Two policemen shot as new Italy government sworn in

By Gavin Jones and Roberto Landucci

ROME (Reuters) - Enrico Letta was sworn in as Italy's new prime minister on Sunday and immediately faced an emergency after an unemployed man shot two police officers outside his office.

The 49 year-old gunman, from the poor southern region of Calabria, told investigators he had planned to attack politicians but had found none within range.

One of the officers was shot in the neck, hitting his spinal cord, and he was in a serious condition, surgeons said. The other was shot in the leg.

In a surreal scene, outgoing Prime Minister Mario Monti received the official trumpet salute in the courtyard of the renaissance Chigi palace before walking across the cordoned-off square, past police crouching over the scene of the shooting, looking for evidence.

There were immediate calls for parties to try to calm a heated public mood that has been exacerbated by deep political divisions as Italy languishes in its longest recession for 20 years and has been without a proper government for months.

"Our politicians have to start providing solutions to the social crisis and to peoples' needs because the crisis transforms victims into killers like the man who shot today," said lower house speaker Laura Boldrini.

"There's a social emergency that needs answers and our politicians have to start giving them."

Letta, 46, who will set out his program in parliament on Monday, has said his first task will be to tackle the economy which has contracted for six consecutive quarters and pushed youth unemployment close to 40 percent.

Official data this month showed that alongside Italy's 2.7 million officially unemployed in 2012, there were 3 million more who were so demoralized they had given up the search for work, a far higher number than in any other EU country.

The gunman's home town of Rosarno has a jobless rate far above the national average and is renowned for the activities of the local mafia, the 'Ndrangheta, and riots by African immigrants paid a pittance to collect the local fruit harvest.

"SHOOT ME"

Having fired several shots at the police on duty outside the prime minister's office, the man, dressed in a suit, shouted "shoot me, shoot me" to other officers nearby, police said.

Letta, on the right of his center-left Democratic Party (PD), ended two months of stalemate that followed an inconclusive general election by uniting political rivals in a broad coalition government.

The mix of center-right and center-left politicians and unaffiliated technocrats has a record number of seven female ministers and is made up by relative youngsters in an attempt to respond to public disillusion with the political elite.

But the continued risk of political instability was spelled out by an ally of center-right leader Silvio Berlusconi.

Renato Brunetta, lower house leader of Berlusconi's People of Freedom party (PDL), said the government would fall unless Letta promised in his maiden speech to swiftly abolish an unpopular housing tax and repay the 2012 levy to taxpayers.

"If the prime minister doesn't make this precise commitment we will not give him our support in the vote of confidence," following the speech, Brunetta told daily Il Messaggero.

He said that during negotiations for the formation of the government Letta had "given his word" on the abolition and repayment of the tax, which would gouge an 8-billion-euro hole in public accounts.

New Economy Minister Fabrizio Saccomanni, formerly deputy governor of Italy's central bank, said he wanted to cut public spending and taxes, but made no reference to the housing tax.

DISCREDITED

In the election, Italians vented their anger at a discredited political class by giving 25 percent of votes to the anti-establishment 5-Star Movement led by former comic Beppe Grillo, which refused to join any coalition.

Divisions have deepened since the vote, with millions of center-left voters upset, first by a bad split inside the PD and then by the party's decision to govern with Berlusconi after its leadership, including Letta, had ruled out that possibility.

Berlusconi, widely written off after being forced from office in 2011 at the height of a debt crisis, is now a vital part of the ruling majority and has placed several ministers in the cabinet, including the PDL's national secretary Angelino Alfano as deputy prime minister and interior minister.

Recent polls give him a lead of between five and eight percentage points over the center-left, and many commentators believe he may bring down the government as soon as he is fully confident of winning an election.

(Additional reporting by James Mackenzie and Antonella Cinelli; Editing by Robin Pomeroy)

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Exclusive: Boston bomb suspects' parents retreat to village, cancel U.S. trip

By Maria Golovnina

UNDISCLOSED LOCATION IN NORTH CAUCASUS, Russia (Reuters) - The parents of the Boston Marathon bombing suspects have retreated to a village in southern Russia to shelter from the spotlight and abandoned plans for now to travel to the United States, the father of the suspects told Reuters on Sunday.

Speaking in the garden of a large house, Anzor Tsarnaev said he believed he would not be allowed to see his surviving son DzhokharŸ, who was captured and has been charged in connection with the April 15 bomb blasts that killed three people and wounded 264.

"Unfortunately I can't help my child in any way. I am in touch with Dzhokhar's and my own lawyers. They told me they would let me know (what to do)," Tsarnaev said in an interview in the village where he relocated with the suspects' mother.

He agreed to the face-to-face meeting on condition that the village's location in the North Caucasus, a string of mainly Muslim provinces in southern Russia, not be disclosed.

"I am not going back to the United States. For now I am here. I am ill," said Tsarnaev, pacing nervously in the garden at sunset in the quiet village set in rolling hills and surrounded by cow pastures.

His face gaunt and tired, Tsarnaev said he suffered from high blood pressure and a heart condition.

Tsarnaev had said in the North Caucasus province of Dagestan on Thursday that he planned to travel to the United States to see Dzhokhar and bury his elder son, Tamerlan, who was killed during a manhunt four days after the bombings.

In Sunday's interview he said he had decided to move away from the family home in Dagestan to the new location because he wanted to keep a low profile.

Dressed in a black shirt and black trousers, he passionately defended his sons' innocence, saying they had nothing to do with Islamist extremists.

"I feel hopeless. We are simple people. We are trying to understand. We are attacked from all sides," he said, clutching his head in despair.

"I don't know whether I should talk or stay silent. I don't want to harm my child. ... We are used to all sorts of things here but we didn't expect this from the United States."

He and other members of the family believe a man shown on television being led naked into a police car the night of the shootout was Tamerlan, and that the blurry footage, still widely available on YouTube, proves Tamerlan was captured alive. Boston police say Tamerlan was killed in a shootout, and the man seen being led into the car was a bystander who was briefly detained.

Anzor Tsarnaev said he raised the issue with U.S. officials who visited him earlier in the week in his home in Dagestan.

"I asked them: 'I saw my child alive, he was being put into a police vehicle alive and healthy. How come media said he was killed?' They were shocked themselves," the father said.

CAUCASUS ROOTS

The Tsarnaevs are ethnic Chechens who lived in the Central Asian country of Kyrgyzstan and in Dagestan before emigrating to the United States with their children. The parents returned to Dagestan two years ago, and Tamerlan spent the first half of 2012 there.

The suspects' mother, Zubeidat, was with Anzor Tsarnaev in the village but did not wish to speak.

"She is ill, she is shocked, she is depressed. She lost her children," Tsarnaev said. The couple are divorced but have stayed together.

Although the Tsarnaev brothers have roots in Dagestan and neighboring Chechnya, neither had spent much time there until Tamerlan returned to Dagestan last year for six months.

During his interview, Anzor Tsarnaev denied Tamerlan had any contact with militants during his stay, painting an idyllic picture of his son's visit to his ancestral homeland.

"When he came to stay here, he was a good boy. He read books, (Leo) Tolstoy, (Alexandre) Dumas and thick English language books. He would wake up late and read all day, late into the night," he said.

"Sometimes we went to the mosque. We went to see our relatives, in Dagestan, in Chechnya. We visited a lot of households, it was a nice atmosphere."

Tsarnaev said he had to force his son to return to the United States to complete his U.S. citizenship application after Tamerlan tried to convince his family to allow him to stay in Dagestan for good.

"I told him: 'No, you have to go back to obtain your U.S. citizenship'. I forced him to go back. I thought it was the right thing to do. I shouldn't have done that," he said with a pained expression on his face.

The father said he had no hope that Tamerlan's body would be released by the U.S. authorities to be buried in his homeland.

"They won't give us his body," he said, his voice breaking with emotion. "We wont be able to bury him in our land."

(Writing by Maria Golovnina)

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Fire breaks out in Bangladesh building where 377 die

By Ruma Paul and Serajul Quadir

DHAKA (Reuters) - Fire broke out on Sunday in a garment factory that collapsed in the Bangladeshi capital, complicating attempts to find any survivors of a disaster that has killed 377 people.

Fire service officials said the blaze had been started by sparks from cutting equipment used by rescuers.

Police said the owner of the factory, Mohammed Sohel Rana,

was arrested on Sunday trying to flee to India, as hopes of finding more survivors from the country's worst industrial accident began to fade.

Rana was arrested by the elite Rapid Action Battalion in the border town of Benapole, Dhaka District Police Chief Habibur Rahman told Reuters, ending a four-day manhunt that began after Rana Plaza, which housed factories making low-cost garments for Western retailers, caved in on Wednesday.

Bangladesh television showed Rana, a local leader of the ruling Awami League's youth front, being flown by helicopter to the capital Dhaka, where he will face charges of faulty construction and causing unlawful death.

Authorities put the latest death toll at 377 and expect it to climb higher with hundreds more still unaccounted for.

Four people were pulled out alive on Sunday after almost 100 hours beneath the mound of broken concrete and metal, and rescuers were working frantically to try to save several others still trapped, fire services deputy director Mizanur Rahman said. One woman was pulled out of debris by rescuers but died, fire service officials said.

"The chances of finding people alive are dimming, so we have to step up our rescue operation to save any valuable life we can," said Major General Chowdhury Hassan Sohrawardi, coordinator of the operation at the site.

About 2,500 people have been rescued from the wrecked building in the commercial suburb of Savar, about 30 km (20 miles) from the capital, Dhaka.

Officials said the eight-storey complex had been built on spongy ground without the correct permits, and more than 3,000 workers - mainly young women - entered the building on Wednesday morning despite warnings that it was structurally unsafe.

A bank and shops in the same building closed after a jolt was felt and cracks were noticed on some pillars on Tuesday.

Police said one factory owner gave himself up on Sunday following the detention of two plant bosses and two engineers the day before.

Anger over the disaster has sparked days of protests and clashes, with police using tear gas, water cannon and rubber bullets to quell demonstrators who set cars ablaze.

Garment workers blockaded a highway in a nearby industrial zone of Gazipur on Sunday demanding capital punishment for the owners.

The main opposition, joining forces with an alliance of leftist parties which is part of the ruling coalition, called for a national strike on May 2 in protest over the incident.

BUILT ON A FILLED-IN POND

Wednesday's collapse was the third major industrial incident in five months in Bangladesh, the second-largest exporter of garments in the world behind China. In November, a fire at the Tazreen Fashion factory in a suburb of Dhaka killed 112 people.

Such incidents have raised serious questions about worker safety and low wages, and could taint the reputation of the poor South Asian country, which relies on garments for 80 percent of its exports. The industry employs about 3.6 million people, most of them women, some of whom earn as little as $38 a month.

Emdadul Islam, chief engineer of the state-run Capital Development Authority (CDA), said on Friday that the owner of the building had not received the proper construction consent, obtaining a permit for a five-storey building from the local municipality, which did not have the authority to grant it.

Furthermore, three other storeys had been added illegally, he said. "Savar is not an industrial zone, and for that reason no factory can be housed in Rana Plaza," Islam told Reuters.

Islam said the building had been erected on the site of a pond filled in with sand and earth, weakening the foundations.

North American and European chains, including British retailer Primark and Canada's Loblaw, a unit of George Weston Ltd, said they were supplied by factories in the Rana Plaza building.

Since the disaster, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has asked factory owners to produce building designs by July in a bid to improve safety. (Writing by John Chalmers and Alex Richardson; Editing by Jeremy Laurence and Stephen Powell)

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Millions in CIA "ghost money" paid to Afghan president's office: New York Times

(Reuters) - Tens of millions of U.S. dollars in cash were delivered by the CIA in suitcases, backpacks and plastic shopping bags to the office of Afghanistan President Hamid Karzai for more than a decade, according to the New York Times, citing current and former advisers to the Afghan leader.

The so-called "ghost money" was meant to buy influence for the Central Intelligence Agency (CIA) but instead fuelled corruption and empowered warlords, undermining Washington's exit strategy from Afghanistan, the newspaper quoted U.S. officials as saying.

"The biggest source of corruption in Afghanistan", one American official said, "was the United States."

The CIA declined to comment on the report and the U.S. State Department did not immediately comment. The New York Times did not publish any comment from Karzai or his office.

"We called it 'ghost money'," Khalil Roman, who served as Karzai's chief of staff from 2002 until 2005, told the New York Times. "It came in secret and it left in secret."

For more than a decade the cash was dropped off every month or so at the Afghan president's office, the newspaper said.

Handing out cash has been standard procedure for the CIA in Afghanistan since the start of the war.

The cash payments to the president's office do not appear to be subject to oversight and restrictions placed on official American aid to the country or the CIA's formal assistance programs, like financing Afghan intelligence agencies, and do not appear to violate U.S. laws, said the New York Times.

There was no evidence that Karzai personally received any of the money, Afghan officials told the newspaper. The cash was handled by his National Security Council, it added.

U.S. and Afghan officials familiar with the payments were quoted as saying that the main goal in providing the cash was to maintain access to Karzai and his inner circle and to guarantee the CIA's influence at the presidential palace, which wields tremendous power in Afghanistan's highly centralized government.

Much of the money went to warlords and politicians, many with ties to the drug trade and in some cases the Taliban, the New York Times said. U.S. and Afghan officials were quoted as saying the CIA supported the same patronage networks that U.S. diplomats and law enforcement agents struggled to dismantle, leaving the government in the grip of organized crime.

In 2010, Karzai said his office received cash in bags from Iran, but that it was a transparent form of aid that helped cover expenses at the presidential palace. He said at the time that the United States made similar payments.

The latest New York Times report said much of the Iranian cash, like the CIA money, went to pay warlords and politicians.

For most of Karzai's 11-year reign, there has been little interest in anti-corruption in the army or police. The country's two most powerful institutions receive billions of dollars from donors annually but struggle just to recruit and maintain a force bled by high rates of desertion.

(Additional reporting by Alistair Bell and Sarah Lynch in Washington; Writing by Michael Perry; Editing by Mark Bendeich)

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Gunmen surround Libyan foreign ministry

By Ghaith Shennib and Jessica Donati

TRIPOLI (Reuters) - Gunmen surrounded Libya's Foreign Ministry on Sunday, calling for a ban on officials who worked for deposed dictator Muammar Gaddafi holding senior positions in the new administration.

Just days after the French embassy in Tripoli was bombed, the armed protest raised fresh security fears in the capital and the German embassy suspended some of its activities.

At least 20 pick-up trucks loaded with anti-aircraft guns blocked the roads while men armed with AK-47 and sniper rifles directed the traffic away from the Foreign Ministry, witnesses said.

Armed groups also tried unsuccessfully to storm the Ministry of Interior and the state news agency, according to the prime minister who called a news conference to address the problem.

"These attacks will never get us down and we will not surrender," Ali Zaidan told reporters.

"Those who think the government is frustrated are wrong. We are very strong and determined."

Since Gaddafi was toppled by Western-backed rebels in 2011, Libya has been awash with weapons and roving armed bands that are increasingly targeting state institutions.

Tensions between the government and armed militias have been rising in recent weeks since a campaign was launched to dislodge the groups from their strongholds in the capital.

Sunday's protest was to demand a law - which has already been proposed - be passed, banning Gaddafi-era officials from senior government positions. The law could force out several ministers as well as the congress leader, depending on the wording adopted.

"The Ministry of Foreign Affairs will remain closed until the political isolation law is implemented," the commander of the militia told Reuters.

The foreign ministry had been targeted because some officials employed there had worked for Gaddafi, he said.

Libya's legislature, the General National Congress, has previously been prevented from voting on the bill, when protesters barricaded assembly members inside a building for several hours in March demanding they adopt the law.

"The country will remain in crisis so long as these people are present," assembly member Tawfiq Al-Shehabi told Reuters.

The German embassy reduced its activities, a spokesman said, after the prime minister's assertion it had stopped work at its Tripoli mission.

"The German embassy continues to operate but public access is temporarily restricted," the spokesman said, declining to say how long the measures would remain in place.

(Editing by Robin Pomeroy)

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Four arrested as Bangladesh building toll rises to 352

By Serajul Quadir and Ruma Paul

DHAKA (Reuters) - Two factory bosses and two engineers were detained in Bangladesh on Saturday, three days after the collapse of a building where low-cost garments were made for Western brands killed at least 352 people.

More were being pulled alive from the rubble at the building, where police said as many as 900 people were still missing in Bangladesh's worst ever industrial accident.

The owner of the eight-storey building that fell like a pack of cards around more than 3,000 mainly young women workers was still on the run.

Police said several of his relatives were detained to compel him to hand himself in, and an alert had gone out to airport and border authorities to prevent him from fleeing the country.

Officials said Rana Plaza, on the outskirts of the capital, Dhaka, had been built on spongy ground without the correct permits, and the workers were sent in on Wednesday despite warnings the previous day that it was structurally unsafe.

Anger at the negligence has sparked days of protests and clashes, with police on Saturday using tear gas, water cannons and rubber bullets to quell demonstrators who burned cars.

Two engineers involved in building the complex were picked up at their homes early on Saturday, Dhaka district police chief Habibur Rahman said. He said they were arrested for dismissing a warning not to open the building after a jolt was felt and cracks were noticed on some pillars the previous day.

The owner and managing director of the largest of the five factories in the complex, New Wave Style, surrendered to the country's garment industry association during the night and they were handed over to police. They will be kept in remand for an initial 12 days.

The factory, which listed many European and North American retailers as its customers, occupied upper floors of the building that officials said had been added illegally.

"PEOPLE ARE ASKING FOR HIS HEAD"

"Everyone involved - including the designer, engineer, and builders - will be arrested for putting up this defective building," said junior internal affairs minister Shamsul Huq.

Anger over the working conditions of Bangladesh's 3.6 million garment workers - most of whom are women earning as little as $38 a month - has grown since the disaster.

Hundreds were on the streets again on Saturday, smashing and burning cars and sparking more battles with police, who responded with tear gas, rubber bullets and a water cannon. Eyewitnesses said dozens of people were injured in the clashes.

An alliance of leftist parties which is part of the ruling coalition said it would call a national strike on May 2 if all those responsible for the disaster were not arrested by Sunday.

Rahman identified the owner of the building as Mohammed Sohel Rana, a leader of the ruling Awami League's youth front.

"People are asking for his head, which is quite natural," said H.T. Imam, an adviser to the prime minister.

Wednesday's collapse was the third major industrial incident in five months in Bangladesh, the second-largest exporter of garments in the world. In November, a fire at the Tazreen Fashion factory nearby the latest disaster killed 112 people.

Such incidents have raised serious questions about worker safety and low wages, and could taint the reputation of the poor South Asian country, which relies on garments for 80 percent of its exports.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Saturday asked garment factory owners to produce building designs by July in a bid to improve safety.

Remarkably, rescuers armed with rod cutters and drills were still pulling people alive from the precarious mound of rubble - 29 in all since dawn on Saturday.

Marina Begum, 22, spoke from a hospital bed of her ordeal inside the broken building for three days.

"It felt like I was in hell," she told reporters. "It was so hot, I could hardly breathe, there was no food and water. When I regained my senses I found myself in this hospital bed."

Frantic efforts were under way to save 15 people trapped under the concrete who were being supplied with dried food, bottled water and oxygen.

Heavy machinery will not be used to remove the remaining bodies and debris until all the survivors are rescued, junior minister for local government Jahangir Kabir Nanak said.

About 2,500 people have been rescued from the remains of the building in the commercial suburb of Savar, about 30 km (20 miles) from Dhaka.

WRONG PERMIT, ILLEGAL FLOORS

Emdadul Islam, chief engineer of the state-run Capital Development Authority (CDA), said the owner of the building had not received the proper building consent, obtaining a permit for a five-storey building from the local municipality which did not have the authority to grant it.

"Only CDA can give such approval," he said. "We are trying to get the original design from the municipality, but since the concerned official is in hiding we cannot get it readily."

Furthermore, another three storeys had been added illegally, he said. "Savar is not an industrial zone, and for that reason no factory can be housed in Rana Plaza," Islam told Reuters.

Islam said the building had been erected on the site of a pond filled in with sand and earth, weakening the foundations.

Duty free access offered by Western countries and low wages helped turn Bangladesh's garment exports into a $19 billion a year industry. Sixty percent of the clothes go to Europe. The United States takes 23 percent and Canada takes 5 percent.

North American and European chains, including British retailer Primark and Canada's Loblaw, a unit of George Weston Ltd, said they were supplied by factories in the Rana Plaza building.

Loblaw, which had a small number of "Joe Fresh" apparel items made at one of the factories, said on Saturday that it was working with other retailers to provide aid and support.

It said it was sending representatives to Bangladesh and was also joining what it described as an urgent meeting with other retailers and the Retail Council of Canada.

(Writing by John Chalmers and Frank Jack Daniel; Editing by Paul Tait and Jeremy Laurence)

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Four die in NATO plane crash in Afghanistan

KABUL (Reuters) - Four members of NATO's International Security Assistance Force (ISAF) were killed on Saturday when their plane crashed in southern Afghanistan, the coalition said in a statement.

ISAF said there was no insurgent activity in the area when the plane went down over the volatile province of Zabul. The province's police chief Rogh Lewanai told Reuters that bad weather caused the plane to crash, in the district of Shahjoi.

Zabul, wedged between Kandahar and Ghazni, has seen much violence over recent weeks, including a suicide bomb attack in early April which killed a young U.S. diplomat, several U.S. soldiers and an unnamed U.S. civilian. Dozens of Afghan civilians have also been killed there this month.

(Reporting by Mirwais Harooni and Amie Ferris-Rotman; Editing by Stephen Powell)

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Stalemate over, Italy's Letta names new government

By James Mackenzie and Gavin Jones

ROME (Reuters) - Italian center-left politician Enrico Letta named a coalition government on Saturday, making one of Silvio Berlusconi's closest allies deputy prime minister and ending two months of damaging political stalemate.

Letta has said his priorities would be the economy, unemployment and restoring faith in Italy's discredited political institutions as well as trying to turn Europe away from austerity to focus more on growth and investment.

An inconclusive general election in February left Italy, the euro zone's third-largest economy, without effective government, threatening investor confidence and holding up efforts to end a recession set to become the longest since World War Two.

Letta, the 46-year-old deputy head of the Democratic Party (PD), said he felt "sober satisfaction" after three days of talks with rival parties produced a government that included a record number of women ministers but few political big hitters.

"I hope that this government can get to work quickly in the spirit of fervent cooperation and without any prejudice or conflict," President Giorgio Napolitano said.

The anti-establishment 5-Star Movement has refused to join a government which party leader Beppe Grillo said "bordered on incestuous" given the relationship between Letta and his uncle Gianni Letta, Berlusconi's long-time chief of staff.

Angelino Alfano, secretary of Berlusconi's People of Freedom (PDL) party, will be deputy prime minister and interior minister, giving the center-right a strong voice.

But otherwise the big ministries were dominated by lower profile politicians or technocrats, which could limit their power to pass unpopular measures and leave a powerful backstage role for Berlusconi, who will not be joining the government.

The cabinet, which Letta said would contain a record number of women, will be sworn in at 05.30 EST on Sunday before a parliamentary vote of confidence, expected on Monday.

Napolitano asked Letta, a career politician on the right of the PD, to try to form a government after a dramatic week in which party leader Pier Luigi Bersani was forced out by a factional mutiny.

The PD's centre-left alliance won control of the lower house in the February election but fell short of the Senate majority needed to govern, exacerbating tensions in its ranks.

The still-unhealed divisions could affect the stability of the new government given the resistance felt by many in the PD to any alliance with Berlusconi, their foe for almost 20 years.

ENCOURAGEMENT

Letta received some encouragement late on Friday when the ratings agency Moody's kept its rating on Italian government debt unchanged at Baa2 because low interest rates were making it possible to buy time to implement much-needed reforms.

Bond yields have fallen to their lowest in more than two years as investors hope for enough stability to help Italy revive its economy and gradually tackle its large public debt.

However, Moody's also said medium-term growth prospects were weak and forecast the economy would shrink by 1.8 percent this year, compounding more than two decades of stagnation.

Berlusconi, in the middle of legal battles over a tax fraud conviction and charges of paying for sex with a minor, had pressed for the cabinet to include close political allies and opposed the inclusion of technocrats.

In the event, however, several of the big ministries were led by non-political figures, with Bank of Italy Director General Fabrizio Saccomanni becoming economy minister.

Anna Maria Cancellieri, a former police official who served as interior minister under Monti, took the justice portfolio and the labor ministry went to Enrico Giovannini, head of statistics agency ISTAT.

Former European Commissioner Emma Bonino will be Italy's first woman foreign minister and Congo-born Cecile Kyenge, named minister for integration, will be its first black minister, according to the Corriere della Sera daily.

(Additional reporting by Roberto Landucci, Steve Scherer; Editing by Robin Pomeroy)

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Analysis: No good military options for U.S. in Syria

By Phil Stewart and Peter Apps

WASHINGTON (Reuters) - Despite President Barack Obama's pledge that Syria's use of chemical weapons is a "game changer" for the United States, he is unlikely to turn to military options quickly and would want allies joining him in any intervention.

Possible military choices range from limited one-off missile strikes from ships - one of the less complicated scenarios - to bolder operations like carving out no-fly safe zones.

One of the most politically unpalatable possibilities envisions sending tens of thousands of U.S. forces to help secure Syrian chemical weapons.

Obama has so far opposed limited steps, like arming anti-government rebels, but pressure to deepen U.S. involvement in Syria's civil war has grown since Thursday's White House announcement that President Bashar al-Assad likely used chemical weapons.

After fighting wars in Afghanistan and Iraq, the Pentagon is wary of U.S. involvement in Syria. The president's top uniformed military adviser, General Martin Dempsey, said last month he could not see a U.S. military option with an "understandable outcome" there.

"There's a lot of analysis to be done before reaching any major decisions that would push U.S. policy more in the direction of military options," a senior U.S. official told Reuters.

That caution is understandable, given the experience of Iraq where the United States went to war based on bad intelligence about weapons of mass destruction. The Pentagon has made repeated warnings of the enormous risks and limitations of using American military might in Syria's civil war.

STRIKES, NO-FLY ZONE

One form of military intervention that could to some extent limit U.S. and allied involvement in Syria's war would be one-off strikes on pro-Assad forces or infrastructure tied to chemical weapons use. Given Syria's air defenses, planners may choose to fire missiles from ships at sea.

"The most proportional response (to limited chemical weapons use) would be a strike on the units responsible, whether artillery or airfields," said Jeffrey White, a former senior official at the Pentagon's Defense Intelligence Agency and a Middle East expert who is now a defense fellow at the Washington Institute For Near East Policy.

"It would demonstrate to Assad that there is a cost to using these weapons - the problem so far is that there's been no cost to the regime from their actions."

It is not clear how the Syrian government would respond and if it would try to retaliate militarily against the U.S. forces in the region. U.S. military involvement would also upset Russia which has a naval facility on Syria's Mediterranean coast.

Another option that the Pentagon has examined involves the creation, ostensibly in support of Turkey and Jordan, of humanitarian safe areas that would also be no-fly zones off limits to the Syrian air force - an option favored by lawmakers including Senator John McCain of Arizona.

This would involve taking down Syrian air defenses and destroying Syrian artillery from a certain distance beyond those zones, to protect them from incoming fire.

Advocates, including in Congress, say a safe zone inside Syria along the Turkish border, for example, would give needed space for rebels and allow the West to increase support for those anti-Assad forces it can vet.

Still, as officials, including Defense Secretary Chuck Hagel, have warned, once established, a safe zone would tie the United States more closely to Syria's messy conflict. Assad would almost certainly react.

"Once you set up a military no-fly zone or safe zone, you're on a slippery slope, mission creep and before you know it, you have boots on the ground," said Bruce Riedel, a former CIA analyst and Middle East expert at the Brookings Institution.

"Or you end up like Libya where you don't really have a control mechanism for the end-game, should you end up with chaos."

The U.S. military has also completed planning for going into Syria and securing its chemical weapons under different scenarios, including one in which Assad falls from power and his forces disintegrate, leaving weapons sites vulnerable to pillaging.

The U.S. fears anti-Assad Islamist rebels affiliated to al Qaeda could grab the chemical weapons but a U.S. intervention into Syria to get the arms would require tens of thousands of American troops.

Asked if he was confident the U.S. military could secure Syria's chemical weapons stock, Dempsey told Congress: "Not as I sit here today simply because they have been moving it and the number of sites is quite numerous."

IS THERE A WILLING COALITION?

Obama said on Friday that he would seek to mobilize the international community around Syria, as he attempts to determine whether pro-Assad forces used chemical weapons.

British and French officials have long made it clear their countries might be willing to join in any U.S.-led action under the right circumstances.

But Hagel warned last week that "no international or regional consensus on supporting armed intervention now exists." Once a fervent advocate of foreign intervention in Syria, Turkey has grown frustrated with the fractured opposition to Assad and with international disunity.

NATO chief Anders Fogh Rasmussen has ruled out Western military intervention and U.S. Admiral James Stavridis, NATO's supreme allied commander, cautioned last month that the alliance would need agreement in the region and among NATO members as well as a U.N. Security Council resolution - something that looks unlikely given probable opposition from Russia and China.

The Pentagon has focused over the past year on synchronizing defense planning on Syria, including with Britain, France and Canada.

It is also enhancing its military presence in Jordan by ordering some 200 Army planners into Jordan to focus on Syria scenarios. That would be a better group to coordinate any military or humanitarian action than the ad-hoc U.S. military team previously in Jordan.

Obama met Jordan's King Abdullah at the White House on Friday and Hagel traveled to Jordan this week, as well as to Israel, Saudi Arabia, Egypt and the United Arab Emirates.

"It seems increasingly clear that the Obama administration is feeling pressure to act," said Mona Yacoubian, a former State Department official and now a Syria expert at the Stimson Center in Washington.

"But they will likely seek two things: conclusive evidence and multilateral support/participation in whatever action (they) choose, which I think would be limited, targeted air strike."

(Editing by Alistair Bell and Sandra Maler)

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Algerian president in France for medical tests

By Lamine Chikhi

ALGIERS (Reuters) - Algerian President Abdelaziz Bouteflika has been transferred to France for further medical tests after suffering a minor stroke on Saturday, Algeria's official news agency said.

The APS agency said late on Saturday that Bouteflika, 76, was in Paris at the recommendation of his doctors.

He was hospitalized after a minor stroke, according to an earlier state press agency report that quoted the prime minister as saying his condition was "not serious."

The health of Bouteflika is a central factor in the stability of the oil-exporting country of 37 million people that is emerging from a long conflict against Islamist insurgents.

APS said Bouteflika had an "ischemic transitory attack," or mini-stroke, at 12:30 p.m. (1130 GMT) on Saturday.

"A few hours ago, the president felt unwell and he has been hospitalized but his condition is not serious at all," Prime Minister Abdelmalek Sellal was quoted as saying.

Elected in 1999, Bouteflika is a member of a generation of leaders who have ruled Algeria since winning independence from France in a 1954-62 war.

They also defeated Islamist insurgents in the 1990s and saw off the challenge of Arab Spring protests two years ago, with Bouteflika's government defusing unrest through pay rises and free loans for young people.

Bouteflika has served three terms as president and is thought unlikely to seek a fourth at an election due in 2014. Leaked U.S. diplomatic cables said in 2011 that Bouteflika had been suffering from cancer, but that it was in remission.

It is unknown who might take over Africa's biggest country by land area, an OPEC oil producer that supplies a fifth of Europe's gas imports and cooperates with the West in combating Islamist militancy.

More than 70 percent of Algerians are under 30. About 21 percent of young people are unemployed, the International Monetary Fund says, and many are impatient with the gerontocracy ruling a country where jobs, wages and housing are urgent concerns.

(Reporting by Lamine Chikhi; Editing by Peter Cooney)

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Anger on streets as Bangladesh building toll passes 300

By Ruma Paul and Serajul Quadir

DHAKA (Reuters) - Bangladesh textile workers vented their anger on Friday, burning cars and clashing with police, as the death toll passed 300 following the collapse of a building housing factories that made low-cost garments for Western brands.

Miraculously rescuers were still pulling people alive from the rubble - 72 since daybreak following 41 found in the same room overnight - two days after the eight-storey building collapsed on the outskirts of the capital, Dhaka.

But there were fears that hundreds of people were still trapped in the wreckage of the building, which officials said had been built illegally without the correct building permits.

"Some people are still alive under the rubble and we are hoping to rescue them," said deputy fire services director Mizanur Rahman.

A spokesman for Prime Minister Sheikh Hasina said she had ordered the arrest of the owners of the building and of the five factories that occupied it.

Army spokesman Shahinur Islam said the death toll had reached 304 and H. T. Imam, an adviser to the prime minister, said it could exceed 350.

Anger over the working conditions of Bangladesh's 3.6 million garment workers, the overwhelming majority of them women, has grown steadily since the disaster, with thousands taking to the streets to protest on Friday.

About 2,350 people have been rescued, at least half of them injured, from the remains of the building in the commercial suburb of Savar, about 30 km (20 miles) from Dhaka.

An industry official has said 3,122 people, most of them female garment workers, had been in the Rana Plaza building despite warnings that it was structurally unsafe.

WRONG PERMIT, ILLEGAL FLOORS

Emdadul Islam, chief engineer of state run Capital Development Authority (CDA), said that the owner of the building had not received the proper building consent, obtaining a permit for a five-storey building from the local municipality, which did not have the authority to grant it.

"Only CDA can give such approval," he said. "We are trying to get the original design from the municipality, but since the concerned official is in hiding we cannot get it readily."

Furthermore, another three storeys had been added illegally, he said. "Savar is not an industrial zone, and for that no factory can be housed in Rana Plaza," Islam told Reuters.

Bangladesh is the second-largest exporter of garments in the world but many factories remained closed for a second day on Friday, with garment workers protesting against poor conditions and demanding the owners of the building and the factories it housed face harsh punishment.

Police and witnesses said protesters set fire to a number of vehicles and damaged other garment factories.

Dhaka District police chief Habibur Rahman identified the owner of the Rana Plaza building as Mohammed Sohel Rana, a leader of the ruling Awami League's youth front.

Imam, the prime minister's adviser, said Rana had "vanished into thin air".

"People are asking for his head, which is quite natural. This time we are not going to spare anybody," Imam said.

STRING OF FATAL INCIDENTS

Wednesday's collapse was the third major industrial incident in five months in Bangladesh. In November, a fire at the Tazreen Fashion factory on the outskirts of Dhaka killed 112 people.

"This incident is devastating for us as we haven't recovered from the shock of Tazreen fire yet," said Finance Minister Abul Maal Abdul Muhith, who visited the site on Friday.

Such incidents have raised serious questions about worker safety and low wages in Bangladesh and could taint the poor South Asian country's reputation as a producer of low-cost products and services.

North American and European chains, including British retailer Primark and Canada's Loblaw, said they were supplied by factories in the Rana Plaza building.

Mohammad Atiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the proprietors of the five factories inside the building had ignored the association's warning not to open on Wednesday after cracks had been seen in the building the day before.

"We asked not to open the factories and told them we will send our engineer, and until you get the green signal don't open the factories," Islam told Reuters.

"But, unfortunately, they violated our instructions," he said. A bank in the building did close on Wednesday after the warning.

PRAYERS, MOURNING

Savar residents and rescuers dropped bottled water and food on Thursday night to people who called out from between floors. Nearby, relatives identified their dead among dozens of corpses wrapped in cloth on the veranda of a school.

Special prayers were offered for the dead, injured and missing at mosques, temples and pagodas across Bangladesh on Friday.

Ten labor groups called for a strike on Sunday by workers at garment factories across the country.

Sixty percent of Bangladesh's garment exports go to Europe. The United States takes 23 percent and Canada takes 5 percent.

Primark and Loblaw, as well as PWT, a Danish company whose Texman brand clothes were also made in factories at Rana Plaza, operate under codes of conduct aimed at ensuring products are made in good working conditions.

The largest factory, New Wave Style, which listed many European and North American retailers as its customers, occupied the sixth and seventh floors, documents seen by Reuters showed.

(Additional reporting by Anis Ahmed in Dhaka, John Chalmers in New Delhi, Jessica Wohl and Nivedita Bhattacharjee in Chicago, Solarina Ho in Toronto, Robert Hertz in Madrid and Mette Kronholm Fraende in Copenhagen; Writing by Paul Tait; Editing by Alex Richardson)

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Bombs kill at least 20 across Iraqi capital

By Kareem Raheem

BAGHDAD (Reuters) - Bomb blasts in Baghdad killed at least 20 more people on Friday at the end of a week of bloodshed that prompted a United Nations envoy to warn Iraq was "at a crossroads".

More than 160 people have been killed since Tuesday, when troops stormed a Sunni protest camp near Kirkuk, triggering clashes that quickly spread to other Sunni areas in western and northern provinces.

Although well below the heights of 2006-7, this week's violence was the most widespread since U.S. troops pulled out of Iraq in December 2011. Militant attacks have increased this year as Iraq's fragile ethnic and sectarian balance comes under growing strain from the civil war in neighboring Syria.

In and around Baghdad, eight people including a soldier were killed in a series of bomb blasts outside mostly Sunni mosques.

Later on Friday, a car bomb killed seven in a busy shopping area in the south of the city. In the capital's Shi'ite stronghold of Sadr City, a motorcycle bomb exploded near a kiosk selling falafel, killing five.

No group claimed responsibility for any of the attacks, but Iraq is home to a number of insurgent groups including a local wing of al Qaeda.

"I call on the conscience of all religious and political leaders not to let anger win over peace, and to use their wisdom, because the country is at a crossroads," U.N. envoy Martin Kobler said in a statement.

SUNNI PROTESTS

Tens of thousands of Sunni Muslims poured onto the streets of Ramadi and Falluja in the western province of Anbar following Friday prayers, in their biggest show of strength since the outbreak of protests last year.

In Ramadi the preacher, who wore military fatigues with his cleric's turban, gave security forces 24 hours to quit the city, warning he would not be responsible for whatever happened after that.

Sunnis have been protesting since December against what they see as the marginalization of their sect since the U.S.-led invasion overthrew dictator Saddam Hussein in 2003 and empowered majority Shi'ites through the ballot box.

The demonstrations had recently eased, but this week's army raid on a protest camp in Hawija, near Kirkuk, 170 km (100 miles) north of Baghdad, reignited Sunni discontent and appears to have given fresh momentum to insurgents.

The army entered the town of Suleiman Pek after militants who seized control on Wednesday pulled back in agreement with the security forces and the provincial governor.

"We withdrew from these places in order to avoid bloodletting of our people because we know that the army wants to commit a new massacre similar to what happened in Hawija," tribal leader Jamil Al-Saqr told Reuters.

A tribal leader in the nearby town of Tuz Khurmato later said five bodies had been brought to the hospital, accusing government troops of executing them. An army source denied that.

(Additional reporting by Raheem Salman; Writing by Isabel Coles; Editing by Mark Trevelyan)

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French Socialists call for tougher stance on Merkel

By Elizabeth Pineau

PARIS (Reuters) - France's ruling Socialist Party is pressing President Francois Hollande to toughen his stance towards a German counterpart it describes as "self-centered", arguing that Chancellor Angela Merkel's pro-austerity policies are hurting Europe.

The message - spelled out in a 21-page document to be presented at a party brainstorming conference in June - added to growing criticism of Berlin from across the Rhine after Socialist National Assembly speaker Claude Bartolone this week raised the prospect of a "confrontation" with Merkel.

The rhetoric follows a French appeal for an extra year to bring its public deficit below 3 percent of economic output in line with European targets, as rising unemployment keeps Europe's no. 2 economy in the doldrums.

"The friendship between France and Germany is not a friendship between France and the European policy of Chancellor Merkel," read the document, which has been endorsed by the Socialist Party but could still be tweaked before its June meeting on Europe.

Criticizing current European policies as an "unholy alliance between the Thatcherite tone" of Britain's prime minister and the "self-centered instransigence" of Chancellor Merkel, the document urges France to speak out against austerity.

A source in Hollande's office said the document represented only the party, but did not dispute its central message.

"There is a line in the text saying the friendship between France and Germany does not only mean Mrs Merkel's policies," the source said. "Friendship lets us criticize her policies, that's what one needs to understand from this document".

Cooperation between France and Germany has long provided the main motor for decision making in the European Union, but a debt crisis has strained those ties in the past year as ideologically opposed leaders have disagreed on points of economic policy.

"FRIENDLY TENSION" OR JUST TENSION?

Hollande was critical of Merkel's insistence on budget consolidation while he was running for president last year, but has adopted a more conciliatory tone since becoming president.

He often describes France's ties with EU paymaster Germany as defined by "friendly tension" between equal partners.

But Assembly speaker Bartolone, the third most senior member of government, said the friendliness was overstated.

Hollande "calls this 'friendly tension'. For me, it's tension, period, and, if needed, a confrontation," Bartolone told the influential center-left daily Le Monde.

"France must be able to fight against the European Right's point of view ... Austerity alone could condemn the beautiful idea that is Europe rather than save it," he added.

Hollande must rely on a solid Socialist majority in parliament to pass structural reforms this year, including overhauls of the jobless and pension systems. But a small camp of dissidents is growing, threatening his Senate majority.

As many in southern Europe complain that austerity has gone too far, the European Central Bank this week rebuffed suggestions the bloc should ease up, and German Bundesbank President Jens Weidmann called on France to follow the rules.

Yet advocates of easing the pace of austerity, long confined in France to hard-left parliamentarians, gained a nod this week from European Commission President Jose Manuel Barroso who noted that austerity no longer had popular support.

France's European Affairs Minister Thierry Repentin told the weekly Journal du Dimanche that Paris was not making any secret of there being a difference of opinion over austerity.

The presidential source said: "This is a very strong document which backs (Hollande's) policies in general: growth, re-launching Europe and solidarity are at the heart of it."

(Additional reporting by Brian Love, Sophie Louet and Nicholas Vinocur; Writing by Nicolas Vinocur; Editing by Catherine Bremer and Mike Collett-White)

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Russian court denies punk band convict Tolokonnikova parole

MOSCOW (Reuters) - A Russian court refused to release from prison one of two jailed members of the Pussy Riot punk band so that she can look after her young daughter.

The court on Friday rejected Nadezhda Tolokonnikova's appeal for parole eight months after she was handed a two-year prison sentence for the band's performance of a "punk prayer" in Moscow's main Russian Orthodox cathedral.

Tolokonnikova, 23, has been serving her sentence for "hooliganism motivated by religious hatred" in a prison colony in central Russia, about 550 km (350 miles) southeast of Moscow.

"I've spent enough time in the prison colony. I've had enough of studying it. Half a year is long enough," Tolokonnikova, a philosophy student, told the judge at the parole hearing, the RAPSI legal news agency reported.

She complained of having frequent headaches in jail in Mordovia, a region that has a large number of prisons.

Her lawyer, Irina Khrunova, said Tolokonnikova's five-year-old daughter Gera needed her mother.

The judge said Tolokonnikova's parental status had been taken into account when she was sentenced - prosecutors had asked for three years - and pointed to two reprimands she has received as evidence her conduct has not been sufficiently "corrected", RAPSI reported.

Tolokonnikova and two other band members, Maria Alyokhina and Yekaterina Samutsevich, were sentenced last August after a trial that was widely condemned abroad as part of a clampdown on dissent by President Vladimir Putin.

Performers such as Madonna, Sting and former Beatle Paul McCartney offered their support for Pussy Riot last year.

SENTENCES DIVIDED OPINION

Although the two-year sentences outraged many liberals, many conservative Russians saw their profanity-laced protest against Putin's close ties with the Church, performed in short dresses and brightly colored tights and balaclavas, as sacrilege.

Samutsevich, 30, was freed in October when her sentence was suspended on appeal after she argued that she had been prevented from taking part in the protest because a guard seized her.

Tolokonnikova and Alyokhina, 24, lost their appeals and in January a judge rejected Alyokhina's request for her sentence to be deferred until her child is older. She has also requested parole and that appeal could be heard next month.

The three women said they had not meant to offend Orthodox Christians with their protest in February 2012, while anti-Putin protests were drawing tens of thousands of people to the streets of Moscow and other big cities.

The rallies have since dwindled and did not stop Putin winning a presidential election the next month.

In his annual nationwide question-and-answer session on Thursday, Putin denied using the courts for political ends.

But he made clear he did not regret Pussy Riot's sentences, mentioning them in the same breath as people who desecrate the graves of World War Two veterans.

But Samutsevich says Pussy Riot's protest at least succeeded in drawing attention to what the all-women protest band sees as Putin's unhealthy relationship with the church and a lack of political freedoms.

"We wanted to start a discussion in society, show our negative view of the merging of the church and state ... The problem was raised internationally, the problem of human rights was put sharply into focus," she said in a recent interview.

(Writing by Timothy Heritage; Editing by Steve Gutterman and Mike Collett-White)

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Obama talks tough, shows no rush to act on Syria chemical arms evidence

By Matt Spetalnick and Jeff Mason

WASHINGTON (Reuters) - President Barack Obama warned Syria on Friday that its use of chemical weapons would be a "game changer" for the United States but made clear he was in no rush to intervene in the civil war there on the basis of evidence he said was still preliminary.

Speaking a day after the disclosure of U.S. intelligence that Syria had likely used chemical weapons against its own people, Obama talked tough while calling for patience as he sought to fend off pressure for a swift response against Syrian President Bashar al-Assad.

"Horrific as it is when mortars are being fired on civilians and people are being indiscriminately killed, to use potential weapons of mass destruction on civilian populations crosses another line with respect to international norms and international law," Obama told reporters at the White House as he began talks with Jordan's King Abdullah.

"That is going to be a game changer," he said. But Obama stopped short of declaring that Assad had crossed "a red line" and described the U.S. intelligence evaluations as "a preliminary assessment."

While some more hawkish lawmakers have called for a U.S. military response and for the arming of anti-Assad rebels, several leading congressional voices urged a calmer approach after Secretary of State John Kerry briefed them.

"This is not Libya," said Nancy Pelosi, the senior Democrat in the House of Representatives, referring to the relative ease with which a NATO bombing campaign helped overthrow Muammar Gaddafi in 2011. "The Syrians have anti-aircraft capability that makes going in there much more challenging."

U.S. officials said on Thursday the intelligence community believes with varying degrees of confidence that Assad's forces used the nerve agent sarin on a small scale against rebel fighters.

Obama had warned earlier that deployment of chemical weapons by the Syrian government would trigger unspecified consequences, widely interpreted to include possible U.S. military action.

Aides have insisted that the Democratic president will need all the facts before he deciding on action, making clear it is mindful of the lessons of the start of the Iraq war more than a decade ago.

Then, the Republican administration of President George W. Bush used inaccurate intelligence to justify the invasion of Iraq in pursuit of nuclear, chemical and biological weapons that turned out not to exist.

Syria denies using chemical weapons in the two-year-old conflict in which more than 70,000 people have been killed.

NO 'AIRTIGHT CASE' SO FAR

Ghassan Hitto, the Syrian opposition's elected interim prime minister, said in an interview with CBS television that the opposition needed a no-fly zone, surgical air strikes, and the establishment of safe passages from the U.S. government so aid could be delivered to the Syrian people more effectively.

"We are certain that this regime has used chemical weapons against the Syrian people," he said.

"We are not asking for boots on the ground. We are not asking for any U.S. soldiers or any British soldiers or any foreign soldiers to come in and put their lives at risk."

U.S. officials said the evaluation that Syria probably used chemical weapons was based in part on "physiological" samples but have refused to say exactly where they came from or who supplied the material.

White House spokesman Jay Carney said the evidence so far of Syrian chemical weapons use was not an "airtight case" and declined to set a deadline for corroborating reports.

Obama and his aides also appeared intent on deflecting pressure for swift action by stressing the need for a comprehensive U.N. investigation on the ground in Syria - something Assad has blocked from going forward.

The United States has resisted being dragged militarily into Syria's conflict and is providing only non-lethal aid to rebels trying to overthrow Assad. Washington is worried that weapons supplied to the rebels could end up in the hands of al Qaeda-linked fighters.

But acknowledgment of the U.S. intelligence assessment appeared to move the United States closer - at least rhetorically - to some sort of action in Syria, military or otherwise.

Carney said Obama would consider a range of options, should it be determined that Syria has used chemical weapons.

"It's important to remember that there are options available to a commander in chief in a situation like this that include but are not exclusive to that option," he said.

Some U.S. experts warn that Obama risks further emboldening Assad if he acts too slowly or not all, but the White House must also keep in mind polls showing most Americans, weary of wars in Iraq and Afghanistan, are against new military entanglements.

As a result, Obama is unlikely to turn to military options quickly or without allies joining him.

Those options vary from limited one-off missile strikes, perhaps one of the least complicated scenarios, to more bold operations like carving out no-fly, "safe zones." One grim scenario envisions sending tens of thousands of U.S. forces to help secure the chemical weapons.

LITTLE CHANCE SEEN FOR DIPLOMACY

Current and former U.S. officials see little chance of achieving success through the two main diplomatic options: persuading Russia to increase pressure on Syria at the U.N. Security Council, or pressuring Assad to negotiate his own departure.

"There is no evidence of any interest on the part of Assad, who seems to think Iran and Hezbollah and Russia can pull his chestnuts out of the fire," said Fred Hof, who was a top State Department official working on Syria until September.

The Obama administration's sudden disclosure of its chemical weapons findings came just two days after it played down an Israeli assessment that there had been repeated use of chemical weapons in Syria. France and Britain have also concluded that evidence suggests chemical arms have been used.

It is unclear why the Obama administration changed its mind so quickly this week.

Weapons inspectors will determine whether banned chemical agents were used only if they are able to access sites and take soil, blood, urine or tissue samples and examine them in certified laboratories, according to the Organisation for the Prohibition of Chemical Weapons, which works with the United Nations on inspections.

Assertions of chemical weapon use in Syria by Western and Israeli officials citing photos, sporadic shelling and traces of toxins do not meet the standard of proof needed for a U.N. team of experts waiting to gather their own field evidence, the organization said.

(Additional reporting by Roberta Rampton, Mark Felsenthal, Arshad Mohammed, Patricia Zengerle, Phil Stewart, Xavier Briand and Peter Apps in Washington and Anthony Deutsch in Amsterdam; Editing by Alistair Bell and Mohammad Zargham)

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Bangladesh building tragedy down to West's cost squeeze: NGOs

LONDON (Reuters) - Major western clothing retailers squeezing Asian suppliers and a flawed approach to ensuring even basic working standards are fuelling conditions for tragedies like the latest factory collapse in Bangladesh, NGOs said on Thursday.

At least 260 people, mainly female workers, were killed and more than 1,000 were injured when the eight-storey Rana Plaza factory building in Savar, 30 km (20 miles) outside the capital Dhaka, collapsed on Wednesday.

"What we're saying is that bargain-basement (clothing) is automatically leading towards these types of disasters," John Hilary, executive director at British charity War on Want, told Reuters.

He said western clothing retailers' desire to undercut rivals has translated into increasing pressure on foreign suppliers to reduce costs.

"If you've got that, then it's absolutely clear that you're not going to be able to have the right kind of building regulations, health and safety, fire safety. Those things will become more and more impossible as the cost price goes down."

Hilary said the push for lower costs inevitably led to factories cutting corners. "As a result of that, we see the sort of disaster that happened yesterday," he said.

War on Want and its partner in Bangladesh, the National Garment Workers' Federation, called on major international buyers to be held to account.

"This negligence must stop. The deaths of these workers could have been avoided if multinational corporations, governments and factory owners took workers' protection seriously," NGWF president, Amirul Haque Amin, said in a statement.

Gareth Price-Jones, Bangladesh country director of British charity Oxfam, said western companies had not done enough.

"Western buyers could be doing much, much more, and they have a moral responsibility to do so," he told Reuters. "Western buyers really need to press for decent wages and safe working conditions."

He said Bangladeshi building regulations were not robust enough for construction in an earthquake zone and were, in any case, frequently ignored.

Around 4,500 Bangladeshi factories produce clothes for many of the world's major brands, employing 4 million workers and generating 80 percent of Bangladesh's $24 billion annual exports, making it the world's No. 2 apparel exporter behind China.

People watch as rescue workers continue their operations at the collapsed Rana Plaza building in Savar, 30 km (19 miles) outside Dhaka April 25, 2013. Survivors from the garment factory that collapsed... more 

People watch as rescue workers continue their operations at the collapsed Rana Plaza building in Savar, 30 km (19 miles) outside Dhaka April 25, 2013. Survivors from the garment factory that collapsed in Bangladesh killing at least 228 people described on Thursday a deafening bang and tremors before the eight-floor building crashed down under them. REUTERS/Stringer (BANGLADESH - Tags: BUSINESS DISASTER TPX IMAGES OF THE DAY) less 

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But with wages as low as $37 a month for some workers toiling for 10-15 hours a day, and increasing publicity about unsanitary and unsafe working conditions, some retailers were getting worried about their reputation.

AUDITS QUESTIONED

A lot have introduced corporate social responsibility (CSR) programs, where they carry out factory audits and inspections and talk to employees about worker conditions.

But War on Want says the CSR processes are often flawed.

"What happens is the workers are trained in what to say, the factories present favorable books and keep back the real books," Hilary said, noting that in countries like China there were courses to coach factories on how to pass an audit without telling the truth.

The Savar disaster came five months after Bangladesh's worst factory fire, which killed 112 people, and another incident at a factory in January in which seven died.

The Ethical Trading Initiative, an umbrella organization that brings NGOs, unions and brands together to try to improve working conditions, said the latest tragedy demonstrated the chronic widespread problems in the sector that affect the most basic of workers' rights.

"These incidents all serve as yet another call to action for the Bangladesh industry, government, retailers, worker representatives and NGOs to work together, to raise workplace safety standards across the country's garment sector," it said.

In Washington, the Asia advocate for the U.S. NGO Human Rights Watch said weak protection of labor rights contributed to the tragedy at Rana Plaza, where none of the factories are unionized.

"Had one or more of the Rana Plaza factories been unionized, its workers would have been in a position to refuse to enter the building on Wednesday morning," said John Sifton.

"The right to organize a union in Bangladesh is not just a matter of getting fair wages, it's a matter of saving lives," he said.

U.S. State Department deputy spokesman Patrick Ventrell told reporters that labor rights in Bangladesh, as well as work conditions, were "something that we've raised in the human rights report, we raised in our bilateral dialogue, certainly directly with the government from our embassy."

The State Department's annual human rights report for 2012, published on April 19, said trade unions in Bangladesh were able to conduct collective bargaining, "but government action made it nearly impossible to form new trade unions in many sectors, for example, in the ready-made garment and shrimp industries."

(Reporting by James Davey, Neil Maidment, and Paul Eckert in Washington; Editing by Will Waterman and Mohammad Zargham)

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The Pyongyang power couple behind dynastic dictator Kim

By Jack Kim

SEOUL (Reuters) - Kim Kyong-hui has battled alcoholism and the killing of her lover to stand alongside her nephew, North Korea's youthful leader Kim Jong-un, as a reminder that he is the true heir of the dynasty's blood-line.

The 67-year-old daughter of North Korea's founder Kim Il-sung cuts a rare female figure in Pyongyang's male-dominated hierarchy and ranks as a four-star general, often sporting her trademark dark glasses at important events.

She is married to Jang Song-thaek, seen as the second most powerful man in the North, who has survived purges and official displeasure to reach the pinnacle of his career, thanks largely to his sometimes tempestuous marriage to Kim.

This Pyongyang power couple has formed a kind of regency in the obscurantist political world of the North behind its young and mercurial leader, who succeeded his father Kim Jong-il in December 2011.

In recent weeks, the 30-year-old dictator has threatened the United States with nuclear attack, declared a "state of war" with South Korea and announced he was restarting a plutonium reactor at the Soviet-era Yongbyon nuclear plant - all on top of conducting a third nuclear test in February and a long-range rocket test in December.

The couple's reach is augmented by their control over the ruling Korean Workers' Party's secret funds that handle the Kim family's finances both at home and abroad, according to An Chan-il, a former North Korean military officer who defected to the South and has become an expert on the North's power elite.

North Korea is one of the most heavily sanctioned states, and uses its diplomats to smuggle cash and contraband, according to South Korean officials and experts on its opaque finances.

BROTHER AND SISTER

Kim Jong-un's aunt rarely appeared in public until it was clear to the Pyongyang elite in 2010 that former ruler Kim Jong-il's health was deteriorating rapidly.

Jang Sung-min, a former South Korean member of parliament who has met Jang Song-thaek, said that while Kim Kyong-hui was a hugely symbolic figure for North Korea as the daughter of the revolutionary leader, she would not otherwise be a public figure. "If Kim Kyong-hui, a woman in a very male dominated society like North Korea, has to go around showing her face on camera, then things must be really desperate," Jang said.

Kyong-hui's mother died in her 30s in 1948. With Kim Il-sung soon plotting the 1950 Korean War and later remarriage, Kyong-hui and her brother Jong-il were left to form close bonds, according to Hwang Jang-yop, a former Workers' Party secretary and the most senior North Korean to defect.

Hwang was an ideologue who helped Kim Il-sung formulate the country's Juche philosophy that fuses Marxism, extreme nationalism and a call for self sufficiency. Hwang, who died in South Korea in 2010, was a close family friend of Jang and Kim, and his son would later marry Jang's niece.

One of Kyong-hui's brothers was reported to have died at a young age in a swimming accident at a family villa in Pyongyang, according to another North defector. "Kim Jong-il is extremely close to Kim Kyong-hui, his little sister," Hwang wrote in a recollection of the ruling family. Other North Koreans confirmed the siblings' closeness and said Kyong-hui occupied a crucial role between her father and brother.

Kim Jong-il supported her when her father opposed her decision to marry, said Jang Jin-song, a North Korean defector who previously worked at the Workers' Party United Front Department, a propaganda unit tasked with destabilizing South Korea. "But she was also very distrustful of him (Kim Jong-il)," Jang said, recalling she was caught in a power struggle between father and son as the junior Kim was being groomed to succeed on Kim Il-sung's death in 1994.

"It's around this time that she started drinking," said Jang, who said he had seen Kim and her husband bicker at public functions while he was working as a state TV reporter. Jang defected to the South in 2004 and now works as a writer.

TROUBLESOME HUSBAND

While the love-hate relationship between Kyong-hui and her late brother can no longer harm North Korea's new leader, her troubled marriage to Jang could, according to defectors and experts on the North.

Jang, 67, has survived purges and been rehabilitated to stand at the peak of power as Vice Chairman of the National Defense Commission, the country's top military body, and is a member of the ruling Workers' Party Politburo. Recently, Pak Pong-ju, a close ally of Jang, was appointed prime minister, making a comeback from an earlier purge and further cementing the influential uncle's power. Pak was previously director of the Worker's Party Light Industry Department, where he succeeded Kim Kyong-hui.

"Jang is both the greatest benefactor and the greatest threat (to Kim Jong-un)", said Park Hyeong-jung at the state-run Korea Institute of National Unification in Seoul, who has extensively studied the North's ruling elite.

Kim and Jang met when they were students at Kim Il-sung University. He had good looks and charm, was popular and outgoing, known more for partying and deftness with the accordion than his academic achievements, said Hwang, the senior defector, who was head of the school at the time. "I thought she was just young before, but then realized she was very confident and determined," Hwang said of Kim.

Her future husband's humble background made Jang a less than ideal suitor for the headstrong daughter of North Korea's founder. Yet Kim Kyong-hui did not let her father's objections stop her from marrying - with the help of her brother, said Jang Jin-song, the defector.

The marriage was not a happy one, said Jang Jin-song. As Jang Song-thaek started rising through the ranks of the Workers' Party, he became less attentive to his family. It was an open secret that he partied hard and womanized, said defectors now in Seoul and South Korean politicians who met Jang on a 2002 visit as part of an economic delegation touring the South's industrial successes.

Their daughter Kum-song, died in an apparent suicide while attending school in France, ironically because her parents objected to her boyfriend, according to Jang Jin-song.

DOOMED AFFAIR

Kim Kyong-hui herself had an affair with a young pianist, Kim Song-ho, who taught her daughter, according to Jang, who recalled that a classmate of his at the Pyongyang University of Music and Dance had been a rival for Kim's affections. The piano teacher, a former child prodigy and household name, and who was 10 years younger than his paramour, would soon disappear. Kyong-hui would be told he had committed suicide.

But Jang the defector said Kim knew her husband had her lover killed, one of a vast number of people who fell victim to a reign of terror Jang Song-thaek orchestrated in the late 1990s to bolster the power of his brother-in-law.

Kim and Jang, while never divorcing, would separate.

Before he became the power behind the throne under Kim Jong-un, Jang was ejected from the elite in 2004 for angering Kim Jong-il by hosting lavish parties, according to media reports and assessments by South Korean think-tanks. Two years later, he was back, and in 2011 was widely credited with orchestrating the ouster of Army chief of staff, Ri Yong-ho, a major rival who had been a loyal aide to the father of Pyongyang's current leader.

"It is Jang who is pulling the strings of people," Han Ki-beom, a long-time North Korea specialist at the South's spy agency, wrote in a paper on Kim Jong-un's leadership. Han has been tapped to be deputy director of the National Intelligence Service by South Korean President Park Geun-hye. He declined to be interviewed for this article.

MILITARY PURGES

The power of the husband and wife team at Kim Jong-un's side could spell trouble for their nephew should the army seek revenge for a series of purges of senior military officials over the past year, said Jang Sung-min, the former deputy and aide to former South Korean President Kim Dae-jung - who boosted ties with the North through his Sunshine Policy and visited Pyongyang in 2000 for a summit meeting with Kim Jong-il.

"Kim Kyong-hui's source of power is her blood relationship to Kim Il-sung and being the sister of the 'Dear General' (Kim Jong-il). Jang Song-thaek's source of power is her," said Jang Sung-min.

"When Kim Kyong-hui dies, it will deal a serious blow to the power base of Jang Song-thaek and Kim Jong-un."

(Additional reporting by Narae Kim; Editing by David Chance, Bill Tarrant and Ian Geoghegan)

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Canada train plot suspect traveled to Iran: U.S. officials

By Mark Hosenball

WASHINGTON (Reuters) - Investigators believe one of two suspects charged in Canada with plotting to blow up a railroad track carrying passenger trains traveled to Iran within the past two years, U.S. law enforcement and national security officials said on Thursday.

Chiheb Esseghaier, a Tunisian-born doctoral student, traveled to Iran on a trip that was directly relevant to the investigation of the alleged plot, the officials said.

They declined to say precisely when Esseghaier, who appeared in court on Wednesday in Toronto, had traveled to Iran, whether he had gone there more than once, or whom he was in contact with while there.

When they announced the arrest of Esseghaier and his alleged co-conspirator, Raed Jaser, this week, Canadian police said the two men had received "direction and guidance" in the plot from "al Qaeda elements in Iran."

U.S. national security sources close to the investigation said that was a reference to a network of low- to middle-level al Qaeda fixers and "facilitators" based in the town of Zahedan, close to Iran's borders with Afghanistan and Pakistan, that moves money and fighters through Iran to support its activities in South Asia.

Canadian police say there is no sign of Iranian government involvement with the suspects.

Neither Canadian nor U.S. officials have said precisely what interactions they believe Esseghaier or his co-defendant engaged in with the alleged al Qaeda network in Iran. Canadian officials have disclosed only minimal details of the alleged Iran connection in public statements.

Esseghaier and Jaser were arrested on Monday after a joint Canada-U.S. investigation that started last year, based on a tip from a member of the Muslim community.

The pair are charged with plotting to derail a passenger train. U.S. officials said the suspects discussed blowing up a trestle on the railway line carrying daily Amtrak trains between Toronto and New York City shortly before the train was scheduled to pass over the track, thus derailing it.

Esseghaier, 30, has been a doctoral student since 2010 at the INRS institute near Montreal where he is researching the use of nanotechnology to detect cancer and other diseases. In his court appearance, he disputed the authority of Canadian law to judge him, saying the criminal code was not a holy book.

The lawyer for Jaser, 35, said he denied the charges against him and would fight them vigorously.

U.S. law enforcement and national security officials said U.S. and Canadian agencies were investigating whether the suspects had accomplices in the United States or Canada.

One official said there was "another shoe to drop" in the case. Canada's National Post newspaper reported on Thursday that the FBI was holding a third man in New York.

A spokesman for the Royal Canadian Mounted Police said his service was not granting interviews about the case. The FBI did not immediately respond to requests for comment.

(Additional reporting by David Ljunggren in Ottawa; Editing by Alistair Bell and Peter Cooney)

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Southeast Asia's 2015 unity dream collides with reality

By Stuart Grudgings

BANDAR SERI BEGAWAN, Brunei (Reuters) - Southeast Asian nations have quietly begun to row back on a deadline of forming an "economic community" by 2015, confirming what many economists and diplomats have suspected for years as the diverse group hits tough obstacles to closer union.

Rather than referring to the end of 2015 as a firm goal, officials at this year's first summit of leaders of the Association of Southeast Asian Nations (ASEAN), whose 10 members range from glitzy Singapore to impoverished Myanmar, prefer to call it a "milestone" to be built on in years ahead.

In so doing, they are bowing to the reality of slow progress and even some regression on politically sensitive goals, such as eliminating non-tariff barriers and lowering obstacles to the free flow of labor in the diverse region of 600 million people.

While failure to meet the ambitious goal, which was brought forward from 2020 originally, is no surprise, it risks undermining ASEAN's credibility at a time when it faces unprecedented divisions over maritime disputes with China.

"Essentially ASEAN's community-building is an ongoing process that will continue even after our 2015 milestones," Brunei Prime Minister and Sultan Hassanal Bolkiah told a summit-concluding news conference on Thursday.

He acknowledged "challenges due to the varying levels of development amongst us".

The summit's final communiqué contained no specific commitment to the 2015 goal, saying that leaders had agreed to "leverage upon ongoing work to establish the AEC", or ASEAN Economic Community.

The problems raise doubts over whether the group, whose renowned "consensus" approach is designed to protect national interests but also slows decision-making, can bridge yawning economic gaps between richer nations like Malaysia and newer, poorer members such as Myanmar and Laos.

"They are a long way off," says Jayant Menon, a senior economist at the Asian Development Bank in Manila, referring to the "Mekong" nations of Laos, Cambodia, Myanmar and Vietnam.

"This kind of exercise - highly ambitious, short time-lines - simply works to fracture the organization further."

Founded in 1967 in the midst of Cold War conflicts, insurgencies and coups in Southeast Asia, ASEAN has become the region's most successful grouping, credited with preventing strife and promoting a surge in trade and investment.

But critics say it appears to be reaching the limits of its integration unless its decision-making and institutional powers are strengthened. The ASEAN Secretariat in the Indonesian capital, Jakarta, has fewer than 1 percent of the staff numbers at the European Commission, a reflection of governments' reluctance to cede sovereignty.

"I think nobody will say that," Philippine President Benigno Aquino told reporters earlier in the oil kingdom of Brunei, where the summit was held this week, when asked if the 2015 goal was now impossible, adding there was much work to be done.

His trade minister, Gregory Domingo, said non-tariff barriers remained the thorniest problem, suggesting that the pace of reform was being dictated by the slowest-moving members.

"We are liberalizing on our own, but our liberalization has to be in sync with others. Otherwise, if we liberalize too fast ahead of others, it will be to our disadvantage."

Complex and unpredictable import standards in some countries - such as the number of bananas required in a bunch - were holding up the liberalization of agriculture trade, he said.

Signs that the AEC was not going according to plan emerged last September at a meeting in Cambodia when a top official said its completion may be delayed to the end of 2015 rather than the beginning.

TOUGH STEPS

Investors and multinational executives are eager for ASEAN to accelerate its integration to give them better access to a big, youthful population and rapidly growing middle class at a time when Southeast Asia is a rare bright spot in the global economy.

But many voice disappointment that progress in harmonizing regulations has not kept pace with the rhetoric and with businesses' own efforts to treat Southeast Asia as one market.

"Frankly, today you're either local or foreign in most countries; there's no in between when it comes to regulations," Nazir Razak, the chief executive of Malaysia's CIMB bank told Reuters in an interview in February. "It's time we give substance to what ASEAN means, what it means to be ASEAN."

ASEAN has made strong progress in some areas, reducing nearly all import tariffs among the wealthier six members to zero, for example, as it moves towards its goal of becoming a free-trade zone.

Overall, it says it has implemented 77.5 percent of AEC measures, up from 74.5 percent last October. But economists say the remaining 20 percent or so of steps are the tough ones, and that many agreed by ASEAN still face the hurdle of domestic ratification.

While formal tariffs have come down, other barriers to trade remain formidable, such as government protection for sensitive industries and sectors.

Malaysia, for example, has been reluctant to liberalize auto trade barriers for fear of competition from regional car-manufacturing powerhouse Thailand. The Philippines has kept in place heavy restrictions on foreign investors that critics say are aimed at shielding domestic businesses from competition.

Indonesia, Southeast Asia's biggest economy, has taken a protectionist turn over the past year by capping foreign ownership of mines and introducing a 20 percent export tax on metal ores in an effort to boost its industry.

Domestic political pressures have limited steps to liberalize worker migration within ASEAN to a handful of professions.

As ASEAN plods along, it risks being overtaken by more nimble moves as Asian countries strike more favorable free-trade deals with countries globally, adding complexity to a so-called noodle soup of regional agreements.

Several ASEAN countries are aiming to join the proposed Trans-Pacific Partnership, which includes the United States.

"This is pulling in different directions," said the ADB's Menon. "I don't know how this is all going to work out."

(Additional reporting by Manuel Mogato; Editing by Jason Szep and Robert Birsel)

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Thirty-eight feared dead in Russian psychiatric hospital fire

MOSCOW (Reuters) - A fire raged through a psychiatric hospital north of Moscow on Friday and 38 people were feared dead, Russian emergency officials and media reports said.

There were believed to have been 41 people in the building when the fire broke out - 38 patients and three staff members - and three were evacuated, the Emergency Situations Ministry said.

It said emergency workers searching the hospital had found 12 bodies so far and that the fire had been extinguished. A Health Ministry official said 38 people were feared dead, state-run RIA news agency reported.

There were bars on the windows of the single-storey building in Ramensky, 120 km (70 miles) north of Moscow, and some patients apparently died while trying frantically to make it to the main entrance to escape, but many others died in their beds, Itar-Tass cited an unnamed source as saying.

Fires at state institutions in Russia such as hospitals, drug treatment centers and homes for the elderly or handicapped have caused numerous casualties in recent years and raised questions about safety measures and conditions.

The Emergency Situations Ministry said the fire started on or under the roof of the hospital at about 2:20 a.m. (2220 GMT on Thursday), but did not give its cause.

(Writing by Steve Gutterman; Editing by Paul Simao and Mohammad Zargham)

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Embassy attack spreads Libyan instability to capital

By Marie-Louise Gumuchian and Ghaith Shennib

TRIPOLI (Reuters) - Libya's central government has long had only a tenuous grip on the eastern city of Benghazi, but the bombing of the French embassy in Tripoli shows its control of the capital may now also be under threat.

The early morning car bomb devastated France's embassy, wounding two French guards, in the most significant attack against foreign interests in Libya since September's deadly assault on the U.S. diplomatic mission in Benghazi.

The U.S. ambassador and three other Americans were killed in the Benghazi attack leading to a lingering political row in Washington with Republicans accusing President Barack Obama's administration of withholding information and the White House defending its handling of the issue.

In a blow to the Libyan government's hope of asserting its authority after the 2011 war that ousted Muammar Gaddafi, the French embassy bombing, was the first of its kind in Tripoli. Both France and Libya called the attack a "terrorist act",

"Given the events in Benghazi in the last year, it may not be that surprising that even areas where there is more state control are not immune," a Western diplomatic source in Tripoli said. "People can't just point to the east now."

In the capital, the presence of state security forces is more evident than elsewhere - pick-up trucks bristling with weapons protect ministries or stand guard at roundabouts.

But the city of around 1.7 million people is not immune to violence - gunfire still often rings late into the night as armed brigades fight pitched battles against rival groups.

In the last month, the justice ministry was stormed by angry militiamen, the prime minister's aide was abducted and a car carrying the head of the national assembly was shot at.

Foreigners have been targeted in everyday crime - car jackings and theft - but the city has been seen as relatively safe compared to the rest of the North African country.

"Security in Libya is related to the post-revolution status and the fact that the ministries of interior and defense are being rebuilt," said Nizar Kawan, a national assembly member.

"The balance of power is not yet on the state's side even though it should have overall power in the country."

SECURING THE COUNTRY

There has been no claim of responsibility for the bombing but al Qaeda's north African arm, AQIM, threatened retaliation for the French intervention in Mali as recently as last week.

Westerners in the region have been on alert since January's bloody hostage-taking at the In Amenas gas plant in Algeria.

Officials said it was too early to say who was responsible.

In Benghazi, British, Italian, United Nations and Red Cross missions have already been the targets of violence. U.S. officials say militants with ties to al Qaeda affiliates were most likely involved in the September 11 Benghazi attack.

"We cannot definitely say this attack was linked to what happened in Benghazi," Interior Minister Ashour Shuail told reporters. "The problem is not just the security of embassies but the security of the whole nation."

Previous incidents in Tripoli have been minor compared to Tuesday's. In June, a small bomb exploded outside the consulate of neighboring Tunisia; in January, a bomb was thrown at an empty building which U.N. officials had considered using.

"(The attack) signals that what in the past was perceived of as some isolated groups operating in the east, in reality are probably a broader network that has links across the country," Claudia Gazzini of International Crisis Group said.

"Maybe in the east it's easier to operate and carry out such attacks; in Tripoli there is a higher number of government security forces but that doesn't necessarily imply that there is control over the capital."

Prime Minister Ali Zeidan's government has sought to clamp down on armed groups, with an Operation Tripoli campaign aimed at dislodging militias from public buildings. But it has faced resistance and still only commands few disciplined police or military officers, often outmatched by thousands of militiamen.

"There is no security at night, we see no police patrols. We want respect from the state," said Abdelhakim Mohammed of the Supreme Security Committee - a grouping of ex-rebel fighters, now better armed and powerful than the police.

"Ministers keeping call us militias to discredit us."

Analysts say various groups could see gain from attacking French interests in Libya, but they also point to the power struggle between the Libyan authorities and militias.

"The French embassy bombing may have been part of a militia turf war," said Geoff Porter, director of North Africa Risk Consulting. "A signal to Zeidan that he should steer clear of the more powerful and well-established Tripoli militias and perhaps Operation Tripoli would be best left to peter out."

Diplomatic missions are now likely to step up security in light of the attack, which may also deter wary investors.

"The exposure of the capital's vulnerability to terrorist attack will come as a severe blow to the Libyan government's faltering efforts to restore investor confidence in the country," IHS Country Analyst Richard Cochrane said.

(Editing by Jon Hemming)

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Analysis: Iran's unlikely al Qaeda ties: fluid, murky and deteriorating

By Myra MacDonald

LONDON (Reuters) - When al Qaeda leader Ayman al-Zawahiri spoke in an audio message broadcast to supporters earlier this month, he had harsh words for Iran. Its true face, he said, had been unmasked by its support for Syrian President Bashar al-Assad against fighters loyal to al Qaeda.

Yet it is symptomatic of the peculiar relationship between Tehran and al Qaeda that in the same month Canadian police would accuse "al Qaeda elements in Iran" of backing a plot to derail a passenger train.

Shi'ite Muslim Iran and strict Sunni militant group al Qaeda are natural enemies on either side of the Muslim world's great sectarian divide.

Yet intelligence veterans say that Iran, in pursuing its own ends, has in the past taken advantage of al Qaeda fighters' need to shelter or pass through its territory. It is a murky relationship that has been fluid and, say some in the intelligence community, has deteriorated in recent years.

"I wouldn't even call it a marriage of convenience. It's an association of convenience," said Richard Barrett, former head of counter-terrorism for Britain's MI6 Secret Intelligence Service and later head of the U.N. Security Council's monitoring team maintaining the world body's al Qaeda and Taliban sanctions blacklists.

"It's not a strategic alliance. An al Qaeda presence may suit the Iranians because it allows them to keep an eye on them, it gives them leverage in the form of people who are akin to hostages," he added.

"There has been a lot of travel between Iraq and Pakistan and I cannot imagine the Iranians are not aware of that," he said. But it was unlikely that Iran would take the risk of actively collaborating with al Qaeda against North America: "I don't think the Iranians would take it kindly if it turned out that there had been plotting by al Qaeda on their territory."

Canadian police have said there was no sign the plot had been sponsored by the Iranian state. Iranian Foreign Ministry spokesman Ramin Mehmanparast said al Qaeda's beliefs were in no way consistent with Tehran's.

As yet, many details of the alleged plot remain unclear. However, a U.S. government source cited a network of al Qaeda fixers based in the Iranian city of Zahedan, close to the borders of both Pakistan and Afghanistan.

The source said they served as go-betweens, travel agents and financial intermediaries for al Qaeda operatives and cells operating in Pakistan and moving through the area.

Another Western source suggested that with relations deteriorating between Iran and al Qaeda over the civil war in Syria, Tehran had acted recently to stop fighters crossing through from Pakistan's Federally Administered Tribal Areas (FATA) to join Islamist militants fighting to overthrow Assad.

"Although the relationship between Iran and Al Qaeda has always been strained, this worsened after 2011 when the two sides lined up on opposite sides in the Syrian civil war," said Shashank Joshi, a researcher at the Royal United Services Institute think-tank in London.

"Syria's strongest rebel group is allied to Al Qaeda, and both have sharply criticized Iranian support for the Assad regime."

It is unclear whether the planning for the alleged Canadian plot, which Canadian police said had been in the works for some time, was carried out before Syria's war deepened the strain between Tehran and al Qaeda.

"There has been a loosening of the ties," said Barrett, noting that documents released after U.S. forces caught and killed Osama bin Laden in Pakistan in 2011 showed the al Qaeda leader saying he was not able to trust the Iranians at all.

"Since then we have Zawahri castigating Iran quite recently. So clearly something had gone wrong."

IRANIAN CONTROL FAR FROM CLEAR

If indeed the al Qaeda network was based in and around Zahedan - which lies on the main road to Pakistan and is the capital of Sistan-Baluchestan province - it is far from clear how easy it would be for Iran to control.

The region is home to a toxic mix of drug smuggling, illicit trade and gun-running by insurgents. Afghan refugees long ago crowded into poor neighborhoods on the outskirts of Zahedan, although Iran, like Pakistan, periodically tries to push them out, arguing they are a security risk.

Iranian authorities have also been battling a Sunni insurgency of their own in recent years by ethnic Baloch complaining of discrimination. The Jundollah group has claimed several attacks including a bombing that killed 42 people in 2009 - there is no sign it is linked to al Qaeda, though it is often confused with a Pakistan-based group of the same name.

At the same time, on the Pakistan side of the border, Pakistani security forces are fighting an insurgency by secular Baloch separatists, while al-Qaeda linked militants in the Sunni sectarian Lashkar-e-Jhangvi group have carried out a string of attacks against the Shi'ite population there.

PRAGMATIC APPROACH

Despite a common Western misconception that Iran, as the pre-eminent Shi'ite power, is motivated by religion, it has always been much more pragmatic in pursuing its national interest, analysts and diplomats say, allowing it to turn a blind eye to Sunni al Qaeda using its territory.

"The thing that has stymied people is that 'al Qaeda is Sunni and the rest of the people we are talking about here are Shia. They don't mix and match.' Well, they do. And they do it whenever they want to. They just look the other way," said Nick Pratt, a retired U.S. Marines colonel and CIA officer now with the George C. Marshall European Center for Security Studies.

Before the U.S.-led invasion of Afghanistan in 2001, Iran cooperated with India and Russia against the Pakistan-backed Taliban then in power in Kabul. When al Qaeda members fled Afghanistan after the overthrow of the Taliban, it detained them under house arrest in Tehran.

"Since 9/11 a number of senior al Qaeda figures including one of Osama bin Laden's sons and senior commander and strategist Saif al Adel made their way to Iran," said Nigel Inkster, former director of operations for Britain's MI6.

"They were detained under quite strict conditions by the Iranian authorities who subsequently sought to use them as a bargaining chip with the US government in their ongoing dispute about Iran's nuclear program," added Inkster, who is now director of Transnational Threats and Political Risk at the International Institute for Strategic Studies.

Vahid Brown, a U.S.-based researcher who has written extensively on al Qaeda, said in an article on the Jihadica website earlier this year that the men who fled to Iran constituted a dissident faction within al Qaeda, which in recent years had become increasingly vocal in their criticism of bin Laden and Zawahiri.

Divided by their views on the advisability of the September 11, 2001 attacks on the United States, broadly speaking, "the pro-9/11 group, including bin Laden and Zawahiri, fled to Pakistan, while the anti-9/11 group ended up in Iran, where they were placed under house arrest by Iranian authorities," he wrote.

Iran had been willing to cooperate with the United States on Afghanistan initially, but relations soured after Tehran was denounced by then President George W. Bush as part of the "axis of evil" in 2002 and worsened further after the U.S.-led invasion of Iraq in 2003.

Later, analysts say, Tehran allowed al Qaeda members - among them al Qaeda in Iraq leader Abu Musab al-Zarqawi - to transit through Iran.

But Iran has been vulnerable to al Qaeda as well. After one of its diplomats was kidnapped in Pakistan some years ago it released some of the al Qaeda members it had under house arrest in exchange for his freedom, according to Pakistani media reports.

"About 18 months ago the Iranians released most if not all of those they were holding, for reasons still not entirely clear," said Inkster.

"There may well be a residual AQ presence in Iran though I would be cautious about presenting it as something very structured or hierarchic," he added.

"AQ is far from being the organization it once was and what matters more are relationships between like-minded individuals. And that may well be what we are seeing in the Canada case. There seems to be no evidence of Iranian official involvement."

(Editing by Peter Graff)

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