traffic for a gathering with a suggested minimum admission of $1,000.

The event, believed to have netted between $1 million to $1.5 million, was among the most profitable of Obama's campaign so far. It attracted hundreds of people, with each giving up to $4,600 for his primary and potential general election campaign.

Earlier Friday, Obama attended two fundraisers in private homes and was to cap the evening with a $100-per-person event at Union Station that was targeted toward a younger demographic.

The latest sprint comes as Obama starts an intense period of money raising in advance of the June 30 second-quarter deadline. He is booked for more than 20 fundraisers in the final month of the quarter.

Obama's staff has sought to dampen expectations that he will exceed the $25 million he raised during the first three months of 2007, while sources in Sen. Hillary Rodham Clinton's campaign have said the New York Democrat will likely top the $26 million she raised during that period.

Obama, however, has the largest base of Internet donors among Democratic candidates. That could help him further expand on the amount he raised during the first quarter, a total that surprised many.

After briefly traveling to Iowa Saturday to kick off a nationwide door-to-door canvass for his campaign, Obama will start a major West Coast fundraising tour Sunday.

Obama's latest fundraisers were held the same day the Tribune reported he is giving to charity more than $16,000 in campaign donations from two Chicago businessmen who had financial ties to indicted dealmaker Antoin "Tony" Rezko.

Rezko, a former friend and fundraiser who has become a public relations problem for Obama's presidential bid, has pleaded not guilty to federal influence peddling and bank fraud charges.

The latest incident marked the fourth time Obama has shed contributions made by Rezko and associates to his previous campaigns, totaling more than $33,000.

Outside the restaurant, Obama said the money was given to charity because he "wanted to make sure there were no questions with respect to this campaign."

Clinton, meanwhile, will hold a high-dollar event at the Palmer House Hilton on June 25. That event, her second here in as many months, is expected to net at least $250,000.

‘CIA secret prisoner’ trial starts in Italy

‘CIA secret prisoner’ trial starts in Italy
By Tony Barber in Rome and Daniel Dombey in London
Copyright The Financial Times Limited 2007
Published: June 8 2007 13:48 | Last updated: June 8 2007 17:32

The spectre of CIA abductions of terrorist suspects returned to haunt George W. Bush Friday night as the US president flew into Rome hours after an Italian court began trying 26 Americans on charges of kidnapping a militant Egyptian imam.

The Milan trial opened as a Council of Europe investigator released a report he said proved beyond doubt that the Central Intelligence Agency had run secret prisons in Poland and Romania from 2003 to 2005.

Dick Marty, a Swiss senator, also accused Germany and Italy of obstructing his efforts to dig out the facts about the CIA’s operations.

Mr Bush acknowledged last year that terrorist suspects had been held in prisons outside the US.

The trial could throw embarrassing light on Italian authorities, particularly the degree of their co-operation in the abduction.

The imam says he was tortured after being spirited into captivity in Egypt.

Italian prosecutors allege that all but one of the 26 American defendants were CIA operatives involved in the “extraordinary rendition” programme launched by the Bush administration after the September 2001 attacks on the US.

None of the 26 is in Italy, and the US has made clear it will never hand them over for prosecution.

The trial’s timing is unfortunate for US and Italian governments. Although adjourned by the judge yestrerday, the case has provided a focus for Italian critics of Mr Bush’s visit at a time when relations between the two countries have run into problems.

Mr Bush is due to hold talks in Rome today with Romano Prodi, prime minister, whose centre-left government contains a few leftists who view Mr Bush as an imperialist warmonger.

Prosecutors say Osama Mustafa Hassan Nasr, known as Abu Omar, was abducted on a Milan street in February 2003, driven to a US airbase in northern Italy, flown to a US base in Germany and taken to Egypt for interrogation.

Before his disappearance, Italy’s counter-terrorism forces were keeping Abu Omar under surveillance because of his alleged activities in recruiting and funding Islamic militants.

The government has asked Italy’s supreme court to throw out the indictments and says that Armando Spataro, chief prosecutor, broke the law as he gathered his evidence.

Seven Italians are also on trial, including Nicolò Pollari, former head of Italy’s military intelligence service.

Mr Pollari denies that he did anything illegal.

Immediately after the trial opened, the judge, Oscar Magi, rejected a request by a lawyer for the Italian defendants that the hearing be closed to reporters and the public. The judge said such a request could be granted only if the government presented a formal argument that the trial risked revealing state secrets.

Doubts over Russia missiles offer

Doubts over Russia missiles offer
By Demetri Sevastopulo and Guy Dinmore in Washington and Andrew Ward in Rome
Copyright The Financial Times Limited 2007
Published: June 8 2007 18:54 | Last updated: June 9 2007 01:46

After months of escalating tensions between Washington and Moscow over US plans for a missile defence shield in Europe, President Vladimir Putin this week surprised George W. Bush with an offer to co-operate with the US.

While Mr Bush welcomed the offer, it was unclear whether it would satisfy the US. The Pentagon wants to install 10 missile interceptors in Poland and a powerful X-band radar in the Czech Republic to counter future threats from Iran. Arguing that there is no threat from Iran, Moscow accuses the US of building a system against Russia.

On Thursday, Mr Putin proposed that the US and Russia jointly host part of the system at a former Soviet radar station in Azerbaijan. He added on Friday that, instead of Poland, the US could locate interceptors in Turkey, Iraq, or at sea.

US and Russian officials are expected to meet later to discuss the idea. But questions exist as to whether the Russian proposal would be a substitute for the US plans. The radar in Azerbaijan, for example, is not the kind of radar the US wants to place in the Czech Republic.

Richard Lehner, spokesman for the US Missile Defense Agency, said the Russian radar in Azerbaijan was “very capable”, but pointed out that it was an early warning radar, as opposed to the X-band radar the Pentagon wants to place in the Czech Republic.

Ted Postol, a missile defence expert at MIT, said Russia had made an “enormously clever proposal”. He said the US could also attempt to place its X-band radar in Azerbaijan, which he said would be a better location to track Iranian missile threats than the Czech site.

The US already has early warning radars in the UK and Greenland, although Lt Gen Trey Obering, head of the Missile Defence Agency, has previously said the US would like another in the Caucasus to provide complete coverage of Iran.

In contrast to the early warning radars, the X-band radar provides greater ability to track and identify objects in space because of its higher resolution.

It is also not clear that the US would be willing to give up the idea of putting missile interceptors in Poland, which the Pentagon says is the best European location.

Mr Bush on Friday re-affirmed the plan to build an interceptor base in Poland, saying Mr Putin’s proposal had not shaken US resolve to locate parts of its missile defence system in Europe.

Speaking after talks with Polish President Lech Kaczynski, he vowed to negotiate a “fair agreement” with Warsaw “that enhances the security of Poland, and the security of the entire continent against rogue regimes who might be willing to try to blackmail free nations”.

Mr Putin also suggested sea-based interceptors, but the US is several years away from testing long-range interceptors.

While military experts debate the technical merits of using Azerbaijan as a forward radar base, Russia’s offer is possibly more significant if it leads to a closer partnership with the US in countering Iran’s emergence as a regional power.

Top US military chief to stand down

Top US military chief to stand down
By Demetri Sevastopulo in Washington
Copyright The Financial Times Limited 2007
Published: June 8 2007 22:17 | Last updated: June 8 2007 23:24

The White House has decided not to nominate General Peter Pace for a second term as chairman of the joint chiefs of staff after senators signalled that the move would spark a divisive battle on Capitol Hill.

Robert Gates, US defence secretary, had intended to recommend the four-star general for another two-year term. But he said he changed his mind after talks with Republicans and Democrats. It became clear that his renomination could be “quite contentious”. He said: “I concluded that because Gen Pace has served as chairman and vice-chairman of the joint chiefs of staff for the last six years, the focus of his confirmation process would have been on the past rather than the future.

“I’ve decided that at this moment in our history, the nation, our men and women in uniform and Gen Pace himself would not be well-served by a divisive ordeal”.

Mr Gates announced he would recommend Admiral Michael Mullen, the chief of naval operations, to President George W. Bush for the position. According to the journalist Bob Woodward’s book, “Plan of Attack”, Adml Mullen was previously considered for the job before having a run-in with Donald Rumsfeld, who was fired as defence secretary after the Democrats retook Congress.

The White House decision not to nominate Gen Pace – the first marine to hold the post – underscores growing dissent on Capitol Hill over the Bush administration’s handling of the Iraq war. Gen Pace was appointed by Mr Rumsfeld after the retirement of Gen Richard Myers.

The White House said Mr Gates had told Mr Bush a few weeks ago that consultations with senators – who must approve the nomination – were not going well.

“In response to a request from Secretary Gates, I solicited the views of a broad range of senators,” Carl Levin, the Democratic chairman of the Senate armed services committee said on Friday. “I found that the views of many senators reflected my own – namely that a confirmation hearing on Gen Pace’s reappointment would have been a backward-looking debate about the last four years.”

Critics accused Gen Pace and Gen Myers of being weak chairmen who allowed Mr Rumsfeld to emasculate the role. John McCain, the top Republican on the Senate armed services committee, once sparked laughter at a hearing when he told Gen Myers that his response was not required because he would only repeat what Mr Rumsfeld had just said.

According to “Plan of Attack”, Gen James Jones, the former US commander in Europe, also told Gen Pace before he took the post that he “should not be the parrot on the secretary’s shoulder”.

Tensions mark the close of G8 summit

Tensions mark the close of G8 summit
By Andrew Ward in Rostock and and Hugh Williamson, Bertrand Benoit and Fiona Harvey in in Heiligendamm
Copyright The Financial Times Limited 2007
Published: June 8 2007 19:12 | Last updated: June 9 2007 01:36

Growing tensions between Russia and the west overshadowed the close of the Group of Eight summit of industrialised nations in Germany on Friday, as Vladimir Putin hardened his stance on the future of Kosovo and offered further controversial proposals to challenge US plans for Europe-based missile defences.

The deepening rift prompted Tony Blair, the outgoing UK prime minister, to warn that people were now becoming “worried and fearful about what is happening in Russia today and Russia’s external policies”.

Mr Blair, whose imminent departure from office enabled him to be particularly blunt, said there there were “real issues” between Russia and the west, adding: “I don’t think they are going to be solved any time soon.”

A series of bilateral talks between Mr Putin and other leaders apparently failed to bridge the differences. Mr Putin dismissed the proposed missile shield as being “very close to our borders and aimed at Iranian weapons which don’t exist”.

Having already surprised the US with an offer to use a Russian radar base in Azerbaijan for its missile defence shield, Mr Putin on Friday suggested that, instead of Poland, the Pentagon place its missile interceptors in Turkey, Iraq or on ships.

He also toughened his stance on the future of Kosovo, rejecting French proposals to resolve the future of the troubled territory, under which Kosovo and Serbia would be given six months to negotiate an alternative status for the region or see it become independent.

The tensions eclipsed the proclaimed achievements of the summit, which was marked by progress on climate change but disappointment for African countries as G8 countries refused to act on promises to boost aid to their continent significantly.

The surprise agreement to begin negotiations on a successor to the Kyoto protocol this December at a United Nations conference in Bali will now make that meeting the most significant on climate change since the protocol was negotiated 10 years ago.

Claude Mandil, executive director of the International Energy Agency, told the Financial Times: “It was very, very good progress...Of course there was a compromise but what was dropped was something that was not important.”

The G8 leaders refused to be specific on when they would meet pledges made at the 2005 Gleneagles summit to boost development assistance by $50bn by 2010, and said they would only “continue their efforts” to increase funding for Aids treatment by $60bn.

Abdoulaye Wade, Senegal president, expressed disappointment, saying his country had “not received an extra dollar in aid” since the Gleneagles pledge at the summit two years ago.

Bono, the rock star and Africa campaigner, condemned the G8 for “broken promises”. On one estimate, only $3bn of the $60bn target will materialise by 2010.

Friday, June 08, 2007

'Long war' plan short on substance

'Long war' plan short on substance
Copyright by The Chicago Sun Times
June 8, 2007

Plan B is beginning to emerge -- the followup to the strategy of the "the surge," which is the current strategy. The president recently has been comparing the Iraq war with the Korean War. Both, he has suggested, are "long wars.'' The one in Korea technically continues, and American troops still are stationed there. Iraq also will be a long war. Some folks at the Pentagon whisper that the Army might start drawing down troops next year (just in time for the election!), but half of them or maybe only a third will remain in Iraq. Thus, there will be a timetable of a sort for withdrawing American troops, which will satisfy the public, but a refusal to give up, which will satisfy the president and his loyal followers.

This brilliant strategy is like all its predecessors, including the original "preemptive" slam-dunk of the invasion of Iraq, verbal legerdemain without any substance. The president and the men around him apparently think that by changing the words that describe the reality in Iraq, they can change the reality -- fooling the American people as they have fooled them for the last four years.

The reality is that the war was a lost cause from the day it started, a hasty, arrogant assumption that the mission would be accomplished in short order and that Iraq, with a little help from the United States, would emerge as a bastion of democracy in the Middle East. We did not send enough troops to achieve these goals, and we had no blueprint for Iraq after the war. This plan was folly and has created a fiasco. Plan B is no different. Neither will be Plan C, which will appear after September. They all share the basic notion that the war could have been won and still can be won.

The president appeals to the public to wait patiently for Gen. David Petraeus to return with a report on the success or failure of "the surge." It is the hapless general who must make a decision that only the president should make. Although the general is an honorable man, he is not likely to report a complete failure. The president, with the aid of some of the residual neo-cons who hang out around the White House, will announce the ''new strategy'': a continued "surge," a draw-down next year, and preparations for a continued presence in Iraq ''after the war.'' Nothing will have changed since the "shock and awe" slogans at the beginning of the war.

The Republican candidates will be under enormous pressure to support the president and to fudge on his commitment to a "long war." The presidential campaign will be shaped by the same issue that shaped the 2006 congressional election: Iraq. Try as they might, the Republicans will not be able to avoid the question of end it or continue it. One ought not, however, underestimate the ability of the Democrats to seize electoral defeat from the jaws of victory.

It's a melancholy picture. Even the remote possibility of the continuation of the war by a new president, to say nothing of a demand that the people endorse a "long war" in Iraq as part of the war on terrorism, would put a strain on the American body politic, already rent by intense anger, that could tear the country apart.

The Bush administration has been a continuous fiasco, symbolized by the roadside bombs in Iraq and the rubble in New Orleans. The arrogance, incompetence, denial, spin, secrecy and appeal to fear, which have marked the last eight years, must be brought to a decisive and conclusive end.

US Waives Some Border Passport Rules

US Waives Some Border Passport Rules
Copyright © 2007, The Associated Press
Published June 8, 2007, 3:09 PM CDT

WASHINGTON -- The Bush administration on Friday temporarily waived some of its new, post-Sept. 11 requirements for flying abroad, hoping to help irate summer travelers whose trips have been jeopardized by delays in processing their passports.

The change would aid those fliers awaiting a U.S. passport to meet the new rule requiring one for travel to Canada, Mexico, the Caribbean and Bermuda. But it won't clear the way for travelers who haven't already applied for a passport.

There is still no passport required for Americans driving across the Canadian or Mexican borders or taking sea cruises, although those travelers are expected to need passports under new rules beginning next year.

Easing the rules should allow the State Department to catch up with a massive surge in applications that has overwhelmed passport processing centers since the rule took effect this year, officials said. The resulting backlog has caused up to three-month delays for passports and ruined or delayed the travel plans of thousands of travelers.

Until the end of September, travelers will be allowed to fly without a passport if they present a State Department receipt, showing they had applied for a passport, and government-issued identification, such as a driver's license.

Travelers showing only receipts would receive additional security scrutiny, which could include extra questioning or bag checks.

DHS spokesman Russ Knocke said the easing of the passport rule would only affect those who have already applied for passports -- not those who apply in coming days for travel later this summer.

"Individuals who have not yet applied for a passport should not expect to be accommodated," Knocke said.

Lawmakers were critical.

"This is further evidence that the Department of Homeland Security and the State Department are simply not ready to make this program work as well as it must," said Sen. Charles Schumer, D-N.Y.

The application surge is the result of the Western Hemisphere Travel Initiative that since January has required U.S. citizens to use passports when entering the United States from Canada, Mexico and the Caribbean by air. It is part of a broader package of immigration rules enacted after the Sept. 11, 2001, terrorist attacks.

In a briefing Friday morning, Maura Harty, the assistant secretary for consular affairs, acknowledged that the State Department did not expect the flood of applications.

"What we did not anticipate adequately enough was the American citizens' willingness and desire to comply with the Western Hemisphere Travel Initiative in the timeframe that they did," Harty said.

Harty said the department had hired 145 people last month to work on the backlog and would hire 400 more people this quarter.

Last year, the agency processed 12.1 million passports. This year, officials expect to process about 18 million, she said. The department received 1 million applications in December, 1.8 million January and 1.7 million in February.

Turnaround times for passports were bumped up from six to 10-12 weeks after the surge, Harty said. But 500,000 applications have already taken longer, she said.

Carrying out the new rules while trying to process existing applications has been akin to "changing out the aircraft engine in flight," she said. Still, the agency expects to eliminate the backlog and meet the new standard of 10-12 weeks before the end of September, she said.

Friday's change would help those like Judy and Darrell Green, of Rifle, Colo., who are still waiting to hear whether their son-in-law's passport will arrive in time for a a family vacation to Mexico to celebrate their 40th wedding anniversary and Darrell's 60th birthday.

Darrell Green's passport arrived Thursday, only after Rep. John Salazar, D-Colo., helped expedite it. Their son-in-law expects to get his Friday with the help of his congresswoman.

"It makes you feel kind of frantic because you've spent all that money," Judy Green said. "It seems like this happens a lot in government. I don't think it's a bad law. They needed to have looked at it more or phased it in."

Lawmakers, who have been pushing for the change for weeks, say they are exasperated that it took so long.

Sen. Norm Coleman, R-Minn., said his office has had to intervene in the cases of more than 1,400 Minnesotans frustrated by the backlog.

"DHS's decision to suspend is simply common sense, and frankly, should have been made months ago," Coleman said.

This summer also may not spell the end of the passport crunch.

Homeland Security has insisted it plans to go ahead with a January 2008 start for requiring passports at all land border crossing in the United States -- a security measure that could trigger a new frenzy of applications.

The State Department is still working on creating a cheaper, passcard alternative for such land crossings.

Lawmakers are already warning that they have serious doubts that the administration will be able to avoid even worse backlogs.

Sen. George Voinovich, R-Ohio, said Congress has given the State Department the flexibility to wait until June 1, 2009, to carry out the land and sea passport requirements. On Friday, he strongly urged the department to take them up on it.

"They continue to insist on the January deadline," Voinovich said of the administration.


Associated Press writers Matthew Lee and Desmond Butler contributed to this report.

The Short View By John Authers - The words "drama" and "Treasury bonds" do not usually go together.

The Short View By John Authers
Copyright The Financial Times Limited 2007
Published: June 8 2007 03:00 | Last updated: June 8 2007 03:00

The words "drama" and "Treasury bonds" do not usually go together. Yesterday was an exception.

The fall of US Treasury prices was greeted with horror by traders. The phrase is overused, but many thought yesterday's events marked the end of an era.

The rise in the 10-year Treasury yield - which underpins many securities in world capital markets - was about 17 basis points at midday in New York, the biggest leap in many years. There was no big economic data release or action from the Federal Reserve. This move was internally generated.

Further, the yield reached the level of 5.05 per cent. For bond traders, many of whom use technical cues, this was crucial. There is a 20-year trend of falling bond yields, as the world has steadily squeezed out inflation. Bond yields fluctuate, but each peak in the cycle for two decades has been progressively lower.

Until yesterday. The abrupt sell-off broke that trend line. The market implied yesterday that the era of stability and declining inflation is over.

What triggered this? Data for weeks have shown the US and world economies growing faster than thought. This week, the "bulge bracket" firms - Goldman Sachs and Merrill Lynch - abandoned their forecasts that the Fed would cut rates this year.

After taking stock, bond traders decided yesterday to sell.

Is this bad for stocks? Usually that depends on why bonds fell - inflation is bad for equities, growth less so. This is not about inflation, as index-linked bonds have barely moved.

What is worrisome is a possible third reason. Money just seems too cheap. Bond yields are not high by historical standards, but the suddenness of their move might dislodge the financing that underpins stocks. If that scenario turns out to be true - and it is still too early to say that it will - the bond sell-off might presage the end of an era for stocks.

US immigration deal on verge of collapse

US immigration deal on verge of collapse
By Alex Barker in Washington
Copyright The Financial Times Limited 2007
Published: June 8 2007 04:13 | Last updated: June 8 2007 18:11

A bipartisan compromise on immigration legislation crafted through months of painful negotiations in Congress looked to be on the verge of collapse on Friday after disgruntled members of both parties joined forces to block the bill.

The defeat of the move to overhaul the troubled immigration system, which was backed by President George W. Bush and both Democrat and Republican Congressional leaders, throws into doubt one of the administration’s top domestic priorities.

The setback also highlighted the immense problems the divided political culture in Washington poses to any legislation that attempts to tackle big domestic issues facing the country, such as social security, immigration, or healthcare. Polls show that the public broadly supported the proposed reforms.

Leading supporters of the legislation, which would have given America’s estimated 12m illegal immigrants a path to qualify for permanent status, vowed to keep on fighting to pass the measures. Ted Kennedy, Democratic senator, promised to come “roaring back” and grab “victory out of the jaws of defeat”.

However, as the two sides began blaming each other, analysts were sceptical that the proposal could be amended to win over its seemingly implacable opponents.

Harry Reid, Senate majority leader, has said he will try to reintroduce the bill. But after the vote he criticised Republicans for failing to deliver promised votes. “This is the president’s bill,” he said. “Where are the president’s people helping us with these votes?”

The passage of the bill through the Senate was blocked late on Thursday night by an unlikely alliance of liberal Democrats and conservative Republicans.

Critics of the bill on the right have derided its measures as offering “amnesty” to undocumented workers who had broken the law without effectively tackling the problem of security at the borders.

The proposal has deeply divided the Republican party and exposed leading supporters of the reforms – such as Mr Bush and John McCain, the presidential candidate and senator – to unusually harsh criticism from within their ranks.

Dissenting Democrats in the Senate were far fewer in number.

Their concerns were that the measures made it harder for divided families to get US green cards and that American jobs were being put at risk by introducing a new temporary worker programme.

House defies Bush with move to increase stem cell funding

House defies Bush with move to increase stem cell funding
By Alex Barker in Washington
Copyright The Financial Times Limited 2007
Published: June 8 2007 03:00 | Last updated: June 8 2007 03:00

Legislation to increase federal funding for embryonic stem cell research was approved by the US Houseof Representatives yesterday but the measure looked doomed to fail after President George W. Bushpromised to use his veto power.

The largely symbolic act of defiance by the Democratic-led House is designed to increase political pressure on the president, who last year rejected a similar bill on the grounds that the techniques used are immoral and destroy human life.

Polls show that the majority of Americans support expanding the research.

The vote in the House, which approved a bill already passed by the Senate, won bipartisan support but fell short of thetwo-thirds majority needed to override a presidential veto.

In a written statement made from the G8 summit in Germany, Mr Bush said it would be a "grave mistake" to fund such research.

"If this bill were to become law, American taxpayers would for the first time in our history be compelled to support the deliberate destruction of human embryos," he said. "For that reason, I will veto the bill passed today."

Democrats made easing restrictions on stem cell research a central plank of their congressional election platform in 2006.

The legislation would provide government funding for researchers to use human embryos created for fertility treatment that would otherwise be discarded.

"Science is a gift of God to all of us and science has to take us to a place that is biblical in its power to cure," said Nancy Pelosi, Democratic speaker of the House. "And that is the embryonic stem cell research."

Mr Bush banned federal funding for stem cell research in 2001 and rejected bipartisan legislation passed by the Republican-led Congress last year.

The Republican party base is generally opposed to embryonic stem cell research. However, a significant minority believe that government funding should be provided.

Prominent members of the party - such as Nancy Reagan, former first lady, and John McCain, senator and presidential candidate - openly oppose Mr Bush over federal funding.

Democrats hope to build a coalition big enough to override the presidential veto.

The ban on funding has raised fears in the scientific community that the US will fall behind in stem cell research. By contrast, opponents of the measure argue that many scientific advances are making work on embryos unnecessary.

A number of congressmen cited research published on Wednesday, for instance, showing that embryonic cells can be made by reprogramming some of the genes in adult skin cells from mice, without having to create an embryo.

Bond yields spark credit concerns

Bond yields spark credit concerns
By Michael Mackenzie and Richard Beales in New York and Joanna,Chung in London
Copyright The Financial Times Limited 2007
Published: June 8 2007 03:00 | Last updated: June 8 2007 03:00

The benign credit conditions that have helped fuel the global buyout boom came under threat yesterday as the yield on 10-year US government bonds registered its biggest daily jump in years.

Some analysts suggested the dramatic rise in yields could herald a sustained period of higher interest rates, increasing the cost of borrowing for companies, deflating borrower-friendly credit markets and eventually crimping the outlook for equity markets.

The S&P 500 index fell 1 per cent by midday in New York while the German Dax dropped 1.4 per cent.

"Stocks need to reflect what bond yields are saying," said Michael Kastner, portfolio manager at SterlingStamos. "Rate cuts have been taken away and, if yields start to reflect that rate hikes are likely this year, then it will get pretty ugly for stocks."

The yield on the 10-year US government note hit 5.14 per cent in New York trading, marking the biggest one-day advance in several years, before settling back to 5.10 per cent. That brought 10-year yields above those on shorter-term Treasuries, restoring a more normal - that is, "steeper" - yield curve.

For much of the past year and a half, longer-dated notes have offered lower yields than shorter-duration bills, creating a "conundrum", as Alan Greenspan, then chairman of the Federal Reserve, put it in 2005.

But yields on US, European and Japanese government bonds have been climbing for a month, fuelled by strong economic data and, in places, fear of inflation.

Government bond yields soared yesterday in the eurozone and the UK, pushing the 10-year Bund yield to a four-and-half-year high and the 10-year gilt yield to its highest for nine years.

The moves come a day after the European Central Bank raised its main interest rate to4 per cent. Many investors fear the ECB will continue raising rates this year to counter inflationary pressures. The Bank of England yesterday kept its main interest rate on hold at5.5 per cent, amid investor worries that rates could rise next month or in August. Predictions of a Fed rate cut have largely been abandoned.

The sharp rise in the US 10-year bond yield was particularly disturbing to technical analysts who monitor the pattern of Treasury interest rates, which have been broadly on the decline since the late 1980s. Over this period, each peak in rates has been progressively lower. Yesterday's advance created a higher peak, breaking the trend and potentially signalling a longer-term advance in rates.

"A lot of people are scared of that 20-year trend line and rightfully so," said Gerald Lucas, senior investment adviser at Deutsche Bank. "A close above that level at the end of this week would likely target a further rise to 5.25 per cent."

The 10-year Treasury is widely used to hedge risk associated with fixed income securities.

Putin in surprise offer to US on missile defence

Putin in surprise offer to US on missile defence
By Andrew Ward in Heiligendamm
Copyright The Financial Times Limited 2007
Published: June 8 2007 03:00 | Last updated: June 8 2007 03:00

Vladimir Putin yesterday seized the initiative in the dispute over US plans to site anti-missile defences in central Europe, suggesting instead a joint plan to base part of the system at a former Soviet radar station in Azerbaijan.

The Russian leader took George W. Bush, US president, by surprise when he made the proposal at the G8 summit in Germany following weeks of rising tensions over the programme.

Mr Putin said he had secured agreement from Azerbaijan to use the radar as part of a collaborative system that would protect Europe from incoming missiles.

If Washington accepted the proposal, he would not haveto carry out his recent threat to retarget Russian missiles against Europe, Mr Putin said.

"This will make it unnecessary for us to place our offensive complexes along the border with Europe," Mr Putin told reporters, standing beside Mr Bush.

Mr Bush described the proposal as "interesting" and said both sides had agreed to engage in "strategic dialogue" to "share ideas" over missile defence.

Stephen Hadley, US national security adviser, said the proposal demonstrated Russian willingness to engage in "real co-operation" on missile defence.

But the two sides were at odds over the potential role of the Azerbaijan radar. Mr Putin portrayed it as an alternative to planned US radar in the Czech Republic. But Mr Hadley said only that Azerbaijan could make a contribution to the system.

Pavel Felgenhauer, a defence analyst in Moscow, said the Gabala radar station was not a suitable substitute for the Czech Republic as it was too close to Iran. It was also too far from the planned US interceptor base in Poland to be viable.

"The Pentagon won't want this at all," he said. "The White House will not reject it out of hand, but I don't forecast any agreement."

Mr Bush has repeatedly called for Russia to "participate" in missile defence. But Russia's proposal went beyond the level of co-operation the US had envisaged. It is unlikely that the US would let its missile shield rely on a former Soviet radar.

Analysts will question whether the proposal marks the start of negotiations that could lead to a compromise, or was made in the knowledge that it would be rejected by the US.

In addition to its planned radar in the Czech Republic, the US wants to locate 10 missile interceptors in Poland.

Washington has argued that the facilities are too close to Russia and too limited to protect against Russia's thousands of ballistic missiles. Moscow views the programme as an expansion of US military influence.

Thursday, June 07, 2007

Radio Arte offers FREE radio journalism courses, ages 15-21

Radio Arte offers FREE radio journalism courses, ages 15-21

I just wanted to let you know that 90.5 FM WRTE Radio Arte Chicago, the non-profit community radio station that I work for, is offering this year once again free radio broadcasting and journalism classes for youth 15-21 years old, with classes in English and Spanish. After the three month course students they are to form part of a Radio Arte production, Sin Papeles/Without Borders (immigration), Homofrecuencia (LGBTQ youth), First Voice/Primera Voz (social justice/ community/ first ammendment). They would also get the chance to submit a proposal for their own show...

Please foward the information to youth who may be interested. Again, the program is free, although there are some technichal equipment that is required, we have support for those who can't afford to. The application and more information at .

Thank you!

Tania Unzueta

Radio Arte’s First Voice/Primera Voz is looking for aspiring reporters, producers, and on-air personalities interested in using the airwaves to talk about a variety of social justice issues. Through a 10-week vocational and leadership training program, young adults 15-21, will engage in media literacy workshops that will teach participants to critically think about issues that affect their everyday lives (immigration, LGBT issues, women’s rights, education, etc), as well as learn how to produce socially conscious features and commentaries to be aired on 90.5fm Radio Arte. Upon completion of their training, participants will become involved in the day-to-day production of First Voice/Primera Voz/Homofrecuencia/Sin Papeles/Without Borders, and will be encouraged to enroll in advanced workshops that will introduce them to marketing, management, and programming.

Primera Voz/First Voice, un programa de Radio Arte transmitiendose de lunes a jueves de 6 a 7 pm, solicita reporteros, productores, y locutores interesados en utilizar nuestro medio de comunicación para promover temas relacionados con conciencia y justicia social. El programa de entrenamiento de Radio Arte invita a jóvenes entre las edades de 15 – 21 años a participar en el curso el cual tiene una duración de 10 semanas. Durante este periodo de entrenamiento vocacional así como de liderazgo, los participantes tomarán talleres de periodismo y radiodifusión en los cuales aprenderán a analizar información de una manera crítica, así motivando a los estudiantes a interesarse y reportar temas que los afectan día a día. Los participantes del entrenamiento aprenderán a redactar y producir cápsulas y segmentos, los cuales serán transmitidos a través de 90.5 fm Radio Arte. Al culminar este entrenamiento, los participantes colaborarán en la producción en alguno de los siguientes programas: First Voice, Primera Voz, Homofrecuencia, Sin Papeles, y Without Borders, así como también tendrán la oportunidad de tomar cursos avanzados de mercadotecnía, administración, y programación

Why it's all in the packaging - 1936 antitrust ruling comes under fresh criticism

Why it's all in the packaging - 1936 antitrust ruling comes under fresh criticism
By John Schmeltzer
Copyright © 2007, Chicago Tribune
Published June 7, 2007

Wander the aisles of Costco or Sam's Club and you enter a bizarre alternate universe of products for sale. Cereal comes in twin packs. Coke is available in cases containing 32 cans, not 24. And printer cartridges are sold in three-packs, not as singles or in pairs as at other stores.

These packaging oddities are a direct result of a 1936 antitrust law that was designed to keep a level playing field in American commerce but critics say has lost its usefulness. They contend the law actually costs consumers millions of dollars annually while forcing manufacturers to concoct wild, unnecessary packaging schemes.

The legislation -- the Robinson-Patman Act -- is such an ingrained part of the American retailing landscape that it gets little notice.

Now a Massachusetts lawsuit involving Ocean Spray Cranberries Inc. has cast a spotlight on the act at the same time that voices in Washington are challenging its relevance.

The basic question, raised by a Federal Trade Commission report in April, is who actually benefits the most financially from, say, the sale of a super jumbo-size container of crackers?

The initial answer might be consumers, because they save money by purchasing in bulk. But the FTC report -- written by a commission that calls for Robinson-Patman's repeal -- suggests that neither consumers nor Costco is the ultimate winner. Rather, the winners are less efficient competitors who, in effect, are shielded by Robinson-Patman, because the act puts restraints on the ability of big-volume retailers to aggressively undercut everyone else on standard-size products.

"This statute imposes significant compliance costs on U.S. businesses and, where applicable, operates as a deterrent to price competition," FTC commission member Jonathan Jacobson said in the report. "The harm it inflicts on U.S. consumers is great."

Not everybody agrees with this sentiment, and there is, as of yet, no rallying cry in Congress to adopt the commission's recommendation to repeal. But the logic of removing barriers to competition between warehouse clubs, big-box discounters and grocery stores, is easy to grasp.

Price the same -- unless ...

The act requires manufacturers to sell products to all retailers at the same price -- unless there is something significantly different, such as the way it is sized or packaged, said Herb Hovenkamp, an antitrust expert at the University of Iowa Law School.

The packaging requirement, of course, is what leads to warehouse clubs selling uniquely large versions of familiar brands. If the act were to go away, then all stores could compete on price for, say, regular-size boxes of cereal or pretzels, though it's true that warehouse stores define themselves by their distinctively-packaged offerings.

Big-box retailers with their tremendous sales volumes likely would be able to negotiate the steepest discounts, thus pressuring grocery stores.

Hovenkamp, who is critical of Robinson-Patman, said its repeal would encourage competition.

"I expect a large number of retailers would make changes and I think nearly all would benefit consumers," he said.

The government already has stepped back from investigating Robinson-Patman violations. The commission noted that the Justice Department has ceased active enforcement and the FTC has "rarely" enforced it in recent years.

But some see trouble if it's repealed. Big retailers already take advantage of their size to demand volume discounts.

Jim Prevor, editor of Produce Business magazine based in Boca Raton, Fla., said he believes "retail competition would become less vigorous" without the act. "It would make it very difficult for a small chain like Treasure Island to compete," he said.

The National Grocers Association agreed: "The law does, and should continue to, guarantee that those who elect to enter and compete in the market have a level playing field."

At the same time that businesses have been watching the FTC, the Ocean Spray lawsuit has become a closely watched focal point because it details how one large consumer products firm manages its way through Robinson-Patman's requirements. It isn't often that a company's pricing strategy gets disclosed to the world, which is why industry people like Prevor has not only been following the suit but blogging about it.

"People from Wal-Mart to Kroger are really watching this case," he said.

Rooted in contract dispute

The lawsuit actually isn't about Robinson-Patman but about a contract dispute between Ocean Spray and two wholesalers, James and Theresa Nolan, who sold Ocean Spray cranberries.

In 2000, according to the suit, Ocean Spray agreed to sell fresh cranberries to Costco for $18 per case for delivery in October and $23 per case for delivery in November, without offering the same price to other club stores. BJ's Wholesale Club, an East Coast club store, discovered the special deal in 2001 and demanded compensation. It subsequently stopped carrying Ocean Spray products for several years, according to the suit.

The lawsuit was filed after the cranberry giant refused to renew its contract with the Nolans' firm.

"Ocean Spray took the position that with Costco they were merely meeting the lower price of a competitor," said Richard LaFarge, who is representing the Nolans in their case against the cranberry giant.

But two years after the Costco pricing incident, the lawsuit alleges that Ocean Spray didn't even bother to claim it was trying to beat a competitor's price when it sold fresh cranberries to H.E. Butt Grocery Co., the largest grocery chain in Texas, for $19 a case compared to the $24 being charged other retailers including Costco, Sam's Club and even Wal-Mart, the world's largest retailer.

Costco and Wal-Mart did not return telephone calls for comment.

Chris Phillips, a spokesman for Lakeville-Middleboro, Mass.-based Ocean Spray, said: "This case has nothing to do with our competitive practices which abide with all laws and standards. It is a case of a disappointed former employee whose contract was not renewed," he said.

He was unwilling, however, to discuss the company's marketing practices outlined in the case.

Prevor said he was fascinated by the suit's depiction of the cutthroat nature of competition and what it means for business ethics.

"You just can't favor one customer over another when you are selling the same item and maintain any customer loyalty," he said.

He added in his blog: "This will wind up being a big story. Much of it turns on legalities such as the exact circumstances under which the Robinson-Patman Act are deemed violated. ... If this goes to trial, the lawyers will duke it out on these grounds."


Nominee under fire for views on gays - Surgeon general pick accused of bias

Nominee under fire for views on gays - Surgeon general pick accused of bias
By Jeffrey McMurray
Copyright © 2007, Chicago Tribune and The Associated Press
Published June 7, 2007

LEXINGTON, Ky. -- President Bush's nominee for surgeon general, Kentucky cardiologist Dr. James Holsinger, has come under fire from gay-rights groups for, among other things, voting to expel a lesbian pastor from the United Methodist Church and writing in 1991 that gay sex is unnatural and unhealthy.

Also, Holsinger helped found a Methodist congregation that, according to gay-rights activists, believes homosexuality is a matter of choice and can be "cured."

"He has a pretty clear bias against gays and lesbians," said Christina Gilgor, director of the Kentucky Fairness Alliance, a gay-rights group. "This ideology flies in the face of current scientific medical studies. That makes me uneasy that he rejects science and promotes ideology."

Holsinger, 68, has declined all interview requests, and the White House had no immediate comment Wednesday.

Holsinger was Kentucky's health secretary and chancellor of the University of Kentucky's medical center. He taught at several medical schools and spent more than three decades in the Army Reserve, retiring in 1993 as a major general.

His supporters, including fellow doctors, faculty members and state officials, said he would never let his theological views affect his medical ones.

"Jim is able, as most of us are in medicine, to separate feelings that we have from our responsibility in taking care of patients," said Douglas Scutchfield, a professor of public health at the University of Kentucky.

In announcing Holsinger as his choice for America's top doctor on May 24, Bush said the physician would focus on educating the public about childhood obesity.

The term of the previous surgeon general, Dr. Richard Carmona, was allowed to expire last summer.

Scutchfield said Holsinger has advocated expanded stem cell research, in opposition to many conservatives, and also has shown political courage in this tobacco-producing state by supporting higher cigarette taxes to curb teen smoking.

Gov. Ernie Fletcher commended Holsinger for working to fight obesity and other health problems in Kentucky, which ranks near the bottom in many categories. "He helped get the ball rolling and focusing on healthy lifestyles," Fletcher said.

As president of the Methodist Church's national Judicial Council, Holsinger voted last year to support a pastor who blocked a gay man from joining a congregation. In 2004, he voted to expel a lesbian from the clergy. The majority of the panel voted to keep the lesbian associate pastor in place, citing questions about whether she had openly declared her homosexuality, but Holsinger dissented.

Sixteen years ago, he wrote a paper for the church in which he likened the reproductive organs to male and female "pipe fittings" and argued that homosexuality is therefore biologically unnatural.

"When the complementarity of the sexes is breached, injuries and diseases may occur," Holsinger wrote, citing studies showing higher rates of sexually transmitted diseases among gay men and the risk of injury from anal sex.

Gilgor, the gay-rights activist, called the paper "one twisted piece of work."

As for the congregation Holsinger helped establish, Hope Springs Community Church, Rev. David Calhoun told the Lexington Herald-Leader last week that the Lexington church helps some gay members to "walk out of that lifestyle."

The National Gay and Lesbian Task Force, which is opposing the nomination, calls such a practice "nothing short of torture" for gays.

Phyllis Nash, who worked under Holsinger for nine years as vice chancellor at the medical center, said the views he took in church appear at odds with his professional actions.

She recalled a women's health conference that Holsinger helped organize in 2002 that included a session on lesbian health. Despite complaints from some lawmakers, Holsinger insisted the session go forward, she said.

- - -
A job that attracts controversy

Some former surgeons general whose work inspired complaints and conflict:

Hugh Cumming: Under his leadership, the Public Health Service in the early 1930s began the four-decade-long Tuskegee syphilis experiment, in which nearly 400 black men were not told they had venereal disease and were left untreated so the disease's effects could be studied.

Thomas Parran Jr.: He was a crusader for approaching venereal disease as a medical condition instead of a target for moral reproach. In 1934, before becoming surgeon general, he dropped plans to speak on CBS radio when the network refused to let him say "syphilis control."

Luther Terry: A committee led by Terry issued the 1964 report that unequivocally linked cigarettes to lung cancer. While that conclusion isn't in dispute today, tobacco companies at the time questioned the evidence. Terry's work led to the warning labels on cigarette packs.

C. Everett Koop: His nomination in 1981 met resistance from liberals who feared he would use the job to spread his anti-abortion views. But later he took harder shots from conservatives over his call for sex education to begin at an early age to help prevent the spread of AIDS.

Joycelyn Elders: Chosen by fellow Arkansan Bill Clinton, she found herself labeled by critics as the "condom queen" for advocating safe sex practices. Elders also invited controversy by urging research into whether legalization of drugs would cut crime. She quit after 15 months.

Sources: and Tribune news services

Killing immigration bill won't block amnesty

Killing immigration bill won't block amnesty
Copyright by The Chicago Sun-Times
June 7, 2007

MANCHESTER, N.H. -- ''Silent amnesty.'' GOP White House hopeful Sen. John McCain (R-Ariz.), a champion of the comprehensive immigration bill faltering on the Senate floor this week, did not invent the phrase. But he has been using it lately. If the notion of "silent amnesty" gains traction, it may throw a lifeline to the comprehensive immigration bill, which is, once again, headed nowhere.

Amnesty is a red-meat word. Immigration opponents spit it out to demagogue, making it difficult to have a rational discussion about what to do with the estimated 12 million immigrants living in the United States illegally.

Backers of the comprehensive immigration bill use a lot of energy to dance around the word amnesty. Giving a break is a form of amnesty. Lou Dobbs has a point. But a process to legalize illegal status -- full of hoops to jump through -- is a long way from the blanket amnesty that opponents talk about.

McCain is trying to reframe the discussion. The word "amnesty" needs to be neutralized. The other day, in calling out rival Mitt Romney, the former Massachusetts governor, who does not support a revamp of the system, McCain said that position amounted to pandering and "silent amnesty."

At the Republican presidential debate at Saint Anselm College here Tuesday night, McCain explained, "For us to do nothing is silent and de facto amnesty. What we have done is what you expect us to do, my friends, and that's come together with the president of the United States, the leader of our party, Democrat and Republican, conservative Republicans like Jon Kyl, Johnny Isakson, Saxby Chambliss and Trent Lott, and sit down and figure out an approach to this problem.''

If Congress stalls, then illegal immigrants stay in the country without doing anything to resolve their status. That, in effect, is also a break. That's a form of amnesty, because there is no way millions of people -- some living in the shadows of society -- are going to be rounded up and sent back.

On the Senate floor, Sen. Ted Kennedy (D-Mass.), who like McCain has worked for years on immigration, said "we will not conduct massive roundups and deport 12 million. We do not have the means to do it. It would disrupt our economy and inflict hardships and cost more than $250 billion to have buses all the way from Los Angeles to New York and back to try and do this, if it was even possible."

Last year, Congress could not agree on a bill when the Republicans controlled both chambers. With the Democrats in charge, the result may be the same because the measure may be loaded with compromises -- such as a guest worker program -- some Democrats just won't accept. Watching the Senate struggle this week with a series of amendments to the main immigration bill, I don't think this downbeat prediction is premature

Immigration is already injected in the 2008 Republican primary, and the debate showed the wide divide between McCain and his chief rivals, former New York Mayor Rudy Giuliani and Romney, who say that the overhaul is not necessary.

Unlike most Senate matters, where 60 votes are needed to keep a measure alive, this time the magic number is just two. As I wrote this Wednesday, the two Senate leaders, Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.), were talking to see if they can break the brewing stalemate. McConnell wants the Senate to consider more amendments; Reid wants an agreement over how much time they will take up.

Whatever the Senate decides, there will have to be a second vote before any bill goes to the president to sign. As Reid said, "Whatever we bring out of the Senate will be an imperfect piece of legislation, of course. But remember, there are other steps before we finish this. The House has to do a bill. The president will have his input there, I'm sure. It has to go to conference. There will be input there.''

If the process stops, then the silent amnesty continues.

Chicago Sun-Times Editorial - Stem cell research bill should be enacted into law

Chicago Sun-Times Editorial - Stem cell research bill should be enacted into law
Copyright by The Chicago Sun-Times
June 7, 2007

It has been a long and difficult journey, and there's a good chance more obstacles will have to be overcome before the desired outcome is reality. But a bill to ease restrictions on federally funded embryonic stem cell research likely will come out of Congress today. Two months after the Senate voted to pass the Stem Cell Research Enhancement Act of 2007, the House is poised to do the same.

The bill will allow for research using stem cells derived from human embryos that were donated by patients who had them created for fertility treatments. Current policy allows federal money only for research using embryonic stem cells created on or before Aug. 9, 2001.

President Bush, who last year vetoed legislation to allow funding of additional lines of embryonic stem cells, has threatened to veto this legislation as well. At last estimate, supporters of the bill still did not have enough votes to overcome a veto. But considering the overwhelming popular support for this research, which could yield treatments and possible cures for juvenile diabetes, Alzheimer's, Parkinson's and other diseases, there's always hope that could change. This issue could have a significant impact on next year's elections. Republicans looking to regain some of their lost support won't want to risk alienating voters on this life-and-death matter and should urge Bush not to wield his veto pen.

Landmark Aids deal under threat

Landmark Aids deal under threat
By Hugh Williamson in Heiligendamm and Andrew Ward in Rostock
Copyright The Financial Times Limited 2007
Published: June 7 2007 03:00 | Last updated: June 7 2007 03:00

The Group of Eight wealthy countries appear on the verge of backtracking on their landmark agreement two years ago to fund universal access to treatment for Aids sufferers, the Financial Times has learnt.

Summit documents ob-tained by the FT show that the G8 is now aiming to help "over the next few years . . . approximately five million people" with Aids - a dramatic cut from the goal of reaching 10m victims by 2010 made at the Gleneagles G8 summit in 2005.

The reduced target comes despite several G8 leaders, including US president George W. Bush and German chancellor Angela Merkel, this week highlighting Aids funding as a key summit priority.

The summit draft communiqué, dated June 1, still says the G8 plans to "scale up towards 'universal access'" but then cites the 5m figure for people who will be supported with "life-saving anti-retroviral treatment".

A senior official familiar with the summit plans on Aids said the lower target would be a "huge backward step given the commitments made at Gleneagles". The British government is lobbying for the summit passage to be revised, G8 diplomats said.

Francoise Ndayishimiye from Burundi, a board member from the Global Fund to Fight Aids, Tuberculosis and Malaria, which receives most of its funds from G8 governments, said it would be a "disaster" if the G8 backs away from its universal access pledge.

The fund, set up at the initiative of the G8 in 2000, said it needed to increase spending to $6bn-8bn a year,from $2bn at present, to achieve the target of universal access to treatment by 2010.

"It is unclear whether we will meet these goals" if the G8 reduces its own target, Seth Amgott, a Global Fund spokesman said.

Mr Bush last week pledged $15bn of fresh cash for anti-Aids initiatives over the next five years - subject to approval from Congress - doubling the existing US commitment.

Speaking following a meeting with Ms Merkel yesterday, President Bush highlighted fighting Aids as one of his top priorities at this week's summit.

"I come with a deep desire to make sure that those suffering from HIV/Aids on the continent of Africa know that they'll get help from the G8," he said.

Ms Merkel is also soon expected to announce a new Aids pledge worth €1bn ($1.35bn; €679m), according to German media. The European Commission, also represented at the G8 summit, pledged last week €100m for the Global Fund for 2007, and proposed a further €300m over the following three years.

Nicolas Sarkozy, French president, said this week that he would make the G8 target of universal access a priority at the summit, according to campaign groups that held talks with him.

The lowered goal in the G8 draft communiqué was inserted at the insistence of the US delegation, according to several officials close to G8 delegations.

Aids experts and campaigners said it reflected divisions between the US and European countries on the targeting of Aids funding, and realisation on the part of G8 governments that providing universal access was in the short term beyond their budgets.

Coverage of about 10m people would cost around $23bn, according to the United Nations Aids agency.

Researchers make stem cells from skin

Researchers make stem cells from skin
By Clive Cookson in London and Rebecca Knight in Boston
Copyright The Financial Times Limited 2007
Published: June 6 2007 23:16 | Last updated: June 6 2007 23:16

Three scientific teams published separate studies on Wednesday showing that embryonic stem cells can be made by reprogramming some of the genes in adult skin cells, without having to create an embryo – at least in mice.

Separately, a fourth scientific paper showed that newly fertilised eggs could be used instead of unfertilised eggs to produce cloned mice. If this technique were extended to humans, it might open up a new source of stem cells for therapeutic cloning research: frozen early-stage human embryos, which are much more plentiful than human eggs.

The animal research, carried out in the US and Japan and published in the journal Nature, will encourage opponents of human embryo experiments. But the scientists involved in the studies said it was far too early to tell whether the same procedures would work with adult human cells, let alone whet her it would be safe to use clinically to treat disease.

“These results are preliminary and proof of principle,” said Rudolf Jaenisch, a member of the Whitehead Institute and a professor of biology at MIT, who led one of the studies. “Human embryonic stem cells remain the gold standard . . . and it is a necessity to continue studying embryonic stem cells through traditional means.”

President George W. Bush banned federal funding of human embryo research in 2001 and has since vetoed bipartisan legislation that would have eased restrictions on the study. That has stoked fears among scientists that the US will fall behind in stem cell research – a trend that is already taking place in fields such as technology and engineering.

Several states, such as California, New York and New Jersey, have begun funding such experiments themselves. In addition, privately funded research on embryonic stem cells is under way at many institutions.

Scientists said that these breakthroughs could move this research forward substantially by attracting greater numbers of scientists to the field, as well increasing private investment.

“There’s still a ways to go but at first blush, the results are very encouraging and it’s certainly a boost for the stem cell research business,” said Terry Devitt, a director at the University of Wisconsin’s stem cell research programme. “But we still have a bottleneck in the federal government. We’re hamstrung because the research is inadequately funded.”

Several candidates for president, both Republican and Democrat, have gone on record as supporting human embryo research, which Mr Devitt said is an indication that funding could increase substantially in the next administration. “Right now we’re stuck,” he said.

Merkel celebrates G8 climate agreement

Merkel celebrates G8 climate agreement
By Fiona Harvey in Kuhlungsborn
Copyright The Financial Times Limited 2007
Published: June 7 2007 11:14 | Last updated: June 7 2007 15:34

Angela Merkel on Thursday hailed a G8 agreement on climate change as the wealthy nations agreed on a goal to cut greenhouse gases and negotiate a new agreement on tackling climate change within the United Nations.

After tough negotiations, the US agreed to ”seriously consider” a goal of cutting greenhouse gas emissions by 50 per cent by 2050, a compromise reached after other leaders present called for a firm target.

Fiona Harvey reports from the G8 summit on the US shift in climate change policy
”In setting a global goal for emissions reductions in the process we have agreed today involving all major emitters, we will consider seriously the decisions made by the European Union, Canada and Japan which include at least a halving of global emissions by 2050,” the G8 said.

The US also committed itself to beginning negotiations on a UN agreement on emissions later this year in Bali.

Ms Merkel said the agreement was ”very successful” and ”a clear commitment to continue the UN climate process.”

She said: “Many countries moved on this issue.”

The commitment to pursue an agreement through the UN marks a clear departure from the Bush administration’s previous position of refusing to participate in discussions of what would follow the Kyoto treaty when its current provisions expire in 2012.

Mr Bush said earlier in the day: “The United States will be actively involved, if not taking the lead, in a post-Kyoto framework, post-Kyoto agreement.”

Such a commitment would go beyond Mr Bush’s plans last week for a series of meetings among the 15 biggest greenhouse gas emitters, to discuss climate change.

”Getting this commitment could be more important than the targets,” one person from a European delegation said before the declaration was agreed.

However, environmental groups warned that Mr Bush was only agreeing to UN talks on a post-Kyoto framework in order to appear less isolated internationally.

Phil Clapp, president of the US National Environmental Trust, said: “He has not really changed his position at all.”

Mr Clapp also said a long term aim to cut emissions, such as was agreed on Thursday, was of less value than a shorter term commitment: “What matters is what you do on emissions in the next ten years, not by 2050.”

Mr Bush also repeated comments from Wednesday that the US wanted to be a bridge between Europe and China and India on climate change. ”I told Tony that we’re deadly honest” in wanting to ”get something done”.

Wednesday, June 06, 2007

Out of touch with Illinois? - Presidential candidate Obama has little to say on local issues

Out of touch with Illinois? - Presidential candidate Obama has little to say on local issues
Copyright by The Sun-Times Columnist
June 6, 2007

Is Barack Obama out of the loop when it comes to his home state of Illinois?

That was the question posed Monday by my NBC5 colleague, political reporter Mary Ann Ahern, after trying hard to get the senator's views on a variety of newsy topics in Chicago. Obama, who showed up at Monday's Operation PUSH convention, stopped for a very brief Q-and-A with waiting reporters. Getting Obama to set aside time to talk to the local press back home has been nothing short of a major challenge for many months now.

What about the state budget funding crisis and casinos? asked Ahern.

''I haven't been following the negotiations closely enough to know what's taking place,'' Obama said.

How has his political mentor, Senate President Emil Jones, the recipient of major ComEd campaign cash, handled the utility rate freeze issue?

''I apologize, guys, but I really have not followed closely what's been happening in Springfield, I had a little bit of other stuff to do,'' the senator said with a smile.

As Obama walked away, reporters called out questions about his now-indicted friend and fund-raiser, Antoin ''Tony'' Rezko. And about Cook County Board President Todd Stroger, someone Obama endorsed, who is currently up to his eyeballs in problems. Obama, still moving, either didn't hear or chose not to answer.

But Ahern persevered, piping up one more time to ask about Stroger and the property tax he promised not to increase but now wants to.

''You know, I, I apologize,'' Obama said. ''I just haven't been following these local stories closely enough to give an informative opinion. Otherwise, I would. I'm not dodging it, I just haven't been reading the stories, so I don't want to misstate something that I don't know about. Is that fair guys? Bye.''

Give Obama points for honesty. He didn't know there is a meltdown of epic proportions under way in Springfield, where he served as a state senator for eight years. And he wasn't tuned up, he said, on the mess that Todd Stroger has yet to address in county government, where there is a downward spiral at Stroger Hospital and the Juvenile Detention Center, just to name two continuing crises that directly affect the poor.

Unlike the junior senator from Illinois, the senior senator, Dick Durbin, was entirely up to speed when questioned on Sunday's NBC5 "City Desk" program, able to comment on the sorry state of this state's warring Democratic leadership, the problems of the county president and the need to do something fast for Illinois consumers hit with staggeringly high gas and electric bills.

But, you might argue, Durbin isn't running for president. And Obama is.


Then again, Durbin is the majority whip, the second most powerful Democrat in the U.S. Senate, and a pretty busy guy on national and international fronts. But first and foremost, he's elected by us in Illinois to pay attention to us in Illinois.

That applies to Obama, too.

Then again, if Obama had been aware of the mess that is going on in Springfield and the calamity that continues to dog Cook County, he might not be eager to talk about it anyway. It would only anger the political people who have given him their full support, not to mention fund-raising efforts in his bid for the White House.

And Obama has already made it clear that when it comes to uncomfortable questions, he's careful whom he's willing to be interviewed by. When Sun-Times' award-winning reporter Tim Novak comprehensively dissected the complicated financial world of Tony Rezko, including Rezko's propitious sale of property to Obama, Obama stayed as far away from Novak as he could get. No lengthy, sitdown interview has ever been allowed by his handlers.

It's not unusual. Hillary Clinton, too, has declined interviews with investigative reporters, among them a New York Times team whose book is just being released.

In the world of presidential politics the mission is clear, staying on message is essential, and the larger, broader national audience is a far, far more desirable target.

Whoever said ''all politics is local'' just wasn't paying attention.

New facility opens for gays, lesbians - Complex boasts cafe, gymnasium, store and theater

New facility opens for gays, lesbians - Complex boasts cafe, gymnasium, store and theater
By Alexa Aguilar
Copyright © 2007, Chicago Tribune
Published June 6, 2007

When Vernita Gray began advocating for gay rights in the early 1970s, she met with gays and lesbians in a small rented space, and they received little support from their straight neighbors and political leaders, she said.

She has witnessed remarkable change since then, Gray said Tuesday, as she stood in a Lakeview rooftop garden that is part of a new, $20 million center for the gay, lesbian, bisexual and transgender community.

"This will be my 38th Pride Parade this month and to come past this building and see what has been accomplished, I will shed some tears," said Gray, a liaison to the gay community for the Cook County state's attorney. "I could not have believed then that this would happen in my lifetime."

The Center on Halsted, 3656 N. Halsted St., is five years in the making, built primarily with the millions raised from 2,000 private donors -- including former tennis star Billie Jean King, for whom the recreational hall is named -- and help from city, state and federal dollars.

With recreational, cultural and support services all under one roof, the facility is the most comprehensive gay community center in the Midwest, its founders say.

In the lofty rooms of the three-story community center, people can play basketball in a huge gym, attend a production in the theater and surf the Web in a computer lab. There is also dedicated space for seniors, teens and offices. There will be a charge for some services, but use of facilities such as the gym and computer lab are free.

The three-story, 185,000-square-foot complex also will house a cafe, underground parking garage and a Whole Foods grocery store, whose rent will help to sustain programs.

Daley, city aldermen and state Treasurer Alexi Giannoulias attended Tuesday's opening ceremony. The center's rooftop garden is named after Daley, who received loud cheers from the crowd at the opening.

Calling it a "labor of love," Daley said the "community center is good for business, good for the community and good for the environment."

The complex features green design, including natural ventilation and light, the rooftop garden and a rainwater collection system that is used for the toilets.

It also features the terra cotta and brick facade of the 1920s-era building once on the site. The remaining 75 percent of the facade is clear glass -- a nod to the fact that the gay community no longer feels it has to hide, officials said.

"It's a huge, visible beacon," said Robbin Burr, the center's executive director.

In addition to services and full-time programs, the center can be used for birthday parties, commitment ceremonies and other events.

There have been services for gays in crisis for years, Burr said, and that will continue. But the community was seeking programs and services for gays who were "comfortable in themselves," she said.

For youth, the center's programs could serve as the first place they feel comfortable with their homosexuality.

"They can find role models here," Burr said, and feel like part of a larger community.

The programs for young people were a major reason Lorin Adolph, 42, decided to donate to the project.

Adolph, a lifetime Lakeview resident, had never given a significant amount to a charitable organization before, but felt moved to do so when he recalled growing up in the 1970s without many gay role models. The adult gays he does remember were ridiculed by his peers, he said.

"I thought, 'If I can be a small part of this place where young people don't have to hear those comments,' then I should do this," Adolph said.

He said he takes pride in living in a city where he can live openly as a gay man.

Gray, the longtime activist, said that while she could never have visualized such progress when she was a younger woman, she's delighted that current and future generations of gays have a permanent home.

"There's nothing like a home of your own," Gray said.


Financial Times Editorial Comment: Time to abandon the absurd charade at Guantánamo Bay

Financial Times Editorial Comment: Time to abandon the absurd charade at Guantánamo Bay
Copyright The Financial Times Limited 2007
Published: June 5 2007 20:59 | Last updated: June 5 2007 20:59

For five years, the administration of President George W. Bush has sought to weave a cloak of legality to clothe the wrongs it has committed in the “war on terror”.

Earlier this week, that threadbare veil was pierced yet again – as it has been so often in the past – when two military judges at the US detention facility at Guantánamo Bay in Cuba rebuked the administration for failing to follow the law.

Civilian courts, including the US Supreme Court, have long looked askance at the way the administration has warped and twisted national and international law to give it a free hand to combat terrorism. Now military judges seem in no hurry either to play their part in this absurd charade of justice.

This week’s rulings are, on the face of it, merely technical: according to a new law rammed through Congress (with bipartisan complicity) last year, the alternative justice system at Guantánamo Bay can only try “alien unlawful enemy combatants”. But the administration failed to comply with that law when it brought two Guantánamo detainees before military tribunals on Monday. Even though the administration all but wrote the relevant provisions of the law – and must have been familiar with what it required – the government did not classify the two men as “unlawful” combatants, as the law demands. (The law does not cover “lawful” combatants, such as uniformed government soldiers.)

It is unclear whether this blunder reflects stunning incompetence or arrogant disregard for the law, but either way it could prove very costly. There can be no further military tribunals until the government either gets the law rewritten, gets a special appeals court (that has not yet been created) to reinterpret the law, or takes other cumbersome steps to recharge the suspects. Either way, there will be more delays, and the path to spurious justice will again be blocked.

Taking the law back to Congress for revision could be risky for the administration: opponents of the court-stripping provisions of the law might seize this opportunity to try to rewrite that part too.

It is high time Mr Bush faced reality. For five years he has struggled to construct an alternative justice system for foreign terrorism suspects. Yet in that time he has convicted no one – and dragged America’s reputation through the dirt.

Mr Bush should abandon this farce and bring the suspects before traditional courts martial. That will doubtless be harder than trying them in kangaroo courts. But it is his only hope of salvaging even a shred of credibility.

Libby sentenced to 30 months in CIA case

Libby sentenced to 30 months in CIA case
By Alex Barker in Washington
Copyright The Financial Times Limited 2007
Published: June 5 2007 17:06 | Last updated: June 5 2007 20:01

Lewis “Scooter” Libby, the former chief of staff to the US vice-president, on Tuesday became the highest ranking government official since the Iran-Contra scandal to face imprisonment after a judge jailed him for two and a half years for perjury and obstruction of justice.

The ruling, which drew gasps from the packed court room, marks the closing chapter in a saga that has dogged some of the most senior members of the US government and raised deep questions about how the war in Iraq was justified.

The prison sentence is likely to raise pressure on President George W. Bush to pardon Mr Libby from members of Washington’s conservative establishment, who believe the former aide was ensnared in a politically motivated investigation.

The former administration aide, who was additionally fined $250,000 (£125,000), was convicted of lying to a grand jury about his role in revealing the identity of Valerie Plame, a covert CIA agent.

Prosecutors claimed that White House officials and the office of Dick Cheney, vice-president, leaked her name in order to discredit Ms Plame’s husband, who had publicly disputed intelligence about Iraq’s nuclear ambitions.

No charges were brought against any individual for deliberately breaking Ms Plame’s cover.

As the sentence was read out, Mr Libby stood before the judge with an impassive expression. In a brief statement to the court he showed no hint of remorse.

“Now I realise that the court must decide on punishment as prescribed by law,” he said, speaking quietly.

“It is respectfully my hope that the court will consider, along with the jury verdict, my whole life.”

Judge Reggie Walton re-jected pleas of leniency from Mr Libby and his defence lawyers, who argued that his “exceptional public service” and the “public humiliation” he had endured made him eligible for probation.

In handing down the sentence, Judge Walton said it was “important that people who occupy positions of responsibility know that if they are going to step over the line . . .  there are consequences”.

Patrick Fitzgerald, the special prosecutor who led the investigation, said Mr Libby showed “absolutely no contrition” and deserved three years in prison.

Rise and fall of Cheney’s aide

Convicted in March on four of five counts in the investigation into who blew the cover of CIA analyst Valerie Plame, whose husband was an outspoken Iraq war critic
No charges have been brought against anyone for the actual leaks to journalists. Federal law makes it a crime knowingly to reveal the identity of a covert agent
Known as “Dick Cheney’s Dick Cheney”, Libby was a quiet force in building the Bush administration’s case for the Iraq invasion
Libby also served in the administration President HW Bush as deputy undersecretary of defence and was at the State Department during the Reagan administration
After the sentencing, Mr Bush said he “felt terrible” for Mr Libby’s family but declined to comment about an intervention until the criminal proceedings had concluded. Mr Libby has an appeal pending and was free to leave the court on Tuesday.

Democrats' White House hopefuls call on the Almighty

Democrats' White House hopefuls call on the Almighty
By Edward Luce
Copyright The Financial Times Limited 2007
Published: June 6 2007 03:00 | Last updated: June 6 2007 03:00

An unusual trend is emerging in the 2008 presidential election campaign: Democrats seem happier talking about God than Republicans.

Whether it is because Mitt Romney is a Mormon, which is off-putting to many evangelicals, or because Rudy Giuliani (a Catholic) is on his third marriage and supports abortion rights, or because John McCain is an Episcopalian (Anglican) and views faith as a private matter, the three Republican frontrunners see little percentage in bringing God into the discussion.

In contrast, the leading Democrats revelled in the chance to discuss their beliefs at a debate on "faith, values and poverty" hosted by Sojourners, a centre-left evangelical group, in Washington on Monday night.

The political logic is clear. Roughly a quarter of Americans describe themselves as evangelical - born again - Christians, of whom 78 per cent voted for George W. Bush in the 2004 election against 21 per cent for the Democrats' John Kerry.

Most of the remainder of the US electorate describe themselves as Christian believers in one form or another. According to the Pew Research Centre's forum on religion and public life, only 26 per cent of Americans think their political leaders express personal religious beliefs "too much". Most of the rest wanted more about God from their elected representatives.

"I can tell you that it is a part of my daily prayer to ask the Lord to give me the strength to see the difference between what I want to do and what he wants me to do," John Edwards, who is a Baptist and is running third in the Democratic presidential stakes, told the audience of 1,500 left-leaning evangelicals. "Not only my faith but also prayer has played a huge role in my life. It does every single day. It's what gives me the strength to keep going."

Barack Obama, the title of whose recent book, The Audacity of Hope, was borrowed from his favourite pastor in Chicago, was equally forthcoming about his faith. Quoting Abraham Lincoln's famous dictum about asking whether you were on God's side and not whether God was on yours, he said: "Are we following His dictates? Are we advancing the causes of justice and freedom? Are we our brother's keeper, our sister's keeper? That's how I measure whether what we are doing is right."

In response to a question about Mr Bush's pre-occupation with "evil", Mr Obama, who belongs to the United Church of Christ, argued there was evil in the world.

Of the three, Hillary Clinton, whose husband, Bill Clinton, held regular prayer meetings in the White House, was the most reticent about advertising her personal beliefs. A United Methodist, Mrs Clinton admitted that she prayed but surmised that there was a lot of "rolling of eyes" from God given the "trivial and self-serving" requests her prayers entailed.

"I take my faith personally and seriously," she said. "I come from a tradition that is perhaps a little too suspicious of people who wear their faith on their sleeves . . . so a lot of the talk about faith doesn't come naturally to me," she said.

In contrast, however, to the traditional Republican line, all three resisted taking hellfire stances on issues such as gay marriage and abortion. Mrs Clinton reiterated her view that abortion should be "safe, legal and rare" - emphasising "rare". Mr Edwards argued that removing poverty and providing healthcare were overriding Christian concerns.

And Mr Obama drew huge applause when he urged chief executives to consider the moral implications of the fact that many of them are paid more in a single day than the average worker receives in a year.

Zapatero warns Eta as truce ends

Zapatero warns Eta as truce ends
By Leslie Crawford in Madrid
Copyright The Financial Times Limited 2007
Published: June 6 2007 03:00 | Last updated: June 6 2007 03:00

Spain was braced yesterday for renewed terrorist violence after Eta, the outlawed Basque group, called off a 15-month truce and said it would resume fighting for an independent state.

José Luis Rodríguez Zapatero, the prime minister who had sought peace talks with Eta since his election in 2004, said the group could expect the full force of the law. "Once again, Eta is taking the wrong course," he said. "Its decision . . . goes against the wishes of Basque and Spanish societies."

Mr Zapatero, who wanted a Northern Ireland-style accord, yesterday tacitly admitted defeat. He had done "all that is within my power to achieve peace and to create a framework of universal coexistence". Now it was over.

Eta's statement dashed hopes for an end to a conflict that has claimed more than 800 victims since the 1960s.

Spain's Socialist government considered the ceasefire broken in December, when Eta set off a car bomb at Madrid's Barajas airport that killed two people. Eta insisted that the truce held.

Madrid called off the peace process but indicated it could resume if Eta showed it was renouncing violence. The sign never came.

The opposition Popular party, meanwhile, refused to back Mr Zapatero's peace overtures. Analysts said the division among the democratic parties had weakened the government's hand.

Although Mr Zapatero appealed for unity, it was not clear if the development would bring the two main parties closer together. Mariano Rajoy, leader of the Popular party, said he was still unsure where the prime minister stood on talks with Eta.

Mr Rajoy called on Mr Zapatero to declare there would be no further contacts with Eta. The end of negotiations, however, will also deprive Mr Rajoy of a powerful issue with which to attack the government.

The end of the ceasefire comes 10 days after local elections in which Eta sympathisers gained control of 17 town halls in the three Basque provinces. Groups that support Eta do better at the polls when Eta is not killing. Even so, its support has been halved since Eta's last truce, in 1998-99.

Mr Zapatero sought peace talks with Eta soon after coming to power. Four days before the March 2004 general election, Islamist terrorists killed 191 people in the Madrid rail bombings. The new government was keen to put an end to Eta violence so it could deal with the more serious Islamist threat.

Eta announced a "permanent ceasefire" in March 2006. Government and Eta representatives held exploratory contacts last year. After the Barajas attack, the government put the peace plan on hold.

In the run-up to the May elections, judges struck off dozens of electoral lists deemed to be surrogates for Batasuna, a political party that was banned in 2002 because of its links to Eta.

However, they could not proscribe the pro-independence Acción Nacionalista Vasca because its candidates had no proven links to Eta. ANV polled 73,344 votes, 7.4 per cent of the total, in the three Basque provinces.

Wal-Mart to launch payments card

Wal-Mart to launch payments card
By Jonathan Birchall in New York
Copyright The Financial Times Limited 2007
Published: June 6 2007 00:01 | Last updated: June 6 2007 00:19

Wal-Mart plans to launch a payments card aimed at the estimated 80m US residents who do not have access to a bank account.

Called the Wal-Mart MoneyCard, the prepaid product would be launched with GE Money, the retailer’s financial partner, nd branded a Visa card, Wal-Mart officials said. An official announcement of the pilot programme could come as soon as this month.

The venture represents a significant expansion of Wal-Mart’s financial services offered to mostly low-income customers, which include low-cost cheque-cashing and money-transfer services.

It also follows the decision this year to abandon a bid to win a state banking licence in the face of a storm of opposition from the banking industry.

Prepaid gift cards are popular in the US, generating a market worth $76bn last year. But Wal-Mart hopes customers will use the cards as quasi-bank accounts to access a range of financial services.

The card would be modelled on the existing Visa Prepaid card, which lets holders have their weekly wages credited to the card, or to top it up at a range of locations, including supermarkets and convenience stores. The card would have a $3,000 limit, with the balance covered by federal deposit insurance through GE Money Bank.

Reloadable cards, purchased without paperwork, are also seen as potentially attractive to the estimated 12m undocumented workers in the US.

Visa’s Prepaid cards are used by more than 30 states, including California, to pay child and unemployment benefits.

Visa estimates 80m people in the US lack a traditional banking relationship. It believes a worker without a bank account spends more than $300 a year in fees, a sum which can be reduced to $130 using a prepaid card.

Card users can be charged for services such as paying bills and ATM withdrawals.

In addition to low fees, Wal-Mart is expected to offer further incentives to support the expansion of its branded prepaid card.

Its own-brand credit cards, issued by the Discover network, offer holders a 3 cents per gallon discount on fuel at Wal-Mart and Sam’s Club petrol stations.

Wal-Mart says it sees its financial services as a way of supporting customers. While it does not break down revenues from financial services, executives say the division is a growing contributor to earnings.

Drive on biofuels risks oil price surge

Drive on biofuels risks oil price surge
By Javier Blas and Ed Crooks
Copyright The Financial Times Limited 2007
Published: June 6 2007 03:00 | Last updated: June 6 2007 03:00

Opec yesterday warned western countries that their efforts to develop biofuels as an alternative energy source to combat climate change risked driving the price of oil "through the roof".

Abdalla El-Badri, secretary- general of the Organisation of the Petroleum Exporting Countries, said the powerful cartel was considering cutting its investment in new oil production in response to moves by the developed world to use morebiofuels.

The warning from Opec, which controls about 40 per cent of global oil production, comes as the group of eight leading industrialised nations meets today with climate change at the top of its agenda. The US and Europe want to use biofuels to combat global warming and to strengthen energy security.

Opec has previously expressed scepticism about alternative energy but Mr El-Badri's comments mark the first clear threat that the cartel might act to safeguard its interests in the face of a shift towards biofuels.

"They are really concerned," said Julian Lee of the Centre for Global Energy Studies in London. "Opec will continue investing, but with biofuels on the horizon, they may not invest enough."

"It is a difficult situation for Opec. On one hand they are asked to produce more, on the other one, Washington and Brussels are telling the cartel 'we are betting on biofuels and we don't want to rely on you [Opec]'."

George W. Bush, the US president, has pledged to cut US petrol use by 20 per cent over the next 10 years through more efficient vehicles and a big increase in biofuel consumption.

World production of biofuels, which are derived from agricultural commodities such as corn and sugar, was equal to 1 per cent of all road transport fuelin 2005.

Mr El-Badri warned that biofuel production could prove unsustainable in the medium term as it competed with food supplies. Biofuels are one reason retail food prices are now heading for their biggest annual increase in about 30 years.

Mr El-Badri said this meant the biofuel strategy championed by Mr Bush and European leaders would backfire because "you don't get the incremental oil and you don't get the ethanol".In this case, he warned, oil prices would go "through the roof".

He said Opec members had so far maintained their investment plans but he warned: "If we are unable to see a security of demand . . . we may revisit investment in the long term."

Opec plans to invest about $130bn (£65.3bn) until 2012 to raise its oil output. Excluding production from Iraq, the cartel forecasts a capacity of 39.7m barrels of crude oil per day in 2010, up from today's 35.7m b/d. From 2013 to 2020 Opec plans to invest another $500bn in production infrastructure but that could change depending on the biofuels outlook, Mr El-Badri said.

Global oil benchmark Brent touched $70.60 a barrel yesterday, close to a nine-month high.

US productivity growth revised down

US productivity growth revised down
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: June 6 2007 15:06 | Last updated: June 6 2007 15:06

US productivity slowed as employers’ labour costs rose more than expected last quarter in a sign of persistent inflation pressures.

Labour costs climbed 1.8 per cent while productivity growth was cut to a rate of 1 per cent from a previous estimate of 1.7 per cent, according to a government report.

The figures underline the Federal Reserve’s concern that businesses will pass along greater labour costs to consumers through higher prices.

Ben Bernanke, the Fed chairman, said this week that there had been a gradual ebbing of core inflation recently.

But he added that the current level was ”somewhat elevated” and emphasised continued risks to price levels.

”The continuing high rate of resource utilisation suggests that the level of final demand may still be high relative to the underlying productive capacity of the economy,” he said.

The slowdown in productivity reflects a sluggish economic performance last quarter, when overall growth fell to 0.6 per cent, its lowest level in more than four years.

Steven Wood, of Insight Economics, said productivity had fallen to its slowest year-on-year growth rate since 1995.

“Just three years ago, non-farm business productivity was growing at more than 4 percent year on year,” he added.

US stocks were opened lower on Wednesday as bonds eased and investors priced in a greater likelihood that the Fed would move to cut rates this year to keep inflation in check.

As investors have pushed long-term interest rates higher there are signs this has dampened mortgage activity.

A separate report showed a drop in mortgage refinancings that offset a rise in borrowing for new purchases, dragging the Mortgage Bankers Association’s index down 1.7 per cent for last week.