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  • U.S. mortgage rates nudge closer to record low

    U.S. mortgage rates nudge closer to record low

    • Thursday April 23, 2009, 11:01 am EDT

    By Julie Haviv

    Reuters – A prospective home buyer tours a condominium for sale in Medford, Massachusetts, April 2, 2009. REUTERS/Brian Snyder …

    NEW YORK (Reuters) – U.S. mortgage rates fell in the latest week, nudging closer to a recent record low, helped by government efforts to bring rates down to levels that will spur demand and help the hard-hit housing market begin to recover.

    Interest rates on U.S. 30-year fixed-rate mortgages fell to 4.80 percent for the week ending April 23, down from the previous week’s 4.82 percent, according to a survey released on Thursday by home funding company Freddie Mac.

    Three weeks earlier, mortgage rates were 4.78 percent, which was the lowest since Freddie Mac started surveying them in 1971.

    The drop is a glimmer of hope for the U.S. housing market amid otherwise dismal data.

    The National Association of Realtors on Thursday said the pace of sales of existing homes in the United States fell 3.0 percent in March to a much lower-than-expected annual rate of 4.57 million units.

    “Although long-term mortgage rates eased slightly this week, ARM rates remain elevated relative to those fixed-rate mortgages,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

    The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A recovery for the market could portend a turnaround for the United States, the world’s largest economy.

    (Additional Reporting by Lucia Mutikani)

  • 10 Countries in Deep Trouble

    10 Countries in Deep Trouble

    • Matthew Bandyk
    • Monday April 20, 2009, 10:32 am EDT

    While the collapsing U.S. housing market may be at the root of the global economic recession, the downturn’s effects are being felt hardest overseas. Take Iceland, for instance. Its biggest banks failed, its economy may shrink 10 percent this year, its government fell, its central banker was sacked, the country was bailed out with a $2.1 billion IMF loan, and 7,000 people (in a country of 300,000) took to the streets in protest.

    Which countries have the greatest chances of being the next stories of failure? U.S.News looked at some countries that are currently facing severe economic disruption that endangers their standards of living, attractiveness to foreign investors, and political stability. First, we examined what Moody’s Investors Service and Standard & Poor’s had to say about them. These firms rate the risk of sovereign bonds, securities that finance the debt of a country. Many of the countries we identified have poor bond ratings or ratings under review for a downgrade, showing that these governments are perceived as being at greater risk of defaulting on their debt.

    Second, we looked at what global markets think about a country’s debt, based on data from Markit. The financial information company provides daily pricing on credit-default swaps, contracts between two parties that provide a kind of insurance on corporate and government debt. Analysis was also supplied by credit-rating organization AM Best. It ranks countries into five tiers based on the risk to insurers posed by the countries’ economic, political, and financial systems. Using these analyses, here are five countries in deep trouble and five worth keeping an eye on.

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    Five Countries in Deep Trouble

    Mexico. Thousands of would-be tourists from America and elsewhere had to cancel spring break trips to Mexico due to ongoing violence related to the drug trade. Mexico was the second country recently identified by the U.S. Joint Forces Command as possibly poised for a “rapid and sudden” collapse. Mexico’s “politicians, police, and judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels,” says the report.

    The violence and tourism decline could not come at a worse time. Economists predict a 3.3 percent contraction of the Mexican economy this year. The poor economic growth means that the government is getting strapped for funds. In April, it asked the International Monetary Fund for a $47 billion loan. While credit-rating agencies don’t expect Mexico’s debt to grow riskier soon, and the risk of its sovereign derivatives has not skyrocketed like some other countries on this list, serious problems still remain for the Mexican economy. The country depends on the United States to consume its exports and pay Mexican immigrants who send money back home. If the U.S. recession deepens, Mexicans will feel the pain as much as Americans.

    Pakistan. The country has already almost gone bankrupt once in the past six months. In October, only an emergency $10 billion in support from the World Bank, the Asian Development Bank, and others prevented Pakistan from defaulting on its debt. During that crisis, the cost of insurance on Pakistan’s debt exploded. Even though the situation has calmed since then, investors are not getting comfortable with Pakistan. It still costs $2.2 million a year to insure $10 million of Pakistan’s sovereign bonds.

    The economic situation isn’t all bad. The Asia Development Bank recently predicted that Pakistan’s economy will grow 4 percent in the next fiscal year beginning in July, compared to 2.5 percent growth estimated this year. But the wild card that could change everything is the country’s political situation. Pakistan is one of the most unstable countries in the world. On April 13, White House counterterrorism consultant David Kilcullen said that a political collapse in Pakistan could come within months. A 2008 report from the U.S. Joint Forces Command identified Pakistan as a country at risk of a “rapid and sudden collapse,” one that would create a devastating security problem for the world. The report says that “the collapse of a state usually comes as a surprise.” Anyone banking their money on Pakistan’s economic growth might not know what hit them.

    Ukraine. While Iceland may have suffered the worst financial collapse of the global recession, Ukraine has also received a dubious honor: It had the priciest sovereign credit-default swaps for the first quarter of the year. It currently costs about $3.9 million to insure $10 million of Ukrainian five-year sovereign bonds. A year ago it cost just under $3,000. S&P rates them CCC–the seventh-best (out of eleven) rating, indicating that Ukraine is vulnerable to nonpayment.

    As the government tries to solve the crisis, Ukrainians are getting squeezed. Kiev, one of the oldest capitals in Europe, has had to shut down free clinics, schools, and increase public transportation costs in order to close a deficit. The Institute for Economic Research and Consulting is forecasting a GDP contraction of 12 percent. The Ukrainian stock market has fallen 25 percent so far this year. The Ukrainian currency, the hyrvnia, is also plummeting, falling 35 percent against the dollar in the last six months. The Ukrainian government’s efforts to shore up the currency, including setting a floor for which the hryvnia can be traded, have so far been in vain.

    Venezuela. Hugo Chavez has inextricably tied the Venezuelan economy to oil, and that didn’t look so bad before the financial crisis. Oil profits helped deliver massive economic growth, so much that 4.8 percent growth in 2008 was seen as a disappointment. But with oil prices having plunged due to the global slowdown, the fortunes for Chavez’s strategy have changed. Many economists are predicting negative growth for Venezuela this year, such as the 4 percent drop predicted by Morgan Stanley.

    From June to September, the cost for an investor to buy insurance against Venezuela’s debt almost doubled. Right now, to protect $10 million in Venezuelan sovereign bonds against default, an investor would need to spend $1.8 million each year. S&P gives Venezuela’s sovereign bonds a BB rating, meaning Venezuela faces “major ongoing uncertainties” that could lead to “inadequate capacity” to meet its obligations. S&P also has a negative outlook for the bond rating, meaning it could decline in the next six months to two years.

    Argentina. The Argentine economy is notorious for its boom and busts. The country last defaulted on its debt in 2002, but enjoyed economic improvements through most of this decade. During that last financial crisis, citizens staged protests known as cacerolazos, which means “banging of pots and pans,” but the demonstrations resulted in broken windows and fires. Argentina has not seen that kind of violence stemming from the current financial crisis yet, but foreign investors are worried the economy is back to “bust” mode. CMS Datavision ranks Argentina as having the third most expensive credit derivatives in the world. Right now, Markit composite prices show an annual cost of $3.2 million for an investor to buy protection against $10 million of Argentina’s sovereign debt. Moody’s rates Argentina’s sovereign bonds as B3, meaning a high, speculative credit risk, and S&P as B-, meaning that more bad economic news for Argentina could lead to default. The Organization for Economic Cooperation and Development gives Argentina a seven, its riskiest classification rating.

    Five Countries to Keep An Eye On

    Latvia. Iceland isn’t the only country that’s seen massive protests against economic hardship. In January, a 10,000-strong demonstration in Latvia’s capital, Riga, turned into a riot. Tremendous economic growth since the end of the Cold War earned Latvia its place as one of the “Baltic Tigers.” GDP growth was 11.2 percent in 2006, for instance. But Latvia’s Ministry of Finance forecasts a 14.9 percent drop in GDP this year. Latvia is getting a $7.5 billion emergency loan from the IMF, but the organization is sitting on part of the money because of the Latvian government’s failures thus far to reform its budget. The past two years have seen the cost of Latvia’s credit default swaps increase over one-hundred fold. Moody’s rates Latvia’s bonds as Baa1, or “moderate” credit risks, and projects that they could become riskier bets in the medium term.

    Croatia. The country’s beaches on the Adriatic Sea draw so many visitors that tourism is almost 20 percent of the country’s GDP. But since the recession is taking a bite out of travelers’ pocketbooks, Croatia’s economy is getting bitten as well. The government forecasts unemployment could rise as high as 12 percent this year. And a recent poll found that 78 percent of Croatians think the country is going in a bad direction, with unemployment cited as the primary reason. All this bad economic news might be one of the reasons S&P projects a possible rating decline for Croatia’s BBB-rated bonds. The BBB rating means that Croatia does not have payment problems yet, but are in a position where their ability to pay for debt could be easily weakened.

    Kazakhstan. While the Central Asian nation’s GDP has grown in recent years, Kazakhstan has two problems that have created the potential for economic disaster: a reliance on foreign lending and a reliance on oil. Kazakhstan holds 3.2 percent of world’s oil reserves. But the soaring oil prices that have boosted Kazakhstan’s economy are no more, and investors have pulled money out of Kazakhstan in response. The cost of buying protection against Kazakhstan’s debt has skyrocketed about 75 percent during the past year. The cost is back up to a peak reached in October, and it currently costs $875,000 a year to insure $10 million of Kazakhstan’s debt. S&P has a negative outlook on Kazakhstan’s BBB-rated sovereign bonds, meaning they could get riskier in the next six months to two years.

    Vietnam. Unlike many of the other countries on this list, Vietnam has had some good news recently. The Asian Development Bank forecasted Vietnam’s economic growth at 4.5 percent for the next year, the highest in Southeast Asia. Yet the country just registered its slowest economic growth in a decade. A survey found that 46 percent of Vietnamese were afraid of unemployment in January, up from 9 percent in September. Both Moody’s and S&P have a negative outlook for Vietnam’s sovereign bonds. The price of its sovereign derivatives has almost doubled in the past year. Vietnam falls into the riskiest of the five tiers as rated by AM Best. In particular, the firm identifies Vietnam’s financial system, plagued by “relatively poor infrastructure and cumbersome bureaucracy,” as “very high” risk.

    Belarus. Minsk, the capital of Belarus, was mostly destroyed during World War II and much of the city was rebuilt in the form of hulking, utilitarian, Soviet-style buildings. Belarus also retains a heavy Soviet influence in its financial system–all but one of the country’s 31 banks is controlled by the state, according to AM Best. Because of Belarus’s failure to reform its financial system, the firm gives the country its highest score for financial risk. Even though Belarus scores relatively well for political stability, that economic rating is enough to push it into the riskiest of the report’s classifications.

    Belarus’s problems aren’t just speculative. Although its economy is still growing, the IMF expects it will expand 1.4 percent this year, compared to 10 percent last year.The country’s government has also been approved for a $2.46 billion IMF loan. But the IMF now forecasts that the country will need a further $10.7 billion in 2009. Still, other experts disagree about just how fragile Belarus’s economy is. Its bonds are rated as B1 from Moody’s, meaning high credit risk but also at the top of the pack of the high-risk countries.

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  • ANCA Genocide Dilemma

    ANCA Genocide Dilemma

    Armenian National Committee of America

    Years of persistent lobbying by the Armenian National Committee of America (ANCA) has now led to more than 100 members of the US Congress supporting the Armenian Genocide bill, and in the light of Obama’s record on Armenian Genocide, this healthy bipartisan majority should have led to Americas President Obama formally signing on, after the bill had been passed by the Congress and the Senate.
    Following President Obama’s 6th April remarks before the Turkish Parliament, ANCA’s Executive Director Aram Hamparian commented: “In his remarks today in Ankara, President Obama missed a valuable opportunity to honour his public pledge to recognize the Armenian Genocide. Harut Sassounian followed by writing of his efforts to “expose the Turkish government’s ploy of creating the false impression that Ankara is engaged in serious negotiations to establish diplomatic relations with Yerevan” ……. “Turkey has been exploiting the illusive promise of opening the border in order to pressure Armenia into making concessions on a host of issues, while simultaneously subverting Pres. Obama’s pledge to recognize the Armenian Genocide”.

    On the 22nd April, the State Department made an announcement, which was followed by numerous reports in the international news that, according to the Turkish Foreign Ministry “Turkey and Armenia had agreed on a roadmap for normalizing relations and reaching reconciliation”. Add to that Russia’s state television announcement that a ‘document’ had been signed, considered to be ‘historic’, it must be assumed that tomorrow 24th April, the chances of President Obama using the ‘Genocide’ word are all but over.

    Turkey, through its determined process of negotiations and manipulations, has not only achieved its priority objective of staving off an otherwise inevitable Obama recognition of Armenia’s Genocide, it has also re-linked normalizing Turkish – Armenian relations to the Armenian – Azerbaijani conflict over Karabakh. The Sargsyan / Nalbandian camp responded with a resounding silence, a signal that they are not too eager to release the details of the ‘roadmap’ or the document’.

    The ANCA effort to gain US recognition has to be commended, but why has ANCA been criticising Turkey for doing exactly what it was expected to do, dissuade Pres. Obama from standing by his pledge to recognize the Armenian Genocide. ANCA should have been directing its criticism at Serzh Sargsyan and Eduard Nalbandian; it was they who thwarted the Obama Genocide recognition, not Turkey.

    But ANCA has a problem with criticising the Sargsyan regime, which goes back to Armenia’s first President, Levon Ter-Petrossian (LTP). ANCA is made up predominantly of members from the Dashnaktutsiun (Dashnak) Party, which was outlawed by LTP after his victory in the 1991 Presidential election. A number of in-country Dashnak leaders were imprisoned for several years accused of involvement in ‘criminal’ activities. Robert Kocharian forced LTP out of office in 1998 (on the Karabakh issue) and brought the Dashnak Party back from political obscurity. Since then, in contrast to the Dashnaks in the Diaspora, who appear to cling on to traditional and highly commendable Dashnak principles, the Dashnaks in Armenia have disgraced themselves by consistently collaborating with the Kocharian / Sargsyan regime and failing their obligations to the Armenian electorate.

    The ANCA was faced with a dilemma; if it had criticised the regime on its Genocide misdealings, then Levon Ter-Petrossian would have been given a boost in his efforts to move back into Armenian mainstream politics, which the Dashnaks in Armenia would not tolerate. The ANCA is also aware that, once in City Hall, LTP would be looking directly at the Armenian Presidential Palace, a major problem for the regime and its faithful co-conspirators, the Dashnak Party. Armenia should therefore not be fooled by a seemingly nationalistic letter from Armen Rostumian, appealing to the US Congress for Genocide recognition; the Dashnaks are in close collaboration with the illegitimate Sargsyan regime in its Genocide ‘Sell-Out’, as it is with all other regime matters.

    If the ANCA had directed its criticism and considerable influence at the party actually responsible for Armenia’s failure in this year’s Genocide recognition debacle, then Armenia would have had a much greater chance of celebrating this 24th April as the day which signalled full international recognition of Armenia’s Genocide.

  • Prime Development to invest $1.5 bln in Turkey malls

    Prime Development to invest $1.5 bln in Turkey malls

    aISTANBUL, April 21 (Reuters) – German real estate company Prime Development said on Tuesday it planned to invest $1.5 bln in building shopping malls in Turkey.

     

    The first two investments in the southern cities of Antakya and Iskenderun, with a total value of $350 million, would be completed within a year, the company added.

     

    Shopping malls have sprouted across Turkey at a dizzying pace in recent years, with foreign money attracted by Turkey’s large, young and increasingly prosperous population of over 70 million. Global property services provider Savills (SVS.L) said in a recent report that while Turkey was not immune to the kind of economic strain seen in Western Europe, the country remained attractive to international retailers looking to gain a foothold in the eastern European/central Asian region.

     

    Further to the arrival of key fashion brands such as C&A, Tommy Hilfiger, Accessorize, Zara, Mango and Gap, Savills said U.S. electricals retailer Best Buy and French DIY retailer Leroy Merlin were also preparing to open their first stores.

     

    According to Savills, average yields for Turkish retail real estate have increased by 25 basis points on a quarterly basis in the first quarter of 2009. Prime retail yields are at 7.75 percent and up to 8.75 percent for secondary properties. (Additional reporting by Sinead Cruise in London, editing by Will Waterman)

    Reuters 

  • Time to renew Economic and Social Council

    Time to renew Economic and Social Council

    April 17, 2009 TDN Editorial


    Opinion


    A spate of dire economic reports has been emerging in recent weeks: plummeting industrial production, collapsing exports, shrinking capacity usage. All are worrisome. But none is as dire as the latest news that unemployment is at a record high, probably the highest in the history of the Republic.

    At the start of the year, new figures reveal, unemployment stood at 15.5 percent. That means today, in the estimate of economist Seyfettin Gürsel, the real figure is probably above 17 percent.

    That means roughly 4 million people in Turkey, a population nearing the size of Denmark, are idle. For young people between the ages of 15 to 25, the jobless rate is now officially 27.9 percent. To put this in international context, only one significant economy in the world today has a worse unemployment picture. This is South Africa, where the figure is 23.2 percent. In Gürsel’s words: “this is catastrophic.”

    It may be too early to pronounce catastrophe. But the social implications of unemployment at these levels are all too familiar. Yes, as we have reported this week, some of this can be absorbed by people returning to complete education. As we report today, young men opting for conscription as officers rather than privates, with the attendant long terms and salaries, is also a rising trend that can help at the margins. But this is not a problem to be solved at the margins. Resort to extremist ideologies, whether based on religious or nationalist ideologies, is one danger. As Chief of General Staff İlker Başbuğ noted in his widely reported address this week, it is the young and the jobless who are most vulnerable and at risk of seeing hope in extremist violence.

    Some of what should occur is obvious: Turkey needs to reach accord with the International Monetary Fund on an accord to underpin the country’s public finances. The country needs a real fiscal stimulus strategy, one aimed at the real economy. Reductions in certain consumer taxes are fine. Tax policies offer further room for creativity, even temporary aid to reduce the cost of creating and maintaining employment Ğ social insurance costs for example Ğ should be on the table. Interest rate policies that serve production are helpful, but worldwide, the limits to monetary policy are reaching the end of effectiveness. And in Turkey, nothing used so far adds up to real stimulus.

    In the face of these growing unemployment figures, one important step would be to dust off the “Economic and Social Council” idea born of the 2001 crisis. Now moribund, this notion was a national advisory body drawing on government, labor union, education and civil society resources to advise on sensible, practical and doable steps. No stone of potential policy should be left unturned. The alternative is that foreseen by Gürsel: catastrophe.

  • Summary of DEBKAfile Exclusives in two weeks ending April 16, 2009

    Summary of DEBKAfile Exclusives in two weeks ending April 16, 2009

    Netanyahu government holds first meeting Sunday 5 April: Binyamin Netanyahu, opening his first cabinet meeting Sunday, April 5 in Jerusalem, said the security cabinet would draft Israel’s peace and security policy in the coming weeks. The cabinet’s agenda covered the urgent passage of the delayed 2009 state budget – possibly at a special Knesset session Monday, the introduction of a basic law amendment for biennual state budgets and boosted welfare aid to help the needy celebrate Passover.
    Israeli layoffs peaked in March with 20,000 applicants lining up for jobs compared with 17,800 in February.

    On May 3, Netanyahu is due to visit Washington for talks with US president Barack Obama. On April 16, US Middle East envoy George Mitchell arrives in Jerusalem for his first talks with the new Israeli government.

    April 7 briefs: – Palestinian rock-throwers injure Israeli motorist on West Bank road.
    – Border Guards detain Palestinian carrying four firebombs into Hebron’s Cave of Patriarchs.
    – Palestinian driver shot dead after running down and injuring three Israeli police officers at Jerusalem village of Tsur Baher Tuesday.
    The police were there to seal off home of Palestinian who killed three Israelis with bulldozer last year on Jerusalem high street.

    Saudis also dismayed by Obama’s seeming tolerance of Iran’s nuclear drive 07 April: On the sidelines of the G20 summit in London, Saudi King Abdullah took the US president sternly to task over his emerging policy on Iran, Syria and Iraq, accusing him to giving the Islamic Republic free rein for its nuclear, expansionist and terrorism-sponsoring Middle East policies.

    As for Israel’s concerns, President Shimon Peres pointed out to visiting US congressmen in Jerusalem Monday that Iran had hoodwinked the entire world in its drive for a nuclear bomb whose main target would be the Jewish state; Israel’s population is short of adequate means of self-defense.

    Deputy Chief of Staff, Maj. Gen. Dan Harel warned that a nuclear-armed Iran would shield Middle East terror groups, so magnifying the threat to Israel manifold.

    But, he added, the IDF was fully capable of backing up any government decision to tackle this existential threat.

    Kazakhstan bids for Israeli role in Baikonur, Russia buys Israeli drones 08 April: Kazakhstan is negotiating for Israel to launch its communications satellites from Baikonur to help turn this space launching facility into a going international business venture long term.

    DEBKAfile’s military sources report that Russia, which built the satellite launching station in 1955 for its own use, does not object, because it is constructing a replacement cosmodrome on its own soil and also developing its own military and aviation industrial ties with Israel.

    Moscow has bought its first unmanned aerial vehicles from Israel for $50 million, the first of more purchases to come. They are Israel Aerospace Industries’ Bird-Eye 400 for escorting ground units and surveillance, I-View MK150 – a short range UAV system intended for operation with medium tactical echelon levels, and Search MK II, an unmanned air vehicle armed for combat (UCAV).

    Jerusalem stammers, Washington deaf to Iran’s race for nuke
    DEBKAfile Exclusive Analysis     10 April: For most of the past decade, Washington and successive Israeli governments have shunted aside to “the international community” and “diplomatic engagement” Iran’s hellbent race for nuclear armament and the missiles for its delivery. New administrations have just taken over in the United States and Israel – but nothing has changed.

    Thursday, April 9, Mahmoud Ahmadinejad announced Iran had completed the nuclear fuel cycle and produced two new high-capacity enrichment centrifuges. He had no fear of retribution.

    Astonishingly, US secretary of state Hillary Clinton said his claims were not a rebuff to the offer of five Security Council permanent members and Germany of talks in which the US would be fully engaged.
    Her consignment of Iran to insuring that the UN International Atomic Energy Agency was “a source of credible information…” must have amused veteran Iranian hands even in Washington.

    For nine years or more, the IAEA has missed every twist and turn on the roads to a bomb followed by Iran and North Korea, starting from the nuclear black market run by Pakistan’s Dr. A.Q. Khan for the benefit of Iran, North Korea and Libya, then North Korea’s nuclear arsenal and ballistic development, followed by Syria’s plutonium reactor. Now come Iran’s nuclear advances in barefaced defiance of the “international community,” a week after North Korea test fired a long-range missile which the US and its allies failed to deter or intercept.

    As for Jerusalem, a “top source” said “Israel does not object to talks between the West and Iran as long as Iran does not take advantage of these talks” – which is exactly what Tehran has been doing for years. Israel expects the international community [again] to act firmly to prevent Iran from obtaining nuclear weapons,” and will discuss he issue in Netanyahu’s talks with Obama next month, the source said. Oh yes? Isn’t that where we came in three governments ago?

    11 April: Shimon Shiran, 57, died of wounds suffered 7 years ago in a Palestinian suicide attack on Haifa Matza restaurant. In dying he raised the death toll from that attack to 16, including his 17-year old daughter.

    Washington Helps Curtail Iran’s Covert Thrust into Egypt
    DEBKAfile Exclusive Report    11 April: Israel has repeatedly warned Egypt that an Iranian multi-branched covert ring would undermine Egyptian security in Sinai and the Suez Canal before turning against Egypt proper. From early 2006, Egyptian and Western security services and Israeli intelligence have been aware of Hizballah’s smuggling operations for Hamas on behalf of Tehran and Iran’s covert networks in Sinai and the Suez Canal cities of Port Said, Suez and Ismailia.

    Last Wednesday, April 8, Cairo disclosed that Egyptian security forces had arrested 49 men, 41 Egyptians, seven Israeli Arabs, and one Lebanese citizen on charges of supporting Hamas and Hizballah. Iran was not mentioned. The arrests had begun last November and were continuing.

    The disclosure sparked a slanging match between Cairo and Hizballah leader Hassan Nasrallah. The latter admitted that the network’s head, Sami Shehab, belonged to Hizballah and had provided Hamas with money and logistical support, “for which we are not ashamed.”

    He thus confirmed a long-held Israeli intelligence contention.

    An Egyptian source shot back by calling Nasrallah an Iranian agent and accusing him of organizing subversion against the Cairo government to divert attention from Tehran’s nuclear ambitions. Neither party spoke of a major undercover Iranian network operating in Egypt for three years, eventually to hook up with clandestine Iranian cells in Somalia and Sudan, an outer safety belt as a counterweight to the US naval presence and deterrent against a strike on its nuclear facilities.

    Six months ago, Cairo began rolling up the Iranian ring, but only after the US beefed up its naval strength in the Gulf of Suez and Red Sea and assured Cairo that more would be done.

    April 12 briefs: – Netanyahu tells Abbas he will resume talks and cooperation to promote peace.
    – Palestinian leader called him with Passover greetings, later called President Peres.
    – Jewish Priests Blessing was celebrated at Jerusalem’s Western Wall on fifth day of Passover.
    – Jerusalem’s Christian shrines packed with Easter pilgrims of many denominations.

    		 Egyptians close in on Iranian-Hizballah arms-smuggling base in Sinai
    DEBKAfile Exclusive Report

    13 April: Egyptian security forces are closing in on a secret Iranian-Hizballah headquarters in central Sinai which has been organizing the flow of smuggled arms to Hamas in the Gaza Strip. Cairo’s intelligence points to three possible locations: Wadi Umar or neighboring Nahel, Beir Hasneh and Badr al Hittain.

    As part of the operation, a 500-strong Egyptian force in armored vehicles carried out a surprise raid on Bedouin territory Monday, April 13. They found nothing but sparked a confrontation with the tribes. The Bedouin chiefs accused Cairo of violating the treaty between them by entering their territory without warning; they threatened a general lockdown in reprisal.

    Under the same treaty, the chiefs are obliged to report to the Egyptian authorities on any foreigners present. Cairo suspected them of holding back this information and covering up for the Iranian-Hizballah smuggling command center.

    Palestinian remote-controlled explosives boat intercepted near Israeli shore 13 April: Israel’s chief of staff Lt. Gen. Gaby Ashkenazi said the unmanned Palestinian “fishing boat” from the Gaza Strip which exploded 400 meters from the Israeli coast Monday, April 13 was heading for an Israeli naval vessel packed with hundreds of kilograms of explosives. DEBKAfile’s military sources report that it was detonated by remote control from the shore.

    Israeli counter-terror forces have been on the alert on air, sea and land for the eight-day Passover festival which ends Wednesday. They suspect Palestinian terrorists of trying out a new method of attacking Israeli coastal targets or offshore Israeli Navy units by means of exploding sea craft driven by remote control.

    Palestinian sources claimed earlier that it was a regular fishing boat which came under Israeli naval fire. They do not explain why it was unmanned.

    Peres threatens military strike
    DEBKAfile Special Report     13 April: Sunday, Israeli President Shimon Peres told an Israeli radio interviewer that if President Barack Obama’s diplomatic efforts to prevent Iran from going nuclear failed, “We’ll strike him,” referring to Iranian President Mahmoud Ahmadinejad.

    Later senior Iranian negotiator, Said Jalili phoned EU official Javier Solana to correct the impression by saying Tehran “welcomed talks”, but he did not contradict the conditions laid down by his superior.

    Ali Larijani, speaker of the Iranian parliament (Majlis) who said: “The Iranian government will only conduct international negotiations on the nuclear issue that are approved by the parliament and the legislature will closely monitor all such talks.”

    He then added: “The proposal by some members of the 5+1 group calling for more intrusive inspections of Iran’s nuclear activities is not legal.”

    In 2007, the Majlis banned the cessation of uranium enrichment and prohibited concessions on Iran’s nuclear program.

    Iran plans a second, bigger satellite launch 14 April: Tuesday, April 14, as North Korea reactivated its nuclear weapons facilities in defiance of UN resolutions, Iran’s president Mahmoud Ahmadinjad announced plans to send a second satellite into space, this one on a rocket with a range of 1,500 km.

    The launch of its first home-made satellite Omid in February, ostensibly for “peaceful telecommunications,” demonstrated Tehran’s acquisition of long-range ballistic technology usable for delivering nuclear warheads. The next satellite would be bigger than Omid and have a longer range.
    Tuesday, North Korea decided to expel international inspectors and reactivate its nuclear facilities in retaliation for the UN Security Council’s c unanimous condemnation of its long-range Taepodong 2 missile launch last week. Pyongyang also announced its withdrawal from the six-power talks on its nuclear program.

    Clearly, both North Korea and Iran are moving ahead on parallel courses, impervious to Western condemnation (of North Korea) and concessions (to Tehran) for the sake of diplomatic engagement.

    Their courses undoubtedly intersect. Of late, a ship that travelled from North Korea to Iran last December is suspected of having several dozen tons of enriched uranium hidden in its cargo.

    Ahmadinejad boasts Iran forced Washington to retreat on enrichment halt 15 April: President Mahmoud Ahmadinejad crowed Wednesday, April 15: “Iran’s resistance and progress in nuclear technology forced Washington to retreat from its position…” Following the suggestion that the six powers’ could waive the US demand for Iran to give up enriching uranium as a pre-condition for talks, the Iranian president said: “You know well that today you are suffering from weaknesses. You have no choice.”

    He said contemptuously that Tehran was preparing a “new package” in response to the US, Britain, China, France, Germany and Russia’s invitation to negotiations and “When it is ready we will present it to you.”

    Israel has military resources to destroy Iran’s nuclear sites – Washington sources 15 April: A prestigious Washington think tank – the Center for Strategic & International Studies (CSIS) – has concluded by means of detailed research and analysis that Israel is militarily capable of destroying Iran’s nuclear program. This view is shared by the Adm. Mike Mullen, Chairman of the Joint US Chiefs of Staff, who asked recently if Israel could carry off an attack on Iran, replied tersely: “Yes.”

    Sole surviving Mumbai massacre suspect goes on trial, as India goes to polls

    15 April: Mohammed Aimal Kasab, 21, a Pakistani, faces possible execution five months after a terrorist siege in which he and 10 gunmen took part killed more than 160 people. The dozen charges include murder, conspiracy to wage war and terrorism. The court sacked his defense lawyer over a conflict of interest, delaying the trial. A replacement must be found by Legal Aid before the trial can proceed.

    The trial opened the day before 700 million Indians begin month-long polling for a new leader and the lower house of parliament. Security was high on the campaign agenda. Indian Army Chief Gen. Deepak Kapoor warned that women are being trained “on the other side” to infiltrate into Jammu and Kashmir.

    Gates totally opposes Israeli strike on Iran 16 April: The US defense secretary Robert Gates Said again Wednesday: “A strike probably would delay Tehran’s nuclear program one to three years, it would unify Iranians, cement their determination to have a nuclear program and also build into the whole country an undying hatred of whoever hits them.”

    Taking issue with Gates, DEBKAfile’s military sources note that he avoided spelling out the words “nuclear weapon” – as though to blur the fact that this is Iran’s goal. As for his use of “undying hatred,” in the future tense, he may not have noticed that the radical Islamic regime bombards its people night and day with their undying hatred for Israel and calls to “wipe the Jewish state off map.”