China sacks 3 senior officials after high-speed train crash (Reuters)

WENZHOU, China (Reuters) – China sacked three senior railway officials Sunday after a collision between two high-speed trains killed at least 43 people and raised new questions about the safety of the fast-growing rail network.

A bullet train Saturday night hit another express which lost power following a lightning strike, state media said, in the country's deadliest rail disaster since 2008.

The power failure knocked out an electronic safety system designed to alert trains about stalled locomotives on the line.

As rescue teams and firefighters with excavators searched for survivors, state television said a 4-year-old boy and a male toddler had been pulled alive from the wreckage.

It was not known how many people were on the trains, which collided on a bridge near the city of Wenzhou in Zhejiang province, some 860 miles south of Beijing.

"The task for us now is to clear the debris and also to check for survivors in those areas that we have not gone to," said 35-year-old rescue worker Wang Jun. "Also, we are trying to get the railway line to be operational again."

Authorities moved quickly to assuage public anger by sacking the head of the Shanghai railway bureau, his deputy and the bureau's Communist Party chief, the Railways Ministry said in a statement on its website (www.china-mor.gov.cn).

The three will "also be subject to investigation," the statement added.

Vice Premier Zhang Dejiang, visiting the scene, "pledged that the investigators will find out the cause of the accident and those responsible will be seriously punished according to the law," the official Xinhua news agency reported.

Rescuers found more bodies Sunday afternoon, bringing the death toll to 43. Almost 200 people remain in hospital, 12 of them in critical condition, Xinhua said.

Two foreigners died in the accident, according to the semi-official China News Service, including a woman in her 20s.

Rail is the most popular method of long-distance transport in China and trains are usually crowded with as many as 1,000 passengers.

The reliability of China's rail network was called into question recently when the flagship Beijing-Shanghai high-speed line suffered a series of power outages soon after opening to great fanfare a month ago.

China's rail network has also been hit by a series of scandals. Three railway officials have been investigated for corruption this year, according to local media reports.

In February, Liu Zhijun was sacked as railways minister for "serious disciplinary violations." He led the rail sector's investment drive over the past decade.

Chinese internet users took to popular Twitter-like microblogging site Weibo to vent their anger about the accident, with some calling for Railways Minister Sheng Guangzu to resign, posting his picture online with a large red cross through it.

"The Railways Ministry should realize that passengers are not just little white mice," wrote Yang Chunxiao.

"Do you think officials are really trying to help? It's all for show," added A Cige.

"FLYING INTO THE AIR"

One train was heading from Beijing to the coastal city of Fuzhou, and the other was running from Hangzhou to Fuzhou.

Both trains were made by China South Locomotive and Rolling Stock Corp Ltd (CSR).

The force of the collision sent "the head of the train flying into the air," said Cai Qi, a 30-year-old villager who saw the accident and rescued five children, four women and one man. "Some of them had their hands or legs broken. Some were crushed inside debris and we pushed and carried them out."

"Suddenly, there was a loud bang," said 32-year-old survivor Yin Caohui. "After that, the train broke. It was all dark and we could not see anything."

A 31-year-old survivor, who gave his last name as Yu, said the train stopped suddenly and the lights immediately went off but the passengers "didn't think it was so serious."

"Only when we got down, we saw so many train carriages falling down," Yu said.

In 2008, an express train traveling from Beijing to the eastern coastal city of Qingdao derailed and collided with another train, killing 72 and injuring 416 people.

(Additional reporting by Aly Song in Wenzhou and Sally Huang and Sui-Lee Wee in Beijing; Writing by Sui-Lee Wee and Ben Blanchard)

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Officials scramble for debt deal as clock ticks (Reuters)

WASHINGTON (Reuters) – White House officials and Republican leaders scrambled on Sunday to reassure global markets the United States would avert a debt default but the two sides gave no sign they were moving closer to a deal.

Treasury Secretary Timothy Geithner said it was unthinkable that the country would default on its obligations and he was confident a deal would get done.

"What the leaders know is that they need to agree on something together that will pass the House (of Representatives), pass the Senate that the president can accept," Geithner told CNN's "State of the Union" program.

But the path forward was murky.

With Asian markets set to open in a few hours, Democrats and Republicans traded blame for the inability to strike a deal to lift the $14.3 trillion limit on U.S. borrowing ahead of an August 2 deadline. Republican leaders want to show progress by 4 p.m. EDT on Sunday, before trading gets underway in Asia, and have legislation to unveil on Monday.

Financial markets are growing more edgy and U.S. banks and businesses are making contingency plans for the possibility of a debt default that would drive up interest rates, sink the dollar and ripple through economies around the world.

Global investors are still reeling from the euro zone crisis that was contained only a few days ago with the unveiling of a fresh rescue package for Greece.

Republican House of Representatives Speaker John Boehner told "Fox News Sunday" he would unveil a bipartisan deal to raise the debt ceiling.

"The preferable path would be a bipartisan plan that involves all the leaders, but it is too early to decide whether that's possible," Boehner said. "If that's not possible, I and my Republican colleagues in the House are prepared to move on our own."

The United States will run out of funds to service its debt on August 2 if Congress does not approve additional borrowing. Republicans have insisted the White House agree to deep spending cuts for long-term deficit reduction before they approve any increase in America's debt burden.

Negotiations have whipsawed for weeks, finally hitting a brick wall over taxes, one of the most ideologically divisive issues in U.S. politics.

'THEIR WAY OR THE HIGHWAY'

White House chief of staff Bill Daley accused House Republicans of intransigence, telling CBS' "Face the Nation" they were insisting that any deal has to be "their way or the highway."

Administration officials also said President Barack Obama would not accept a two-tiered proposal offered by Boehner that would lift the debt ceiling through the end of 2011 and then require another vote.

Daley said it was critical Congress approve a new debt ceiling that gets the country into 2013, past the November 2012 presidential election.

On Fox, Boehner said raising the debt ceiling and implementing major reforms would have to be done in two stages. "There is going to be a two-stage process. It is not physically possible to do all of this in one step."

Administration officials said a far-reaching "grand bargain" that would combine a debt-limit increase with a 10-year plan to reduce the deficit by $4 trillion was still a possibility, despite Boehner's decision on Friday to walk away from talks with the White House on such a plan.

Boehner said his last offer to the White House on the larger deal was still on the table. That offer included some $800 billion in new tax revenue and massive spending cuts.

To pass any deal that includes more tax revenue, Boehner must overcome staunch resistance from Tea Party movement conservatives in his own party, who adamantly oppose any steps to raise taxes, fiercely defending tax cuts for the rich enacted during the administration of George W. Bush.

Rating agencies say they will cut America's Triple-A credit rating if the United States fails to meet debt payments, likely triggering global market turmoil. Even if the United States does not default, its rating will be under pressure if Congress and the president fail to tackle long-term deficit reduction.

Macroeconomic Advisers, a consultancy, said a failure to lift the debt ceiling and a month-long delay in agreeing on a modest deficit-reduction plan could push the unemployment rate to 9.6 percent by the end of the year, up from 9.2 percent in June.

"It seems the height of policy folly for elected officials, intent on a game of budgetary chicken, to chance this downside risk during an economic recovery that was sub-par to begin with and lately seems to have faltered further," Macroeconomic Advisers said in a blog on Friday. "Sometimes in a game of chicken, people get injured -- seriously."

(Additional reporting by Dave Clarke, Donna Smith, Richard Cowan, Andy Sullivan, Laura MacInnis and Alister Bull; Editing by Will Dunham and Todd Eastham)

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Panetta in Iraq to see officials, commanders (AP)

By ROBERT BURNS, AP National Security Writer Robert Burns, Ap National Security Writer – 1?hr?51?mins?ago

BAGHDAD – From one war front to another Sunday, Pentagon chief Leon Panetta hopped from a U.S. outpost in Afghanistan's southern desert to Baghdad, where he sought to encourage Iraqi leaders to decide soon whether they want a residual American military force beyond year's end.

He refused to say whether the Obama administration wants the extension, but he expressed concern at a spike in U.S. deaths caused by what American officials believe are sophisticated explosive devices made in Iran.

Panetta prepared for talks Monday with Prime Minister Nouri al-Maliki and other senior members of a government politically divided more than a year after national elections. Iraq has gone that long without defense or interior ministers, whose departments are responsible for the military and police.

The approximately 46,000 U.S. troops remaining in Iraq are to depart by the end of 2011 under an agreement negotiated in 2008 by the Bush administration, which went to war in 2003 to topple Saddam Hussein's government.

Asking even a few thousand to stay longer carries political risk leaders in both countries.

A signature pledge of President Barack Obama 2008 election campaign was to get the U.S. out of Iraq. For Iraqis fed up with violence, a longer U.S. presence looks like a formula for further strife.

The Associated Press reported on July 5 that the White House is offering to keep up to 10,000 troops in Iraq next year, despite opposition from key Democrats who demand that Obama bring home the troops as promised.

Panetta spent Sunday afternoon at Camp Dwyer, a dust-choked U.S. outpost in southern Afghanistan. He pinned Purple Heart medals on two Marines, had lunch with young officers, got a glimpse at an Army Black Hawk medevac unit and quizzed an Afghan army officer on commanding a unit that specializes in detecting land mines and roadside bombs.

The 73-year-old Panetta, on the job since July 1 after 2 1/2 years heading the CIA, appeared to hold up well under the intense heat. But at one point he seemed to lose track of his latest job switch. In a pep talk to a group of Marines, he said he has always valued public service, from his time in the Army in the 1960s to eight terms as a congressman and his years in the Clinton White House, "and now as director of the CIA."

At issue in Baghdad is whether the Iraqi government will request that the U.S. negotiate a troop extension. The scheduled departure of virtually all U.S. troops by Dec. 31 will leave the country with significant gaps in its ability to defend its own airspace and borders.

Panetta's predecessor at the Pentagon, Robert Gates, visited Iraq in April to push for an early decision and make clear that Washington believes an extension is in both countries' interest.

Panetta, however, seemed less willing to commit to a residual force.

Speaking to reporters before boarding his plane for the flight to Iraq from Camp Dwyer in southern Afghanistan, Panetta was asked whether he intended to encourage the Iraqis to request an extension.

"I'll encourage them to make a decision" about what they want, he replied, leaving open the question of what the White House would accept.

Panetta said he thinks U.S. should consider any Iraqi request and he said Obama "feels we ought to consider it as well." Obama has said repeatedly over the past year that he is responsibly ending the Iraq war and bringing U.S. troops home this year.

Panetta said he also intended to urge Iraqi leaders to do more to go after Shiite militia groups that are using Iranian-supplied weapons to step up attacks on U.S. troops. The U.S. death toll of 15 in June was the highest for any month in the past two years, Panetta said.

"That has concerned us," he said, adding that Iraqi Shiite militiamen using Iranian weapons need to be targeted more aggressively. Pentagon officials believe the Iranians are providing more arms, such as airborne makeshift "lob bombs" and explosively formed projectiles, to give the impression of driving U.S. troops out of Iraq.

Panetta came to his new job with links to the wars in Iraq and Afghanistan, even if he was not directly involved in military strategy.

He visited both countries during his CIA tenure. Both wars have an unusually heavy intelligence component, with U.S. special operations teams taking on al-Qaida and other insurgents.

One concern about the plan to withdraw all U.S. forces from Iraq by the end of this year is that Iraq's intelligence services are not yet up to the task of adequately supporting counterterrorism forces.

Panetta was a member of the Iraq Study Group, created by Congress in 2006 to consider a better way forward in a war that was spiraling out of control at the time. Coincidentally, Panetta served on the group with Gates until Gates quit because he was picked to replace Donald H. Rumsfeld as defense secretary.

Panetta signed off on the group's final report, which concluded that it was time to get all U.S. ground combat brigades out of Iraq, leaving troops to train the Iraqi army and to undertake strikes against al-Qaida cells.

President George W. Bush took a decidedly different course, ordering troop reinforcements to Iraq as part of a new strategy that is widely credited for turning around the war.

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Robert Burns can be reached at http://twitter.com/robertburnsAP

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