Egyptian judges suspend talks with president

CAIRO (AP) — In their latest face-off with Egypt's Islamist rulers, the country's top council of judges decided Wednesday to suspend its participation in a government-backed judicial reform conference following a renewed push by lawmakers on a controversial bill that would force thousands of their colleagues into retirement.

The Supreme Judicial Council said in statement published by the state news agency MENA that it was backing out of the "Justice Conference" expected for later this month. It had been sponsored by Egypt's Islamist President Mohammed Morsi, and judges were supposed to come up with a plan to remake their institution.

The conference was seen as an overture to the judges by Morsi, who has clashed frequently with the judiciary since becoming president last summer. Morsi's allies say Egypt's judiciary is filled with supporters of ousted president Hosni Mubarak, who have worked to undermine the transition to democracy and the Islamists' rise to power. Judges say Morsi has tried to interfere in their affairs and curb their independence, with an eye to control them.

The crisis over the judiciary is the latest of many challenges facing Morsi, who faces a weakened economy and opposition from a wide range of mostly secular-leaning groups. Morsi's backers say the opposition is stirring up unrest to undermine his rule, while his opponents say Morsi, who was elected with 51 percent of the vote, has failed to live up to his promises of being inclusive and ignored the goals of the uprising against the longtime autocratic ruler Hosni Mubarak.

Many judges already had reservations about the conference, citing mistrust between them and the president and his Islamist allies.

The new bill, proposed by Islamist lawmakers last month, has sparked uproar. One of its most controversial clauses drops the retirement age for judges from 70 to 60. This would affect nearly a quarter of the country's 13,000 judges and prosecution officials, most of them in senior positions, including in Egypt's Supreme Constitutional Court.

The Council said in its brief statement that the decision followed moves by Morsi's Islamist allies to resume debating the law, which "contradicts the requirement of convening the conference." The council said it had consulted with the country's top courts and judges before taking the decision in an emergency meeting. There was no immediate comment from the President's office.

The council's six judges met Morsi last month, and the two sides agreed to form a committee of legal experts that would draft legislation to reform the judiciary. Morsi said in a statement that he will personally adopt all the conclusions of the conference for proposals of bills in order to submit them to the legislative council.

The Egyptian judiciary has become a significant battleground between Islamists and the largely secular opposition. It is the sole branch of government not dominated by Morsi's Islamist allies, although he does have some backers among the judges. A protest by opponents and supporters of the bill turned into violent street clashes in April.

The judiciary has dealt Islamists several political setbacks. Courts dissolved the Islamist-majority lower house of parliament last year, saying the law governing its election was invalid.

This year, a court forced a delay in elections for a new parliament when it ruled that the election law had to be reviewed by the Supreme Constitutional Court. That court is due to issue a verdict next month in a case challenging the constitutionality of the current legislature, the Shura Council, which was mandated to issue law until a new parliament is elected and is discussing the judiciary law.

Senior judge Ashraf Nada, who presides over Cairo's Appeal court, said the new drive to push the law into discussion in the Shura Council was a tactic to pressure the SCC ahead of the decision on the body's constitutionality next month.

"The return of the law to the Shura Council despite a promise from Morsi that it won't be discussed until the Justice Conference is convened is a conspiracy," Nada said. "If Morsi couldn't hold them to their word, he shouldn't have called for the conference in the first place."

Nada warned that the law discussed in parliament threatens to "destroy" the Egyptian judiciary because it would send thousands of senior, well trained judges to retirement, without a way of replacing them.

Essam Sultan, a leading member of the Islamist al-Wasat party that introduced the proposed law, said the conference should still be convened with "representatives of the people" even if judges do not attend and then its recommendations be sent to the Shura Council.

He wrote on his Facebook page Wednesday that the judges are not above scrutiny, and that the public is looking for justice to be meted out after many years because of "huge cracks" in the justice system.

"It is a mistake for some judges to think that they alone are interested in conferences and draft bills that relate to matters of justice, and that the people don't exist," Sultan wrote. "The solution is with the people."

Judges say the lawmakers are violating the country's new constitution, which requires that the judiciary be consulted on any laws pertaining to their profession before taking it to the legislature. In an emergency session last month, the powerful Judges Club, the main organization representing Egypt's 13,000 judges, said the law is trampling on their rights and vowed to complain to international organizations against violations against the judiciary.

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Egypt's Mubarak talks for 1st time since detention

CAIRO (AP) — Egypt's former president, Hosni Mubarak, has spoken to the public for the first time since his detention two years ago, saying he is dismayed at the country's state of affairs and particularly the plight of the poor.

The 85-year old Mubarak spoke to Al-Watan newspaper after a session of his retrial for his role in the killing of hundreds of protesters during the uprising that forced him to step down in 2011.

He was detained two years ago and put on trial. He has since been hospitalized, sentenced to life in prison and then granted a retrial.

Mubarak told the newspaper that it was too early to judge his elected successor, the Islamist Mohammed Morsi.

Mubarak's comments were published Sunday, a day after his trial session.

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U.S., Russia seek new Syria peace talks; rebels skeptical

By Arshad Mohammed and Erika Solomon

MOSCOW/BEIRUT (Reuters) - Russia and the United States agreed to seek new peace talks with both sides to end Syria's civil war, but opposition leaders were skeptical on Wednesday of an initiative they fear might let President Bashar al-Assad to cling to power.

Visiting Moscow after Israel bombed targets near Damascus and as President Barack Obama faces renewed calls to arm the rebels, U.S. Secretary of State John Kerry said Russia had agreed to try to arrange a conference as early as this month.

An East-West disagreement that has seen some of the frostiest exchanges between Washington and Moscow since the Cold War has deadlocked U.N. efforts to settle the Syrian conflict for two years, so any rapprochement could bring an international common front closer than it has been for many months.

Israeli air strikes, reports of the use of chemical weapons and the increasing prominence of al Qaeda-linked militants among the rebels have all added to international urgency for an end to a war that has killed more than 70,000 people.

But with Syria's factional and sectarian hatreds more entrenched than ever, it is far from clear the warring parties are ready to negotiate with each other. Most opposition figures have ruled out talks unless Assad and his inner circle are excluded from any future transitional government.

"No official position has been decided but I believe the opposition would find it impossible to hold talks over a government that still had Assad at its head," said Samir Nashar, a member of the opposition's umbrella National Coalition body.

"Before making any decisions we need to know what Assad's role would be. That point has been left vague, we believe intentionally so, in order to try to drag the opposition into talks before a decision on that is made."

In the past, the United States has backed opposition demands that Assad be excluded from any future government, while Russia has said that must be for Syrians to decide, a formula the opposition believes could be used to keep Assad in power.

Opposition members said they were concerned by comments from Kerry in Moscow, echoing Russia, that the decision on who takes part in a transitional government should be left to Syrians.

"Syrians are worried that the United States is advancing its own interests with Russia using the blood and suffering of the Syrian people," said National Coalition member Ahmed Ramadan.

"We are in touch with the U.S. side and need to be assured that there is no change in its position on Assad."

Inside the country, where rebel groups are numerous and have disparate views, a military commander in the north, Abdeljabbar al-Oqaidi, told Reuters he would want to know details of the U.S.-Russian plan before taking a view. "But," he added, "if the regime were present, I do not believe we would want to attend."

There was no immediate response from the Syrian government, which has offered reforms but dismisses those fighting it as terrorists and puppets of outside powers - the West, Turkey and Arab states opposed to Assad's ally Iran. Speaking before the announcement in Moscow, Assad sounded his usual defiant tone.

"The recent Israeli aggressions expose the extent of the complicity between the Israeli occupier, regional countries and the West in promoting the current events in Syria," he was quoted as saying by a Lebanese televisions station.

"The Syrian people and their heroic army ... are capable of confronting this Israeli adventure, which represents one of the faces of terrorism that is targeting Syria every day."

COMMON INTERESTS

Alarmed at the prospect of the conflict spilling across a volatile region central to global energy supplies and transit routes, the major powers have, as Kerry told Putin on Tuesday, "very significant common interests" in pushing for a settlement.

"The alternative," Kerry later told a joint news conference with Russian Foreign Minister Sergei Lavrov, "is that Syria heads closer to an abyss, if not over the abyss and into chaos."

Both sides fear a failed state in Syria could provide a base for hostile militants willing to strike around the world.

Last June, at a conference in Geneva, Washington and Moscow agreed on the need for a transitional government in Syria but left open the question of whether Assad would be excluded. Diplomacy has foundered since then, and the mediator of the Geneva conference, former U.N. Secretary General Kofi Annan, quit in despair, saying differences among powers were too wide.

Rejecting a characterization of Moscow as the protector of Assad, to whom it still provides arms, Lavrov said Russia was not concerned by the fate of "certain" individuals.

"The task now is to convince the government and all the opposition groups ... to sit at the negotiating table," he said.

Kerry said the conference should be held "as soon as is practical - possibly and hopefully by the end of the month". Neither he nor Lavrov said where it might take place.

Russia, backed by China, has vetoed three U.N. Security Council resolutions hostile to Assad. Alarmed at Western powers' use of a U.N. mandate to oust Muammar Gaddafi in Libya, Moscow and Beijing are wary of such interference in their own affairs.

ASSAD DEFIANT

Recent developments have focused minds on the risks of wider war in the Middle East.

The White House said last month that Assad's troops had probably used chemical weapons - which Obama has called a "red line" that would mandate a strong, if unspecified, response. The Syrian government and the rebels have each accused the other of using poison gas, a charge both sides deny.

Islamist fighters have pledged allegiance to al Qaeda, highlighting the risk to the West that a poorly managed change of leadership in Syria could bring hostile militants to power.

And Israeli air strikes in recent days - which Israeli officials said hit Iranian arms headed for Assad and Tehran's Lebanese allies Hezbollah - underlined the risk of escalation and cross-border conflict in the heart of the Middle East.

The violence has inflamed a confrontation between Sunni and Shi'ite Muslims in the Middle East, with Shi'ite Iran supporting Assad and Sunni powers like Saudi Arabia backing the rebels.

Tehran warned of unforeseeable consequences if Assad were toppled and said only a political settlement would avert a regional conflagration.

"God forbid, if there is any vacuum in Syria, these negative consequences will affect all countries," Foreign Minister Ali Akbar Salehi said in Jordan. "No one knows what will happen."

COOPERATION

Diplomatic sources in Moscow made clear the latest push for peace was being driven by growing alarm following the Israeli air raids, the possibility of foreign arms pouring into Syria and the possible use of chemical weapons.

Moscow and Washington have also signaled they want to improve cooperation on security matters since the Boston Marathon bombings, which U.S. officials suspect was carried out by ethnic Chechens who had lived in Russia. U.S. officials said FBI chief Robert Mueller had been in Moscow on Tuesday to discuss the bombings, but gave no details.

In a further sign of Washington's efforts to improve ties with Russia, Kerry avoided any sharp public criticism of Moscow's human rights record when he met civil rights activists in the Russian capital on Wednesday before his departure.

In Syria itself, Internet connections with the outside world were cut off on Tuesday, according to data from Google Inc and other global Internet companies.

Google's Transparency Report pages showed traffic to Google services pages from Syria suddenly stopping shortly before 10 p.m. Damascus time (1900 GMT).

Obama has shown little desire to embroil U.S. forces in Syria after winding down engagements in Iraq and Afghanistan, but has rejected criticism he might back out of a commitment to act if Assad crossed the "red line" of using chemical weapons.

On Tuesday, he pointed to the deaths of Osama bin Laden and Gaddafi to say "we typically follow through on our commitments".

Obama has said U.S. intelligence agencies believe Assad's forces probably used chemical arms but that the evidence is not entirely conclusive. Syria is not part of an international treaty that bans poison gas but has said it would never use chemical weapons in an internal conflict.

The chaos in Syria, where a fifth of the 25 million population has been driven from their homes, was underlined by the latest incident of rebels taking U.N. peacekeepers hostage on the ceasefire line with the Israeli-occupied Golan Heights.

U.N. Secretary-General Ban Ki-moon strongly condemned the incident and called for the four Filipinos' immediate release. They were detained as they patrolled close to an area where 21 Filipino observers were held for three days in March.

The Yarmouk Martyrs Brigade said the peacekeepers were seized for their own safety during clashes in the area.

(Additional reporting by Steve Holland in Washington, Suleiman al-Khalidi in Amman and Arshad Mohammed, Timothy Heritage, Alexei Anishchuk and Steve Gutterman in Moscow; Writing by Alastair Macdonald, Timothy Heritage and Peter Graff; Editing by Alastair Macdonald)

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South Korea wants talks with North on shuttered industrial zone

SEOUL (Reuters) - South Korea said on Thursday it was proposing formal talks with North Korea to discuss restarting work at a joint factory zone located just north of the rivals' heavily armed border which has been suspended since early April amid security tensions.

North Korea has denied South Korean workers and supplies entry to the industrial zone located a few miles inside the border accusing Seoul of using the joint project to insult its leadership. About 180 South Korean workers remain in the area and are believed to be running out of food and supplies.

It has also withdrawn its workforce from the zone amid spiraling tensions between the two Koreas amid a fusillade of hostile rhetoric from Pyongyang in response to what it sees as threatening U.S. and South Korean military drills.

Ties between the two Koreas were all but severed after the sinking of a South Korean navy ship in 2010 widely blamed on Pyongyang. The North also bombed a South Korean island later that year.

(Reporting by Jack Kim; Editing by David Chance)

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Plea deal talks under way for U.S. soldier accused in Iraq killings: lawyer

By Eric M. Johnson

SEATTLE (Reuters) - A U.S. soldier charged with killing five fellow servicemen in 2009 at a military counseling center in Iraq is seeking a plea deal with Army prosecutors that would spare him from facing the death penalty, his lawyer told Reuters on Tuesday.

Army Sergeant John Russell, under confinement at Joint Base Lewis-McChord near Tacoma, Washington, is accused of going on a shooting frenzy at Camp Liberty, adjacent to the Baghdad airport, in an attack his lawyers have insisted stemmed from combat stress.

Jury selection for his court-martial had been set to begin this week.

But those proceedings were paused while negotiations continued between the two sides on a possible deal in which Russell would plead guilty to murder in return for prosecutors agreeing not to seek the death penalty, his civilian attorney, James Culp said.

"The pretrial agreement that we are working through would have John plead guilty to murder-two, intentional murder, where John takes responsibility for the intentional killing of five people," he told Reuters.

Army prosecutors declined to discuss the status of the case.

The prosecution, which has accused Russell of acting with premeditation, is likely to seek a sentence of life without the possibility of parole, Culp said. He declined to say what punishment he would recommend.

Assuming the talks lead to an agreement, the presiding judge in the case, Army Colonel David Conn, will question Russell next Monday in a proceeding known as a "providence inquiry" to determine whether the circumstances of the shooting support a guilty plea and that Russell believes he is guilty.

DEGREE OF GUILT

Even if the judge accepts the plea bargain, under the military justice system Russell would still face a court-martial - with opening and closing statements, testimony from witnesses and the presentation of evidence - to decide the degree of his guilt.

The choice then would be between a verdict of premeditated murder, or the lesser offense of intentional murder, and his prison term would hinge on that finding.

If no plea bargain is reached, or if the judge rejects such a deal, then Russell would face a lengthier, full-fledged trial in which the determination of his guilt or innocence would be at stake, as well as the question of a death penalty if he were convicted of premeditated murder.

His lawyers would also be free to pursue an acquittal through an insanity defense in that instance.

The state of Russell's mind has been the focus of legal proceedings over the past year and would remain a key factor in deciding whether he acted with malice of forethought or acted on impulse.

Defense attorneys have said Russell, who was attached to the 54th Engineer Battalion based in Bamberg, Germany, suffered a host of mental ailments after several combat tours and was suicidal prior to the attack.

An independent forensic psychiatrist, Dr. Robert Sadoff, has concluded that Russell suffered from post-traumatic stress disorder and psychosis at the time of the shootings. And Sadoff suggested Russell was provoked to violence by maltreatment at the hands of mental health personnel he sought for treatment at Camp Liberty.

"At the very last moment, the extreme despair became rage, and he killed people," Culp said. "He didn't have the mental wherewithal to be planning pre-meditated murder."

Conn will also decide after next Monday's providence inquiry whether Russell will be tried before a judge alone or a jury.

Jury selection, if a panel is to be needed, would begin on April 23, with the two sides slated to begin presenting their case at trial on May 6.

(Reporting by Eric M. Johnson; Editing by Cynthia Johnston, Steve Gorman and Lisa Shumaker)

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U.S. official puts onus on Iran in upcoming nuclear talks

WASHINGTON (Reuters) - Progress in this week's nuclear talks between Iran and six major powers in Almaty, Kazakhstan, depends on how Tehran responds to a proposal put forward by the six, a U.S. official said on Wednesday.

The official, speaking on condition of anonymity, told reporters the powers - Britain, China, France, Germany, Russia and the United States - hoped "positive" Iranian rhetoric would be matched by concrete responses and actions by the Iranians.

(Reporting By Arshad Mohammed; Editing by Sandra Maler)

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U.S., Russia aim to reconvene stalled missile defense talks

MOSCOW/WASHINGTON (Reuters) - Russian and U.S. defense chiefs signaled on Monday their intention to reconvene long-stalled missile defense talks, the Pentagon said, following a change in U.S. missile defense plans for Europe that has been met cautiously by Moscow.

There have been no meetings at the deputy minister-level since 2011, when six were held, a U.S. defense official told Reuters. Talks set for 2012 were canceled because of scheduling conflicts, he said.

The Pentagon said Russian Defense Minister Sergei Shoigu expressed a desire to reconvene the talks, and that Defense Secretary Chuck Hagel assured him they would continue and would be carried forward by the Pentagon's policy chief, Jim Miller.

"We are very interested in further developments on the European missile defense and our minister offered to restart regular consultations on that between deputy ministers," Anatoly Antonov, a deputy of Shoigu, was quoted as saying by Russian news agency RIA.

The news came after a March 16 announcement that the United States would station 14 new anti-missile interceptors in Alaska in response to North Korean provocations, but at the same time forgo a new type of interceptor that would have been deployed in Europe.

Cold War-era foes Moscow and Washington have long been at loggerheads over the shield in Europe. President Barack Obama's move in 2009 to scale down earlier, Bush-administration plans only offered a short-lived respite. Russia's main concern is that the European shield would weaken its nuclear deterrent.

Russia's point man for U.S. relations, Deputy Foreign Minister Sergei Ryabkov, said on March 21 that the Obama administration's planned changes brought a new element to the issue.

He called for further dialogue, noting Moscow still had concern that U.S. missile defenses could threaten its security.

U.S. Admiral James Stavridis, NATO supreme allied commander Europe, noted Russia's concerns in an article published on NATO's website on Monday but said: "We strongly disagree."

"And (we) feel that the system is clearly designed to protect populations against Iran, Syria and other ballistic-missile capable nations that threaten the European continent," Stavridis wrote.

(Reporting by Gabriela Baczynska in Moscow and Phil Stewart in Washington; Editing by Angus MacSwan and Xavier Briand)

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New U.S., Chinese officials reach out ahead of talks later this year

By Anna Yukhananov and Sui-Lee Wee

BEIJING/WASHINGTON (Reuters) - A fresh roster of U.S. and Chinese economic and diplomatic officials on Wednesday pledged to strengthen relations between the world's two largest economies, even as concerns persist over currency rates, cybersecurity and the Korean peninsula.

U.S. Treasury Secretary Jack Lew, in his first international trip since taking office last month, wrapped up a two-day visit to Beijing with a meeting with Chinese Premier Li Keqiang, having reopened dialogue on economic reforms but saying more action is needed on China's exchange rate.

"It was clear from the discussions that China has made a serious commitment to their reform agenda. The challenge will be to drive forward toward material progress," Lew told reporters shortly before heading back to Washington.

On economic reforms, Lew said the dominant theme "was what can be done to generate more domestic demand and more growth."

Li told Lew that Sino-U.S. relations should establish "a new form of thinking" and that both sides should use a "strategic, global and long-term vision to view each other," according to a Chinese government website.

Separately, Chinese Foreign Minister Wang Yi told U.S. Secretary of State John Kerry in a phone call on Wednesday that Sino-U.S. relations are "now at a new historical point, we have to forge ahead on the foundations set by the previous people," the Chinese government said.

A senior U.S. official said Kerry, congratulating Wang on his new post, spoke with him about the secretary of state's planned trip to China next month, as well as bilateral and regional issues, North Korea, and cybersecurity.

Like Kerry and Lew, Wang and Li are both newly appointed to their positions.

The exchanges this week offer a preview of deeper talks scheduled for later this year when both Kerry and Lew will host their Chinese counterparts in Washington for the U.S-China Strategic and Economic Dialogue, an annual high-level forum.

COMPETITION AND COOPERATION

Underscoring the continued economic friction between Washington and Beijing, a bipartisan group of U.S. lawmakers on Wednesday reintroduced legislation to pressure China to allow its currency to rise further against the dollar. Similar proposals in recent years have failed to make it into law.

Many lawmakers assert that China's yuan is undervalued, harming U.S. exporters.

The yuan has appreciated 16 percent in real terms against the dollar since June 2010. The currency hit an all-time high against the dollar on Wednesday, but Lew said China needs to make more progress reforming its foreign exchange regime.

"China's exchange rate should be market-determined. That's in our interest and China's interest. They recognize the need to do it for internal reasons as well," Lew told reporters.

Lew's visit with China's new leaders and senior economic officials as well as with U.S. business leaders in Beijing was aimed at improving economic cooperation and boosting growth.

The two sides also discussed growing tensions on the Korean peninsula, European debt, Internet security and climate change.

Li, who was chosen as premier on Friday, told Lew that China "is ready to work with the United States to promote Sino-U.S. relations and develop it in a cooperative, inclusive, healthy and stable way amid competition," the government said.

Lew also met with Chinese President Xi Jinping, Finance Minister Lou Jiwei and People's Bank of China Governor Zhou Xiaochuan.

During his talks, Lew raised the issue of computer hacking. U.S. President Barack Obama last week convened a meeting with CEOs at the White House on such digital attacks and later called Xi over the issue.

The concerns follow a recent assessment by U.S. intelligence leaders that for the first time said cyber attacks and cyber espionage had supplanted terrorism as the nation's top threat.

"It has to be recognized, as the president indicated, this is a very serious threat to our economic interests. There was no mistaking how seriously we take this issue," Lew told reporters.

On North Korea, which has made a series of provocative threats, Lew said the United States and China "will continue to pursue methods available to change the policy perspective in Pyongyang. We share a common objective of a denuclearized Korean peninsula and we will continue to discuss it."

(Corrects family name for Chinese premier to Li from Keqiang, paragraph 5)

(Reporting by Anna Yukhanov and Sui-Lee Wee in Beijing and Doug Palmer and Arshad Mohammed in Washington; Writing by Susan Heavey; Editing by Warren Strobel and Paul Simao)

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China eyes faster trade talks as trans-Pacific pact advances

By Aileen Wang and Nick Edwards

BEIJING (Reuters) - China will hold three rounds of trade negotiations with Japan and South Korea this year and step up talks with other trading partners, the Ministry of Commerce said on Tuesday, as U.S. efforts to seal a trans-Pacific free trade deal gather pace.

China said the first set of talks on a three-way free trade agreement (FTA) with its two neighbors would be staged in Seoul, the South Korean capital, from March 26-28. They will then move to China, with a third leg to be held in Japan, ministry spokesman Shen Danyang told a news conference.

The talks are seen by analysts as a two-pronged initiative by Beijing to engage with Japan after recent diplomatic tension over disputed island territory in the East China Sea, while also countering the "pivot" by the United States to reaffirm its role in Asia in the face of China's economic rise.

Japanese Prime Minister Shinzo Abe said last week that Tokyo would seek to join the U.S.-led Trans-Pacific Partnership (TPP) talks that currently bring together the United States, Canada, Mexico, Australia, New Zealand, Chile, Peru, Vietnam, Malaysia, Brunei and Singapore.

Bringing the world's third-largest economy into the negotiations would set the stage for a final agreement covering nearly 40 percent of world's economic output, but could also isolate China in the process.

"We will improve communications and talks with the related parties and push forward the progress of our own free trade areas," Shen told reporters when asked to respond to Japan's plan to join TPP negotiations.

"We always think that every economy in the world has the right to participate in the process of world economic integration and we always take an open and inclusive attitude for all efforts to push for regional and world cooperation," Shen said.

"We also think that any regional or bilateral free trade agreement should be only a complement to the multi-lateral trade system, not a replacement for it," he said.

Shen gave no dates for any of the later talks he said were planned as part of the three-way China-Japan-South Korea pact.

The three nations last held ministerial-level talks on a free trade deal four months ago during the East Asia Summit held in Cambodia.

(Reporting by Nick Edwards; Editing by Paul Tait)

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Qatar in talks to invest up to 10 billion pounds in UK projects - report

(Reuters) - Qatar has begun talks with the UK government to invest up to 10 billion pounds into key infrastructure projects in Britain, the Financial Times reported on Wednesday citing people involved in the negotiations.

The Financial Times reported that officials and ministers from both countries held talks over what schemes the Qataris could invest in and whether a specific fund could be set up for the same.

Although the 10 billion pounds investment figure was cited, a timeline for the investment has not been agreed, the FT said.

Potential projects include power plants, road and rail projects and even the Thames 'super-sewer' project under London, the daily reported. The new 14 billion pound nuclear reactor at Hinkley Point in Somerset planned by French utility EDF was one of the schemes discussed, FT said.

(Reporting by Karen Rebelo in Bangalore; Editing by Bob Burgdorfer)

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Cardinals count down to conclave with final talks

VATICAN CITY (AP) — Cardinals enter the Sistine Chapel on Tuesday to elect the next pope amid more upheaval and uncertainty than the Catholic Church has seen in decades: There's no front-runner, no indication how long voting will last and no sense that a single man has what it takes to fix the church's many problems.

On the eve of the vote, cardinals offered wildly different assessments of what they're looking for in a pope and how close they are to a decision. It was evidence that Benedict XVI's surprise resignation has continued to destabilize the church leadership and that his final appeal for unity may go unheeded, at least in the early rounds of voting.

Still, the buzz in the papal stakes swirled around Cardinal Angelo Scola, an Italian seen as favored by cardinals hoping to shake up the powerful Vatican bureaucracy, and Brazilian Cardinal Odilo Scherer, a favorite of Vatican-based insiders intent on preserving the status quo.

Cardinals held their final closed-door debate Monday over whether the church needs more of a manager to clean up the Vatican's bureaucratic mess or a pastor to inspire the 1.2 billion faithful in times of crisis. The fact that not everyone got a chance to speak was a clear indication that there's still unfinished business going into the first round of voting.

"This is a great historical moment but we have got to do it properly, and I think that's why there isn't a real rush to get into things," Cardinal Wilfrid Fox Napier from South Africa said as he left the session Monday.

None of that has prevented a storm of chatter over who's ahead in the race.

Scola is affable and Italian, but not from the Italian-centric Vatican bureaucracy called the Curia. That gives him clout with those seeking to reform the nerve center of the Catholic Church that has been discredited by revelations of leaks and complaints from cardinals in the field that Rome is inefficient and unresponsive to their needs.

Scherer seems to be favored by Latin Americans and the Curia. The Brazilian has a solid handle on the Vatican's finances, sitting on the governing commission of the Vatican bank, the Institute for Religious Works, as well as the Holy See's main budget committee.

As a non-Italian, the archbishop of Sao Paolo would be expected to name an Italian as secretary of state — the Vatican No. 2 who runs day-to-day affairs at the Holy See — another plus for Vatican-based cardinals who would want one of their own running the shop.

The pastoral camp seems to be focusing on two Americans, New York archbishop Timothy Dolan and Boston archbishop O'Malley. Neither has Vatican experience. Dolan has admitted his Italian isn't strong — seen as a handicap for a job in which the lingua franca of day-to-day work is Italian.

Canadian Cardinal Marc Ouellet is well-known and well-respected by many cardinals, stemming from his job at the important Vatican office that vets bishop appointments; less well known is that Ouellet has a lovely voice and is known to belt out French folk songs on occasion.

If the leading names fail to reach the 77 votes required for victory in the first few rounds of balloting, any number of surprise names could come to the fore as alternatives.

Those include Cardinal Luis Tagle, archbishop of Manila. He is young — at age 55 the second-youngest cardinal voting — and was only named a cardinal last November. While his management skills haven't been tested in Rome, Tagle — with a Chinese-born mother — is seen as the face of the church in Asia, where Catholicism is growing.

Whoever he is, the next pope will face a church in crisis: Benedict XVI spent his eight-year pontificate trying to revive Catholicism amid the secular trends that have made it almost irrelevant in places like Europe, once a stronghold of Christianity. Clerical sex abuse scandals have soured many faithful on their church, and competition from rival evangelical churches in Latin America and Africa has drawn souls away.

Closer to home, the next pope has a major challenge awaiting him inside the Vatican walls, after the leaks of papal documents in 2012 exposed ugly turf battles, allegations of corruption and even a plot purportedly orchestrated by Benedict's aides to out a prominent Italian Catholic editor as gay.

Cardinals on Monday heard a briefing from the Vatican No. 2 about another stain on the Vatican's reputation, the Vatican bank. Cardinal Tarcisio Bertone, who heads the commission of cardinals overseeing the scandal-marred Institute for Religious Works, outlined the bank's activities and the Holy See's efforts to clean up its reputation in international financial circles.

Massimo Franco, noted columnist for leading daily Corriere della Sera, said the significance of the revelations about the bank and the Holy See's internal governance cannot be underestimated in this conclave, having determined both Benedict's decision to resign and the major task ahead for his successor.

Franco, whose new book "The Crisis of the Vatican Empire" describes the Vatican's utter dysfunction, said cardinals are still traumatized by Benedict's resignation, leading to the uncertainty heading into the conclave.

"It's quite unpredictable. There isn't a majority neither established nor in the making," he said.

Cardinal Francisco Javier Errazuriz of Chile concurred, saying that while Cardinal Joseph Ratzinger had tremendous front-runner status going into the 2005 conclave that elected him pope after just four ballots, the same cannot be said for any of the candidates of 2013.

"This time around, there are many different candidates, so it's normal that it's going to take longer than the last time," he told The Associated Press. "There are no groups, no compromises, no alliances, just each one with his conscience voting for the person he thinks is best, which is why I don't think it will be over quickly."

Dolan, a possible papal contender, seemed to think otherwise and was bounding with optimism by the end of the pre-conclave meetings and the drama about to unfold.

"I'm kind of happy they're over because we came here to elect a pope and we'll start it tomorrow with the holy sacrifice of the Mass, then into the conclave and look for the white smoke!" Dolan enthused on his radio show on SiriusXM's "The Catholic Channel."

Errazuriz said the key isn't so much where the next pope comes from, but what he would bring to the papacy.

Cardinals, he told AP, are looking for a pope "who is close to God, has love for people, the poorest, the ability to preach the Gospel to the world and understand the young and bring them closer to God. These are the categories that count."

He argued that Latin America, counting 40 percent of the world's Catholics, is underrepresented in the college of cardinals. "It doesn't have 40 percent of the cardinals," he said.

Tuesday begins with the cardinals checking into the Vatican's Domus Sanctae Martae, a modern, industrial-feel hotel on the edge of the Vatican gardens. While the rooms are impersonal, they're a step up from the cramped conditions cardinals faced before the hotel was first put to use in 2005; in conclaves past, lines in the Apostolic Palace used to form for using bathrooms.

Tuesday morning, the dean of the College of Cardinals, Angelo Sodano, leads the celebration of the "Pro eligendo Pontificie" Mass — the Mass for the election of a pope — inside St. Peter's Basilica, joined by the 115 cardinals who will vote.

They break for lunch at the hotel, and return for the 4:30 p.m. procession into the Sistine Chapel, chanting the Litany of Saints, the hypnotic Gregorian chant imploring the intercession of the saints to help guide the voting. After another chant imploring the Holy Spirit to intervene, the cardinals take their oath of secrecy and listen to a meditation by elderly Maltese Cardinal Prosper Grech.

While the cardinals are widely expected to cast the first ballot Tuesday afternoon, technically they don't have to. In conclaves past, the cardinals have always voted on the first day.

The first puffs of smoke from the Sistine Chapel chimney should emerge sometime around 8 p.m. Black smoke from the burned ballot papers means no pope, the likely outcome after Round 1. White smoke means the 266th pope has been chosen.

Austrian Cardinal Christoph Schoenborn, also a leading papal contender, said he was going into the conclave still rattled by the fact that his mentor, Benedict, had resigned.

"It made me cry. He was my teacher. We worked together for over 40 years," Schoenborn said during a Mass late Sunday. Nevertheless, Schoenborn said the cardinals had banded together to face the future.

"It makes us brothers not contenders," he said. "Such a surprising act has already begun a true renewal."

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Reporters Jorge Pina and Daniela Petroff contributed.

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Netanyahu says Iran using nuclear talks to "buy time" for bomb

JERUSALEM (Reuters) - Renewed international efforts to negotiate curbs on Iran's disputed nuclear program have backfired by giving it more time to work on building a bomb, Israeli Prime Minister Benjamin Netanyahu said on Sunday.

His remarks on the inconclusive February 26-27 meeting between Iran and six world powers signaled impatience by Israel, which has threatened to launch preemptive war on its arch-foe, possibly in the coming months, if it deems diplomacy a dead end.

Senior U.S. diplomat Wendy Sherman flew in to brief Israel about the Kazakh-hosted talks, in which Tehran, which denies seeking nuclear arms, was offered modest relief from sanctions in return for halting mid-level uranium enrichment.

There was no breakthrough. The sides will reconvene in Almaty on April 5-6 after holding technical talks in Istanbul.

"My impression from these talks is that the only thing that is gained from them is a buying of time, and through this time-buying Iran intends to continue enriching nuclear material for an atomic bomb and is indeed getting closer to this goal," Netanyahu told his Cabinet in remarks aired by Israeli media.

Extrapolating from U.N. reports on Iran's enrichment of uranium to 20 percent fissile purity, a short technical step from weapons-grade, Netanyahu has set a mid-2013 "red line" for denying the Islamic republic the fuel needed for a first bomb.

Iranian media reported on Sunday the country was building around 3,000 new advanced enrichment centrifuges, a development that could accelerate the nuclear project.

The prospect of unilateral Israeli strikes, and the likely wide-ranging reprisals by Iran and its regional allies, worries Washington, which wants to pursue diplomacy as it winds down costly military commitments abroad.

OBAMA VISIT LOOMS

In an attempt to make their proposals more palatable to Tehran, the United States and five other world powers appeared to have softened previous demands in Almaty - for example regarding their requirement that the Iranians ship out their stockpile of the higher-grade uranium.

A senior Israeli official said that while the Netanyahu government had hoped for a tougher line by the so-called P5+1, it was resigned to awaiting the results of this round of talks.

"At the end of the day, what matters is that the Iranians end their enrichment, whether it's through shutting down their facilities or through more nuanced technical safeguards," the official, speaking on condition of anonymity, told Reuters.

The official would not comment on how or if the latest diplomacy had affected the readiness of Israel, which is widely assumed to have the region's only nuclear arsenal, to go to war.

Iran may have warded off that threat by turning some of its 20 percent-pure uranium into fuel rods for a research reactor.

The international standoff and shifting timelines are expected to dominate U.S. President Barack Obama's trip to Israel later this month. The Israelis urge a tougher posture on Iran from their ally, which has a hefty military presence in the Gulf and says it is poised to use force as a last resort.

Israeli Defense Minister Ehud Barak, in a speech in Washington to the American Israel Public Affairs Committee, echoed Netanyahu in voicing doubt that diplomacy would stop Iran's nuclear ambitions.

"Therefore, all options must remain on the table," he told the pro-Israel lobby group. "We expect all those who say it to mean it. We mean it."

Israel's dovish president, Shimon Peres, sounded more upbeat after meeting Sherman last Thursday. Peres said he had "total faith in the Obama administration, in its commitment and its actions in preventing Iran from developing nuclear weapons".

Obama's Israel visit has been overshadowed by local politics too, given the rightist Netanyahu's failure so far to build a new coalition government after he narrowly won a January 22 ballot.

Appealing to potential party allies to rally to him in the name of national security, Netanyahu told his cabinet: "To my regret this is not happening, and in the coming days I will continue my efforts to unify and galvanize forces ahead of the major national and international challenges that we face."

(Additional reporting by Paul Eckert in Washington; Writing by Dan Williams; editing by Andrew Roche and Christopher Wilson)

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Cardinals get down to work in pre-conclave talks

VATICAN CITY (AP) — Cardinals from around the world have descended on Rome to discuss some of the major problems facing the Catholic Church ahead of the conclave to elect Benedict XVI's successor as pope. Topping the agenda: Vatican scandals, Benedict's remarkable decision to resign and efforts to keep Christianity relevant in today's world.

The first pre-conclave meeting is scheduled for Monday morning, headed by the dean of the College of Cardinals, Cardinal Angelo Sodano. He has said the date for the start of the conclave won't be set until all the cardinals are in Rome, meaning a definitive date may not come until mid-week.

The function of the pre-conclave sessions is to discuss core issues facing the church and for the cardinals to get to know one another better — both of which are designed to help the 115 voting-age "princes" of the church choose the right man for the papacy.

This time around, there's one unofficial agenda item that is attracting the most attention: a briefing from the three cardinals who conducted the investigation into the leaks of confidential documents from the pope's study.

Italian news reports have been rife with unsourced reports about the purported contents of the cardinals' dossier — reports which the Vatican has labeled as "false."

Even if the reports are off, though, the leaks themselves confirmed a fairly high level of dysfunction within the Vatican bureaucracy, with intrigues, turf battles and allegations of corruption, nepotism and cronyism at the highest levels of the church hierarchy.

In one of his last audiences before resigning, Benedict met with the three cardinals who prepared the report and decided that their dossier would remain secret. But he gave them the go-ahead to answer cardinals' questions about its contents.

"What we talk about ... will be certainly the governance of the church and in that context there may be questions to people who did the report," U.S. Cardinal Francis George told reporters. "I think we will find out a lot from a lot of sources to figure out what is necessary now to govern the church well here in Rome itself."

The pope's ex-butler was convicted by a Vatican court of stealing the papers and giving them to an Italian journalist, though he was later pardoned by Benedict.

Another topic facing the cardinals is the reason they're here in the first place: Benedict's resignation and its implications. His decision to end 600 years of tradition and retire rather than stay on the job until death has completely altered the concept of the papacy, and cardinals haven't shied from weighing in about the implications for the next pope.

Previously, cardinals might have been wary about electing a very young pope, fearing a lengthy papacy. With Benedict's resignation, the field might be open now to a younger pope, or conversely an older one who may serve for a few years and then retire without having his final years play out on the world stage, as was the case with Benedict's predecessor, Pope John Paul II.

Cardinal Donald Wuerl, archbishop of Washington, D.C., said the demands on a pope are enormous these days and take a toll: There's world travel, writing encyclicals, holding audiences with visiting heads of state and bishops — not to mention governing the 1.2 billion-strong church and taking time out to pray.

"I wonder if the church isn't better served by simply knowing we can choose the best person we think to be pope, then at a certain point if he thinks 'I can't do this anymore,' then he is free to step aside, just like Pope Benedict did," Wuerl told The Associated Press on Sunday. "I think it is a very liberating thought that we are free to face this reality, this possibility."

Sydney Archbishop Cardinal George Pell, though, has said the resignation was "slightly destabilizing" for the church and that he doesn't want it to create a trend with popes "popping in and out."

South African Cardinal Wilfrid Fox Napier told Spain's El Mundo newspaper that a talent for governance and stamina were important considerations for choosing the new pope — but more important was that the pope must be someone who can show that the church and faith are alive.

It's a sentiment echoed by Wuerl: "Our task is to say to as many people as will listen 'There is a God. God loves you. God wants to be a part of your life,'" Wuerl told AP. "If there are some internal problems in the Vatican, administrative problems at the Vatican, that eventually will be dealt with. It certainly isn't going to condition how I am going to be looking at who is going to guide and lead the church in the next years."

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Tricia Thomas contributed.

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Kerry talks Syria, Iran in Saudi Arabia

RIYADH, Saudi Arabia (AP) — U.S. Secretary John Kerry is in Saudi Arabia for talks with Saudi and Gulf Arab officials expected to focus on the crisis in Syria and fears about Iran's nuclear program.

Kerry was meeting in Riyadh Monday with the foreign ministers of Kuwait, Bahrain and Oman as well as the Saudi crown prince and foreign minister. Saudi Arabia and several other Gulf states are believed to be involved in shipping weapons to Syrian rebels, who have yet to receive lethal aid from the West. They share deep U.S. concerns about Iran's nuclear ambitions and increasing assertiveness in the region.

Kerry is in Saudi Arabia as part of his nine-nation maiden overseas trip as secretary of state. He travels next to the United Arab Emirates and Qatar before returning to Washington Wednesday.

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White House, Republicans dig in ahead of budget talks

WASHINGTON (Reuters) - Positions hardened on Wednesday between President Barack Obama and Republican congressional leaders over the budget crisis even as they arranged to hold last-ditch talks to prevent harsh automatic spending cuts beginning this week.

Looking resigned to the $85 billion in "sequestration" cuts starting on Friday, government agencies began reducing costs and spelling out to employees how furloughs will work.

Expectations were low that a White House meeting on Friday between Obama and congressional leaders, including Republican foes, would produce any deal to avoid the cuts.

Public services across the country - from air traffic control to food safety inspections and education - might be disrupted if the cuts go ahead.

Put into law in 2011 as part of an earlier fiscal crisis, sequestration is unloved by both parties because of the economic pain it will cause, but the politicians cannot agree how to stop it.

A deal in Congress on less drastic spending cuts, perhaps with tax increases too, is needed by Friday to halt the sequestration reductions, which are split between social programs cherished by Democrats and defense spending championed by Republicans.

Obama stuck by his demand that Republicans accept tax increases in the form of eliminating tax loopholes enjoyed mostly by the wealthy as part of a balanced approach to avoiding sequestration.

"There is no alternative in the president's mind to balance," White House spokesman Jay Carney told reporters.

Obama wants to end tax breaks for oil and gas companies and the lower "carried interest" tax rate enjoyed by hedge funds.

But Republicans who reluctantly agreed to raise income tax rates on the rich to avert the "fiscal cliff" crisis in December are in no mood for that.

"One thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," said Senate Republican leader Mitch McConnell.

In one of the first concrete effects of the cuts, the administration took the unusual step of freeing several hundred detained illegal immigrants because of the cost of holding them.

Republicans described that move by Immigration and Customs Enforcement (ICE) as a political stunt aimed at scaring them into agreeing to end the sequestration on Obama's terms.

The issue looked like it might become more controversial on Wednesday when The Associated Press reported that the Homeland Security Department official in charge of immigration enforcement and removal had announced his resignation on Tuesday just after news of the immigrants' releases came out.

But ICE said the report was "misleading." The official, Gary Mead, told ICE weeks ago of his retirement in April after 40 years of federal service, a spokeswoman said. Earlier, Carney denied the White House had ordered the immigrants' release.

Friday's White House meeting will include McConnell and the other key congressional leaders: Senate Democratic leader Harry Reid, House of Representatives Democratic leader Nancy Pelosi, and House Speaker John Boehner, the top U.S. Republican.

'BELATED FARCE'?

The chances of success were not high.

One congressional Republican aide criticized the White House for calling the meeting for the day the cuts were coming into effect. "Either someone needs to buy the White House a calendar, or this is just a - belated - farce. They ought to at least pretend to try."

Unlike during other fiscal fights in Congress, the stock market is taking the sequestration impasse calmly.

U.S. stocks rose, with major indexes posting their best daily gains since early January, as Federal Reserve Chairman Ben Bernanke remained steadfast in supporting the Fed's stimulus policy and data pointed to economic improvement.

On Thursday, the Senate is expected to vote on competing Democratic and Republican ideas for replacing the sequestration. Both measures are expected to be defeated.

The Republican plan unveiled late on Wednesday would let the sequestration go into effect on Friday, but require Obama to submit an alternative $85 billion spending reduction plan to Congress by March 15, thus allowing more flexibility on how the cuts would be carried out.

Congress would have until March 22 to reject the proposal, in which case the original sequestration would remain in place. Democrats were still studying it. But on Tuesday, Senate Majority Leader Harry Reid said new revenues needed to be part of any substitute plan.

The Democratic proposal would replace the across-the-board cuts mainly with tax increases on the rich coupled with spending cuts. Some of those would be achieved by eliminating crop subsidies for large agricultural companies. More savings would be through minor defense cuts in later years.

Republicans have vowed to block any tax increases for deficit reduction.

Bernanke said sequestration was too drastic an approach for reducing the budget deficit.

"What I am advising is a more gradual approach. I'm not saying we should ignore the deficit. I am not saying we shouldn't deal with long-term fiscal issues, but I think that from the perspective of our recovery, a more gradual approach would be constructive," he told a House Financial Services Committee hearing.

Among many warnings from the Obama administration of possible damage to public services, the Air Force said its Thunderbirds exhibition flying team is expected to be grounded if sequestration happens.

The Pentagon will put most of its 800,000 civilian employees on unpaid leave for 22 days, slash ship and aircraft maintenance and curtail training.

But the full weight of sequestration will take place over seven months, allowing Obama and the Republicans time to work out a deal after the cuts begin this week.

White House spokesman Carney said sequestration would officially start just before midnight on Friday night if no deal were reached.

Government agencies began to tell employees how sequestration will force them to take furloughs. The Environmental Protection Agency acting head, Bob Perciasepe, told employees in an email that the agency did not know how much of its budget will be cut but it was working on an estimate of 5 percent.

"What might that mean for our employees? If the sequester order requires a 5.0% cut, the impact could be up to 13 furlough days," he said. That would likely mean four furlough days by June 1, he said.

(Additional reporting by Mark Felsenthal, Rick Cowan and Valerie Volcovici; Writing by Alistair Bell; Editing by Tim Dobbyn and Lisa Shumaker)

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