Jewish Group: IRS Targeted Us Because ‘They Thought We Might Be Funding Terrorism’

Z Street

Lori Lowenthal Marcus, President of Z Street, appears on "On the Record." (Photo: Fox News)

Soon after the Internal Revenue Service admitted it had been targeting conservative organizations applying for 501 (c) (4) status around the 2012 election -- though it was later discovered it had been happening since at least 2010 -- it was learned that Jewish groups had also faced similar scrutiny.

Now, we are learning that at least one group was told it was because of purported worries they were funding terrorism.

Z Street has been vocal about the treatment it received after battling with the IRS for years.  It filed a lawsuit against the government entity in 2010 alleging viewpoint discrimination after applying for 501 (c) (3) status in 2009 (processed through the same office as 501 (c) (4)).

Lori Lowenthal Marcus, president of Z Street, appeared on "On the Record" with Greta Van Susteren Tuesday to explain the situation.

"After we filed our lawsuit, the IRS began having several different positions on why it was taking so long, one of which was because terrorism happens in Israel.  Therefore, they had to look into our organization, because they thought we might be funding terrorism.  We are a purely educational entity.  We didn't fund anybody; we barely funded ourselves!"

When Greta asked whether anyone in her group has been arrested for terrorism, whether their assets have ever been frozen in connection with terrorism, or whether the group has ever even been accused of promoting terrorist activity, the president incredulously replied, "No!"

If that's not enough, the group only filed the suit after their lawyer was told by the IRS that groups connected to Israel receive special scrutiny, and that some are sent to a special unit to determine whether the organization's positions contradict those of the administration's."

"At that point we knew that is classic viewpoint discrimination, and we had to [take] action," she said.

Their group has still not been approved for the 501 (c) (3) status it applied for in 2009.

Watch the entire interview, below:

Watch the latest video at video.foxnews.com

The POLITICO did some investigating on the matter, writing:

Legal filings show that the problems for Z Street -- and apparently for other Israel-related groups -- stemmed from an obscure unit in the Cincinnati IRS office: the "Touch and Go Group." One of the so-called TAG Group's duties was to weed out applications that might be coming from organizations which might be used to fund terrorism. In response to Z Street's lawsuit, an IRS manager acknowledged that applications mentioning Israel were getting special attention. "Israel is one of many Middle Eastern countries that have a 'higher risk of terrorism,'" wrote Jon Waddell, manager of the IRS's Exempt Organizations Determinations Group. "A referral to TAG is appropriate whenever an application mentions providing resources to organizations in a country with a higher risk of terrorism."

A spokesman for the Treasury Inspector General for Tax Administration declined to say Monday whether that office had reviewed the issue of scrutiny of Israel-related groups as part of the review of how the IRS handled political groups, or separately. "I don't have any information for you one way or the other on that," said the spokesman, David Barnes. [Emphasis added]

When Z Street went to court though, the government denied its views on Israel or the Obama administration had anything to do with why it was transferred to the TAG Group.

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Related:

• Did the IRS Also Target a Pro-Israel Group?
• Local News Reporter: IRS Started 'Hammering' Me After Tough Obama Interview
• 'Submit!': Beck's Passionate Break Down of the IRS 'Inquisition' of Conservative Groups -- and What's Coming Next in the Case

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Conservative group says IRS approved nonprofit status after applying with ‘liberal-sounding name’

MediaTrackers.org

In May 2011, Drew Ryun, a conservative activist and former Republican National Committee staffer, began filling out the Internal Revenue Service application to achieve non-profit status for a new conservative watchdog group.

He submitted the paperwork to the IRS in July 2011 for a news site called Media Trackers, which calls itself a "non-partisan investigative watchdog dedicated to promoting accountability in the media and government." Although the site has investigated Republicans like Ohio Gov. John Kasich and Florida Gov. Rick Scott, the site's organizers are apologetically conservative.

"One thing we don't hide is: 'Yeah, we're conservative—free-market, free-enterprise, full-spectrum conservative,'" Ryun told Mother Jones magazine last year.

Eight months passed without word from the agency about the group's application, Ryun said. In February 2012, Ryun's attorney contacted the IRS to ask if it needed more information to secure its non-profit status as a 501(c)3 organization. According to Ryun, the IRS told him that the application was being processed by the agency's office in Cincinnati, Ohio—the same one currently facing scrutiny for targeting conservative groups—and to check back in two months.

As directed, Ryun followed up with the IRS in April 2012, and was told that Media Trackers' application was still under review.

When September 2012 arrived with still no word from the IRS, Ryun determined that Media Trackers would likely never obtain standalone non-profit status, and he tried a new approach: Starting over. He applied for permanent non-profit status for a separate group called Greenhouse Solutions, a pre-existing organization that was reaching the end of its determination period.

The IRS approved Greenhouse Solutions' request for non-profit status in three weeks.

When news broke last week that the IRS had applied heavier scrutiny to conservative groups seeking non-profit status from 2010-2012, Ryun said he became convinced that his second application was approved quickly because he applied under the Greenhouse Solutions title, which he called a "liberal-sounding name."

"Within three weeks, Greenhouse received permanent non-profit status from the IRS, and the IRS approval was transmitted to us from its Cincinnati office. We then rolled the Media Trackers project into Greenhouse and began work on a number of new projects," Ryun told Yahoo News in an interview. "Do I think we benefited from what many think is a liberal-sounding name? Absolutely."

In December 2012, Ryun simply made Media Trackers a project of Greenhouse Solutions and withdrew the Media Trackers application.

The IRS website explains why some requests for tax-exempt status take longer than others to process.

"Sometimes, representatives of exempt organizations and practitioners question why certain applications for tax exemption are processed faster than others. Not all applications are the same," the site reads. "While many are complete when received and involve straight-forward scenarios, others may be incomplete or involve complex issues that require further development."

The IRS is currently under fire from both Democrats and Republicans, and Attorney General Eric Holder on Tuesday announced that he had directed the FBI to launch a criminal probe into the IRS. The same day, the Treasury inspector general for tax administration submitted a review of the IRS' practices, which found that the agency had used "inappropriate criteria" to determine which groups were eligible for non-profit status. Current and former IRS officials are expected to testify about the issue before House committees starting Friday.

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How your tea party group got added to the IRS’ ‘Be On the Look Out’ list

Screenshot from Inspector General report

The screenshot above is taken from an official review of the Internal Revenue Service's practices for determining which groups were eligible for tax-exempt status between 2010 and 2012.

The report, written by the Treasury Inspector General for Tax Administration and obtained by Yahoo News Tuesday, details missteps the IRS took in targeting certain political groups for additional scrutiny.

The audit confirms previous reports that the IRS flagged applications from organizations that used words like "tea party" and "patriots" in their title. Even groups that said they wanted to advocate for making "America a better place to live" were placed on a "Be On the Look Out" or BOLO list.

From the report:

In May 2010, the Determinations Unit began developing a spreadsheet that would become known as the “Be On the Look Out” listing (hereafter referred to as the BOLO listing), which included the emerging issue of Tea Party applications. In June 2010, the Determinations Unit began training its specialists on issues to be aware of, including Tea Party cases. By July 2010, Determinations Unit management stated that it had requested its specialists to be on the lookout for Tea Party applications.

In "many" cases, the report said, organizations put on the list had to wait more than two years to receive notice from the IRS on the status of their applications.

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Jewish group warns of neo-Nazi parties in Europe

BUDAPEST, Hungary (AP) — The World Jewish Congress said Tuesday it is greatly concerned about the emergence of neo-Nazi parties such as the Golden Dawn in Greece, Jobbik in Hungary, and Germany's National Democratic Party.

A study presented at the WJC assembly in Budapest, the Hungarian capital, highlighted the links regarding the strengthening of such extremist groups, the European economic crisis and latent Nazi-type tendencies.

"Although neo-Nazi style movements and ideologies are present in other parts of the world, it is unsurprising that an ideology that was born in Europe should be most likely to show a resurgence in Europe inside the party political system," the study said.

Among its recommendations, the study said mainstream parties should quarantine neo-Nazi groups by refusing to appear with them at public events or meeting with them in private.

The "economic crisis, which has nurtured the neo-Nazi cause, may endure or worsen," the document said. "We must be prepared for all eventualities."

In a resolution adopted by the World Jewish Congress at the end of its three-day meeting, the group led by U.S. businessman Ronald Lauder urged countries whose constitutions allow it to urgently consider banning neo-Nazi parties or organizations "posing a threat to the safety and well-being" of minorities.

One concern of the group is Golden Dawn, Greece's third most popular party. The party, which was once marginal, is fond of Nazi literature and symbols but rejects the neo-Nazi label. Hungary's Jobbik is the second-largest opposition group in parliament, having won 16.7 percent of the vote in 2010. Germany's far-right National Democratic Party has deputies in two of Germany's 16 regional assemblies but no representation at the federal level.

Hungarian Prime Minister Viktor Orban's speech at the start of the WJC meeting on Sunday was criticized by the Jewish organization for failing to specifically mention the threat posed by Jobbik.

On Tuesday, however, Lauder said he was told about a recent interview Orban gave to the Yedioth Ahronoth Israeli newspaper in which the prime minister called Jobbik "an increasing danger" to Hungarian democracy.

"This was a strong statement about Jobbik," Lauder said, apologizing for not knowing sooner about the interview published last week. "I would like that to be put in the record that the prime minister really did take a stand against Jobbik and I appreciate that."

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Syrian militant group unites with al-Qaida in Iraq

BEIRUT (AP) — Al-Qaida's branch in Iraq and the most powerful rebel extremist group in Syria have officially joined ranks against President Bashar Assad to forge a potentially formidable militant force in the Middle East.

The merger of the Islamic State in Iraq and Jabhat al-Nusra forms a new entity that could be an even stronger opponent in the fight to topple Assad and become a dominant player in what eventually replaces his regime.

The new group, called the Islamic State in Iraq and the Levant, underscores the growing confidence and muscle of Islamist radicals fighting on the rebel side in Syria's civil war. It also bolsters the Syrian government's assertions that the regime is battling terrorists and that the uprising is a foreign-backed plot.

While the U.S. and its European and Gulf allies are concerned about the rising prominence of Islamists among the rebels, the merger is unlikely to prompt a shift in the international support. Late last year, Washington declared that Jabhat al-Nusra had ties to al-Qaida and designated it a terrorist organization.

To try to counter the rising influence of Jabhat al-Nusra and other Islamic extremists in the civil war, the U.S. and its allies have boosted their support for rebel factions deemed to be more moderate.

On the political front, they helped created the opposition umbrella group, the Syrian National Coalition, in the hope that it will serve as the united face of those trying to unseat Assad and administer much of the territory in northern Syria that rebels have managed to pry away from regime forces in the past year.

The U.S. and other countries also have stepped up covert support for rebels on the ground by helping to coordinate shipments of new weapons and training rebels in Jordan, officials say. Those receiving training are mainly secular Sunni Muslim tribesmen from central and southern Syria who once served in the army and police.

The force is seen as a counterbalance to the Islamic militant groups — chief among them Jabhat al-Nusra — that have proven to be among the most effective of the myriad rebel factions fighting Assad's forces, officials say.

The merger was announced by the leader of the Islamic State of Iraq, Abu Bakr al-Baghdadi, in a 21-minute audio message posted on militant websites late Monday. A website linked to Jabhat al-Nusra known as al-Muhajir al-Islami — the Islamic emigrant — confirmed the merger.

Together, the groups will now be known as the Islamic State in Iraq and the Levant, al-Baghdadi said. The Levant is the traditional name referring to the region from southern Turkey to Egypt on the eastern Mediterranean.

"It is time to announce to the Levantine people and the whole world that Jabhat al-Nusra is merely an extension and part of the Islamic State of Iraq," he said.

He said the Iraqi group was providing half of its budget to the conflict in Syria, and that Jabhat al-Nusra would not have a separate leader but instead be led by the "people of Syria themselves" — implying that he would be in charge in both countries.

The announcement comes two days after the leader of al-Qaida, Ayman al-Zawahiri, urged Islamic fighters in Syria to unite in their efforts to oust Assad.

Jabhat al-Nusra, which has welcomed militants from across the Muslim world into its ranks, has made little secret of its links across the Iraqi border, but until now it has not officially declared itself to be part of al-Qaida.

The Syrian group, which wants to oust Assad and replace his regime with an Islamic state, first emerged in a video posted online in January 2012. Since then, it has demonstrated its prowess — and ruthlessness — on the battlefield.

It has claimed responsibility for many of the deadliest suicide bombings against Syrian government institutions and military facilities. The group's success helped fuel a surge in its popularity among rebel fighters, although it has also emerged as a source of friction with more moderate and secular brigades in Syria.

The group also has tried to provide basic services in the parts of northern Syria under rebel control, including security and food to civilians struggling to survive.

Bilal Saab, director of the Institute for Near East and Gulf Military Analysis, North America, said the merger will make Jabhat al-Nusra an even more formidable force in Syria.

"I think you're going to have a pooling of resources, a more massive influx of fighters coming from Iraq into Syria. It will help them better position themselves in the period after Assad. It will certainly better help them defeat the Syrian regime more quickly," Saab said.

"It does matter for them that they're getting more materiel and more people and more expertise, especially Iraqi veterans who have really been vetted on the battlefield and who have fought coalition forces since 2003," he added.

Al-Qaida in Iraq arose after the 2003 U.S. led-invasion of Iraq, and fought a bloody insurgency against American troops and Iraqi government forces. Generally, the group has not operated beyond Iraq's borders.

The union with al-Qaida also poses risks for Jabhat al-Nusra.

Coming under the banner of a non-Syrian group could tarnish the group's image in the eyes of some rebels and Syrian civilians, particularly if the group tries to impose its strict Islamic beliefs.

"It has the potential to backfire, and help marginalize the group from other fighting factions and from the civilian population," said Elizabeth O'Bagy of the Institute for the Study of War.

She said by email that the merger could prompt a growing number of Syrians to view Jabhat al-Nusra's actions "as an outside imposition that is detrimental to Syria's future."

For now, it is unlikely to undermine Jabhat al-Nusra's standing in the eyes of the broader rebel movement, which desperately needs the group's unmatched skills on the battlefield to defeat a government war machine that enjoys far superior firepower with its tanks, helicopter gunships, fighter jets and artillery.

Still, for rebels who favor a civil state in post-Assad Syria, the presence of jihadi fighters presents a dilemma: It helps their immediate goal of getting rid of Assad, but it hurts them politically to have a group designated as a terrorist organization on their side.

"Their thinking is ... 'let's deal with the problem right now of deposing the regime, and then take care of these rogue, radical elements later when we have international support,'" Saab said. "For now, they need them. When everything is over, there's going to be a huge fight over basically all of Syria."

Among those most concerned by the merger is Iraq, whose Shiite-led government has been trying for years to snuff out an al-Qaida-led Sunni insurgency.

In a column published Tuesday in the Washington Post, Iraqi Prime Minister Nouri al-Maliki warned that a Syria controlled by al-Qaida and its affiliates "would be more dangerous to both our countries than anything we've seen up to now." He added that such a scenario "grows more likely by the day."

A top Iraqi intelligence official told The Associated Press in Baghdad that his organization has always known that "al-Qaida in Iraq is directing Jabhat al-Nusra." He said the groups announced their union because of "political, logistical and geographical circumstance." The official, who spoke on condition of anonymity because he was not authorized to brief the media, said Iraqi authorities will take "strict security measures to strike them."

Iraqi officials say the groups are sharing three military training compounds, logistics, intelligence and weapons, and are growing in strength around the Syria-Iraq border.

One of the most dramatic attacks by the group — and at the time the clearest indication of cross-border cooperation with al-Qaida in Iraq — came on March 4, when 51 Syrian soldiers were killed in a well-coordinated ambush. The Syrians had crossed into Iraq to seek refuge following clashes with rebels on the Syrian side of the border.

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Associated Press writers Zeina Karam and Bassem Mroue in Beirut, Maamoun Youssef in Cairo, and Qassim Abdul-Zahra in Baghdad contributed to this report.

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Gaza group: Hamas shaves heads for 'indecent' hair

GAZA CITY, Gaza Strip (AP) — A rights group says police in Hamas-ruled Gaza are arresting, beating and shaving the heads of young men who sport what they consider "indecent" hair styles.

Witnesses say those targeted wore their hair long or styled into tall spikes.

Since seizing Gaza in 2007, the Islamic militant Hamas has been slowly imposing its fundamentalist version of Islam on the already-conservative Gaza. This includes getting women to cover up with headscarves and long robes.

The Palestinian Center for Human Rights said Sunday that the latest crackdown is over hair styles. The group quotes a young man who says he was among 13 who were detained by police and had their heads shaved

Police spokesman Ayman Batniji says the police have shaved the heads of some detainees, but denies it's a campaign.

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African linked to extremist group sentenced in NYC

NEW YORK (AP) — An East African man has been sentenced in New York to just over nine years in prison for conspiring to support terrorism by associating with a violent extremist group in Somalia.

Mohamed Ibrahim Ahmed was sentenced Wednesday in federal court to nine years and three months in prison. He had pleaded guilty in June.

Ahmed was detained in Nigeria in 2009 before being turned over to U.S. authorities. Prosecutors in New York had accused the Eritrean (ehr-ih-TREE'-uhn) man of receiving explosives training, buying an assault rifle and raising money for al-Shabaab.

Al-Shabaab was designated by the United States as a terrorist group in 2008. Manhattan's top federal prosecutor said in a release that Ahmed traveled thousands of miles to align himself with al-Shabaab and aid their campaign of terror.

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Iran denies link to group arrested in Saudi Arabia

DUBAI (Reuters) - Iran's foreign ministry said the country was not linked to a group of alleged spies arrested in Saudi Arabia, Iranian media reported on Sunday.

Saudi Arabia said on Tuesday that it had detained an Iranian, a Lebanese, and 16 Saudis for spying. Political analysts and press in Sunni Muslim Saudi Arabia have accused Shi'ite Iran of being behind the alleged espionage.

The two countries are locked in a struggle for influence across the region, backing opposing sides in Bahrain, Yemen, Syria, Lebanon and Iraq. Gulf Arab foreign ministers, meeting in Riyadh last month, issued a statement condemning what they said was Iranian "meddling" in their countries - an accusation Tehran rejects.

Iran's foreign ministry spokesman, Ramin Mehmanparast, denied that an Iranian national was involved in the alleged spy ring and called the allegations a "repetitive scenario", according to Iran's English-language Press TV on Sunday.

"Raising such baseless issues at the media level is merely for domestic consumption," he said, according to Press TV.

Leaders of Saudi Arabia's Shi'ite minority have also criticized the arrests of 16 members of their community, which they said sought to exploit sectarian tension.

The Saudi government has previously blamed unrest among Shi'ites in the Qatif district of oil-producing Eastern Province on an unnamed foreign power, which officials privately acknowledge means Iran - a charge local Shi'ite activists have denied. Sixteen people have been killed in Qatif in clashes with police in the past two years.

Riyadh also accuses Tehran of having masterminded an alleged plot to assassinate its ambassador in Washington that was announced by U.S. police in late 2011. Iran denies this.

Kuwait said in 2010 it had uncovered an Iranian spy ring, Yemen said last year it had arrested Iranian spies and that Tehran was backing rebels in the north, and Bahrain has accused Iran of plotting attacks on its territory. Tehran has denied all these charges.

(Reporting By Yeganeh Torbati; Additional reporting by Angus McDowall in Riyadh; Editing by Pravin Char)

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Insight: Bipartisan Senate group on path to immigration bill

By Thomas Ferraro

WASHINGTON (Reuters) - In a Congress riven by partisan conflict on deficits and guns, a circle of eight senators from both parties meeting several times a week might be on the cusp of a major legislative breakthrough.

The so-called Gang of Eight - four Democrats and four Republicans - is completing a plan for the biggest overhaul of immigration laws since 1986. The group is not only holding together after four months of intense discussions - an accomplishment in itself in Washington's brutally partisan atmosphere - it is down to the last sticking points, according to the senators and aides.

The centerpiece, they say, will be a 10- to 15-year path to U.S. citizenship - perhaps under a different formulation - for 11 million illegal immigrants. The issue has gained new urgency for both parties after strong Hispanic support for President Barack Obama and fellow Democrats in last year's election.

In an effort to improve the plan's chances with Republicans, the path to citizenship may wind up being called a road to a green card - the permit issued by the government that allows foreigners to work in the United States and ultimately apply for citizenship.

If so, that would reflect the influence of Republican Senator Marco Rubio of Florida, one of the group's members.

"There is no such thing as a path toward citizenship," Rubio said in an interview. "There is a path toward a green card."

"We want to be generous and we want to be fair, but we also have to be fair to the people trying to do it legally," Rubio said. "To become a citizen, you first have to get a green card. I made that clear" to the others, Rubio said.

Senate aides said they were not worried about what one called "semantics. ... We all agree you need to get a green card before getting citizenship. He is just reflecting concerns in his own party."

The goal is a Senate bill sometime next month, with a Senate vote by June or July. Considering the battles in line ahead of immigration - on deficit reduction and gun violence - that schedule could be optimistic.

There are also plenty of challenges ahead.

The group envisions a commission that would help control the future flow of low-skilled guest workers into the United States in a way that satisfies businesses' need for employees as well as unions' desires to protect their members and U.S. wages.

But satisfying both the U.S. Chamber of Commerce and the AFL-CIO labor organization on how that would work has become a problem.

"It is a tightrope to bring in the workers that are necessary but not at the expense of American workers," Democratic Senator Dick Durbin of Illinois, one of the eight, said in an interview. "We need to find a reasonable way to thread the needle."

BORDER COMMISSION DEBATED

The group has promised that before there is a pathway to anything, U.S. borders must be declared "secure."

It has been considering a commission composed of elected officials from border states to help the U.S. government make that determination, a prospect that has raised concerns from some Democrats, who fear giving border-state Republicans - they point to Arizona Governor Jan Brewer - an outsized role.

Brewer has clashed with the Obama administration over an Arizona law she signed in 2010 clamping down on illegal immigration.

"The idea is to have local input about the progress we are making on the borders," said Durbin. "But critics fear any one governor could say it is inadequate, denying citizenship to millions."

"We need a way to have local input, but not local veto," Durbin said.

The senators appear to have public opinion on their side.

According to a Public Religion Research Institute poll released on Thursday, 63 percent of Americans said they supported a path to citizenship for undocumented foreigners.

But the path through Congress will not be easy.

Republican Senator Mike Lee of Utah, a favorite of the conservative Tea Party movement, was invited to join the group, but declined, for reasons that reflect broader concerns within the Republican Party.

"There were a few things I couldn't agree to," Lee said of the framework the group of eight developed and released in January, which included the pathway to citizenship.

"In trying to address the problem, we shouldn't create another one by giving a special set of legal advantages to illegal aliens," Lee said.

Lee warned that the group may be trying to do too much with one bill. "I'm not convinced that comprehensive" legislation - as opposed to a piecemeal approach - "won't be a problem itself," Lee said.

Lee and five other Republican members of the Senate Judiciary Committee are trying to slow down the immigration bill. In a letter to Democratic Judiciary Chairman Patrick Leahy of Vermont on Wednesday, they warned "against rushing a massive bill with far-reaching implications," suggesting a "step-by-step" approach was needed.

It takes 60 votes to get a bill through the Senate, which is composed of 53 Democrats, two independents who vote with Democrats and 45 Republicans.

A BAND AND A BOND

But for some in the group of eight, getting this far in the era of gridlock is hope for the hopeless.

"It is the most productive series of conversations that I have had in four years in the Senate," said Democratic Senator Michael Bennet of Colorado, one of the eight lawmakers participating in the discussions. "This is the best opportunity in a generation to pass immigration reform."

"I think comprehensive reform is doable," Arizona Republican Senator Jeff Flake said, another member of the group. "We wouldn't be in this if we didn't think we could do it."

Some have been down this road before. New York Democrat Chuck Schumer and South Carolina Republican Lindsey Graham, agreed on a comprehensive plan in 2010 only to see it unravel. Senator John McCain of Arizona, working with the late Massachusetts Democratic Senator Edward Kennedy, tried unsuccessfully in 2005 and 2006.

But after the 2012 election in which Democrats won the Hispanic vote nationally by 70 percent, Graham said he sensed a new imperative.

The morning after the election, Graham called Schumer and said, "I want to get the band back together and McCain wants in."

Graham explained in an interview what prompted his call.

Democrats, including Obama, had long promised Hispanics some action on immigration.

"The reality from the Republican point of view is that we had to get this issue resolved," Graham said. "So we Republicans had a need and Democrats had a need," which equaled an "an opportunity to get it done."

Until late last year, Schumer and McCain, who have been in Congress together for three decades, had rarely spoken to each other. The chill between them eased a bit in January when they ended up as a part of a group of lawmakers who reached a deal on new Senate rules to ease gridlock.

"We bonded," said Schumer, "and then moved to immigration."

McCain brought in Durbin, with whom he grew close in 1983 when both were newly elected members of the House of Representatives.

Durbin had made friends with freshman Republican Rubio in predawn workouts in the Senate gym. Durbin invited Rubio.

"I told Marco: 'I think you should be part of this. What do you think?" Durbin recalled. "He said: 'I think I can work with you. At least I'm willing to try.'"

TALKING TO THE HOUSE

The senators have been meeting two to four times a week since December, each session focusing on a mutually agreed-upon agenda. They sit in a circle with 20 staffers behind them, aides said.

"Everyone in there wants to get it done," said Flake. "No one is looking for scoring political points. That makes all the difference."

"There have been hard and tough negotiations, but it has been done all in the spirit of achieving the goal, in which compromise has been made on both sides," said New Jersey's Democratic senator, Robert Menendez, another group member.

A group of eight House members - also four Democrats and four Republicans - began working on its own plan years ago, long before the Senate group even formed.

The emerging and comprehensive House plan, like the one in the Senate, has a proposed path toward citizenship.

Republicans Flake, McCain and Graham recently meet with a number of House Republicans to explain their efforts.

"I don't want to say what their positions were, but they were cordial," said Flake, elected to the Senate in November after 12 years in the House. "They listened."

Flake said he expected the Senate to pass a comprehensive bill while the House approved a limited one. But differences between the two measures could then be worked out, he said.

McCain said he believed "we can convince our House Republican friends - if we can make sure that they are convinced that we have an effective control of the border and it is not amnesty."

McCain said that while he recognized the political and economic advantages of immigration reform, there was a humanitarian need as well, which he said he knew well as an Arizonan.

"Young people have been brought across the border by a coyote (smuggler) and told, 'Tucson is over there,' and have died in the desert," McCain said.

All the members see their immigration effort as a test of whether Congress, when it is divided, can get anything of significance done.

"It could help get Democrats and Republicans to work together," McCain said. "That is what the American people want."

If members as far apart as Schumer and McCain can come together, it will send a message, said Graham.

"If these two guys can deal with an issue as complicated as immigration and wind up with a product good for the country, who knows, good government may break out."

"But," Graham added with a sigh, "I doubt it."

(Editing by Fred Barbash, Mary Milliken and Peter Cooney)

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Economy may need shock therapy soon - employers group

LONDON (Reuters) - Britain's chancellor may have to apply shock treatment to the country's economy, including the controversial option of new borrowing to fund investment, if there is no sign of growth in six months' time, a business leader has said.

This month's budget announcement by George Osborne must include several measures to boost the economy which could be funded by cuts to welfare and other spending, said John Longworth, director general of the British Chambers of Commerce.

But if growth prospects remain elusive, more radical options will be needed, he said.

"If within the next six months there is no prospect of growth ... you might have to consider actually borrowing more money but you should only do it to fund areas that the market would forgive," he told reporters.

As well as taking on new debt to fund more infrastructure spending, the government may also have to consider big cuts in corporate and capital gains taxes to kick-start growth.

"It would be a sort of defibrillator approach to the economy," said Longworth, whose organisation represents more than 100,000 British businesses.

Osborne and Prime Minister David Cameron have ruled out any shift from their plan to rein in Britain's budget deficit, even as the economy runs the risk of falling into its third recession in four years. Cameron said last week that the country would plunge "into the abyss" if he changed course.

But signs have grown of differences within the ruling coalition ahead of the March 20 budget statement. Business minister Vince Cable suggested it might be possible for the government to borrow to fund more spending without spooking financial markets.

The BCC and another leading employers group, the CBI, both said on Monday that they backed the government's focus on tackling the budget deficit but said there was room for measures to boost growth too.

Those measures included moving ahead with the government's long-delayed business bank which would help provide credit to companies struggling to get loans from commercial banks.

The two employers groups called for more investment in housing and road repairs as quick ways to spur growth, and a freeze in business rates - the taxes companies pay based on the value of their properties.

The BCC estimated the measures it was proposing for Osborne's budget this month would cost 29.6 billion pounds over three years, it said could be found by cutting benefits for people who do not need them and through other savings.

The CBI's proposals would cost 2.2 billion pounds in the 2013 fiscal year which could be funded through savings in central government spending and the sale of public land and property, said the CBI's chief policy director, Katja Hall.

The CBI represents around 240,000 British businesses.

(Editing by Toby Chopra)

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Malaysian troops attack armed Philippine group in Sabah

KUALA LUMPUR (Reuters) - Malaysian troops launched an attack on an armed Filipino group on Tuesday, trying to end a standoff on Borneo island after violence in recent days that killed at least 27 people, a Malaysian government official said.

The operation to take over an area occupied by about 180 Filipinos, dozens of them armed, began at 7 a.m. (06.00 p.m. EST Monday), a spokesman for Malaysian Prime Minister Najib Razak said. The government sent seven army battalions to the area in eastern Sabah state on Monday to reinforce police.

Two policemen were killed along with 12 militants when Malaysian security forces tried to tighten a cordon around the armed group on Friday. That sparked more violence over the weekend with six policemen and seven more gunmen killed in another area, raising concerns the violence was spreading.

"After the first attack, I have asserted that the intruders must surrender and if they refuse the authorities of this country will take action," Najib said in a statement.

"The government has to take the right action in order to preserve the pride and sovereignty of this country."

The group, which arrived by boat about three weeks ago, say they are descendants of the sultanate of Sulu in the southern Philippines, which ruled parts of northern Borneo for centuries. They are demanding recognition and an increased payment from Malaysia for their claim as the rightful owners of Sabah.

Malaysia has refused their demands and along with the Philippine government had urged the group to return home.

The violence has sparked a political crisis ahead of elections for both the Philippine and Malaysian governments and raised concerns of instability in resource-rich Sabah state.

(Reporting by Niluksi Koswanage; Writing by Stuart Grudgings; Editing by Dean Yates)

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Gay group calls for apology from Scottish cardinal

LONDON (AP) — A Scottish cardinal who stepped down from church leadership after admitting sexual misconduct should apologize to gay people for his years of "vicious and cruel language" about them, Britain's leading gay-rights group said Monday.

Officials in the Vatican refused to say whether they would formally investigate allegations against Cardinal Keith O'Brien. He resigned last week as Britain's most senior Roman Catholic cleric after being accused of inappropriate behavior by three priests and a former priest.

Until his abrupt resignation as archbishop of St. Andrews and Edinburgh, O'Brien had been due to join cardinals from around the world in Rome for a conclave that will elect a successor to Pope Benedict XVI.

The cardinals met Monday, without O'Brien, for the first of their pre-conclave meetings.

O'Brien has not directly addressed the allegations against him, which include "an inappropriate approach" to a seminarian after night prayers and "inappropriate contact" with another priest.

But he said Sunday that "my sexual conduct has fallen below the standards expected of me as a priest, archbishop and cardinal."

"To those I have offended, I apologize and ask forgiveness," he said.

Stonewall Chief Executive Ben Summerskill said Monday that the gay-rights group noted "with sadness that the cardinal didn't find it in him to apologize to gay people, their families and friends for the harm his vicious and cruel language caused."

The Scottish Catholic Media Office said the complaints against O'Brien had been reported to the Vatican, and it expected there would be an investigation.

The Vatican refused to confirm or deny Monday whether it was investigating O'Brien, and declined to say when it learned of the allegations against him. The Vatican spokesman, the Rev. Federico Lombardi, repeated his statement from last week, which was that the original four accusers had sent their complaint via the papal ambassador to Britain, and the pope had been informed.

Pressed to respond to reports of a purported fifth accuser, who reportedly approached the Vatican directly in October with accusations, another spokesman, the Rev. Thomas Rosica, read O'Brien's statement and said the Vatican would say no more.

O'Brien, 74, had been a staunch advocate of church teaching against homosexuality, calling same-sex marriage "a grotesque subversion of a universally accepted human right" and saying that British government plans to legalize same-sex marriage would "shame the United Kingdom in the eyes of the world."

Last year, Stonewall named O'Brien "Bigot of the Year" for his hard line on homosexuality.

Despite his views on same-sex relationships, O'Brien was long known for his relatively liberal stance on some social issues.

Shortly after he was named cardinal in 2003, O'Brien made an unusual public pledge to defend Roman Catholic Church teaching, having previously suggested there should be more open discussion on issues such as the requirement of celibacy for priests and the church's ban on contraception.

The cardinal largely kept those views to himself over the next decade, although he reiterated them in an interview with the BBC just before the allegations against him emerged. O'Brien told the broadcaster that he was open to priests marrying and having children.

"The celibacy of the clergy, whether priests should marry — Jesus didn't say that," he said in the interview last month. "When I was a young boy, the priest didn't get married and that was it. I would be very happy if others had the opportunity of considering whether or not they could or should get married."

Another British cardinal, Cormac Murphy-O'Connor, said Monday that the claims against O'Brien weren't necessarily evidence that the 1.2 billion-strong Catholic Church — which has been wracked by scandals over sexual abuse by priests — was in need of deep reform.

"There's always been sinners in the church but there's always been saints," he told BBC radio from Rome.

Murphy-O'Connor — who, at 80, is too old to vote in the conclave — said that while sometimes wrongdoing was the responsibility of the church, "sometimes it is just the weakness of individuals and the wrong that they do."

"To say that this is all in the church, I just don't think it is true," he said.

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Nicole Winfield in Rome contributed to this report.

Jill Lawless can be reached at http://Twitter.com/JillLawless

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Beppe Grillo's protest group wins Italian hearts

ROME (AP) — It says a lot about the political mood in Italy that when an unidentified package arrived at comic-turned-political leader Beppe Grillo's house, the bomb squad was called.

The package, delivered Thursday, actually contained bottles of Sardinian liquor — a congratulations gift for his group's meteoric rise in Italy's latest election. The vote did not deliver a clear winner but showed Grillo's anti-establishment 5 Star Movement to be the top vote-getter among political parties.

One thing is clear: Three-party gridlock creating the first hung parliament in modern Italian history has raised political tensions even as Italy's economic situation continues to deteriorate. New figures released Friday show the recession-mired Italian economy contracted 2.4 percent last year, while Italian unemployment rose to a record 11.7 percent in January and 39 percent for youths.

No party won a clear majority in both houses, but if there was a moral winner it was Grillo and his grassroots movement.

"If there was a winner in this election, it was surely Beppe Grillo. Grillo did well from Piedmont to Sicily. He did well in all regions of Italy, with few exceptions he surpassed 20 percent of the vote and in some places 30 percent. It is a national party, it did well everywhere," said Edoardo Bressanelli, a political science professor at Rome's LUISS University.

Grillo himself appeared surprised by the breadth of his success -- along with it possibility for his movement to play a role in forming a new government.

"He expected to be important, but he thought he would be a hard opposition. He didn't expect to be a big player," Bressanelli said.

A total of 163 "Grillini" have won seats: 109 of 630 seats in Italy's lower house and 54 of 315 seats in its upper house. They rode a wave of popular anger at austerity measures, an overprivileged political class, a series of corporate scandals and an underlying absence of public morality. They are not numerous enough to form a government — Pier Luigi Bersani's center-left coalition won control of the lower house and is expected to get the first shot — but those loyal to Grillo certainly will have a key say in how Italy's new government is formed. Grillo won't hold office himself due to a manslaughter conviction for a 1981 traffic accident that left three dead.

Despite market unease over Italy's political gridlock, it will be weeks until President Giorgio Napolitano begins convening the parliamentary groups to form a government, after the newly elected parliament convenes on March 15 and elects its leaders.

In the jockeying ahead of the new legislature, the 64-year-old Grillo hasn't given up his edgy, biting tones or his uncompromising positions. So far he has been unwilling to become an ally of either of Italy's traditional parties — the center-left led by Bersani or the conservatives led by former prime minister Silvio Berlusconi — that he has harangued from his comic's stage for years.

"Bersani is a dead man talking," Grillo wrote on a blog post after the Democratic Party leader made overtures toward him. Grillo went on to call Bersani "a political stalker" for making "indecent proposals instead of stepping down, as anyone in his place would do. He managed to lose while winning."

Grillo instead says his movement should for a government. He says his forces will not vote to support any new government but would back legislation by conscience, one piece at a time. The withholding of a confidence vote limits the possibilities of forming a solid majority in the Senate, where the votes are split.

Bressanalli said one possible outcome is that Grillo could form a limited alliance with the center-left to achieve very specific agenda items before going into a new election soon.

Grillo has been clear about his goals. He wants to cut the number of parliamentarians in half, reduce their salaries, pay unemployed Italians a "citizen's stipend" of €1,000 ($1,300) a month, pass an anti-corruption law and create incentives to help the small businesses that power Italy's economy.

He also has called for a referendum on the euro currency shared by Italy and 16 other European nations.

The Grillo lawmakers indicate they will shun the traditional perks of office, in which lawmakers spend lavishly on hotels and expensive dishes like caviar pasta while in Rome. Instead they will share accommodations and seek out vegetarian fare.

But all lack experience, and that makes them an unknown quantity.

"We know nothing, absolutely nothing" about these new lawmakers, noted political commentator Sergio Romano said.

For all the revolution his forces promise to bring, the former comic also is showing new signs of reasonableness.

After criticizing Italy's president, Giorgio Napolitano, for years, he praised him Thursday for defending Italy amid cutting remarks from a German politician who said Italy had elected "two clowns " — a reference to Grillo and to Berlusconi. Napolitano, in Germany on a state visit, canceled a dinner with the politician after the comment.

"In these years he has been criticized for many, in my opinion, mistaken choices," Grillo wrote on his blog. "But in Germany I saw my president of the Republic. An Italian who stood up straight. Hats off!"

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Egypt protest group signs Morsi up to go to space

CAIRO (AP) — An Egyptian opposition group is using a novel way to protest against President Mohammed Morsi: Sign him up for a chance to win a trip to space.

The April 6 Youth Movement said on its official Facebook page on Thursday that it had entered the Islamist leader's name in the online contest because it wanted to be rid of him. It called on supporters to vote for the president so he'd have a chance to win the trip into space.

There was no immediate response from the president's press office to an email seeking comment.

"For sure, no one in the universe can put up with blatant lies, reneging on promises except for the brotherly people of the moon," the group wrote on its post.

"It is for this reason that the president needs your votes. President Morsi, we wish you safe travels."

April 6 was a driving force behind the 2011 uprising that toppled Hosni Mubarak's regime. Many of its supporters backed Morsi in the June 2012 election he narrowly won to become Egypt's first freely elected president.

But later, the group became among the fiercest critics of the president and his Muslim Brotherhood, the fundamentalist group from which he hails. The opposition accuses Morsi of monopolizing power and going back on campaign promises to have an inclusive government and introduce far reaching reforms.

Morsi's supporters say the new government cannot immediately fix years of neglect and poor administration from Mubarak's 29-year rule.

The group also posted a collage of Morsi, who is a U.S.-trained engineer, in a white space suit.

"I want to go to space because I completed my mission," April 6 mockingly quoted Morsi as saying below his image.

The contest is being run by Axe, a brand of men's grooming products. It promises to send 22 people to the edge of space and back aboard a private spaceship. For the competition, Axe teamed up with U.S. astronaut Buzz Aldrin, the second man to walk on the moon during NASA's Apollo 11 mission in 1969.

Contestants sign up and then get their friends to vote for them. Those with the most votes move to the next stage where they compete in their own country for a chance to go into space. The top recruits advance to a space camp in Orlando, Florida, where they are to take part in three training missions. A panel of space experts chooses those contestants they think are prepared to make the trip into space.

The winners then are to fly 103 kilometers (64 miles) into space with the space tourism company, Space Expedition Corp.

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https://www2.axeapollo.com/en_AE/244825/mohammed-morsi?image=0(hash)./mohammed-morsi?&_suid=13614680934900703352844006959

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