UK Monitors: Georgia fired first shot

Two former British military officers are expected to give crucial evidence against Georgia when an international inquiry is convened to establish who started the country’s bloody five-day war with Russia in August.

Ryan Grist, a former British Army captain, and Stephen Young, a former RAF wing commander, are said to have concluded that, before the Russian bombardment began, Georgian rockets and artillery were hitting civilian areas in the breakaway region of South Ossetia every 15 or 20 seconds.

Their accounts seem likely to undermine the American-backed claims of President Mikhail Saakashvili of Georgia that his little country was the innocent victim of Russian aggression and acted solely in self-defence.

During the war both Grist and Young were senior figures in the Organisation for Security and Cooperation in Europe (OSCE). The organisation had deployed teams of unarmed monitors to try to reduce tension over South Ossetia, which had split from Georgia in a separatist struggle in the early 1990s with Russia’s support.

On the night war broke out, Grist was the senior OSCE official in Georgia. He was in charge of unarmed monitors who became trapped by the fighting. Based on their observations, Grist briefed European Union diplomats in Tbilisi, the Georgian capital, with his assessment of the conflict.

Grist, who resigned from the OSCE shortly afterwards, has told The New York Times it was Georgia that launched the first military strikes against Tskhinvali, the South Ossetian capital.

“It was clear to me that the [Georgian] attack was completely indiscriminate and disproportionate to any, if indeed there had been any, provocation,” he said. “The attack was clearly, in my mind, an indiscriminate attack on the town, as a town.”

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City of London recession to trigger £11bn tax revenue black hole

The financial crisis will result in tax revenues from City bonuses alone falling by as much as £4bn next year, according to one of Britain’s most influential economic forecasting firms.


Restrictions on bonuses at the banks which the Government is helping to rescue will also have the unintended consequence of lowering tax revenues Photo: MICHAEL WALTER

As investment banks, hedge funds and private equity firms – three of the principal drivers of the Square Mile’s explosive growth of recent years – cut tens of thousands of jobs, the Centre for Economics and Business Research (CEBR) expects the Treasury to face an overall City-generated taxation “black hole” of more than £10bn.

The CEBR believes the Government will collect around £5bn less than previously-estimated in corporation tax, while tax generated by bonuses, National Insurance contributions and base salaries is likely to fall by around £6bn.

The bleak forecasts underline the many ways in which cutbacks in the City, which has become a crucial engine of national economic growth, will contribute to an expected recession in Britain.

Restrictions on bonuses at the banks which the Government is helping to rescue will also have the unintended consequence of lowering tax revenues from City firms.

The deficit means Alistair Darling, the Chancellor, may need to borrow up to £110bn in the next financial year to plug the hole in the national balance sheet – almost three times the estimate of the £38bn forecast in his Budget statement last March.

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Jobless ranks hit 10 million, most in 25 years; unemployment hits 14-year high


Sunny Yang, left, a masters degree student from Shanghai and employed banker in New York City, speaks with World Bank representative Roberto Amorosino about opportunities for unemployed friends of his during a career fair at Columbia Univeristy Friday, Nov. 7, 2008 in New York. The U.S. unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace. (AP Photo/Julie Jacobson)

WASHINGTON (AP) — The nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It’s only going to get worse.

The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. And there was more grim news from U.S. automakers: Ford Motor Co. and General Motors Corp., American giants struggling to survive, each reported big losses and figured to be announcing even more job cuts before long.

Regulators, meanwhile, shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19.

The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17.

Read moreJobless ranks hit 10 million, most in 25 years; unemployment hits 14-year high

Obama’s choice draws anti-Arab taunt

Obama’s choice of White House chief of staff, Rahm Emanuel

In strikingly racist remarks, the father of Rahm Emanuel has said Israel will benefit from Obama’s choice of White House chief of staff.

“Obviously he will influence the president to be pro-Israel. Why wouldn’t he be? What is he, an Arab? He’s not going to clean the floors of the White House,” Benjamin Emanuel, father of Rahm Emanuel, told the Israeli Ma’ariv daily.

In a Thursday statement, US president-elect Barack Obama announced that Rahm Emanuel had accepted his offer to serve as the next White House chief of staff, the highest-ranking member of the Executive Office of the President of the United States.

News of Benjamin Emanuel’s comments came as Israeli newspapers rejoiced over Obama’s choice of the Illinois Congressman to become ‘the second-most powerful man in Washington’.

According to the Israeli Ha’aretz paper, Benjamin Emanuel ‘is a Jerusalem-born pediatrician who was a member of the Irgun (Etzel or IZL), a militant Zionist group that operated in Palestine between 1931 and 1948.’

Rahm Emanuel, who is named after a Zionist combatant, also served for the Israeli military during the 1991 Persian Gulf War.

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UK: Perilous state of economy revealed by MPC’s shock move

The perilous state of the UK economy was exposed as the Bank of England’s Monetary Policy Committee made an unprecedented 1.5 percentage point cut in interest rates.


Winston Churchill meets the Queen in 1955. Photo: PA

The shock vote brought interest rates down to 3pc for the first time since January 1955, when Winston Churchill was prime minister. Economists forecast that the cut could pave the way for further reductions – with some claiming that rates could hit a historic low of 1pc.

Thursday’s move was interpreted as a desperate attempt to protect the UK economy from a severe recession.

“There has been a very marked deterioration in the outlook for economic activity at home and abroad,” said the MPC in an explanatory statement, adding that the threat of inflation was now receding.

It warned that after the most serious crisis in the global banking sector for almost a century, households and businesses were likely to find it difficult to obtain credit “for some time.” The MPC counted falling share prices, a sharp reduction in UK output, and a squeeze on household budgets among a nasty cocktail of circumstances that have combined to hit both businesses and consumers hard.

The MPC’s decision came amid a raft of gloomy news and data emerged. Figures from Halifax, the UK’s biggest mortgage lender, showed that house prices have fallen by 15pc over the past 12 months.

It was the sharpest drop since the survey began in 1983 and brought the average house price down to £168,176 in October, compared with almost £200,000 in the same month last year.

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IMF urges radical action to fight global recession

The International Monetary Fund has slashed its forecast for the world economy next year, predicting outright contraction for the rich economies of North America, Europe, and Japan for the first time since the Second World War.


Taxi driving through Tokyo at night. Photo: GETTY

“Prospects for global growth have deteriorated over the past month. The financial crisis remains virulent. Markets have entered a vicious cycle of asset deleveraging,” said the fund yesterday.

Britain’s economy will suffer and will see the steepest decline in G7 club of leading powers, shrinking 1.3pc as the crunch in the City of London leads to more job losses. Germany will decline by 0.8pc, The US and Spain by 0.7pc.

Sending shivers through stockmarkets everwhere, the Fund cut its world outlook next year to just 2.2pc, down from 3pc just a month ago. This is a global recession under the IMF’s 3pc rule-of-thumb.

“Financial stress is likely to be deeper and more protracted than envisaged in October. Markets are pricing in expectations of much higher corporate default rates, as well as higher losses on securities and loans,” it said.

“Activity is increasingly being held back by slumping confidence. As the financial crisis has become more entrenched, households and firms are increasingly anticipating a prolonged period of poor prospects for jobs and profits. As a result, they are cutting back.”

Olivier Blanchard, the IMF’s chief economist, called on authorities around the world to respond rapidly with combined monetary and fiscal stimulus, saying risk on an inflationary surge had subsided as commodities prices slump.

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Darling summons bank chiefs over rate cut failure

Alistair Darling summoned the chief executives of Britain’s biggest banks to Downing Street today to demand that they immediately pass on the Bank of England’s interest rate cut to their customers.

Treasury sources confirmed to The Times that the Chancellor told the heads of all Britain’s big high street lenders – including HSBC, Barclays, Lloyds TSB, HBOS Nationwide and Abbey – to implement rate cuts immediately.

Yesterday, the Bank of England slashed interest rates by 1.5 per cent to 3 per cent, the lowest level in 54 years, and today, the shock reduction helped to ease the strain in nervous money markets.

Libor, which is the rate at which banks lend to each other and is key for pricing mortgages, fell by more than one per cent from 5.561 per cent to 4.496 per cent.

However, the figure remains almost 1.5 per cent higher than the official interest rate.

The spread between the Bank of England’s borrowing cost and the rate that banks charge to borrow money over a three-month period – a key measure in the wholesale money market – is the widest since October 22. The day before, Mervyn King, the Governor of the Bank of England, publicly acknowledged for the first time that a recession in the UK is now likely.

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Record opium harvest in Afghanistan threatens new heroin crisis in Britain

• EU agency fears glut and reversal of deaths decline
• UK tops cocaine abuse table for fifth year in row


Afghan farmers in a poppy fi eld: Helmand province, centre of British military operations, accounts for over half of the opium crop. Photograph: Ahmad Masood/Reuters

A glut of opium on the world market, fuelled by a record Afghan harvest, threatens a new heroin crisis in Britain, the European Union’s drug agency warned yesterday. The agency’s annual report also confirms that the UK remains at the top of the European league table of 27 countries for cocaine abuse for the fifth year in a row. The UK accounts for 820,000 of the 4 million Europeans who have “recently used” cocaine.

But the agency also reports that there are “stronger signals” of the declining popularity of cannabis across Europe, especially among British school students.

Nevertheless the drug experts say that a quarter of all Europeans – 71 million people – have tried cannabis at some time in their lives.

The heroin warning from the European monitoring centre for drugs and drug abuse follows two record opium harvests in Afghanistan of 8,200 tonnes in 2007 and 7,700 tonnes this year. The harvests represent 90% of the world’s illicit opium production with Helmand province, the centre of British military operations, accounting for over half of the crop.

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US Imposes Banking Sanctions on Iran


A general view shows the reactor building of the Bushehr nuclear power plant in southern Iran (File)

The U.S. Treasury has moved to further restrict Iran’s access to the U.S. financial system, by banning certain money transfers.

The Treasury Department announced on Thursday that it will revoke Iran’s so-called “U-Turn” license, which currently allows transfers to briefly enter the United States before being sent to offshore banks.

Until Thursday, U.S. banks were allowed to process certain money transfers for Iranian banks and other Iranian customers as long as the payments were initiated by and ended up in offshore non-U.S. and non-Iranian banks.

U.S. officials say the ban is aimed at increasing financial pressure on Iran to end alleged support of terrorist groups and nuclear proliferation.

Iran is under three sets of international sanctions. It has been accused by several Western countries of seeking nuclear weapons. Tehran says its nuclear program is solely for peaceful purposes.

Separately on Thursday, Israeli Foreign Minister Tzipi Livni said any U.S. talks with Iran may be seen as a sign of weakness.

The statement was Israel first official note of caution over Barack Obama’s election as U.S. president. Mr. Obama said during the campaign he would be willing to hold talks with Iranian leaders.

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Philadelphia to close libraries, pools, cut jobs

Mayor says city among many facing large budget shortfalls in bad economy

PHILADELPHIA – The city will close libraries and swimming pools, suspend planned tax reductions, cut more than 800 jobs and trim salaries for some administrators in order to weather “an economic storm” that could leave the city with a $1 billion shortfall, Mayor Michael Nutter said Thursday.

Nutter outlined the drastic budget cuts in a live, 10-minute televised address – a rarity that represented an attempt to convey the dire nature of the city’s financial situation.

“The city must prepare for the worst,” Nutter said. “Painful program and service cuts are necessary.”

The city is facing a deficit of $108 million this year, and the shortfall could grow to more than $1 billion by 2013, Nutter said.

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