WARSAW, Poland – Poland's economy grew by 0.5 percent in the first quarter, expanding at a slower pace than in the previous quarter during a particularly harsh winter but still on track for a strong full-year performance amid Europe's broader financial and economic turmoil.
The quarter-on-quarter growth figure released Monday by the Central Statistical Office compared with growth of 1.1 percent in the last three months of 2009.
The numbers were largely in line with economist' expectations, said Maja Goettig, chief economist with Bank BPH in Warsaw, attributing the less robust growth to the harsh winter.
Goettig said she believes the country can achieve 3 percent overall growth in 2010. She and other economists expect growth to accelerate later in the year.
"We're satisfied with this figure," Goettig said.
The data released showed that gross domestic product rose 2.8 percent compared with the first quarter of 2009.
Poland, a country of 38 million people, has done better than many of its neighbors during the past three years of economic turmoil.
It was the only European country that consistently posted growth during the global economic downturn — expanding by 1.7 percent last year. It is the largest of 10 ex-communist countries that joined the European Union in recent years, and its large domestic market helped buoy the economy during the rough times.
It also benefited from being less dependent on exports than neighbors such as the Czech Republic and Slovakia.
Goettig said that domestic consumption remains "the main driver to GDP growth," and that the newest figures show factories are rebuilding inventory.
luni, 31 mai 2010
China warns debt woes threaten global recovery
TOKYO (Reuters) – China warned on Monday that Europe's struggle to contain ballooning debt posed a risk to global economic growth, raising the specter of a double-dip recession.
Premier Wen Jiabao, addressing business leaders during an official visit to Japan, issued his warnings a day after France admitted it will struggle to keep its top credit rating and days after a downgrade of Spain's credit status again jolted financial markets.
Referring to the risk of a second dip in global economic growth rates, Wen said: "I believe that we can't say with absolute certainty, so we must undertake close observation and act to prevent it.
"The world economy is stable and beginning to revive, but this revival is slow and there are many uncertainties and destabilizing factors," he said, adding it was too early to wind down stimulus deployed during the 2007-2009 financial crisis.
Governments around the world ran up record debts during the $5 trillion effort to pull the economy out of its deepest slump since the Great Depression and now face a tough balancing act: how to reduce debt without choking off growth.
"Some countries have experienced sovereign debt crises, for example Greece. Is this kind of phenomenon over? Now it seems that it's not so simple," Wen said. "The sovereign debt crisis in some European countries may drag down Europe's economic recovery."
ECB Governing Council member Ewald Nowotny summed up the task.
"The big challenge is to prevent a vicious circle in which (a) crisis of the public sector again leads to crisis developments in the financial and real sectors of the economy," he told a conference hosted by Austria's central bank.
Greece stumbled into the global spotlight late last year when it sharply revised its budget deficit figures, provoking a series of credit downgrades and sending its borrowing costs soaring, which in turn fanned fears it may default on its obligations.
While a 110 billion euro rescue package put together by the European Union and the International Monetary Fund helped avert an immediate meltdown, it failed to dispel fears that other highly indebted euro zone members such as Spain, Portugal and Italy may face a similar fate.
POLITICAL BACKLASH
A massive 750 billion euro emergency scheme cobbled together by EU leaders early this month, again with IMF help, aimed to deter with its sheer size possible speculative attacks on the euro zone's weaker members and thus support the euro.
In return for the safety net, Athens, Lisbon, Madrid and Rome signed billions of euros in spending cuts and tax hikes to rein in debt, despite an outcry from trade unions and political backlash.
IMF Managing Director Dominique Strauss-Kahn praised Spain's austerity package in a newspaper interview, saying they should help restore confidence.
On Friday, Fitch became the second ratings agency to strip Spain of its top triple-A rating a day after it passed its austerity plan by a single vote.
However, recent opinion polls showing the ruling Socialists trailing badly behind the center-right opposition cast doubt whether the government will manage to muster enough support in parliament for its budget.
Such concerns, have been plaguing the euro, which is heading for its worst month since January 2009, down more than 7 percent against the dollar since the start of May and heading for the sixth straight monthly fall. It was steady in Asia on Monday.
"It is difficult to see a recovery in market sentiment as there are worries that further bad news about southern European countries may come out," said a currency trader at a Japanese bank.
Investors and policymakers around the world are also increasingly worried that Europe's efforts to cut debt will sap the continent's anemic growth, denting demand for exports from emerging economies and derailing the global recovery.
The fact that not just the fiscally weakest southern European countries, but also nations at the euro zone's core are under pressure to cut debt and deficits amassed during the financial crisis, is adding to those concerns.
On Sunday, France said keeping its AAA credit rating would be a stretch without some tough action on its deficit, while Germany indicated it might resort to raising taxes to bring its shortfall closer to the EU's limit of 3 percent of gross domestic product.
France, the euro zone's second-largest economy, expects the budget deficit to hit 8 percent of GDP this year, but aims to bring it down to the EU limit by 2013. Germany, Europe's biggest economy, expects its deficit to exceed 5 percent of GDP in 2010. In the future, major improvements are needed in the euro area to prevent bad fiscal behavior and to enforce effective sanctions in the case of breaches of fiscal rules, the head of the European Central Bank, Jean-Claude Trichet told the conference in Austria.
Striking a more optimistic note, China's Wen said the world's third-largest economy and its prime growth engine remained on course to meet its growth targets this year, though he added it would require Beijing to "maintain a certain level of intensity in its economic stimulus." (Additional reporting by Sarah Morris in Madrid; Writing by Tomasz Janowski; Editing by Neil Fullick)
Premier Wen Jiabao, addressing business leaders during an official visit to Japan, issued his warnings a day after France admitted it will struggle to keep its top credit rating and days after a downgrade of Spain's credit status again jolted financial markets.
Referring to the risk of a second dip in global economic growth rates, Wen said: "I believe that we can't say with absolute certainty, so we must undertake close observation and act to prevent it.
"The world economy is stable and beginning to revive, but this revival is slow and there are many uncertainties and destabilizing factors," he said, adding it was too early to wind down stimulus deployed during the 2007-2009 financial crisis.
Governments around the world ran up record debts during the $5 trillion effort to pull the economy out of its deepest slump since the Great Depression and now face a tough balancing act: how to reduce debt without choking off growth.
"Some countries have experienced sovereign debt crises, for example Greece. Is this kind of phenomenon over? Now it seems that it's not so simple," Wen said. "The sovereign debt crisis in some European countries may drag down Europe's economic recovery."
ECB Governing Council member Ewald Nowotny summed up the task.
"The big challenge is to prevent a vicious circle in which (a) crisis of the public sector again leads to crisis developments in the financial and real sectors of the economy," he told a conference hosted by Austria's central bank.
Greece stumbled into the global spotlight late last year when it sharply revised its budget deficit figures, provoking a series of credit downgrades and sending its borrowing costs soaring, which in turn fanned fears it may default on its obligations.
While a 110 billion euro rescue package put together by the European Union and the International Monetary Fund helped avert an immediate meltdown, it failed to dispel fears that other highly indebted euro zone members such as Spain, Portugal and Italy may face a similar fate.
POLITICAL BACKLASH
A massive 750 billion euro emergency scheme cobbled together by EU leaders early this month, again with IMF help, aimed to deter with its sheer size possible speculative attacks on the euro zone's weaker members and thus support the euro.
In return for the safety net, Athens, Lisbon, Madrid and Rome signed billions of euros in spending cuts and tax hikes to rein in debt, despite an outcry from trade unions and political backlash.
IMF Managing Director Dominique Strauss-Kahn praised Spain's austerity package in a newspaper interview, saying they should help restore confidence.
On Friday, Fitch became the second ratings agency to strip Spain of its top triple-A rating a day after it passed its austerity plan by a single vote.
However, recent opinion polls showing the ruling Socialists trailing badly behind the center-right opposition cast doubt whether the government will manage to muster enough support in parliament for its budget.
Such concerns, have been plaguing the euro, which is heading for its worst month since January 2009, down more than 7 percent against the dollar since the start of May and heading for the sixth straight monthly fall. It was steady in Asia on Monday.
"It is difficult to see a recovery in market sentiment as there are worries that further bad news about southern European countries may come out," said a currency trader at a Japanese bank.
Investors and policymakers around the world are also increasingly worried that Europe's efforts to cut debt will sap the continent's anemic growth, denting demand for exports from emerging economies and derailing the global recovery.
The fact that not just the fiscally weakest southern European countries, but also nations at the euro zone's core are under pressure to cut debt and deficits amassed during the financial crisis, is adding to those concerns.
On Sunday, France said keeping its AAA credit rating would be a stretch without some tough action on its deficit, while Germany indicated it might resort to raising taxes to bring its shortfall closer to the EU's limit of 3 percent of gross domestic product.
France, the euro zone's second-largest economy, expects the budget deficit to hit 8 percent of GDP this year, but aims to bring it down to the EU limit by 2013. Germany, Europe's biggest economy, expects its deficit to exceed 5 percent of GDP in 2010. In the future, major improvements are needed in the euro area to prevent bad fiscal behavior and to enforce effective sanctions in the case of breaches of fiscal rules, the head of the European Central Bank, Jean-Claude Trichet told the conference in Austria.
Striking a more optimistic note, China's Wen said the world's third-largest economy and its prime growth engine remained on course to meet its growth targets this year, though he added it would require Beijing to "maintain a certain level of intensity in its economic stimulus." (Additional reporting by Sarah Morris in Madrid; Writing by Tomasz Janowski; Editing by Neil Fullick)
India's economy grows at fastest pace in 2 years
MUMBAI, India – A rebound in manufacturing and recovering farm output drove India's quarterly economic growth to 8.6 percent, the best in two years as Asia's third-largest economy returns to pre-crisis levels of expansion.
Growth for the financial year ended March was 7.4 percent, beating a government forecast of 7.2 percent, officials said Monday. The acceleration in the January-March quarter is likely to add to pressure on the central bank to raise interest rates to contain inflation.
India has rebounded from the global downturn faster than expected thanks to strong domestic consumption and investment, but two uncertainties loom: Rain and Europe.
As India's farmers wait for the monsoon, hoping last year's drought won't be repeated, the nation's business elite watches Europe — which accounts for a fifth of India's exports — hoping its sovereign debt crisis won't dampen the investment that's needed to drive growth.
Manufacturing surged an unsustainable 16.3 percent off a low base for the March quarter, up from 0.6 percent a year earlier and its strongest performance in at least two years. Agriculture — which remains an important source of employment — limped along at 0.7 percent, up from the prior quarter's contraction of 1.8 percent, but worse than a year earlier, when it grew 3.3 percent.
"We remain vulnerable to the monsoons, as ever," said Enam Securities economist Sachchidanand Shukla. "This is an annual uncertainty that can shave off 60 to 70 basis points (0.6 to 0.7 of a percentage point) from growth. If the monsoon were to fail again, growth will definitely slip below 8 percent."
He said an unusually bountiful winter crop boosted growth after the worst rainfall since 1972 diminished summer yields.
Monday's figures showed that investment is becoming a key driver of growth as private consumption falls as a share of overall economic activity.
"It's a sign of India moving on to a higher growth trajectory," said D.K. Joshi, chief economist at Crisil, an Indian research and ratings agency. "Investment has picked up really fast and is at par with other economies when they started lifting on a sustained basis."
Investment as a share of gross domestic product rose to 34.6 percent during the March quarter, government data showed. That's far higher than it was in the 1990s, when it hovered near 22 percent of GDP, and close to its peak of 37 percent not long before the global recession, Joshi said.
Europe, India's most important export market, could drag on India, especially if its debt crisis undermines global growth.
Joshi calculates that only about 7 percent of investment comes from abroad. Still, if foreign funding — which Indian companies have used to feed their growing appetite for overseas acquisitions — dries up, domestic sources will be stretched, he said.
"We are more connected to Europe than ever, but we have our own strengths," he said.
From 2003-2008, economic growth averaged 8.8 percent a year, before slumping to 6.7 percent last fiscal year as the Great Recession roiled India's economy.
India's prime minister Manmohan Singh says the billion-plus nation needs to grow at 10 percent a year to eradicate chronic poverty.
Growth for the financial year ended March was 7.4 percent, beating a government forecast of 7.2 percent, officials said Monday. The acceleration in the January-March quarter is likely to add to pressure on the central bank to raise interest rates to contain inflation.
India has rebounded from the global downturn faster than expected thanks to strong domestic consumption and investment, but two uncertainties loom: Rain and Europe.
As India's farmers wait for the monsoon, hoping last year's drought won't be repeated, the nation's business elite watches Europe — which accounts for a fifth of India's exports — hoping its sovereign debt crisis won't dampen the investment that's needed to drive growth.
Manufacturing surged an unsustainable 16.3 percent off a low base for the March quarter, up from 0.6 percent a year earlier and its strongest performance in at least two years. Agriculture — which remains an important source of employment — limped along at 0.7 percent, up from the prior quarter's contraction of 1.8 percent, but worse than a year earlier, when it grew 3.3 percent.
"We remain vulnerable to the monsoons, as ever," said Enam Securities economist Sachchidanand Shukla. "This is an annual uncertainty that can shave off 60 to 70 basis points (0.6 to 0.7 of a percentage point) from growth. If the monsoon were to fail again, growth will definitely slip below 8 percent."
He said an unusually bountiful winter crop boosted growth after the worst rainfall since 1972 diminished summer yields.
Monday's figures showed that investment is becoming a key driver of growth as private consumption falls as a share of overall economic activity.
"It's a sign of India moving on to a higher growth trajectory," said D.K. Joshi, chief economist at Crisil, an Indian research and ratings agency. "Investment has picked up really fast and is at par with other economies when they started lifting on a sustained basis."
Investment as a share of gross domestic product rose to 34.6 percent during the March quarter, government data showed. That's far higher than it was in the 1990s, when it hovered near 22 percent of GDP, and close to its peak of 37 percent not long before the global recession, Joshi said.
Europe, India's most important export market, could drag on India, especially if its debt crisis undermines global growth.
Joshi calculates that only about 7 percent of investment comes from abroad. Still, if foreign funding — which Indian companies have used to feed their growing appetite for overseas acquisitions — dries up, domestic sources will be stretched, he said.
"We are more connected to Europe than ever, but we have our own strengths," he said.
From 2003-2008, economic growth averaged 8.8 percent a year, before slumping to 6.7 percent last fiscal year as the Great Recession roiled India's economy.
India's prime minister Manmohan Singh says the billion-plus nation needs to grow at 10 percent a year to eradicate chronic poverty.
British Airways cabin crew continue strike
LONDON – British Airways cabin crew walked out for the 14th day Monday in an on-and-off strike over pay and working conditions, and a union leader said labor disruptions could continue into the summer.
Striking cabin crew walked off their jobs May 24 for five days and began the new round of strikes Sunday after the latest round of talks collapsed. The cabin crew union has called for another five days of strikes beginning on June 5 if there is no settlement.
The airline says it plans to fly more than 70 percent of its long-haul flights, compared to the 60 percent it had operated during last week's strike, and 55 percent of short-haul flights, up from 50 percent last week.
A big sticking point in the dispute is British Airways' decision to take away free travel benefits for cabin crew who joined in the strikes.
Tony Woodley, joint general secretary of the Unite union, blamed British Airways Chief Executive Willie Walsh for blocking a settlement and said the union is preparing for another vote on continuing strikes beyond early June.
"Willie, we all know there is a deal to be done at British Airways, one that recognizes the real commercial needs and problems of your company as well as our members' legitimate interests. Unite is ready to do that deal," Woodley told union members in Manchester, according to a text released by the union.
"But we are not, and never will, be prepared to see our members and our union humiliated," he added.
Seven days of walkouts in March cost the airline around 43 million pounds ($63 million).
Striking cabin crew walked off their jobs May 24 for five days and began the new round of strikes Sunday after the latest round of talks collapsed. The cabin crew union has called for another five days of strikes beginning on June 5 if there is no settlement.
The airline says it plans to fly more than 70 percent of its long-haul flights, compared to the 60 percent it had operated during last week's strike, and 55 percent of short-haul flights, up from 50 percent last week.
A big sticking point in the dispute is British Airways' decision to take away free travel benefits for cabin crew who joined in the strikes.
Tony Woodley, joint general secretary of the Unite union, blamed British Airways Chief Executive Willie Walsh for blocking a settlement and said the union is preparing for another vote on continuing strikes beyond early June.
"Willie, we all know there is a deal to be done at British Airways, one that recognizes the real commercial needs and problems of your company as well as our members' legitimate interests. Unite is ready to do that deal," Woodley told union members in Manchester, according to a text released by the union.
"But we are not, and never will, be prepared to see our members and our union humiliated," he added.
Seven days of walkouts in March cost the airline around 43 million pounds ($63 million).
Officials: 3 killed in separate Iraq attacks
BAGHDAD – Three people were killed and several others wounded in separate attacks in Iraq, police and hospital officials said Monday.
Among the dead was a prominent local leader of anti-insurgent Sunni forces known as Awakening Councils who was shot by two gunmen armed with silenced pistols. The attackers fled the scene after attacking Nael al-Azami near a popular cafe in Baghdad's northern Azamiyah district Monday morning.
Elsewhere in the capital, a roadside bomb struck an Iraqi police patrol in the capital's Ghadir neighborhood, killing one policeman and wounding 10 bystanders and officers nearby.
In Kirkuk, a policeman has died after a roadside bomb hit his patrol Sunday night. Four of his colleagues were seriously hurt in the blast.
A series of other early morning blasts across Baghdad wounded 11.
The first explosion occurred at 7 a.m. when a bomb attached to a civilian SUV exploded while it was heading down Baghdad's eastern Palestine Street, injuring the driver and a passenger.
About 90 minutes later, two separate roadside bombs targeting police patrols in eastern Baghdad injured a total of five policemen and four bystanders.
The police and hospital officials who described the attacks spoke on condition of anonymity because they were not authorized to speak publicly.
Among the dead was a prominent local leader of anti-insurgent Sunni forces known as Awakening Councils who was shot by two gunmen armed with silenced pistols. The attackers fled the scene after attacking Nael al-Azami near a popular cafe in Baghdad's northern Azamiyah district Monday morning.
Elsewhere in the capital, a roadside bomb struck an Iraqi police patrol in the capital's Ghadir neighborhood, killing one policeman and wounding 10 bystanders and officers nearby.
In Kirkuk, a policeman has died after a roadside bomb hit his patrol Sunday night. Four of his colleagues were seriously hurt in the blast.
A series of other early morning blasts across Baghdad wounded 11.
The first explosion occurred at 7 a.m. when a bomb attached to a civilian SUV exploded while it was heading down Baghdad's eastern Palestine Street, injuring the driver and a passenger.
About 90 minutes later, two separate roadside bombs targeting police patrols in eastern Baghdad injured a total of five policemen and four bystanders.
The police and hospital officials who described the attacks spoke on condition of anonymity because they were not authorized to speak publicly.
Is Sochi Safe Enough for the Olympics?
In 2007, Russian Prime Minister Vladimir Putin gave a "national pledge" that Sochi, a Black Sea resort town near the border with Georgia, would be a safe venue for the 2014 Winter Games. The International Olympic Committee believed him, and Russia won the bid. But Sochi, it turns out, is no Vancouver, and on May 26 the credibility of Putin's promise took a drastic hit. Just before 7:00 p.m., a bomb stuffed with shrapnel was detonated in the nearby city of Stavropol, wounding more than 40 people and killing seven others, including two young girls. No group claimed responsibility for the attack, and in the aftermath investigators fumbled around for a possible motive. But the blast, and the uncoordinated official response to it, has prompted some experts to pose unpleasant questions: Had the security situation around Sochi been properly assessed before Russia took on its Olympic challenge? And if the risk of violence is real, might countries consider pulling their athletes out of the Games?
Perhaps the most frightening aspect of the attack and the ensuing investigation has been the sheer number of possible bad guys. According to the various law enforcement officials speaking to Russian media after the blast, there are no less than four groups in that region thought capable of bombing a crowded square in broad daylight. It could have been the Islamist rebels camped out in the nearby Caucasus mountains, they said, but it could also have been Russian nationalists or local mafia groups. Some police officials have suggested the bombing could lead back to neighboring Georgia, noting the blast fell on May 26 - Georgian Independence Day. Georgia and Russia fought a war in 2008, and one of the disputed regions in that war, Abkhazia, lies about 25 miles away from Sochi. (See pictures of a jihadist's journey.)
"The region is such a muddied and bloodied aquarium of conflict that to pick out any one fish is impossible," says retired KGB Colonel Oleg Nechiporenko, now the chief analyst for Russia's National Anti-Terrorist and Anti-Criminal Fund. "Even the idea of holding the Olympics has to be predicated on the end of all violent conflicts in the area, and here we are preparing to hold the Games in what is virtually the front line in our war on terrorism."
For decades, this conflict has focused on the North Caucasus, the basket case of territories that lies a short drive from Sochi and includes Chechnya and the tinderbox republics of Dagestan and Ingushetia. In January, with the Olympic preparations clearly in mind, President Dmitry Medvedev appointed a newcomer named Alexander Khloponin to try to stabilize these regions by developing their economies rather than bringing more police. He has made little progress. As a businessman and former governor in Siberia, Khloponin has no local power base in the North Caucasus; he is grappling with pervasive corruption and widespread poverty, not to mention Islamist insurgents fighting to turn the territory into a Muslim caliphate governed by strict Shari'a law. On March 29, two suicide bombers killed 40 people in the Moscow subway; Chechen warlord Doku Umarov, the leader of those insurgents, claimed responsibility. (See pictures of terror in Mumbai.)
But Khloponin has made some surprising claims in the wake of last week's Stavropol blast. In an interview with the Rossiyskaya Gazeta daily published on May 27, he said that the latest explosion has nothing to do with the Islamist rebels, and was most likely part of a turf war between local gangs. That same day he told a meeting of law enforcement officials that the violent scramble for assets in this region is likely get worse as Russia tries to build tourist infrastructure and ski resorts in the lead up to the Olympics. "There has been an attempt to lump this division of property together with ethnic fighting or to present it as terror," he said, adding that both interpretations were wrong.
It is true that turf wars and racketeering are still common in this part of Russia. Last February, a suspected mafiosi named Alik Minalyan - nicknamed Sochi Alik - was gunned down in Moscow after allegedly running the Sochi underworld for years, and Islamist groups in the North Caucasus are known to extort money to finance their activities. But investigators in Stavropol were quick to question Khloponin's statements on Thursday, telling Russian news agencies that jihadis were still at the top of their list of suspects. These contradictory claims, and the fact that no arrests have yet been made, have done little to calm the public after the bombing. (See pictures of Obama in Russia.)
"It looks like the result of panic, of bad coordination, as if they are trying to cover all the possibilities in case one of them is right," says Nikolai Zlobin, director of the Russia and Eurasia Project at the World Security Institute in Washington. "That shows there has never been a full and systematic security review in these regions to figure out what is a theoretical threat and what is an actual threat."
For its part, the International Olympic Committee is standing by its decision to grant Sochi the right to host the 2014 Games. In a statement to TIME, the IOC says the latest bombing has not changed its position. "Security arrangements fall under the responsibility of the local authorities of the host cities, who ensure that everything that is humanly possible is done to protect the athletes, the spectators and all the people involved in the staging of the Games. We have no doubt that Russia will be up to the task."
But as 2014 approaches, other countries will be watching to see what dangers their athletes might face in Sochi; if any large nation decides to pull out, Zlobin says it could cause a "chain reaction." "There are so many danger points, and this terror attack showed that they are not prepared for them," he notes. "It would be very easy to derail these Olympics, or at least show that the athletes there will be in a compromised position."
Perhaps the most frightening aspect of the attack and the ensuing investigation has been the sheer number of possible bad guys. According to the various law enforcement officials speaking to Russian media after the blast, there are no less than four groups in that region thought capable of bombing a crowded square in broad daylight. It could have been the Islamist rebels camped out in the nearby Caucasus mountains, they said, but it could also have been Russian nationalists or local mafia groups. Some police officials have suggested the bombing could lead back to neighboring Georgia, noting the blast fell on May 26 - Georgian Independence Day. Georgia and Russia fought a war in 2008, and one of the disputed regions in that war, Abkhazia, lies about 25 miles away from Sochi. (See pictures of a jihadist's journey.)
"The region is such a muddied and bloodied aquarium of conflict that to pick out any one fish is impossible," says retired KGB Colonel Oleg Nechiporenko, now the chief analyst for Russia's National Anti-Terrorist and Anti-Criminal Fund. "Even the idea of holding the Olympics has to be predicated on the end of all violent conflicts in the area, and here we are preparing to hold the Games in what is virtually the front line in our war on terrorism."
For decades, this conflict has focused on the North Caucasus, the basket case of territories that lies a short drive from Sochi and includes Chechnya and the tinderbox republics of Dagestan and Ingushetia. In January, with the Olympic preparations clearly in mind, President Dmitry Medvedev appointed a newcomer named Alexander Khloponin to try to stabilize these regions by developing their economies rather than bringing more police. He has made little progress. As a businessman and former governor in Siberia, Khloponin has no local power base in the North Caucasus; he is grappling with pervasive corruption and widespread poverty, not to mention Islamist insurgents fighting to turn the territory into a Muslim caliphate governed by strict Shari'a law. On March 29, two suicide bombers killed 40 people in the Moscow subway; Chechen warlord Doku Umarov, the leader of those insurgents, claimed responsibility. (See pictures of terror in Mumbai.)
But Khloponin has made some surprising claims in the wake of last week's Stavropol blast. In an interview with the Rossiyskaya Gazeta daily published on May 27, he said that the latest explosion has nothing to do with the Islamist rebels, and was most likely part of a turf war between local gangs. That same day he told a meeting of law enforcement officials that the violent scramble for assets in this region is likely get worse as Russia tries to build tourist infrastructure and ski resorts in the lead up to the Olympics. "There has been an attempt to lump this division of property together with ethnic fighting or to present it as terror," he said, adding that both interpretations were wrong.
It is true that turf wars and racketeering are still common in this part of Russia. Last February, a suspected mafiosi named Alik Minalyan - nicknamed Sochi Alik - was gunned down in Moscow after allegedly running the Sochi underworld for years, and Islamist groups in the North Caucasus are known to extort money to finance their activities. But investigators in Stavropol were quick to question Khloponin's statements on Thursday, telling Russian news agencies that jihadis were still at the top of their list of suspects. These contradictory claims, and the fact that no arrests have yet been made, have done little to calm the public after the bombing. (See pictures of Obama in Russia.)
"It looks like the result of panic, of bad coordination, as if they are trying to cover all the possibilities in case one of them is right," says Nikolai Zlobin, director of the Russia and Eurasia Project at the World Security Institute in Washington. "That shows there has never been a full and systematic security review in these regions to figure out what is a theoretical threat and what is an actual threat."
For its part, the International Olympic Committee is standing by its decision to grant Sochi the right to host the 2014 Games. In a statement to TIME, the IOC says the latest bombing has not changed its position. "Security arrangements fall under the responsibility of the local authorities of the host cities, who ensure that everything that is humanly possible is done to protect the athletes, the spectators and all the people involved in the staging of the Games. We have no doubt that Russia will be up to the task."
But as 2014 approaches, other countries will be watching to see what dangers their athletes might face in Sochi; if any large nation decides to pull out, Zlobin says it could cause a "chain reaction." "There are so many danger points, and this terror attack showed that they are not prepared for them," he notes. "It would be very easy to derail these Olympics, or at least show that the athletes there will be in a compromised position."
New U.S.-Russian space crew ready to go
MOSCOW – The next U.S.-Russian crew for the international space station said Monday they are fully ready for their mission even though they initially flunked one of their tests.
NASA astronauts Doug Wheelock and Shannon Walker and Russian commander Fyodor Yurchikhin told reporters Monday that will blast off for the orbiting outpost in a Russian Soyuz spacecraft on June 16 from the Baikonur cosmodrome in Kazakhstan.
Yurchikhin said they had to take an equipment test twice after a failure, but added that the problem demonstrated the crew's team spirit.
"I realize that it is completely my responsibility for all that problems we faced during our exam," he said. "And I assure you we are a real crew."
The trio will join Russians Alexander Skvortsov and Mikhail Kornienko and U.S. astronaut Tracy Caldwell Dyson, whose crewmates are scheduled to return to Earth early Wednesday.
Russian Oleg Kotov, American T.J. Creamer and Soichi Noguchi of Japan are set to land in Kazakhstan stepped in the Soyuz TMA-17 spacecraft.
NASA astronauts Doug Wheelock and Shannon Walker and Russian commander Fyodor Yurchikhin told reporters Monday that will blast off for the orbiting outpost in a Russian Soyuz spacecraft on June 16 from the Baikonur cosmodrome in Kazakhstan.
Yurchikhin said they had to take an equipment test twice after a failure, but added that the problem demonstrated the crew's team spirit.
"I realize that it is completely my responsibility for all that problems we faced during our exam," he said. "And I assure you we are a real crew."
The trio will join Russians Alexander Skvortsov and Mikhail Kornienko and U.S. astronaut Tracy Caldwell Dyson, whose crewmates are scheduled to return to Earth early Wednesday.
Russian Oleg Kotov, American T.J. Creamer and Soichi Noguchi of Japan are set to land in Kazakhstan stepped in the Soyuz TMA-17 spacecraft.
Israel boat raid sparks condemnations, protests
ANKARA, Turkey – Turkey withdrew its ambassador to Israel and called for an emergency session of the U.N. Security Council as criticism and condemnations arose across Europe and the Arab world Monday over Israel's deadly commando raid on ships taking humanitarian aid to the blockaded Gaza Strip.
The raid, in which at least 10 pro-Palestinian activists were killed, was a new blow to Israel's international standing at a time when the West — including the United States — have grown frustrated with its stance in the peace process. The bloodshed particularly hurts its relations with Turkey, which was once a close regional ally of Israel but has become increasingly critical of it.
Around 10,000 Turks marched in protest from the Israeli consulate in Istanbul to a main square, chanting, "Murderous Israel you will drown in the blood you shed." The protesters earlier Monday tried to storm the Consulate building but were blocked by police. The flotilla of six ships, carrying some 700 activists, was sponsored in part by a Turkish organization.
Around 1,000 protested in Jordan's capital, Amman, calling for their government to cut diplomatic ties with Israel. Smaller protests erupted in capitals across the Middle East as well as in the Bosnian capital Sarajevo, the Greek city of Thessaloniki and the Pakistani city of Karazhi.
Palestinian youths protesting the raid scuffled with Israeli soldiers, throwing bottles and stones at them, at a checkpoint north of Jerusalem, as senior Palestinian negotiator Saeb Erekat called the Israeli raid a "war crime."
Israel says the activists attacked its commandos as they boarded the six ships taking tons of supplies to Gaza, while the flotilla's organizers say the Israeli forces opened fire first.
U.N. Secretary-General Ban Ki-moon condemned the violence, saying, "I am shocked by reports of killing of people in boats carrying supply to Gaza. I heard the ships were in international water. That is very bad." He called for a "thorough investigation."
French President Nicolas Sarkozy condemned "the disproportionate use of force" against the flotilla.
"All light must be shed on the circumstances of this tragedy, which underlines the urgency of resuming peace talks," he said in a statement.
Greece suspended a military exercise with Israel and postponed a visit by Israel's air force chief. Greece, Egypt, Sweden, Spain and Denmark summoned Israel's ambassadors demanding explanations for the violence.
But the strongest reaction came from Turkey. Deputy Prime Minister Bulent Arinc called Israel's actions "piracy" and said Turkey is withdrawing its ambassador on Monday as well as canceling three joint military drills and calling on the U.N. Security Council to convene in an emergency session about Israel. Turkey is currently a member of the council.
"I strongly condemn the use of force by Israeli military forces on an aid convoy composed of 32 countries, including Turkey," Arinc said. "This attack must not remain unanswered." He also said a Turkish youth soccer team currently in Israel would be brought home.
The raid also brought heightened attention to Israel's blockade of the Gaza Strip, imposed after the Palestinian militant group Hamas seized control of the tiny Mediterranean territory in 2007. The blockade — along with Israel's fierce offensive against Gaza in the winter of 2008-2009 to stop Hamas rocket fire — has fueled anti-Israeli sentiment around the Arab world.
The president of Iran, a key supporter of Hamas, called the raid "an inhuman act."
"All in all, these (actions) only bring closer the end of the miserable and false regime" in Israel, President Mahmoud Ahmadinejad said, according to state TV.
The Cairo-based Arab League called an emergency session for Tuesday to address the attack, as the two only Arab states with peace deals with Israel — Jordan and Egypt — sharply condemned the violence. Jordan's information minister, Nabil al-Sharif, called it a "heinous crime" and called for the lifting of the blockade on Gaza.
The incident also put Egypt in a tight position. The only Arab country bordering the Gaza Strip, it has helped enforce the blockade by cracking down on smuggling tunnels that are a key source of goods to Gaza's 1.5 million people and by rejecting pressure that it open its border crossing. The Egyptian government has said it cannot open the border since there is no agreement on restoring European monitors who left during the Hamas takeover.
Egypt's Foreign Ministry said the violence underlines how Gaza "remains under total Israeli occupation," and it called "for the immediate lifting of the Israeli siege on Gaza."
In Beirut, about 500 Palestinian and Lebanese activists protested in front of the U.N. headquarters, setting Israeli flags on fire. "The only solution with the usurping entity is resistance. This entity only understands the language of force," Hezbollah lawmaker Nawar al-Saheli told the crowd.
In neighboring Syria, more than 200 Syrian and Palestinian protesters staged a sit-in before the offices of the United Nations to denounce the Israeli raid.
The raid, in which at least 10 pro-Palestinian activists were killed, was a new blow to Israel's international standing at a time when the West — including the United States — have grown frustrated with its stance in the peace process. The bloodshed particularly hurts its relations with Turkey, which was once a close regional ally of Israel but has become increasingly critical of it.
Around 10,000 Turks marched in protest from the Israeli consulate in Istanbul to a main square, chanting, "Murderous Israel you will drown in the blood you shed." The protesters earlier Monday tried to storm the Consulate building but were blocked by police. The flotilla of six ships, carrying some 700 activists, was sponsored in part by a Turkish organization.
Around 1,000 protested in Jordan's capital, Amman, calling for their government to cut diplomatic ties with Israel. Smaller protests erupted in capitals across the Middle East as well as in the Bosnian capital Sarajevo, the Greek city of Thessaloniki and the Pakistani city of Karazhi.
Palestinian youths protesting the raid scuffled with Israeli soldiers, throwing bottles and stones at them, at a checkpoint north of Jerusalem, as senior Palestinian negotiator Saeb Erekat called the Israeli raid a "war crime."
Israel says the activists attacked its commandos as they boarded the six ships taking tons of supplies to Gaza, while the flotilla's organizers say the Israeli forces opened fire first.
U.N. Secretary-General Ban Ki-moon condemned the violence, saying, "I am shocked by reports of killing of people in boats carrying supply to Gaza. I heard the ships were in international water. That is very bad." He called for a "thorough investigation."
French President Nicolas Sarkozy condemned "the disproportionate use of force" against the flotilla.
"All light must be shed on the circumstances of this tragedy, which underlines the urgency of resuming peace talks," he said in a statement.
Greece suspended a military exercise with Israel and postponed a visit by Israel's air force chief. Greece, Egypt, Sweden, Spain and Denmark summoned Israel's ambassadors demanding explanations for the violence.
But the strongest reaction came from Turkey. Deputy Prime Minister Bulent Arinc called Israel's actions "piracy" and said Turkey is withdrawing its ambassador on Monday as well as canceling three joint military drills and calling on the U.N. Security Council to convene in an emergency session about Israel. Turkey is currently a member of the council.
"I strongly condemn the use of force by Israeli military forces on an aid convoy composed of 32 countries, including Turkey," Arinc said. "This attack must not remain unanswered." He also said a Turkish youth soccer team currently in Israel would be brought home.
The raid also brought heightened attention to Israel's blockade of the Gaza Strip, imposed after the Palestinian militant group Hamas seized control of the tiny Mediterranean territory in 2007. The blockade — along with Israel's fierce offensive against Gaza in the winter of 2008-2009 to stop Hamas rocket fire — has fueled anti-Israeli sentiment around the Arab world.
The president of Iran, a key supporter of Hamas, called the raid "an inhuman act."
"All in all, these (actions) only bring closer the end of the miserable and false regime" in Israel, President Mahmoud Ahmadinejad said, according to state TV.
The Cairo-based Arab League called an emergency session for Tuesday to address the attack, as the two only Arab states with peace deals with Israel — Jordan and Egypt — sharply condemned the violence. Jordan's information minister, Nabil al-Sharif, called it a "heinous crime" and called for the lifting of the blockade on Gaza.
The incident also put Egypt in a tight position. The only Arab country bordering the Gaza Strip, it has helped enforce the blockade by cracking down on smuggling tunnels that are a key source of goods to Gaza's 1.5 million people and by rejecting pressure that it open its border crossing. The Egyptian government has said it cannot open the border since there is no agreement on restoring European monitors who left during the Hamas takeover.
Egypt's Foreign Ministry said the violence underlines how Gaza "remains under total Israeli occupation," and it called "for the immediate lifting of the Israeli siege on Gaza."
In Beirut, about 500 Palestinian and Lebanese activists protested in front of the U.N. headquarters, setting Israeli flags on fire. "The only solution with the usurping entity is resistance. This entity only understands the language of force," Hezbollah lawmaker Nawar al-Saheli told the crowd.
In neighboring Syria, more than 200 Syrian and Palestinian protesters staged a sit-in before the offices of the United Nations to denounce the Israeli raid.
Israeli commandos storm aid flotilla; 10 killed
JERUSALEM – Israeli naval commandos stormed a flotilla of ships carrying aid and hundreds of pro-Palestinian activists to the blockaded Gaza Strip on Monday, killing at least 10 passengers in a predawn raid that set off worldwide condemnation and a diplomatic crisis.
Israel said the forces encountered unexpected resistance as they boarded the vessels. Dozens of passengers and at least five Israeli soldiers were wounded in the confrontation in international waters.
Israel's tough response triggered widespread condemnation across Europe; many of the passengers were from European countries. The raid also strained already tense relations with Israel's longtime Muslim ally Turkey, the unofficial sponsor of the mission, and drew more attention to the plight of Gaza's 1.5 million people.
Turkey announced it was withdrawing its ambassador to Israel, canceling three joint military drills and calling on the U.N. Security Council to convene in an emergency session about Israel. The Israeli ambassadors in Sweden, Spain, Denmark and Greece were summoned for meetings, and the French foreign minister called for an investigation.
The violent takeover also threatened to deal yet another blow to Israel's international image, already tarnished by war crimes accusations in Gaza and its blockade of the impoverished Palestinian territory.
It occurred a day before Prime Minister Benjamin Netanyahu was to meet with President Barack Obama at the White House to discuss the Middle East peace process.
French President Nicolas Sarkozy condemned "the disproportionate use of force" against the flotilla.
"All light must be shed on the circumstances of this tragedy, which underlines the urgency of resuming peace talks," he said in a statement.
Israeli Defense Minister Ehud Barak expressed regret for the deaths but blamed the violence on organizers of the flotilla, calling the effort a "political provocation" by anti-Israel forces.
Israeli security forces were on alert across the country, and the government advised Israelis to avoid travel to Turkey.
There were conflicting accounts of what happened early Monday.
An Al-Jazeera reporter on one of the Turkish ships said the Israelis fired at the vessel before boarding it. The Israelis, who had declared they would not let the ships reach Gaza, said they only opened fire after being attacked by activists with sticks, knives and live fire from weapons seized from the Israeli commandos.
"On board the ship we found weapons prepared in advance and used against our forces," declared Israel's deputy foreign minister, Danny Ayalon.
"The organizers' intent was violent, their method was violent and the results were unfortunately violent. Israel regrets any loss of life and did everything to avoid this outcome."
Palestinian President Mahmoud Abbas condemned the Israeli "aggression," declared three days of mourning across the West Bank and called on the U.N. Security Council and Arab League to hold emergency sessions on the incident.
Ismail Haniyeh, leader of the rival Hamas government in Gaza, condemned the "brutal" Israeli attack and called on U.N. Secretary-General Ban Ki-moon to intervene.
Israel's military chief, Lt. Gen. Gabi Ashkenazi, said soldiers were forced by violent activists to respond with live fire.
Israel said the forces encountered unexpected resistance as they boarded the vessels. Dozens of passengers and at least five Israeli soldiers were wounded in the confrontation in international waters.
Israel's tough response triggered widespread condemnation across Europe; many of the passengers were from European countries. The raid also strained already tense relations with Israel's longtime Muslim ally Turkey, the unofficial sponsor of the mission, and drew more attention to the plight of Gaza's 1.5 million people.
Turkey announced it was withdrawing its ambassador to Israel, canceling three joint military drills and calling on the U.N. Security Council to convene in an emergency session about Israel. The Israeli ambassadors in Sweden, Spain, Denmark and Greece were summoned for meetings, and the French foreign minister called for an investigation.
The violent takeover also threatened to deal yet another blow to Israel's international image, already tarnished by war crimes accusations in Gaza and its blockade of the impoverished Palestinian territory.
It occurred a day before Prime Minister Benjamin Netanyahu was to meet with President Barack Obama at the White House to discuss the Middle East peace process.
French President Nicolas Sarkozy condemned "the disproportionate use of force" against the flotilla.
"All light must be shed on the circumstances of this tragedy, which underlines the urgency of resuming peace talks," he said in a statement.
Israeli Defense Minister Ehud Barak expressed regret for the deaths but blamed the violence on organizers of the flotilla, calling the effort a "political provocation" by anti-Israel forces.
Israeli security forces were on alert across the country, and the government advised Israelis to avoid travel to Turkey.
There were conflicting accounts of what happened early Monday.
An Al-Jazeera reporter on one of the Turkish ships said the Israelis fired at the vessel before boarding it. The Israelis, who had declared they would not let the ships reach Gaza, said they only opened fire after being attacked by activists with sticks, knives and live fire from weapons seized from the Israeli commandos.
"On board the ship we found weapons prepared in advance and used against our forces," declared Israel's deputy foreign minister, Danny Ayalon.
"The organizers' intent was violent, their method was violent and the results were unfortunately violent. Israel regrets any loss of life and did everything to avoid this outcome."
Palestinian President Mahmoud Abbas condemned the Israeli "aggression," declared three days of mourning across the West Bank and called on the U.N. Security Council and Arab League to hold emergency sessions on the incident.
Ismail Haniyeh, leader of the rival Hamas government in Gaza, condemned the "brutal" Israeli attack and called on U.N. Secretary-General Ban Ki-moon to intervene.
Israel's military chief, Lt. Gen. Gabi Ashkenazi, said soldiers were forced by violent activists to respond with live fire.
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