Former U.S. Senator Chuck Hagel (R-NE) testifies during a Senate Armed Services Committee hearing on his nomination to be Defense Secretary, on Capitol Hill in Washington, January 31, 2013. Hagel, 66, is a decorated Vietnam War veteran and a former two-term Republican senator.

WASHINGTON | Sun Feb 17, 2013 6:21pm EST

WASHINGTON (Reuters) - A senior Republican senator said on Sunday that party colleagues will drop tactics to delay a vote on former Senator Chuck Hagel to be defense secretary, saying that President Barack Obama's nominee likely has sufficient support to be confirmed into this key post.

"We will have a vote when we get back, and I am confident that Senator Hagel will probably have the votes necessary to be confirmed as the secretary of defense," Arizona Senator John McCain, who has led the opposition against his former Republican colleague, told NBC's "Meet the Press" program.

Democrats, who control the Senate, have scheduled a vote for February 26, after members return from a week-long recess. Republicans held up the nomination last week in a delay characterized as the first time the Senate had used a procedural tactic called a filibuster to block a defense nominee.

With Democrats holding 55 votes in the 100-seat Senate, Hagel's nomination is expected to win the simple majority of 51 votes needed for his confirmation to become the civilian leader at the Pentagon, once such a vote is allowed.

If confirmed, Hagel, a 66-year old decorated Vietnam War veteran, would replace 74-year-old Leon Panetta.

Hagel, who broke from his party as a senator by opposing former President George W. Bush's handling of the Iraq War, has faced withering criticism from Republicans since Obama nominated him on January 7 to be the defense secretary.

Some Republicans have questioned if Hagel is sufficiently supportive of Israel, tough enough on Iran or capable of leading the Pentagon. McCain continued on Sunday to voice concern.

"I don't believe he is qualified. But I don't believe we should hold up his nomination any further because I think it is a reasonable amount of time to have questions answered."

(Reporting By Alister Bull; Editing by Philip Barbara)

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U.S. Defense Secretary Leon Panetta speaks about a suicide bombing near a NATO base, during a joint news conference with Afghan President Hamid Karzai at the Presidential Palace in Kabul December 13, 2012.

WASHINGTON | Thu Jan 10, 2013 6:41pm EST

WASHINGTON (Reuters) - Defense Secretary Leon Panetta said on Thursday he had ordered the U.S. military services to freeze civilian hiring, delay maintenance work and reduce other spending as fears grow the Pentagon will likely face another huge budget cut in March.

Speaking at a Pentagon news conference, Panetta acknowledged for the first time that across-the-board cuts he had said would be "devastating" to national security were increasingly possible and "we simply cannot sit back now and not be prepared for the worst."

The Pentagon is facing some $500 billion in cuts to defense spending over the next decade under a procedure known as sequestration. That comes on top of $487 billion in cuts over a decade that the department began implementing last fiscal year.

The new round of cuts, ordered by Congress as part of the effort to reduce the massive U.S. deficit, were due to go into effect on January 2, but lawmakers reached a deal on New Year's Day delaying the spending reductions until March 1.

The White House had told the Pentagon until recently not to plan for the across-the-board budget cuts. Those cuts had been approved by the Obama administration and Congress to try to force lawmakers to reach a compromise spending deal. But they were never expected to take effect because they hit almost everything equally, regardless of strategic importance.

Under the new law, the Pentagon faces $45 billion in cuts this year unless Congress can agree on an alternative package of spending reductions. Analysts say that even if Congress approves an alternative deal, that could include hundreds of billions of dollars in additional cuts to projected defense spending.

"My fear in talking to members of Congress is that ... this issue may now be in a difficult place in terms of their willingness to confront what needs to be done to detrigger sequester," Panetta said.

'PRUDENT MEASURES'

"Regardless of what Congress does or fails to do, we still have an obligation to protect this country," he added. "So for that reason, I have asked the military services and the other components to immediately begin implementing prudent measures that will help mitigate our budget risk."

Panetta, who will leave office once his replacement is confirmed by the U.S. Senate, said he had asked the military services to freeze civilian hiring, curtail non-critical facilities maintenance, delay awarding certain contracts and take other steps to reduce spending.

He said he also had asked the services as a precautionary measure to begin planning how they would implement unpaid leave for the department's nearly 800,000 civilian employees if that became necessary.

The department's civilian workers can be placed on unpaid leave for up to 22 work days - about a calendar month - but the Pentagon must notify Congress of the intended step 45 days in advance.

A top defense analyst said on Wednesday that sequestration would probably require all 791,000 civilian defense employees to take the full amount of furlough possible in order to achieve the savings that would be required in the personnel accounts.

A defense official said the services also were directed to curtail travel, training and conferences; to reduce expenses on things like supplies, business information technology and ceremonies; and to cancel ship and aircraft maintenance in the third and fourth quarters as necessary.

Army General Martin Dempsey, chairman of the Joint Chiefs of Staff, said that if the budget cuts hit: "We'll continue to resource those who are next to deploy. ... It would be unconscionable to do otherwise. Likewise, we'll continue to care for our wounded warriors and their families."

"But for the rest of the force, operations, maintenance and training will be gutted. We'll ground aircraft, return ships to port and sharply curtail training across the force," he said. "Within months, we will be less prepared. Within a year, we'll be unprepared."

Panetta said the Pentagon's budget crisis was compounded by the fact that Congress had not approved the department's spending plan for the 2013 fiscal year, instead extending funding under a continuing resolution that keeps it at 2012 levels, which represents a 5 percent cut.

He said that resolution was to expire on March 27 and if Congress failed to pass the 2013 appropriations bill, it could end up extending spending at 2012 levels for the rest of the fiscal year, which ends on September 30. That would take a further $11 billion out of the Pentagon's operations and maintenance budget.

"If you take the total sum of all these cuts, we're looking at a 19 percent to 20 percent reduction in the base budget operating dollars for active units, including what looks like a cut of almost 30 percent for the Army," Panetta said.

(Editing by Peter Cooney)

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US Democratic presidential candidate Senator Barack Obama (D-IL) (R) shares a laugh with Senator Chuck Hagel (R-NE) at the Amman Citadel in Amman July 22, 2008.

WASHINGTON | Sun Dec 30, 2012 12:12pm EST

WASHINGTON (Reuters) - President Barack Obama offered strong support for former Republican Senator Chuck Hagel as the potential next U.S. defense secretary but said in remarks aired on Sunday that he had not yet decided on a nominee for the Pentagon post.

Hagel is considered a leading candidate to replace outgoing Secretary of Defense Leon Panetta, but the former Nebraska lawmaker has come under criticism for his record on Israel and for a comment that being gay was an inhibiting factor for being an ambassador.

"I've served with Chuck Hagel. I know him. He is a patriot. He is somebody who has done extraordinary work both in the United States Senate, somebody who served this country with valor in Vietnam," Obama told NBC's "Meet the Press" in an interview taped on Saturday and broadcast on Sunday.

Any nomination for defense secretary must be approved by the Senate where some lawmakers have voiced criticism about their former colleague.

"I think a lot of Republicans and Democrats are very concerned about Chuck Hagel's positions on Iran sanctions, his views toward Israel, Hamas and Hezbollah, and that there is wide and deep concern about his policies. All of us like him as a person," Republican Senator Lindsey Graham said.

"There would be very little Republican support for his nomination, at the end of the day, there will be very few votes," Graham said on Fox News Sunday.

Republican Senator Tom Coburn from Oklahoma said bluntly: "I cannot vote for Chuck Hagel."

Aside from his controversial statements, "he does not have the experience to manage a very large organization like the Pentagon," Coburn said on CBS' "Face the Nation." "If there's a place that we need great management it's the Pentagon."

Senator Richard Durbin, a Democrat from Illinois, said on the same television show that Hagel deserved "respect for the service he's given our country in the military and in the Senate" and should be given consideration. "He at least deserves a hearing and an opportunity," he said.

Obama said he had seen nothing that would disqualify Hagel.

The president said Hagel had apologized for his comments related to homosexuality, referred to by NBC's David Gregory in the interview.

"With respect to the particular comment that you quoted, he apologized for it," Obama said.

"And I think it's a testimony to what has been a positive change over the last decade in terms of people's attitudes about gays and lesbians serving our country. And that's something that I'm very proud to have led," he said.

Obama came out in favor of gay marriage in the middle of his re-election bid this year. Earlier in his term he presided over the end of the "don't ask, don't tell" policy that prohibited gay men and women from serving openly in the U.S. military.

Hagel, who left the Senate in 2008, has faced questions about his record on Israel.

Some of Israel's leading U.S. supporters contend that Hagel at times opposed Israel's interests, voting several times against U.S. sanctions on Iran, and made disparaging remarks about the influence of what he called a "Jewish lobby" in Washington.

Obama, who has strained relations with Israeli Prime Minister Benjamin Netanyahu, has faced questions of his own from the American Jewish community about his approach to the U.S. ally.

Obama said Hagel was doing an "outstanding job" serving on an intelligence advisory board and gave no indication on when he would make his final decision about the defense chief job.

The president has already backed down once from a contentious nomination, choosing Democratic Senator John Kerry to replace Hillary Clinton as secretary of state rather than going with his presumed first choice, U.S. Ambassador to the United Nations Susan Rice, whom many Republicans opposed after she made controversial remarks about the September 11 attacks on a U.S. mission in Benghazi, Libya, that killed four Americans.

(Editing by Sandra Maler)

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1 of 4. A damaged tank is seen at the Free Syrian Army controlled infantry college in the country side in Aleppo December 21, 2012.

DUBAI | Sat Dec 22, 2012 6:05am EST

DUBAI (Reuters) - The installation of Patriot anti-missile batteries sent by NATO members to bolster Turkey's defenses against a possible missile attack from Syria will only harm Turkey's security, Iran's defense minister was quoted as saying on Saturday.

NATO approved Turkey's request for the air defense system earlier this month, in a move meant to calm Ankara's fears of being hit by Syrian missiles.

Iran has strongly supported its Arab ally President Bashar al-Assad of Syria as he attempts to suppress a 21-month-old uprising against his rule. Tehran opposes the installation of NATO missiles as Western interference in the region and has said it could lead to a "world war.

"The installation of Patriot missiles in Turkey plays no role in establishing Turkey's security and this harms the country of Turkey," Iranian Defense Minister Ahmad Vahidi said on Saturday, according to the Iranian Students' News Agency (ISNA). "The West has always pursued its viewpoints and interests and we disagree with the presence of Western countries in regional interactions."

Vahidi also denied that Iran is training Syrian forces to battle the rebels, ISNA reported. Iran considers itself, Syria's rulers and the Lebanese Shi'ite militant group Hezbollah as part of an "axis of resistance" against U.S. and Israeli power in the Middle East, but has denied accusations that it helping Assad militarily.

"Syria has no need for the training of its forces by the Islamic Republic of Iran, because Syria has a powerful military which has prepared itself for involvement with the Zionist regime (Israel)," Vahidi said.

(Reporting by Yeganeh Torbati; Editing by Lisa Shumaker)

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Employees of Standard Chartered leave a branch of the bank in central Seoul August 9, 2012.

LONDON | Thu Aug 9, 2012 2:36pm EDT

LONDON (Reuters) - Standard Chartered is failing to convince some shareholders of its defense against allegations it broke U.S. sanctions on Iran, leaving them worried about possible lawsuits, fines and the loss of top executives.

StanChart, which has cherished its image as one of the cleanest names in global finance, lost more than a quarter of its market value in 24 hours after New York's banking regulator accused it on Monday of assisting $250 billion of money-laundering transactions over nearly 10 years.

Despite StanChart's protests that just $14 million of deals flouted the U.S. rules, its shares are still around 15 percent below levels before the New York State Department of Financial Services (DFS) branded it a "rogue institution".

"Even if it is only $14 million, they have still committed a crime, and they are still guilty," one of the 10 biggest institutional investors in the bank told Reuters, explaining why the shares remained depressed.

"And if this is hot air and they are just bluffing, then they are playing a very dangerous game," the investor said, putting the risk of either chief executive Peter Sands or Chief Financial Officer Richard Meddings quitting the bank at "5-8 percent and rising".

The bank could face a huge fine and even its state banking license is under threat, a punishment that would paralyze its U.S. operations and relegate the London-listed institution to the second tier of global banks.

The accusations could end up harming StanChart's 'AA-' credit rating, Fitch Ratings said.

Speculation that StanChart could sue the New York regulator for injury to its reputation and stock price were adding to worries about the potential loss of U.S. business, one of the 25 biggest investors in the bank said.

"I think the phrase 'Don't fight the Fed' applies in more ways than just one. Who knows what else the regulator could unearth if they really wanted a fight?" he said.

"(StanChart) tend to have a chippy approach which doesn't always win friends, and they need to be careful ... I would rather see them settle and leave this whole sorry saga behind them."

London lawyers echoed the warning.

"It's very difficult to say whether Standard Chartered believe they have a case without knowing all the details ... but I think history tells us that it is extremely tough to take on the U.S. regulators and win," Tom Hibbert, head of the banking litigation group at City of London law firm RPC.

OVERVALUED?

Standard Chartered's stock was already ripe for a sell-off even before its high-profile tussle with U.S. regulators came to light, analysts at Canaccord Genuity said.

Low exposure to the euro zone's troubles, healthy capital reserves and a halo burnished by steering clear of the interest rate manipulation scandal tainting other banks have given it a trading premium so wide that returns could only be reached through "near flawless execution of ambitious consensus estimates".

"To our mind the stock is priced for everything to go right, and nothing to go wrong," the analysts said, maintaining their advice to sell the stock.

The bank's woes offer a timely reminder of the risks investors face by supporting lenders with deep roots in emerging markets, said Jeff Yeh, Chief Investment Officer at Capital Investment Trust in Taipei, with about $5 billion in assets.

"I think the events of the past few days really drove home that point, and I think a growing number of funds may not be as comfortable with these large banks as they used to be."

While quick to deny the money laundering allegations in the press, some say StanChart's lack of direct communication with shareholders is limiting its share price recovery.

"They haven't been in touch with us, which surprises me, because when they had rights issue one, two and three, they were in touch well in advance, but this time, not a tweet," the top 10 investor said.

"We have been proactive in reaching out to all our investors, both shareholders and debtholders, and the process is ongoing," a spokesman for Standard Chartered said.

It will not want to lose the goodwill of those such as Hugh Young, managing director of top-five StanChart shareholder Aberdeen Asset Management Asia, who is giving it the benefit of the doubt for now.

"It's something to worry about, although I noticed a lot of emotive and sensational language which slightly diminishes the allegation ... The StanChart we recognize is not the rogue bank portrayed in the allegation," he said.

(Reporting by Sinead Cruise, additional reporting by Sarah White, Sudip Kargupta, Kelvin Soh and Denny Thomas; Editing by Will Waterman and Matthew Tostevin)

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