Census report: More Americans relying on Medicare, Medicaid (VIDEO) (The Christian Science Monitor)

By Daniel B. Wood Daniel B. Wood – Tue?Sep?13, 9:01?pm?ET

More people relied on state and federal health insurance programs as employer-based plans became more expensive and as US unemployment levels remained high, according to the US Census Bureau's annual report on income, poverty, and health insurance coverage.

About 1.5 million fewer Americans had health insurance plans covered by their employers in 2010 than in 2009 – while 1.8 million more joined government insurance plans.

The number of people covered by Medicaid, the government program for the poor, increased 1.5 percent to 48.6 million. Those covered by Medicare, the government program for the elderly, rose 2.1 percent to 44.3 million.

RECOMMENDED: Health care law's future - four scenarios

Already, Republican presidential candidates are attacking President Obama's new health-care law for growing the size of the federal government. So what do these numbers say about his health-care reform?

Some say the report demonstrates a weakness in the Obama health-care law a€“ and is a clear admonition for voters.

Watch video showing the latest Census figures here:

newslook

“As federal lawmakers and the Obama administration grapple with significant budget cuts, the increase in the number of Americans who lack job-based health insurance very well could put more strain on federally funded programs like Medicare and Medicaid,” says John Egan, managing editor of InsuranceQuotes.com. “In other words, taxpayers could end up footing a bigger chunk of the health-care bill for Americans who do not have employer-sponsored health insurance.”

Passed by a Democratic-controlled Congress and signed into law last year, the Affordable Health Care Act was designed to expand insurance coverage to some 32 million uninsured by the time it goes into full effect in 2014.

Tuesday's Census report showed that almost 50 million Americans are uninsured, or 1 million more than in 2009. It also showed that there were 46.2 million people living in poverty in 2010, up from 43.6 million in 2009 a”€ the third consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published. That represents 15.1 percent of people in the US.

The growing ranks of poor Americans demonstrate the need for federal safety-net programs, argues Ron Pollack, founding executive director of Families USA, a national organization for health care consumers. “This, to me, tells Washington it’s very important to protect Medicaid, because to do otherwise would fray the lifeline that people who have lost employer-sponsored healthcare need to stay insured.”

Only a few provisions of the 2010 healthcare reform law have gone into effect so far, so it may be too early to declare the law a failure or a success, some analysts say.

Moreover, the Census report may overstate the number of uninsured, says Devon Herrick, from the National Center for Policy Analysis in Dallas. He cautions that the Census numbers overrely on self-reporting by those whose circumstances may be very different from the prior 12 months.

“Most experts agree the Census Bureau is not actually measuring the uninsured for the full year. Rather, people on surveys tend to answer the Census Bureau question based on whether they have coverage at that point in time.”

The report shows that a clear and worrisome trend was afoot even before the world economic downturn hit in 2007. The number Americans lacking health insurance rose from 13.7 percent to 16.7 percent from 2000 to 2009.

“The implications of this, for me, is that it wasn’t the policy of any one time that created this problem of health-insurance affordability, and therefore to blame or applaud the current administration is way too simplistic,” says Kaveh Safavi, a health industry analyst for Accenture, a global management consulting firm. “This is not a political issue but rather a fundamental economic national issue that needs to be discussed that way.”

RECOMMENDED: Health care law's future - four scenarios

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Special report: The secret plan to take Tripoli (Reuters)

TRIPOLI (Reuters) – Colonel Muammar Gaddafi's regime was delivered by a caterer, on a memory stick.

Abdel Majid Mlegta ran the companies that supplied meals to Libyan government departments including the interior ministry. The job was "easy," he told Reuters last week. "I built good relations with officers. I wanted to serve my country."

But in the first few weeks of the uprising, he secretly began to work for the rebels. He recruited sympathizers at the nerve center of the Gaddafi government, pinpointed its weak links and its command-and-control strength in Tripoli, and passed that information onto the rebel leadership on a series of flash memory cards.

The first was handed to him, he says, by Gaddafi military intelligence and security officers. It contained information about seven key operations rooms in the capital, including internal security, the Gaddafi revolutionary committees, the popular guards -- as Gaddafi's voluntary armed militia was known -- and military intelligence.

The data included names of the commanders of those units, how many people worked in each center and how they worked, as well as crucial details like the number plates of their cars, and how each unit communicated with the central command led by intelligence chief Abdullah al-Senussi and Gaddafi's second son Saif al-Islam.

That memory card -- which Mlegta later handed to officials at the North Atlantic Treaty Organization (NATO) -- provided the basis of a sophisticated plan to topple the Libyan dictator and seize Tripoli. The operation, which took months of planning, involved secretly arming rebel units inside the capital. Those units would help NATO destroy strategic targets in the city -- operation rooms, safe houses, military barracks, police stations, armored cars, radars and telephone centers. At an agreed time, the units would then rise up as rebels attacked from all sides.

The rebels called the plan Operation Dawn Mermaid. This is the inside story -- much of it never before told -- of how that plan unfolded.

The rebels were not alone. British operatives infiltrated Tripoli and planted radio equipment to help target air strikes and avoid killing civilians, according to U.S. and allied sources. The French supplied training and transport for new weapons. Washington helped at a critical late point by adding two extra Predator drones to the skies over Tripoli, improving NATO's ability to strike. Also vital, say western and rebel officials, was the covert support of Arab states such as the United Arab Emirates and Qatar. Doha gave weapons, military training and money to the rebels.

By the time the rebels were ready for the final assault, they were so confident of success that they openly named the date and time of the attack: Saturday, August 20, at 8 p.m., just after most people in Tripoli broke their Ramadan fast.

"We didn't make it a secret," said Mohammed Gula, who led a pro-rebel political cell in central Tripoli and spoke to Reuters as rebels first entered Gaddafi's Bab al-Aziziyah compound. "We said it out on the street. People didn't believe us. They believe us now."

THE DIGITAL GIFT

Planning began in April, two months into the uprising. Rebel leader Mahmoud Jibril and three other senior insurgents met in the Tunisian city of Djerba, according to both Mlegta and another senior official from the National Transitional Council (NTC), as the alternative rebel government calls itself.

The three were Mlegta, who by then had fled Tripoli and joined the rebels as the head of a brigade; Ahmed Mustafa al-Majbary, who was head of logistics and supplies; and Othman Abdel-Jalil, a scientist who became coordinator of the Tripoli plan.

Before he fled, Mlegta had spent just under two months working inside the regime, building up a network of sympathizers. At first, 14 of Gaddafi's officers were prepared to help. By the end there were 72, Mlegta says. "We used to meet at my house and sometimes at the houses of two other officers... We preserved the secrecy of our work and it was in coordination with the NTC executive committee."

Brigadier General Abdulsalam Alhasi, commander of the rebels' main operation center in Benghazi, said those secretly helping the rebels were "police, security, military, even some people from the cabinet; many, many people. They gave us information and gave instructions to the people working with them, somehow to support the revolution."

One of those was al-Barani Ashkal, commander-in-chief of the guard at Gaddafi's military compound in the suburbs of Tripoli. Like many, Ashkal wanted to defect, but was asked by the NTC to remain in his post where, Alhasi says, he would become instrumental in helping the rebels enter the city.

The rebel planning committee -- another four men would join later, making seven in all -- knew that the targets on the memory sticks were the key to crippling Gaddafi's forces. The men included Hisham abu Hajar, chief commander of the Tripoli Brigade, Usama Abu Ras, who liaised with some cells inside Tripoli, and Rashed Suwan, who helped financially and coordinated with the tribes of Tripoli to ease the rebels' entry.

According to Mlegta and to Hisham Buhagiar, a rebel colonel and the committee's seventh member, the group initially drew up a list of 120 sites for NATO to target in the days leading up to their attack.

Rebel leaders discussed their idea with French President Nicolas Sarkozy at a meeting at the Elysee Palace on April 20.

That meeting was one of five in Paris in April and May, according to Mlegta. Most were attended by the chiefs of staff of NATO countries involved in the bombing campaign, which had begun in March, as well as military officials from Qatar and the United Arab Emirates.

After presenting the rebels' plan "from A to Z", Mlegta handed NATO officials three memory cards: the one packed with information about regime strongholds in Tripoli; another with updated information on regime sites as well as details of 65 Gaddafi officers sympathetic to the rebels who had been secretly supplied with NATO radiophones; and a third which contained the plot to take Tripoli.

Sarkozy expressed enthusiasm for the plan, according to Mlegta and the senior NTC official, who spoke on condition of anonymity.

The leaders slimmed the 120 targets down to 82 and "assigned 2,000 armed men to go into Tripoli and 6,000 unarmed to go out (onto the streets) in the uprising," according to rebel colonel Buhagiar. He joined the opposition National Front for the Salvation of Libya in 1981 and has lived in the United States and trained as a special forces operative in both Sudan and Iraq.

There were already anti-Gaddafi cells in the capital that the rebels knew they could activate. "The problem was that we needed time," the senior NTC official said. "We feared that some units may go out into the streets in a spontaneous way and they would be quashed. We also needed time to smuggle weapons, fighters and boats."

In the early months of the uprising, pro-rebel fighters had slipped out of Tripoli and made their way to the north-western city of Misrata, where they were trained for the uprising, rebels in Misrata told Reuters in June. The leaders of two rebel units said "hundreds" of Tripoli residents had begun slipping back into the city by mid-July. Commander Alhasi and other rebel officers in Benghazi said the number of infiltrators sent into Tripoli was dozens, not hundreds.

"This was not D-Day," Alhasi told Reuters in his office.

"THE OVERSEAS BRIGADE"

Most of the infiltrators traveled to Tripoli by fishing trawler, according to Alhasi. They were equipped with light weapons -- rifles and sub-machineguns -- hand grenades, demolition charges and radios.

"We could call them and they could call each other," Alhasi said. "Most of them were volunteers, from all parts of Libya, and Libyans from overseas. Everybody wants to do something for the success of the revolution."

Although Tripoli was ostensibly under the control of Gaddafi loyalists, rebels said the security system was porous: bribery or other ruses could be used to get in and out. Small groups of men also began probing the government's security system with nighttime attacks on checkpoints, according to one operative who talked to Reuters in June.

It was possible to smuggle weapons into Tripoli, but it was easier and less risky -- if far more expensive -- to buy them from Gaddafi loyalists looking to make a profit before the regime collapsed. The going rate for a Kalashnikov in Tripoli was $5,000 over the summer; in Misrata the same weapon cost $3,000.

Morale got a boost when rebels broke into government communication channels and recorded 2,000 calls between the regime's top leadership, including a few with Gaddafi's sons, on everything from military orders to sex. The NTC mined the taped calls for information and broadcast some of them on rebel TV, a move that frightened the regime, according to the senior NTC source. "They knew then that we had infiltrated and broken into their ranks."

Recordings of two of the calls were also handed to the International Criminal Court. One featured Gaddafi's prime minister al-Baghdadi al-Mahmoudi threatening to burn the family of Abdel Rahman Shalgham, a one-time Libyan ambassador to the United Nations and an early defector to the rebels. Al-Mahmoudi described Shalgham as a slave. The other was between al-Mahmoudi and Tayeb al-Safi, minister of economy and trade; the pair joked about how the Gaddafi brigades would rape the women of Zawiyah when they entered the town.

Several allied and U.S. officials, as well as a source close to the Libyan rebels, said that around the beginning of May, foreign military trainers including British, French and Italian operatives, as well as representatives from Qatar and the United Arab Emirates, began to organize serious efforts to hone the rebels into a more effective fighting force.

Most of the training happened in the rebel-held Western Mountains. But Eric Denece, a former French intelligence operative and now Director of the French Center for Research on Intelligence, says an elite rebel force of fighters from the east was trained both inside and outside Libya, at NATO bases and those of other allies. This "overseas brigade" was then dropped back into the country. In all, estimated Denece, some 100-200 foreign operatives were sent to Libya, where they focused on training and military coordination. Mlegta confirms that number.

FRENCH DROPS, BRITISH INFILTRATION

Rebel commander Alhasi insists western special forces were not involved in combat; the main help they gave was with the bombing campaign and training. London, Paris and Washington also say their troops were not involved in combat.

"They complied with our (bombing) requirements, immediately sometimes, sometimes we had a delay," said Alhasi, who has a big satellite photograph of Tripoli on one of his walls. "We had the information on the ground about the targets and relayed it to them."

A European official knowledgeable about such operations said "dozens" of plain-clothes French military advisers were sent to Libya. A French official said between 30 and 40 "military advisers" helped organize the rebels and trained them on basic weapons and more high-tech hardware.

In May, the French began smuggling weapons into western Libya. French military spokesmen later confirmed these arms drops, saying they were justified as "humanitarian support", but also briefing that the aim was to prepare for an advance on Tripoli.

British undercover personnel carried out some of the most important on-the-ground missions by allied forces before the fall of Tripoli, U.S. and allied officials told Reuters.

One of their key tasks, according to allied officials, was planting radio equipment to help allied forces target Gaddafi's military forces and command-and-control centers. This involved dangerous missions to infiltrate the capital, locate specific potential targets and then plant equipment so bomber planes could precisely target munitions, destroying sensitive targets without killing bystanders.

WASHINGTON'S ROLE

In mid-March, a month after violent resistance to Gaddafi's rule first erupted, President Obama had signed a sweeping top secret order, known as a covert operations "finding", which gave broad authorization to the CIA to support the rebels.

But while the general authorization encompassed a wide variety of possible measures, the presidential finding required the CIA to come back to the White House for specific permissions to move ahead and help them. Several U.S. officials said that, because of concerns about the rebels' disorganization, internal politics, and limited paramilitary capabilities, clandestine U.S. support on the ground never went much beyond intelligence collection.

U.S. officials acknowledge that as rebel forces closed in on Tripoli, such intelligence "collection" efforts by the CIA and other American agencies in Libya became very extensive and included efforts to help the rebels and other NATO allies track down Gaddafi and his entourage. But the Obama administration's intention, the officials indicated, was that if any such intelligence fell into American hands it would be passed onto others.

A senior U.S. defense official disclosed to Reuters details of a legal opinion showing the Pentagon would not be able to supply lethal aid to the rebels -- even with the U.S. recognition of the NTC.

"It was a legal judgment that the quasi-recognition that we gave to the NTC as the legitimate representative of the Libyan people didn't check the legal box to authorize us to be providing lethal assistance under the Arms Export Control Act," the senior official said.

HELP FROM THE GULF

In some ways the rebels' most unlikely ally was Qatar.

The Gulf Arab state is keen to downplay its role, perhaps understandably given that it is ruled by an absolute monarch. But on the ground, signs abounded of the emirate's support. The weapons and equipment the French brought in were mostly supplied by Qatar, according to rebel sources. In May, a Reuters reporter saw equipment in boxes clearly stamped "Qatar." It included mortar kits, military fatigues, radios and binoculars. At another location, Reuters saw new anti-tank missiles.

Qatar's decision to supply arms to the rebellion, one source close to the NTC told Reuters, was instigated by influential Libyan Islamist scholar Ali Salabi, who sought refuge in Qatar after fleeing Libya in the late 1990s. He had previously worked with Gaddafi's son Saif, to help rehabilitate Libyans who had fought in Afghanistan. Salabi's brother Ismael is also a leader of a rebel militia in Libya.

Salabi "is the link to the influential figures in Qatar, and convinced the Qataris to get involved," said the source close to the NTC.

HIRED GUNS

By early June, Libya seemed locked in a stalemate.

After three months of civil war, rebels had seized huge swathes of territory, but NATO bombing had failed to dislodge Gaddafi. The African Union said the only way forward was a ceasefire and negotiated peace. London joined Paris in suggesting that while Gaddafi must step down, perhaps he could stay in Libya.

But hidden away from view, the plan to seize Tripoli was moving into action.

The rebels began making swift advances in the Western Mountains, out of Misrata and around the town of Zintan. Newly arrived Apache attack helicopters operating from Britain's HMS Ocean, an amphibious assault ship, were destroying armored vehicles. NATO aircraft dropped leaflets to dispirit Gaddafi forces and improve rebel morale.

"The game-changer has been the attack helicopters which have given the NTC more protection from Gaddafi's heavy weapons," a French Defense Ministry official said.

The rebels' foreign backers were eager to hasten the war. For one thing, a U. N. mandate for bombing ran only to the end of September; agreement on an extension was not guaranteed. One U.S. official, speaking on condition of anonymity, told Reuters the main U.S. concern was "breaking the rough stalemate before the end of the NATO mandate".

The Europeans were also burning through costly munitions and Washington was concerned about wear and tear on NATO allies' aircraft. "Some of the countries... basically every deployable F-16 they had in the inventory was deployed," a senior U.S. defense official told Reuters.

But the momentum was shifting in the rebels' favor.

On July 28, the assassination of rebel military commander Abdel Fatah Younes proved a surprise turning-point. The former Interior Minister had defected to the rebels in February. Some believe he had held back their advance from the east, for reasons that remain unclear. Younes' death at the hands of his own men raised questions about the NTC and added impetus to NATO's desire to push things along in case the anti-Gaddafi forces imploded.

The West forced NTC head Mahmoud Jibril to change his cabinet. NATO then took more of the lead in preparations, according to Denece, who said he has contacts within both French and Libyan intelligence.

There was another boon to the rebels. Regional heavyweight Turkey came out in support of the NTC in July, and then held a conference at which 30 countries backed them. "The Turks actually were very helpful throughout this in a very quiet kind of way," said the senior U.S. defense official.

With the morale of Gaddafi troops eroding, the end was clearly near. Mediocre at the best of times, Gaddafi's fighters began fading away. So too did his secret weapon: foreign mercenaries.

After the uprising began, Gaddafi recruited several thousand mercenaries; some formed the core of his best-organised forces. Most of the hired guns came from countries to Libya's south such as Chad, Mali, and Niger, but some were from further afield, including South Africa and the Balkans.

Among them was a former Bosnian Serb fighter who had fought in Sierra Leone as a mercenary and later worked as a contractor in Afghanistan and Iraq. Hired in March, first as an instructor and later as the commander of a 120mm mortar battery, the fighter, who used his nom-de-guerre Crni ("the Black" in Serbian), told Reuters he had been paid regularly in cash in the western currency of his choice.

"I knew Libyans had poor discipline, but what I have seen was dismal in comparison with what we had in former Yugoslavia during our wars," he told Reuters. "They were cowards, at least many of them. Communications were the biggest problem, as they just couldn't figure out how to operate anything more sophisticated than a walkie-talkie, so we resorted to cellphones, when they worked and while they worked."

It was in early August, he said, that "everything started falling apart." The force of which he was a part began retreating from a rebel onslaught. "At some point we came under fire from a very organised group, and I suspect they were infiltrated (by) NATO ground troops," he said. The loyalist units pulled back to a point about 50 km (30 miles) from Tripoli. By mid-August, "I decided it was enough. I took a jeep with plenty of fuel and water and another two Libyans I trusted, and we traveled across the desert to a neighboring country. It took us four days to get there."

A DRONE DEBATE

Foreign agents, meanwhile, were circulating far and wide. At the Tunisia-Libya border in early August, a Reuters reporter ran into a Libyan with an American accent who identified himself as the head of the rebel command center in the Western Mountains. He was accompanied by two muscular blond western men. He said he spent a lot of time in the United States and Canada, but would not elaborate.

As the rebels advanced on Zawiyah, the Reuters reporter also saw western-looking men inside the Western Mountain region traveling in simple, old pickup trucks. Not far away, rebels in Nalut said they were being aided by CIA agents, though this was impossible to verify.

Operation Dawn Mermaid was initially meant to begin on August 10, according to Mohammed Gula, the political cell leader in central Tripoli. But "other cities were not yet ready", the leadership decided, and it was put off for a few days.

A debate flared inside the Pentagon about whether to send extra Predator drones to Libya. "It was a controversial issue even as to whether it made sense to pull (drones) from other places to boost this up to try to bring this to a quicker conclusion," the U.S. defense official said.

Those who backed the use of extra drones won, and the last two Predators were taken from a training base in the United States and sent to north Africa, arriving on August 16.

In the meantime, the rebels had captured several cities. By August 17 or 18, recalls Gula, "when we heard that Zawiyah had fallen, and Zlitan looked like it was about to fall, and Garyan had fallen, we decided now is the time."

Those successes had a knock-on effect, U.S. and NATO officials told Reuters. With much of the country now conquered, Predator drones and other surveillance and strike planes could finally be focused on the capital. Data released by the Pentagon showed a substantial increase in the pace of U.S. air strikes in Libya between August 10 and August 22.

"We didn't have to scan the entire country any longer," a NATO official said. "We were able to focus on where the concentrations of regime forces were."

ZERO HOUR

Days before the attack on Tripoli, the White House began leaking stories to TV networks saying Gaddafi was near the end. But U.S. intelligence officials -- who are supposed to give an objective view of the situation on the ground -- were pushing back, telling journalists they were not so sure of immediate victory and the fighting could go on for months.

Then, on August 19, a breakthrough: Abdel Salam Jalloud, one of the most public faces of Gaddafi's regime, defected. Jalloud had been trying to get out for the previous three months, according to the senior NTC official. "He asked for our help but because he wanted his whole family, not only his immediate one, to flee with him it was a logistical problem. His whole family was around 35."

By now, the mountain roads were under rebel control. They took him and his family from Tripoli to Zintan and across the border into Tunisia. From there, he flew to Italy and on to Qatar.

The rebel leadership was ready. But now NATO wanted more time. "Once they got control of Zawiyah, we were sort of expecting that they would make a strategic pause, regroup and then make the push on into Tripoli," the senior U.S. defense official said.

"We told NATO we're going to go anyway," said a senior NTC official.

The western alliance quickly scaled back its number of bombing targets to 32 from 82, while rebel special forces hit some of the control rooms that were not visible, like those in schools and hospitals.

The signal to attack came soon after sunset on August 20, in a speech by NTC Chairman Mustafa Abdel Jalil. "The noose is tightening," he said. A "veritable bloodbath" was about to occur.

Within 10 minutes of his speech, rebel cells in neighborhoods across Tripoli started moving. Some units were directly linked to the operation; many others were not but had learned about the plan.

"We didn't choose it, the circumstances and the operations led us to this date," Alhasi told Reuters when asked why the uprising in Tripoli began then. "There was a public plan in Tripoli that they would rise up on that day, by calling from the mosques. It was not a military plan, not an official plan, it was a people's plan. The people inside Tripoli, they did this in coordination with us."

In the first few hours, rebel cells attacked installations and command posts. Others simply secured neighborhoods, setting up roadblocks and impeding movement.

Ships laden with food and ammunition set off from rebel-held Misrata. Rebel forces began pushing toward the capital from the Western Mountains and from the east. According to French newspapers, NATO cleared a path on the water by destroying pro-Gaddafi speed boats equipped with explosives.

The first rebel soldiers reached the city within a few hours. The rag-tag army didn't look like much: some warriors wore football kit bearing the name of English soccer players. But they encountered little resistance.

One rebel source said Gaddafi had made a fatal error by sending his important brigades and military leaders, including his son Mu'atassem, to secure the oil town of Brega. The Libyan leader apparently feared the loss of the oil area would empower the rebels. But it meant he left Tripoli without strong defences, allowing the rebels easy entry.

The air war was also overwhelming the regime. Under attack, Gaddafi forces brought whatever heavy equipment they still had out of hiding. In the final 24 hours, a western military official said, NATO "could see remnants of Gaddafi forces trying to reconstitute weapons systems, specifically surface-to-air missiles". NATO pounded with them with air strikes.

COLLAPSE

By Sunday August 21, the rebels controlled large parts of Tripoli. In the confusion, the NTC announced it had captured Saif al-Islam. Late the following evening, though, he turned up at the Rixos, the Tripoli hotel where foreign reporters were staying. "I am here to disperse the rumors...," he declared.

U.S. and European officials now say they believe Saif was never in custody. NTC chief Mahmoud Jibril attributes the fiasco to conflicting reports within the rebel forces. But, he says, the bumbling turned into a bonanza: "The news of his arrest gave us political gains. Some countries recognized us, some brigades surrendered ... and more than 30 officers defected."

As the Gaddafi brigades collapsed, the rebels reached a sympathizer in the Libyan military who patched them into the radio communications of Gaddafi's forces. "We could hear the panic through their orders," said the senior NTC official. "That was the first indication that our youths were in control of Tripoli."

As the hunt for Gaddafi got underway, the NTC began implementing a 70-page plan, drawn up in consultation with its foreign military backers, aimed at establishing security in the capital.

Officials in London, Paris and Washington are at pains to say the plan is not based on the experience of Iraq or any other country, but the lessons of their mistakes in Baghdad are obvious.

At a press conference in Qatar, NTC head Jibril said Libya would "rehabilitate and cure our wounds by being united so we can rebuild the nation."

Unity was not hard to find during the uprising. "The most important factor was the will of the people," commander Alhasi told Reuters. "The people hate Gaddafi."

Will Libya remain united once he's gone?

(With reporting by Robert Birsel in Benghazi, Peter Graff in Tripoli, Michael Georgy in the Western Mountains, Phil Stewart and Mark Hosenball in Washington, Regan Doherty in Doha, Bill Maclean and Peter Apps in London, John Irish in Paris, Nick Carey in Chicago, Aleksander Vasovic in Belgrade and Justyna Pawlak in Brussels; editing by Simon Robinson, Mike Williams and Sara Ledwith)

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Fed asks BofA to list contingency plan: report (Reuters)

(Reuters) – The Federal Reserve has asked Bank of America Corp to show what measures it could take if business conditions worsen, the Wall Street Journal said, citing people familiar with the situation.

BofA executives recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, the people told the paper.

Bank of America and the Fed declined to comment to the Journal. Both could not immediately be reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)

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Google settles pharmacy charges for $500 million: report (Reuters)

SAN FRANCISCO (Reuters) – Google Inc will pay $500 million to settle government charges that it showed ads for pharmacies that operate illegally, regulators are expected to announce on Wednesday, according to a report in the New York Times.

The investigation by the United States Department of Justice was revealed by Google in May, when the company disclosed in a regulatory filing that it had set aside $500 million for a potential settlement of a federal investigation into its advertising practices.

Media reports at the time said the investigation concerned ads for online pharmacies that sold counterfeit drugs or that sold drugs to buyers who didn't have prescriptions.

Google did not immediately return a request for comment.

The United States Attorney's office in Rhode Island, which has led the investigation, is expected to make the announcement at a press conference on Wednesday, according to the New York Times.

(Reporting by Alexei Oreskovic; Editing by Derek Caney)

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Special report: Pension scandal shakes up Venezuelan oil giant (Reuters)

CARACAS (Reuters) – Venezuela received an enviable honor last month: OPEC said it is sitting on the biggest reserves of crude oil in the world -- even more than Saudi Arabia.

But the Venezuelan oil industry is also sitting atop a well of trouble.

The South American nation has struggled to take advantage of its bonanza of expanding reserves. And a scandal over embezzled pension funds at state oil company PDVSA has renewed concerns about corruption and mismanagement.

Retired workers from the oil behemoth have taken to the streets in protest. Their beef: nearly half a billion dollars of pension fund money was lost after it was invested in what turned out to be a Madoff-style Ponzi scheme run by a U.S. financial advisor who was closely linked to President Hugo Chavez's government.

The fraud case centers on Francisco Illarramendi, a Connecticut hedge fund manager with joint U.S.-Venezuelan citizenship who used to work as a U.S.-based advisor to PDVSA and the Finance Ministry.

Several top executives at PDVSA have been axed since the scandal, which one former director of the company said proved Venezuela under Chavez had become "a moral cesspool."

Pensioners are not the only ones still wondering how such a large chunk of the firm's $2.5 billion pension fund was invested with Illarramendi in the first place.

The question cuts to the heart of the challenges facing PDVSA, one of Latin America's big three oil companies alongside Pemex of Mexico and Brazil's Petrobras.

The Organization of the Petroleum Exporting Countries issued a report last month showing Venezuela surpassed Saudi Arabia as the largest holder of crude oil reserves in 2010.

PDVSA is ranked by Petroleum Intelligence Weekly as the world's fourth largest oil company thanks to its reserves, production, refining and sales capacity, and it has been transformed in recent years into the piggy-bank of Chavez's "21st Century Socialism."

The timing of the scandal is not good for Chavez: the charismatic, 57-year-old former coup leader underwent cancer surgery in Cuba in June and is fighting to recover his health to run for re-election next year. He needs every cent possible from PDVSA for the social projects that fuel his popularity.

MULTI-TASKING

The company does a lot more than pump Venezuela's vast oil reserves. Tapped constantly to replenish government coffers, PDVSA funds projects ranging from health and education to arts and Formula One motor racing. From painting homes to funding medical clinics staffed by Cuban doctors, the restoration of a Caracas shopping boulevard and even a victorious team at the Rio carnival, there's little that PDVSA doesn't do.

Jeffrey Davidow, a former U.S. ambassador to Venezuela who now heads the Institute of the Americas at the University of California, San Diego, points to the occasion when PDVSA senior executives turned down invitations to a regional energy conference at the last minute back in May, saying they were too busy because of PDVSA's leading role in the government's "Gran Mission Vivienda" project. It aims to build two million homes over the next seven years.

"In poorly-managed societies, national oil companies tend to be the most efficient organizations, so the government gives them more work to do, instead of letting them focus on being better oil companies," Davidow told industry executives in the ballroom at a luxurious La Jolla hotel.

That's the kind of criticism that Chavez, who has nationalized most of his country's oil sector since he was elected in 1999, says is rooted in a bankrupt "imperial Yankee" mind-set.

He purged perceived opponents from PDVSA's ranks in response to a crippling strike in 2002-2003 that slashed output, firing thousands of staff and replacing them with loyalists. Since then, the company has endured one controversy after another.

There was the "maleta-gate" affair in 2007, so-called after the Spanish word for suitcase, when a Venezuelan-American businessman was stopped at Buenos Aires airport carrying luggage stuffed with $800,000 in cash that U.S. prosecutors said came from PDVSA and was intended for Cristina Fernandez's presidential campaign in Argentina. Both Fernandez and Chavez denied the charge.

There have also been persistent allegations by industry experts and international energy organizations that Venezuela inflates its production statistics -- which PDVSA denies -- and a string of accidents, including the sinking of a gas exploration rig in the Caribbean last year and a huge fire at a giant oil storage terminal on an island not far away.

In a big blow to its domestic popularity, tens of thousands of tons of meat and milk bought by PDVSA's importer subsidiary, PDVAL, were left festering in shipping containers at the nation's main port last year, exacerbating shortages of staples on shop shelves. Opposition media quickly nicknamed the subsidiary "pudreval" in a play on the Spanish verb "to rot" - "pudrir".

In an apparent damage-limitation exercise after the pension scandal, five members of the PDVSA board were relieved of their duties in May, including the official who ran the pension fund. They were replaced by Chavez loyalists including the country's finance minister and foreign minister.

Gustavo Coronel, a former PDVSA director in the 1970s and later Venezuela's representative to anti-graft watchdog Transparency International, said the fraud had been going on right under the noses of the PDVSA board.

"What this scandal shows is that Venezuela has become a moral cesspool, not only restricted to the public sector but to the private sector as well," he wrote on his blog.

"Money is dancing like a devil in Venezuela, without control, without accountability. Those who are well connected with the regime have thrown the moral compass by the side Venezuelan justice will not move a finger. Fortunately, U.S. justice will."

SHOW ME THE MONEY

U.S. investigators say Illarramendi, the majority owner of the Michael Kenwood Group LLC hedge fund, ran the Ponzi scheme from 2006 until February of this year, using deposits from new investors to repay old ones. He pleaded guilty in March to multiple counts of wire fraud, securities and investment advisor fraud, as well as conspiracy to obstruct justice and defraud the U.S. Securities and Exchange Commission. He could face up to 70 years in prison.

By those outside the circles of power in Venezuela, Illarramendi was seen as one of the "Boli-Bourgeoisie" -- someone who was already wealthy but grew much richer thanks to the "Bolivarian Revolution," named by Chavez after the dashing 19th century South American independence hero Simon Bolivar. In one widely-circulated image, Illarramendi is seen overweight and balding, wearing a dark blue overcoat and clutching a blue briefcase as he left federal court in Bridgeport, Connecticut after pleading guilty.

An ex-Credit Suisse employee and Opus Dei member in his early 40s who lived in the United States for at least the last 10 years but traveled frequently to Venezuela, Illarramendi is on bail with a bond secured on four U.S. properties he owns.

He was close to PDVSA board members and Ministry of Finance officials, but is not thought to have known Chavez personally. The son of a minister in a previous Venezuelan government, Illarramendi did enjoy some perks -- including using a terminal at the capital's Maiquetia International Airport normally reserved for the president and his ministers, according to one source close to his business associates.

His sentencing date has not been set yet, but a receiver's report by the attorney designated to track down the cash is due in September. In June, SEC regulators said they found almost $230 million of the looted money in an offshore fund.

That was just part of the approximately $500 million Illarramendi received, about 90 percent of which was from the PDVSA pension fund, according to the SEC.

PDVSA has assured its former workers they have nothing to worry about, and that the money will be replaced. But what concerns some retirees are allegations the company may have broken its own rules for managing its pension fund, which should have provided for more oversight by pensioners.

A representative of the retirees should attend meetings where the use of the fund is discussed, but no pensioners have been called to attend such a meeting since 2002.

PDVSA's investment in capitalist U.S. markets may seem to be incongruous given the president's anti-West rhetoric, but the scale of such transfers is not known, and the investment options for such funds at home in Venezuela are sharply limited, not least by restrictive currency controls.

Energy Minister Rafael Ramirez told Reuters that Illarramendi only had an advisory role with PDVSA, and that it ended six years ago. So quite how he came to be managing such a big chunk of the pension fund is a hotly debated topic. Ramirez said the pension fund had been administered properly, and that the losses were of great concern to the company.

In July, PDVSA boosted pension payments to ex-employees by 800 bolivars a month, or about $188. The government also allocated nearly half the income from a new 2031 bond issue of $4.2 billion to the company's pension fund -- probably to replenish deposits lost in the scandal.

Still, ex-PDVSA worker Luis Villasmil says his monthly stipend barely meets the essentials for him, his wife, a diabetic son and a niece. One morning in April, he rose early and met several dozen other PDVSA retirees to march in protest to the company's local headquarters in Zulia, the decades-old heartland of Venezuela's oil production.

"I never thought we would be in this situation," the 65-year-old told Reuters with a sigh. "I think PDVSA should show solidarity with the retirees and pay their pensions whatever happens because it is responsible. But that's not the heart of the issue, which is to recover the money if possible."

Ramirez, who once proclaimed that PDVSA was "rojo rojito" (red) from top to bottom, says the firm's 90,000 staff have nothing to worry about. "Of course we are going to support the workers," he told Reuters in March. "We will not let them suffer because of this fraud. We have decided to replace it (the lost money) and to make ourselves part of the lawsuit (against Illarramendi)."

ORINOCO FLOW

The latest scandal comes at a time when observers are focused on the future of PDVSA, given Chavez's uncertain health, next year's election and OPEC's announcement on reserves.

The producer group said in July that Venezuela leapfrogged Saudi Arabia last year to become the world's no.1 reserves holder with 296.5 billion barrels, up from 211.2 billion barrels the year before.

"It has been confirmed. We have 20 percent of the world's oil reserves ... we are a regional power, a world power," Chavez said during one typical recent TV appearance, scribbling lines all over a map to show where planned refineries and pipelines to the coast would be built.

The new reserves were mostly booked in the country's enormous Orinoco extra heavy belt, a remote region of dense forests, extraordinary plant life and rivers teeming with crocodiles and piranhas.

And there lies the rub. Not only is the Orinoco crude thick and tar-like, unlike Saudi oil which is predominantly light and sweet, it is also mostly found in rural areas that have little in the way of even basic infrastructure. It costs much more to produce and upgrade into lighter, more valuable crude.

So hopes now rest on a string of ambitious projects that Venezuela says will revitalize a declining oil sector, eventually adding maybe 2 million barrels per day (bpd) or more of new production to the country's current output of about 3 million bpd, while bringing in some $80 billion in investment.

The projects are mostly joint ventures with foreign partners including U.S. major Chevron, Spain's Repsol, Italy's Eni, Russian state giant Rosneft and China's CNPC, as well as a handful of smaller companies from countries such as Japan, Vietnam and Belarus. Even after the nationalizations of the past, investors clearly want a seat at the Orinoco oil table.

In June, Ramirez announced new funding for Orinoco projects this year of $5.5 billion through agreements with Chinese and Italian banks.

The question remains: will PDVSA have the operational capacity required as the lead company in each project, and will it be able to pay its share?

"Processing that extra heavy crude requires a lot of capital and equipment, and the climate is not good for that at the moment," said one regional energy consultant who has worked with PDVSA and asked not to be named.

There may be billions of barrels in the ground, but the pension scandal will only underline the risks going forward for foreign companies with billions of dollars at stake.

(Additional reporting by Emily Stephenson in Washington; Editing by Andrew Cawthorne, Claudia Parsons and Michael Williams)

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Retailers report solid sales gains for July (AP)

NEW YORK – Many retailers posted solid sales during the kickoff to the back-to-school season as discounts and high temperatures in July drove shoppers to air-conditioned malls. But merchants worry that momentum won't continue through the remainder of the second-biggest shopping period of the year as the weather gets cold and the deals dry up.

Despite a flow of bad economic news that kept consumer confidence shaky, a number of retailers reported July sales on Thursday that beat Wall Street estimates, including discounter Target, department store Macy's, and luxury chain Saks. The International Council of Shopping Centers' preliminary tally of retailers' sales at stores open at least a year — a key indicator of a merchant's health — was up 4.6 percent, a slower pace than June's 6.9 percent gain but in line with forecasts.

While the numbers signal a strong start to the back-to-school shopping period, which runs roughly between mid-July through September, there are concerns that shoppers will soon return to their habits of the Great Recession by focusing on necessities and waiting for sales. That could be a big problem for retailers, which are raising prices in order to offset with rising fuel, labor and other production costs.

"Early going, July looks like it's shaping up to be a solid month despite all the economic headwinds," said Ken Perkins, president of RetailMetrics LLC., a research firm. "But the concern is whether shoppers will buy back-to-school items at full price."

The concern stems from the fact that while the recession officially ended in June 2009, many shoppers, particularly in the low-to-middle income bracket, feel like it never ended. After all, the economic picture for most has not improved.

For many, wage gains haven't kept pace with higher household costs for food and gas, which is $1 more per gallon than a year ago. Home values remain depressed, and companies are not hiring. Adding to that, this fall, shoppers will face higher price tags as retailers try to offset higher labor costs in China and prices of raw materials.

In this environment, retailers that cater to higher-income shoppers have fared the best. The biggest standouts have been luxury retailers like Saks Inc., which had a 15.6 percent increase for the month. That was much higher than the 8.5 percent forecast

Wholesale club operator Costco Wholesale Corp. also managed to attract higher income shoppers and others who like the treasure hunt experience in its stores. The company, which is based in Issaquah, Wash., said revenue from stores open at least a year climbed 10 percent in July, compared with the 8.6 percent analysts surveyed by Thomson Reuters had predicted.

Meanwhile, those catering to the low- and middle-income shoppers have been hurt the most by the economic downturn. Still, many of those retailers posted sales gains during the month.

Target, which has been beefing up its grocery business, said revenue at stores opened at least a year rose 4.1 percent in July as shoppers picked up more groceries and health and beauty products. Target said consumers spent more per transaction and it expects the key revenue measure to rise in the low- to mid-single digits in August. The company said back-to-school sales are off to "a solid start."

Many department stores also had respectable results as they drew shoppers in with exclusive merchandise and sales on select items. J.C. Penney Co.'s 3.3 percent beat the 2.3 percent estimate from Wall Street. And Macy's Inc. posted a 5 percent gain, which exceeded the 4.1 percent forecast.

Macy's, which also runs Bloomingdale's stores, benefited from growing online sales. CEO Terry Lundgren also said that "fresh, interesting and distinctive merchandise," a "re-energized" culture, and better employee sales skills, also helped.

The hope among retailers is that the July sales momentum will continue into August, with shoppers picking up a few fall items at full price while buying some summer bargains, too. But surveys from the National Retail Federation, Deloitte L.L.P. and other groups show that customers plan to buy only what the family needs, focus on fat discounts and reuse last year's items.

"It's going to be tough for retailers to succeed because of the economic uncertainty," said Stifel Nicolaus analyst Richard Jaffe.

The back-to-school season is important for retailers because it accounts for 16.1 percent of annual retailers' revenues, according to the International Council of Shopping Centers. It's also an opportunity for retailers to gain insight into consumers' shopping habits heading into the biggest shopping season of the year, which starts on the day after Thanksgiving.

Retailers will get a better sense of how shoppers are spending during the back-to-school shopping season in August. So far, analysts and retail trade groups are sticking to their forecasts for the season, ranging from unchanged to 3 percent compared with a year ago. The National Retail Federation expects families to spend $603.63 on back-to-school items, from clothing to supplies, down slightly from last year's $606.40.

But not every retailer posted encouraging results during the beginning of the back-to-school season. Gap said it had a 5 percent drop in revenue at stores opened at least a year in July, worse than the 0.7 percent decline that analysts had expected. Its namesake division, Old Navy and Banana Republic as well as its overseas business, all posted drops. Still, the retailer offered a profit outlook that was above Wall Street estimates because of improvements in inventory.

Department-store chain Kohl's Corp. also posted disappointing results, with a 4.6 percent drop. That was well below the 3.4 percent gain that Wall Street analysts had expected. And teen retailer Aeropostale Inc. had a 14 percent drop in revenue at stores opened at least a year.

"We are very disappointed with our second-quarter financial results that were clearly unacceptable," said Thomas P. Johnson, chief executive officer at Aeropostale in a statement.

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Special Report: Murdoch affair spotlights UK's dirty detectives (Reuters)

LONDON (Reuters) – In a small, semi-detached house overlooking a park in the unlovely south London suburb of Croydon, Jorge Salgado-Reyes sits at a glass-topped desk in his living room plying his trade as a private eye.

In the corner, a goldfish glides around a water tank. A flat screen television hangs from the wall alongside replica samurai swords and photographs of landscapes. Black leather sofas line two of the walls.

The phone rings. Salgado-Reyes answers it, jots down a few notes and consults his screen. "A non-molestation order," he says, referring to a court order he is being asked to monitor.

Charging up to 75 pounds ($120) an hour, the dapper, goateed gumshoe takes on cases that range from the banal to the tragic -- tracing missing people, serving court orders, monitoring "anti-social behavior" such as vandalism or noisy neighbors, checking cases of benefit fraud, or simply carrying out checks for people who are convinced, rightly or wrongly, that their house is bugged.

Salgado-Reyes is the acceptable face of private investigation in Britain. But there's another side to the industry, a subculture in which sleuths tap police contacts and criminal informants for information that they then sell on to tabloid reporters; where private detectives excavate nuggets that can be used to embarrass politicians or celebrities and titillate readers.

Of all the dark corners the country's phone-hacking scandal has lit up over the past two weeks -- illegal tabloid tactics, cozy ties between newspapers and the police, the press's influence over politicians -- perhaps none are murkier than London's private investigator underworld.

One former Metropolitan Police detective who spoke on condition of anonymity told Reuters that in some cases the line between private investigation and organised crime is nonexistent.

"A number of private investigators now operate on behalf of criminal enterprises to steal information, to try to identify potential sources that are giving information against them, to identify competitors, to find out where competitors keep drugs," the former detective said.

"And they are used by the underworld to try to infiltrate law enforcement to find out what law enforcement knows. It's always been like that, in fairness, but information was never in the plentiful state that it is now."

Investigators like Salgado-Reyes say their less scrupulous counterparts are tainting the industry.

"I know for a fact that there are some people convicted of offences who are working as PIs," he told Reuters. "If PIs are providing services for organised crime, then I think we are talking about people who are already part of the criminal world."

That could now change. An advocacy group called Hacked Off that campaigns against press intrusion is demanding that the most notorious snoopers face an official inquiry into the hacking scandal, where their testimony might pose a threat to figures in Britain's establishment. It could also lead to tighter laws around the industry, which is currently unregulated.

"These are criminals masquerading as investigators," said Tony Imossi, president of the 98-year-old Association of British Investigators (ABI), the oldest representative body of private detectives in Britain.

"ALERT, CUNNING AND DEVIOUS"

One detective in particular may hold the key to the News of the World scandal and even the political fortunes of Prime Minister David Cameron. Jonathan Rees, a convicted criminal who was once acquitted of a murder charge, regularly sold information to the News of the World and other newspapers, according to police documents obtained by anti-corruption researcher Graeme McLagan.

In the 1990s, Rees was a super-broker of scurrilous information. Unusually prolific, he tended not to use the voicemail hacking most closely associated with the News of the World. (The Guardian newspaper reported on July 4 that the voicemail of murdered schoolgirl Milly Dowler had been hacked by a News of the World investigator, triggering a public outcry.)

Rees's speciality was buying information from cops and civil servants and arranging drug stings, according to McLagan, author of "Bent Coppers," a study of graft inside London's police, also known as Scotland Yard. Rees would then tip off both police and press to strengthen contacts and make money, he wrote.

Asked to respond to the allegations, Rees's lawyer, Nigel Shepherd, told Reuters by email that it was "not only News International that was implicated in unlawful enquiries... the media think only in terms of a witch hunt against News International." He did not elaborate.

According to the Guardian, Rees's targets have included members of the royal family, central bank officials, rock stars Mick Jagger and George Michael, the family of Peter Sutcliffe, a notorious serial killer dubbed the Yorkshire Ripper, and leading politicians.

Rees even tried to undermine the Yard's internal efforts against corruption by spreading rumors about some of the people associated with it, McLagan reported.

"They are alert, cunning and devious individuals who have current knowledge of investigative methods and techniques which may be used against them," said an internal police report into Rees and his associates cited by McLagan.

"Such is their level of access to individuals within the police, through professional and social contacts, that the threat of compromise to any conventional investigation against them is constant and very real."

Rees has not been convicted of an offence in relation to his illicit news-gathering for the media. But he has emerged as a key figure in the scandal because he resumed working for the News of the World in 2005 after serving a jail term for conspiracy to pervert the course of justice in a child custody case.

By then, the News of the World was edited by Andy Coulson. Coulson was forced to quit in 2007 when the newspaper's royal editor and another private investigator, Glenn Mulcaire, were jailed for hacking into voicemail messages of aides to the royal family. The editor, who has always maintained he had not known about the phone-hacking, went on to work as Cameron's communications chief.

"CONFIDENCE IN JUSTICE AT STAKE"

In April 2008, Rees and three others were arrested on suspicion of the murder of Rees's former business partner, Daniel Morgan, who had been found dead outside the Golden Lion pub in Sydenham in March 1987.

Morgan was lying beside his BMW with an axe sticking out of his head.

His family says he had discovered information about police corruption in the weeks before his killing -- a development it alerted police to more than 20 years ago. In the weeks before his murder, Morgan had repeatedly expressed concerns over corrupt police officers in south London, they say.

Rees was charged with conspiracy to murder, but the case remains one of Britain's longest unsolved murder inquiries, in part because of police malpractice. In March 2011, commenting on the failure of the case, Detective Chief Superintendent Hamish Campbell said the initial probe had been flawed and "police corruption was a debilitating factor."

The case against Rees failed due to procedural flaws: the prosecution said it could not guarantee that police could satisfy rules protecting the right to a fair trial.

Documents the defense wanted to see had gone missing. And on two occasions, material not disclosed to the defense was found in the police's possession. The judge said the police had had ample grounds to prosecute but the decision to pull the case was principled and right. He recorded a 'not guilty' verdict.

Shepherd, Rees's lawyer, told Reuters: "We would point out that Mr. Rees has been found wholly innocent of this charge, having been acquitted on 11th March 2011."

MPs now want to know what Coulson knew about Rees's past. Coulson resigned from his job with Cameron in January this year just as a new police investigation into phone-hacking gathered pace. He did not respond to a request for comment sent through his lawyer.

The Prime Minister says any warnings of Coulson's possible links to phone-hacking never reached him. But since Rees's past had been known to several senior policemen as far back as the 1990s, critics ask, why did no one in government raise the alarm? What happened to warnings from Alan Rusbridger, editor in chief of the Guardian, or Cameron's coalition partner, Liberal Democratic Party leader Nick Clegg, both of whom say they alerted Cameron's office to Coulson's link to Rees?

Rebekah Brooks, Coulson's predecessor as News of the World editor, told lawmakers on Tuesday she had never met Rees but agreed it "seems extraordinary" that he was rehired after his conviction. She said she did not know what he did for the company.

"Public confidence in the criminal justice system is at stake," Jenny Jones, a member of the Metropolitan Police Authority, which oversees the force, told Reuters. Jones argues the judicial inquiry into the News International affair will need to probe the role played by private eyes.

"I don't think any of the (Metropolitan Police Commissioners) have really tackled it successfully and we still need to clear this up," said Jones. "The time of Jonathan Rees is exactly how far back we need to go to address corruption involving officers in the Met and private detectives."

Alastair Morgan, Daniel Morgan's brother, told Reuters the "recent revelations have shown how rotten our culture is -- the police culture, the political culture, the culture inside News International. This whole episode has shown what sort of dirt we live in."

"MUTUAL ADMIRATION SOCIETY"

John O'Connor, former head of the specialist detectives unit known as the Metropolitan Police Flying Squad, wrote in the Independent newspaper that the roots of police and News International cooperation on stories go back to the 1980s. In an era of tension between employers and labor unions, he said, the police would help the company get its papers to market during strikes.

In the process, Scotland Yard and company executives formed friendships, he wrote.

"This mutual admiration society worked very well for a time. Information passed freely both ways. The police benefited from undercover operations run by the newspapers, and in return the papers got their exclusive stories. ... The culture of police officers mixing with journalists was encouraged, and little thought was given to the potential of misconduct."

Soon the papers were using their own private detectives like Rees and Mulcaire, the snoop who listened in on Milly Dowler's phone.

In May 2006, the Information Commissioner (ICO) published a ground-breaking report into the trade in illicit data. The state-backed watchdog monitors how Britain handles confidential personal information. Its report detailed what it called "evidence of a pervasive and widespread 'industry' devoted to the illegal buying and selling of such information."

In a study of just one private detective, Steve Whittamore, the ICO discovered that 305 different journalists had instructed him to obtain about 13,343 different items of information over a three-year period.

While it is not illegal for newspapers to use private eyes, the ICO said it suspected that around 11,345 of the items were "certainly or very probably" in violation of data protection laws.

A second ICO report in December 2006 identified the publications that had contacted Whittamore. The top five buyers among news media were the Daily Mail, Sunday People, the Daily Mirror, the Mail on Sunday and the News of the World.

The offence of deliberately and willfully misusing private data in Britain is punishable only by a fine. Since 2004 the ICO has prosecuted at least 14 cases of private detectives obtaining information illegally, but fines seldom go above a few hundred pounds.

The ICO has recommended judges be given the option to jail offenders, but five years on, that proposal has gone nowhere. In a joint submission to the ICO, newspaper proprietors said custodial sentences would have "a serious chilling effect on investigative journalism."

"DO ME A Favor: CAN YOU CHECK IT?"

The publicity surrounding the role of private detectives in the phone-hacking scandal infuriates many mainstream operators who say regulation is long overdue.

"If money is exchanged from journalists to serving police officers it's abhorrent," said the ABI's Imossi, who estimates there are 3,500 private investigators in Britain, of whom only about 500 are members of his organization. It vets new members and tests their expertise.

Imossi says friendships can blur the choices that otherwise honorable serving and former police detectives make in handling data, but they should have the discipline to avoid temptation.

After a few pints together in the pub, he says, "someone says 'do me favor, I'm interested in this registration number of a vehicle, can you check it?' The serving officer should have the discipline to say 'No you're bang out of order. It's not going to be done.

"But four pints of lager later their judgment is impaired and, 'Yes, it's no hassle, I can do it.' It's a difficult situation. They have my sympathy. But I'm sorry, it's the law of the hand. If you break it, that's it."

Private investigator Salgado-Reyes says he believes most in the business are honest. "I know for a fact that there are some people convicted of offences who are working as a PI ... So regulation would address that," he said.

"Having said that, if you are prepared to break the law, you can get away with it. So therefore you need some kind of team to go after these people."

ORGANISED CRIME

ABI General Secretary Eric Shelmerdine says there is a legitimate need for private sector investigators. "Fraud in the UK alone runs into billions every year. If you took the professional private investigators out of the picture then the losses would be even greater," he said.

Mark Button, a Reader in Criminology at the University of Portsmouth, told Reuters the detectives need regulating.

It is "perverse" that under UK law a security man who sits and monitors CCTV screens all day needs a license, whereas a private detective who gathers information does not, he said.

Powerful new spy technology is easily available -- legal to buy but often illegal to operate, due to anomalies in legislation -- making the danger that much greater.

"There's greater potential now because they've realized that information is a very valuable commodity not just to protect themselves, but from which substantial amounts of money can be earned," the former Metropolitan Police detective said.

Police surveillance bugs are subject to close oversight, he said: a private investigator "can do as he likes."

Salgado-Reyes says the News International scandal has unfairly stigmatized his trade.

"Hacking, blagging -- we've been tarred with that brush. But most PIs are working in an ethical manner. Why would I cut a corner by using illicit methods, when I am being paid by the hour to do the job correctly and legally?"

(Editing by Simon Robinson and Sara Ledwith)

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Hospital denies 'Mubarak in full coma' report (AFP)

CAIRO (AFP) – A Red Sea hospital on Sunday denied a report that Egypt's ailing former president Hosni Mubarak had fallen into a "full coma," two weeks before he is due to go on trial for murder and corruption.

"The former president is in a full coma after his health suddenly deteriorated," state television quoted Mubarak's lawyer as saying.

But minutes later, the head of the hospital in the Red Sea resort of Sharm el-Sheikh where Mubarak is being treated denied that the former strongman, now 83, had gone into a coma, the channel reported.

"Sharm el-Sheikh hospital chief denies reports of Mubarak coma," according to a scrolling headline on the television.

However, another medical source was less clearcut, telling AFP: "It seems there has been some deterioration in his health, but the reports of a coma are still unclear."

Mubarak has been in the Sharm el-Sheikh hospital since April when he suffered a heart attack during questioning over alleged fraud and the killing of protesters during the uprising which ousted him in February.

The former president has denied accusations he was involved in corruption and ordered the killing of protesters during the unrest that broke out on January 25, leaving nearly 850 people dead and more than 6,000 injured.

"I would never participate in the killing of Egyptian citizens and would never seize state money and I have never acquired anything illegally," he told investigators, in a transcript published by the independent daily Al-Dustur.

"I gave orders to deal with the protesters without violence, peacefully, without the use of weapons, or bullets or even carrying weapons during the protests," Mubarak reportedly said.

The former president is due to go on trial on August 3.

On Saturday, officials said Mubarak's trial would most likely be held in Sharm el-Sheikh for security reasons.

He could either be put in the dock or questioned by court officials in his hospital room, with the rest of the trial proceedings taking place in a court room, the official said.

An interior ministry official told AFP the trial location "has not been completely settled, but Mubarak will most likely be tried in Sharm el-Sheikh."

It was not immediately clear whether his two sons would be transferred to a Sharm el-Sheikh prison from Cairo if the hearings take place in the resort.

Protesters who have staged a sit-in for more than a week in Cairo's Tahrir Square, epicentre of the demonstrations that ousted Mubarak, demand his transfer to Cairo and accuse the ruling military of delaying the trials of former regime officials.

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Special Report: Inside Rebekah Brooks' News of the World (Reuters)

LONDON (Reuters) – "It was the kind of place you get out of and you never want to go back again." That's how one former reporter describes the News of the World newsroom under editor Rebekah Brooks, the ferociously ambitious titian-haired executive who ran Britain's top-selling Sunday tabloid from 2000 to 2003.

Journalists who worked there in that period describe an industrialized operation of dubious information-gathering, reporters under intense pressure attempting to land exclusive stories by whatever means necessary, and a culture of fear, cynicism, gallows humor and fierce internal competition.

"We used to talk to career criminals all the time. They were our sources," says another former reporter from the paper who also worked for Murdoch's daily tabloid, the Sun. "It was a macho thing: 'My contact is scummier than your contact.' It was a case of: 'Mine's a murderer!' On the plus side, we always had a resident pet nutter around in case anything went wrong."

The 168-year-old paper published for the last time last Sunday after exposure of its widespread use of phone-hacking triggered a scandal that has engulfed Rupert Murdoch's UK newspaper group News International, its New York-based parent company News Corp, and Britain's political classes and police.

Brooks, one of two top Murdoch executives who resigned on Friday, has maintained she neither sanctioned nor knew about the phone hacking. The Guardian newspaper reported the paper's targets went beyond celebrities to include murdered schoolgirl Milly Dowler and the bereaved relatives of dead soldiers. Murdoch has apologized personally to the Dowler family.

Four former employees of Britain's best-selling Sunday tabloid have told Reuters that Brooks' denials are simply not credible. They say people on the paper's newsdesk, the hub that directs news coverage, were regularly grilled about the top stories by Brooks and later by her successor Andy Coulson, who resigned over the phone-hacking scandal in 2007 and went on to become Prime Minister David Cameron's spokesman.

"They went in and they were cross-examined for two hours every day. And it was all about the genesis of all the stories," the first ex-reporter, who worked at the paper for seven years, told Reuters.

The News of the World's reporting methods were first questioned when it published a story about an injury to Prince William's knee in 2005, prompting fears his aides' voicemail messages were being intercepted. The royal family complained to police. More than a year later the paper's royal editor Clive Goodman and private detective Glenn Mulcaire were jailed for six months for conspiracy to access phone messages.

Coulson, by then the newspaper's editor, resigned immediately, although like Brooks he has repeatedly denied any knowledge of phone-hacking. Until recently, the paper continued to maintain that the hacking was isolated to Goodman.

Former employees say that's hard to believe, not only because of the story approval process, but also because budgets were so tightly controlled that payments for such services would not have gone unnoticed.

"It's simply not conceivable that somebody who was editor wouldn't have known," says the journalist who spent seven years at the paper, covering general news.

Neither Brooks nor Coulson could be reached for comment, and News International declined comment for this story beyond saying: "There are numerous views from former employees and we are not going to counter each one."

Reuters is a competitor of Dow Jones Newswires, the financial news agency that News Corp acquired along with the Wall Street Journal in 2007.

SURVIVALISTS

When Brooks became editor, at age 31, she had a brief to broaden the paper's appeal by intensifying the focus on celebrity and showbusiness news and publishing fewer of the harder stories the paper had been known for -- politicians caught taking illegal drugs or footballers caught with their pants down. More and more front pages were taken over by stories about C-list celebrities, such as contestants in the TV reality show "Big Brother," to the irritation of the old guard.

At the same time, the pressure to get exclusive stories was so intense that dubious practices were barely questioned. "They were 'dodgy business HQ'. I'm not sure if people even realized it was illegal. It was a don't-get-caught culture," said the reporter of seven years' standing. New staff would be given the cold shoulder until they'd proved themselves to be "thoroughly disreputable" so their colleagues could trust them.

"It was no place for anyone to pipe up and say: 'This doesn't seem ethical to me.' That would have made you a laughing stock."

Journalists didn't explicitly ask for private investigators to get involved in their work, but help would be provided if a reporter got stuck on a promising story. "How it arrived on your desk was a bit of a mystery. You didn't know and you didn't ask," said the reporter. "Every week, somebody's mobile phone records, somebody's landline records, sometimes even somebody's medical records. It was common enough not to be notable."

A fifth former News International employee who worked with News Of the World journalists at this time said its reporters were under "unbelievable, phenomenal pressure," treated harshly by bosses who would shout abuse in their faces and keep a running total of their bylines. Journalists were driven by a terror of failing. If they didn't regularly get stories, they feared, they would be fired. That meant they competed ruthlessly with each other.

Because the News of the World was a Sunday paper, where a hot story on Tuesday could be useless five days later, pressure was much more intense than at the Sun, said the ex-journalist who worked at both titles.

"The News of the World was much more secretive than the Sun. At the Sun, you knew what was going on, what people were working on. In the News of the World you never knew what anyone was working on. They'd send you out to a job and wouldn't tell you what it was for. It'd be: 'You're going to meet a man. Don't ask his name and whatever you do don't get him excited. Just take his statement and leave,'" he said.

"You became a complete survivalist."

Reporters say they lived in constant fear of byline counts which weeded out those who had filed the fewest stories. "They were always seeking to get rid of people because it was a burn-out job. Their ideal situation was you work your nuts off for six months and they let you work there another six months," said the general news reporter.

"Every minute you spent there you felt that your employer hated you."

DESTROYING LIVES

Charles Begley, an ex-News of the World reporter, has spoken out about the bullying culture. He said he felt close to breaking-point when, three hours after the September 11, 2001 attacks on New York's twin towers, he was ordered to appear at the paper's daily conference dressed in a Harry Potter outfit he had been given to help the tabloid capitalize on the craze for the books about the boy wizard.

"At that time, we were working on the assumption that up to 50,000 people had been killed," he said then, according to tapes published in 2002 by the Daily Telegraph of a conversation between him and assistant news editor Greg Miskiw. "I was required to parade myself around morning conference dressed as Harry Potter."

It was during this conversation that Miskiw made a comment that was to become notorious in Britain: "That is what we do -- we go out and destroy other people's lives."

Contacted for this story, Begley said he did not wish to comment further on his experiences but stood by statements he made at the time.

The reporter who worked on both the Sun and the News of the World recalls that at one stage, every journalist in the News of the World newsroom was ordered to apply to become a contestant on "Big Brother," in the hope the paper could do an undercover report on it.

"Someone came round the office with all these application forms and we were all given a three-line whip to try to get on that bloody show. They were desperate to get someone on there and 'expose' it all. Everyone was moaning about it," he said.

The same journalist also described how four reporters were sent off as a punishment to spend a stint on a crack-ridden estate in Bristol and write a feature about it. They never went, he said.

Matt Driscoll, a sports reporter sacked in April 2007 while on long-term sick leave for stress-related depression, was later awarded 800,000 pounds ($1.3 million) for unfair dismissal. The employment tribunal found that he had suffered from a culture of bullying led by then-editor Coulson.

"Nobody ever felt secure there and that's the way they liked it. On the edge, scared, insecure," said the general news reporter.

SAVING MONEY

Contrary to a popular perception that the tabloid threw large sums of money around to get stories, the news budget was extremely tightly controlled, the journalists said. One described how entire expense reports might be struck through with a red line without any reason given.

Readers who supplied a front-page story would typically be paid about 10,000 pounds, while story pitches negotiated by a publicist would command at least twice that. Smaller user-submitted stories would fetch a couple of hundred pounds. On Saturday afternoon, when it was too late for a reader to sell a story to another paper, their fee would often be reduced.

This is another reason it was hard to believe senior editors were not aware of phone hacking and other expensive illegal services provided by outsiders, the ex-reporters told Reuters. Mulcaire, the private investigator later jailed for phone hacking, was paid more than 100,000 pounds a year by the News of the World.

"No newspaper editor would not know what a 102,000 pound budget was used for. They knew about every 50 quid," said the long-term freelancer.

Eavesdropping on voicemail or obtaining call logs was initially a money-saving measure, according to the former employees. Rather than committing a reporter to stake out a venue for as long as it took to catch out a couple having an affair, for example, voicemails could first be scrutinized to establish the time and place of a rendez-vous, saving the reporter time and the paper money.

As its uses became apparent, it was employed more and more. The general news reporter said he was first shown how to listen in to people's cellphone voicemail by a colleague in the 1990s.

"It became the course of first resort rather than last," the long-term freelancer told Reuters.

CYNICAL

But the focus on celebrities and reality television stars was causing problems inside the paper.

"It was a ridiculously cynical approach to news," says Peter Burden, author of the 2008 book "News of the World? Fake Sheikhs & Royal Trappings." "They just thought: here are these endless people that Joe Public are interested in because of 'Big Brother', and they thought they could do what the hell they liked with them and they raided them rotten, them and their families."

Editors would then often use damaging stories as bargaining chips, trading them for future access to public figures or to build relationships with stars. Often, the paper would drop the story they had altogether and publish something more sympathetic.

"It would be things like: 'We know you were sleeping with your secretary but we'll keep it out of the paper if you give us the story about how you were given away as a child," said the long-term freelancer.

"They used to call stories 'levers'," said the general news reporter. "They weren't necessarily interested any more in using the story you'd proved or got past the lawyers. They were interested in using the story as leverage in order to get a different story. Sometimes the kind of story that you would bargain as an alternative wasn't actually the truth. It annoyed a lot of reporters.

"It was relationship-building for them. Basically, she (Brooks) was trading in your hard work to be friends with influential PRs. They used the stories to bank credit with influential people. It then made the whole raison d'etre of the place something different."

MACHO CULTURE

Brooks did little to change the paper's culture. Former employees say she could equal her male counterparts in swearing, and would join the men for a drink in the pub. She could also be fearsome, intimidating even the aggressive Miskiw.

"Part of that macho culture was that you would laugh at the risk and the dodgy illegality you might find yourself involved in," said the general news reporter.

It became practically a matter of honor not to use respectable journalistic methods, the reporters said.

"The whole idea of having friendly relations with someone and getting them on the record -- that was just weird. You had to get stuff on someone and then confront them," he said.

In Brooks's resignation statement on Friday, she said: "I feel a deep sense of responsibility for the people we have hurt ... I now need to concentrate on correcting the distortions and rebutting the allegations about my record as a journalist."

(Additional reporting by Olesya Dmitracova and Stephen Mangan in London and James Mackenzie in Rome; Editing by Simon Robinson and Sara Ledwith)

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Ireland unveils new report on Catholic child abuse (AP)

DUBLIN – A new investigation into the Catholic Church's chronic cover-up of child abuse found Wednesday that a rural diocese and its bishop ignored Irish church rules requiring all suspected molestation cases to be reported to police — and the Vatican encouraged this concealment.

The government, which ordered the two-year probe into 1996-2009 cover-ups in the County Cork diocese of Cloyne, warned its findings suggest that parishes across Ireland could pose a continuing danger to children's welfare today.

Justice Minister Alan Shatter pledged to pass a new law making it an imprisonable crime to withhold knowledge of suspected child abuse as he published the investigation into the Cloyne diocese in southwest Ireland.

Shatter said previous pledges by Irish church leaders to place Irish civil law first and report all abuse cases dating back to 1995 had been "built on sand."

The 341-page Cloyne report is the fourth such government-ordered probe into how church leaders for decades protected their own reputation — and their own pedophile staff members from the law — at the expense of Irish children. The previous reports and scandals since 1994 have decimated the church's reputation and standing in this once-devoutly Catholic nation.

Wednesday's report by an independent panel of investigators found that former Cloyne Bishop John Magee, who resigned last year without admitting he'd covered up crimes, and senior aides failed to tell police anything about most abuse reports from 1996 to 2009 and withheld basic information in all cases.

It documented a catalog of errors in the church's suppression of information on 19 suspected child-abusing priests, only one of whom is currently facing criminal charges.

Shatter and Children's Minister Frances Fitzgerald called Magee's failures particularly shocking because they were so recent and followed a series of Irish church initiatives to protect children from abuse.

"That's the most horrifying aspect of this document. This is not a catalog of failure from a different era. This is not about an Ireland of 50 years ago. This is about Ireland now," Fitzgerald said.

The primate for Ireland's 4 million Catholics, Cardinal Sean Brady, and the official who replaced Magee in Cloyne, Archbishop Dermot Clifford, issued immediate apologies and pledged greater openness and cooperation with state authorities. Brady himself last year admitted he helped to conceal the crimes of one serial-rapist priest from Irish authorities in the mid-1970s but rejected calls to resign.

Magee, a former senior Vatican official and private secretary to Popes Paul VI, John Paul I and John Paul II, said he took "full responsibility" for what he called "the flawed implementation of the church procedures."

"I now realize that I should have taken a much firmer role in ensuring their implementation," said Magee, who was the fifth Irish bishop to resign amid accusations they encouraged the endangerment of children.

But Irish government leaders and abuse-rights advocates said the Vatican also bore heavy responsibility particularly for encouraging the most recent known cover-ups.

They and the investigators emphasized that Ireland's bishops formally agreed in 1995 to begin reporting suspected child-abuse cases to police in rules that became valid Jan. 1, 1996. The Irish church took that step after the first abuse victims went public with their lawsuits, a development that opened the floodgates for more than 13,000 such cases.

But a confidential January 1997 letter from the Vatican's diplomat in Ireland to the Irish bishops warned them that the Irish church's child-protection policies were invalid under Catholic canon law; those internal church laws must be respected foremost; and any accused priests were likely to have any punishments successfully appealed in Rome.

That letter from the late Archbishop Luciano Storero, then Pope John Paul II's ambassador to Ireland, dismissed the Irish policy as representing "a study document." The Associated Press was the first media organization to publish that letter in full in January.

Shatter said the Vatican's criticisms of the 1996 child-protection initiative "was entirely unhelpful, giving comfort and support to those who dissented from the guidelines. We want to say as clearly as we can that this approach, when the state was entitled to rely on assurances about the operation of the guidelines, was wholly unacceptable."

The Vatican offered no immediate response.

In his 2010 pastoral letter to Ireland's Catholics condemning pedophiles in the ranks, Pope Benedict XVI faulted bishops for failing to follow canon law and offered no explicit endorsement of Irish child-protection efforts by the Irish church or state. Benedict was widely criticized in Ireland for failing to admit any Vatican role in covering up the truth.

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DSK accuser sues NY Post for "prostitute" report (Reuters)

NEW YORK (Reuters) – The hotel maid who accused former IMF chief Dominique Strauss-Kahn of sexual assault sued the New York Post and five of its journalists for libel on Tuesday for reporting that she was a prostitute.

The 32-year-old Guinean immigrant accused the Post of publishing defamatory articles between July 2-4 "in an apparent desperate attempt to bolster its rapidly plunging sales."

The suit filed in Bronx state court seeks damages to be determined at trial for articles it said the Post knew were false or should have known were false before they were published.

A spokesman for the Post was not immediately available for comment.

On Friday prosecutors called into question the woman's credibility for a series of lies about her background including a false story about being gang-raped on her application for U.S. asylum.

The Post reported on Saturday that the Sofitel housekeeper "was doing double duty as a prostitute, collecting cash on the side from male guests." An article the following day reported that the housekeeper "continued to work as a prostitute in a Brooklyn hotel where she was stashed by prosecutors."

"All of these statements are false, have subjected the plaintiff to humiliation, scorn and ridicule throughout the world by falsely portraying her as a prostitute or as a woman who trades her body for money and they constitute defamation and libel per se," the suit said.

(Reporting by Noeleen Walder and Jennifer Golson; Editing by Daniel Trotta and Sandra Maler)

(This article has been modified to show the suit has been filed in the Bronx, not Manhattan; fixes number of defendants)

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Report: 197 migrants feared drowned off Sudan (AP)

KHARTOUM, Sudan – A ship carrying African migrants bound for Saudi Arabia has caught fire and 197 people are feared drowned off Sudan's northeastern coast, a semiofficial news agency reported Tuesday.

The Sudan Media Center said three of the migrants were rescued. The ship had launched from the Red Sea State and sailed for four hours in Sudanese territorial waters before the blaze began, according to the news agency.

Local authorities were still searching for possible survivors, it said.

The report says the owners of the boat, all Yemenis, have been arrested, although it gave no more details about them.

A second attempt to smuggle 247 migrants, mostly from Chad, Nigeria, Somalia and Eritrea, also was uncovered in the same state, the report said, without elaborating.

Sudan has experienced several other incidents of illegal migrants drowning off the coast on their way to nearby countries in past years. Thousands of African migrants, especially Eritreans and Ethiopians, risk the dangerous route to escape conflicts in their countries and seek better lives in oil-rich states.

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Banks cutting principal on some mortgages: report (Reuters)

NEW YORK (Reuters) – Bank of America Corp and JPMorgan Chase & Co have started modifying tens of thousands of mortgages where the banks deem the loans especially risky, even if the borrowers have not asked, the New York Times reported on Sunday.

In some cases, the paper said, the banks are slashing the amount borrowers owe, citing one case in Florida where a woman's principal balance was cut in half.

The paper said the banks are targeting holders of pay option adjustable-rate mortgages, a type of loan where borrowers have the option of skipping some principal and interest payments and having the amount added back onto the loan.

Such "option ARM" loans were seen as especially high risk in the wake of the financial crisis; the two banks collectively still have tens of billions of dollars of such loans in their portfolios.

One law professor quoted by the Times said the banks were behaving in contradictory ways, modifying some loans that should not be and not modifying some loans that should be.

Spokespeople for the two banks were not immediately available to comment.

(Reporting by Ben Berkowitz. Editing by Maureen Bavdek)

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Britain to pull 800 troops from Afghanistan: report (Reuters)

LONDON (Reuters) – Britain will announce this week that it is to withdraw up to 800 troops by the end of next year, according to a report in the Sunday Times newspaper.

The move comes after last month's announcement that thousands of U.S. troops would start being withdrawn later this year as part of a process of handing security over to Afghan forces.

"UK force levels in Afghanistan are kept under constant review," a Ministry of Defense spokesman said.

"The prime minister (David Cameron) has been clear that there will be no UK troops in combat roles in Afghanistan by 2015 and it is right that we bring troops home sooner where progress allows and taking account of military advice."

The British government announced in May that it would pull about 400 troops from Afghanistan over the following nine months, trimming its force to 9,500.

The Sunday Times said it was expected that Cameron would announce Wednesday a pull-out of between 500 and 800 troops between next February and the end of 2012.

Britain has the second-biggest foreign contingent in Afghanistan, with the majority in the southern Helmand province, one of the most violent areas. So far 374 British service personnel have died in the decade-long war.

Last month, President Barack Obama announced he planned to withdraw 33,000 troops from Afghanistan by the end of next summer. After the withdrawal, about 70,000 U.S. troops will remain in the country.

Cameron said it was significant that only 10,000 of those U.S. soldiers would leave this year, meaning there would be no let-up in the pressure on the Taliban insurgents.

The chief of staff of Germany's armed forces said in an interview to be broadcast Sunday that Germany would reduce its troop levels in Afghanistan by about 500 from the current force of 4,800 at the end of the year.

(Reporting by Michael Holden; Editing by Alison Williams)

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U.S. considers 56.2 mpg vehicle fuel standard: report (Reuters)

NEW YORK (Reuters) – The Obama administration is considering requiring all new cars and trucks sold in the United States to get an average of 56.2 miles per gallon by 2025, The Wall Street Journal reported on Sunday.

U.S. officials presented the possible new standard in a proposal to representatives of Detroit auto makers, the Journal reported in its online edition.

The newspaper said the proposal isn't final and could be adjusted over the next several weeks before it is presented to White House budget officials.

(Reporting by Helen Chernikoff; Editing by Leslie Adler)

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