1 of 15. Members of the Free Syrian Army pose with their weapons and a snowman at the Jouret al Shayah area in Homs January 10, 2013. Picture taken January 10, 2013.

BEIRUT/GENEVA | Fri Jan 11, 2013 10:30am EST

BEIRUT/GENEVA (Reuters) - Rebels seized control of one of Syria's largest helicopter bases on Friday, opposition sources said, in their first capture of a military airfield used by President Bashar al-Assad's forces.

Fighting raged across the country as international mediator Lakhdar Brahimi sought a political solution to Syria's civil war, meeting senior U.S. and Russian officials in Geneva.

But the two world powers are still deadlocked over Assad's fate in any transition.

The United States, which backs the 21-month-old revolt, says Assad can play no future role, while Syria's main arms supplier Russia said before the talks that his exit should not be a precondition for negotiations.

Syria is mired in bloodshed that has cost more than 60,000 lives and displaced millions of people. Severe winter weather is compounding their misery. The U.N. children's agency UNICEF says more than 2 million children are struggling to stay warm.

The capture of Taftanaz air base, after months of sporadic fighting, could help rebels solidify their hold on northern Syria, according to Rami Abdelrahman, head of the pro-opposition Syrian Observatory for Human Rights.

TACTICAL, NOT STRATEGIC GAIN

But Yezid Sayigh, at the Carnegie Middle East Centre in Beirut, said it was not a game-changer, noting that it had taken months for the rebels to overrun a base whose usefulness to the military was already compromised by the clashes around it.

"This is a tactical rather than a strategic gain," he said.

In Geneva, U.N.-Arab League envoy Brahimi's closed-door talks began with individual meetings with U.S. Deputy Secretary of State William Burns and Russian Deputy Foreign Minister Mikhail Bogdanov. He later held talks with both sides together.

A U.S. official said negotiations would focus on "creating the conditions to advance a political solution - specifically a transitional governing body".

Six months ago, world powers meeting in Geneva proposed a transitional government but left open Assad's role. Brahimi told Reuters on Wednesday that the Syrian leader could play no part in such a transition and suggested it was time he quit.

Responding a day later, Syria's foreign ministry berated the veteran Algerian diplomat as "flagrantly biased toward those who are conspiring against Syria and its people".

Russia has argued that outside powers should not decide who should take part in any transitional government.

"Only the Syrians themselves can agree on a model or the further development of their country," Foreign Ministry spokesman Alexander Lukashevich said.

REFUGEE MISERY

But Syrians seem too divided for any such agreement.

The umbrella opposition group abroad, the Syrian National Coalition, said on Friday it had proposed a transition plan that would kept government institutions intact at a meeting with diplomats in London this week. But the plan has received no public endorsement from the opposition's foreign backers.

With no end to fighting in sight, the misery of Syrian civilians has rapidly increased, especially with the advent of some of the worst winter conditions in years.

Saudi Arabia said it would send $10 million worth of aid to help Syrian refugees in Jordan, where torrential rain has flooded hundreds of tents in the Zaatari refugee camp.

A fierce storm that swept the region has raised concerns for 600,000 Syrian refugees who have fled to neighboring countries, as well as more than 2.5 million displaced inside Syria, many of whom live in flimsy tents at unofficial border camps.

Opposition activists report dozens of weather-related deaths in Syria in the last four days. UNICEF said refugee children are at risk because conditions have hampered access to services.

Earlier this week, another United Nations agency said around one million Syrians were going hungry. The World Food Programme cited difficulties entering conflict zones and said that the few government-approved aid agencies allowed to distribute aid were stretched to the limit.

The WFP said it supplying rations to about 1.5 million people in Syria each month, far short of the 2.5 million deemed to be in need.

(Additional reporting by Alexander Dzsiadosz in Beirut and Raissa Kasolowsky in Abu Dhabi; Editing by Alistair Lyon)

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Russia's Deputy Foreign Minister Sergei Ryabkov speaks during a news briefing in the main building of Foreign Ministry in Moscow, December 15, 2008.

MOSCOW | Fri Jan 11, 2013 9:15am EST

MOSCOW (Reuters) - Moscow is alarmed that no date or venue has been agreed for a new round of talks between global powers and Iran over Tehran's nuclear programme, Russian Deputy Foreign Minister Sergei Ryabkov said on Friday.

Iran, which denies Western accusations it is seeking to develop a capability to make nuclear weapons, said last week it had agreed to resume talks in January with six powers. But Ryabkov said there was no final agreement on a date or venue.

"This alarms us, because the pause has dragged on," the Interfax news agency quoted Ryabkov, the Russian negotiator, as saying. "As a nation and a member of the 'group of six' we are working actively to find a solution."

There was no breakthrough in three rounds of talks since April 2012 and Israel has stepped up talk of pre-emptive attacks on Iranian nuclear sites, lending urgency to diplomacy.

Western diplomatic sources said on Friday that Iran has yet to respond to a proposal to hold a new round of talks next week with the six nations - the United States, France, Britain, China, Russia and Germany.

Global powers, particularly in the West, want to rein in Iran's uranium enrichment work. Tehran says it is refining uranium for peaceful ends only but enrichment yields material that can be used to make nuclear bombs if processed further.

(Writing by Steve Gutterman; Editing by Mark Heinrich)

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U.S. President Barack Obama and first lady Michelle Obama visit military personnel and their families as they walk into Anderson Hall base chow hall at the Marine Corps Base Hawaii in Kaneohe Bay, Hawaii December 25, 2012.

WASHINGTON/HONOLULU | Wed Dec 26, 2012 7:30pm EST

WASHINGTON/HONOLULU (Reuters) - Efforts to prevent the U.S. economy from going over a "fiscal cliff" stirred back to life on Wednesday with less than a week to go before potentially disastrous tax hikes and spending cuts kick in at the New Year.

In a sign that there may be a way through deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.

President Barack Obama will try to revive budget crisis talks - which stalled last week - when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.

But the White House and Republicans are still far apart, as hopes for legislation to prevent the economy from tumbling off the fiscal cliff switch to the Senate.

Democrats control a majority in that chamber but still need some support from Republicans across the aisle for a likely attempt to raise taxes on the wealthy.

A senior administration official told reporters traveling with Obama in Hawaii that senior Republican leaders in Congress, Senator Mitch McConnell and Boehner, should step up to head off the looming tax and spending hit.

"It's up to the Senate Minority Leader not to block a vote, and it's up the House Republican leader, the Speaker of the House ... to allow a vote," the official said.

Months of congressional gridlock on how reduce the deficit and rein in the nation's $16 trillion federal debt have begun to affect ordinary Americans.

Shoppers might have spent less this holiday season for fear of looming income tax increases and reports of lackluster retail holiday sales added to the urgency for a deal. U.S. stocks fell on Wednesday, dragged lower by shares of retail companies.

TREASURY BUYING TIME

To avoid defaulting on the national debt if the budget crisis spins out of control, the Treasury Department announced measures essentially designed to buy time to allow Congress to resolve its differences and raise the debt borrowing limit.

Obama flies back from Hawaii overnight and is due in the White House on Thursday morning.

Starbucks Chief Executive Howard Schultz is urging workers in the company's roughly 120 Washington-area coffee shops to write "come together" on customers' cups on Thursday and Friday to tell politicians to end the crisis.

"We're paying attention, we're greatly disappointed in what's going on and we deserve better," Schultz told Reuters.

Boehner and his House Republican leadership team said in a statement that "the Senate must act first."

That puts the ball in the court of the Democrats in the Senate, which is likely to base any legislation on a bill it passed earlier this year to continue tax breaks for households with incomes below $250,000.

A spokesman for Senate Majority Leader Harry Reid issued a strongly worded statement calling on Republicans to "drop their knee-jerk obstruction."

"The Senate bill could pass tomorrow if House Republicans would simply let it come to the floor," the spokesman said.

A Senate bill would likely contain an extension of expiring unemployment benefits for those who have been out of work for extended periods.

With the 435 members scattered throughout the country because the House is in recess, House Republican leaders scheduled a conference call for Thursday with members to possibly discuss bringing the chamber back into session to deal with the fiscal cliff.

The budget fight is not just about taxes, however.

The country faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.

House Republicans have passed a bill to stop the military portion of the spending cuts and place the entire burden on domestic activities, including some social safety net programs.

But the main focus is on how to stop tax hikes on January 1.

"This is the (emergency) scenario that we have long believed would rise in probability the closer we go to December 31, which essentially calls for extending all the rates for those individuals making under $200K and households under $250K and does not address the debt ceiling or the deficit," analyst Chris Krueger of Guggenheim Securities wrote in a research note.

Republican Senator Kay Bailey Hutchison of Texas, who is retiring at year's end, told MSNBC that $250,000 "is too low of a threshold" for raising income taxes.

RAISING TAX THRESHOLD

She said that in conversations she has had with some Senate Democrats, "they are saying maybe more in the $400,000 to $500,000 category."

Obama himself recently offered to raise the threshold to $400,000, before negotiations with Boehner broke off.

Boehner and other Republican leaders said in a statement that if the Senate sends the House new fiscal cliff legislation, "The House will then consider whether to accept the bills ... or to send them back to the Senate with additional amendments.

"The House will take this action on whatever the Senate can pass, but the Senate first must act."

But even if a handful of Senate Republicans support Democrats on a measure to avoid the worst of the fiscal cliff, time is short. When the Senate returns on Thursday it is due to work on a disaster aid bill to help New York and New Jersey recover from Superstorm Sandy and other measures.

All 191 House Democrats might have to team up with at least 26 Republicans to get a majority if the bill included tax hikes on the wealthiest Americans, as Obama is demanding.

Some of those votes could conceivably come from among the 34 Republican members who are either retiring or were defeated in the November elections and no longer have to worry about the political fallout.

An alternative is for Congress to let income taxes go up on everyone as scheduled. Then, during the first week of January, lawmakers would strike a quick deal to reduce them except on people in the highest brackets.

They could also pass a measure putting off the $109 billion in automatic spending cuts that most lawmakers want to avoid.

Once the clock ticks past midnight on December 31, no member of Congress would have to vote for a tax increase on anyone - taxes would have risen automatically - and the only votes would be to decrease tax rates for most Americans back to their 2012 levels.

(Additional reporting by Thomas Ferraro in Washington and Lisa Baertlein in Los Angeles, Writing by Alistair Bell)

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U.S. President Barack Obama hosts a bipartisan meeting with Congressional leaders in the Roosevelt Room of White House to discuss the economy, November 16, 2012. Left of President Obama is Speaker of the House John Boehner.

WASHINGTON | Sun Dec 23, 2012 12:49am EST

WASHINGTON (Reuters) - The "fiscal cliff" deadline is days away and the U.S. Congress and President Barack Obama have left town for Christmas.

But even if they were still here, it wouldn't have mattered, according to Steny Hoyer, the second-ranking Democrat in the House of Representatives. He says they were going nowhere to resolving the disagreement over how to fix the nation's fiscal problems.

Last month's dreams of a "grand bargain" of tax hikes and spending cuts seem long gone. They had been reduced to more modest bargains in mid-December, and as 2013 approaches, are on the verge of relegation to a "stop-gap measure," at best the sort of temporary fix that Congress undertook in 2011.

A stop-gap that puts everything off for a while but resolves nothing is now the most promising alternative, if there is to be one, to the across-the-board tax hikes and spending cuts described as a "fiscal cliff" because they threaten to send the U.S. economy plunging into another recession.

It is also the way fiscal showdowns have ended in Washington in recent years.

Such a fix, at best, would delay the spending cuts and tax hikes further into 2013 as well as work to address in a long-term way a government budget that has generated deficits exceeding $1 trillion in each of the last four years. Even worse, it would set up a huge fight in January and February over raising the U.S. debt ceiling, which controls the amount of money the federal government can borrow.

Dysfunction in Washington was specifically cited as one of the reasons rating agency Standard & Poor's cut the U.S. debt rating to AA-plus after a battle over the debt ceiling in 2011. That alone - not to mention going over the cliff - could lead to another rating cut.

At worst, the new year could start with a full-fledged jump off the 'cliff,' with an understanding, communicated to financial markets, that Congress and the White House would come back and try again for a solution.

Given the apparent deadlock, some congressional aides this week said that Washington needed to begin telegraphing to Wall Street that markets should not panic if a "fiscal cliff" deal is not struck in December.

The goal, one aide said on condition of anonymity, is to avoid starting 2013 with a steep stock market drop like the one the U.S. suffered in 2008, when the country's financial industry was falling apart and Congress was divided over what to do.

On Friday, Obama acknowledged that only small steps might be possible with so little time remaining.

Those, the Democratic president said, would consist of extending benefits for the long-term unemployed and keeping income tax rates low for 98 percent of Americans - meaning raising taxes on households with net incomes above $250,000 a year but not for those earning less.

He held out the possibility of something "comprehensive," as he put it, but it had a hollow ring at the close of a work week that saw House Speaker John Boehner step back from negotiations and pursue a partisan plan that even some of his fellow Republicans could not stomach.

MARKET PRESSURE

The steps that Obama outlined were immediately rejected by Republicans, who have given ground on their previous steadfast opposition to any tax hikes but are still demanding that the White House agree to more substantial spending cuts.

"The president has failed to offer any solution that passes the test of balance," declared Boehner spokesman Brendan Buck, minutes after the end of Obama's statement on Friday.

On Saturday, a spokesman for Senate Republican leader Mitch McConnell was similarly dismissive, noting Obama's call had neither bipartisan support nor spending cuts to ride along with tax increases.

McConnell, on Friday, suggested bringing up a House-passed bill that extends current tax rates for all Americans, including the top earners, and then pushes for comprehensive tax reform next year that theoretically could raise new revenues to help cut deficits.

But Obama has promised repeatedly to veto any extension of the expiring Bush-era tax cuts that fail to hike rates for the wealthy.

And Democrats, who control the Senate, have dismissed the McConnell idea, arguing that Obama ran his successful 2012 re-election campaign on a promise of forcing the wealthy to bear more of the burden of deficit reduction.

Democratic aides in Congress think their own bill implementing Obama's $250,000 income threshold, which passed the 100-member Senate in July with 51 votes, could breeze through this month, or next year after the "fiscal cliff" is breached.

The prospect of a breach is being discussed far more seriously now, and not just as a bluff or to set up the other side for blame.

"I think we're going to go over the cliff," said Republican Representative Patrick Tiberi of Ohio. "I don't see something getting done."

In an MSNBC interview Friday, Hoyer, a 31-year veteran of Congress from Maryland, said it wouldn't matter if everyone was in Washington instead of on holiday.

"Frankly, we've been in town for four weeks and members haven`t been doing much," he said, calling it "one of the least productive times that I've been in Congress."

Even Obama speaks of "a mismatch" between how people are thinking about the looming tax hikes and spending cuts "outside of this town and how folks are operating here. And we've just got to get that aligned," he said in his statement.

ITG Investment Research Chief Economist Steve Blitz on Saturday said sliding the "fiscal cliff" negotiations into the new year was not a huge deal. "I think markets will pressure for a deal in January," he said.

The "pressure" could be in the form of a significant stock market drop, which would hit workers' retirement plans, threaten to deter consumer and business spending, and possibly rattle other countries' economies at a time when the global economy is far from robust.

(Additional reporting by Rachelle Younglai; Editing by Martin Howell and Paul Simao)

View the original article here

U.S. President Barack Obama hosts a bipartisan meeting with Congressional leaders in the Roosevelt Room of White House to discuss the economy, November 16, 2012. Left of President Obama is Speaker of the House John Boehner.

WASHINGTON | Sun Dec 23, 2012 12:49am EST

WASHINGTON (Reuters) - The "fiscal cliff" deadline is days away and the U.S. Congress and President Barack Obama have left town for Christmas.

But even if they were still here, it wouldn't have mattered, according to Steny Hoyer, the second-ranking Democrat in the House of Representatives. He says they were going nowhere to resolving the disagreement over how to fix the nation's fiscal problems.

Last month's dreams of a "grand bargain" of tax hikes and spending cuts seem long gone. They had been reduced to more modest bargains in mid-December, and as 2013 approaches, are on the verge of relegation to a "stop-gap measure," at best the sort of temporary fix that Congress undertook in 2011.

A stop-gap that puts everything off for a while but resolves nothing is now the most promising alternative, if there is to be one, to the across-the-board tax hikes and spending cuts described as a "fiscal cliff" because they threaten to send the U.S. economy plunging into another recession.

It is also the way fiscal showdowns have ended in Washington in recent years.

Such a fix, at best, would delay the spending cuts and tax hikes further into 2013 as well as work to address in a long-term way a government budget that has generated deficits exceeding $1 trillion in each of the last four years. Even worse, it would set up a huge fight in January and February over raising the U.S. debt ceiling, which controls the amount of money the federal government can borrow.

Dysfunction in Washington was specifically cited as one of the reasons rating agency Standard & Poor's cut the U.S. debt rating to AA-plus after a battle over the debt ceiling in 2011. That alone - not to mention going over the cliff - could lead to another rating cut.

At worst, the new year could start with a full-fledged jump off the 'cliff,' with an understanding, communicated to financial markets, that Congress and the White House would come back and try again for a solution.

Given the apparent deadlock, some congressional aides this week said that Washington needed to begin telegraphing to Wall Street that markets should not panic if a "fiscal cliff" deal is not struck in December.

The goal, one aide said on condition of anonymity, is to avoid starting 2013 with a steep stock market drop like the one the U.S. suffered in 2008, when the country's financial industry was falling apart and Congress was divided over what to do.

On Friday, Obama acknowledged that only small steps might be possible with so little time remaining.

Those, the Democratic president said, would consist of extending benefits for the long-term unemployed and keeping income tax rates low for 98 percent of Americans - meaning raising taxes on households with net incomes above $250,000 a year but not for those earning less.

He held out the possibility of something "comprehensive," as he put it, but it had a hollow ring at the close of a work week that saw House Speaker John Boehner step back from negotiations and pursue a partisan plan that even some of his fellow Republicans could not stomach.

MARKET PRESSURE

The steps that Obama outlined were immediately rejected by Republicans, who have given ground on their previous steadfast opposition to any tax hikes but are still demanding that the White House agree to more substantial spending cuts.

"The president has failed to offer any solution that passes the test of balance," declared Boehner spokesman Brendan Buck, minutes after the end of Obama's statement on Friday.

On Saturday, a spokesman for Senate Republican leader Mitch McConnell was similarly dismissive, noting Obama's call had neither bipartisan support nor spending cuts to ride along with tax increases.

McConnell, on Friday, suggested bringing up a House-passed bill that extends current tax rates for all Americans, including the top earners, and then pushes for comprehensive tax reform next year that theoretically could raise new revenues to help cut deficits.

But Obama has promised repeatedly to veto any extension of the expiring Bush-era tax cuts that fail to hike rates for the wealthy.

And Democrats, who control the Senate, have dismissed the McConnell idea, arguing that Obama ran his successful 2012 re-election campaign on a promise of forcing the wealthy to bear more of the burden of deficit reduction.

Democratic aides in Congress think their own bill implementing Obama's $250,000 income threshold, which passed the 100-member Senate in July with 51 votes, could breeze through this month, or next year after the "fiscal cliff" is breached.

The prospect of a breach is being discussed far more seriously now, and not just as a bluff or to set up the other side for blame.

"I think we're going to go over the cliff," said Republican Representative Patrick Tiberi of Ohio. "I don't see something getting done."

In an MSNBC interview Friday, Hoyer, a 31-year veteran of Congress from Maryland, said it wouldn't matter if everyone was in Washington instead of on holiday.

"Frankly, we've been in town for four weeks and members haven`t been doing much," he said, calling it "one of the least productive times that I've been in Congress."

Even Obama speaks of "a mismatch" between how people are thinking about the looming tax hikes and spending cuts "outside of this town and how folks are operating here. And we've just got to get that aligned," he said in his statement.

ITG Investment Research Chief Economist Steve Blitz on Saturday said sliding the "fiscal cliff" negotiations into the new year was not a huge deal. "I think markets will pressure for a deal in January," he said.

The "pressure" could be in the form of a significant stock market drop, which would hit workers' retirement plans, threaten to deter consumer and business spending, and possibly rattle other countries' economies at a time when the global economy is far from robust.

(Additional reporting by Rachelle Younglai; Editing by Martin Howell and Paul Simao)

View the original article here

1 of 3. U.S. President Barack Obama speaks about the fiscal cliff at the White House in Washington December 21, 2012.

WASHINGTON | Fri Dec 21, 2012 11:43pm EST

WASHINGTON (Reuters) - The White House on Friday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

In remarks before flying to Hawaii for a break, Obama suggested reaching a short-term deal on taxes and extending unemployment insurance to avoid the worst effects of the "fiscal cliff" on ordinary Americans at the start of the New Year.

"We've only got 10 days to do it. So I hope that every member of Congress is thinking about that. Nobody can get 100 percent of what they want," said Obama.

Obama said he wanted to sign legislation extending Bush-era tax cuts for 98 percent of Americans in the coming days.

The Democrat appeared to be offering bickering lawmakers a way to fix the most pressing challenge - tax cuts that expire soon - while leaving thorny topics such as automatic spending cuts or extending the debt ceiling for later.

Obama called on lawmakers to use the holiday break to cool off frayed nerves, "drink some eggnog, have some Christmas cookies, sing some Christmas carols," and come back next week ready to make a deal.

Negotiations were thrown into disarray on Thursday when House of Representatives Speaker John Boehner failed to convince his fellow Republicans to accept tax cuts for even the wealthiest of Americans as part of a possible agreement with Obama.

"How we get there, God only knows," Boehner told reporters on Friday when asked about a possible comprehensive fiscal cliff solution.

If there is no agreement, taxes would go up on all Americans and hundreds of billions of dollars in automatic government spending cuts would kick in next month - actions that could plunge the U.S. economy back into recession.

Obama spoke to Boehner on Friday and held a face-to-face White House meeting with the top Democrat in Congress, Senate Majority Leader Harry Reid.

Before his defeat in Congress, Boehner had extracted a compromise from Obama to raise taxes on Americans making more than $400,000 a year, instead of the president's preference of those with income of $250,000 a year.

But with talks stalled on the level of spending cuts to which Obama would agree, Boehner attempted a backup plan to raise taxes only on those making more than $1 million a year - amounting to just 0.18 percent of Americans.

BAD DEFEAT FOR BOEHNER

Boehner's reverse in the House was worse than first thought. A key Republican lawmaker said Boehner scrapped the vote when he realized that between 40 and 50 of the 241 Republicans in the House would not back him.

Obama and his fellow Democrats in Congress are insisting that the wealthiest Americans pay more in taxes in order to help reduce federal budget deficits and avoid deep spending cuts. Republicans control the House and Democrats control the Senate.

Stocks dropped sharply early Friday on fears that the United States could go fall back into recession if politicians do not prevent it.

But major indexes lost less than 1 percent, suggesting investors still held out hope that an agreement will be brokered in Washington.

"I think if you get into mid-January and (the talks) keep going like this, you get worried, but I don't think we're going to get there," said Mark Lehmann, president of JMP Securities, in San Francisco.

Boehner, joined by his No. 2, Eric Cantor, at a Capitol Hill news conference, said the ultimate fault rests with Obama for refusing to agree to more spending reductions that would bring down America's $1 trillion annual deficit and rising $16 trillion debt.

"What the president has proposed so far simply won't do anything to solve our spending problem. He wants more spending and more tax hikes that will hurt our economy," Boehner said.

Democrats responded with incredulity.

House members, heading to their home states for the holidays, were instructed to be available on 48 hours notice if necessary.

"They went from 'Plan B' to 'plan see-you-later,'" Obama adviser David Axelrod said on MSNBC on Friday morning.

The crumbling of Boehner's plan highlights his struggle to lead some House Republicans who flatly reject any deal that would increase taxes on anyone.

Republican Representative Tim Huelskamp criticized Boehner's handling of the negotiations, saying the speaker had "caved" to Obama opening the door to tax hikes. Huelskamp, a dissident first-term congressman from Kansas, said he was not willing to compromise on taxes even if they are coupled with cuts to government spending sought by conservatives.

Fiscal conservatives "are so frustrated that the leader in the House right now, the speaker, has been talking about tax increases. That's all he's been talking about," Huelskamp said on MSNBC on Friday morning.

(Additional reporting by Roberta Rampton, Richard Cowan, Rachelle Younglai, Thomas Ferraro and Matt Spetalnick; Writing by Steve Holland; Editing by Alistair Bell and Lisa Shumaker)

View the original article here

1 of 3. U.S. President Barack Obama speaks about the fiscal cliff at the White House in Washington December 21, 2012.

WASHINGTON | Fri Dec 21, 2012 11:43pm EST

WASHINGTON (Reuters) - The White House on Friday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

In remarks before flying to Hawaii for a break, Obama suggested reaching a short-term deal on taxes and extending unemployment insurance to avoid the worst effects of the "fiscal cliff" on ordinary Americans at the start of the New Year.

"We've only got 10 days to do it. So I hope that every member of Congress is thinking about that. Nobody can get 100 percent of what they want," said Obama.

Obama said he wanted to sign legislation extending Bush-era tax cuts for 98 percent of Americans in the coming days.

The Democrat appeared to be offering bickering lawmakers a way to fix the most pressing challenge - tax cuts that expire soon - while leaving thorny topics such as automatic spending cuts or extending the debt ceiling for later.

Obama called on lawmakers to use the holiday break to cool off frayed nerves, "drink some eggnog, have some Christmas cookies, sing some Christmas carols," and come back next week ready to make a deal.

Negotiations were thrown into disarray on Thursday when House of Representatives Speaker John Boehner failed to convince his fellow Republicans to accept tax cuts for even the wealthiest of Americans as part of a possible agreement with Obama.

"How we get there, God only knows," Boehner told reporters on Friday when asked about a possible comprehensive fiscal cliff solution.

If there is no agreement, taxes would go up on all Americans and hundreds of billions of dollars in automatic government spending cuts would kick in next month - actions that could plunge the U.S. economy back into recession.

Obama spoke to Boehner on Friday and held a face-to-face White House meeting with the top Democrat in Congress, Senate Majority Leader Harry Reid.

Before his defeat in Congress, Boehner had extracted a compromise from Obama to raise taxes on Americans making more than $400,000 a year, instead of the president's preference of those with income of $250,000 a year.

But with talks stalled on the level of spending cuts to which Obama would agree, Boehner attempted a backup plan to raise taxes only on those making more than $1 million a year - amounting to just 0.18 percent of Americans.

BAD DEFEAT FOR BOEHNER

Boehner's reverse in the House was worse than first thought. A key Republican lawmaker said Boehner scrapped the vote when he realized that between 40 and 50 of the 241 Republicans in the House would not back him.

Obama and his fellow Democrats in Congress are insisting that the wealthiest Americans pay more in taxes in order to help reduce federal budget deficits and avoid deep spending cuts. Republicans control the House and Democrats control the Senate.

Stocks dropped sharply early Friday on fears that the United States could go fall back into recession if politicians do not prevent it.

But major indexes lost less than 1 percent, suggesting investors still held out hope that an agreement will be brokered in Washington.

"I think if you get into mid-January and (the talks) keep going like this, you get worried, but I don't think we're going to get there," said Mark Lehmann, president of JMP Securities, in San Francisco.

Boehner, joined by his No. 2, Eric Cantor, at a Capitol Hill news conference, said the ultimate fault rests with Obama for refusing to agree to more spending reductions that would bring down America's $1 trillion annual deficit and rising $16 trillion debt.

"What the president has proposed so far simply won't do anything to solve our spending problem. He wants more spending and more tax hikes that will hurt our economy," Boehner said.

Democrats responded with incredulity.

House members, heading to their home states for the holidays, were instructed to be available on 48 hours notice if necessary.

"They went from 'Plan B' to 'plan see-you-later,'" Obama adviser David Axelrod said on MSNBC on Friday morning.

The crumbling of Boehner's plan highlights his struggle to lead some House Republicans who flatly reject any deal that would increase taxes on anyone.

Republican Representative Tim Huelskamp criticized Boehner's handling of the negotiations, saying the speaker had "caved" to Obama opening the door to tax hikes. Huelskamp, a dissident first-term congressman from Kansas, said he was not willing to compromise on taxes even if they are coupled with cuts to government spending sought by conservatives.

Fiscal conservatives "are so frustrated that the leader in the House right now, the speaker, has been talking about tax increases. That's all he's been talking about," Huelskamp said on MSNBC on Friday morning.

(Additional reporting by Roberta Rampton, Richard Cowan, Rachelle Younglai, Thomas Ferraro and Matt Spetalnick; Writing by Steve Holland; Editing by Alistair Bell and Lisa Shumaker)

View the original article here

A Google carpet is seen at the entrance of the new headquarters of Google France before its official inauguration in Paris December 6, 2011.

PARIS | Fri Dec 21, 2012 2:26pm EST

PARIS (Reuters) - The French government said it would extend to the end of January the deadline for talks between Google Inc and the French press to settle a dispute over the search engine's links to online news articles.

Press associations in France, and other European countries, want Google to pay when it displays links to newspapers in Internet searches.

In reply, Google has threatened to stop indexing articles from the French press.

Talks between the search engine and French publishers, which the government said are advancing, were expected to wrap up by the end of the year.

If no deal were struck, France would press ahead with a law that would force Google to pay for the right to provide links to online news articles.

(Reporting by Elena Berton; Editing by Gerald E. McCormick)

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Actor and director Ben Affleck speaks at a news conference to promote the film 'Argo' during the 37th Toronto International Film Festival, September 8, 2012.

NEW YORK | Fri Oct 12, 2012 12:25pm EDT

NEW YORK (Reuters) - Antonio "Tony" Mendez is the rarest of creatures: A former spy who has come out of the woodwork.

His story is the subject of Ben Affleck's new film, "Argo," released in the United States Friday, and tipped to feature in Hollywood's awards season.

"Argo" is based on one of Mendez's most remarkable missions, rescuing six Americans from Iran during the height of the 1979 hostage crisis and helping them pose as a Canadian film crew making a fictitious film called "Argo." It follows Mendez's memoir of the same name, released in September.

Mendez, 72, who was named in 1997 one of the CIA's top 50 officers of its first 50 years, talked to Reuters about "Argo" the movie, the real CIA operation and current events in the Middle East.

Q: "Argo" the film depicts the 1979 storming of the U.S. embassy and hostage crisis. How do you compare that to riots in the region in more recent times?

A: "Seeing those crowds surging in front of multiple U.S. embassies and consulates does indeed bring back memories. Security has been beefed up in many ways, but these events show that perhaps they should be beefed up even more."

Q: Why recall the story of the rescue operation now?

A: "I wanted to set the details down on paper for the record and call out my colleagues, who were involved in the planning, even if many were in alias. I wanted to pass on the lessons learned to the public and to my former work mates, something that the CIA does not often do."

Q: Decades later, what perspective do you bring?

A: "Before, Argo was an unorthodox operation, designed out of frustration, a form of risk taking that would probably not be approved in today's political environment. Today, the impact lingers on. A presidency was lost, America's relationship with Iran was severed, and radical Islam had struck its first blow."

Q: Some aspects remain classified, how did those kinds of restrictions impact your writing of the book?

A: "It caused us to mask the true identity of certain individuals and intelligence entities that worked with us. We had to be cautious in describing methods and techniques, but it didn't impede the telling of the story. Not much was lost."

Q: When the story first became public, the CIA asked you to be open to the media. How did it feel to vocalize your participation and who outside the CIA knew about it?

A: "It went against every instinct I had when the CIA first asked me to tell this story, but eventually I lost my inhibition. Only the Canadian government and some elements in Hollywood knew the story at the time. I believe that both are glad to see credit given."

Q: Was there anything that surprised you or complicated things as the Argo rescue unfolded?

A: "Trying to leave Iran, there were mechanical problems with Swiss Air, which was a surprise. A journalist discovered the ruse."

Q: How did this operation compare to the others?

A: "Argo was wildly different from most other exfiltrations I have been involved in. At the CIA we used to say innovation is born out of necessity, sometimes out of desperation. Argo had an operational necessity that demanded out-of-the-box thinking, and this kind of unorthodox planning probably won't be replicated until another occasion when traditional solutions won't work. Necessity drives imagination."

Q: You worked at the CIA through critical periods of transition. What changes did you see?

A: "Don't really want to go there. The agency continually improves its abilities, trains its officers in the state-of-the-art, and then advances that very state-of-the-art. I don't need to be there to know that their ability in documents and disguise is still unparalleled."

Q: What do you make of the situation in Iran now?

A: "Iran is still a pariah, caught up between the radical elements of Islam and the Arab spring. Hostage taking has become common, and as long as the West needs oil they will be able to threaten their neighbors and the rest of the world. A powerful argument for transitioning to renewable energy can be made here."

Q: There's a certain irony to Argo becoming a real movie. What are your thoughts on it?

A: ""Argo" is a magnificent movie. Ben Affleck did a great job. We worked closely with the screenwriter and it has been a very personal experience for me, one I will always treasure."

Q: Any favorite spy movies?

A: "Almost anything that John LeCarre does, and the Bond series. Those don't reflect real espionage, but they are certainly entertaining."

(Editing by Christine Kearney and Bernadette Baum)

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1 of 5. A BAE Systems sign is seen outside the company's Warton site near Preston, northern England, in this file picture taken October 1, 2009.

PARIS | Thu Sep 27, 2012 5:58pm EDT

PARIS (Reuters) - Europe's EADS (EAD.PA) rejected calls on Thursday to allow extra time for negotiations over a $45 billion merger with BAE Systems (BAES.L), as brinkmanship looked set to play a key role in politically complex plans to create a new defense giant.

Fabrice Bregier, head of the Airbus planemaker unit and part of the inner circle running Franco-German-Spanish EADS, was quoted as saying it was crucial to stick to the date set by UK regulators under rules designed to protect investors.

"The importance is that opinions converge. The October 10 deadline may seem soon but it is absolutely necessary given the environment," Bregier told the French daily Les Echos in an interview to be published on Friday.

EADS (EAD.PA) and BAE are in talks to create what would be the world's largest defense company. But their efforts have become snagged on differences over control between France and Germany while there are also political concerns about jobs.

German Defence Minister Thomas de Maiziere joined France in pressing the companies to seek an extension of the UK deadline in order to give politicians more room to bridge differences.

"Perhaps we need more time. It depends on the answers for our questions and so I think we need more time," de Maiziere told reporters at a meeting in Cyprus.

France and Germany want to safeguard their influence over EADS while special arrangements will be needed to ringfence sensitive operations, including work BAE does in the United States and on Britain's nuclear submarines.

In the past two weeks, investors uncertain about the deal have stripped 4 billion euros from the value of EADS, illustrating the risk Chief Executive Tom Enders could face if he agrees to expose the stock to a further month of negotiation.

BAE shares have also shed their initial gains and analysts warn they may struggle to carry investors with them beyond October 10 if the talks show no signs of progress.

Yet with two weeks left, EADS and BAE have little incentive to seek an extension to the deadline.

Softening the deadline would ease pressure on Europe's politicians to come to an agreement acceptable to the companies while placating U.S. and UK fears of political interference.

For these reasons, experts say a bid for an immediate extension is unlikely unless there is progress. But if there is stalemate running up to the deadline, leaders of both companies could play hardball and decide to abandon the plan.

"It's normal that different points of view are expressed. Especially in an operation where states have strategic interests to preserve," Bregier told Les Echos.

"This kind of operation requires rapid decisions and it's not EADS or BAE management pushing, it's the markets and the clients, who want to know what the future of the group will be," he said adding that the current merger plan included guarantees to the United States covering its security concerns.

INFLUENCE AND TRADE-OFFS

The merger to create the world's biggest defense and aerospace company would dilute the influence of the French, German and Spanish governments in the company, prompting negotiations over their roles in the future.

German reservations include how to safeguard jobs and protect the merged firm from any future hostile takeover, a government document obtained by Reuters on Monday showed.

On Wednesday, a French government source said France would want to retain certain rights, as well.

EADS is standing firm, reiterating its "intention and current expectation" to provide further clarity by that date.

Technically, extensions to the UK stock market deadline are relatively simple and are usually granted, lawyers say.

Yet in classic European negotiating style, as seen on issues from farm subsidies to national bailouts, talks generally go down to the wire.

Raising the threat of a missed deadline, or demanding it be kept, is a tried and tested tactic in the brinkmanship so often seen among the 27 nations of the European Union.

De Maiziere called talks with his British and French counterparts on Wednesday evening "constructive".

"This is a complex situation, there are a lot of questions and conditions, nothing has (been) decided yet ... We will keep in contact," he said.

European governments all face severe spending pressures, but a stand-off between France and Germany over control of EADS is seen as the bigger roadblock, rekindling a climate of mistrust which set in during management rows from 2005 onwards.

France holds a 15 percent stake in EADS and wants to retain its right to influence group strategy. Spain owns 5 percent.

Germany is not a direct shareholder but sees the transaction as a chance to enlarge its influence. At the same time, EADS and BAE are pressing for less political influence.

Airbus's Bregier said he did not see the issue of German state participation being an issue in the talks and did not see any reason why measures could not be taken to ensure a balance with France, whose government would end up with a 9 percent share in the new group as plans stand today.

Signs of discord first emerged at the weekend when Reuters reported that France appeared to rebuff German proposals for a common position [ID:nL5E8KLN1G].

EADS and BAE have said they will offer the governments of France, Germany and Britain a "special share" in the new company, allowing them to block any future hostile takeover, but are determined to prevent any meddling in management decisions.

(Additional reporting by Michele Kambas, Adrian Croft, Rhys Jones, Gernot Heller, Mark John, Catherine Bremer; editing by Jason Neely, Bernard Orr)

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