Premier Silvio Berlusconi’s government failed to come up with immediate growth measures to show a summit of world leaders, sending Italy’s borrowing rates to dangerous new highs Thursday and igniting talk of a possible government collapse.
Italy’s respected president, who would be responsible for choosing an interim government if Berlusconi’s did fail, was holding talks with party leaders in a search for possible alternatives.
Berlusconi’s weakening grip on his majority was evident in a Cabinet meeting that lasted late into the night Wednesday amid reports of discord with his finance minister, Giulio Tremonti. Berlusconi wanted the Cabinet to agree to enforce some emergency economic reforms as a decree, so they could take immediate effect, including selling government property and privatizing some local public services.
Instead, he headed Thursday to a summit in Cannes of the Group of 20 wealthy nations with only proposed legislation, requiring approval by a divided Parliament.
At Cannes, Berlusconi pledged to other eurozone leaders that he would put the measures to a vote of confidence within the next two weeks. If those measures fail, Berlusconi would be forced to step down.
Berlusconi has insisted that his government will survive its mandate until 2013, but even his coalition partners, the Northern League, have cast doubt on that.
“It is difficult to avoid the impression that this government’s time is numbered in days, or weeks, and that the legislature will finish at the beginning of 2012,” the Corriere della Sera newspaper wrote in a front page editorial.
“Berlusconi has become a puppet in the Italian political theater,” the speaker of the lower house and former Berlusconi ally, Gianfranco Fini, told state TV.
He urged Berlusconi to show his leadership by seeking a broad alliance to see the country through the crisis.
Market reaction to Italy’s political deadlock was withering. Italy is the eurozone’s third largest economy, far too large to be bailed out like Greece, Portugal and Ireland have been. Yet Italy has a debt of euro1.9 trillion ($2.6 trillion), or 120 percent of GDP, second only to the debt ratio in extremely troubled Greece.
The yield on Italy’s 10-year bonds jumped to 6.4 percent on the secondary market at one point Thursday, 4.62 percentage points higher than the rate on the German equivalent bund. Speculation that the European Central Bank was back in the markets buying up Italian bonds took the yield back down to 6.17 percent.
The ECB has been buying up Italian bonds for weeks in an attempt to keep borrowing rates at manageable levels. Borrowing costs of 7 percent or more are widely considered unsustainable, which could cause a default on public debt.
President Giorgio Napolitano met with leaders of Italian parties Thursday to gauge the political situation and seek alternatives. If the government falls, Napolitano would decide if a technical government or someone else in the center-right would run the country before new elections.
Napolitano sought to reassure Italy’s partners and the markets, saying that both the majority and the opposition “are aware of the weight of the problems that Italy must confront with urgency.” He said the next parliament vote would allow him to better evaluate the political situation.
The head of Berlusconi’s party, Alfonso Alfano, insisted after meeting with Napolitano that Berlusconi has a majority to continue to 2013. But even he addressed the possibility of the government’s failure, saying that new elections, and not a technical government, should be next.
Berlusconi’s influence frayed further when six of his Party of Freedom (PDL) lawmakers signed a letter saying they would no longer support him in parliament if he did not seek to build a national unity government.
“The current government does not have the consensus in parliament to achieve the difficult agenda of commitments taken in front of European institutions, the parliament and the Italian people,” they wrote.
Later, another two of his lawmakers defected to a centrist party.
The government has been further weakened by reports of discord on emergency measures between Berlusconi and his finance minister.
After raising expectations of a decree, the government announced legislation reportedly after Napolitano suggested they would enjoy more legitimacy if passed by parliament. They include divesting government-owned real estate, privatizing local public companies, encouraging investment in infrastructure and liberalizing the labor market.
The measures must be approved by the end of the year, the government said in a statement.
They were outlined to the European Union last week after Italy and Berlusconi came under pressure from other eurozone governments and financial markets to find ways to boost the country’s anemic growth.
However, doubts have been growing that Berlusconi has the political muscle to push such reforms through.
Markets plunged Tuesday on fears that Europe’s plan to save the euro was already unraveling after the decision by Greece’s leader to call a referendum on the country’s latest rescue package.
Should the Greek government lose the referendum vote _ and opinion polls say it’s going to have real trouble getting enough support _ then the implications for Greece and Europe are massive. The vote could end up deciding whether Greece remains in the 17-nation euro currency union.
Markets, it seems, are taking the view that Greek Prime Minister George Papandreou won’t be able to pull off a come-from-behind victory _ assuming that his government holds together. Papandreou saw his parliamentary majority cut to 2 seats Tuesday after one lawmaker defected, and at least seven more Socialist deputies have called for the formation of a cross-party, national unity government.
“Talk about your all-time bonehead moves,” said Benjamin Reitzes, an analyst at BMO Capital Markets. “It would reintroduce the risk that Greece could face a disorderly default and potentially be forced to leave the euro.”
Papandreou stunned investors, as well as his own citizens and his partners in the eurozone, by announcing late Monday that a plebiscite will be held in what he called “a supreme act of democracy and of patriotism for the people to make their own decision.” A confidence vote in the Socialist government will also take place at the end of this week.
The announcement came as the shine from last week’s European deal appeared to be wearing off.
On Monday, sentiment was already turning sour after U.S. brokerage firm MF Global filed for bankruptcy amid reports that it had bought too much bad European debt and fears over the public finances of Italy, the eurozone’s third-largest economy. Italy’s debts dwarf the euro1 trillion ($1.4 trillion) that Europe’s bailout fund will have at its disposal if last week’s commitments are delivered.
“The 6-8 percent falls over two days have now effectively given back all the gains from the post Brussels meeting rally,” said Louise Cooper, markets analyst at BGC Partners.
The plan presented last week by eurozone leaders was intended to be Europe’s comprehensive solution to a debt crisis that’s already seen three countries, including Greece, bailed out.
The three-pronged strategy of boosting the bailout fund, getting private creditors to take a bigger hit on their Greek debt holdings and forcing the banks to raise more capital was largely viewed favorably by the markets, although details need to be ironed out faxless cash advance.
In Europe, the FTSE 100 index of leading British shares fell 2.7 percent to 5,398, while Germany’s DAX slid 4.6 percent to 5,859. The CAC-40 in France was 4.7 percent lower at 3,090.
Italy’s stock market fared even worse, trading 6.7 percent lower as its borrowing costs spiked in the bond markets. The yield on Italy’s 10-year bonds was up another 0.30 percentage point to 6.30 percent, not far below the 7 percent level many investors think is unsustainable.
Unsurprisingly, Greek shares led the retreat with the main exchange in Athens down 7.3 percent.
The euro was 1.4 percent lower at $1.3652.
Wall Street suffered a big retreat at the open _ the Dow Jones industrial average was down 2 percent at 11,713 while the broader Standard & Poor’s 500 index slid 2.3 percent to 1,224.
As well as the events in Europe, investors have a raft of economic news to digest this week, culminating in Friday’s monthly U.S. jobs report.
The Federal Reserve and the European Central Bank also meet to decide on their monetary policies this week. The new ECB chief, Mario Draghi, will hold his first meeting and press conference Thursday. Investors will be looking for signs that the ECB is considering cutting interest rates and that it will continue its program of buying the bonds of troubled eurozone nations, especially Italy and Spain.
Earlier in Asia, stocks fell sharply.
Japan’s Nikkei 225 index retreated 1.7 percent to close at 8,835.53. Hong Kong’s Hang Seng lost 2.5 percent to 19,369.96 and Australia’s S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India, Indonesia and Thailand were also down.
South Korea’s Kospi gained marginally to 1,909.63 and China’s Shanghai Composite Index added 0.1 percent to 2,470.02.
Oil prices tracked equities sharply lower. Benchmark crude for December delivery was down $2.54 at $90.65 a barrel in electronic trading on the New York Mercantile Exchange.
____
Pamela Sampson in Bangkok contributed to this report.
Barclays PLC reported a 7 percent rise in net profit in the first nine months on Monday, largely on the back of a one-time boost from investment banking.
The bank reported a net profit of 2.65 billion pounds ($4.25 billion) compared to 2.48 billion pounds a year earlier.
Revenue was up 10 percent to 25.2 billion pounds in part due to a 3 billion pounds credit gain in the third quarter.
The bank said the gain came from widening spreads on Barclays Capital’s structured products, a range of investment products which typically include complex derivatives.
For the third quarter, pretax profit was up from 327 million pounds a year ago to 2.4 billion pounds, again reflecting the one-off gain. Adjusted pretax profit for the quarter was up 5 percent to 1.34 billion pounds, broadly in line with the market consensus.
The adjusted figure excludes the own credit, a 1.8 billion pounds writedown on its stake in the investment firm BlackRock Inc. and other one-time items.
Barclays Capital third-quarter income excluding the gain was down 15 percent to 2.25 billion pounds.
Barclays shares were up 2.9 percent to 207 pence in early trading on the London Stock Exchange.
“Overall, these results are slightly better than we had expected,” said Gary Greenwood, analyst at Shore Capital, who nonetheless rates the shares as “sell.”
The bank reported that it had reduced its exposure to sovereign debt in Spain, Italy, Portugal, Ireland and Greece by 31 percent in the quarter to 8 billion pounds, with about half of the remaining exposure in Italy.
A year has passed since entrepreneur Kim Harris concluded that the security of a paid professional position with health benefits outweighed the autonomy of operating a mobile dog grooming business.
Counting on the graduate degrees she earned in social work and criminal justice, the East St. Louis resident waded into the job market confident of a return to the full-time workforce.
Harris, 45, now realizes she underestimated the depth of the employment crisis.
“Even my undergraduate degree in education hasn’t helped,” said Harris, who supplements her business income with a part-time job as an aide at a Metro East health care facility. “They’re laying off teachers everywhere, too.”
Officials who track St. Louis economic trends are unfortunately unable to offer much in the way of hope to job-seekers such as Harris, one of 132,345 area residents who are jobless and don’t want to be.
Job creation, they say, has stalled on both sides of the Mississippi River, and the prognosis for early 2012 isn’t much better.
Hiring “is stuck on hold nationally and will probably continue to drift down a little,” said Howard Wall, director of the Institute for the Study of Economics and the Environment at Lindenwood University. “We’re just along for the ride, and there’s not much we can do about it instant credit report.”
Vicki Niederhofer, an economic analyst with the Illinois Department of Employment Security office in Belleville, has seen the jobless rate in her state again creep into double digits after a solid year of improvement.
The Metro East lost 2,700 jobs in the year since September 2010 as the unemployment rate remained unchanged at 9.1 percent during the 12-month stretch. (Chicago, by contrast, added 17,000 jobs in the same period.)
“The national headwinds are difficult to fight,” Niederhofer said.
A Post-Dispatch survey of the region’s 40 largest employers seems to bear out Niederhofer’s belief that hiring won’t rebound until recession-weary consumers loosen the purse strings.
Less than a third of companies, government agencies and nonprofit organizations said they were planning to expand their workforce by the end of the year.
In employment economics, the past often serves as prologue.
Given that, Niederhofer cites a 2010 baseline survey conducted by her agency to forecast the Metro East jobs with the “highest projected demand” through 2018.
Health care tops the list, followed by office and administrative support, management, food preparation, transportation and production.
Experts say there are 72 million reasons
A former Goldman Sachs board member on Wednesday surrendered to federal authorities to face criminal charges stemming from a massive hedge fund insider trading case.
Rajat Gupta appeared in Manhattan federal court. The charges were not immediately disclosed.
The Securities and Exchange Commissioner originally brought civil fraud charges against Gupta in March. The SEC alleged that, at the height of the financial crisis, he passed along privileged financial information that helped enrich Raj Rajaratnam, a former billionaire hedge fund manager who was the prime target of the criminal probe.
Gupta’s lawyer responded by accusing the SEC of launching a “flawed case premised in large part on unreliable evidence being used in an attempt to bring down a man of sterling reputation and remarkable achievements without the procedural safeguards historically accorded to all persons similarly charged.”
The Indian-born, Harvard-educated Gupta also has served on the boards of Procter & Gamble and the parent company for American Airlines. He was a guest at President Barack Obama’s first state dinner.
Gupta’s name played prominently at the criminal trial earlier this year of Rajaratnam, who was convicted after prosecutors used a trove of wiretaps on which he could be heard coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades.
Jurors heard testimony that at an Oct. 23, 2008, Goldman board meeting, members were told that the investment bank was facing a quarterly loss for the first time since it had gone public in 1999.
Prosecutors produced phone records showing Gupta called Rajaratnam 23 seconds after the meeting ended, causing Rajaratnam to sell his entire position in Goldman the next morning and save millions of dollars payday loans with no fax.
Rajaratnam also earned close to $1 million when Gupta told him that Goldman had received an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant, prosecutors said.
In one tape played at trial, Rajaratnam could be heard grilling Gupta about whether the Goldman Sachs board had discussed acquiring a commercial bank or an insurance company.
“Have you heard anything along that line?” Rajaratnam asked Gupta.
“Yeah,” Gupta responded. “This was a big discussion at the board meeting.”
Prosecutors sought to maximize the impact of the Gupta tape by calling Goldman Sachs chairman Lloyd Blankfein to testify that the phone call violated the investment bank’s confidentiality policies.
Gupta’s lawyer Gary P. Naftalis said Tuesday night that his client and Rajaratnam communicated for “legitimate reasons.” He said his client didn’t trade in any securities, didn’t tip Rajaratnam so he could trade and didn’t share in any profits.
“The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity,” Naftalis said in an emailed statement.
Rajaratnam, who’s in his mid-50s, was sentenced earlier this year to 11 years in prison. His lawyers had argued for 6 1/2 to nine years. Defense attorney Terence Lynam asked the judge to show compassion because of Rajaratnam’s illnesses, saying: “He does not deserve to die in prison.”
Greek railway workers and journalists joined ferry crews, garbage collectors, tax officials and lawyers on Tuesday in a strike blitz against yet more austerity measures required if the country is to avoid defaulting on its debts.
The protests will lead into a general strike over the coming two days, culminating on Thursday when Parliament holds a crucial vote on the new painful cutbacks that follow nearly two years of austerity. A similar strike before an austerity bill in June was accompanied by large protest marches which degenerated into street battles between rioters and police.
The highly unpopular new measures include further pension and salary cuts, the suspension on reduced pay of 30,000 public servants out of a total of more than 750,000 and the suspension of collective labor contracts.
Meanwhile, European countries are trying to work out an overall solution to the continent’s deepening debt crisis, ahead of a weekend summit in Brussels.
“The situation is exceptionally difficult, because there is great uncertainty in Europe, great uncertainty internationally,” Finance Minister Evangelos Venizelos said in a meeting with the country’s president, Karolos Papoulias. “People … are making big sacrifices. We are carrying out a patriotic duty because we have to save the country.”
Venizelos also tempered expectations for reaching a definitive deal on a second rescue package for Greece at a European Union summit this weekend. The second bailout, worth euro109 billion, was initially agreed in July, but crucial details remain to be worked out.
“We must not have great expectations for Sunday’s summit,” Venizelos said. “We will seek what is best for the country and the eurozone. Everyone understands that if Greece is saved, the eurozone will be saved too. And the reverse is also true: if the Europeans fail on Greece they will not be able to safeguard themselves.”
Greece’s embattled Socialist government needs to pass the new measures _ which some of its own backbenchers have threatened to block _ to receive the next euro8 billion ($11 billion) installment of the original euro110 billion package of international rescue loans that have been keeping it afloat since May 2010.
“It must be understood that we are fighting a war here,” the finance minister said, adding that a “national fight” must be waged against tax evasion. “If some people think that we live under normal circumstances and we are implementing a policy we want to implement of cutbacks and austerity, they are very much mistaken.”
The bailout was needed after the country’s borrowing rates soared on international markets upon revelations that Athens had misrepresented its financial data for years. Rating agencies cut Greece’s credit grade to the lowest in the world.
The country has maintained a market presence through regular sales of short-term debt _ up to six months _ and on Tuesday successfully auctioned euro1.62 billion worth of 13-week treasury bills. The country had to offer buyers a slightly higher yield, 4.61 percent compared with 4.56 percent at the previous sale last month. Investor interest was slightly higher, with the auction 2.86 times oversubscribed.
The government has said it will run out of cash in mid-November if the next bailout loan installment is not forthcoming.
Tuesday’s strikes kept island ferries in port for a second day, while stinking mounds of rotting garbage remained uncollected for the 17th day on the streets of Greece’s cities, carpeting sidewalks and forcing pedestrians to make detours through speeding traffic.
Tax collectors and lawyers joined the strikes, while civil servants occupied the finance and labor ministry buildings.
The new austerity measures were announced after the government failed to meet its savings targets, despite some 22 months of austerity that saw a record loss of jobs during a deep recession.
In July, unemployment rose to 16.5 percent, from 16 percent in June and 12 percent a year earlier, according to data provided Tuesday by Greece’s statistical authority. The total number of unemployed exceeded 820,000.
On Wednesday and Thursday, teachers, doctors, taxi drivers and bank employees will be on strike, together with air traffic controllers _ whose walkout will halt all flights for two days.
The country’s two main labor unions have also called rallies and protest marches to Syntagma Square outside Parliament in central Athens during the general strike, while a Communist union has urged members to block off the assembly building on the day of the vote.
Vans mounted with loudspeakers did the rounds of central Athens Tuesday, urging workers to “flood Syntagma Square and surround Parliament.”
Candy shaped like marijuana that’s showing up on store shelves around the country won’t get kids high, but aghast city leaders and anti-drug activists say the product and grocers carrying it represent a new low.
“We’re already dealing with a high amount of drug abuse and drug activity and trying to raise children so they don’t think using illegal substances is acceptable,” said City Councilmember Darius Pridgen. “So to have a licensed store sell candy to kids that depicts an illegal substance is just ignorant and irresponsible.”
The “Pothead Ring Pots,” “Pothead Lollipops” and bagged candy are distributed to retail stores by the novelty supply company Kalan LP of the Philadelphia suburb of Lansdowne. It also wholesales online for $1 for a lollipop and $1.50 for a package of three rings.
Company president Andrew Kalan said the candy, on the market six to nine months and in 1,000 stores around the country, promotes the legalization of marijuana.
“It does pretty well,” he said.
“This is the first complaint I’ve heard,” Kalan said, “and people are usually not shy. I’m actually surprised this is the first.”
An irate parent brought the candy to Pridgen’s attention, hoping the city could apply pressure and get it out of stores.
Pridgen and Councilmember Demone Smith displayed the candy, along with fake marijuana known as “K2″ that’s also sold in some stores at Tuesday’s Common Council meeting, where Pridgen said he’d refuse to grant licenses to stores in his district that planned to sell the merchandise and would seek to embarrass stores that carry it. The synthetic marijuana is sold as incense but is smoked.
Synthetic marijuana typically involves dried plant material sprayed with one of several chemical compounds. The products contain organic leaves coated with chemicals that provide a marijuana-like high when smoked. The Drug Enforcement Administration recently used its emergency powers to outlaw five chemicals found in synthetic marijuana.
It appeared Pridgen’s message had gotten out by Thursday. A check of about a half-dozen stores in Buffalo, often in impoverished neighborhoods where real drugs are a festering problem, turned up none of the controversial candy.
The bags of “Pothead Sour Gummy Candy,” and lollipops shaped like marijuana leaves appear to be a recent addition to the inventory of some corner stores. The sour apple-flavored candy contains nothing illegal, but with its marijuana leaf, the word “Legalize” and a joint-smoking, peace sign-waving user on the packaging, critics say it’s not only in poor taste but an invitation to try the real thing free 3-in-1 credit report.
“It’s the whole idea that it promotes drugs and the idea that, here, you’ll look cool if you use this _ which is what gets these kids in trouble in the very first place,” said Jodie Altman, program supervisor at Renaissance House, a treatment center for drug- and alcohol-addicted youth.
Charmaine Rosendary, 36, of Buffalo shook her head when she saw a picture of the package.
“That’s not right. It’s just promoting marijuana,” she said while buying produce Friday at a Buffalo market. She said she wouldn’t allow her five teenagers, ages 15-19, to have it.
“I would not buy it or give them money to buy it,” she said. “It looks like weed.”
It’s not the first legal product to come under fire.
In 2008, the Hershey Co. stopped making Ice Breakers Pacs in response to criticism that the mints looked too much like illegal street drugs. Police in Philadelphia complained that the packets, nickel-sized dissolvable pouches with a powdered sweetener inside, closely resembled tiny heat-sealed bags used to sell powdered street drugs.
Candy cigarettes and fruity or energy drink-infused alcoholic beverages have been criticized for targeting young people. And in 1997, the Federal Trade Commission said the iconic Joe Camel cigarette ads and packaging violated federal law because they appealed to kids under 18. The tobacco company, R.J. Reynolds, eventually shelved the caricature.
A spokesman for the Office of National Drug Control Policy said advocates for legalization who claim marijuana is benign are not supported by science.
“Trivializing drug use is a threat to public health because it erodes perceptions of harm among young people,” said Rafael Lemaitre.
Kalan said his company carries several products with the marijuana leaf and “legalize” message to accommodate growing demand in the movement to legalize marijuana.
“We don’t advocate for a political position. We just look at what the marketplace wants and respond to it,” the wholesaler said. “It’s just candy… It’s sour apple flavor, it doesn’t claim to be pot in disguise or anything like that.”
QUOTE OF THE WEEK
“I believe history will remember Steve Jobs as one of the greatest innovators of all time, the Thomas Edison of the 21st century one hour payday loan.”
In a significant new blow to al-Qaida, U.S. airstrikes in Yemen on Friday killed Anwar al-Awlaki, an American militant cleric who became a prominent figure in the terror network’s most dangerous branch, using his fluent English and Internet savvy to draw recruits for attacks in the United States.
The strike was the biggest U.S. success in hitting al-Qaida’s leadership since the May killing of Osama bin Laden in Pakistan. But it raises questions that other strikes did not: Al-Awlaki was an American citizen who has not been charged with any crime. Civil liberties groups have questioned the government’s authority to kill an American without trial.
The 40-year-old al-Awlaki was for years an influential mouthpiece for al-Qaida’s ideology of holy war, and his English-language sermons urging attacks on the United States were widely circulated among militants in the West.
But U.S. officials say he moved into a direct operational role in organizing such attacks as he hid alongside al-Qaida militants in the rugged mountains of Yemen. Most notably, they believe he was involved in recruiting and preparing a young Nigerian who on Christmas Day 2009 tried to blow up a U.S. airliner heading to Detroit, failing only because he botched the detonation of explosives sewn into his underpants.
Yemen’s Defense Ministry said another American militant was killed in the same strike alongside al-Awlaki _ Samir Khan, a U.S. citizen of Pakistani heritage who produced “Inspire,” an English-language al-Qaida Web magazine that spread the word on ways to carry out attacks inside the United States. U.S. officials said they believed Khan was in the convoy carrying al-Awlaki that was struck but that they were still trying to confirm his death. U.S. and Yemeni officials said two other militants were also killed in the strike but did not immediately identify them.
Washington has called al-Qaida in the Arabian Peninsula, as the branch in Yemen is called, the most direct threat to the United States after it plotted that attack and a foiled attempt to mail explosives to synagogues in Chicago.
In July, U.S. Defense Secretary Leon Panetta said al-Awlaki was a priority target alongside Ayman al-Zawahri, bin Laden’s successor as the terror network’s leader.
The Yemeni-American had been in the U.S. crosshairs since his killing was approved by President Barack Obama in April 2010 _ making him the first American placed on the CIA “kill or capture” list. At least twice, airstrikes were called in on locations in Yemen where al-Awlaki was suspected of being, but he wasn’t harmed.
Friday’s success was the result of counterterrorism cooperation between Yemen and the U.S. that has dramatically increased in recent weeks _ ironically, even as Yemen has plunged deeper into turmoil as protesters try to oust President Ali Abdullah Saleh, U.S. officials said.
Apparently trying to cling to power by holding his American allies closer, Saleh has opened the taps in cooperation against al-Qaida. U.S. officials said the Yemenis have also allowed the U.S. to gather more intelligence on al-Awlaki’s movements and to fly more armed drone and aircraft missions over its territory than ever before.
The operation that killed al-Awlaki was run by the U.S. military’s elite counterterrorism unit, the Joint Special Operations Command _ the same unit that got bin Laden.
A U.S. counterterrorism official said American forces targeted a convoy in which al-Awlaki was traveling with a drone and jet attack and believe he’s been killed. The official was not authorized to speak publicly and spoke on condition of anonymity.
The Yemeni government announced that al-Awlaki was “targeted and killed” around 9:55 a.m outside the town of Khashef in mountainous Jawf province, 87 miles (140 kilometers) east of the capital Sanaa. It gave no further details.
Local tribal and security officials said al-Awlaki was traveling in a two-car convoy with two other al-Qaida operatives from Jawf to neighboring Marib province when they were hit by an airstrike. They said the other two operatives were also believed dead. They spoke on condition of anonymity because they were not authorized to talk to the press.
Al-Awlaki, born in New Mexico to Yemeni parents, began as a mosque preacher as he conducted his university studies in the United States, and he was not seen by his congregations as radical. While preaching in San Diego, he came to know two of the men who would eventually become suicide-hijackers in the Sept. 11, 2001 attacks on the World Trade Center and the Pentagon. The FBI questioned al-Awlaki at the time but found no cause to detain him.
In 2004, al-Awlaki returned to Yemen, and in the years that followed, his English-language sermons _ distributed on the Internet _ increasingly turned to denunciations of the United States and calls for jihad, or holy war. The sermons turned up in the possession of a number of militants in the U.S. and Europe arrested for plotting attacks.
Al-Awlaki exchanged up to 20 emails with U.S. Maj. Nidal Malik Hasan, alleged killer of 13 people in the Nov. 5, 2009, rampage at Fort Hood. Hasan initiated the contacts, drawn by al-Awlaki’s Internet sermons, and approached him for religious advice.
Al-Awlaki has said he didn’t tell Hasan to carry out the shootings, but he later praised Hasan as a “hero” on his Web site for killing American soldiers who would be heading for Afghanistan or Iraq to fight Muslims.
In New York, the Pakistani-American man who pleaded guilty to the May 2010 Times Square car bombing attempt told interrogators he was “inspired” by al-Awlaki after making contact over the Internet.
After the Fort Hood attack, al-Awlaki moved from Yemen’s capital, Sanaa, into the mountains where his Awalik tribe is based and _ it appears _ grew to build direct ties with al-Qaida in the Arabian Peninsula, if he had not developed them already. The branch is led by a Yemeni militant named Nasser al-Wahishi.
Yemeni officials have said al-Awlaki had contacts with Umar Farouk Abdulmutallab, the accused would-be Christmas plane bomber, who was in Yemen in 2009. They say the believe al-Awlaki met with the 23-year-old Nigerian, along with other al-Qaida leaders, in al-Qaida strongholds in the country in the weeks before the failed bombing.
Al-Awlaki has said Abdulmutallab was his “student” but said he never told him to carry out the airline attack.
The cleric is also believed to have been an important middleman between al-Qaida militants and the multiple tribes that dominate large parts of Yemen, particular in the mountains of Jawf, Marib and Shabwa province where the terror group’s fighters are believed to be holed up.
Last month, al-Awlaki was seen attending a funeral of a senior tribal chief in Shabwa, witnesses said, adding that security officials were also among those attending. Other witnesses said al-Awlaki was involved in negotiations with a local tribe in Yemen’s Mudiya region, which was preventing al-Qaida fighters from traveling from their strongholds to the southern city of Zinjibar, which was taken over recently by Islamic militants. The witnesses spoke on condition of anonymity for fear of reprisals and their accounts could not be independently confirmed.
Yemen, the Arab world’s most impoverished nation, has become a haven for hundreds of al-Qaida militants. The country has also been torn by political turmoil as President Saleh struggles to stay in power in the face of seven months of protests. In recent months, Islamic militants linked to al-Qaida have exploited the chaos to seize control of several cities in Yemen’s south, including Zinjibar.
A previous attack against al-Awlaki on May 5, shortly after the May raid that killed Osama bin Laden, was carried out by a combination of U.S. drones and jets.
Top U.S. counterterrorism adviser John Brennan has said cooperation with Yemen has improved since the political unrest there. Brennan said the Yemenis have been more willing to share information about the location of al-Qaida targets, as a way to fight the Yemeni branch challenging them for power.
Yemeni security officials said the U.S. was conducting multiple airstrikes a day in the south since May and that U.S. officials were finally allowed to interrogate al-Qaida suspects, something Saleh had long resisted, and still does so in public. The officials spokes on condition of anonymity to discuss intelligence issues.
____
AP correspondent Matt Apuzzo and AP Intelligence Writer Kimberly Dozier in Washington contributed to this report.
Some of the nation’s largest oil refineries are seeking huge tax refunds that could force school districts and local governments across Texas to give back tens of millions of dollars they were counting on to pay teachers and provide other services.
The refineries want the tax breaks in exchange for buying pollution-controlling equipment. But the cost to public schools would be dear, coming only months after lawmakers slashed education spending by more than $4 billion.
If a three-member commission appointed by Gov. Rick Perry grants the refunds, nearly half the money would be taken from schools. Classrooms in cities with refineries would be hurt most.
“We were already cut at the knees as it is, but more cuts? It’s appalling,” said Patricia Gonzales, a single mother of twins at Park View Intermediate School in Pasadena, a refinery town just south of Houston.
She is president of the parent-teacher organization, which was created this past summer after budget cuts left the school without basic supplies such as pencils and paper towels.
The Texas Commission on Environmental Quality is evaluating 16 refund requests that could add up to more than $135 million, according to county tax data and application documents analyzed by The Associated Press.
What’s more, if the commission grants the requests, at least 12 other refineries that have not sought a refund also could qualify.
On Monday, about a dozen community activists handed out fliers in Pasadena as they conducted a mock bake sale offering $10,000 cookies, brownies and cupcakes to draw attention to the problem.
Gonzales lives near a miles-long stretch of refineries, where massive pipes and stacks light the night like skyscrapers do in other cities. An intense odor of burnt chemicals hangs over the town.
“There are days when we can’t go out because our children’s asthma is that bad,” she said. “And then they want money back?”
The state commission expressed some support for the refund last year, raising speculation that it is preparing to side with the industry.
Beginning in 2006, the Environmental Protection Agency began requiring refineries to remove sulfur dioxide from diesel and gasoline, and many refineries had to either upgrade existing “hydrotreater” units or purchase new, more effective equipment.
San Antonio-based Valero Energy Corp. argues that the units should qualify for a tax exemption under an amendment to the Texas Constitution that says industrial plants don’t have to pay taxes on equipment purchased to reduce on-site pollution.
Valero first asked for the refund for six of its refineries in 2007. Since then, at least four other companies have asked for the same retroactive refund.
Valero’s initial request was denied. The company appealed, and the panel’s chairman, Bryan Shaw, said last April that the Legislature probably intended a broader interpretation of the law. He instructed his staff to research whether they could award partial exemptions to Valero.
Shaw declined to comment, saying it could present a conflict because the issue will be brought before him again.
Valero could potentially get a refund of more than $92 million, but company spokesman Bill Day said executives believe the final refund would be much smaller. He said appraisers will probably estimate the value of refinery properties below the amount submitted by the company.
There is no timeline for a ruling. The slow pace of the decision has put municipalities and school districts in the position of collecting and spending money they could be forced to return.
Schools alone could be forced to fork over $62.8 million, according to data compiled by the AP.
In smaller, more rural counties _ where property taxes from heavy industry provide a big chunk of funding for schools and government services _ the effect could be even greater. For example, in Moore County, where a Valero refinery is seeking two exemptions, a $15.8 million refund would amount to more than $720 per person.
“If it was a good year and property values were up, it wouldn’t be so bad,” said Hugh Landrom Jr., president of Hugh Landrom and Associates, an engineering firm that does industrial appraisals for Galveston and other counties that are home to large refineries and chemical plants.
But the pain is “compounded by the state budget cuts that are being passed down to everybody,” Landrom said.
If the abatements are approved, all Texas schools would be affected. Refinery towns would be hurt the most.
“The dollars that are lost by these school districts directly affect the children of the employees that help make these companies what they are,” said David Hodgins, consultant and attorney for the Texas Association of School Administrators.
The Pasadena schools will have to refund $11.3 million to two refineries, according to the AP analysis.
The school where the Gonzales children attend class has laid off eight staff members and is asking parents to donate money to pay for basketballs, volleyballs and even gloves for the science teachers.
The Valero spokesman insisted the refund would not “be a disaster.”
“I guarantee you, it’s not a surprise to the school districts,” Day said. “Yes, they spent the money. Yes, we’re asking for an abatement on our pollution-control equipment. … But this is really no different than a homeowner appealing their property tax, just on a larger scale.”
___
Associated Press Writer Troy Thibodeaux contributed to this report from New Orleans.
Powered by WordPress -- XHTML 1.0