Searchers dismiss possibility wreckage in Bay of Bengal is from MH370

(Reuters) - A private company said it had found what it believes is wreckage of a plane in the Bay of Bengal that should be investigated as potential debris from missing Malaysia Airlines Flight MH370, but the possibility was dismissed by search coordinators.

The Joint Agency Coordination Centre (JACC) managing the multinational search for the missing plane said it continued to believe that the plane came down in the southern Indian Ocean off Australia.

The Bay of Bengal is located between India and Myanmar, thousands of miles from the current search area. The wreckage was reported by Australian geophysical survey company GeoResonance.

"The company is not declaring this is MH370, however it should be investigated," GeoResonance said in a statement.

The company said it had passed on the information to Malaysian Airlines and the Malaysian and Chinese embassies in Australia on March 31, and to the JACC on April 4.

"The company and its directors are surprised by the lack of response from the various authorities," GeoResonance said.

"This may be due to a lack of understanding of the company's technological capabilities, or the JACC is extremely busy, or the belief that the current search in the Southern Indian Ocean is the only plausible location of the wreckage."

GeoResonance says on its website that it offers a unique and proven method of geophysical survey that detects electromagnetic fields from various chemical elements. GeoResonance did not respond to requests for further comment.

Flight MH370, carrying 227 passengers and 12 crew, went missing in March en route from Kuala Lumpur to Beijing.

The Australian-led search team said it was relying on information from satellite and other data to determine the missing aircraft's location and the location in the GeoResonance report was not within that search arc.

"The joint international team is satisfied that the final resting place of the missing aircraft is in the southerly portion of the search arc," it said.

A massive search operation involving aircraft, ships and sophisticated underwater equipment capable of scouring the ocean floor has so far failed to turn up any trace of the plane.

Australia's Prime Minister Tony Abbott said on Monday the chance of finding floating debris was now remote, and a new phase of the search would focus on the seabed.

Malaysia's transport ministry said in a statement late on Tuesday that it was assessing the credibility of the latest report.

"In line with Malaysia's consistent stand of verifying and corroborating any new lead since Day 1 of the search operations, we are aware of a report citing the detection of potential aircraft wreckage in the Bay of Bengal," said Acting Transport Minister Hishammuddin Hussein.

"Malaysia is working with its international partners to assess the credibility of this information."

(Reporting By Lehar Maan in Bangalore and Lincoln Feast in Sydney; Editing by Joyjeet Das, Saumyadeb Chakrabarty and Alex Richardson)

• Malaysia Airlines
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Chemical watchdog to investigate Syria chlorine gas claims

By Thomas Escritt and Mariam Karouny

AMSTERDAM/BEIRUT (Reuters) - The global chemical weapons watchdog overseeing the destruction of Syria's toxic stockpile will send a fact-finding mission to Syria to investigate allegations by rebels and activists of chlorine gas attacks, the organization said on Tuesday.

The Hague-based Organisation for the Prohibition of Chemical Weapons (OPCW) said President Bashar al-Assad's government had agreed to accept the mission and had promised to provide security in areas under its control.

"The mission will carry out its work in the most challenging circumstances," the OPCW said, referring to the three-year-old conflict between Assad's forces and rebels. It gave no exact date for the mission but said it would take place soon.

Accusations by rebels and Syrian activist of at least three separate chlorine gas attacks by Assad's forces in the last month have exposed the limits of a deal which Assad agreed last year for the destruction of his chemical arsenal.

The accord followed a sarin gas attack on rebel-held outskirts of Damascus last August in which hundreds of people were killed. Washington and its allies blamed Assad's forces for the attack, but Damascus authorities said rebels carried it out to try to force Western military intervention.

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People gather at the site of two car bomb attacks at al-Abassia roundabout in Homs April 29, 2014, i …

Damascus has now shipped out or destroyed 92 percent of the chemicals it pledged to eliminate. However chlorine, which also has many industrial uses, was never included in the list submitted to the OPCW.

Videos released by activists of chlorine gas canisters they said were dropped in barrel bombs from Syrian military helicopters could not be verified by Reuters but analysts say the pattern of attacks suggest a coordinated campaign with growing evidence of government responsibility.

The U.S. State Department said last week that if Syrian authorities used chlorine gas with the intent to kill or harm this would violate the Chemical Weapons Convention (CWC), which it joined as part of last year's agreement.

In addition to the possible chlorine use, diplomats say Western powers believe Syria may have not have declared all of its chemical stockpiles - an accusation which Syria has denied.

One Western diplomat said a separate OPCW mission arrived in Syria last week to discuss discrepancies between Syria's original declaration and the quantities which have been shipped out so far.

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Residents inspect damage from mortar bombs that landed in Badr al-Din al-Hussein school complex, a r …

BOMBINGS FOLLOW ASSAD'S NOMINATION

Last year's chemical deal helped avert the threat of U.S. air strikes against Assad's forces. Since then the 48-year-old president has consolidated his control around Damascus and central Syria and now appears determined to match those military advances with political gains.

On Monday he declared he will run in a June 3 election - dismissed in advance by his opponents as a charade - which is widely expected to deliver him a third term in office.

Ten other hopefuls have also put their names forward, but Syria's election law requires candidates to have lived in Syria for 10 years and to win the endorsement of 35 members of the pro-Assad parliament, ruling out members of Syria's opposition in exile or any other dissenting voices.

A day after Assad's formal nomination, more than 50 people were killed in car bombs and mortar attacks targeting government-controlled areas of Damascus and Homs.

In Homs, at least 37 people including children were killed by two car bombs near a busy roundabout in Zahraa, a neighborhood where the population is mainly from Assad's Alawite minority, an offshoot of Shi'ite Islam.

A local security source put the death toll at 42.

In central Damascus, two mortar shells struck an education complex in the mainly Shi'ite district of Shaghour, killing at least 14 people and wounding dozens.

(Reporting by Dominic Evans; Editing by Angus MacSwan)

• Politics & Government
• Unrest, Conflicts & War
• Syria
• chlorine gas
• OPCW
• President Bashar al-Assad
• Damascus

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Ukraine separatists seize second provincial capital, fire on police

By Vasily Fedosenko

LUHANSK, Ukraine (Reuters) - Hundreds of pro-Moscow separatists stormed government buildings in one of Ukraine's provincial capitals on Tuesday and fired on police holed up in a regional headquarters, a major escalation of their revolt despite new Western sanctions on Russia.

New U.S. and EU sanctions packages, announced with fanfare, were seen as so mild that Russian share prices rose in relief. A small number of names were added to existing blacklists, while threats to take more serious measures were put on hold.

Nevertheless, Russian President Vladimir Putin responded by threatening to reconsider Western participation in energy deals in Russia, the world's biggest oil producer, where most major U.S. and European oil companies have extensive projects.

Demonstrators smashed their way into the provincial government headquarters in Luhansk, Ukraine's easternmost province, which abuts the Russian border, and raised separatist flags over the building, while police did nothing to interfere.

As night fell, about 20 rebel gunmen opened fire with automatic weapons and threw stun grenades at the headquarters of the region's police, trying to force those inside to surrender their weapons, a Reuters photographer at the scene said.

"The regional leadership does not control its police force," said Stanislav Rechynsky, an aide to Interior Minister Arsen Avakov, referring to events in Luhansk. "The local police did nothing."

The rebels also seized the prosecutor's office and the television center.

The separatist operation in Luhansk appears to give the pro-Moscow rebels control of a second provincial capital. They already control much of neighboring Donetsk province, where they have proclaimed an independent "People's Republic of Donetsk" and declared a referendum on secession for May 11.

The rebels include local youths armed with clubs and chains, as well as "green men" - heavily armed masked men in military uniforms without insignia.

Adding control of Luhansk would give them sway over the entire Donbass coalfield - an unbroken swath of territory adjacent to Russia - where giant steel smelters and heavy plants account for around a third of Ukraine's industrial output.

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Pro-Russian armed men take cover behind a car near the local police headquarters in Luhansk, eastern …

It is the heart of a region that Putin described earlier this month as "New Russia", reviving a term from when the tsars conquered it in the 18th and 19th centuries. Most people who live in the area now identify themselves as Ukrainians but speak Russian as their first language.

MOSCOW ACCUSED

Ukraine, a country of 45 million people the size of France, has a thousand-year history as a state but has spent much of the last few centuries under the shadow of its larger neighbor. It emerged as a modern independent nation after the Soviet Union broke up in 1991, with borders drawn up by Bolshevik commissars from territory previously ruled by Russia, Poland and Austria.

Its current crisis erupted after a pro-Russian president was toppled in February in a popular uprising. Within days, Putin had declared the right to use military force and dispatched his undercover troops to seize Crimea.

The United States and European Union accuse Moscow of directing the uprising with the intent of dismembering Ukraine.

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Pro-Russian armed men take cover behind cars near the local police headquarters in Luhansk, eastern  …

"Today, Russia seeks to change the security landscape of eastern and central Europe," U.S. Secretary of State John Kerry said in a speech on Tuesday. "Whatever path Russia chooses, the United States and our allies will stand together in our defense of Ukraine."

Nevertheless, U.S. and European officials have repeatedly made clear they will not consider military action.

The U.S. embassy in Kiev described the behavior of pro-Russian activists - who also attacked a rally of Kiev supporters on Monday with clubs and iron bars, and are holding dozens of hostages including seven unarmed European military monitors - as "terrorism, pure and simple".

U.S. President Barack Obama, announcing new sanctions on Monday, said they were intended to change Putin's "calculus".

But so far they have shown no sign of restraining the Kremlin leader, who overturned decades of post-Cold War diplomacy last month to seize and annex Ukraine's Crimea Peninsula and has since massed tens of thousands of troops on the frontier. Russia has openly threatened to invade to protect Russian speakers, though it denies that it plans to do so.

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Ukrainian soldiers stand guard at a check point near the village of Malinivka, southeast of Slavians …

Putin threatened on Tuesday to review the role of Western firms in Russian energy deals.

"We would very much wish not to resort to any measures in response. I hope we won't get to that point," Putin told reporters after meeting leaders of Belarus and Kazakhstan.

"But if something like that continues, we will of course have to think about who is working in the key sectors of the Russian economy, including the energy sector, and how."

Russia's RTS stock index rose 1.23 percent on Tuesday in relief that the latest EU and U.S. sanctions were so modest.

BLACKLISTS

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A Ukrainian soldier stands guard in front of armoured personnel carriers at a check point near the v …

After Russia took Crimea in March, Washington and Brussels each drew up sanctions blacklists that ban travel by and freeze the assets of individuals and firms deemed to have played a role in threatening Ukraine. The EU added 15 Russians and pro-Russian Ukrainians to its blacklist on Tuesday, a day after Washington added seven individuals and 17 firms to its own list.

But neither list includes any of Russia's major firms.

The latest U.S. list names Igor Sechin, a long-time Putin ally who now heads Russia's biggest oil company, Rosneft. But the firm said the blacklisting of its boss would not affect its operations, including plans to buy the oil trading arm of Wall Street bank Morgan Stanley.

Sechin's name was conspicuously left off the EU list. European countries do more than 10 times as much trade with Russia as the United States, buying a quarter of their natural gas from Moscow. They have been slower than Washington to embrace sanctions that might jeopardize trade.

Moscow has shrugged off the blacklists as pointless, though Washington and Brussels say they have had an indirect economic impact by scaring investors into withdrawing capital.

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A man uses a fire extinguisher as members of self-defence units of the Euromaidan movement attempt t …

"You have to look over the period of time Russia went into Crimea; since we've imposed sanctions, there has been a quite substantial deterioration in Russia's already weak economy," U.S. Treasury Secretary Jack Lew told congressional hearings.

"We see it in their stock exchange, we see it in their exchange rate, we see it in a number of important economic indicators."

Lew said Washington could also impose wider sanctions on Russian industry. Obama said on Monday Western countries were keeping that option "in reserve" in case of further escalation.

A hostage drama has kept the issue on the boil in European capitals. On Friday, rebels captured eight unarmed European military monitors. A Swede was freed three days later, but four Germans, a Dane, a Czech and a Pole are still held in Slaviansk, a town rebels have turned into a heavily fortified redoubt.

The self-declared "people's mayor" of the town, Vyacheslav Ponomaryov, said on Tuesday he would discuss their release only if the EU dropped sanctions against rebel leaders.

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Members of the self-defence units of the Euromaidan movement gather at a barricade as they attempt t …

"If they fail to remove the sanctions, then we will block access for EU representatives, and they won't be able to get to us. I will remind my guests from the OSCE about this," he said, referring to the European hostages. Nevertheless, he later met OSCE representatives and said they had made "good progress" in discussions on the release of the captives.

Ukraine's authorities are struggling to find a way to evict the separatists, who also took a small town hall in Pervomaisk in the Luhansk region on Tuesday and a number of buildings in another city on Monday. Kiev launched an "anti-terrorist" operation in early April, but it has yielded little so far.

The Russian Foreign Ministry said the EU sanctions would not ease tensions in Ukraine.

"Instead of forcing the Kiev clique to sit at the table with southeastern Ukraine to negotiate the future structure of the country, our partners are doing Washington's bidding with new unfriendly gestures aimed at Russia," the ministry said.

Gennady Kernes, the mayor of eastern Ukraine's biggest city, Kharkiv, was in a stable condition on Tuesday in a hospital in Israel, where he was flown after an assassination attempt. Kernes was shot in the back on Monday.

(Additional reporting by John O'Donnell in Brussels, Pavel Polityuk and Matt Robinson in Kiev, Darya Korsunskaya in Minsk, Steve Gutterman, Elizabeth Piper, Oksana Kobzeva, Megan Davies, Olesya Astakhova and Vladimir Soldatkin in Moscow; Writing by Peter Graff; Editing by Will Waterman/Mark Heinrich)

• Politics & Government
• Foreign Policy
• Ukraine
• Russia

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U.S. offers $5 million for Chinese businessman accused of Iran dealings

WASHINGTON (Reuters) - The United States offered a reward of up to $5 million on Tuesday for a Chinese businessman accused of supplying missile parts to Iran, and targeted companies from China and Dubai for allegedly helping Iran evade weapons and oil sanctions.

In a signal Washington will keep pressure on Iran over its nuclear program, the U.S. Treasury Department said it was sanctioning eight of Chinese businessman Li Fangwei's Chinese companies for allegedly procuring missile parts for Iran.

The U.S. State Department said it was offering a reward of up to $5 million for information leading to the arrest and/or conviction of Li, who is also known as Karl Lee.

Li has been the target of U.S. sanctions in the past for his alleged role as a principle supplier to Iran's ballistic missile program.

The State Department said the announcement of the bounty for Li was coordinated with Treasury and the Justice Department, which unsealed an indictment against him on charges including conspiracy to commit money laundering, bank fraud, and wire fraud.

"According to the Indictment, he (Li) controls a large network of front companies and allegedly uses this network to move millions of dollars through U.S.-based financial institutions to conduct business in violation of the International Emergency Economic Powers Act (IEEPA) and the Weapons of Mass Destruction Proliferators Sanctions Regulations, which prohibit such financial transactions," the State Department said in a statement.

Treasury also said it was targeting a firm based in Dubai and several associated individuals for helping Iran evade U.S. sanctions against its oil industry.

Iran and a group of world powers reached a temporary deal in November under which Tehran would get about $7 billion in sanctions relief in return for steps to restrain its nuclear activities.

The deal called for negotiation of a full agreement within a year, and Treasury said on Tuesday it was still pressing for a more definitive resolution.

"We will continue vigorously to enforce our sanctions, even as we explore the possibility of a comprehensive deal addressing Iran's nuclear program," Treasury Under Secretary David Cohen, who oversees sanctions policy, said in a statement.

A United Nations report said earlier this month that Iran has acted to cut its most sensitive nuclear stockpile by nearly 75 percent, making clear Tehran is undertaking the agreed steps to curb its nuclear program.

A U.S. official, however, told Reuters last month Iran had pursued a longstanding effort to buy banned components for its nuclear and missile programs in recent months, even while it was striking an interim deal with major powers to limit its disputed atomic activity.

Vann Van Diepen, principal deputy assistant secretary of state for international security and non-proliferation, added that Li had continued to supply such items despite U.S. pressure on China to tighten export controls.

Contacted by Reuters on Feb 4, 2013, for an earlier story about his business, Li said he continued to get commercial inquiries from Iran but only for legitimate merchandise. Li said his metals company, LIMMT, had stopped selling to Iran once the United States began sanctioning the firm several years ago.

China has said that it is very clear in its stance on non-proliferation and that it has seriously fulfilled its obligations to U.N. resolutions about export controls.

(Reporting by David Brunnstrom and Jason Lange Editing by Andrea Ricci and Paul Simao)

• Politics & Government
• Foreign Policy
• Iran
• U.S. Treasury Department

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Shootouts claim 14 lives in northern Mexican border city

MEXICO CITY (Reuters) - At least 14 people were killed in a series of shootouts in the northern Mexican border city of Reynosa on Tuesday as gunmen battled police in a region racked by violence between warring drug gangs.

Assailants in armored vehicles opened fire on federal police and military officers in three shootouts in Tamaulipas, an unruly state on the U.S. border where the brutal Zetas drug gang has fought the Gulf Cartel for control.

The death toll in Reynosa, which is directly across the border from Hidalgo, Texas, included 10 gunmen, two federal police officers as well two young adults who were caught in the crossfire while driving in separate vehicles.

It was not immediately clear if the gunmen were affiliated with any drug cartels, which vie for control of lucrative smuggling routes into the United States.

Some of the slain gunmen were killed while still in their trucks, while others were found dead on the street, a security official told Reuters.

Drug violence in Mexico has claimed more than 85,000 lives since the start of 2007 when then-President Felipe Calderon ordered the military to engage the cartels.

Calderon's successor, President Enrique Pena Nieto, pledged to end the violence when he took office in December 2012. But although police data shows killings have dropped somewhat, large areas of the country are still convulsed by cartel violence.

(Reporting by Lizbeth Diaz; Writing by David Alire Garcia; Editing by Dave Graham & Kim Coghill)

• Crime & Justice
• Society & Culture

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Macedonia's conservatives re-elected; opposition condemns vote

By Kole Casule

SKOPJE (Reuters) - Macedonia's conservative ruling party has secured a third term in office, winning both parliamentary and presidential elections on Sunday, based on preliminary results of the ballot that the opposition said it would not recognize.

With more than 63 percent of the votes counted, Prime Minister Nikola Gruevski's VMRO-DPMNE was leading with 43 percent, compared with 24 percent for the main opposition party, the center-left SDSM, the state electoral commission said.

Incumbent President Gjorge Ivanov also was leading the SDSM-backed challenger in the presidential election, the commission said.

"This is a big, huge and strong victory. The people have clearly expressed their will," Gruevski, who has ruled the former Yugoslav republic since 2006 in coalition with the ethnic Albanian party DUI, told a cheering crowd at his party's headquarters in Skopje early on Monday.

The DUI had captured 14 percent, setting the coalition on course for a comfortable majority in the new parliament.

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Macedonian Prime Minister Nikola Gruevski leaves a polling station with his wife Borkica in Skopje A …

SDSM leader Zoran Zaev, however, accused Gruevski and his party of "abusing the entire state system", saying there were "threats and blackmails and massive buying of voters" in the elections.

"A few minutes after the polls closed, I'm here to say that SDSM and our opposition coalition will not recognize the election process, neither the presidential nor the parliamentary," Zaev told reporters in Skopje.

Gruevski, 43, and his party dismissed the opposition allegations as an attempt to manipulate public opinion.

"I'm sorry that besides our clear victory, the leader of the opposition for his personal interest has decided to ignore the will of the people. I hope he'll sleep on it and will decide to change the decision."

Monitors from the Organisation for Security and Cooperation in Europe will present their findings later on Monday, after the state electoral commission publishes the results.

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Macedonian Prime Minister Nikola Gruevski casts his ballots next to his wife Borkica at a polling st …

ECONOMIC GROWTH

Opposition parties have often accused Gruevski of creeping authoritarianism and corruption. Foreign diplomats in Skopje say there are concerns about media freedom and political pressure on journalists.

Gruevski has said any complaints of authoritarianism come from opposition parties that lack a concrete political program to unseat him. He has dismissed as false the corruption charges and has threatened lawsuits against SDSM's Zaev.

It was not immediately clear what concrete steps the opposition would take once the results are officially confirmed. The SDSM said it was "keeping all options open and would decide in the next few days".

Macedonia, with a population of 2 million, remains one of Europe's poorest countries. Unemployment is above 28 percent, but Gruevski's government has achieved solid economic growth, low public debt and a rise in foreign investment, unlike most other Balkan countries.

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A boy casts ballots for his mother during presidential and early parliamentary elections in Skopje A …

Diplomats have also praised Gruevski for keeping in check tensions between Macedonia's Slav majority and its large ethnic Albanian minority, whose rebellion in 2001 to secure more political rights brought the country to the brink of civil war.

But during his eight years in office, Skopje's bid to join the European Union and NATO has been frozen because of a dispute with neighboring EU member Greece over Macedonia's name, which Athens wants changed because it is also the name of a northern Greek province.

Macedonia became a formal candidate for EU membership in 2005 but has made no progress since, as Greece has continued to block it. Years of U.N.-mediated talks have yielded no results.

The parliamentary election was called a year ahead of schedule, after the coalition partners failed to agree on a joint candidate for president.

(Writing by Zoran Radosavljevic; Editing by Mohammad Zargham and Paul Simao)

• Politics & Government
• Elections
• SDSM

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Hungarians march against anti-Semitism after far-right poll gains

BUDAPEST (Reuters) - Tens of thousands of Hungarians joined a protest march on Sunday against anti-Semitism, three weeks after the far-right Jobbik party won nearly a quarter of votes cast in a national election.

Budapest's annual 'March of the Living' has drawn an increasing number of participants in recent years to commemorate the deaths of around half a million Hungarian Jews during the Holocaust in World War Two.

The marchers, many holding European Union and Israeli flags, attended the inauguration of a Holocaust monument on a bank of the Danube where Jews were executed during the war. They then marched in silence through the city to an old railway station from which trains departed 70 years ago for Nazi death camps.

More people are taking part because they fear anti-Semitism is again on the rise, said Miklos Deutsch, 64, a restaurant manager, after a shofar, a traditional Jewish instrument made from a ram's horn, gave the signal for the march to start.

"The cause, indeed, is poverty. When the economy does not really work and people are poor, somebody has to be blamed, and the Jews and the gypsies are blamed," he said.

"The strengthening of Jobbik is dangerous," added Deutsch, whose parents lost most of their relatives in the Holocaust.

Unemployment has fallen under the rule of Prime Minister Viktor Orban's conservative Fidesz party, which again secured a two-thirds parliamentary majority in this month's election.

But many Hungarians still struggle to make ends meet and this discontent has helped Jobbik increase its support to 21 percent of the national vote from 16 percent four years ago.

Jobbik denies being anti-Semitic but does little to dispel its reputation for intolerance. Its followers are often openly hostile to Jews and other ethnic and religious minorities.

"Anti-Semitism has risen. You can feel that in all segments of society: in politics, in media, in schools and in social intercourse," said another marcher, Gyorgy Burjan, a retired engineer, adding that Jobbik had capitalized on that.

Jewish groups have also protested against a plan to build a memorial to Hungary's 1944 German occupation, saying it would conceal the responsibility of local authorities who collaborated with the Germans to ship hundreds of thousands to the camps.

After Sunday's march, around 600 participants boarded a train bound for Poland, where they were due to take part in a commemoration at the Nazi death camp of Auschwitz near Krakow.

(Reporting by Sandor Peto; Editing by Gareth Jones)

• Politics & Government
• Society & Culture
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Sisi urges big vote in Egyptian election; Islamists urge boycott

CAIRO (Reuters) - Former Egyptian army chief Abdel Fattah al-Sisi on Sunday called for a big turnout in a presidential election he is expected to win easily, countering a call for a boycott by allies of deposed Islamist president Mohamed Mursi.

Sisi, who deposed Mursi after mass protests against his rule last July, faces only one competitor in the May 26-27 election - leftist Hamdeen Sabahi. He came third in the 2012 election won by Mursi of the Muslim Brotherhood.

Sisi called on Egyptians to vote in "unprecedented numbers for the sake of Egypt", according to an official statement outlining comments he made during a meeting on Sunday with investors in the tourism industry.

An alliance of Islamist parties opposed to last year's military takeover had earlier issued a statement declaring their boycott of the election, describing it as "a farce" designed to appoint "the coup orchestrator" as president.

In a statement posted on Facebook, the National Alliance to Support Legitimacy also said it would not recognise election monitoring planned by "Western supporters of the coup" - an apparent reference to the European Union, which has agreed to send an observation mission.

Sisi, who has been lionised by the Egyptian media, was widely seen as Egypt's de facto leader after deposing Mursi. He stepped down from his position as head of the military and defence minister last month in order to run in the election.

His supporters see him as the kind of strong figure needed to stabilise a country in crisis. His opponents, mostly in the Islamist opposition, see him as the mastermind of a bloody coup that robbed power from Egypt's first freely-elected leader.

Egyptians last voted earlier this year in a referendum on a new constitution. It was approved by more than 98 percent of those who cast ballots, with a turnout of 39 percent, according to official results.

(Writing by Tom Perry; editing by Andrew Roche)

• Politics & Government
• Elections

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American detained in North Korea tore up his visa: tour company

By Victoria Cavaliere

NEW YORK (Reuters) - A 24-year-old American man detained in North Korea had arranged a private tour of the country through a U.S. travel company and gave no indication he might try to seek asylum upon arriving in Pyongyang, the company's director said Sunday.

Matthew Todd Miller was taken into custody by North Korean officials after entering the country on April 10, ripping up his tourist visa and demanding asylum, according to North Korea's state-run KCNA news agency.

Miller's travel to North Korea was arranged by New Jersey-based Uri Tours, which specializes in guided trips through the isolated Communist country, and he gave no indication he might be seeking asylum.

"Nothing in his tour application raised concerns prior to his departure," John Dantzler-Wolfe, the director of Uri Tours, told Reuters in an email.

"We cannot speak to Mr. Miller's motivations or mental state. He did not express any special intentions in his tour application," he said.

The U.S. State Department said it was aware of reports that a U.S. citizen had been detained in North Korea and it was in touch with the Swedish Embassy in Pyongyang on the issue.

The United States has no diplomatic relations with North Korea and the interests of American citizens in the country are represented by Sweden.

Reuters has so far not been able to contact Miller's family.

Dantzler-Wolfe said Miller had arranged a private tour of North Korea and requested only local guides, instead of the usual combination of local and foreign tour leaders.

Those guides informed Uri Tours that Miller had arrived in the country and "deliberately ripped his visa and had declared that he was 'not a tourist,'" Dantzler-Wolfe said.

An emergency contact name provided on Miller's tour application could not be reached, Dantzler-Wolfe said.

The American visitor has been identified in Korean media as Miller Matthew Todd, apparently in the Korean convention of putting the last name first.

Miller is the latest American visitor to be detained by North Korean authorities.

In December, 85-year-old Merrill E. Newman was released after more than a month of detention after being pulled from a flight about to depart Pyongyang and accused of war crimes during the Korean War six decades ago.

Another American, Kenneth Bae, has been held in North Korea for more than a year. He was arrested as he led a tour group in the country in 2012 and sentenced to 15 years of hard labor on charges of state subversion.

North Korea has twice canceled visits by Robert King, the U.S. special envoy for North Korean human rights issues, to discuss Bae's case.

(Reporting by Victoria Cavaliere; Editing by Dan Whitcomb and Sandra Maler)

• Politics & Government
• Foreign Policy
• North Korean

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Ukraine rebels free Swedish hostage; Obama seeks unity against Russia

By Matt Spetalnick and Thomas Grove

KUALA LUMPUR/SLAVIANSK, Ukraine (Reuters) - Pro-Russian rebels paraded European monitors they are holding in eastern Ukraine on Sunday, freeing one but saying they had no plans to release another seven as the United States and Europe prepared new sanctions against Moscow.

U.S. President Barack Obama called for the United States and Europe to join forces to impose stronger measures to restrain Moscow. In a move senior U.S. officials said may come as early as Monday, the White House said it would add names of people close to President Vladimir Putin and firms they control to a list of Russians hit by sanctions over Ukraine, and also impose new restrictions on high-tech exports.

The European Union is expected to follow suit by adding to its own list of targeted Russian people and firms, but Washington and Brussels have yet to reach agreement on wider measures designed to hurt the Russian economy more broadly.

In Donetsk, where pro-Russian rebels have proclaimed an independent "people's republic", armed fighters seized the headquarters of regional television and ordered it to start broadcasting a Russian state TV channel.

Speaking during a visit to Malaysia, Obama said restraining Russian President Vladimir Putin's ambitions in Ukraine would depend on the United States and its allies finding a unified position on tighter sanctions.

"We're going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified rather than this is just a U.S.-Russian conflict," Obama told reporters.

White House deputy national security adviser Tony Blinken said the new U.S. measures would be focused mostly on adding to a list of those barred from travel to the United States and hit by asset freezes.

"We're going to save a little news for Monday but what I can tell you is this," Blinken told CBS television. "We will be looking to designate people who are in (Putin's) inner circle, who have a significant impact on the Russian economy. We'll be looking to designate companies that they and other inner-circle people control."

He added: "We'll be looking at taking steps, as well, with regard to high-technology exports to their defense industry. All of this together is going to have an impact."

The standoff over Ukraine, an ex-Soviet republic of about 45 million people, has dragged relations between Russia and the West to their lowest level since the end of the Cold War.

After Ukrainians overthrew a pro-Russian president, Putin overturned decades of international diplomacy last month by announcing the right to use military force on neighboring territory. He has seized and annexed Ukraine's Crimea peninsula and massed tens of thousands of troops on the frontier.

Heavily armed pro-Russian gunmen have seized buildings in towns and cities across eastern Ukraine. Kiev and its Western allies say the uprising is directed by Russian agents. Moscow denies it is involved and says the uprising is a spontaneous reaction to oppression of Russian speakers by Kiev.

An international agreement reached this month calls on rebels to vacate occupied buildings, but Obama said Russia had not "lifted a finger" to push its allies to comply.

"In fact, there's strong evidence that they've been encouraging the activities in eastern and southern Ukraine."

PRISONERS

The Organisation for Security and Cooperation in Europe (OSCE) has sent unarmed monitors to try to encourage compliance with the peace deal. The pro-Russian rebels seized eight European monitors three days ago and have been holding them at their most heavily fortified redoubt in the town of Slaviansk.

One, a Swede, was permitted to leave on Sunday after OSCE negotiators arrived to discuss their release. A separatist spokeswoman said the prisoner had been let go on medical grounds, but there were no plans to free the others.

The captives, from Germany, the Czech Republic, Denmark, Poland and Sweden, were paraded before reporters on Sunday and said they were in good health.

"We have no indication when we will be sent home to our countries," the group's leader, German Colonel Axel Schneider, told reporters as armed men in camouflage fatigues and balaclavas looked on. "We wish from the bottom of our hearts to go back to our nations as soon and as quickly as possible."

Germany denounced the appearance and said Moscow must press their captors to free the prisoners.

"The public parading of the OSCE observers and Ukrainian security forces as prisoners is revolting and blatantly hurts the dignity of the victims," Foreign Minister Frank-Walter Steinmeier said in a statement.

"It is an infringement of every rule of behavior and standards that are made for tense situations like this. Russia has a duty to influence the separatists so that the detained members of the OSCE mission are freed as soon as possible."

The OSCE, a European security body, includes Russia. Its main Ukraine mission was approved by Moscow, although the Europeans held in Slaviansk were on a separate OSCE-authorized mission that did not require Russia's consent.

Vyacheslav Ponomaryov, the rebel leader who has declared himself mayor of Slaviansk, has described them as prisoners of war and said the separatists were prepared to exchange them for fellow rebels in Ukrainian custody.

Washington is more hawkish on further sanctions than some of its European allies, which has caused a degree of impatience among some U.S. officials. Many European countries are worried about the risks of imposing tougher sanctions - the EU has more than 10 times as much trade with Russia as the United States and imports about a quarter of its natural gas from Russia.

But the top Republican on the U.S. Senate Foreign Relations Committee said the Obama administration's sanctions on Russian individuals had not gone far enough.

"I think we need to put sectoral sanctions in place," Senator Bob Corker told CBS. "To me, hitting four of the largest banks there would send shockwaves into the economy. Hitting (Russian gas giant) Gazprom would certainly send shockwaves into the economy," he said.

'RUSSIA! RUSSIA!'

At the Donetsk television headquarters, about 400 pro-Russian demonstrators chanted: "Russia! Russia!" and "Referendum!" - a call for a vote like one in Crimea that preceded its annexation by Russia last month. Four separatists in masks controlled access at the entrance, and more masked gunmen in camouflage fatigues could be seen inside.

Oleg Dzholos, the station's director, who came outside to speak to reporters, said the people who seized the building had ordered him to change the programming.

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A Ukrainian soldier stands guard at a checkpoint outside the city of Slaviansk April 27, 2014. REUTE …

"They used force to push back the gates," he said. "There were no threats. There were not many of my people. What can a few people do? The leaders of this movement just gave me an ultimatum that one of the Russian channels has to be broadcast."

Ponomaryov, the rebel leader in Slaviansk, said his men had captured three officers with Ukraine's state security service who, he said, had been mounting an operation against separatists in the nearby town of Horlivka.

The Russian television station Rossiya 24 showed footage it said was of a colonel, a major and a captain. They were shown seated, with their hands behind their backs, blindfolded, and wearing no trousers. At least two had bruises on their faces.

Ukraine's State Security Service said the three had been part of a unit which went to Horlivka to arrest a suspect in the murder of Volodymyr Rybak, a pro-Kiev councillor whose body was found last week in a river near Slaviansk.

(Additional reporting by Tatyana Makeyeva in Donetsk, Ukraine, Natalia Zinets in Kiev, Nigel Stephenson and Lidia Kelly in Moscow, Kylie MacLellan in London, and Eric Beech in Wsahington; Writing by Christian Lowe, Giles Elgood, Peter Graff and Peter Cooney; Editing by Sonya Hepinstall and Sandra Maler)

• Politics & Government
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• President Barack Obama
• Vladimir Putin
• Ukraine
• Russia
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Palestinian unity government will recognize Israel: Abbas

By Noah Browning

RAMALLAH, West Bank (Reuters) - Palestinian President Mahmoud Abbas signaled on Saturday that he remains committed to troubled U.S.-backed peace talks, saying that any unity government agreed with the militant group Hamas would recognize Israel.

Abbas's comments appeared aimed at soothing U.S. concerns about the unity deal he reached on Wednesday with Hamas, an Islamist faction sworn to Israel's destruction and designated by the West as a terrorist organization.

Israel suspended peace negotiations with Abbas after the reconciliation pact, and the United States said it would reconsider annual aid to the Palestinians worth hundreds of millions of dollars.

"The government would be under my command and my policy," Abbas told senior leaders of the Palestine Liberation Organisation (PLO) at his presidential headquarters in the occupied West Bank city of Ramallah.

"Its purview will be what happens domestically. I recognize Israel and it would recognize Israel. I reject violence and terrorism," he said.

The deal between Hamas and Abbas's Fatah party envisions agreement on a government of independent technocrats within five weeks and elections at least six months later.

Hamas's opposition to Israel does not necessarily contradict Abbas's position, as both sides have agreed that the unity government will not include Hamas members but be comprised of technocrats.

But Israeli Prime Minister Benjamin Netanyahu ruled out talks with such a government.

"That's the oldest trick in the book. It's called the front office-back office gambit," he said, in which "shady organizations" put forward "smooth-talking frontmen - the men in suits," Netanyahu said in an interview with MSNBC on Thursday,

"We will not sit and negotiate with a Palestinian government that is backed by Hamas in which Hamas has effective share of power," Netanyahu said.

Hamas on Saturday said it would not change its stance on Israel. "The recognition of Israel by the president of the Palestinian Authority, Mahmoud Abbas, is not new. What is important is that Hamas did not and will never recognize Israel," Hamas spokesman Sami Abu Zuhri told Reuters.

Abbas seeks a Palestinian state in Gaza, the occupied West Bank and East Jerusalem, lands Israel captured in a 1967 war.

Hamas, which seized control of Gaza from Abbas's secular Fatah in a brief 2007 civil war, retains thousands of fighters and an arsenal of rockets. It has fought repeated battles with Israel since it took control of the enclave.

A senior U.S. official said on Thursday that a unity government formed with Hamas could call into question some $500 million in their annual security and budget aid to Abbas.

A future Palestinian government must "unambiguously and explicitly commit to non-violence, recognition of the state of Israel, and acceptance of previous agreements and obligations between the parties," the official told Reuters.

WILLING TO EXTEND TALKS

Hamas and Fatah have in recent years agreed similar unity deals, that were not eventually implemented. Israeli lawmaker Tzachi Hanegbi, a confidant of Netanyahu, said on Saturday that such a scenario was likely and that it left the door open for talks to resume.

"If the agreement falls through then we come back, the Palestinians know what the Israeli-American proposal is (for restarting negotiations), it can be decided on and talks can be renewed," Hanegbi told Channel Two's Meet the Press.

The Israeli-Palestinian peace talks had shown little sign of progress since they began in July and the United States had been struggling in the past few weeks to extend negotiations beyond an original April 29 deadline for a peace accord.

Abbas said he was open to resuming the talks and pushing on beyond the deadline, as long as Israel met long-standing demands to free prisoners and halt settlement building on occupied land.

"How can we restart the talks? There's no obstacle to us restarting the talks but the 30 prisoners need to be released," Abbas said. "We will present our map ... until the map is agreed upon, all settlement activity must cease completely," he said.

But an Israeli official, speaking on condition of anonymity, said Abbas was "recycling previous terms he knows Israel has not accepted, after he had, time and again in the past month, refused to move forward in the negotiations."

Talks veered toward collapse after Israel failed to release a final group of Palestinian prisoners it had promised to free in March, and after Abbas signed several international treaties, which Israel said was a unilateral move towards statehood.

The peace talks resumed in July after a three-year deadlock. The two sides were at odds over Israeli settlement construction in the West Bank and East Jerusalem, activity most countries deem illegal, and over Abbas's refusal to accept a demand by Netanyahu that he recognize Israel as a Jewish state.

(Additional reporting by Nidal al-Mughrabi in Gaza and Maayan Lubell in Jerusalem; Editing by Andrew Heavens and Stephen Powell)

• Politics & Government
• Foreign Policy
• Abbas
• Israel
• Hamas
• unity government

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Ukraine blames Moscow for 'human shield' detentions in east

By Thomas Grove

SLAVIANSK, Ukraine (Reuters) - Pro-Russian separatists in eastern Ukraine offered on Saturday to release eight captive international observers in a prisoner exchange, as Western governments prepared new sanctions against Moscow.

The pro-Western government in Kiev blamed Russia for what it called the kidnapping on Friday of the monitors from the Organisation for Security and Cooperation in Europe (OSCE).

The separatists said they suspected the observers of spying; Ukraine said they were being used as human shields.

Since Ukrainians toppled their pro-Russian president in February, Russia has annexed Ukraine's Crimean peninsula and massed tens of thousands of troops on the country's eastern border. NATO has responded by sending reinforcements to eastern Europe, in the gravest East-West crisis since the Cold War.

Earlier on Saturday the Group of Seven major economies announced they had agreed to impose more sanctions on Russia, which they believe is bent on destabilizing its former Soviet neighbor and possibly grabbing more territory. Diplomats said the United States and the European Union were expected to unveil new punitive action against Russian individuals from Monday.

Russia denies orchestrating a campaign by pro-Moscow militants who have seized control of public buildings across eastern Ukraine. It accuses the Kiev government of whipping up tensions by sending troops to root out the separatists.

The OSCE sent more monitors on Saturday to seek the release of those detained in Slaviansk, a city under the separatists' control. Those being held are from Germany, Sweden, Denmark, Poland and the Czech Republic.

"COINS TO EXCHANGE"

Vyacheslav Ponomaryov, de facto mayor of Slaviansk, told reporters: "They were soldiers on our territory without our permission, of course they are prisoners."

He said the separatists were ready to exchange the captured monitors for fellow rebels now in the custody of the Ukrainian authorities.

"Prisoners have always been coins to exchange during times of war. It's an international practice," he said.

Ukraine's state security service said the OSCE observers - part of a German-led military verification mission deployed since early March at Kiev's request - were being held "in inhuman conditions" and that one needed medical help.

A spokeswoman for the Vienna-based organisation, of which Russia is a member, said the OSCE had been in contact with "all sides" since late on Friday but had had no direct contact with the observers.

The Russian foreign ministry said it was working to resolve the crisis, but blamed Kiev for failing to ensure the OSCE mission's safety in "areas where the authorities do not control the situation and where a military operation against residents of their own country has been unleashed".

Russia's Komsomolskaya Pravda newspaper released a video interview with a man it identified as Ivan Strelkov, a militia leader in Slaviansk, accused by Ukraine's security services of being an employee of Russian intelligence.

He suggested the monitors might have been using their diplomatic status "to carry out reconnaissance of the resistance positions, for the benefit of the Ukrainian army".

It is standard practice for serving military officers to be seconded to OSCE missions.

DIPLOMATIC MOVES

German Foreign Minister Frank-Walter Steinmeier discussed the Ukraine situation with his Russian counterpart Sergei Lavrov by telephone on Saturday "with an accent on possible steps to de-escalate the situation," the Russian ministry said.

Steinmeier said Lavrov had offered his backing, which he welcomed.

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An armored personnel carrier is seen near a barricade around the state security service building in  …

In a separate call with U.S. Secretary of State John Kerry, the Russian minister said Ukraine must halt military operations in the southeast of the country in order to defuse the crisis.

Ukrainian Prime Minister Arseny Yatseniuk said Russian military aircraft entered Ukrainian airspace seven times overnight.

"The only reason is to provoke Ukraine ... and to accuse Ukraine of waging war against Russia," the prime minister told reporters before cutting short a visit to Rome.

Washington deployed 150 paratroopers to Lithuania on Saturday. A total of 600 U.S. troops have now arrived in Poland and the former Soviet Baltic states in a bid to reassure nervous NATO allies.

"As threats emerged, we see who our real friends are," Lithuanian President Dalia Grybauskaite said as she greeted the troops at the Siauliai air base.

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An armored personnel carrier is seen near a barricade around the state security service building in  …

Without mentioning Russia, she said the presence of U.S. troops would "repel those who encroach on stability in Europe and peace in the region".

"The numbers are not important. If just one of our guests is harmed, this would mean an open confrontation, not with Lithuania but with the United States of America."

"DOOR REMAINS OPEN"

U.S. officials said new sanctions targeting "cronies" of President Vladimir Putin could be unveiled as early as Monday unless Russia moved fast to defuse the crisis.

In a joint statement, G7 leaders said Russia had not taken any concrete steps to implement an accord, signed earlier this month in Geneva, intended to rein in illegal armed groups.

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The self-styled mayor of Slaviansk Vyacheslav Ponomaryov attends a news conference in the mayor' …

"Instead, it has continued to escalate tensions by increasingly concerning rhetoric and ongoing threatening military maneuvers on Ukraine's border," it said.

"We have now agreed that we will move swiftly to impose additional sanctions on Russia."

But it added: "We underscore that the door remains open to a diplomatic resolution of this crisis."

Senior EU diplomats will meet on Monday to discuss the next steps and are expected to add 15 more names to a list of Russians subject to asset freezes and a travel ban.

Putin acknowledged for the first time this week that sanctions were causing difficulties for Russia, though he said the impact was not "critical".

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The self-styled mayor of Slaviansk Vyacheslav Ponomaryov attends a news conference in the mayor' …

Standard & Poor's cut Russia's sovereign long-term debt rating on Friday, making it more expensive for the government to borrow money. That forced the central bank to raise its key interest rate to limit a fall in the rouble.

Russian banks have been moving funds out of foreign accounts in anticipation of sanctions.

Russia has threatened to cut off gas to Ukraine, which would have a knock-on effect on customers further west because many pipelines transit the country.

Slovakia said on Saturday it had reached an agreement with Ukraine on opening up limited reverse flow of natural gas from central Europe to Ukraine.

(Additional reporting by Maria Tsvetkova in Donetsk, Ukraine, Pavel Polityuk in Kiev, Nigel Stephenson and Jason Bush in Moscow, James Mackenzie in Rome, and Madeline Chambers and Sabine Siebold in Berlin; Writing by Christian Lowe and Robin Pomeroy; Editing by Mark Trevelyan)

• Politics & Government
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Activists rally in Cairo against law curbing demonstrations

CAIRO (Reuters) - Hundreds of Egyptian activists demonstrated on Saturday against an anti-protest law, one month before a presidential election which former army chief Abdel Fattah al-Sisi is widely expected to win.

They marched to the presidential palace in Cairo calling for the scrapping of the law passed by Egypt's army-backed interim leadership in November to curb unrest that erupted after the army's overthrow of elected Islamist president Mohamed Mursi.

The law requires anyone planning a demonstration to obtain police permission. Saturday's protesters did not.

A few threw stones at the police, who did not react and there was no serious violence.

"Down, down with army rule," the protesters chanted. Some burned posters of Sisi, who stepped down from his post as the head of the army last month to run for the presidency in the vote on May 26-27.

Western powers and rights groups have voiced concern about the future of freedoms and democracy in Egypt three years after the ousting of Hosni Mubarak, an autocrat who ruled unchallenged for 30 years, in a popular uprising.

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Demonstrators shout slogans against the government and Egypt's former army chief Abdel Fattah al …

But a fierce army-backed crackdown on activists, mainly from Mursi's Muslim Brotherhood group, has narrowed hopes of greater political freedoms under the former army leader's rule.

Thousands of Islamists have been killed or jailed since Mursi was forced out on July 3. Some liberal activists have also been arrested. But Sisi is popular with many Egyptians who see him as capable of restoring security after three years of turmoil.

"We are determined to continue to protest to cancel this law," said protester and spokesman of the liberal al-Dostour party, Khaled Dawoud. "I hope the law gets scrapped so that elections are carried out in suitable conditions."

Three leading activists of the anti-Mubarak revolt were jailed for three years in December for defying the law by failing to apply for permission from the police to protest.

The activists who rallied on Saturday asked for their release. "I call for a presidential pardon for the jailed activists and also 12 other young members from the Dostour party," Dawoud said.

Hundreds of police and army officers have also been killed in violence that spread across the country after Mursi's overthrow and which the state blamed on the Brotherhood.

The Brotherhood, which is Egypt's oldest and most organized political movement and won all five elections held since Mubarak's downfall, denies any links to violence saying it is committed to peaceful activism.

(Reporting by Yasmine Saleh; editing by Andrew Roche)

• Unrest, Conflicts & War
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South Korean PM resigns over government response to ferry disaster

By Narae Kim

SEOUL (Reuters) - South Korean Prime Minister Chung Hong-won announced his resignation on Sunday over the government response to the ferry disaster, in which it was first announced that everyone had been rescued, focusing attention on poor regulatory controls.

The Sewol ferry sank on a routine trip south from the port of Incheon to the traditional holiday island of Jeju on April 16.

More than 300 people, most of them students and teachers on a field trip from the Danwon High School on the outskirts of Seoul, have died or are missing and presumed dead.

The children on board the Sewol were told to stay put in their cabins, where they waited for further orders. The confirmed death toll on Sunday was 187.

South Korea, Asia's fourth-largest economy and one of its leading manufacturing and export powerhouses, has developed into one of the world's most technically advanced countries, but faces criticism that regulatory controls have not kept pace.

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Participants holding funeral streamers bearing messages for victims of the capsized passenger ship S …

As part of the investigation, prosecutors raided two shipping safety watchdogs and a coastguard office. They have also raided two vessel service centers, which act as maritime traffic control.

Chung's resignation has to be approved by President Park Geun-hye, who has the most power in government.

"Keeping my post too great a burden on the administration," a somber Chung said in a brief announcement. "...On behalf of the government, I apologize for many problems from the prevention of the accident to the early handling of the disaster.

"There are too many irregularities and malpractices in parts of society that have been with us too long and I hope those are corrected so that accidents like this will not happen again."

Chung was booed and someone threw a water bottle at him when he visited grieving parents the day after the disaster. President Park was also booed by some relatives when she visited a gym where families of the missing were staying.

Tempers have frayed over the slow pace of the recovery and frequent changes in information provided by the government.

The Gyeonggi Provincial Office of Education sent text messages to parents that "All Danwon High School students are rescued" in the hours after the disaster, media reported.

(Writing by Nick Macfie; Editing by Michael Perry)

• Disasters & Accidents
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North Korea says army must develop to be able to beat U.S.

By Nick Macfie

SEOUL (Reuters) - North Korean leader Kim Jong Un urged the army to develop to ensure it wins any confrontation with the United States, the reclusive country's news agency said on Sunday, a day after U.S. President Barack Obama warned the North of its military might.

Kim led a meeting of the Central Military Commission and "set forth important tasks for further developing the Korean People's Army and ways to do so", KCNA news agency said.

"He stressed the need to enhance the function and role of the political organs of the army if it is to preserve the proud history and tradition of being the army of the party, win one victory after another in the confrontation with the U.S. and creditably perform the mission as a shock force and standard-bearer in building a thriving nation."

Obama said on Saturday on a visit to Seoul, where the U.S. army has a large presence, that the United States did not use its military might to "impose things" on others, but that it would use that might if necessary to defend South Korea from any attack by the reclusive North.

North and South Korea are still technically at war after their 1950-53 civil conflict ended in a mere truce.

The impoverished North, which routinely threatens the United States and the South with destruction, warned last month it would not rule out a "new form" of atomic test after the U.N. Security Council condemned Pyongyang's launch of a mid-range ballistic missile into the sea east of the Korean peninsula.

North Korea is already subject to U.N. sanctions over its previous three atomic tests.

Recent satellite data shows continued work at the nuclear test site in North Korea, although experts analyzing the data say that preparations do not appear to have progressed far enough for an imminent test.

"We don't use our military might to impose these things on others, but we will not hesitate to use our military might to defend our allies and our way of life," Obama told U.S. forces at the Yongsan garrison.

"So like all nations on Earth, North Korea and its people have a choice. They can choose to continue down a lonely road of isolation, or they can choose to join the rest of the world and seek a future of greater opportunity, and greater security, and greater respect - a future that already exists for the citizens on the southern end of the Korean peninsula."

(Editing by Michael Perry)

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• Barack Obama
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Western intelligence suggests Syria can still produce chemical arms

By Louis Charbonneau

UNITED NATIONS (Reuters) - Syria maintains an ability to deploy chemical weapons, diplomats say, citing intelligence from Britain, France and the United States that could strengthen allegations Syria's military recently used chlorine gas in its bloody civil war.

The comments reflect a growing conviction among Western capitals that President Bashar al-Assad has failed to come clean about Syria's chemical weapons program despite his promises to end it, and they insist the United States and its allies will resist calls by Assad to shut down a special international chemical disarmament mission set up to deal with Syria.

Syria denies it maintains the capacity to deploy chemical weapons, calling the allegation a U.S. and European attempt to use their "childish" policies to blackmail Assad's government.

But in a tacit acknowledgement of the original declaration's incompleteness, Syria earlier this month submitted a more specific list of its chemical weapons to the international disarmament mission after discrepancies were reported by inspectors on the ground, officials said.

Under threat of U.S. airstrikes, Assad agreed with the United States and Russia in September to dispose of his chemical weapons - an arsenal that Damascus had never previously formally acknowledged - after hundreds of people were killed in a sarin gas attack in August on the outskirts of the capital.

Washington and its Western allies said it was Assad's forces who unleashed the sarin attack, the world's worst chemical attack in a quarter-century. The government blamed the rebel side in Syria's civil war, which is now in its fourth year.

The verification of Syria's declaration on its poison gas arsenal and its destruction has been overseen by a joint team of the United Nations and the Organization for the Prohibition of Chemical Weapons (OPCW), the global chemical arms watchdog.

Diplomats say Western governments have long suspected Syria did not declare all aspects of its chemical arms program. But the envoys say they have kept silent on the issue to avoid giving Assad an excuse to curtail cooperation with the U.N.-OPCW mission and slow down an already delayed timetable for shipping toxins out of the country.

With more than 90 percent of Syria's declared chemical stockpiles now out of the country, Western officials have started to break their silence.

"We are convinced, and we have some intelligence showing, that they have not declared everything," a senior Western diplomat told Reuters, adding that the intelligence had come from Britain, France and the United States.

When asked how much of its program Syria has kept hidden, the diplomat said: "It's substantial." He offered no details.

AMBIGUITIES AND DISCREPANCIES

Syrian U.N. Ambassador Bashar Ja'afari dismissed the charge.

"These countries aren't really reliable and their policies towards the implementation of the agreement between the Syrian government and the OPCW aren't principled but rather childish," he said in a mobile-phone text message to Reuters.

"If they have some evidence they must share it with the OPCW rather than pretending to have secret evidence!"

Ja'afari said the three Western powers' goal was to needlessly extend the U.N.-OPCW mission by "keeping the 'chemical file' open indefinitely so that they can keep exerting pressure and blackmailing the Syrian government."

Another Western official, who also spoke on condition of anonymity, told Reuters that while there was not 100 percent certainty Syria maintains chemical weapons, the three Western powers agreed that there is a "high level of probability" that Syria deliberately under-reported the full extent of its chemical arms-related stockpiles.

He cited examples of large batch of a sarin precursor chemical going missing in Syria and Damascus' unverified claims to have destroyed most of its mustard gas stocks before the U.N.-OPCW mission arrived in the country and other anomalies.

In interviews over the last two months with Western officials with access to intelligence about Syria, Reuters learned that topics of concern include deadly nerve agent ricin, mustard gas, precursor chemicals used to make sarin, and, more recently, the use of chlorine gas in Syria.

U.S. and British officials have also spoken of ambiguities and problems with the Syrian chemical weapons declaration. U.S. officials warned as early as November that intelligence suggested Syria may try to hide some toxins.

Suspicions that its declaration was incomplete deepened when Syria did not report to the OPCW having sarin, which was used in the outskirts of Damascus on August 21, or the type of rockets used to deliver an estimated 300 liters of the toxin.

The senior Western diplomat said Britain, France and the United States had provided information to the OPCW months ago, including on specific undeclared chemical weapons sites. He added that the three powers had also provided Assad's staunch ally Russia with the intelligence but "they have not reacted."

The OPCW had no immediate comment when queried. A Russian U.N. mission spokesman said he had no comment, though Moscow reiterated on Friday its position that claims about the Syrian government using chemicals weapons were false.

(Additional reporting by Anthony Deutsch in The Hague, Michelle Nichols in New York, Mark Hosenball and Phil Stewart in Washington; Edited by Jason Szep and Lisa Shumaker)

• Politics & Government
• Unrest, Conflicts & War
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• OPCW
• chemical weapons
• President Bashar al-Assad

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'Pause' perhaps needed in Israeli-Palestinian talks: Obama

By Matt Spetalnick

SEOUL (Reuters) - U.S. President Barack Obama said on Friday a "pause" might be needed in U.S.-brokered peace talks between Israel and the Palestinians, suggesting leaders on both sides lacked the will to make the necessary compromises.

Israel on Thursday suspended participation in negotiations with the Palestinians in response to President Mahmoud Abbas's unexpected unity pact with the rival Islamist Hamas group, which Israel and the United States consider a terrorist organization.

Speaking at a news conference in Seoul, Obama called the Palestinian move "unhelpful" and said it was one of a series of choices the two sides had made in recent weeks that had hurt the chances of reaching a peace deal.

"There may come a point at which there just needs to be a pause and both sides need to look at the alternatives," Obama said, offering a grim assessment of nine months of direct talks that were overseen by Washington but ultimately led nowhere.

While Obama insisted he was not ready to abandon his quest for Middle East peace, he said: "What we haven't seen is, frankly, the kind of political will to actually make tough decisions, and that's been true on both sides."

There was no immediate reaction from leaders in Israel or the Palestinian Territories, who have blamed each other for the latest in a string of failed peace efforts.

Obama was careful not to apportion blame and left open the hope that one day the respective camps would overcome their mutual distrust and walk through what he said was the only door available to them to end their generations-old conflict.

"We will continue to encourage them to walk through that door. Do I expect that they will walk through that door next week, next month, or even in the course of the next six months? No," he said.

CRITICISM

U.S. Secretary of State John Kerry has invested considerable time and political capital in the talks, visiting the Middle East more than a dozen times in a year to try to narrow the yawning divide that separates Israeli and Palestinians.

The stalemate represents a blow to him at a time when the United States, Israel's closest ally, has faced fierce criticism from friend and foe alike over its handling of Middle East problems such as Syria's civil war, nuclear talks with Iran and Egypt's upheavals.

Obama acknowledged on Friday that achieving an Israeli-Palestinian peace deal - a goal that has eluded many previous U.S. presidents - had always been a "long shot" for his administration, which failed in a first-term peace initiative.

But he said it was in U.S. interests to end a dispute that was "combustible".

The negotiations struggled almost as soon as they started last July, with the Palestinians enraged by a wave of new Jewish settlement building on land they envisage as part of a future state, and Kerry had been struggling to convince the bitter foes to extend the talks beyond an original April 29 deadline.

Israeli Prime Minister Benjamin Netanyahu said on Thursday he would not sanction discussions with Palestinian President Mahmoud Abbas at a time when he was looking to form a unity government with militant group Hamas, which governs Gaza.

Previous efforts to end the seven-year schism have imploded and there was no indication that Abbas would succeed this time around, meaning that although the direct peace talks are in a coma, they are not necessarily dead.

The Palestinians argue that just as Netanyahu has parties in his coalition that are fiercely opposed to the creation of an independent Palestine, so Abbas can forge a pact with a group that does not recognize Israel's right to exist.

(Reporting by Matt Spetalnick and Mark Felsenthal; Writing by Crispian Balmer; Editing by Angus MacSwan)

• Politics & Government
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• Barack Obama
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28 killed in attack on Shi'ite political rally in Iraq

By Raheem Salman

BAGHDAD (Reuters) - A series of explosions killed 28 people and wounded more than 40 at a Shi'ite political organization's rally in Iraq on Friday, police and medical sources said.

The militant group Asaib Ahl Haq (League of the Righteous) was presenting its candidates for elections on April 30 at the rally in eastern Baghdad. Three bombs exploded in succession as people were leaving, Reuters reporters at the scene said.

A roadside bomb went off near the main gate, followed by a suicide car bomb after a few minutes and then a final explosion.

Al Qaeda offshoot the Islamic State of Iraq and the Levant (ISIL) claimed responsibility for the attack in a statement posted on the Internet.

The group said it had carried out the bombings in response to "murder, torture and displacement" of Sunnis by Shi'ite militias which "massacred children and women".

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An explosion is seen during a car bomb attack at a Shi'ite political organisation's rally in …

The attack came as tensions ran high in Iraq in the runup to a national election on April 30 and as the Iraqi security forces are locked in a four-month battle with ISIL in western Anbar province.

It appeared to be the work of ISIL aimed at baiting the group to strike Sunni neighborhoods or communities in hopes of provoking a full-fledged civil war.

SPEECH AGAINST SUNNI RADICALS

Asaib's main leader Sheik Qais Khazaali had just delivered a speech accusing some politicians of aiding terrorism and vowed his movement was ready for any action by ISIL.

"To all ISIL ... we are ready. We are prepared," he said. "We are the defenders of this country. You will never reach us."

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An explosion is seen during a car bomb attack at a Shi'ite political organisation's rally in …

He added: "If ISIL is the sickness, were are the medicine."

As people started to leave the stadium, the first bomb exploded. Grey smoke rose in the air and people ran or scrambled for cover. The a white mini-van raced to the stadium's main gate and detonated, unleashing a massive ball of fire.

Army and police shot in the air and a final explosion shook the ground. Asaib members commandeered cars to rush the injured to hospital. A wounded man limped away, stained in blood, while people hunted for missing friends or relatives.

Asaib, which has formed its own party, al-Sadiqoon (the truth seekers), is accused by some Sunnis and Shiites of carrying out killings and driving families from their homes.

Khazaali denies the allegations but says his movement defends Iraq against terrorism. Some of Asaib's members are in Syria defending the shrine of Sayyida Zainab in Damascus.

Pictures of its slain fighters from Syria can be seen around Baghdad and Shi'ite cities across the south.

Khazaali was an aide to Shiite cleric Muqtada Sadr and led his own faction of fighters, who broke away from Sadr's Mahdi Army militia. At the height of sectarian violence in 2006 and 2007, some of the worst attacks on Sunnis were blamed on Asaib.

The group also carried out attacks on the U.S. military.

(Reporting by Raheem Salman; Editing by Ned Parker and Andrew Roche)

• Unrest, Conflicts & War
• Politics & Government
• Islamic State of Iraq
• Iraq

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Mediators held in Ukraine as U.S. readies new Russia sanctions

By Thomas Grove and Arshad Mohammed

SLAVIANSK, Ukraine/WASHINGTON (Reuters) - The United States and the European Union are expected on Monday to impose new sanctions on Russian individuals, sources said on Friday, as the Ukraine crisis escalated with armed pro-Russia separatists seizing a bus carrying international mediators.

The Pentagon said Russian aircraft breached Ukraine's airspace several times over the past 24 hours, but did not offer more details. Pentagon spokesman Colonel Steve Warren called on Russia to "take immediate steps to de-escalate the situation."

The separatist self-declared mayor of the east Ukraine city of Slaviansk told Reuters the mediators were being held because they were believed to have a spy amongst them from the pro-Western government in Kiev.

"People who come here as observers bringing with them a real spy: it's not appropriate," Vyacheslav Ponomaryov said in front of a security service building occupied by separatists where the Ukrainian government said the observers were being detained.

The fresh U.S. and EU sanctions come in response to Russia's alleged efforts to destabilize eastern Ukraine, said sources familiar with the matter, speaking on condition of anonymity.

The EU is expected to name 15 previously unidentified individuals to be placed under sanctions and would focus on those it thinks are responsible for the unrest in Ukraine, the sources said.

The United States is expected to impose sanctions on entities and individuals, including "cronies" of Russian President Vladimir Putin, they said.

The sources said the one thing that might prevent the EU and the United States from moving ahead with the sanctions on Monday would be a sudden reversal of what they say is Russian-sponsored separatist movements in eastern Ukraine.

"You will find a European list much more connected to actions on the ground, and an American list more focused on cronies and entities," said one of the sources, adding that some EU nations remain concerned about placing sanctions on Putin associates.

DIPLOMATIC CHANNELS

German Defence Minister Ursula von der Leyen said 13 observers from the Organization for Security and Cooperation in Europe (OSCE) had been seized, including three members of the German armed forces, a German translator and a Danish national.

"It is critical that we use all diplomatic channels to free this team immediately and unhurt," von der Leyen said, adding that officials were trying to establish the captors' demands.

Russia denies allegations it is directing the separatists, who have taken control of large parts of eastern Ukraine over the past three weeks.

But the White House said U.S. President Barack Obama and European allies agreed on Friday that Russia had escalated tension in the region, where the rebels have declared an independent "People's Republic of Donetsk".

Britain and Germany agreed further sanctions were in order, building on targeted U.S. and European sanctions against Russian and Ukrainian individuals following Russia's annexation of Crimea.

"We are working with our international partners to make sure that when we do it, we do it in an effective way," U.S. Treasury Secretary Jack Lew said.

Putin has scoffed at the sanctions so far imposed, which have been limited to travel bans and overseas assets freezes on individuals.

The standoff has led to heavy capital flight from Russia, prompting credit rating agency Standard & Poor's to cut the country's ratings on Friday. That forced the central bank to raise its key interest rate to reverse a drop in the ruble.

Ukraine sent in troops to try to dislodge the separatists for the first time on Thursday, killing up to five rebels around Slaviansk in what it said was a response to the kidnapping and torture of a politician found dead on Saturday.

Russia's foreign minister, Sergei Lavrov, accused authorities in Kiev of waging "war on their own people".

"This is a bloody crime, and those who pushed the army to do that will pay, I am sure, and will face justice," Lavrov said.

The Kremlin says it has the right to defend Russian speakers anywhere if they are under threat and has deployed extra troops on the border with Ukraine, which NATO says number up to 40,000.

They began military exercises on Thursday and Ukraine said they had approached to within 1 km (0.6 mile) of its border and that it would treat any incursion as an invasion.

Ukrainian special forces launched a second phase of their operation on Friday by mounting a full blockade of Slaviansk, the rebels' military stronghold, a presidential official said.

One of its military helicopters was hit by rocket fire and exploded while on the ground at an airport near the city, the Defence Ministry said.

'SPEEDY REACTION'

Pro-Western leaders in Kiev, who took power in February after Moscow-ally President Viktor Yanukovich fled following mass protests against him, say they fear Russia will try to take over eastern Ukraine.

Russian troops seized Ukraine's Crimean peninsula on the Black Sea soon after Yanukovich left for Russia in February. Moscow denies interfering in eastern Ukraine, as it did in Crimea before admitting its forces had gone in.

The White House statement came after Obama pressed four European leaders on the need for more robust action against Russia. Europe is reluctant to impose tough sanctions due to its reliance on Russian gas and trade ties with Moscow.

"The president noted that the United States is prepared to impose targeted sanctions to respond to Russia's latest actions," it said. "The leaders agreed to work closely together, and through the G7 and European Union, to coordinate additional steps to impose costs on Russia."

Britain agreed the current sanctions would need to be extended given what it said was Russia's refusal to support an international peace agreement that it signed up to last week under which all sides agreed to work to disarm illegal groups.

German Chancellor Angela Merkel said the leaders would have to react. "Because of the lack of progress we will have to contemplate further sanctions," she said before the call.

France said sanctions had been discussed and the leaders had called for a "speedy reaction" to the crisis from leading industrial nations. Italy said the leaders had agreed on the situation but gave no details.

"The leaders underscored that Russia could still choose a peaceful resolution to the crisis, including by implementing the Geneva accord," the White House statement said.

Lavrov said Moscow was committed to implementing the Geneva agreement but accused Washington of distorting it with "one-sided demands". However, Russia's Defence Ministry said it was ready for "unbiased and constructive" talks with the United States to stabilize the situation.

U.S. Secretary of State John Kerry said Russia was using propaganda to hide what it was trying to do in eastern Ukraine - destabilize the region and undermine next month's Ukrainian presidential elections - and decried its "threatening movement" of troops up to Ukraine's border.

Ukraine's Prime Minister Arseny Yatseniuk said Russia wanted to start World War Three by occupying the country and creating a conflict that would spread to the rest of Europe.

(Additional reporting by Gabriela Baczynska in Moscow, Roberta Rampton in Washington, Maria Tsvetkova in Donetsk, Alexei Anishchuk, Lidia Kelly and Oksana Kobzeva in Moscow, Alastair Macdonald and Pavel Polityuk in Kiev, Alexandria Sage in Paris, James Mackenzie in Rome and Erik Kirschbaum in Berlin; writing by Will Waterman and Philippa Fletcher; Editing by Mark Trevelyan and Mohammad Zargham)

• Politics & Government
• Foreign Policy
• Russia
• eastern Ukraine
• European Union
• Ukraine

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Japan, U.S. tiptoe into new phase of Pacific trade talks

By Krista Hughes

WASHINGTON (Reuters) - The United States and Japan are edging into a new phase of trade negotiations after U.S. President Barack Obama and Japanese Prime Minister Shinzo Abe's summit, people with knowledge of talks to create one of the world's biggest trade pacts said.

Talks on the Trans-Pacific Partnership, a 12-nation bloc which would span 40 percent of the world economy and extend from Asia to Latin America, have been deadlocked as the United States and Japan stared off over farm and auto exports.

Although Obama and Abe did not announce an end to the stalemate at Thursday's meeting in Tokyo, a joint statement issued shortly before Obama left on Friday said the two countries identified a "path forward" on key issues, a contrast to the "gaps" highlighted after previous talks.

Briefing reporters on the president's plane from Japan, a senior U.S. official said negotiators set the parameters for agreement on Japan's sensitive sugar, beef, pork, rice, dairy and wheat sectors, involving which trade barriers to eliminate, which to reduce, and over which time period.

"There are these parameters, and there are trade-offs among parameters. The deeper the cut in the tariff, the longer time it may take to get there," he said.

A U.S. congressional aide briefed on the negotiations said there was momentum heading into TPP negotiations in Vietnam in May, where concrete trade-offs could be made.

"That's the first time we have seen the Japanese moving in our direction," said the aide, who declined to be identified because of the sensitive nature of the discussions.

"We were on a path of gridlock and now there seems to be a path forward, if you're a trade negotiator you've got to be excited about that."

Trade experts said the administration comments pointed to a long phase-out period for tariffs Japan was prepared to move on such as beef, which it agreed to cut in a deal with Australia weeks earlier, while allowing continued protection for sectors such as rice.

"That's something that the United States can do, because U.S. negotiators are not under extreme political pressure to get a comprehensive reform on rice," said Peterson Institute for International Economics trade analyst Jeffrey Schott.

Officials from other TPP countries noted U.S. recognition of the role market access played in persuading other TPP partners to sign up to common rules on issues such as intellectual property, important to the United States and Japan.

For big agricultural exporters such as Canada, New Zealand and Australia, access to Japan's markets might offset doubts about the intellectual property rules.

"Once it's clear that there is going to be a U.S.-Japan deal that is perceived to be a good deal for everybody ... there will be decisions made," the aide said. "There will be trade-offs, trade-offs not just in the market access talks but trade-offs within the rules package as well, across the entire agreement."

The joint statement also called on other trading partners to take steps needed to conclude the agreement, making clear the United States and Japan do not want to bear the burden alone.

"It's going to take all 12 countries, not two, in order for TPP to cross the finish line," said Alston & Bird policy adviser Eric Shimp, a former U.S. Trade Representative negotiator.

But Japan would likely have to go into more detail about its concessions to prompt Canada to open up its dairy and poultry markets.

"It's hard for me to see Canada offering more market access, or showing its hand, before Japan does. The sequence is fairly clear," said McDermott Will & Emery partner Jay Eizenstat, also a former USTR negotiator.

(Reporting by Krista Hughes; Editing by Mohammad Zargham)

• Politics & Government
• Foreign Policy
• Barack Obama

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