Exclusive: China police investigate U.S. citizen near border with North Korea - source

By James Pearson and Megha Rajagopalan

SEOUL/BEIJING (Reuters) - A Korean-American who runs a Christian NGO in a Chinese city on the border with North Korea is being investigated by Chinese authorities and has had his bank accounts frozen, a source with direct knowledge of the case told Reuters on Thursday.

Peter Hahn, a naturalized U.S. citizen, has been under interrogation by Chinese authorities for the last three weeks and is not permitted to leave the country, said the source, who requested anonymity, citing the sensitive nature of the case.

The source did not know what prompted the probe, which coincides with an investigation of a Canadian Christian couple who run a coffee shop in the nearby city of Dandong on suspicion they stole military secrets.

Several people working in the region, or who are in contact with those that do, said Hahn's case appeared to be part of a wider sweep of Christian-run NGOs and businesses along the Chinese side of the border with North Korea.

While China can be suspicious of Christian groups and President Xi Jinping has launched a wide crackdown on underground churches, foreign missionaries usually operate without too much harassment.

Hahn runs a school for ethnic Korean children in the Chinese city of Tumen. Through his Tumen River Area Development Initiative (TRADI) NGO, he also operates several humanitarian projects and joint venture companies inside North Korea, including a local bus service in the Rajin-Songbon (Rason) Special Economic Zone.

The school declined to comment when asked about the case, and Tumen police could not be reached for comment.

A spokesman at the U.S. embassy in Beijing said he could not provide any information on the matter. Marie Harf, a spokeswoman for the U.S. State Department in Washington, said she was aware of the reports about Hahn's detention but could not comment further for reasons of privacy.

Hahn's company cars had been confiscated and his bank accounts frozen, the source said, adding that his NGO's humanitarian food shipments to North Korea had been suspended following the freeze.

"OPENLY CHRISTIAN"

The source said that Hahn was a Christian and was open about his faith. A description on its website said Hahn founded the NGO in 1997 to help North Korean refugees in Yanji, the capital of China's autonomous ethnic Korean region, a short drive from Tumen, where Hahn is based.

"TRADI's main goal is to sacrifice themselves for the ministry of God," a description of the NGO's vision on its website says. "Through the bridge that TRADI built around the community of Tumen and North Korea, we hope to break down the wall of oppression, imprisonment, and injustice."

North Korea espouses freedom of religion, but it is ranked as one of the world's most oppressive regimes in terms of such freedom, and severely punishes citizens who veer from a state-sponsored ideology that venerates its leaders.

It was not immediately clear why China, North Korea's main ally and economic benefactor, was cracking down on missionaries in the region, but experts said it had cooperated with North Korea in the past along the border.

"North Korean security forces and diplomatic officials are working particularly hard this calendar year to combat growth in religious activities along the border," said Christopher Green of the Seoul-based Daily NK website, quoting repeated reports from sources both inside North Korea and in cities on the Chinese side of the border.

Reuters was unable to independently verify the reports from inside isolated North Korea.

Christian activists focused on China said the two countries had been collaborating closely, despite an apparent dip in relations between Beijing and Pyongyang.

"In recent years they have not always seen eye to eye, but it's a common interest for both sides to crack down on the border, particularly refugee issues," said Bob Fu of China Aid, a U.S.-based Christian advocacy group.

China's porous border with North Korea, which snakes through mountains, is a thriving hub of cross-border black market trade as well as a route taken by North Korean refugees fleeing economic hardship and religious and political persecution.

"JERUSALEM OF THE EAST"

"Pyongyang was once known as the Jerusalem of the East," said David Alton, chairman of the UK parliament's All-Party Parliamentary Group on North Korea, referring to how the city was a thriving center for missionaries long before Korea was divided.

"North Korea's leadership is well aware that below the surface, secret religious faith remains deep in the hearts of many North Koreans," he told Reuters.

"Their fear of Christianity has led to suppression, persecution (and) cruel incarceration."

Many missionaries are drawn to the Rason SEZ, where foreigners, including U.S. citizens, can gain a residence permit and set up joint venture companies with the local government.

While some foreign Christians in sensitive border areas are relatively open about their faith, others are wary of being monitored by North Korea and China and use phrases like "meeting place" to describe underground or house churches.

Buses operated by Hahn's NGO with a North Korean partner in Rason bear a logo resembling a fish, a secret symbol used by early Christians persecution in the Roman Empire.

U.S. missionary Kenneth Bae, sentenced by Pyongyang last year to 15 years hard labor for attempting to overthrow the state, operated businesses in Dandong and used his tour company, Nation Tours, to take foreign missionaries across the border into North Korea.

SOUTH KOREAN FUNDS

Beyond tours, bakeries that produce small, nutritious buns that are distributed to school children and orphans in North Korean border cities are often set up by missionary groups in China, or in North Korea in cooperation with the North Korean authorities.

The bakeries distribute much-needed food to impoverished North Korea, but critics argue such humanitarian aid is often deeply intertwined with religious conversation and salvation.

Hahn, who is based in California but has a residence permit for Rason, also runs a bakery, attached to the school, which has produced bread for North Korea since 2003.

Deliveries of bread from the bakery to North Korean children had been delayed by the freeze of Hahn's funds, the source said.

A proportion of Hahn's funding came from churches in South Korean. His school received money from Pohang Baptist Church in South Korea, according to a letter from the school's vice principal on the church's website.

The investigation into Canadians Kevin Garratt and his wife Julia Dawn Garratt came a week after Canada took the unusual step of singling out Chinese hackers for attacking a key computer network and lodged a protest with Beijing.

In response, China accused Canada of making irresponsible accusations that lacked credible evidence.

"With the Garratts, that was tit-for-tat with what happened in Canada. Peter Hahn is a different issue, I think it's more related to his faith and the work he was doing," said David Etter, who was recently forced to close his Christian-run Western restaurant in Yanji, citing a lack of customers.

"He was very open about his faith and why he was doing what he was doing," he said.

(Additional reporting by Ju-min Park in Seoul and David Brunnstrom in Washington,; Editing by Mike Collett-White and Peter Galloway)

• Politics & Government
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Moscow bans Western food imports; Russian quits as Ukraine rebel chief

By Polina Devitt and Sergei Karpukhin

MOSCOW/DONETSK Ukraine (Reuters) - Moscow banned imports of most food from the West on Thursday in retaliation against sanctions over Ukraine, a stronger than expected measure that isolates Russian consumers from world trade to a degree unseen since Soviet days.

In eastern Ukraine, the Russian citizen who has led the rebel "Donetsk People's Republic" stepped down in favour of a local man, a move that could provide some faint new hope for peace. Kiev has long said it could negotiate with locals but never with foreigners it considers international terrorists.

A Dutch recovery team called off its work at the site where a Malaysian airliner was shot down over rebel-held territory last month, saying escalating fighting had made the frontline location too dangerous.

NATO's secretary general, visiting Kiev in a show of support for Ukraine, called on Russia to pull back from the brink of war against its neighbour. The Western military alliance says Moscow has massed troops on the border in preparation for a possible ground invasion.

Moscow imposed a one year ban on all meat, fish, dairy, fruit and vegetables from the United States, the 28 European Union countries, Canada, Australia and non-EU member Norway.

Russia has become by far the biggest consumer of EU fruit and vegetables, the second biggest buyer of U.S. poultry and a major global consumer of fish, meat and dairy products.

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A vendor sells Norwegian fish at the city market in St.Petersburg August 7, 2014. REUTERS/Alexander  …

President Vladimir Putin ordered his government to adopt the measures in retaliation against Western countries which imposed sanctions on Russia's defence, oil and financial sectors over its support for rebels waging an insurrection in east Ukraine.

Putin had promised the measures would not hurt Russian consumers, which suggested he might exclude some popular products. But in the end, the bans announced by his prime minister, Dmitry Medvedev, mentioned no exceptions.

Agriculture Minister Nikolai Fyodorov acknowledged that the measures would cause a short-term spike in inflation, but said he saw no danger in the medium or long term. Russia would boost imports from other suppliers such as Brazil and New Zealand.

White House economic adviser Jason Furman said the measures would hurt Russia's own economy. The U.S. Treasury said it was prepared to tighten its own sanctions on Russia further if Moscow continues aiding the Ukrainian rebels.

The EU's executive Commission said it reserved the right to take action to retaliate against the Russian ban.

RUSSIAN DOMESTIC MARKET HIT

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A vendor sells chickens at the city market in St.Petersburg August 7, 2014. REUTERS/Alexander Demian …

Food represents a small fraction of Russia's overall imports from the West. But the ban will have a disproportionate impact on farmers in specific sectors in producing countries, and on Russian consumers, who will face higher prices and shortages with inflation already rising and the rouble falling.

"The first casualties would be the domestic market. However it will have some implications for the farmers in the producing countries," Abdolreza Abbassian, a senior economist with the United Nations Food and Agriculture Organization, said.

Russians have relished imported food since the fall of the Soviet Union, when year-round supplies of fresh fruit and vegetables arrived and ubiquitous cheap American frozen chicken quarters became known as "Bush's legs" after the then president.

The ban affects all meat, fish, poultry, fruit and vegetables from the listed countries, but does not include other food items - mostly commodities such as grains, seed oils, sugar, coffee, tea and cocoa. Russia spent $25.5 billion last year on imports in the affected categories, $9.2 billion of it from the countries hit by the ban.

It spent $39 billion overall on food, including $17.2 billion on all food items from the listed countries.

The nascent middle class in Moscow, which buys Italian cheese and American beef at fancy supermarkets, will take a hit, but so will ordinary people who buy Polish apples and Greek cucumbers in street markets.

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A vendor sells meat at the city market in St.Petersburg August 7, 2014. REUTERS/Alexander Demianchuk

Moscow may also ban Western airlines from flying transit routes though its air space. European carriers would spend more on fuel flying around Russia on the way to Asia, but Moscow would lose hundreds of millions of dollars in overflight fees.

In another move that will annoy Washington, Moscow gave a three year residency permit to Edward Snowden, the former U.S. intelligence contractor who sought asylum in Russia after leaking details of U.S. surveillance programmes.

BACK FROM THE BRINK

The rebels in Ukraine have been led mostly by Russian citizens and armed with tanks, artillery and other heavy weapons that Kiev and the West say can only have come from Russia.

They have declared independent "people's republics" in two industrial provinces of eastern Ukraine which they call "New Russia" - a term Putin has applied to all of Ukraine's south and east, where Ukrainians mostly speak Russian.

Alexander Borodai, a combative Russian nationalist who led the self-proclaimed "Donetsk People's Republic", told a news conference he was stepping down in favour of Alexander Zakharenko, a local who leads a heavily-armed rebel unit.

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Russian President Vladimir Putin delivers a speech during a meeting at Kremlin in Moscow July 31, 20 …

Borodai, who emerged as the main face of the rebels in recent weeks, personally negotiating with Malaysia's prime minister to hand over the "black box" flight data recorders of the downed airliner, said he would stay on as an adviser.

Russian share prices rose after Reuters reported that he might step aside. The presence of Russians atop the rebel leadership has been seen as an obstacle to any peace process.

NATO's Secretary-General Anders Fogh Rasmussen visited Kiev in a show of support for Ukraine, although the Western alliance has made clear it will not fight to defend the country, which is not a member and not covered by its mutual defence treaty.

Kiev said Rasmussen had discussed a possible NATO fund to help Ukraine pay for defensive systems like command and control.

NATO says Russia has massed 20,000 troops at the border and may be planning to declare a humanitarian mission as an excuse to invade. Rasmussen said Moscow should "step back from the brink" and not "use peacekeeping as an excuse for warmaking".

Western countries imposed initially mild sanctions on Russia after it annexed Ukraine's Crimea peninsula in March, but tightened them after flight MH17 was shot down on July 17.

The latest Western measures limit access by Russian state banks to global capital markets and also block imports of defence and oil industry equipment.

Washington and Brussels say the Malaysian airliner was almost certainly shot down by an advanced anti-aircraft missile system supplied to the rebels by Russia. Moscow denies this.

The disaster galvanised politicians, particularly in Europe, who had previously been reluctant to take strong action against a big trading partner.

Dutch inspectors are trying to investigate the cause of the disaster and recover any personal effects and remains of bodies of the 298 victims of the crash that might still be left at the site. Their work was halted by fighting in the area, near the road linking the two main rebel bastions of Donetsk and Luhansk.

"Over the past few days, the security situation in eastern Ukraine - including the MH17 crash site - has been getting progressively worse," Dutch Prime Minister Mark Rutte said. "In this light, it is currently not advisable to continue the repatriation mission."

Ukrainian military spokesman Andriy Lysenko said seven more Ukrainian service members had been killed in the past day of fighting. Another Kiev military spokesman said a Ukrainian warplane had been shot down but the pilot ejected to safety. Kiev has lost numerous aircraft in recent weeks.

Despite their advanced weapons, the rebels have steadily lost ground since June, leaving them mainly besieged inside two provincial capitals, along with hundreds of thousands of civilians who fear a full-scale government assault.

Russia has announced military exercises near the border this week. On Wednesday, NATO said Moscow had amassed 20,000 troops near the frontier and could be planning a ground invasion under the pretext of launching a humanitarian mission.

Putin has rallied Russians with relentless nationalist campaigns in state media against Ukraine and in support of the rebel cause, and Western officials fear he might invade to prevent a humiliating rebel defeat.

(Additional reporting by Reuters Moscow, Richard Balmforth in Kiev, Tom Miles in Geneva, Andrew Deutsch in Amsterdam, Gabriela Baczynska, Anton Zverev and Dmitry Zhdannikov in Moscow, Maria Tsvetkova in Donetsk, Barbara Lewis in Brussels and Isla Binnie in Rome; Writing by Peter Graff; editing by David Stamp)

• Politics & Government
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• Moscow
• Ukraine
• President Vladimir Putin
• eastern Ukraine
• Kiev

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Mediators race against clock to extend Gaza truce

By Nidal al-Mughrabi and Lin Noueihed

GAZA/CAIRO (Reuters) - Mediators worked against the clock on Thursday to extend a truce between Israel and Palestinian militants in the Gaza Strip, as the three-day ceasefire entered its final hours.

Israel said it was ready to agree to an extension as Egyptian go-betweens pursued talks with Israeli and Palestinian delegates in Cairo on ending a war that has devastated the Hamas-controlled enclave.

Palestinians want an Israeli-Egyptian blockade on Gaza lifted and prisoners held by Israel to be freed. Hamas's armed wing said it was ready to resume fighting unless Palestinian demands were met, and Israel said it would respond forcefully if attacked.

"Indirect talks are ongoing and we still have today to secure this," an Egyptian official said when asked whether the truce was likely to go beyond Friday's 8 a.m. (0500 GMT) deadline.

"Egypt's aims are to stabilise and extend the truce with the agreement of both sides and to begin negotiations towards a permanent agreement to cease fire and ease border restrictions."

The Palestinian delegation met Egyptian intelligence officials late on Thursday. Israeli officials said Israel's delegates would return to Cairo in the evening having briefly returned home to confer with Prime Minister Benjamin Netanyahu.

After a month of bitter battles, the two sides are not talking face to face.

Gaza officials say the war has killed 1,875 Palestinians, most of them civilians. Hamas said on Thursday it had executed an unspecified number of Palestinians as Israeli spies.

Israel says 64 of its soldiers and three civilians have died in the fighting that began on July 8, after a surge in Palestinian rocket salvoes into Israel.

An Israeli official said late on Wednesday that Israel "has expressed its readiness to extend the truce under its current terms" beyond Friday morning's expiry of the three-day deal, which took effect on Tuesday and has so far held.

A senior Israeli minister, Yaakov Peri, said on Army Radio that an extension would be "right for both sides" and added: "Let's hope that reason prevails."

GAZA RALLY

In Gaza, Palestinian factions held a rally, with several thousand supporters urging Hamas to "bomb Tel Aviv".

Mushir Al-Masri, a Hamas official, told the crowd that Israel should know that "our fighters are in the battlefield with their fingers on triggers".

Hamas's armed wing called on Palestinian negotiators to quit the talks in Cairo unless progress were made towards meeting the group's demands, which include opening Gaza's seaport.

"We urge the Palestinian delegation negotiating not to renew the truce except after the acceptance in principle, particularly to establish the seaport, and if there is no acceptance then we ask the delegation to withdraw from talks," the armed wing's spokesman, Abu Ubaida, said in a televised statement.

"We are ready to enter the battle anew and we will give the occupation a difficult decision to make: either we will bring them into a long war of attrition or we will draw them into a broad territorial war," he added, threatening attacks he said would paralyse the Israeli economy and shut down Ben Gurion International Airport near Tel Aviv.

A Hamas refusal to extend the ceasefire could further alienate Egypt, whose government has been hostile to the group and which ultimately controls Gaza's main gateway to the world, the Rafah border crossing.

Israel's military chief, Lieutenant-General Benny Gantz, said that if Hamas broke the truce, Israel would use "whatever force necessary to ensure the security of Israeli citizens".

A senior Israeli military officer, briefing foreign reporters, said Hamas was capable of resuming attacks with its remaining rockets but it could take "months" for guerrillas to replenish their arsenal from domestic production facilities battered by Israel's assault.

"They started with around 9,000 rockets (in their total arsenal) and now they have a bit less than 3,000," the officer said. "The majority are short-range, less than 40 km (25 miles)."

Israel's central bank governor, Karnit Flug, put the war damage to the Israeli economy at $1.44 billion and Finance Minister Yair Lapid said the 2014 budget could absorb the cost of the conflict without raising taxes. But the Fitch ratings agency said budget planning next year might reflect the need to reverse recent falls in defence spending.

GROUND FORCES

Israel withdrew ground forces from Gaza on Tuesday, shortly before the truce began. There were signs it expected the quiet to last, as emergency restrictions on civilians living near Gaza in Israel's south were lifted to permit more public activities. Residents were urged to resume their routines.

The Israelis described the ceasefire as a tradeoff of "calm for calm". They have shown little interest in easing their naval blockade of Gaza and controls on overland traffic and airspace, worrying Hamas could restock on weapons from abroad.

In Gaza, where half a million people have been displaced by a month of bloodshed, some residents left U.N. shelters to return to neighbourhoods devastated by Israeli shelling.

U.S. President Barack Obama, backing efforts to broker a durable ceasefire, called for a longer-term solution that provides Israel with security while offering Gaza residents hope they will not be permanently cut off from the world.

While condemning Hamas for launching rockets against Israel from population centres, Obama urged an eventual formula to ease the hardships of ordinary Palestinians.

Efforts to achieve a lasting truce could prove difficult, with the sides far apart on their central demands, and each rejecting the other's legitimacy. Islamist Hamas calls for the Jewish state's destruction, while Israel denounces Hamas as a terrorist group and refuses any direct contact.

(Additional reporting by Stephen Kalin and Maggie Fick in Cairo, Ali Sawafta in Ramallah, Allyn Fisher-Ilan and Ori Lewis in Jerusalem; Writing by Giles Elgood in Jerusalem; Editing by Jeffrey Heller and Andrew Roche)

• Politics & Government
• Unrest, Conflicts & War
• Israel
• Gaza Strip
• Hamas

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Exclusive: Liberia health system collapsing as Ebola spreads

By Stella Dawson

WASHINGTON (Thomson Reuters Foundation) - The health care system in Liberia is collapsing, hospitals closing down and medical workers fleeing from the Ebola epidemic, which is poised to worsen, Liberia's foreign minister said on Thursday.

"People are dying from common diseases because the health care system is collapsing," Minister of Foreign Affairs Augustine Kpehe Ngafuan said in an interview with Thomson Reuters Foundation.

"It is going to have a long-term impact, even after this crisis is behind us."

Treatable diseases such as malaria and diarrhea are left untended because frightened Liberians are shunning medical centers, and these deaths could outstrip those from the Ebola virus by three or four fold, he said.

But his biggest concern is the spreading epidemic.

"We are hearing it is going to get worse before it gets better. We do not know how much worse that will be. My main worry is the fear of how many people will die. Right now it is out of control and jumps from place to place," Ngafuan said.

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A Samaritan's Purse medical personnel demonstrates personal protective equipment to educate volu …

The number of trained doctors and nurses, already in critical short supply after years of civil war, is shrinking as medical workers get infected, quarantined or are afraid to report to work. The country entered the epidemic with only about 50 doctors for 4 million people, he said.

"What is happening is the entire health sector is being devastated by the crisis. It is not only a killer, but it kills those who care for them, and a good number of them are dying," Ngafuan said.

Overwhelmed, the three West African countries most affected by the Ebola virus - Liberia, Guinea and Sierra Leone - stressed at a meeting on Monday with top-level U.S. government officials, the Centers for Disease Control and Prevention and the World Bank that a global response is critical, Ngafuan said.

Sierra Leone's Foreign Minister Samura Kamara in a separate interview in Washington after the three-day U.S.-Africa Summit delivered a similar message.

"This is a disease that is beyond the capacity of the three national governments. We need greater international awareness and support and it should be considered a global health crisis that needs a global response," he said.

Both ministers said they were satisfied with the U.S. response. They have requested emergency assistance to contain the disease, logistical help, laboratories, additional health workers, and help with prevention and education programs.

USAID, the international aid agency, pledged an additional $5 million and sent in an emergency team and the World Bank $200 million in emergency funding to fight the disease, which has claimed 932 lives and spread to Nigeria.

The focus in West Africa is on containment, the ministers said. They were told experimental drugs and vaccines now under development at best would not be available until next year. "It is too early for that," said Kamara.

But they need more financial help.

Sierra Leone estimates the cost of its emergency measures from July through December at about $25 million but only has $7 million, Kamara said. Liberia's Minister of Health has put the cost at $21 million for the period and faces a $10 million to $15 million shortfall, Ngafuan said. They were tapping their diaspora communities for emergency relief while in Washington.

Rebuilding more resilient health care systems will cost many millions more, the ministers said. But the crisis has shown how disease can ravage their economies and morph into a national security threat.

"It is like you are pressing the pause button on the general economic activity. Schools are not opening. People are in quarantine. They are not coming to work. It is going to have an impact," Ngafuan said.

(Reporting by Stella Dawson; Editing by Lisa Shumaker)

• Health
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• Liberia
• health care system
• Augustine Kpehe Ngafuan
• Thomson Reuters Foundation

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Obama authorizes limited air strikes in Iraq if needed

By Matt Spetalnick and Isabel Coles

WASHINGTON/ARBIL Iraq (Reuters) - President Barack Obama said on Thursday he had authorized limited U.S. airstrikes to blunt the onslaught of Islamic militants in northern Iraq and began military airdrops of humanitarian supplies to besieged religious minorities to prevent a "potential act of genocide."

Speaking after meetings with his national security team, Obama - in his most significant response to the Iraq crisis – said he approved "targeted" use of air power to protect U.S. personnel if Islamic State militants advance further toward the Kurdish capital Arbil or threaten Americans anywhere in the country.

The airstrikes would be the first carried out by the U.S. military in Iraq since the withdrawal of its forces at the end of 2011, but Obama insisted he would not commit ground forces and had no intention of letting the United States get dragged back into a war there.

Obama took action amid international fears of a humanitarian catastrophe engulfing tens of thousands of members of Iraq's minority Yazidi sect driven out of their homes and stranded on Sinjar mountain under threat from rampaging militants of Islamic State, an al Qaeda splinter group. Many Iraqi Christians have also fled for their lives.

"We can act carefully and responsibly to prevent a potential act of genocide," Obama told reporters at the White House.

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Iraqi security forces and volunteers take part in a mission to secure an area from militants of the  …

Obama was responding to urgent appeals from Iraqi and Kurdish authorities to help cope with an unfolding humanitarian crisis as the militants surged across northern Iraq.

It was unclear, however, whether the measures announced by Obama would be enough to halt the militant advance or shift the balance on the battlefield in favor of embattled Iraqi and Kurdish forces.

Reuters photographs showed what appeared to be Islamic State fighters controlling a checkpoint at the border area of the Kurdish semi-autonomous region, little over 30 minutes' drive from Arbil, a city of 1.5 million that is headquarters of the Kurdish regional government and many businesses.

The fighters had raised the movement's black flag over the guard post. However, a Kurdish security official denied that the militants were in control of the Khazer checkpoint, and the regional government said its forces were advancing and would "defeat the terrorists," urging people to stay calm.

With the refugees on the mountaintop desperately short of food, water and medicine, U.S. aircraft began dropping emergency aid in the area shortly before Obama spoke on Thursday.

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Kurdish "peshmerga" troops take part in an intensive security deployment against Islamic S …

"We intend to stay vigilant and take action if these terrorist forces threaten our personnel or facilities anywhere in Iraq, including our consulate in Arbil and our embassy in Baghdad." he said.

Obama sent in a small number of U.S. military advisers in June to help the Iraqi government's efforts to fend off the Islamic militant offensive, but he was reluctant to take direct military action. He had put the onus on Iraq's Shi'ite Prime Minister Nuri al-Maliki to form a more inclusive government to help defuse the crisis.

Washington's calculus appeared to shift after Islamic State, which routed the Iraqi military in the north and seized a broad swath of territory in recent months, made recent gains against Kurdish forces and moved toward Arbil, capital of the Kurdish semi-autonomous region.

Obama's decision to deepen U.S. re-engagement in Iraq came after urgent deliberations by a president who won the White House in 2008 on a pledge to disentangle the United States from the long, unpopular war there.

Until this week, most of Kurdistan had been protected from militants by its own armed forces, called the pesh merga. Hundreds of thousands of Iraqis fleeing the Islamists, including Christians, Yazidis and others, have taken refuge in the Kurdish area.

The Islamic State's Sunni militants have swept across northwestern Iraq in recent weeks. The Islamic State views as infidels Iraq's majority Shi'ites and minorities such as Christians and Yazidis, a Kurdish ethno-religious community.

(Additional reporting by Roberta Rampton, Missy Ryan and Mark Felsenthal in Washington, Tom Miles in Geneva and James Mackenzie in Rome; Writing by Michael Georgy; Editing by Paul Taylor, Janet McBride, Will Waterman, David Stamp, Jonathan Oatis, Howard Goller and Ken Wills)

• Unrest, Conflicts & War
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Gaza ceasefire holds on second day, extension talks under way

A 72-hour Gaza truce held through its second day on Wednesday and Israel said it was ready to extend the deal as Egyptian mediators pursued talks with Israelis and Palestinians on an enduring end to a war that devastated the Hamas-ruled enclave.

Egypt's intelligence chief met a Palestinian delegation in Cairo, the state news agency MENA said, a day after he conferred with Israeli representatives. The Palestinian team, led by an official from Western-backed President Mahmoud Abbas's Fatah party, includes envoys from Hamas and the Islamic Jihad group.

"The indirect talks between the Palestinians and Israelis are moving forward," one Egyptian official said, making clear that the opposing sides were not meeting face to face. "It is still too early to talk about outcomes but we are optimistic."

Egyptian Foreign Minister Sameh Shukri told reporters his country was working hard for a deal and sought "solutions to protect the Palestinian people and their interests".

An Israeli official said Israel "has expressed its readiness to extend the truce under its current terms" beyond a Friday deadline for the three-day deal that took effect on Tuesday.

A senior Hamas political leader based in Cairo, Moussa Abu Marzouk, said on Twitter late on Wednesday night that "there is no agreement" to prolong the ceasefire.

"Extending the 72-hour calm for another period was not discussed (with Hamas in Cairo today)," said Sami Abu Zuhri, the Hamas spokesman in Gaza.

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Egyptian Foreign Minister Sameh Shoukry (R) meets with Quartet Representative to the Middle East and …

Earlier a senior official with the Islamist movement's armed wing threatened to quit the talks without progress towards achieving its demands to lift a Gaza blockade and free prisoners held by Israel.

"Unless the conditions of the resistance are met, the negotiating team will withdraw from Cairo and then it will be up to the resistance in the field," a senior commander of the armed wing told Reuters, speaking on condition of anonymity.

Israel's armed forces chief, Lieutenant-General Benny Gantz, said in televised remarks that should Hamas disrupt the calm, "we will not hesitate to continue to use our force wherever necessary and with whatever force necessary to ensure the security of Israeli citizens near and far."

Israel withdrew ground forces from tiny, densely populated Gaza on Tuesday morning and started a 72-hour, Egyptian-brokered ceasefire with Hamas as a first step towards a long-term deal.

It showed signs of expecting the truce to last by lifting official emergency restrictions on civilians living in Israel's south near Gaza, permitting more public activities and urging everyone to resume their routines.

Streets in towns in southern Israel, which had been under daily rocket fire from the Gaza Strip, were filled again with playing children. The military said that two rocket-warning sirens sounded in the south proved to be false alarms.

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A Palestinian child goes through toys at a vendor's stall in a market in Gaza City, northern Gaz …

In Gaza, where some half-million people have been displaced by a month of bloodshed, some residents left U.N. shelters to trek back to neighbourhoods where whole blocks have been destroyed by Israeli shelling and the smell of decomposing bodies fouls the air.

BLOCKADE

Palestinians want an end to the Israeli-Egyptian blockade on impoverished Gaza and the release of prisoners, including those Israel arrested in a June crackdown in the occupied West Bank after three Jewish seminary students were kidnapped and killed.

Israel has resisted those demands.

"For Israel the most important issue is the issue of demilitarisation. We must prevent Hamas from rearming, we must demilitarise the Gaza Strip," Mark Regev, a spokesman for Prime Minister Benjamin Netanyahu, told Reuters television.

Frank Lowenstein, the U.S. special envoy to the talks, has arrived in Cairo as well, a State Department spokesman said.

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Palestinians search for victims as people gather atop the remains of a house, which witnesses said w …

U.S. Secretary of State John Kerry, in an interview on the BBC's HARDtalk programme, also spoke of a need for Hamas to decommission its rocket arsenal.

"What we want to do is support the Palestinians and their desire to improve their lives and to be able to open crossings and get food in and reconstruct and have greater freedom," Kerry said. "But that has to come with a greater responsibility towards Israel, which means giving up rockets, moving into a different plane."

Kerry said, however, that all this would "finally come together" as part of wider Israeli-Palestinian peacemaking.

He has spearheaded such peace efforts but they collapsed in April over Israeli opposition to a unity deal between Hamas and the Fatah-led Palestine Liberation Organization and over Israel's reneging on a pledge to free further Palestinian prisoners.

Netanyahu welcomed Kerry's remarks, calling them "very important". He also told reporters in Jerusalem he saw a chance for "important parties in the Middle East to be able to fashion a new reality" he thought might yield a "sustainable peace or at least a sustainable quiet that can lead to other things".

Netanyahu also saw a role for Abbas in a post-war Gaza, answering when asked about it that "we have cooperated and are cooperating with the Palestinian Authority" about the issue.

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U.S. Secretary of State John Kerry speaks at the Ghana Compact Signing Ceremony at the State Departm …

Hamas, a powerful rival to the Palestinian Authority and in control of Gaza since 2007, has ruled out giving up its weapons.

HUMANITARIAN AID

An Israeli official who declined to be identified said Israel wanted humanitarian aid to flow to the Palestinian enclave's 1.8 million inhabitants as soon as possible.

But, the official said, the import of cement - vital for reconstruction - would depend on achieving guarantees that it would not be used by militants to construct more infiltration tunnels leading into Israel and other fortifications.

Gaza officials say the war has killed 1,874 Palestinians, most of them civilians. Israel says 64 of its soldiers and three civilians have been killed since fighting began on July 8, after a surge in Palestinian rocket salvoes into Israel.

An Israeli opinion poll, conducted after the ceasefire went into effect, said Israelis, while not regarding the Gaza war as a victory for their country's powerful military, remained highly supportive of Netanyahu.

According to Haaretz newspaper poll, 51 percent of those surveyed said neither side won and 36 percent believe Israel emerged victorious. Six percent said Hamas was the victor.

Of the 442 people who took part in the poll, 77 percent described the right-wing prime minister's performance during the war as excellent or good.

Efforts to turn the ceasefire into a lasting truce could prove difficult, with the sides far apart on their central demands, and each rejecting the other's legitimacy. Hamas rejects Israel's existence and vows to destroy it, while Israel denounces Hamas as a terrorist group and eschews any contact.

Egypt has positioned itself as a mediator in successive Gaza conflicts but, like Israel, its current administration views Hamas as a security threat.

Besides the loss of life, the war has cost both sides economically. Gaza faces a massive $6 billion price tag to rebuild devastated infrastructure. Israel has lost hundreds of millions of dollars in tourism and other sectors and fears cuts in overall economic growth this year as well.

(Additional reporting by Ali Sawafta in Ramallah, Allyn Fisher-Ilan and Ori Lewis in Jerusalem and Maggie Fick in Cairo; Writing by Jeffrey Heller in Jerusalem; Editing by Giles Elgood and Mark Heinrich)

• Politics & Government
• Foreign Policy
• Gaza Strip
• Israel

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Libyan Congress calls for U.N.-backed ceasefire to end clashes

By Ayman Al-Warfalli and Feras Bosalum

BENGHAZI Libya (Reuters) - Libya's newly elected House of Representatives on Wednesday called for an immediate ceasefire under United Nations supervision to end three weeks of clashes among rival armed factions that have killed more than 200 people.

After the worst fighting in Tripoli and Benghazi since the 2011 uprising ousted Muammar Gaddafi, Western governments have mostly closed up their embassies, fearing the North African state is edging toward another civil war.

Lawmakers, meeting in the eastern town of Tobruk far from the clashes in Tripoli and Benghazi, on Wednesday voted to back a proposal for an immediate ceasefire that would be monitored by the United Nations.

Details of the proposal were not immediately available, and it was unclear warring militias would accept the parliament decision after some of their political allies had already dismissed the new 200-member Congress as unconstitutional.

"One hundred and thirty-one members of the parliament have voted to support an immediate ceasefire for all ongoing fighting in the country and to let United Nations supervise the operation," said lawmaker Iissa al-Oraybi.

Libya's western partners, who once backed the 2011 rebellion with NATO air strikes, hope the new assembly can end the political deadlock that triggered heavy clashes in the capital and the eastern city of Benghazi.

But the United Nations, the United States and most European countries have already closed up their embassies and evacuated staff. It was unclear whether the United Nations would accept any immediate role in monitoring.

The parliament also voted to hand some executive powers temporarily to the legislature until a new presidential election and a new president is chosen, as lawmakers push to consolidate their transition from a previous parliament.

Elected in June, the House of Representatives replaces the General National Congress (GNC) after a vote which, analysts said, eroded the dominance of Islamist factions linked to the Muslim Brotherhood in the legislature.

Some Islamist-leaning lawmakers and former GNC deputies allied with the Misrata armed brigades involved in Tripoli clashes have rejected the new parliament as unconstitutional.

On Wednesday, there was little of the heavy artillery and rocket fire that for the last three weeks has hit southern and western Tripoli, where Islamist-leaning Misrata brigades are fighting to take control of Tripoli airport from rival militias allied with the town of Zintan.

The battle for the airport is part of a wide struggle between two loose factions of ex-rebels and their political allies who once fought together against Gaddafi, but whose rivalries have erupted over dominations of postwar Libya.

On one side are the Zintan brigades - based in the city some 130 km (80 miles) southwest of Tripoli - with their anti-Islamist Qaaqaa and Al-Sawaiq fighters, including some ex-Gaddafi forces, and political allies who say they are a defending Libya against extremists.

Against them are fighters loyal to the western port of Misrata and other militias who are allied with the Islamist Justice and Construction party, an arm of the Muslim Brotherhood, who say they are fighting ex-Gaddafi elements.

(Writing by Aziz El Yaakoubi; Editing by Patrick Markey and Gunna Dickson)

• Unrest, Conflicts & War
• Politics & Government
• Muammar Gaddafi
• United Nations

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Russia bans all U.S. food, EU fruit and vegetables in sanctions response; NATO fears invasion

By Polina Devitt and Maria Tsvetkova

MOSCOW/DONETSK Ukraine (Reuters) - Russia will ban all imports of food from the United States and all fruit and vegetables from Europe, the state news agency reported on Wednesday, a sweeping response to Western sanctions imposed over its support for rebels in Ukraine.

The measures will hit consumers at home who rely on cheap imports, and on farmers in the West for whom Russia is a big market. Moscow is by far the biggest buyer of European fruit and vegetables and the second biggest importer of U.S. poultry.

RIA quoted the spokesman for Russia's food safety watchdog VPSS, Alexei Alexeenko, as saying all European fruit and vegetables and all produce from the United States would be included in a ban drawn up on the orders of President Vladimir Putin to punish countries that imposed sanctions on Russia.

Earlier, Alexeenko told Reuters bans on EU and U.S. goods would be "quite substantial", and would specifically include U.S. poultry, although he declined to give a full list of banned goods. He could not be reached again after the RIA report.

The war of economic sanctions has escalated even as fighting has intensified on the ground in eastern Ukraine in the three weeks since a Malaysian airliner was shot down over territory held by pro-Russian rebels.

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Ukrainian servicemen drive a military armoured vehicle along a road in Donetsk region August 6, 2014 …

NATO said on Wednesday Russia had massed around 20,000 combat-ready troops on Ukraine's border and could use the pretext of a humanitarian mission to invade. It was the starkest warning yet from the Western alliance that Moscow could mount a ground assault on its neighbour.

As rebels have lost ground to Ukrainian government troops, Russia announced military exercises this week near the border.

"We're not going to guess what's on Russia's mind, but we can see what Russia is doing on the ground – and that is of great concern. Russia has amassed around 20,000 combat-ready troops on Ukraine's eastern border," NATO spokeswoman Oana Lungescu said in an emailed statement.

Moscow could use "the pretext of a humanitarian or peace-keeping mission as an excuse to send troops into Eastern Ukraine", she said. A NATO military officer, speaking on condition of anonymity, said Russia's build-up at the border included tanks, infantry, artillery, air defence systems, logistics troops, special forces, and aircraft.

A Russian defence ministry spokesman dismissed the NATO accusations: "We've been hearing this for three months already."

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Armed pro-Russian separatists stand guard at a checkpoint in the settlement of Yasynuvata outside Do …

Moscow annexed Ukraine's Crimea peninsula in the Black Sea in March, and Western countries say it has funded and armed pro-Russian rebels since they rose up in east Ukraine in April.

Over the past two months, government troops have fought back, gaining ground against the rebels, who are led almost exclusively by Russian citizens and have managed to acquire tanks, missiles and other heavy weaponry that Kiev and its Western allies say can only have come from across the frontier.

Kiev said 18 Ukrainian servicemen had been killed and 54 injured in 25 separate clashes over the past day in eastern Ukraine. Military spokesman Andriy Lysenko said troops had been shelled from inside Russian territory and frontier guards had come under a four-hour mortar and artillery attack.

Fighting has intensified since Malaysia Airlines flight MH17 crashed on July 17, killing all 298 people on board. Western countries say it was shot down by rebels with an advanced anti-aircraft missile supplied by Russia. Moscow denies blame, and the Russians who command the rebels deny they had such missiles.

The United States and the EU imposed sanctions on Russia that were mild at first but have been tightened sharply since the airliner was brought down, now targeting Russia's defence, oil and financial sectors.

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Ukrainian servicemen are seen inside army vehicles on a road in Donetsk region August 6, 2014. REUTE …

On Wednesday, Putin ordered his government to come up with a list of agricultural products from countries that had imposed sanctions on Russia, which would be banned in retaliation. He told the government to avoid measures that would hurt Russian consumers, but the blanket bans reported by RIA were about as sweeping as could be.

Russia imported $43 billion worth of food last year. According to the European Commission, Russia bought 28 percent of EU fruit exports and 21.5 percent of its vegetables in 2011.

It was the second biggest buyer of U.S. poultry after Mexico last year, accounting for 8 percent of U.S. chicken meat exports, according to the U.S. Department of Agriculture. U.S. poultry has been ubiquitous in Russia since the early days after the Soviet Union, when cheap American chicken quarters sold at street markets were called "Bush's legs" after the president.

SIEGE Kiev's military offensive has pushed the rebels out of many of their strongholds, leaving them largely besieged in the cities of Donetsk and Luhansk, which the rebels have proclaimed capitals of two "people's republics".

Residents in Donetsk, east Ukraine's main industrial hub and now the principal rebel redoubt, said Ukrainian warplanes had carried out air strikes overnight.

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A convoy of military armoured vehicles is seen near a checkpoint on a road in Donetsk region August  …

Reuters journalists heard the planes roar overhead and massive explosions during the night. In the morning, an industrial district 2-3 km (1-2 miles) from the city centre was pocked with craters, including two huge holes 7 metres (7 yards) wide and 2 metres deep, ripped into the asphalt.

"The planes were flying low. Then there were two massive explosions and the glass was blown out of the window. It was terrifying. This is war. There will never be peace," said Nadezhda, a woman who lived nearby.

Government military spokesman Lysenko denied Ukrainian planes had carried out air strikes: "The Ukrainian military does not bomb the towns of Donetsk and Luhansk or any other similar populated places," he said.

Many residents have fled the two cities, but hundreds of thousands of people are still living in them, increasingly fearful that they will bear the brunt of a full-blown assault.

The latest Russian troop build-up on the border is not the first time Moscow has concentrated forces there: NATO estimated Russia had as many as 40,000 troops in place earlier in the crisis before Putin pulled them back in June.

But the government's advance since then may be prompting new action from the Kremlin, after months in which state-controlled Russian media have mounted a sustained campaign of anti-Ukrainian agitation and nationalist pride focused on Crimea.

Since March, Putin has vowed to use military force to protect Russian-speaking "compatriots" across the former Soviet Union. He branded southern and eastern Ukraine "New Russia", a name the rebels took up as catch-all for most militia groups.

Most people in eastern and southern Ukraine identify themselves as ethnic Ukrainians who speak Russian as a native language. Outside of the two provinces partly occupied by the armed separatist fighters, most have rallied behind Kiev, despite reservations about the government there.

Polish Prime Minister Donald Tusk said on Wednesday the threat of a direct intervention by Russia's military in Ukraine has risen over the last couple of days.

A senior U.S. official said Washington was keeping a "very close eye" on Russian activity at the border.

"The last few weeks have not been good ones for the Russians. They have seen the separatists lose ground and the Malaysian airliner shoot-down was a public relations disaster for the Russians. Unfortunately we have not seen a sense that the Russians are acting on the negative feedback and looking to deescalate. In fact we've see signs that Putin seems to be doubling down," said the official.

"There's the buildup on the border, no change in the propaganda machine in Russia, talk of the need for humanitarian peacekeeping in Ukraine itself."

(Additional reporting by Natalia Zinets and Richard Balmforth in Kiev, Lina Kushch in Donetsk, Barbara Lewis and Tom Koerkemeier in Brussels, Dmitry Zhdannikov and Maria Kiselyova in Moscow, Matt Spetalnick and Mark Hosenball in Washington and Adrian Croft in London; Writing by Peter Graff; editing by David Stamp)

• Politics & Government
• Military & Defense
• Russia
• President Vladimir Putin
• NATO
• Ukraine

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Canadian couple set up agency to help fund North Korean aid trips: friend

By Nicole Mordant and Cameron French

VANCOUVER/TORONTO (Reuters) - A Canadian couple detained in China amid spying allegations made regular trips to deliver goods to North Korea, their close friend and pastor said on Wednesday, and set up a British Columbia-based organization to collect funds for their work.

Rich Kao, head minister at a small church just outside Vancouver that backs the Garratt's North Korea-focused charity, North Star Aid, said the trips were humanitarian ventures.

Kao said the Garratts, who moved to China in 1984, had been doing missionary work in the country but came back to Canada about seven years ago. Soon after, they joined his church and then launched North Star Aid, the North Korea-focused aid group that has come under the spotlight since news of the Garratts' detention emerged.

Kevin and Julia Garratt, who returned to China in 2008 and settled in Dandong on the North Korean border, were detained Monday. The investigation comes a week after Canada took the unusual step of singling out Chinese hackers for attacking a key computer network.

It is unusual for foreigners to be charged with violating China's state secrets law - a serious crime that is punishable by life in prison or death in the most severe cases.

Kao, 53, said he met the Garratts when they attended a service at the Five Stones Church in New Westminster, British Columbia, where Kao is senior pastor.

"They were in between home churches, so they happened to come to one of our services, and in the course of getting to know them and building the friendship, it seemed like a fit for them to join our fellowship," he told Reuters.

He said the Garratts were moved to focus on North Korea after seeing the poverty in the country and the contrast with improving conditions in China.

North Star operates as a subsidiary of Five Stones, Kao said, but is run by the Garratts from Dandong and largely staffed by church volunteers. North Star's funding largely comes from outside the church, he said, and the group relies heavily on word-of-mouth for support.

Simeon Garratt, 27, the couple's eldest son, said North Star was run "mainly by local business people."

"It's a fully functioning charity," he said in Vancouver. "They set it up so people could get ... a tax write-off."

The charity's website says it serves North Korea "with love and practical assistance" and features a photo gallery of workers delivering aid from trucks.

Garratt said his parents had done some North Korea-related aid work prior to living in Dandong but wanted to do it "on a larger scale," prompting their move to the city, an important gateway to the reclusive state.

(Writing by Cameron French; Editing by Amran Abocar and Ken Wills)

• Society & Culture
• North Korea

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Soldier who killed U.S. general spent three years in Afghan army

By Hamid Shalizi and Krista Mahr

KABUL (Reuters) - The Afghan who opened fire on a high-ranking delegation visiting a military complex in Kabul, killing U.S. Major General Harold Greene, had served in the army for three years, an Afghan defense official said on Wednesday.

In the immediate aftermath of Tuesday's attack, the Defence Ministry had described the gunman, who was also killed, as a "terrorist in army uniform", indicating its belief he was an Islamist militant who had infiltrated the army from outside.

While details about the identity of the soldier and his motivation remain sketchy, the fact that he had spent so long in the army before turning on fellow soldiers is likely to be a major line of inquiry in an investigation launched on Wednesday.

"What motivated the shooting is still under investigation, but the shooter was an army soldier, not a terrorist from outside the base," said the official.

Initial findings from the investigation were due to land on Afghan President Hamid Karzai's desk by the evening.

Greene was the most senior U.S. military official killed in action overseas since the war in Vietnam. A German general was also among 14 coalition troops wounded after the man opened fire with a light machine gun.

The attack has raised fresh questions about the ability of NATO soldiers stationed in Afghanistan to train local forces, and will undermine trust between them at a crucial time.

Most foreign soldiers plan to withdraw from the war-torn country by the end of 2014, but, recognizing the challenge Afghan forces face in battling a vicious insurgency led by the Taliban, a contingent could remain beyond the deadline in a training and counter-terrorism role.

"LISTENING TO A SPEECH"

At their peak in 2012, so-called "insider" attacks threatened the very foundation of the U.S.-led mission in Afghanistan and prompted the coalition to bring in a host of measures to reduce interaction with their local allies.

The number of incidents fell from nearly 50 in 2012 to about 15 last year.

"Despite all security measures, such attacks by insiders can never be totally ruled out," a German defense ministry spokesman said.

The coalition, called the International Security Assistance Force (ISAF), insisted the attack would not compromise their plans to train and assist Afghanistan's fledgling armed forces, built from scratch after the Taliban were ousted in 2001.

"We do not view the incident at Marshal Fahim National Defense University in Kabul yesterday as representative of the positive relationship which we have nurtured," it said in a statement.

According to a spokesman for the German forces' mission command in Potsdam, near Berlin, the shooting at the complex on the outskirts of Kabul came from a neighboring building.

"The ISAF delegation was listening to a speech in the open air on the premises of the Marshal Fahim National Defense University when somebody opened fire," he said.

The attack was initially believed to have taken place at the British-backed officer training academy nicknamed "Sandhurst in the Sand".

The coalition later clarified that it happened on another part of the complex, where security was managed by the Afghans.

High-ranking officers, including Greene and Brigadier General Michael Bartscher of Germany, were likely to have had their own protection teams.

According to an Afghan Interior Ministry official, initial information suggests that the attacker was called Rafiullah.

The defense official said he was a low-ranking soldier who was recruited to join the army from Paktika province in eastern Afghanistan bordering Pakistan.

The area is a hotbed of Taliban activity and a stronghold of their Islamist militant allies, the Haqqani network.

The soldier's reasons for opening fire may never be known, but the fact that the Taliban, who regularly make exaggerated claims of attacks on foreign forces, have remained silent suggests the soldier may have acted of his own accord.

(Additional reporting by Sabine Siebold and Alexandra Hudson in Berlin; Writing by Jessica Donati; Editing by Mike Collett-White)

• Military & Defense
• Unrest, Conflicts & War
• Harold Greene
• Afghanistan

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