States declare emergency after storms leave 12 dead and millions without power

Three governors declared a state of emergency after powerful storms swept through the eastern United States Friday night, resulting in at least 12 deaths and leaving more than three million without power.
Under the statewide emergency declaration, Virginia, West Virginia and Ohio, can utilize all government resources immediately to help those in need. The District of Columbia also declared a state of emergency.
Gov. John Kasich cited widespread power losses in Ohio, utility damages and excessive heat that could create crisis conditions for some Ohioans. State emergency officials say 800,000 to 1 million people still had power outages Saturday morning.
West Virginia Gov. Earl Ray Tomblin declared a state of emergency after more than 500,000 customers in 27 counties were left without electricity. Current estimates have 688,000 people without power in the state. Tomblin's office says the state is running out of fuel and they're fearful that they will run out of gas.
Virginia Gov. Bob McDonnell said the state had its largest non-hurricane power outage in its history. There are 2.5 million without power.
The storm system across the eastern part of the United States caused seven fatalities, including two boys at a New Jersey campsite.
The boys, ages 7 and 2, were in a tent huddled with their family members, when a tree fell early Saturday morning, authorities said.
There were six reported deaths in Virginia, including a 90-year-old woman asleep in bed when a tree slammed into her home, a police spokeswoman said Saturday. Another man was killed by a falling tree while watching the storm from his deck and a woman died after she, too, was hit by a falling tree after she got out of her car to observe a downed tree. Both those deaths occurred in Albermarle County, Va. A fallen tree also killed a man driving in Maryland, and another resident was killed in a separate incident. A woman was also killed when a barn collapsed in Ohio.
In addition, a park police officer was injured by an uprooted tree in the northern Virginia county, and an 18-year-old man was struck by a power line, Jennings said. He was in stable condition after receiving CPR, she said.
Widespread power outages were reported from Indiana to New Jersey, with the bulk of the service interruptions concentrated on Washington, D.C., and the surrounding areas. Earlier Friday, the nation's capital reached 104 degrees -- topping a record of 101 set in 1934.
More than 20 elderly residents at an apartment home in Indianapolis were displaced when the facility lost power due to a downed tree. Most were bused to a Red Cross facility to spend the night, and others who depend on oxygen assistance were given other accommodations, the fire department said.
The storms, sometimes packing 70 mph winds, toppled three tractor trailers on Interstate 75 near Findlay, Ohio.
"Our officers and firefighters are out there with power saws, trying to clear the streets," Jennings said.
At least four utility poles fell on a road in Columbus, Ohio, making it too dangerous for people in four cars to get out, police said. One person was taken to a hospital.
As of 1 a.m. Saturday, Pepco was reporting 406,000 outages in the District of Columbia and Montgomery and Prince George's counties, Md.
"We have more than half our system down," said Pepco spokeswoman Myra Oppel. "This is definitely going to be a multi-day outage."
Amtrak suspended its service from Washington, D.C., to Philadelphia due to the storms, at least until mid-morning. Dulles Airport in Northern Virginia reporting some power issues with a computer system that handles airline departure/arrival information.
In the Washington, D.C., area, the Metrorail subway trains were returned to their endpoints due to the storms and related damage, officials said.
"It has had a widespread effect on the region," Metro spokesman Dan Stessel said early Saturday. He said about 17 train stations were operating on backup power due to local power outages, but that he didn't anticipate service being disrupted on Saturday.

Read more: http://www.foxnews.com/weather/2012/06/30/mid-atlantic-storms-knock-out-power-to-nearly-2-million/?test=latestnews#ixzz1zJy6a8yK

Brotherhood's Mursi sworn in as Egyptian president

Field Marshal Tantawi shook the hand of the new Egyptian president after saluting him

Mohammed Mursi has been sworn in as Egypt's first civilian, democratically elected president at a historic ceremony in Cairo.

Hours after the ceremony, he was saluted by Field Marshal Hussein Tantawi, leader of the military council which is handing over power.

Mr Mursi has promised to restore the parliament dissolved by the military.

In a speech at Cairo University, the Muslim Brotherhood politician said the army must respect the people's will.

He will have to sort out a very difficult relationship with an entrenched military, regional analyst Magdi Abdelhadi says.

The regime of former President Hosni Mubarak is still largely intact and many in it will not work with the new president, he adds.

Overthrown in February last year after mass pro-democracy demonstrations, Mubarak was sentenced to life imprisonment at the beginning of this month for failing to prevent the killing of protesters by the security forces.

---

The thing everyone in Cairo was talking about was the traffic.
Unlike in the days of Hosni Mubarak, Mohamed Mursi did not demand the streets should be closed as he made his way through the day of formalities and speeches.
During his inaugral address at Cairo University, he even apologised to students whose exams had to be postponed because of the ceremony.
It was all part of his message that this is a new era, and he is a new kind of president. He keeps telling Egyptians that they put him in power, and he is answerable to them.
Of course, many would say he also rules by consent of the military. The military leaders saluted their new president as they formally handed control to him. But Mohamed Mursi knows that today was just another step in the long battle over who really rules Egypt.

Egypt, the biggest Arab nation, is a key US ally in the region, as well as one of the few states in the Arab world to maintain diplomatic relations with Israel.

'Promise kept'
Parliament was dissolved by Field Marshal Tantawi's Supreme Council of the Armed Forces (Scaf), which assumed legislative powers under a controversial "interim constitutional declaration".

But on Saturday Scaf handed over power to Mr Mursi after a military parade at the Hykestep military base on the outskirts of Cairo.

"We have fulfilled our promise which we made before God and the people," Field Marshal Tantawi said at the hand-over ceremony.

"We now have an elected president, who assumed Egypt's rule through a free and direct vote reflecting the will of Egyptians."

The field marshal, who saluted Mr Mursi and shook hands with him several times, decorated the new president with the Shield of the Armed Forces, the country's highest honour.

In his speech earlier at Cairo University, Mr Mursi said: "The army is now returning to its original role, protecting the nation and its borders."
'Servant of the people'
Parliament, the new president insisted in his speech, had been elected in a free and fair ballot and had been entrusted with drafting a new, democratic constitution.

He hailed those killed in the uprising against President Mubarak. Families of some of the dead were in the hall and they held up photos of their sons and daughters.

He vowed to raise Egypt to the rank of a modern state "where the president is the servant of his people".

Mr Mursi was sworn in at the supreme constitutional court.

The Egyptian people, he said, had "laid the foundations for a new life, for full freedom, a genuine democracy, for putting the meaning and significance of the constitution and stability above everything else".

His government would be based on the democratic pillars of "the constitutional court, the Egyptian judiciary, and the executive and legislative powers".

The oath of office had originally been scheduled to take place at the parliament, which is dominated by the Muslim Brotherhood-backed Freedom and Justice Party and other Islamists.

Mr Mursi said he was determined that the constitutional court, which had declared November's parliamentary election to be flawed, would remain "independent, strong, effective - away from any suspicion and abuse".

On Friday, Mr Mursi performed prayers at Cairo's al-Azhar mosque, one of the most prominent seats of learning in Sunni Islam.

He has sought to allay fears among some secular and Coptic Christian Egyptians that he will use his presidency to impose Islamic law.

Mr Mursi's campaign has said he plans to appoint a woman and a Coptic Christian as his vice-presidents.

In his speech at Cairo University, he said all Egyptians would be equal before the law.

UN envoy calls for transitional government in Syria

 

Kofi Annan: ''We strongly condemn the continued escalating killing''

UN peace envoy Kofi Annan has said there is international agreement that a transitional government should be set up in Syria.

This could include both members of the government and opposition, he said after talks in Geneva.

But US Secretary of State Hillary Clinton said Syrian President Bashar al-Assad could not remain in power.

Meanwhile, activists said a funeral procession in a suburb of Damascus came under mortar attack and 30 people died.

The UK-based Syrian Observatory for Human Rights released amateur video footage claiming to show the explosion in Zamalka, a town 10km (six miles) east of the Syrian capital.

There has been no independent confirmation of the incident.
'Legitimate aspirations'
In Geneva, Russian Foreign Minister Sergei Lavrov said there were no preconditions to the proposed transition that dictated who should or should not be in the transitional government.

Saturday's "action group" conference was attended by both Western powers and Russia and China.

Mr Annan also called for an immediate ceasefire and adherence to the UN's six-point peace plan.

He said there should be access to Syria for humanitarian organisations and media.

“Start Quote

I hope all in Syria will embrace what has been laid out here and work with us to stop the killing and build a better future”

End Quote Kofi Annan UN and Arab League envoy

Mr Annan said the conference had agreed there should be a "transitional government body with full executive powers".

"We are determined to work together urgently and intensively to bring about an end to the violence and human rights abuses, and the launch of a Syrian-led political process, leading to a transition that meets the legitimate aspirations of the Syrian people, and enables them independently and democratically to determine their own future," he said.

He warned: "The action group has pledged action, and they are sending a message of determination and hope, but today's words must not become tomorrow's disappointments.

"The hard work starts now. We must work together to implement what has been agreed. We cannot do this alone. I hope all in Syria will embrace what has been laid out here and work with us to stop the killing and build a better future."

Speaking on behalf of the five permanent members of the UN Security Council - the US, UK, France, Russia and China - British Foreign Secretary William Hague said all five were committed to supporting Mr Annan's efforts.

Russia had blocked a provision in Mr Annan's plan that would have called for Mr Assad to step down to make way for a unity government.

Mrs Clinton told reporters after Saturday's talks: "Assad will still have to go... given the blood on his hands."

Mr Assad has said he will not accept any solution to his country's crisis imposed from outside.

He told Iranian television that it was an "internal issue" which had "nothing to do with foreign countries", stressing that no amount of foreign pressure would make his government change its policy on internal security.

Some 15,800 people have died in the 16-month uprising against the rule of President Assad, activists say.

In the latest report, the observatory said a mortar bomb had gone off in Zamalka.

The first video the group released showed a crowd of chanting mourners bearing a shrouded body on a bier along a street. There is a sudden, blinding flash and a loud bang with the sound of breaking glass, at which point the recording stops.

In the second video, dazed people can be seen staggering or running through a cloud of smoke or dust.

When the cloud clears, bodies, some of them mutilated, can be seen strewn along the street. A shrouded corpse on a bier similar to that from the first video can be seen abandoned on the ground nearby.

David Cameron 'prepared to consider EU referendum'

Mr Cameron said the government needed 'tactical and strategic patience'

David Cameron is prepared to consider a referendum on the UK's EU relationship, but only when the time is right, he has written in the Sunday Telegraph.

In the article, the prime minister said he wanted a "real choice" for voters but said that an immediate in/out referendum was not what most wanted.

BBC political correspondent Carole Walker said Mr Cameron was "opening the door" to a possible referendum.

Nearly 100 Conservative MPs have called for a poll during the next Parliament.

In a letter to the prime minister, they urged him to make it a legal commitment to hold a vote on the UK's relationship with the EU.
'More to come'
The prime minister acknowledged the need to ensure the UK's position within an evolving European Union had "the full-hearted support of the British people" but said they needed to show "tactical and strategic patience".

Continue reading the main story

“Start Quote

It will undoubtedly be hard going, but taking the right path in politics often is”

End Quote David Cameron Prime Minister

He disagreed "with those who say we should leave and therefore want the earliest possible in/out referendum" because he did not think it was in the country's best interests.

"An 'in' vote too would have profound disadvantages. All further attempts at changing Britain's relationship with Europe would be met with cries that the British people had already spoken," he added.

He wrote: "There is more to come - further moves, probably further treaties - where we can take forward our interests, safeguard the single market and stay out of a federal Europe.

"Let us start to spell out in more detail the parts of our European engagement we want and those that we want to end. While we need to define with more clarity where we would like to get to, we need to show tactical and strategic patience.

"The eurozone is in crisis which needs to be resolved, and we are in a coalition government during this Parliament.

"Nevertheless I will continue to work for a different, more flexible and less onerous position for Britain within the EU.

"How do we take the British people with us on this difficult and complicated journey? How do we avoid the wrong paths of either meekly accepting the status quo or giving up altogether and preparing to leave? It will undoubtedly be hard going, but taking the right path in politics often is.
'Real choice'
"As we get closer to the end point we will need to consider how best to get the full-hearted support of the British people, whether it is in a general election or a referendum.

"As I have said, for me the two words 'Europe' and 'referendum' can go together, particularly if we really are proposing a change in how our country is governed, but let us get the people a real choice first."

The BBC's Carole Walker said the article meant Mr Cameron had moved a step closer to offering a referendum and that the prime minister was trying to tell his backbenchers he was on their side.

But he was also saying that with the "huge amount of change going on in Europe" now was not the time.

"He wants to change Britain's relationship with Europe, and, interestingly enough, he says that he believes that there's far too much Europe, too much bureaucracy, too much legislation... which in his view should be scrapped," said our correspondent.

Many Conservative MPs believe Britain should renegotiate the terms of its EU membership and take back significant powers.

More than 100 earlier this year demanded that Britain should withdraw from the European Arrest Warrant and 130 other crime and policing rules.

Conservatives have also long pressed for Britain to be exempted from the European Working Time Directive and other laws they see as harming Britain's economic competitiveness.

However, Deputy Prime Minister Nick Clegg and fellow Lib Dem coalition members are likely to resist moves to repatriate powers.

The pro-European Liberal Democrats made a manifesto commitment to an "in/out referendum the next time a British government signs up for fundamental change in the relationship between the UK and the EU".

India police kill '17 Maoists' in Chhattisgarh

 The Maoists are active in more than a third of India's 600-odd districts

Police in India say they have killed 17 Maoist rebels in an overnight clash in the central state of Chhattisgarh.

Six personnel of the paramilitary Central Reserve Police Force (CRPF) were wounded in the clash in the rebel-dominated Bijapur district, they said.

The BBC's Salman Ravi in the state capital, Raipur, says local villagers, mostly tribals, have held a protest, contesting the police claim.

They have alleged that most of those killed were villagers, not insurgents.

The Maoists are active in more than a third of India's 600-odd districts. They say they are fighting for the rights of the poor peasants and labourers.

Prime Minister Manmohan Singh has described them as the biggest internal security challenge facing India.

Fighting started late Thursday night when the policemen were carrying out an operation in the dense forests of Basaguda.

A senior police officer in Bijapur, Prashant Agarwal, told the BBC that they had recovered a large number of arms and ammunition from the area.

Mr Agarwal said only five of the bodies had been identified so far and that they were trying to identity the others.

Felda shares up 19% as investors bet on palm oil demand

Demand for palm oil has been growing especially from India and China

Shares in Malaysian palm oil firm Felda have surged on their debut as investors bet on growing demand for its product from the region.

The firm's shares jumped as much as 20% to 5.46 ringgit on the Malaysian stock exchange, Bursa Malaysia.

The company had raised 10.4bn ringgit ($3.2bn; £2bn) via its share sale, which was the world's second biggest this year after Facebook.

Malaysia is the world's second largest producer of palm oil.

According to government statistics, the palm oil industry currently generates an annual turnover of $16.6bn (£10.6bn).
'Very important company'
Demand for palm oil has been rising steadily in recent years, especially from emerging economies such as India and China.

The commodity is used in a variety of products such as biscuits, soap and biofuel.

Felda is among the world's leading producers of palm oil and analysts said that investors were hopeful that it would benefit from the rising demand.

They said the firm had also got the backing of domestic institutional investors, which had made smaller retail investors more confident about its prospects, despite a recent drop in its profits.

"A lot of people were waiting for [the IPO] for a long, long time," said Linda Koh, an analyst with research house InsiderAsia.

"More importantly, it will get a lot of support from the local institutions. It's a very important company for the government."

China to set up a trial zone for yuan convertibility

 

Full convertibility of the yuan is seen as key to a more global role for the Chinese currency

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• China loosens currency controls
• China yuan move hints at reforms
• China eyes freer financial sector

China is to set up a special business zone to experiment with the yuan's convertibility, the latest step in its moves to open up its capital markets.

The Qianhai zone will be established in the southern city of Shenzhen, just across the border from Hong Kong.

Beijing has been seeking to open up its capital markets to try to trigger a fresh wave of economic growth.

It has also been pushing for a more global role for its currency.

Zhang Xiaoqiang, vice chairman of China's National Development and Reform Commission, the state planning agency, said: "The country's policy is to gradually open up its capital account and realise the full convertibility of the yuan.

"Qianhai, as the first experimental zone of the country's modern service industry, should be a pioneer of that."

The zone will now be established over the next eight years, with construction set to start in 2013.

Shenzhen is where China first introduced its key economic reforms 30 years ago.
Loosening grip
China's yuan was pegged to the US dollar until 2005, when it was allowed to float against a basket of currencies each day.

Since then, the yuan has risen nearly 30% against the dollar.

Continue reading the main story

“Start Quote

This is a logical next step of the ongoing capital account opening and yuan internationalisation”

End Quote Wei Yao Societe Generale

Beijing has also introduced a range of reforms, indicating that it was willing to further loosen its grip on the yuan.

In April this year, it widened the range in which the yuan can fluctuate against the US dollar to 1% either side of a daily price set by the central bank. The previous limit was 0.5%.

It has also almost tripled the amount that international fund managers can invest in China to $80bn (£50bn).

Analysts said the latest move to set up a special zone to test the yuan's convertibility indicated that Beijing was keen on continuing its financial and currency reforms.

"This is a logical next step of the ongoing capital account opening and yuan internationalisation," said Wei Yao, China economist at Societe Generale in Hong Kong.

"A lot of developments this year show that China is indeed sincerely committed to reforms and opening up."
Fully convertible?
Although the exact details are yet to be announced, it is widely expected that once the special zone is established, banks in Hong Kong will be allowed to lend money to companies based in that zone.
Continue reading the main story

US Dollar v Chinese Yuan

Last Updated at 29 Jun 2012, 22:56 GMT

$1 buys	change	%
6.3553	- -0.00	- -0.02

Currently, such financial transactions are not allowed by China.

The BBC's Hong Kong correspondent Juliana Liu said that the move was a significant step in Beijing's financial reforms.

"The idea is that if the experiment is successful, then it is possible that the yuan will be fully convertible for investment as well as business," she said.

China has been pushing the use of the yuan as an alternative to the US dollar as a global reserve currency.

Most analysts have said that the yuan needs to be fully convertible before it can be treated as a reserve currency.

However, Liu Dongmin, a senior researcher at the Chinese Academy of Social Sciences who helped to draft the plans for the special zone, said that while the step would help boost the yuan's role as an international currency, China would not rush to fully open up its capital and financial markets.

"This is something we'll only be experimenting with in Qianhai. And it is far from a full opening up of China's capital account."

Colorado wildfires: President Obama begins visit

 

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Obama: Federal, state and local agencies worked together

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• In pictures: Colorado wildfires

US President Barack Obama has toured neighbourhoods ravaged by a wildfire which drove tens of thousands of people from their homes in a Colorado city.

The visit comes after Mr Obama issued a disaster declaration, allowing federal funds to be used to combat the blaze.

Searchers have found a second body at a burned-out Colorado Springs home, where two people had been reported missing.

The Waldo Canyon fire has destroyed 346 houses, making it the most destructive in the state's history.

Mr Obama was met in Colorado Springs by Mayor Steve Bach, Colorado Governor John Hickenlooper, and Senator Mark Udall.

On Friday morning, officials said the fire was 15% contained and that favourable weather conditions helped firefighting crews make good progress overnight.

Incident commander Richard Harvey said there had been no perimeter growth of the fire, and no additional structures were lost or damaged.

But the forest service has warned that it could still take weeks to get the wildfires under control.

Another blaze in northern Colorado - the High Park fire - has killed one person and razed 257 homes, officials have said.

Half of America's firefighting resources, some 1,100 personnel, have been deployed in the state, where nearly 160,000 acres have burned.
Body found
Some mandatory evacuation notices have been lifted, authorities said on Friday, enabling some people to begin returning home.

Continue reading the main story

Wildfire tracking online

Here is a selection of resources to help track the progress of the Waldo Canyon fire
Local news station KKTV created this map illustrating the fire's rapid growth, and the Colorado Springs Gazette is live-blogging with updates from local police and details of services for residents.
This crowd-sourced, interactive map overlays social media content with terrain and wind conditions to give a fuller picture of the situation on the ground. Colorado's division of Emergency Management is also running a Twitter feed @COEmergency with updates on fires across the state.
And the Federal Emergency Management Agency (FEMA) has created helpcoloradonow.org, a website listing ways to help those affected by the fire.

Many people remain in shelters and officials said that it may take some time to restore gas and electricity services to those who have been allowed to re-enter their houses.

On Tuesday, about 32,000 people were forced to leave their homes as the Waldo Canyon fire surged across the city limits of Colorado Springs, the state's second biggest city and home to some 420,000 people.

On Friday, Police Chief Pete Carey said a second body had been found in a gutted house in the city, a day after the remains of another person were found at the same address.

Officials are trying to trace fewer than 10 people who may be missing.

The authorities informed those who had lost homes on Thursday. Some had already been able to tell if their houses had survived from aerial photos, which showed rows of buildings reduced to ashes.

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People affected by the wildfires discuss their experiences of the disaster

"Our minds just started sifting through all the memories of that house that we lost that can't be replaced," resident Rebekah Largent told the Associated Press news agency, after learning from lists distributed by the authorities that her house had been among those destroyed.

Mayor Bach said it would be a difficult time for those affected.

"This community is going to surround them with love and encouragement," he said.

The fire has caused an estimated $3.2m (£2m) of damage.

Wildfires are also sweeping parts of Montana, Utah, Wyoming, South Dakota, New Mexico, Nevada, Arizona and California.

Aerial views of Colorado Springs show houses reduced to rubble

Syria conflict: Russia-US still split ahead of talks

 

Sergei Lavrov said he was optimistic ahead of Saturday's talks

 

Areas of "difficulty and difference" remain between Russia and the US ahead of key talks on the crisis in Syria, a US official says.

The state department spokesman played down chances of a deal at the talks, to take place on Saturday in Geneva.

Russian Foreign Minister Sergei Lavrov earlier met US counterpart Hillary Clinton, and said there was a "very good chance" of finding common ground.

More than 100 people have been killed in Syria since Thursday, reports say.

At least 25 people, including 11 civilians and 13 soldiers, died on Friday, and there were 117 civilian deaths on Thursday, the UK-based Syrian Observatory for Human Rights said.

Other groups gave higher death tolls.

Meanwhile, Syrian President Bashar al-Assad said he would not accept any solution to his country's crisis imposed from outside.

He told Iranian television that it was an "internal issue" which had "nothing to do with foreign countries", stressing that no amount of foreign pressure would make his government change its policy on internal security.
'Change in position'
Saturday's conference in Geneva was called by the UN and Arab League envoy, Kofi Annan, as the violence intensified in Syria.

Mr Lavrov and Mrs Clinton met in St Petersburg in an effort to agree a consensus formula to end the bloodshed.

---

The latest diplomatic efforts on Syria cannot succeed without Russia's backing. It's a sign of just how key Moscow is that ahead of the talks in Geneva, there were talks in St Petersburg - between the Russian Foreign Minister and the US Secretary of State.
Russia's role is vital because it has influence in Damascus which the other players don't - it supplies Syria with weapons, and political support - while Russia's veto at the UN Security Council has already been used as a counterweight to western pressure. Speaking afterwards Sergei Lavrov said he believed there was a good chance that all sides round the table in Geneva would find common ground.
But recent rhetoric between Russia and America suggests that East and West still don't agree on the key question - the fate of President Assad. Moscow sounds unwilling to pressure him into leaving power. If that remains Russia's position, then reaching a consensus on a transitional government will be hard.

While Russia has been hostile to any solution that would see Mr Assad forced from power, the US has insisted he steps down.

After leaving the talks with Mrs Clinton, Mr Lavrov said: "We have a very good chance to find common ground at the conference in Geneva tomorrow.

"I felt a change in Hillary Clinton's position. There were not ultimatums. Not a word was said that the document we will discuss in Geneva is untouchable."

But a US state department official later told reporters: "There are still areas of difficulty and difference."

Discussing the chances of an agreement being reached on Saturday, the official said: "We may get there, we may not."

Meanwhile, Mr Lavrov's deputy Gennady Gatilov said on his Twitter account: "Our Western partners want to decide the outcome of the political process in Syria themselves, even though it is a job for the Syrians."

Some 3,000 people were killed across Syria in the past month, reports say

Those invited for the Geneva talks include the five permanent members of the UN Security Council, as well as Turkey, Iraq, Kuwait and Qatar.

Mr Annan wants support for an interim government that could include opposition members and officials serving under Mr Assad, but exclude those "whose continued presence and participation would undermine the credibility of the transition and jeopardise stability and reconciliation", his spokesman said.

Diplomats said this was an implicit reference to the Syrian president.

Syrian opposition groups have said the president would have to hand over power and leave the country as part of any settlement.

India spy Surjeet Singh returns from Pakistan jail

 

 

The BBC's Andrew North: "There are few signs that this is going to make any difference to relations between these two long term rivals"

 

An Indian man has returned to his country after spending more than 30 years in jail in Pakistan for spying.

Surjeet Singh was greeted at the Wagah border crossing by his son and other family members and well-wishers.

Wearing marigold garlands around his neck, Mr Singh admitted to reporters: "I had gone there for spying."

There was confusion this week when Pakistan said another Indian, Sarabjit Singh, would be freed, but later clarified it was to be Surjeet Singh.

Sarabjit Singh has been on death row for more than 21 years after being convicted of spying and bomb attacks he denies carrying out.

Campaigners are still pressing for him to be freed too as part of what is being seen as a recent thaw in diplomatic relations between India and Pakistan.

On Wednesday, Pakistan released more than 300 Indian fishermen being held in a Karachi jail as a goodwill gesture.

The fishermen are also expected to cross the Wagah border on Thursday.
'Really happy'

 

TV pictures showed Mr Singh crossing the Wagah border, accompanied by Border Security Force personnel and police.

Family members greeted him by putting several marigold garlands around his neck and offered him sweets.

Nearly 250 people from his village had arrived in buses to receive him at the border.

"I am free after 30 years. I've met my family, I'm really happy," he told reporters.

Mr Singh said he had been treated well in jail.

He said he met his fellow prisoner, Sarabjit Singh, regularly in Lahore's Kot Lakhpat prison and that he had been well treated too.

Surjeet Singh said he would do everything possible to get his fellow prisoner freed. He said "media hype" had spoiled Sarabjit Singh's case.

Surjeet Singh now plans to go to the Golden Temple, Sikhdom's holiest place, "to pray and hug my children".

There are few details available of how Mr Singh came to be in Pakistan or when exactly he was arrested.

Surjeet Singh returned to India amid emotional scenes

He was a resident of Phidde village in Punjab's Ferozepur district and his family says his real name is Makhan Singh and that he was a low-ranking government employee.

He is believed to be in his mid-70s.

Earlier this week, Pakistan's law minister conveyed to the government that Surjeet Singh had completed his life term and ought to be released and sent back to India.

That followed reports, which turned out to be wrong, that Pakistan was about to free Sarabjit Singh.

On Thursday, Indian External Affairs Minister SM Krishna said he "welcomed" Surjeet Singh's release, but it was now "time for Sarabjit Singh to be freed".

Pakistan and India frequently arrest each other's citizens, often accusing them of being spies after they have strayed across the land or maritime border.

In recent years, several Indians returning from Pakistani jails have admitted to spying. Some have criticised India's government for abandoning them.

China's Shenzhou-9 spacecraft returns to Earth

 

Astronauts Liu Yang, Jing Haipeng and Liu Wang will land the Shenzou-9 craft in Inner Mongolia

China's Shenzhou-9 spacecraft will return to earth with its three crew members following a 13-day mission.

The craft is expected to land in the Inner Mongolia region of China at about 10:00 (02:00 BST) on Friday.

The astronauts on board carried out a series of experiments during the trip, as well carrying out a successful manual docking with a lab module.

Crew member Liu Yang hit the headlines around the world for being the first Chinese woman in space.

The 33-year old, who is a major in the country's air force, featured in documentaries in China.

Her selection for the mission came at the 11th hour, with Captain Wang Yaping challenging her for selection as the first female Chinese astronaut.

The crew of the Shenzou-9 craft successfully carried out the country's manual docking manoeuvre earlier in the week.

The delicate procedure, which saw it joined to the Tiangong-1 lab module, was mastered by the USSR and US space teams in the 1960s.

US Supreme Court upholds healthcare reform law

 

 

Obama: "A victory for people all over this country"

The US Supreme Court has said President Barack Obama's landmark healthcare reform act is constitutional.

The court upheld a core requirement known as the "individual mandate" that Americans buy insurance or pay a fine.

Of the nine justices on the bench, Chief Justice John Roberts' vote was decisive in the Supreme Court's 5-4 ruling in favour of the law.

The ruling comes months before the US election, with Republicans vowing to push for a repeal of the bill.

Healthcare is a deeply polarising issue in the US and Republicans strongly opposed Mr Obama's legislation.

The state of Florida, along with 12 other states, filed a legal challenge to the bill minutes after Mr Obama signed The Patient Protection and Affordable Care Act (ACA) into law in March 2010.

They were later joined by 13 more states, the National Federation of Independent Businesses and several individuals.
'Implement and improve'
Speaking afterwards, President Obama called the court's decision a victory for the country, saying people would not need to "hang their fortunes on chance" or fear financial ruin if they became sick.

"The highest court in the land has now spoken. We will continue to implement this law and we'll work together to improve on it where we can," Mr Obama said, speaking at the White House.

"What we won't do - what the country can't afford to do - is re-fight the political battles of two years ago or go back to the way things were. With today's announcement, it's time for us to move forward.

"We will be better off because we had the courage to pass this law," Mr Obama added.

Republican presidential candidate Mitt Romney said the healthcare bill was "bad law yesterday, it's bad law today".

"This is a time of choice for the American people. If we're going to get rid of Obamacare we're going to have to replace President Obama. My mission is to make sure we do exactly that."

He called "Obamacare" a tax rise that would add to the national debt, a "job-killer", and said it would put the federal government "between you and your doctor".

Congressional leaders also responded quickly to the verdict. Senate Minority Leader Mitch McConnell, a Republican, said: "We've passed plenty of terrible laws around here that were constitutional."

On the Senate floor, he said the only way to fix the law was "full repeal".

Meanwhile, the Senate's Democratic majority leader, Harry Reid, disagreed: "Now that this matter is settled, let's move on to other things. Like jobs."
'Triggering a tax'
The mandate was eventually upheld by the justices, citing the taxation powers granted to Congress by the US constitution.

Chief Justice Roberts said: "We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation's elected leaders.

"We ask only whether Congress has the power under the Constitution to enact the challenged provisions."

A majority of justices agreed that the penalty individuals must pay if they refuse to buy health insurance falls within Congress' power to levy taxes, upholding the "individual mandate".

"The mandate can be regarded as establishing a condition - not owning health insurance - that triggers a tax - the required payment to IRS," Justice Roberts wrote.

The government's main argument was that the law was legal under Congress' ability to regulate "interstate commerce" - but a majority of justices did not agree with this view.

Four dissenting justices said that limits on the power of Congress to regulate commerce and raise taxes "cannot be such as will enable the Federal Government to regulate all private conduct and to compel the States to function as administrators of federal programs."

"That clear principle carries the day here," they added.

In an opinion written by Justice Anthony Kennedy, the dissenting justices went further, to say: "In our view, the entire Act before us is invalid in its entirety."
Medicare clause limited
While the court described the penalty as a tax, it did not invoke a law that could have prevented the justices from ruling on the case.

Under a law called the Anti-Injunction Act, taxes cannot be legally challenged until after they have been levied. This could have delayed a verdict till 2015 - after the "individual mandate" comes into effect and the first round of penalties have been paid.

They were also not required to rule on the issue of "severability", which would determine whether other parts of the healthcare law could stand even if the mandate was struck down.

In addition to the individual mandate, the Supreme Court was asked to consider another part of the law that deals with the expansion of Medicaid, a government healthcare programme for low-income citizens.

The court ruled to limit that provision but did not strike it down altogether, saying Congress could place conditions on the use of federal funds.

"What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding," the Supreme Court's opinion said.

Some hospital and health insurance stocks were trading higher in the wake of the Supreme Court's ruling.

Barclays: Cameron says bank faces 'serious questions'

Last Updated at 28 Jun 2012, 14:25 GMT *Chart shows local time

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Prime Minister David Cameron has said that Barclays Bank management has "serious questions" to answer over how it manipulated banking lending rates.

Barclays was fined £290m ($450m) after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

Chancellor George Osborne, meanwhile, raised the possibility of criminal charges against guilty bankers.

The scandal hit Barclays shares, which fell as much as 15% on Thursday.

Other banks shares fell as well.

Midway through the session RBS was down 10%, Lloyds was down almost 5% and HSBC was down 3.5%.

The bank had acknowledged on Wednesday that its actions between 2005 and 2009 had fallen "well short of standards".

Other banks are still being investigated by UK and US regulators about their role in the affair.

Investigators say that Barclays' traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.
'Who was responsible?'

David Cameron: "The whole senior management team have got some big questions to answer"

Mr Cameron said "the whole management team have got some serious questions to answer. Let them answer those questions first.

"Who was responsible? Who was going to take responsibility? How are they being held accountable?"

In a statement to the House of Commons, Chancellor Osborne said: "The FSA report is a shocking indictment of the culture at banks like Barclays in the run-up to the financial crisis."

"Through 2005, 2006 and early 2007 we see evidence of systematic greed at the expense of financial integrity and stability and they knew what they were doing," he said.

Currently fines paid by banks help to bring down the levy other financial firms pay to run the regulator.

The Chancellor said the government is looking to change that to make sure the taxpayer benefits from the fines.

Labour party leader, Ed Miliband, said: "This cannot be about a slap on the wrist.

"The people that have done the wrong thing in this case should face the full force of the law... including criminal prosecutions."

Regulators say that Barclays manipulated how it reported the interest rates at which banks lend to each other to benefit their traders and financial status.

Tracey McDermott, director of enforcement at the FSA, which imposed fines alongside the US financial regulator, told the BBC that "we need to look at each case on its own particular facts but the initial indications are that Barclays was not the only firm that was involved in this."

The US Department of Justice also said criminal investigations into "other financial institutions and individuals" were ongoing.

Other big names believed to be under investigation include Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland.

George Osborne: "How were such failures allowed to continue undetected and unchecked?"

The current chief executive of Barclays, Bob Diamond, was also in charge of the unit where the manipulations occured, and is now facing calls for his resignation. On Wednesday, he and three of his top colleagues said they would give up their bonuses this year.

However the Liberal Democrat peer, Lord Oakeshott, said that if Mr Diamond had any shame, he would resign.

Martin Taylor, who was Barclays' chief executive from 1994 to 1998, said the bank had engaged in "systematic dishonesty".

"It's hard to believe that a policy which seems to be so systematic was not known by people at or very near the top of the bank."

Andrew Tyrie, chairman of the Commons treasury committee, said it would summon Mr Diamond to account for what had happened.
Mortgage deals
Barclays' misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

They can also affect lending rates to the public, for instance with some mortgage deals.

The British Bankers Association asked the government on Thursday to consider taking over the regulation of how Libor is set.
Continue reading the main story

Crisis jargon buster

Use the dropdown for easy-to-understand explanations of key financial terms:

Libor

AAA-ratingAdministrationAusterityBailoutBankruptcyBase rateBasel accordsBear marketBISBondBRICBull marketCapitalCapital adequacy ratioCapitulation (market)Carry tradeChapter 11Collateralised debt obligations (CDOs)Commercial paperCommoditiesCore inflationCorrection (market)CPICredit crunchCredit default swap (CDS)Credit ratingCurrency pegDead cat bounceDebt restructuringDefaultDeficitDeflationDeleveragingDerivativeDividendsDodd-FrankDouble-dip recessionECBEFSFEFSMEIBEquityESMEurobondEuropean Banking AuthorityFederal ReserveFinancial Policy CommitteeFiscal policyFreddie Mac, Fannie MaeG20G7G8GDPGlass-SteagallHaircutHedge fundHedgingIIFIMFImpairment chargeIndependent Commission on BankingInflationInsolvencyInvestment bankJunk bondKeynesian economicsLehman BrothersLeverageLiabilityLiborLiquidationLiquidityLiquidity crisisLiquidity trapLoans-to-deposit ratioMark-to-market (MTM)Monetary policyMoney marketsMonoline insuranceMortgage-backed securities (MBS)MPCNaked short sellingNationalisationNegative equityOECDPonzi schemePrivate equity fundProfit warningQuantitative easingRating agencyRecapitalisationRecessionRepoReserve currencyReservesRetained earningsRights issueRing-fenceSecurities lendingSecuritisationSecurityShadow bankingShort sellingSpread (yield)SPVStability pactStagflationSticky pricesStimulusSub-prime mortgagesTARPTier 1 capitalTobin taxToxic debtsTroikaUnwindVolcker RuleWorld BankWrite-downYield

Libor

London Inter Bank Offered Rate. The rate at which banks in London lend money to each other for the short-term in a particular currency. A new Libor rate is calculated every morning by financial data firm Thomson Reuters based on interest rates provided by members of the British Bankers Association.

Glossary in full

'Accepted culture'

The fine imposed on Barclays is part of an international investigation into the setting of interbank rates between 2005 and 2009.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

The FSA said Barclays traders were quite open about their routine attempts to manipulate rates.

"Requests to Barclays' submitters were made verbally and a large amount of email and instant message evidence consisting of derivatives traders' requests also exists," the FSA said.

In one instance, a trader recounted a conversation in which he had "begged" the submitter to put in a lower Libor figure.

"I'm like, dude, you're killing us," he said. His manager replied, "just tell him to... put it low".

In turn, the staff submitting the data would respond to the traders' requests.

"For you…anything," said one. "Done… for you big boy," said another.

And: "I owe you big time... I'm opening a bottle of Bollinger."

India PM Singh: Revive economy's animal spirit

 

Mr Singh has taken over the finance portfolio

Indian PM Manmohan Singh has urged his officials to come up with measures to revive the economy's "animal spirit".

His remarks came days after he took over the finance portfolio from Pranab Mukherjee who resigned in order to run for president.

Mr Mukherjee left at a time when the economy has been in serious decline.

Reforms have stalled, investments have been deferred and the rupee has seen one of the biggest declines among Asian currencies.

India's economy expanded at an annual rate of 5.3% in the first quarter, the slowest pace of growth for nine years.

Mr Singh told finance minister officials at a meeting on Wednesday to "get the economy going again and restart the India growth story".

"The growth rate has taken a dip; the industrial performance is not satisfactory; things are not rosy on the investment front; inflation continues to be a problem," he said in remarks released by his office.

"On the external front, I am concerned about the way the exchange rate is going. Investor sentiment is down and capital flows are drying up."

Mr Singh said there were "problems on the tax front" and the insurance sector was slowing down "which is not normal in a country with large unmet insurance needs".

"In the short run we need to revive investor sentiment, both domestic and international," he added.

Earlier this week India announced a number of measures to prop up the rupee, which has been falling against the US dollar.

Australia debates asylum bill after boat sinking The boat, pictured before it sank on Wednesday, in an image released by AMSA Continue reading the main story

 

The boat, pictured before it sank on Wednesday, in an image released by AMSA

 

Dozens of people rescued after a boat sank were transferred to Christmas Island, amid fierce debate on the issue of asylum in the Australian parliament.

On Wednesday a bill that would allow offshore processing of asylum seekers was passed in the lower house.

This is now being debated in the upper house, but is considered unlikely to survive the vote.

Australian officials said 130 people were rescued from boat - the second to sink in the area a week.

Prime Minister Julia Gillard warned that this was the ''last chance'' for parliament to pass the bill before it takes a break.

"I'm prepared to say to every senator... that this is the right thing for them to do in all good conscience," she told ABC Radio.

"I don't want to see a 13-year-old girl drown at sea in the weeks between now and when this parliament comes back in the spring. I don't want to see that," she said.

At least four people are believed to have died when the boat sank north of Christmas Island, which is part of Australian territory, on Wednesday.



Another asylum-seeker boat believed to have been carrying 200 people sank in the area a week ago.

That boat was believed to have been carrying about 200 people. A total of 110 people were rescued and 17 bodies were found. The search for survivors was called off late on Saturday.

On Wednesday night, another boat carrying 100 people was intercepted by Customs and Border Protection officials off Christmas Island.

Christmas Island lies off Australia's north-west coast. It is closer to Indonesia than Australia, and is targeted by asylum-seekers hoping to get to Australia.

These boats are often overloaded and poorly maintained. About 50 asylum-seekers died when their boat broke up on rocks off Christmas Island in December 2010.
Policy deadlock
The recent incidents have reignited debate over Australia's asylum seeker policy deadlock.

The new bill would reopen a detention centre on the Pacific island of Nauru and allow the Australian government to send asylum-seekers to Malaysia for processing.

Under a refugee swap deal with Malaysia, Australia would send 800 asylum-seekers who arrived by boat to Malaysia and receive 4,000 refugees in return over four years.

Last year a court ruled against such a move, saying Malaysia - which has not signed UN refugee conventions - did not offer adequate protection.

The opposition is against the deal and is demanding that an immigration detention centre on Nauru be reopened.

Ms Gillard is pushing for a compromise to reopen the Nauru centre as well as go ahead with the Malaysia deal.

She wants the opposition to back a bill to allow an immigration minister to designate any country that is part of the Bali Process an offshore processing location.

The Bali Process is a regional group of more than 40 nations working together to deal issues of illegal boat arrivals and people smuggling.

Critics say such a move would provide inadequate protection for asylum-seekers' human rights.

Merkel heads to Brussels for crucial euro summit

Francois Hollande and Angela Merkel have differing views on debt management

 

European Union leaders are preparing to meet for a closely-watched Brussels summit on the fate of the euro.

On the summit's eve, German Chancellor Angela Merkel held two hours of talks with the French President Francois Hollande in Paris.

The two remain at odds on how to move forward, with Germany opposed to pooling debt while France insists the eurozone needs further integration.

Mrs Merkel has warned there is no "magic formula" to solve the crisis.

"Because I know the expectations and hopes that are pinned on this summit, I will repeat right at the start what cannot be said often enough," Mrs Merkel said in Berlin before the Paris talks.

"There is no quick solution and no simple solution. There is no one magic formula... with which the government debt crisis can be overcome in one go."

Mrs Merkel left for Brussels without making further statements after her meeting with Mr Hollande but said that "progress" for a pact for growth had been made and she hoped European leaders would adopt a 130bn-euro ($162bn) stimulus package.

Mr Hollande, who became French president on a ticket of anti-austerity, has been a strong supporter of the growth package.

European authorities have unveiled proposals such as the creation of a European treasury, which would have powers over national budgets.

The 10-year plan is designed to strengthen the eurozone and prevent future crises, but critics say it will not address current debt problems.

Spanish Prime Minister Mariano Rajoy said on Wednesday that his country could not afford to finance itself for long at current bond rates.

Spanish 10-year government bonds have been trading at yields above 6.8%, coming close to the 7% considered unaffordable.
'Vicious circle'
Several EU leaders want individual countries' debts guaranteed by the whole eurozone, for instance in the form of centrally issued eurobonds.

Protesters parked a mannequin of Angela Merkel outside her offices in Berlin

But Mrs Merkel told parliament that eurobonds were "the wrong way" and "counter-productive", adding: "We are working to breach the vicious circle of piling up debt and breaking [EU] rules."

She said to loud applause: "It is imperative that we don't promise things that we cannot deliver. Joint liability can only happen when sufficient controls are in place."

Stronger competitiveness was the condition for sustained growth, the chancellor said.

Mr Hollande believes eurobonds should be a eurozone priority for helping countries like Italy and Spain bring their borrowing costs down.

But Mrs Merkel continues to insist that before anything is done to increase the burden on German taxpayers, building blocks towards greater fiscal, banking and, eventually, political union must be put in place.

The BBC's economic correspondent Andrew Walker, in London, says that there is certainly a chance that the summit will take a small step on a path that would partly deal with the fundamental weaknesses in the Eurozone.

But, in the absence of major short-term action, he explains, borrowing costs for countries such as Spain and Italy are likely to remain painfully high, making the eurozone's financial situation strained for a long time to come.

Turkey PM Erdogan issues Syria border warning

Evolving tactics of Syrian rebels

MI5 fighting 'astonishing' level of cyber-attacks

 

 

Jonathan Evans admits some threats might be "dogs that don't bark"

Continue reading the main story

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• Olympic security test is unveiled

MI5 is working to counter "astonishing" levels of cyber-attacks on UK industry, the organisation's chief has said.

In his first public speech for two years, Jonathan Evans warned internet "vulnerabilities" were being exploited by criminals as well as states.

The attacks were a threat to the integrity of information, he added.

Mr Evans also warned the London 2012 Olympics was an "attractive target" for terrorist groups, but said security preparations were well under way.

For this reason the Games would not be an easy target even though there was no doubt some terrorist networks had considered carrying out an attack, he said.

In the speech on Monday night, Mr Evans spoke of MI5's efforts to tackle "industrial-scale processes involving many thousands of people lying behind both state sponsored cyber espionage and organised cyber crime".

"Vulnerabilities in the internet are being exploited aggressively not just by criminals but also by states," he said.

"The extent of what is going on is astonishing."

In the past Russia and China have been cited as the countries most involved in state-based attack.

"This is a threat to the integrity, confidentiality and availability of government information but also to business and to academic institutions," Mr Evans said.

"What is at stake is not just our government secrets but also the safety and security of our infrastructure, the intellectual property that underpins our future prosperity and... commercially sensitive information."
London 2012 - One extraordinary year

 

Cyprus to ask for bailout from eurozone partners

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Cyprus has told the European authorities that it intends to apply for financial assistance, the fifth eurozone member to do so.

It said it needs help to shore up its banks, which are heavily exposed to the Greek economy.

The announcement came on another day of nervousness about the single currency.

Shares in Italy, Spain and Greece fell sharply amid concerns that an EU summit this week will again fail to produce a deal to shore up the euro.

The Spanish prime minister called for Thursday's European Union summit to "dispel doubts" about the euro.

The Italian and Spanish indexes both closed about 4% down. The fall on Spain's Ibex index was exacerbated by a Reuters report that the Moody's credit rating agency is planning to downgrade Spain's banks.

Earlier, Spain formally requested a bailout loan for its banking sector, expected to be for up to 100bn euros (£80.2bn, $125bn).
'Contagion'
The country needs to find about 1.8bn euros over the next few days to recapitalise its second largest lender, Cyprus Popular Bank.

In a short statement, the government said that it required assistance following "negative spillover effects through its financial sector, due to its large exposure in the Greek economy".

A government spokesman, Stefanos Stefanou, said the amount of European aid would be subject to negotiations in the coming days.

He said that despite the request, the Cypriot government would continue negotiations for a possible loan from a country outside the EU, such as Russia or China.
Cyprus's main probems

• Banks: Cypriot banks' exposure to Greece totals 29bn euros, or 160% of GDP, including both Greek government bonds and loans to Greek residents.
• Recession: Economy expected to shrink 1.2% this year (IMF).
• Deficit: 2011 deficit 6.3% of GDP - one of the highest in the eurozone.
• Highest public sector wage bill in eurozone (as a percentage of GDP).

The country has already borrowed 2.5bn euros from Russia, whose business people are important customers of Cyprus's relatively large offshore financial sector which offers low tax rates.

The BBC's chief economics correspondent Hugh Pym described Cyprus' problems as "classic contagion".

Its banks have lost large amounts on Greek government bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hard hit by the deep recession in neighbouring Greece, its biggest trading partner.

Credit ratings agency Fitch said the country, which has a population of one million, would need 4bn euros to support its banks, the equivalent of almost a quarter of its GDP, or economic output, last year.

Earlier, it cut the Cypriot government's credit rating to junk status, making it even harder for the country to raise the funds itself.
Summit fever
Fears are building that this week's two-day European Union summit could prove inconclusive.

"We must dispel doubts over the eurozone," said Spain's prime minister Mariano Rajoy.

"The single currency is, must be, irreversible," he said.

In another indication of the conflicts between European nations on the best way forward, Angela Merkel reiterated her opposition to calls to pool eurozone debt, which would make it cheaper for eurozone economies to borrow.

"There has to be a balance between guarantees and controls," she said.

IG Index analyst Chris Beauchamp blamed Chancellor Merkel's reluctance to share liability for eurozone debts for the share price falls.

"This was, is and will remain the fundamental issue in the crisis - Germany is understandably not keen on taking on the burden of debts built up by (as it sees it) spendthrift countries," he said.
Banking union
The problems facing Europe's banks will be on the agenda at the summit of European leaders on 28 and 29 June.

The BBC's economics editor Stephanie Flanders said: "On difficult areas like banking union, officials are making more progress than anyone would have expected a month or two ago.

"But the Germans have succeeded in dramatically lowering expectations for what could be achieved by Friday."

Draft documents prepared for the meeting, which have been reported by news agencies, detail proposals for a single European banking supervisor and a common scheme for guaranteeing bank deposits.

There would also be a central fund to wind down bad banks.

Options for the regulator include having one body, possibly the European Central Bank, to oversee the continent's biggest banks, while another watchdog supervises the day-to-day operations of all the banks.

The proposals also include closer fiscal union, with the prospect of eurozone countries sharing debt raised again.