Obama confronts US economic 'emergency'

WASHINGTON - White House contender Barack Obama said Monday the faltering US economy was now in the grip of an "emergency" as he pivoted back to the domestic agenda after a triumphant foreign tour.

In a meeting with a high-powered panel of economic advisers, the Democrat returned to the most pressing anxiety of US voters after bidding to cement his commander-in-chief credentials with his overseas trip.

But as voters reel from job losses, home seizures and rocketing fuel prices, the rival campaign of Republican John McCain said Obama's economic plan would serve only to plunge the United States into a 1930s-style depression.

After a federal stimulus plan and a newly passed bill to rescue the stricken housing market, Obama told the advisory meeting: "I believe more action is going to be necessary.

"The economic emergency is growing more severe," he said, pointing to job cuts, falling wages and a deepening credit crunch.

"And this is an emergency that you feel not only just from reading The Wall Street Journal but from travelling across Ohio and Michigan into New Mexico and Nevada, where you meet people day after day who are one foreclosure notice or one illness or one pink slip away from economic disaster."

Obama's economic panel included former treasury secretary Robert Rubin, ex-Federal Reserve chairman Paul Volcker, billionaire investor Warren Buffett and Google chairman Eric Schmidt.

Boosting Obama's appeal for a break with partisan politics, two ex-members of President George W. Bush's administration - Treasury secretary Paul O'Neill and Securities and Exchange commissioner William Donaldson - also attended.

Laura Tyson, who was the chief economic adviser to former president Bill Clinton, said there were as many policy differences among some of the Democratic participants as with the Republican appointees.

She stressed to reporters: "There is no silver bullet. There are tradeoffs in everything. Some people were focusing more on the long-term issues... some of them were focusing on what we might do in the next six months."

Obama promoted his proposals for middle-class tax cuts while levying higher taxes on the rich, new federal stimulus spending, and additional measures to prop up the property market.

He argued longer-term measures were needed to rein in excesses on Wall Street and to fix the budget deficit, which government officials said Monday was set to balloon to a record US$482 billion in the next fiscal year.

With fewer than 100 days now before the November 4 election, McCain aides vied to steal Obama's thunder and dent a bounce in the polls enjoyed by the Democrat since his trip to Afghanistan, Iraq, the Middle East and Europe.

In the latest daily poll from Gallup released Monday, Obama led McCain by 48 per cent to 40. That was down a point from Sunday, but Gallup said the Democrat was still basking in the afterglow of his rock-star reception overseas.

Carly Fiorina, a key lieutenant to McCain and former boss of computing giant Hewlett-Packard, said a recession triggered by the 1929 Wall Street crash became a depression through the imposition of higher taxes and trade barriers.

"The reality is when an economy is slowing, if you raise taxes and you curtail free trade through isolationist policies, bad economic times become worse," she told reporters.

"We know this from history... and that is precisely the proposal that Barack Obama is making," Fiorina said.

"And that is why I say as a businesswoman, I hope Barack Obama continues to consult with experts because I think his understanding of the economy leaves a great deal to be desired."

The Obama campaign accuses McCain of fuzzy arithmetic on his own vows to cut taxes across the board, balance the budget and sustain a hefty US military presence in Iraq.

And it has ridiculed the Arizona senator's admission last December that he knows more about national security than about the economy.

McCain suffered a setback just over a week ago with the resignation of his own top economic adviser, Phil Gramm, after the former Texas senator had called the United States a "nation of whiners" over the economy.

Iran President Ahmadinejad seeks new approach from US

WASHINGTON - Iranian President Mahmoud Ahmadinejad said in an interview aired on US television Monday that if the United States adopted a genuinely new approach to his country Tehran would respond in a positive way.

"Today, we see new behaviour shown by the United States and the officials of the United States. My question is, is such behaviour rooted in a new approach?" the president told NBC in a rare interview with a US broadcaster.

"In other words, mutual respect, cooperation and justice? Or is this approach a continuation in the confrontation with the Iranian people, but in a new guise?" he said from Tehran, speaking through an interpreter.

If US behaviour represented a genuine change, "we will be facing a new situation and the response by the Iranian people will be a positive one," Ahmadinejad said in an excerpt of the interview, conducted in the presidential compound.

Ahmadinejad's comments, which will be aired in full later Monday, came after the United States took the unprecedented step of sending a top diplomat to meet Iran's chief negotiator at talks in Geneva over Tehran's disputed nuclear programme.

Ahmadinejad announced Saturday that Iran had boosted the number of uranium-enriching centrifuges to 6,000, in an expansion of its nuclear drive that defies international calls for a freeze.

Iran faces three sets of UN Security Council sanctions over its refusal to halt uranium enrichment, which makes nuclear fuel as well as the fissile core of an atomic bomb.

Ahmadinejad reiterated in the interview that Tehran did not intend to build nuclear weapons, according to a partial transcript.

"We are not working to manufacture a bomb. We don't believe in a nuclear bomb," he said when asked if Iran sought to be a nuclear power.

History has shown that possessing nuclear weapons did not help other countries with their political goals, he added.

"Nuclear bombs belong to the 20th century. We are living in a new century."

However, the White House remained sceptical of Ahmadinejad's conciliatory tone.

"I think we have to approach this with a big grain of salt. President Ahmadinejad said one thing to the Iranian people on Saturday and another thing to an American journalist on Monday," spokeswoman Dana Perino said.

"So I think that all of us need to consider this with a healthy dose of scepticism."

World powers, concerned Tehran is pursuing a clandestine nuclear weapons project, have offered to start pre-negotiations during which Tehran would face no further sanctions if it added no more uranium-enriching centrifuges.

Permanent UN Security Council members - Britain, China, France, Russia and the United States - plus Germany have made Iran an offer, which includes trade incentives and help with a civilian nuclear programme in return for suspending enrichment.

Iran was given a two-week deadline to respond that expires on Saturday.

When asked about the proposal from Western powers that offers improved trade terms and other incentives, Ahmadinejad said Iran was a "mighty country" and not at all isolated.

"For the continuation of our lives and for progress, we do not need the services, if I can use the word, of a few countries," he said.

The United States has warned Tehran of "punitive measures" if it spurns the offer and presses on with enrichment.

Meanwhile on Monday, Israeli Defence Minister Ehud Barak met in Washington with US Defence Secretary Robert Gates for talks that an Israeli adviser said would focus on the threat posed by Iran's nuclear programme.

Pentagon spokesman Bryan Whitman confirmed that the talks took place for about an hour and described them as "part of standard defence consultations."

Despite Ahmadinejad's relatively moderate words, the State Department said it was looking out for a clear, official statement of policy ahead of Saturday's deadline.

"We are waiting what we believe to be a definitive statement from the government of Iran, we are looking for it to come through the traditional channel," State Department spokesman Gonzalo Gallegos said.

"And then, it will be reviewed and then, we will decide where we will be going from there," he told reporters.

Bush approves death sentence for army prisoner

WASHINGTON - US President George W. Bush on Monday approved the execution of an army soldier on death row for murder and rape, in the first such move by a US president in more than 50 years.

Army private Ronald A. Gray was convicted and sentenced to death in 1988 by a military court, which in the United States requires the president's signature of approval in order to go ahead.

Bush granted the army's formal request that he approve the sentence by signing an order from the Oval Office, the White House said.

"President Bush this morning accepted the recommendation of the Secretary of the Army to approve a sentence of death for army private Ronald A. Gray, affirming the sentence that resulted from a general court martial for multiple charges of murder and rape committed while serving as a member of the armed services," press secretary Dana Perino said in a statement.

"While approving a sentence of death for a member of our armed services is a serious and difficult decision for a commander-in-chief, the president believes the facts of this case leave no doubt that the sentence is just and warranted," she said.

“Private Gray was convicted of committing brutal crimes, including two murders, an attempted murder, and three rapes. The victims included a civilian and two members of the army."

Perino said the White House anticipated further appeals in the case and would not comment further.

The last US president to approve a military execution was president Dwight D. Eisenhower in 1957. That prisoner was put to death in 1961.

The most recent president to act on a military request for approval of a death sentence was John F. Kennedy, who in 1962 commuted a death sentence to life imprisonment, the White House said.

End 'state of war' with Israel, says Syria's US envoy

JERUSALEM - Syria's ambassador to the United States on Monday called for ending the "state of war" with long-time foe Israel, weeks after the two states announced the launch of indirect peace talks.

"We desire to recognise each other and end the state of war," Imad Mustafa told a gathering of activists in Washington allied with Israel's Peace Now movement, in remarks broadcast on Israeli army radio.

"Here is then a grand thing on offer. Let us sit together, let us make peace, let us end once and for all the state of war."

He added however that any peace agreement would depend on an Israeli withdrawal from the Golan Heights, which the Jewish state occupied in the 1967 war and annexed in 1981.

His remarks came just two weeks after Syrian President Bashar al-Assad said Damascus would establish "normal" relations with Israel, including the opening of embassies, if the Turkish-mediated talks lead to a peace deal.

The launch of indirect talks between the two enemies, which have technically been at war since 1948, was revealed in May, following an eight-year freeze.

The talks had previously foundered in 2000 on the question of the strategic Golan plateau which runs down to the shores of the Sea of Galilee, Israel's main source of fresh water, and is currently home to some 20,000 Jewish settlers.

Israel has demanded that Syria cut its ties with the Lebanese Hezbollah militia, the Palestinian Hamas movement, and other armed groups pledged to the Jewish state's demise, as well as distance itself from Iran.

Bomb attacks in Iraq kill at least 56

BAGHDAD - Three women bombers blew themselves up on Monday in a crowd of Shiite pilgrims in Baghdad, one of a string of attacks in Iraq that killed at least 56 people, undermining hopes of a drop in violence.

Scores of people were also wounded in the attacks, which came after a relative lull in the sectarian violence that has ravaged Iraq since February 2006, when insurgents blew up a Shiite mosque in the central city of Samarra.

The triple attack in Baghdad killed at least 25 pilgrims as they headed to a holy shrine for a major religious ceremony on the Shiite Muslim calendar that has been marred by bloodshed in the past, security officials said.

Another 27 people died and 126 others were wounded in a suicide bombing during a protest rally in the northern oil city of Kirkuk, and by gunfire in a panicked stampede that followed, local officials said.

Among the dead in Baghdad were women and children, security and hospital officials told AFP, adding that about 70 other people were wounded.

The violence was condemned by the White House.

"The United States condemns the violent attacks on innocent Iraqis," National Security Council spokesman Gordon Johndroe said.

"We urge the Iraqi people and government to respond with calm determination to the threat from violent extremists who seek to destabilise the country."

The bombers struck in the Karrada district of central Baghdad as pilgrims were making their way on foot towards Kadhimiyah in the north of the city, site of a Shiite festival on Tuesday.

"At least 25 people were killed and more than 70 were wounded in three suicide attacks, probably by female suicide bombers," a police official said.

On Sunday, gunmen shot dead seven pilgrims in Madin, a town south of Baghdad, despite tight security for Tuesday's ceremony honouring revered imam Mussa Kadhim that is expected to attract up to one million worshippers.

Pilgrims from around the country are flocking to Baghdad to mourn the revered imam who died 12 centuries ago, prompting authorities to step up security amid concern over attacks.

Systematic violence - suicide bombings and sectarian killings - has dropped sharply in the capital since a peak in 2006, but police fear a wave of attacks in the city of six million people.

Major General Qassim Atta, spokesman for city security, told reporters that his force had information that this year's pilgrims may be targeted.

"We ask people to help in all ways with our security forces," Atta said, adding that up to one million people were expected.

Checks have been particularly stringent amid what appears to be growing trend of using women in insurgent bombings, which have claimed hundreds of lives across the volatile country.

The attack in Kirkuk targeted a crowd of people who were protesting against a controversial provincial election law, police said.

The suicide bomber detonated his explosives amid the crowd, causing a stampede which prompted guards to open fire, officials said.

"The victims were people who ran away after the explosion, and guards opened fire, shooting into the air," said Najat Hassam, a senior member of the Kurdistan Democratic Party (KDP).

"More people then responded to the gunfire with more shooting."

Kirkuk is often the scene of communal tensions among Kurds, Arabs and Turkmens, and the latest violence was sparked by protests over the controversial legislation for planned provincial elections.

The draft bill is currently being reviewed by the Iraqi parliament but many Kurdish and Shiite ministers oppose it.

Kurds in particular are worried that the law will fail to address issues on how the provincial council of Kirkuk should be constituted.

The question is important to them because it could affect ownership of the northern province's oil resources, claimed by both Arabs and Kurds.

Meanwhile a key Sunni political party sought to distance itself from the violence in Kirkuk. Sunnis have often been linked to the Al-Qaeda insurgency.

"This criminal act came at a sensitive and critical time when discussions about the destiny of the Kirkuk have been in focus," the Iraqi Islamic Party of Vice President Tareq al-Hashemi said. "We condemn the act."

Another three men and a woman were killed on Monday in a roadside bombing near Baquba north of Baghdad, police said

Rice to press North Korean envoy on nukes

SINGAPORE - U.S. Secretary of State Condoleezza Rice has begun talks with Asian officials in Singapore before meeting North Korea's top diplomat in what will be the Bush administration's highest-level contact with the communist state in four years.

Amid promising developments in the international effort to get the North to abandon nuclear weapons, Rice is hoping to gauge the North's commitment to the process when she sees North Korean Foreign Minister Pak Ui Chun on Wednesday on the sidelines of an Asian security forum in Singapore.

Pyongyang has been given a four-page draft document detailing what the United States says it must do to prove it has told the truth about its past atomic programs, a key element in the six-nation denuclearization initiative.

Diplomats expect Pak to provide at least an initial response to the proposal at the meeting with Rice and the foreign ministers of the other four nations involved: China, Japan, South Korea and Russia.

"It will give some indication of the amount of effort the North Koreans have put into completing this verification protocol," chief U.S. negotiator Christopher Hill said late Tuesday.

The draft calls for intrusive inspections of North Korean nuclear facilities, soil sampling, interviews with key scientists and a role for U.N. atomic experts. Hill travels on Friday to the International Atomic Energy Agency headquarters in Vienna to brief them on developments.

Hill said the goal is to reach a formal agreement on the document by mid-August after negotiations on the fine points, some of which the North Koreans have already objected to.

"They made some preliminary comments and indicated some problems with it," he said. "But we have to see what their considered comments back from the capital are."

South Korea's main nuclear envoy Kim Sook said Tuesday that: "The ball is actually in the North Korean court because they already received the draft of the verification protocol."

If Pyongyang agrees to the proposal, it would lead to the start of a key process of checking if the North turned in a correct account of its nuclear activity and facilities last month in a step toward their dismantlement and eventual abandonment.

Verification is expected to take months to finish and the Bush administration is eager to make quick progress in its last six months in office.

Officials, including Rice, who will be meeting a North Korean foreign minister for the first time, have played down chances of any breakthrough at Wednesday's meeting, which has been organized by China as an informal session.

Chinese Foreign Minister Yang Jiechi said, though, that the gathering "will be very good for advancing the agenda of the talks."

Rice says she plans to deliver "a very strong message" that the process "really needs to be completed, and that it has to be a verification protocol that can give us confidence."

She has refused to describe the meeting as an historic or landmark event, it will be the Bush administration's highest-level contact since 2004 with North Korea, a charter member of the president's "axis of evil."

It comes amid positive developments in the six-nation effort to get the North to denuclearize. The campaign began in 2003, but then stalled and gained steam only after Pyongyang detonated an atomic device in 2006.

In June, North Korea submitted a long-delayed list of its nuclear programs involving plutonium, but it did not include details about nuclear weapons, an alleged uranium enrichment program and possible nuclear proliferation with country's such as Syria.

Rice made clear that those concerns still have to be addressed if progress is to continue. "We [need] a way to address proliferation as well as all nuclear programs, including highly enriched uranium," she said.

Still in return for its steps, Washington announced it would remove the North from its terrorism blacklist and relaxed some economic sanctions on the communist nation. That led Pyongyang to blow up the cooling tower at its main nuclear reactor.

Hezbollah hands over remains to Israel in prisoner swap

ROSH HANIKRA, Israel -- Israeli forensic experts have begun trying to identify the remains of what are believed to be two captured Israeli soldiers, the Israel Defense Forces said.

Hezbollah officials handed over two black coffins to Red Cross officials, who will carry them over the border to Israel.

If forensics experts determine that the remains are those of Staff Sgt. Ehud Goldwasser and Sgt. 1st Class Eldad Regev, Israel will turn over to Hezbollah five Lebanese prisoners -- including convicted murderer Samir Kuntar, whom many Israelis consider the embodiment of evil.

Israel also is returning the remains of 199 fighters from Lebanon who the Jewish state said were killed in clashes over the years. Nineteen coffins were being transferred onto Red Cross trucks and sent to the Lebanese side, the Israeli military said.

The forensic determination is expected to take several hours.

The IDF said it would not comment on the transfer until it was complete.

"The IDF has yet to complete the process of identifying the soldiers' remains and will therefore make no comments about the process conclusions until those are completed and the families of the soldiers are notified," it said in a statement. Video Watch as the coffins are delivered »

The transfer began shortly before 10 a.m. (3 a.m. ET) at the Rosh Hanikra crossing in western Galilee, which the army had declared a closed military zone a day earlier.

The swap caps a tireless campaign by the soldiers' families to bring them home. It also ends decades of resistance by the Israeli government, which wanted to use Kuntar as a bargaining chip to obtain information about a missing airman whose plane crashed in Lebanon in 1986.

"To get the two servicemen back, we've had to pay a high price," said Mark Regev, spokesman for Israeli Prime Minister Ehud Olmert. "We deliberated, we grappled with this decision for a long time because ultimately it's not an easy decision."

The Shiite militia Hezbollah cast the swap as a victory for all Lebanese, with one official calling it "an official admission of defeat."

On Saturday, Hezbollah delivered to Israel its report on the status of the airman, Ron Arad. Despite Olmert's description of the report as "absolutely unsatisfactory," the Israeli Cabinet approved the swap in a 22-3 vote Tuesday.

The day promised to be a somber one for Israel, but Lebanon was planning a boisterous "welcome home" ceremony for Kuntar and the four other prisoners.

21 bodies buried at Iraq school

BAGHDAD, Iraq -- Twenty-one decomposed bodies were found buried at a school under construction in Anbar province, Iraqi authorities said Wednesday, and family members say some of the victims were kidnapped two years ago.

The bodies were found in the Adala neighborhood of central Ramadi, the capital of Anbar province west of Baghdad, an Iraqi Interior Ministry official said.

Laborers working at the construction site found the corpses, which Iraqi security forces transferred to a morgue.

Family members have identified some of the bodies, the official said.

Largely Sunni Anbar province was once dominated by insurgents, including members of al Qaeda in Iraq. But in the past two years, an anti-al Qaeda tribal movement called "the awakening" has managed to reduce their numbers in the province's Euphrates River valley area.

U.S.-backed groups called Awakening Councils have spread across Iraq.

Also on Wednesday, a soldier with the U.S.-led coalition was killed in an explosion in Salaheddin province in northern Iraq, the U.S. military said. Two other coalition soldiers were wounded.

Darfur attack kills 7 peacekeepers

Seven members of a joint United Nations-African Union peacekeeping patrol have been killed by a heavily armed militia group in Sudan's Darfur region, the U.N. said.

Five of those killed were Rwandan, a U.N. peacekeeping official said, and the other two were a Ugandan and a Ghanaian.

Twenty-two others were wounded in the attack, which was immediately condemned by U.N. Secretary-General Ban Ki-moon.

"The attackers used heavy weapons and engaged the UNAMID convoy in an exchange of fire for more than two hours," according to the statement released by Ban's spokesman.

UNAMID is the acronym for the U.N.-AU mission in Darfur. The peacekeepers are allowed to used force when fired upon directly.

"The secretary-general condemns in the strongest possible terms this unacceptable act of extreme violence against AU-U.N. peacekeepers in Darfur and calls on the government of Sudan to do its utmost to ensure that the perpetrators are swiftly identified and brought to justice," the statement said.

"The secretary-general expresses his deepest condolences to the families of the peacekeepers who lost their lives, and reiterates his appreciation for their service, valor and commitment to the search for peace in Darfur."

The ambush happened around 2:45 p.m. (1145 GMT) in northern Darfur. The rescue mission did not take place until after dark, she said.

The peacekeepers who were attacked operated out of Shangil Tobayi -- a base to the west of El Fasher.

In five years of war the U.N. says more than four million people have been affected: Two-and-a-half million people forced from their homes and more than 300,000 killed.

Sudanese officials dispute those numbers claiming only 10,000 have died -- a number they say is normal for five years of war.

U.S. President George W. Bush calls the killings genocide and has put sanctions on Sudan. The U.N. says Sudan's government is guilty of crimes against humanity and of violating international human rights laws every bit as heinous and serious they say as genocide.

In February 2008, a fresh wave of killing forced 58,000 people to flee their homes as government troops and Janjaweed militiamen retaliated against rebels.

A U.N. report said Sudan broke international law as 115 innocent civilians were killed using tactics similar to those employed in 2003, 2004, the worst years of the war.

Peacekeepers are frequently targeted by militias in Darfur, where they are trying to protect civilians from "janjaweed" militias -- nomadic Arab militias, supported by Sudan's government, which target pastoral black Africans.

Ten African Union peacekeepers were killed in October in an ambush on their peacekeeping base -- the deadliest single attack on AU peacekeepers since they began their mission in late 2004.

U.S. aims to reduce cluster bomb

WASHINGTON -- The U.S. military will continue to use cluster bombs but will try to reduce the number of civilian casualties by redesigning them so there are fewer ordnances that detonate long after the weapon is fired, officials said Wednesday.

The new policy requires that by 2018 the United States use only a new style of cluster bomb -- one with a 99 percent detonation rate for the hundreds of bomblets released from each of the scatter-style weapons.

A cluster bomb, when dropped from an aircraft or missile, releases hundreds of smaller explosives each the size of a grenade. When the bomblets detonate, they send shrapnel over an area about the size of a football field.

A number of the bomblets have remained undetonated until handled or stepped on by civilians -- often children. In 2006, the top United Nations aid official called Israel's use of cluster bombs in the last three days of that summer's war with Hezbollah "immoral."

The U.N. said that 100,000 deadly bomblets dropped in 2006 were still lying unexploded across areas of southern Lebanon, where they are maiming and killing people.

Under the new U.S. policy, cluster bombs in its arsenal will be destroyed if they don't meet the 99 percent requirement.

In addition, the Department of Defense will begin disposing of excess cluster bombs in its inventory "as soon as possible," according to a Pentagon statement released Wednesday.

The policy change comes as international pressure builds for a ban on cluster bombs.

The United Kingdom in May joined more than 100 other countries in signing an international treaty that would ban cluster munitions and require that stockpiles be destroyed within eight years.

The treaty is expected to be ratified at the end of the year in Oslo, Norway.

The United States, Russia, Pakistan, Israel, China and India, all makers of cluster bombs, boycotted the May talks.

Pentagon officials have said cluster bombs save the lives of U.S. troops and have a legitimate role in its arsenal.

"They provide distinct advantages against a range of targets, where their use reduces risks to U.S. forces and can save U.S. lives," according to a Pentagon statement.

Dud rates, the number of bomblets that fail to explode, can range from 3 to 16 percent, according to military watchdog groups.