Pakistan looms large as Clinton flies to India (Reuters)

ATHENS (Reuters) – Secretary of State Hillary Clinton hopes to cement gains in ties with emerging global power India when she flies to New Delhi on Monday ties while heading off new frictions with fragile U.S. ally Pakistan.

Clinton's two-day trip to India, her second as secretary of state, follows President Barack Obama's visit last November and underscores Washington's growing bonds with the world's second most populous country and its $1.6 trillion economy.

Clinton will meet Indian leaders for a U.S.-India "strategic dialogue" session, regular meetings designed to get officials from both sides working more closely together, and comes nearly a week after deadly triple bomb attack on India's financial hub of Mumbai.

She will then move on to Chennai, the eastern port city which has become a hub for U.S. trade and investment, including a major auto engine plant for Ford Motor Co..

U.S. officials say Clinton's trip will demonstrate the breadth of cooperation -- which ranges from expanding military and intelligence work to educational exchanges and nuclear and other hi-tech energy projects.

But the pending U.S. drawdown of forces in Afghanistan and Indian relations with traditional rival Pakistan will both be in focus as Indian security fears grow following Wednesday's attacks on Mumbai.

U.S. officials and political analysts say that Clinton will urge India to stay the course and not raise tension, concerned that any overreaction by New Delhi could upset an already fragile U.S. relationship with Islamabad.

"She will encourage India to do all it can to engage Pakistan, to find areas where they might be able to break down some of their barriers and build some kind of confidence in each other," said Karl Inderfurth, a former senior State Department official under the Clinton administration and now at the Center for Strategic and International Studies.

It will not be an easy sell -- although analysts say India itself is increasingly worried over the stability of its neighbor and has its own reasons for moving cautiously.

No one has claimed responsibility for last week's Mumbai blasts, the worst such attack since Pakistan-based militants struck India's financial hub in 2008, killing 166 people and raising tensions with Islamabad.

Indian police have questioned members of a home-grown militant group, taking some of the immediate heat off Pakistan.

But both New Delhi and Washington suspect that elements of the Pakistani establishment may not be fully onboard with the U.S.-led fight against Islamic militants, doubts underscored in May when U.S. forces killed al Qaeda leader Osama bin Laden in a compound not far from Islamabad without telling the government in advance.

"The Indians see the United States as finally waking up to the problem of Pakistan, and they will not want to interject themselves into that process," said Ashley Tellis, an India expert at the Carnegie Endowment for International Peace.

LOOKING AHEAD

Clinton will update Indian Prime Minister Manmohan Singh and other officials on Pakistan, as well as on U.S. plans to draw down about a third of the 100,000 U.S. forces from Afghanistan during the next year.

Indian officials are concerned an overly hasty U.S. departure could benefit the Taliban and by extension Pakistan, and Clinton will outline how Washington plans to both stay engaged amid growing talk of a political settlement.

Despite shared concerns, which include China's growing assertiveness and traditional friendship with Pakistan, Clinton will spend much of her time highlighting U.S.-India economic ties -- a relationship both sides say holds great promise, but has yet to fulfill its potential.

The United States was disappointed when India rejected U.S. bids for an $11 billion fighter aircraft contract in April, but still hopes to profit from New Delhi's ongoing military shopping spree such as a $4.1 billion purchase of Boeing C-17 military transport planes in June.

U.S. firms want to take a slice of India's $150 billion nuclear energy market but have lagged state-backed rivals from Russia and France.

U.S. power giants such as General Electric are hoping to get a foothold after a landmark 2008 nuclear cooperation accord, although progress has been slow.

Washington has been pushing India to water down a law passed in 2010, which would force all private nuclear reactor builders to take on uncapped compensation in the event of a nuclear disaster and is considered tougher than in other nuclear power-producing countries.

And U.S. hopes for Indian moves to open up potentially lucrative sectors such as insurance and large-scale "big box" retail have been repeatedly set back, while outsourcing of U.S. jobs to cheaper Indian workers has also been a concern.

(Editing by Paul de Bendern and Nick Macfie)

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Clinton backs Greek strategy on debt crisis (Reuters)

ATHENS (Reuters) – Secretary of State Hillary Clinton on Sunday voiced strong U.S. support for Greece's battle to overcome its debt crisis, saying it was taking the difficult steps required for future growth.

Clinton's visit to Athens was intended to signal Washington's backing for Prime Minister George Papandreou ahead of a meeting of euro zone leaders in Brussels on Thursday to decide on a new bailout package for Greece amid fears the debt crisis could spill over to Spain and Italy.

"Americans know these are difficult days, and again we stand with you as friends and allies," Clinton said at a news conference.

"The United States strongly supports the Papandreou government's determination to make the necessary reforms to put Greece back on a sound financial footing and to make Greece more competitive economically."

While Washington believes European countries should take the lead in managing the Greek debt crisis, it has also been pushing through its membership in the International Monetary Fund (IMF) to support Papandreou's austerity plans, which have led to violent protests at home.

Clinton said Greek's politically painful plan for a medium-term fiscal strategy and bringing down its whopping debt were like "chemotherapy," but would bring results in the end.

"I am not here to in any way downplay the immediate challenges because they are real. But I am here to say that we believe strongly that this will give Greece a very strong economy going forward," Clinton said.

Greek Foreign Minister Stavros Lambrinidis said that despite the popular outrage over the deficit reduction plan, the government was determined to forge ahead.

"We believe that we shall come out of this difficulty victorious," he said. "Many on both sides of the Atlantic have bet on the collapse of Greece and then have been proven wrong. We will continue to prove them wrong."

DIGGING OUT

Greece, which has launched an austerity plan, is hoping for a second European bailout package of about 110 billion euros of extra funds to keep it financed until the end of 2014, when it is supposed to return to financial markets.

Clinton was due to meet Papandreou, President Karolos Papoulias and Finance Minister Evangelos Venizelos before heading to the Acropolis museum in central Athens to sign a cultural agreement designed to prevent trafficking of Greece's rich trove of cultural artifacts.

Despite financial headaches on both sides of the Atlantic, U.S. officials say ties between Washington and Athens are strong and that Greece has been a valuable partner in NATO-led campaigns in both Afghanistan and Libya.

The United States was also grateful to Athens for taking steps to prevent a planned activist flotilla from sailing for Gaza earlier in July, heading off what Washington feared could have been a dangerous confrontation between the pro-Palestinian activists with Israel, which had vowed to block the ships.

U.S. officials said Clinton also discussed several of Greece's diplomatic priorities including remaining strains in its relationship with Turkey and slow reunification talks on the ethnically-split island of Cyprus.

Clinton, who arrived in Greece on Saturday after a visit to Turkey which included a meeting of the international contact group on Libya, is due to depart on Monday for a visit to India that will begin the Asian segment of her round-the-world trip.

(reporting by Andrew Quinn, editing by Peter Millership)

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Clinton urges Kadhafi to deliver democracy not threats (AFP)

TRIPOLI (AFP) – US Secretary of State Hillary Clinton demanded on Saturday that Moamer Kadhafi deliver democracy instead of threats after the Libyan leader warned Europe of stinging attacks unless NATO halts its air war.

"Instead of issuing threats, Kadhafi should put the well-being and interests of his own people first and he should step down from power and help facilitate a democratic transition," Clinton said on a visit to NATO ally Spain, the latest leg of a European tour.

In a speech broadcast by loudspeaker to thousands of supporters in Tripoli's emblematic Green Square on Friday, the Libyan leader had warned that his loyalists could launch stinging attacks on Europe like "locusts and bees."

"The Libyan people are capable, one day, of taking the battle to Europe and the Mediterranean," Kadhafi said.

"They could attack your homes, your offices, your families could become legitimate military targets because you have transformed our offices, headquarters, homes and children into military targets which you say are legitimate," he said.

"If we decide to do so, we are capable of throwing ourselves on Europe like swarms of locusts or bees."

Spanish Foreign Minister Trinidad Jimenez was asked at a news conference with Clinton about Kadhafi's threat, and vowed that NATO would keep up the pressure on the Libyan leader.

"We are working together to protect the Libyan people from the threats and violence that Kadhafi is employing against them. We will stay until we achieve our goals," she said.

Clinton said: "The NATO-led mission is on track and pressure on Kadhafi is mounting and the rebels have been gaining strength and momentum. We need to see this through."

Libyan state television, meanwhile, said NATO air strikes on Saturday had "destroyed infrastructure and claimed victims" in Al-Jafra, a desert region 600 kilometres (360 miles) south of Tripoli.

And some 300 children rallied in front of invited foreign media outside UN offices to condemn the air strikes.

Kadhafi's regime has earned notoriety over the four decades since he seized power in 1969, arming militant groups from Northern Ireland to the Philippines, and being held responsible for a string of bombings against Western targets, including in Europe.

The Libyan leader also urged his supporters to retrieve weapons that France supplied to rebels battling his regime from bases in an armed enclave in the strategic Nafusa Mountains, southwest of the capital.

"March on the jebel (mountains) and seize the weapons that the French have supplied," he said.

French Foreign Minister Alain Juppe said on Friday that this week's arms drop was meant only to defend peaceful civilians from Kadhafi's forces and thus fell in line with existing UN resolutions on the conflict.

"It is not a violation of the UN Security Council resolutions" under which France and other allies launched air strikes and imposed embargoes to protect civilians from Kadhafi, he said.

NATO said on Saturday that it had stepped up its air strikes against Kadhafi's forces on the front lines around the rebels' two enclaves in the mainly government-held west -- the Nafusa Mountains and Libya's third-largest city Misrata.

After a retreat from around the plains town of Bir al-Ghanam some 80 kilometres (50 miles) from Tripoli, rebel spokesman Colonel Ahmed Omar Bani said the rebel army would soon try to push the frontline northward.

"In the next two days the (revolutionaries) will come up with answers, things will change on the frontline," he said.

In the past four days in Gharyan, a government stronghold near the mountains, NATO aircraft struck eight targets including a military complex used to resupply Kadhafi troops, tanks and other military vehicles, the alliance said.

In its daily report for Friday, NATO said it had launched a total of 42 strike sorties over Libya, hitting two tanks near Gharyan and two armed vehicles near Bir al-Ghanam, also near the Nafusa.

In and around Tripoli, it said it had hit a military facility, three radars, two anti-aircraft guns, a missile launcher, four tanks, and a command and control vehicle.

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