Minnesota government shuts down

(CNN) -- The Minnesota government was forced to shut down Friday for the second time in six years after lawmakers failed to reach a budget agreement before a midnight Thursday deadline.

Gov. Mark Dayton held a news conference to announce an impasse in budget talks two hours before the deadline.

"This is a night of deep sorrow for me," Dayton said.

The governor, a member of the Minnesota Democratic-Farmer-Labor party wants to raise taxes on the wealthiest 1.9% of Minnesotans, as well as cut spending.

Republicans accused the governor of giving up too soon.

Senate Majority Leader Amy Koch said in a statement issued by her office Friday that Republicans had "100 matched" some of Dayton's funding requests. She called the governor's decision a "major disappointment."

"We met several times in order to bridge the gap between our differences over more complicated areas of the budget and left thinking that a budget agreement was imminent," she said. "Unfortunately, Gov. Dayton has chosen to prioritize his rigid, tax-and-spend ideology, rather than prioritize the best interests of Minnesotans as we move into the holiday weekend."

Republicans had proposed passing a temporary funding bill while they worked out their remaining differences with Dayton.

"This is very disappointing, very disheartening," House Speaker Kurt Zellers said after Dayton's news conference.

Zellers told reporters that budget talks were much closer than Dayton previously said.

The state Democratic-Farmer-Labor party blamed Republicans for the shutdown, accusing them of stubbornly favoring millionaires over other Minnesota residents.

"Minnesotans deserve more than what the GOP has forced upon them with this government shutdown," party chair Ken Martin said in a statement. "Our state's residents deserve much more than the devastating cuts to education, health care, public safety, and other vital services that the Republicans are digging in their heels to enact."

The last government shutdown was in 2005, when Tim Pawlenty was governor.

The shutdown means 46 state boards and agencies will be closed, with minimal staffing at 29 others, according to CNN affiliate WCCO.

Residents are already feeling the impact.

The Minnesota Department of Transportation had shut down more than 80 highway rest stops by Thursday afternoon.

State parks and the zoo are also set to be closed. Emergency and disaster agencies, Minnesota State Patrol, the state court system and the prison system are a few of the agencies that will remain open.

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Ontario government spending plans optimistic: auditor (Reuters)

TORONTO (Reuters) – Ontario's latest spending forecasts are optimistic and aggressive, the province's auditor general said on Tuesday, which may make it difficult for the government to meet its fiscal targets.

The auditor's report comes just three months ahead of an October election. The governing Liberals are trailing the main opposition Progressive Conservatives in recent polls.

Under legislation introduced in 2004, the Ontario government is required to release a pre-election report on the province's finances, including revenue and spending projections for three years. It also requires that the fiscal plan should be based on modest assumptions.

"It's going to be very challenging ... this is a fairly optimistic and aggressive set of assumptions. Really, things have to go right," Auditor General Jim McCarter told reporters.

"The risk would basically be you have a much higher risk of not meeting your fiscal targets if things that you hope are going to happen don't happen," he added.

McCarter pointed out that the government's plan is largely reliant on its ability to freeze public sector salaries, which make up half of government spending.

However, since the government's announcement to freeze salaries in 2010, he noted that about 60 percent of compensation agreements with the public sector have resulted in pay raises.

The forecasts were in line with the estimates made in the March budget, when the government projected it would take until 2017-18 to eliminate its C$16.3 billion ($16.6 billion) deficit.

McCarter concluded that estimates of revenues and of interest costs on the provincial debt were in fact "prudent and cautious."

Expenditures however -- the other half of the equation that the government actually has control over, versus economically driven revenues -- were viewed with more skepticism.

The auditor's report notes that the government says it will spend an average of just 1.8 percent more in each of the next three years, even though its annual spending growth over the past eight years, after adjusting for large one-time expenses, averaged almost 7 percent.

Ontario Finance Minister Dwight Duncan said in response to the report that he himself has characterized the expenditure assumptions as aggressive, adding the province's deficit targets are not at risk.

"In fact, we have overachieved and he doesn't say that. I think what he says is he talks about reserves, he talks about contingency. He talks about the conservative nature of our revenue projections," Duncan told reporters.

"On balance, I thought his report was fair ... I think we're on target moving forward."

($1=$0.98 Canadian)

(Reporting by Claire Sibonney; editing by Rob Wilson)

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Myanmar government warns Suu Kyi planned tour could cause riots (Reuters)

YANGON (Reuters) – A possible tour of Myanmar by pro-democracy leader Aung San Suu Kyi could cause riots, state media warned on Wednesday, implying she would be responsible for her own safety.

Nobel Peace Prize laureate Suu Kyi is planning her first trip outside the former capital Yangon since she was freed from home detention last year just after elections to end army rule.

The military still effectively controls the government.

"Her followers and supporters are gushing that the icon must keep in touch with the public. They seem willing to exploit the public. They also propagate that the government is responsible for security of Daw Aung San Suu Kyi on her trip," a commentary in all three official newspapers said.

"We are deeply concerned that if Daw Aung San Suu Kyi makes trips to countryside regions, there may be chaos and riots, as evidenced by previous incidents," it added.

"Daw" is an honorific in Myanmar for women.

In 2003, in an episode now known as the Depayin Massacre, Suu Kyi's motorcade was attacked by pro-junta thugs and 70 of her supporters died in what was seen as an assassination attempt.

"The government has said that Daw Aung San Suu Kyi is just an ordinary public member, so it will not restrict her from traveling and doing things in accordance with the law, but she shall honor the laws for the rule of law," the commentary read.

Suu Kyi, 66, has not announced any dates for the tour, nor an itinerary.

Her party, the National League for Democracy (NLD), was officially dissolved last year when it refused to register for elections held in November. Suu Kyi was released from seven years of house arrest a week after the vote.

Official media, which act as a mouthpiece for the government, also said on Wednesday the government had warned the NLD "not to harm peace and stability" and to respect the law.

"If they really want to accept and practice democracy effectively, they are to stop such acts that can harm peace and stability and the rule of law as well as the unity among the people including monks and service personnel," the letter said, according to state media.

NLD spokesman Nyan Win confirmed a letter had been received. "We got that letter yesterday but we still have not talked it over and decided what to do about it," he said.

The newspapers said the letter accused the party of keeping its headquarters and various offices open and organizing meetings even through it had been dissolved.

"Such acts are not only against the law but also tantamount to opposing the Hluttaws (legislature)," they said.

(Reporting by Aung Hla Tun; Editing by Alan Raybould and Daniel Magnowski)

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Somalia pardons UK and American ransom couriers: government (Reuters)

MOGADISHU (Reuters) – Somalia has pardoned six foreigners convicted of illegally carrying millions of dollars into the country with the intention of paying pirate ransoms, a government spokesman and presidency officials said.

Somali authorities detained three Britons, an America and two Kenyans late last month, impounding their two aircraft and $3.6 million in cash.

"Considering the humanitarian situation, the Somali President pardoned the six foreigners," government spokesman Abdirahman Osman Yarisow told Reuters on Sunday, adding that the ransom money the men were carrying would be kept.

The Somali government says it is illegal to pay ransoms to the armed pirate gangs stalking the strategic sea-lanes linking Europe and Asia, but the practice remains common.

A Somali court convicted the six of illegally taking money into the country, aiding and abetting piracy and undermining the integrity of the Somali state.

They were handed jail terms of up to 15 years and ordered to pay fines of up to $15,000.

The government spokesman and officials at the presidency said the men would be allowed to leave Somalia with the two planes, after paying fines for each aircraft.

"Because of their illegal arrival, the two planes were each fined $50,000. And the $3.6 million in cash has been taken by the government. They may fly today or tomorrow. It depends on their departure process. The Somali government never encourages payments to pirates" he said.

A Reuters witness said the men were in a police building at Mogadishu airport on Sunday morning.

Maritime piracy costs the global economy up to $12 billion annually and has spawned numerous private security businesses offering armed protection for ships and ransom deliveries, which are often dropped onto hijacked ships from light aircraft.

The security consultancy firm that had contracted the men to carry the ransom money declined to comment.

(Editing by David Clarke)

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It Won the Confidence Vote, but Greece's Government Still Has Everything to Lose (Time.com)

For Greek Prime Minister George Papandreou, winning the vote of confidence in Parliament was the easy part. His ruling Socialists hold a slim majority, and last week's cabinet reshuffle elevated party hardliners to keep rogue deputies in line. The vote, held just after midnight on Wednesday morning, passed 155 to 143.

Now, back to the hard part: Papandreou's embattled government resumes the deeply unpopular austerity program that's supposed to save Greece from defaulting on its massive national debt. Euro-zone leaders say the government must approve €28 billion of cuts, tax hikes, financial reforms and privatization in a June 28 vote before Greece receives the latest installment of bailout loans to allow it to keep paying off its debts. (See pictures of protests in Greece.)

Since last year, when Greece imposed a program of deep budget cuts and tax hikes in exchange for more than $150 billion in bailout loans from the European Union and International Monetary Fund (IMF), austerity has increasingly become a dirty word for many Greeks. "Austerity means unemployment, a dead economy and a 45% cut to my pension after I worked almost 40 years to get it," says Dimtrios Kountomerkos, a 58-year-old Athenian who retired from the Hellenic Air Force two years ago. "And still, after all these cuts, everyone says we're going to default again. What's the point?"

Kountomerkos and two of his friends were among the thousands who were waiting outside Parliament last night for the outcome of the vote. They drank beer and booed each time a deputy voted to support Papandreou's government. Most of the crowd was aligned with the aganaktizemenoi, the revolution-minded Greeks who have camped out for weeks in Syntagma Square across the street from Parliament. Modeled after Spain's young indignados, who protested their nation's own austerity cuts, the aganaktizemenoi represent the most visible revolt against Papandreou, whom they deride as a weak leader carrying out orders from international lenders instead of looking out for the Greek people. Many of these protesters are left-wing activists who oppose capitalism and blame banks for Greece's problems. They want to upend a political system they see as irrevocably broken, and call Papandreou's government a "junta" to associate it with the military dictatorship that ruled the country from 1967-74. It's a painful jab at Papandreou, who hails from Greece's most powerful family, which was chased out of the country by the military dictators. (See more on Greece's debt crisis.)

The aganaktizemenoi may be using a dated template to create a fresh revolution, but they have mobilized Greeks who have been quietly stewing about the country's downward economic spiral. Yet, the Syntagma protesters offer no clear solutions on how to save Greece from its debt crisis, says Stathis Kalyvas, a political-science professor at Yale. "It's a protest movement, so they know what they're against, but what they are for is very fuzzy," he says. "But it's an important movement in that it makes 'political time,' which is usually glacial, move faster - and it's clear Greek politicians have to move much, much faster on this crisis."

To do so, the Socialists must, at the very least, stay unified. That's easier now that Papandreou has brought in Evangelos Venizelos as the new finance minister and deputy prime minister. Venizelos, a 54-year-old constitutional-law scholar and former defense minister, is a forceful politician who is both widely respected and feared. He is also the Prime Minister's longtime foe, having unsuccessfully challenged Papandreou in 2007 for leadership of the PASOK party. "Venizelos is considered a tough, serious guy," says Ioannis Tsarmougelis, an economics professor at the University of the Aegean. "He is someone who commands attention in the party." (See why another Greek bailout is a bad idea.)

Passing the latest austerity measures also looks easier now. The new measures include more cuts to public spending, as well as tax hikes and a privatization plan. One part of this privatization includes reducing Greece's holding in the state-run electricity company, the Public Power Corporation (PPC). The PPC's union, Genop, says the privatization will lead to higher rates for consumers at a time when they're finding it hard to pay their bills. Genop is protesting with 48 hours of rolling power cuts that began Tuesday.

The most controversial part of the new austerity package is the government's plan to trim the public sector by 150,000 workers. Many Greeks consider the public sector bloated and inefficient, but cutting it will cost the government dearly politically. For decades, both PASOK and the main opposition New Democracy party crammed the public sector with their cadres, regardless of their qualifications, as a way to curry favor with supporters. "It's been a no-go zone for politicians for years, but the public sector must be overhauled," says political analyst Dimitris Skalkos. "It's the first step to wean Greek politicians from their dependence on special interests, and it will also open up this economy."

The public-sector union, ADEDY, will join the private-sector union in a 48-hour strike next Monday and Tuesday, when Parliament is supposed to discuss and vote on the new fiscal measures. Meanwhile, the Syntagma protesters are vowing to stay in the square until new elections are called. They say public opinion is on their side: According to a survey by Kapa Research for To Vima newspaper, more than 47% of Greeks surveyed oppose new austerity measures and want early elections. Papandreou is vowing to finish his government's term, which ends in 2013. (See how one year after the bailout, Greece is still hurting.)

Many analysts say Papandreou's government is doomed, and new elections are inevitable. But they also acknowledge that stability is crucial as markets and creditors watch Greece right now. The government is in talks with international lenders about a second bailout that could be as large as last year's package. The hard part, for Greece and for Europe, is far from over.

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Government to introduce bill to restore mail service (Reuters)

OTTAWA (Reuters) – The government will introduce legislation on Monday afternoon to force Canada Post employees back to work and restore mail service, Labor Minister Lisa Raitt told Parliament.

"It's both parties at the table who are negotiating and have been unable to attain an agreement. And that's why we're acting on behalf of Canadians, on behalf of small businesses, on behalf of charities who are being affected by this work stoppage across the country," Raitt said.

"That's exactly why we'll be introducing back-to-work legislation today."

Canada Post locked out its employees last Wednesday following a series of rotating strikes.

(Reporting by Randall Palmer)

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6-party government in Finland after lengthy talks (AP)

HELSINKI – Six parties across the political spectrum united Friday to form a government, saving Finland from the embarrassment of having no prime minister at a key European Union summit next week.

Coalition talks had dragged on for weeks, marred by disagreements over economic policy and European bailouts, following an April 17 election that for a while appeared to have catapulted a nationalist party into power.

After a previous attempt failed, a relieved Prime Minister-designate Jyrki Katainen announced that six parties had agreed on the main priorities for a broad-based coalition government.

Katainen's National Coalition Party, which won the election, joined forces with the Social Democrats, the left-wing Left Alliance, the Greens, the Swedish People's Party and the Christian Democrats. The coalition, dubbed "the six-pack" by Katainen, will command 126 seats in the 200-seat Parliament.

The True Finns, a nationalist group that opposed bailout packages for debt-ridden European Union nations, scored the biggest gains in the election but were dropped from coalition talks because of disagreements on EU policy.

At the insistence of the small Christian Democrats — with close ties to the country's state Lutheran church — the coalition said it would consider tightening Finland's abortion laws.

Katainen pledged to improve the competitiveness of the Nordic country's economy and boost employment and entrepreneurship by lowering taxes, especially for lower income households. The government would raise some excise taxes and cut spending to balance the budget.

"Finland needs to get back on a growth track," Katainen said at a news conference. "We need ... such economic policies that will boost employment and bring investments to Finland."

Friday's agreement paves the way for Katainen to be formally approved by Parliament next week, so that he can travel to a June 23-24 EU summit as prime minister.

In their program, the coalition parties pledged not to change Finland's EU policies, committing the country to be actively involved in key EU projects also in the future. But in a nod to the euroskeptic sentiment that boosted the True Finns, they promised to also take into account views critical of European integration.

The coalition said it would not grant new permits to build nuclear power plants, dealing a blow to national utility Fortum Oyj, which has expressed interest in increasing its current nuclear capacity.

The conservatives will get six portfolios in the 19-member Cabinet, including the posts of prime minister and foreign trade minister. The Social Democrats will also get six portfolios including finance and foreign affairs.

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As Austerity Anger Swells, Greece's Government Struggles (Time.com)

Updates Appended: June 16, 2011

Even after the scuffles between police and anarchists erupted into clouds of tear gas on June 15, Giorgos Liolios did not leave Syntagma Square. For more than a year, Liolis, a 37-year old Athenian struggling to keep his small bakery afloat, was part of the silent majority that gave Prime Minister George Papandreou the benefit of the doubt. But after a year of austerity left him nearly broke, his brother unemployed and the debt-ridden country no better off, he drove to Athens from his suburb to stand alongside thousands of angry Greeks who, for weeks, had transformed Syntagma into a mini-Tahrir Square, complete with drum circles, tents and Cretan rebel songs.

"Everyone in that building should be ashamed," he says, pointing to the parliament building, which is now surrounded by protesters waving banners depicting Papandreou as Judas and a donkey. "They want us to sacrifice, but we need to see why we're sacrificing. As Greeks, we just want to live with enough money to get by, to have a little dignity. We can't do that anymore. We can't take it anymore. Why can't George Papandreou understand that?" (See pictures of economy-driven riots in Greece.)

It's now clear that Papandreou got the message. On Thursday, which also happened to be the American-born Premier's 59th birthday, he presided over an emergency meeting of the parliamentary group of his ruling party, PASOK, which he leads and his father, Andreas, founded, after two deputies defected and a day after state-run NET TV reported that he had considered resigning. But afterwards, in a televised speech to PASOK deputies, Papandreou vowed to stay in office and work to lead Greece out of its debt crisis.

"We do not have the luxury to run away" from our responsibilities, he said, to applause from the PASOK deputies. "I have to fight, all of us here have to fight."

It was a show of party unity after a fractious Wednesday, when Papandreou huddled with advisors and talked to Antonis Samaras, leader of the main opposition party New Democracy, about forming a coalition government that would pursue austerity policy together. In a short televised speech Wednesday night, he said he would form a new cabinet and ask parliament for a vote of no-confidence. Samaras responded with his own televised speech and said that the country and markets no longer had faith in the Socialists.

Pressure on Papandreou has been building for weeks. On June 13 Standard & Poor's downgraded Greece's credit rating, handing it the lowest rating in the world and noting the country is "increasingly likely" to face debt restructuring. With his poll ratings in free fall and his own deputies defecting from the Party, Papandreou seems to be running out of options. Some analysts wondered if he would even last the day as Premier. (See more on Greece's debt crisis.)

"This government is almost dead," says Kostas Ifantis, a political science professor at the University of Athens. "I cannot see how they can push forward with the very, very painful measures the country needs. It was hard ten months ago, but it's even harder now."

There's little indication that a new government will pave the way to stability - even if new cabinet consists of fresh faces rather than longtime Greek politicians, whom most Greeks view as hopelessly corrupt and insular. "Markets are not going to respond well to this political turbulence," says Theodore Pelagidis, a professor of economic analysis at the University of Piraeus. "Right now, what is seriously lacking in this country is political leadership, and neither major party can offer it. There is no way out of this crisis without a healthy political system, which this country does not have." (See how one year after the bailout, Greece is still hurting.)

Papandreou's new resolve means snap elections will be put off - for now. If his government continues to struggle, elections may be the only option down the road, analysts say. "In addition to an economic crisis in Greece, we now have a legitimacy crisis," says law professor Aristides Hatzis, who runs www.greekcrisis.net, a blog that diligently charts every twist and turn of the debt crisis. "George Papandreou was elected on a mandate of expanding government and he has had to shrink it. People are demonstrating every day outside parliament, and some people are even attacking parliament. Elections are the only way to regain legitimacy."

But even if elections take place, the country still faces a leadership vacuum. Support for both PASOK and New Democracy have reached new lows, which suggests neither party would have a majority in early elections. Defectors from those groups have joined smaller parties, such as the sclerotic Communist Party of Greece (KKE) and the nationalist, often incendiary Popular Orthodox Rally (LAOS), diluting the power of the main parties even more. (See how Greek voters gave the austerity plan a second chance.)

Back in Syntagma Square, Giorgos Liolios shakes his head as young demonstrators throw rocks at riot police, who respond with still more tear gas. He smeared his face with liquid Maalox earlier in the morning to close his pores, but that doesn't stop his eyes from stinging. Through all the haze and turmoil, it's difficult for him to see any clear champion for the millions of Greeks struggling to get by. Business at his small bakery is down 50 percent from last year. His taxes have gone up. Even the spaghetti he buys at the supermarket has doubled in price. "I'm not an anarchist, I'm not a fascist, I'm not a punk," he says, wiping his face. "I'm a Greek. Just a regular person trying to have a regular life. I'm willing to make sacrifices for my country, but not if it leaves me for dead."

The original version of this story has been updated to reflect new developments.

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Yemen opposition: talks over after Saleh government snub (Reuters)

SANAA (Reuters) – Talks to resolve Yemen's political crisis have failed after the deputy to wounded President Ali Abdullah Saleh refused to speak with groups demanding he cede power immediately, opposition figures said.

Saleh, forced to seek medical treatment in Saudi Arabia for wounds suffered in an attack on his palace nine days ago, has refused to leave office despite nearly six months of street protests and many diplomatic attempts to remove him.

The ensuing political paralysis and long-standing conflicts with Islamist insurgents, separatists and rebel tribesmen, has fanned Western and regional fears of Yemen collapsing into chaos and giving al Qaeda a stronghold alongside oil shipping routes.

A member of the group of opposition parties demanding Saleh transfer power now said international efforts to broker an agreement to that end had collapsed because the acting leader, Vice President Abd-Rabbu Mansour Hadi, would not talk to them.

"The American and European efforts for a dialogue between opposition parties and the ruling party has failed. The vice-president has refused to deal with or meet opposition parties," Mohammed al-Mutawakkil said.

"He justifies that by saying he is preoccupied with dealing with the fuel crisis and the ceasefire, as well as the security situation in the provinces."

A ceasefire has held in Sanaa since Saleh left a week ago, after more than 200 people were killed and thousands fled during two weeks of clashes between his loyalists and the forces of tribal leader Sheikh Sadeq al-Ahmar, who backs the protesters.

The capital, however, is all but paralyzed by shortages of fuel and electricity, and violence in a southern province -- whose capital Islamist gunmen seized last month -- has worsened.

POPULATION FLEES CITY AMID FIGHTING

Yemen's army killed 21 al Qaeda members in the southern province of Abyan on Saturday, 18 of them in Zinjibar, the provincial capital that fell. Ten soldiers were killed in fighting there and another city, Lawdar, state media said.

Residents of Zinjibar said fighting continued early on Sunday, leaving at least four soldiers and several gunmen dead.

Yemen's health ministry said it would send 10,000 tones of medical supplies to people who have fled Zinjibar, including some 10,000 in the southern port of Aden.

A Yemeni NGO, Seyaj, called for help evacuating some 500 people trapped in the town due to continued fighting.

Opposition parties have said they will form their own transitional assembly in a week if Saleh does not cede power. It is not clear whether those parties have any significant influence over many of the protesters.

Saleh has three times backed out of plans crafted by oil-rich Gulf neighbors to quit after a transitional period.

His opponents have accused him of handing over Zinjibar to Islamists to reinforce his threat that the end of his three-decade rule, as demanded by protesters, would amount to ceding the region to al Qaeda.

Saleh has not been seen in public since the palace attack, which left him with burns and shrapnel wounds. Yemen's ambassador in London said on Saturday that he was recovering and in a "stable condition".

Saudi medical sources and Yemeni officials said Prime Minister Ali Mohammed Megawar and another cabinet member injured in the palace attack had been taken for more surgery, and described their condition as "serious".

Interfax news agency reported two planes had been dispatched to evacuate Russian nationals who want to leave the country. About 1,000 Russians citizens are in Yemen. (Additional reporting by Mohammed Mukhashaf in Aden, Douglas Busvine in Moscow; Writing by Joseph Logan; Editing by Louise Ireland)

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Seeking Calm, Bahrain's Government Lifts Martial Law (Time.com)

By lifting its 13-week martial law decree on Wednesday, Bahrain's government meant to signal the end of a violent crackdown against its Shi'ite opposition - and show a nervous international business community that normality had been restored in the embattled island nation. Instead, however, the day was marked by tear gas attacks on peaceful protesters in the Shi'ite enclave of Sitra. They continued on Thursday and Friday with government forces firing tear gas and rubber bullets at protesters marching on the site of the torn-down Pearl roundabout, as activists elsewhere were called into police stations to face charges of anti-government activity.

Most prominent Shi'ite activists are either missing or behind bars, leaving those remaining to protest the government's attempt to paint a patina of normality over the turmoil that has engulfed the country since February. "Bahrain's not going to go back to normal; that's not going to happen anytime soon," says Joost Hiltermann, deputy director for the Middle East and North Africa at the International Crisis Group. "The lifting of emergency law is done to placate international opinion, which has been very harmful to the business climate in the country." (See photos of the protests in Bahrain.)

Maryam al-Khawaja, head of the foreign relations office at the Bahrain Center for Human Rights, says the crackdown will continue even as the country reopens for business. "Things are not going to change... the [lifting of] martial law is just the government realizing that they need to save some of their tarnished international image."

The biggest reason the regime is looking to quickly restore its tarnished reputation is to ensure that the Bahrain leg of the Formula 1 Grand Prix - arguably the most high-profile international event on the country's calendar - is held later this year. The auto race was supposed to have been held in March, but was postponed as a result of the turmoil. On Friday, the world motor sport's governing body, the FIA, announced it would restore the race to this year's calendar. FIA chief Bernie Ecclestone had told CNN earlier this week, "If it's safe and everything is good, then I think the teams will be happy to support it." In a statement, the FIA said that their decision "reflects the spirit of reconciliation in Bahrain, which is evident from the strong support the race receives from the government and all major parties in Bahrain, including the largest opposition group."

The F1 showpiece isn't the only reason the regime is trying to portray a restoration of normality. Bahrain's role as the Middle East epicenter for foreign investment banking has been threatened by the defection of nervous Western expats and a decrease in foreign investment since violence erupted in downtown's Pearl roundabout in February, and Saudi tanks arrived to violently suppress protests. "A lot of banks are thinking of leaving and relocating, so they have been really worried," Hiltermann says. "Keeping martial law in place is not good for business or for its image. [Bahrain's] reputation has taken a hit and they want to overcome that as much as they can." (See if Obama's Mideast speech will help the reformists in Bahrain.)

Bahrain's Crown Prince, Salman bin Hamad Al-Khalifa, said in a statement Tuesday that military forces had begun withdrawing from the streets of Manama. "As a nation, we face several challenges ahead as we seek to address issues of concern, while continuing efforts to prevent extremism and sectarianism taking hold in Bahrain," he said. "We are seeking to fairly balance out the need to maintain law and order with the desire for freedoms. This will require responsible actions on both sides. Alongside this, the government will be seeking to address key areas where recent events have shown a need for investigation, accountability and change."

His father, King Hamad bin Isa al-Khalifa, said that national dialogue would commence at the beginning of July, "a process that will involve all sections of society, will be fully inclusive and allow the people of Bahrain to participate in their vision for country's future." In his May 19 Middle East policy speech, President Obama had directly addressed himself to Bahrain's rulers, warning that "you can't have a real dialogue when parts of the peaceful opposition are in jail."

The weeks preceding the announcement lifting martial law saw a stepped up effort to silence voices of dissent. Under martial law, the state was legally able to detain citizens for what it deemed anti-government activity, and to try them in closed military courts. At least four Shi'ites have been sentenced to death, accused of injuring or killing police officers. Nabeel Rajab, the outspoken president of the Bahrain Center for Human Rights, was finally brought in for interrogation last week, as was Mazen Mahdi, one of few Bahraini journalists still allowed to work. MP Matar Ibrahim Matar, considered a friend of the opposition Wefaq movement and arrested in early May, was finally allowed to call home this week, though he remains in jail. Ali al-Salman, Wefaq's head, told Reuters that his organization was not against the regime, signaling that the opposition that has finally bowed to government pressure. (See photos of the crackdown in Bahrain.)

"The government escalated and continued with oppressive measures to stamp out any opposition before the lifting of martial law," says Shadi Hamid, research director at the Brookings Doha Institute. "There are these last pockets of dissent that are now being crushed. Everyone's been silenced." The Human Rights Center's al-Khawaja says hers was the last group left to speak out - "everyone else has been captured or is in hiding abroad." Her sister, Zainad, became one of the country's most famous female activists when she staged a hunger strike following the arrests of her father, brother, husband and uncle. On Thursday, she headed to the police station for a final summons.

Even with the lifting of martial law, as reports of torture continue to pour out of Manama, it remains to be seen how Bahrain will deal with the leaders and activists still awaiting persecution. "They won't have the trappings now that will allow them to try people in military courts," Hiltermann says. "But they can still bring people in, intimidate them, cow them. There's a lot of things you can do under regular law. The question to me is whether the people who were charged under martial law will still be tried in these courts after the law is lifted. That will tell us much about how the government intends to go forward with this."

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Tribal fighters seize Yemen government buildings

Thousands of Yemeni protesters demonstrate against President Ali Abdullah Saleh in the city of Ibb on Wednesday.NEW: Saleh is a member of the powerful al-Hashid tribeNEW: The United States is not planning to evacuate its embassyHundreds of al-Hashid tribal members occupy SABA news agencySimilar fighting broke out in the Hasabah neighborhood Tuesday

(CNN) -- Anti-regime tribesmen battling Yemeni forces occupied the government's news agency compound and the Tourism Ministry in the capital Wednesday, the latest regime entities to be taken over during this week's street battles, witnesses said.

Hundreds of al-Hashid tribal members occupied and surrounded the SABA news agency compound and the tourism building in Sanaa after fighting with government forces in the Hasabah neighborhood.

Other ministry buildings in Hasabah have also been seized. They are the Interior, Trade and Commerce, the Education and the Local Administration headquarters. These and other government buildings in Hasabah were evacuated Tuesday night by the Interior Ministry as fighting raged.

Yemeni state-run television said supporters loyal to the main opposition al-Hashid tribe were shelling government facilities.

The fighting broke out after a regionally brokered deal calling for President Ali Abdullah Saleh to leave office fell through.

Saleh himself is a member of the al-Hashid tribe, a huge and powerful entity with many strands.

After a March Friday when dozens of anti-government demonstrators were killed, the tribal leader, Sheikh Sadeq al-Ahmar, embraced the anti-government demonstrators and broke ranks with the president.

Along with that development, more and more tribal members have turned their backs on the president as well.

The violence has spurred international attention.

"We expressed our joint concern on the deteriorating situation on the ground," U.S. President Barack Obama said Wednesday in a news conference in England with British Prime Minister David Cameron.

The United States is evaluating the security situation in Yemen, but is not moving to evacuate the embassy, State Department spokesman Mark Toner said Tuesday. However, the embassy is permitting those employees who want to leave to do so.

U.N. Secretary-General Ban Ki-moon, who also expressed fears that the battles might further destabilize the situation, called for "an immediate end to the fighting" and the continuation of efforts to resolve the country's political crisis.

Saleh's office called many media outlets, including Yemen TV, and issued statements from Saleh defending himself.

"I will not be forced by the tribes to enter a civil war," Saleh said. "We will not give in and will fight those who threaten security and stability in the country."

Similar clashes Tuesday killed as many as 41 people -- with both sides claiming casualties. Tribal leader Sadeq al-Ahmar said 17 men from the al-Hashid tribe were killed in those clashes. The government said 14 soldiers and 10 civilians were killed.

The fresh flare-up of violence marked the latest round of clashes in Yemen, a key U.S. ally in the fight against al Qaeda.

The country has been roiled by protests for most of the year amid anti-government demonstrations that have swept across much of the Arab world, and many of the protesters in Yemen want Saleh to step aside after three decades of rule.

But representatives of the masses of demonstrators who've taken to the streets for months insist their movement is nonviolent and say they will continue a peaceful revolution as the tribesmen and government forces battle.

"The government wants to show the world that our revolution is violent. We tell them no, it is peaceful and will always be peaceful," said Mohammed Saleh Abdullah, a youth revolution leader.

Riyadh Areqi, another youth revolution leader, said protests will continue "under all circumstances until Saleh falls and is held accountable for all his crimes."?

"What is taking place between the al-Ahmar family and government forces does not involve the Yemeni revolution," he said. "Millions are protesting peacefully today around the country while Saleh sheds the blood of the Yemeni people."

Gulf Arab states said Monday that they had suspended efforts to ease the embattled president from office after he once again balked at signing a deal with opposition leaders.

In a statement carried by the Saudi Press Agency, foreign ministers with the Gulf Cooperation Council said they were dropping the deal "for lack of appropriate circumstances for agreement."

The council is made up of representatives from the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait.

Under its plan, Saleh would have ceded power to a transitional government after 30 days.

At his meeting Wednesday with Cameron, Obama noted that Yemenis want a "more unified and more secure" nation and "greater opportunity and prosperity."

"We are proud of the leadership of the Gulf Cooperation Council in seeking an orderly and peaceful resolution to the crisis, and we call on President Saleh to move immediately on his commitment to transfer power."

Opposition leaders signed the pact Saturday, but Saleh said he would not go along unless the opposition re-signed the agreement in a public ceremony at his presidential palace, which was surrounded by armed pro-government protesters.

Opposition members have long contended that Saleh had no intention of signing the agreement.

Saleh said Wednesday that he's "willing to sign the proposal, but on the basis of dialogue."

"I will not give any more concessions in order to step down," he said.

Journalist Jeb Boone contributed to this report.

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Gbagbo party to shun Ivory Coast government (Reuters)

ABIDJAN (Reuters) – Ivory Coast's former ruling party acknowledged on Wednesday that President Alassane Ouattara had won November's disputed election, but said it would not join a unity government until ex-president Laurent Gbagbo was freed.

The party's interim president, Mamadou Koulibaly, was speaking to journalists after a five-hour closed-door meeting of members of Gbagbo's Ivorian Popular Front (FPI) in Abidjan.

"The FPI is in no hurry to go there (to a unity government). It can be formed without us and then, when our conditions are met, we will be ready," Koulibaly said. "Conditions of security, of the release of our comrades, must be met, say our activists. Then can we seriously consider joining the government."

Gbagbo's refusal to step down, despite U.N.-certified results showing Ouattara had won the election, triggered a violent standoff culminating in French and U.N. forces bombing Gbagbo's compound, enabling pro-Ouattara troops to seize him.

Ouattara's offer of a unity government is partly aimed at starting a process of national reconciliation after a decade of war, instability, and ethnic division.

But Koulibaly told Radio France International on Tuesday that a "unity government is not necessarily the answer."

"The RHDP (Ouattara's party) won this election against our party, which was in power for 10 years. The RHDP is in power and it can go ahead and create its government, our comrades say," Koulibaly told the journalists on Wednesday.

GBAGBO IN DETENTION

Gbagbo is being held in the north, and Ouattara is unlikely to agree to release him or his top aides. Ouattara wants Gbagbo tried for alleged crimes against humanity committed in the aftermath of his refusal to quit.

His party leader, Pascal Affi N'Guessan, and his deputy, Simone Gbagbo, wife of former president Laurent Gbagbo, are also both under arrest.

Around 3,000 people were killed during the conflict in the world's top cocoa producer and a million more fled their homes in the main city Abidjan alone.

Amnesty International said on Wednesday that forces loyal to both Gbagbo and Ouattara had committed war crimes: [ID:nLDE74N2AR]

"Hundreds of people have been unlawfully killed, often only on the grounds of their ethnicity and presumed political affiliation. Women and adolescents have been victims of sexual violence, including rape, and hundreds of thousands of people were forced to flee their homes."

Ouattara now faces the tough task of balancing reconciliation with justice for those responsible for the most serious crimes.

Ouattara has asked the International Criminal Court to investigate the most serious allegations on both sides, which include mass killings, rape, kidnap and executions.

But he also wants a South African-style national truth and reconciliation commission.

"We talk about national reconciliation and truth, but at the same time we talk about justice. Our activists questioned whether it will be real justice or the justice of revenge," Koulibaly said.

(Editing by Kevin Liffey)

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Ecuador government declares referendum victory

QUITO, Ecuador (AP) — Ecuador's vice president declared victory after an exit poll Saturday indicated voters roundly approved 10 ballot questions proposed by leftist President Rafael Correa that critics say will strengthen his grip on power, inhibit press freedom and lessen the judiciary's independence.

Ecuador's President Rafael Correa reacts after listening favorable reports about a referendum he proposed Saturday.

The exit poll by SP Investigacion y Estudios, which regularly does work for the government, said voters approved all the questions by greater than 60 percent. First official results were expected later Saturday.

The plebiscite was an important gauge of popularity for Correa, who was first elected in 2006 and easily re-elected in 2009 after a rewrite of the constitution. He is eligible for re-election in two years.

Some of the questions were straightforward, such as whether to ban bullfighting and gambling. Others were quite complex. Each required a separate vote.

Two of the most controversial measures would bar owners of news media from having other commercial interests and create a government media oversight panel.

Critics say both would make it easier for Correa, who is often at loggerheads with the largely opposition news media and business community, to subtly impose censorship.

Another important ballot question called for dissolving Ecuador's judicial oversight council and replacing it with a temporary body given the task of reworking the system. Another would allow authorities to detain people for longer without filing charges.

Results of the exit poll were broadcast immediately after polls closed, and Vice President Lenin Moreno told reporters that the government took the victory with "humility" but added that lawmakers now have a mandate from the public to convert the vote's results into law.

Five of the questions mandate constitutional changes. The other five require congressional action.

Former President Lucio Gutierrez, a fierce Correa opponent, told The Associated Press that with the referendum Correa "seeks to take by force justice and dominate the news media."

Correa, who did not immediately speak, is a close ally of President Hugo Chavez of Venezuela and is firmly in South America's leftist bloc.

He enjoys a 65 percent approval rating in a corruption-bedeviled country that in the decade prior to his election saw three presidents, most recently Gutierrez, ousted in popular revolts.

With a forceful, uncompromising style, Correa has alienated many former allies, including leaders of Ecuador's indigenous movement. They are angry with his insistence that the state have the last word on subsoil and water rights.

But Correa's populist programs, such as $35 monthly payments to nearly 2 million poor families, construction of low-income housing and a commitment to universal free education, have boosted his popularity in this small Andean nation of 14.3 million people.

Political analyst Adrian Bonilla of the FLACSO think tank says that with strong leadership, Correa has ably leveraged Ecuador's oil wealth and an effective tax system into popular programs.

He has drawn criticism for alleged autocratic tendencies, however. Former President Osvaldo Hurtado, a conservative in the Christian Democratic party, said before Saturday's vote that Correa has conjured "a perfect dictatorship" by manipulating democratic institutions much as many say Chavez has in Venezuela.

Correa has alienated many foreign investors by renegotiating oil contracts to give Ecuador a higher cut of profits and has forged new business ties with China and Iran.

Last month, he expelled U.S. Ambassador Heather Hodges after the WikiLeaks website disclosed a diplomatic cable from her suggesting Correa was well aware but tolerant of high-level corruption in Ecuador's national police. Correa denied the allegation.

Polls indicated before Saturday's vote that about half of Ecuadoreans were having trouble understanding the ballot questions.

Many voted "no" as a result.

"The truth is I don't understand a lot of the questions," said Nataly Mendez, a 24-year-old pharmaceutical representative voting in Quito's lower-middle-class Don Bosco neighborhood. "That's why I voted no."

Many who voted "yes" said it was out of esteem for the government.

"We Ecuadoreans should be committed and help out if we want things to change," said Maria Lourdes Silva, a 43-year-old cosmetics saleswoman.

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Taliban gunmen attack Afghan government offices

KANDAHAR, Afghanistan (AP) — Taliban gunmen unleashed a major assault Saturday on government buildings in Afghanistan's largest southern city — a former Taliban stronghold where international and Afghan forces are trying to establish security and a functioning government.

A NATO vehicle crosses an empty street after gunmen attacked the compound of Kandahar's governor Saturday in Afghanistan.

Shooting started shortly after midday and the gunfire was still ringing through Kandahar city hours later. Government and hospital officials confirmed that the governor's compound, the mayor's office and the intelligence agency offices had all been attacked.

The Taliban said a large number of their militants flooded into Kandahar city with these three sites as their targets. There were also reports of gunfire elsewhere in the city, but these could not be immediately confirmed.

"The Taliban attacked a number of different locations," government spokesman Zalmai Ayubi told the Associated Press, speaking from a safe room inside the governor's compound. He said he could confirm for certain only that the governor's compound and the mayor's office were under assault.

At least 12 people had been wounded, according to officials at the city's main hospital. Dr. Irsan — who gave only one name — confirmed that some of the wounded had been caught up in the firefight at the intelligence agency. He said others had been shot in the crossfire around the governor's compound.

There were no immediate reports of deaths from the government, though the Taliban said that their militants had managed to enter at least the governor's compound and claimed that there were deaths.

"A lot of people have been killed," Taliban spokesman Qari Yousef Ahmadi said.

An AP reporter near the governor's compound said the shooting there was focused at the back of the compound, near the governor's residence. At least two larger blasts were also be heard.

Shopkeepers throughout the city closed down their stores and the streets emptied of people and cars as Kandahar residents bunkered down inside to wait out the fight. Police blocked journalists from getting near the buildings under assault. Military helicopters hovered overhead.

Saturday's attack was the latest in a series of strikes by the Taliban insurgency at a high-profile government installation. Last month, the militant group launched deadly attacks inside the Defense Ministry, at a joint U.S.-Afghan base and at the Kandahar police headquarters. The group also sprung more than 480 inmates from the Kandahar city prison in a stunning jailbreak through a tunnel that had been dug over months.

The attack also came a day after the Taliban issued a statement saying that Osama bin Laden's death would boost the morale of the insurgency and threatening that they would show their strength.

"The martyrdom of Sheik Osama bin Laden will give a new impetus to the current jihad against the invaders," the group said in Friday's statement. "The forthcoming time will prove this both for the friends and the foes."

But Ahmadi said this was not a revenge attack for bin Laden's death but a plot that had been in the works for months.

"This operation has been planned for a long time, for the past month or two," Ahmadi said.

The Taliban said last week, before the strike on bin Laden, that more large attacks were planned as part of their spring offensive.

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Pakistanis doubt government claims about knowledge of bin Laden

LAHORE, Pakistan — Farhan Masood feels like many Pakistanis on the subject of Osama bin Laden: He's having a hard time believing the government's claim that it had no idea the al-Qaeda mastermind was living for years in a nice town with a large military base an hour's drive from the capital.

Pakistanis along with international and local media gather Tuesday outside Osama bin Laden's compound, where he was killed during a raid by U.S. special forces.

"Nothing can happen of any sort without the involvement of officials anywhere," said Masood, who runs SoloTech, a company involved in retinal- and facial-recognition technology. "We believe that Osama bin Laden was not killed in Pakistan. If he was killed, then where is the footage? The photos of the incident?"

The Pakistan government appeared Wednesday to issue conflicting accounts of what it knew and when it knew it, angering Pakistanis who admire bin Laden and and those who did not care for him. Pakistani Prime Minister Yousuf Raza Gilani, breaking his silence on the subject, said his government was in the dark as were others.

"There is an intelligence failure of the whole world, not Pakistan alone," Gilani said during a visit in Paris.

Pakistani Foreign Secretary Salman Bashir told the BBC on Wednesday that Pakistan had informed the United States as far back as in 2009 about its suspicions of the occupants in the home in Abbottabad. Bin Laden had been living at the compound for at least five years and was killed there early Monday in a raid by U.S. special forces.

"Of course they (the U.S.) have a much more sophisticated equipment to evaluate and to assess," he said as to why Pakistan did not act on its suspicions.

Many Pakistanis believe they know why.

"At the lower level, there are elements within the security establishment who have sympathies with the anti-U.S. extremist forces," said Farooq Tariq, a labor leader in Lahore.

"To say the least, this was a gross inefficiency on the part of our intelligence agencies," said Zaman Khan, a human rights activist.

The home is short walk from the elite Pakistan Military Academy at Kakul, near Abbottabad and not far from a neighborhood where many military families and retired officers live. The Pakistani who owned the compound that was Osama bin Laden's final hideaway had bought up adjoining plots of land over two years and once told a seller that the property he bought for "an uncle" had become very valuable, according to the Associated Press.

Property records obtained by the AP on Wednesday show that a man named Mohammed Arshad bought the land where bin Laden's compound was built between 2004 and 2005 and paid $48,000.

U.S. officials have identified the courier who led the Americans to in Laden as Sheik Abu Ahmed, a Pakistani born in Kuwait. They obtained his name from detainees held in secret CIA prison sites in Eastern Europe and vetted it with top al-Qaeda operatives such as 9/11 mastermind Khalid Sheikh Mohammed, the AP reported.

U.S. officials said the courier and his brother were killed in the commando raid on the compound early Monday.

One of bin Laden's daughters, who said she saw U.S. forces shooting her father, is in Pakistani custody, said a Pakistani intelligence official, speaking to the AP on condition of anonymity in line with the agency's policy. At least 10 people, including six or seven children, and a woman, are in Pakistani custody, he said.

For many Pakistanis, it's hard to believe the three-story house with 16-foot-high outer walls ? unusual for the neighborhood ? could have remained out of sight of security agencies.

"People were skeptical in this neighborhood about this place and these guys. They used to gossip, say they were smugglers or drug dealers," said farmer Mashood Khan, 45. "People would complain that even with such a big house they didn't invite the poor or distribute charity."

The Pakistani government refuted charges that the house should have tipped it off as a possible terrorist hide-out. "It needs to be appreciated that many houses (in the northwest) have high boundary walls, in line with their culture of privacy and security," the government said. "Houses with such layout and structural details are not a rarity."

Like many towns where the army has a strong presence, the streets of Abbottabad are well-groomed. Street signs tell residents to "Love Pakistan." The city is known for its good schools, including some established by Christian missionaries. Girls wear veils while carrying Hannah Montana backpacks to school.

Many houses in the outlying areas have modern amenities but are located on streets covered with trash. Shepherds herd their flocks of sheep along dusty roads just a few hundred yards from modern banks.

"That house was obviously a suspicious one," said Jahangir Khan, who was buying a newspaper in Abbottabad. "Either it was a complete failure of our intelligence agencies or they were involved in this affair."

Still others say the failure was to permit bin Laden's death.

Thousands of people congregated at funeral prayers for bin Laden held in Karachi and Lahore. Hafiz Saeed, the leader of the outlawed Islamic organization Lashkar-e-Taiba, led the prayers and said bin Laden died a martyr to Islam.

Contributing: Aisha Chowdhry

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Government to Expand Airline Tarmac-Delay Rule

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In this Feb. 8, 2010 file photo, with the U.S. Capitol in the background, a US Airways plane takes off from Washington's Reagan National Airport.

DALLAS -- Federal officials are expanding a tarmac-delay rule to prohibit airlines from holding passengers on stranded international flights for longer than four hours.

The change stems from a late-December debacle in which several planes loaded with international travelers were stuck for up to 10 hours on snowy New York runways.

That's one provision in a new passenger-protection rule to be issued Wednesday. The rule also will require airlines to refund bag fees if they lose customers' luggage, to include fees and taxes in advertised prices, and to pay passengers more if they get bumped from oversold flights.

Most of the new regulations will take effect in four months. U.S. Transportation Secretary Ray LaHood, whose department will issue the new orders, said they were designed to make sure airlines treat travelers fairly.

"It's just common sense that if an airline loses your bag or you get bumped from a flight because it was oversold, you should be reimbursed," he said.

The new rule expands upon last year's 3-hour limit on tarmac delays for flights within the U.S. Consumer advocates complained that the rule didn't cover foreign airlines or international flights operated by U.S. ones, but their protests seemed to be ignored until the December blizzard shut down airports on the East Coast.

Several inbound flights, including ones operated by British Airways and Cathay Pacific, were stranded at New York airports with no chance for passengers to get off the plane for hours.

Transportation Department officials acknowledged the incident was a major factor in their decision to impose a 4-hour limit on tarmac delays for international flights. Airlines that break the rule can be fined up to $27,500 per passenger -- more than $10 million for a fully loaded superjumbo jet like an Airbus A380 -- although the government has never imposed anything close to the maximum.

Airlines also will be required to provide food, water, working toilets and medical care after two hours.

In comments to the Transportation Department, airline trade groups said the threat of penalties will force them to cancel more international flights if there's a chance of a long delay. They warned that with some international flights operating only once every few days, passengers could be stranded far longer under the new rule.

On refunding bag fees for lost luggage, the Transportation Department decided not to require refunds for bags delivered late. Airlines are already required to compensate passengers for the value of lost bags, regardless of whether a fee was paid to check them.

Wednesday's rule confirms another change that the regulators proposed last year -- they will raise compensation for passengers bumped off oversold flights. Currently, it's up to $400 or $800 depending on how long a passenger is delayed before catching a makeup flight. Those limits will be raised to $650 and $1,330.

Last year, airlines forcibly bumped 65,000 passengers and another 681,000 took voluntary offers to give up their seats. Still, that's a tiny fraction of 1 percent of all travelers. The higher limits could give savvy travelers leverage to cut a better deal for their seats after gate agents ask for volunteers.

The new rule also requires airlines to prominently disclose all potential fees -- for checking bags, changing reservations, upgrading seats, and so on ---- on their websites. Airlines will also have to include taxes and government-imposed fees in the fares that they advertise. Airlines had argued that car dealers and other businesses don't have to do that.

But in a setback for travel agents, the government declined at least temporarily to force airlines to clearly disclose all fees in their electronic connections with agents.

"Travel agents and corporate travel departments are just having to guess at the total price of a trip," said Kevin Mitchell of the Business Travel Coalition. "Without information on fees, they can't comparison-shop." The Transportation Department said it would consider the issue some more.

Regulators also dropped a proposal to require that airlines include their customer-service promises in their legal contracts with passengers. While it sounds bureaucratic, consumer groups say it will be an important step in forcing airlines to live up to their promises.

Consumer advocates still hadn't seen the new rule on Tuesday but said they were assured by government officials that many of their issues would be addressed.

"There's going to be a lot of good stuff, a lot of little things that will make people feel better about traveling," said passenger-rights advocate Kate Hanni.

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Airlines must reimburse for lost bags, bumped flights, government says

By Alan Diaz, By AP

Passengers stand in line at the American Airlines counter as they try to rebook their flights at Miami International Airport on Feb. 1.

EnlargeCloseBy Alan Diaz, By AP

Passengers stand in line at the American Airlines counter as they try to rebook their flights at Miami International Airport on Feb. 1.

The rules, issued by the Department of Transportation, will take effect Aug. 23. Airlines will be required to more clearly disclose the fees charged for such services as checking bags and changing reservations.

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Federal Government Orders 16 Mortgage Lenders to Reimburse Homeowners

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The federal government on Wednesday ordered 16 of the nation's largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.

Government regulators also directed the financial firms to hire auditors to determine how many homeowners could have avoided foreclosure in 2009 and 2010.

Citibank, Bank of America, JPMorgan Chase and Wells Fargo, the nation's four largest banks, were among the financial firms cited in the joint report by the Federal Reserve, Office of Thrift Supervision and Office of the Comptroller of the Currency,

The Fed said it believed financial penalties were "appropriate" and that it planned to levy fines in the future. All three regulators said they would review the foreclosure audits.

In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.

Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.

"I want to know what abuses (the government agencies) identified, which banks committed them and how their proposed consent agreement is going to fix these problems," said Rep. Elijah Cummings, D-Md., the ranking member of the House Government and Oversight Committee. "Based on what I have read ... I am not encouraged at all."

The other lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MERSCORP.

Citigroup said in a statement that it had "self-identified" needed changes in 2009 and that it has helped more than 1.1 million homeowners avoid foreclosure.

"We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements," the company said.

Ally Financial, formerly known as GMAC, said it had not found "any instance where a homeowner was foreclosed upon without being in significant default."

Without specifically identifying instances of bad foreclosures, the government agencies noted in its report that the "deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers."

John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer housing watchdog, said the government's action is a year too late. It does little to help those who are just now wrestling with a foreclosure and those who have already been displaced, he said. Rather than moving swiftly to seize people's homes, the banks should have done a better job helping people lower their mortgage payments through modification programs, he said.

"This should have happened a long time ago," he said. "There are so many people who, if they had received a meaningful modification, could have stayed in their homes."

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Government targets thieves infecting computers

taking control of several of the malicious computer servers and sending commands to make them stop transferring pirated data.

Millions of dollars were stolen from U.S. computer users, said the officials, who spoke on condition of anonymity because the investigation is continuing.

STORY: Data thieves target e-mail addressesThe investigators were trying to contain a malware program called Coreflood, which has been around for at least a decade and can record key strokes, allowing cyber criminals to take over unsuspecting computers and steal passwords, banking and credit card information.

Investigators seized five major computer servers that were controlling hundreds of thousands of infected computers, and also seized 29 domain names used by the botnet to communicate with those servers. A botnet is a network of infected computers.

Describing the operation, FBI officials said they essentially broke the link between the cyber thieves and the infected computers. When the malware sent a message back to the Coreflood control sites asking what to do with all the data it had gathered from a computer, investigators responded with their own message: Send nothing. Shut down.

As a result, FBI officials said they are comfortable that a significant portion of the Coreflood botnet has been disabled, but the program is still running on the infected computers.

Officials said they did not notify computer owners that they had been compromised, and no personal information was gathered by U.S. officials during the digital communications.

The malware exploits a vulnerability in computers running Windows operating systems and allows those that are infected to be controlled remotely. And some 1.8 million of the infected computers are in the United States; the remainder in countries around the world.

Thirteen defendants, identified only as John Does, were accused in a civil complaint of engaging in wire fraud, bank fraud and illegal interception of electronic communications. Officials would not say what country the attack came from, but agreed it was consistent with cybercrime activity from Eastern Europe.

The court order authorized the government to respond to signals sent from infected computers in the U.S., a move designed to stop the Coreflood software from running. The purpose is to prevent further harm to hundreds of thousands of unsuspecting users of infected computers.

The thieves engaged in wire transfers from the infected computers to steal $115,000 from a Michigan real estate company; $78,000 from a law firm in South Carolina; $151,000 from an investment company in North Carolina; and $241,000 from a defense contractor in Tennessee.

The exact extent of the financial loss caused by the Coreflood botnet is not known, because of the large number of computers infected and the quantity of data stolen.

Computer users can go to the Microsoft website to learn how to clean the malware from their computers.

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Government Shutdown 2011

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A U.S. was averted at the last minute Friday night after the House and Senate reached a temporary spending agreement.

The measure, which will keep the government running until Thursday, postponed an impending furlough of some 800,000 federal workers.

Friday’s “bridge” agreement calls for $39 billion in short-term spending cuts, and pushes off the contentious issue of abortion funding, which Republicans sought to block.

By Thursday, the House and Senate will schedule votes on a longer-term budget that will carry the government through Sept. 30, the end of the current fiscal year.

The news was greeted with a mixture of relief over a crisis averted, and frustration over continued wrangling that will spill into next week. And harsh rhetoric left its mark.

Throughout the afternoon leading up to the midnight deadline, Democrats said abortion funding was a crucial sticking point, as Republicans held fast to their demand to cut off Title 10 “women’s health” programs. Roughly 25 percent of Title 10 funds go to Planned Parenthood, the nation’s leading abortion provider.

One-third of Planned Parenthood’s annual $1.1 billion budget comes from the taxpayers, and Democrats were equally determined to keep the money flowing. Both sides reportedly agreed to vote on the issue separately next week.

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