Rival groups march over king's reforms in Morocco (Reuters)

CASABLANCA, Morocco (Reuters) – Thousands of rival demonstrators marched through cities in Morocco on Sunday over constitutional reforms proposed by King Mohammed after unrest inspired by "Arab Spring" uprisings in the Arab world.

Critics of the reforms say they do not go far enough to reduce his powers. The march against the monarch's measures was the latest in a wave of protests in the North African state and comes days before a July 1 referendum on the reform plan.

"We reject the offers made (by the king). They keep the essence of authority in the hands of a non-elected person who will not be subject to any form of accountability," said Hamid, a jobless 38-year-old among 7,000 protesters who marched through a working class suburb of Casablanca, Morocco's largest city.

Aziz Yaakoubi, a member of the "February 20" pro-democracy street movement named after its founding date, said two of the protesters were injured after being pelted with stones by a group of rival demonstrators in favor of the king's reform.

A smaller rally of about 2,000 people opposed to the king's proposals marched through the capital Rabat, separated from rival marchers by dozens of baton-wielding riot police.

"The police encircled us, they didn't let us march to the parliament," said Najib Chawki, one of the coordinators of the movement, which is urging supporters to boycott the vote. "It shows that the powers in Morocco have no interest in changing."

The 47-year-old king unveiled the reforms this month after some of the largest street protests the Arab world's longest-serving dynasty has seen for decades. His fortunes are being watched by other monarchs, notably in the Gulf.

PREACHERS TOLD TO BACK REFORM

The new charter still allows him to name a prime minister -- but this time only from the party that wins most seats at parliamentary elections -- and to vet appointments of other ministers and suggest the termination of their mandates.

It explicitly grants the government executive powers, but it keeps the king at the helm of the army, religious authorities and the judiciary and still allows him to dissolve parliament, though not unilaterally as it is the case now.

The Moroccan street movement has not won the mass support that toppled leaders of Tunisia and Egypt and does not demand an end to the monarchy. It focuses instead on the king's perceived growing business influence and his grip on the political system.

National income per head in Morocco was $2,810 in 2009, according to the World Bank, higher than Egypt's $2,070.

But Morocco ranks 13 places below Egypt at 117th in the United Nations' Human Development Index, a measure of quality of life based on factors such as child welfare and life expectancy.

"Surely there is graft and a lot of oppression. But the new constitution will change everything," said 19-year-old Casablanca resident Karim Azhari.

"It will bring state education up to the same level as the private sector and it will reduce unemployment," he said. Asked why he thought that, he replied: "That's what they tell us."

Authorities on Friday ordered mosque preachers to urge worshippers to vote for the reform, saying it would be unIslamic to disobey the king, described in sermons as "God's appointee."

Mustapha Nazih, a cleric at a pro-reform march in Casablanca organized by Boutchichiya Zawiya, one of Morocco's biggest and wealthiest sufi schools, said he had come all the way from the town of Beni Mellal, 300 km (190 miles) from Casablanca.

"We didn't have to pay for the bus fare. The Islamic Affairs Ministry asked us to come to Casablanca and we did so happily."

(Writing and additional reporting by Mark John in Rabat; Editing by Matthew Jones)

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Greek PM makes rival finance chief to shore up support (Reuters)

ATHENS/BERLIN (Reuters) – Greek Prime Minister George Papandreou sacrificed his unpopular finance minister on Friday and put his main socialist party rival into the job in a bid to force through an austerity plan to avert bankruptcy.

The appointment, which analysts said was a second-best after Papandreou failed to persuade respected former European Central Bank vice-president Lucas Papademos to come aboard, came just before a crucial Franco-German summit to discuss future aid to Athens.

The elevation of Defense Minister Evangelos Venizelos to the finance ministry was aimed at securing party backing for crucial tax rises, spending cuts and sell-offs of public assets required for the EU and IMF to disburse emergency loans to keep Greece afloat next month and avoid a default which could unleash global financial turmoil.

Outgoing Finance Minister George Papaconstantinou, who negotiated a first 110 billion euro bailout for Athens last year and had the confidence of international lenders and financial markets, was shunted aside to the environment ministry in a crisis-driven reshuffle.

"Venizelos is politically powerful and that might bode well for the implementation of fiscal consolidation, even though he has no track record in financial matters," UBS analyst Alexander Kyrtsis said.

Initial Greek market reaction was positive with bank shares rising by as much as 4 percent and the Athens stock market index up 2 percent.

But bond markets remain spooked by fears of a Greek default and most economists are overwhelmingly skeptical that Greece can ever repay its debt mountain, which has reached 340 billion euros or 150 percent of the country's annual economic output.

Reuters' calculations based on 5-year credit default swap prices from Markit show an 81 percent probability of Greece eventually defaulting on its debt based on a 40 percent recovery rate.

In Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy will try to overcome sharp differences on how to involve private investors in the second rescue plan without sparking carnage in financial markets.

A German minister said he expected them to strike a compromise after weeks of wrangling that has rattled markets.

"I believe the meeting today will yield a solution," German Deputy Foreign Minister Werner Hoyer told ZDF television. "I am sure they will come to a compromise."

The European Central Bank and European Commission have warned that any form of private sector involvement that causes a "credit event" or a downgrading of Greek debt to default status could wreak devastating damage on the euro zone.

BOND MARKETS RATTLED

Battered by strikes, protests and a string of resignations in his PASOK party, Papandreou has vowed to drive through his unpopular reform program for the sake of stability in Greece.

The political drama in Athens, where mass street protests turned violent and efforts to form a national unity government collapsed on Wednesday, and the splits in the EU continued to rattle bond markets on Friday.

The yield on 10-year Greek government bonds spiked to a record high of 18.9 percent just before the reshuffle was announced, and the cost of insuring Greek debt against default also hit a new all-time peak.

There were some signs on Thursday of growing tension in interbank lending on money markets, as occurred when the Greek debt crisis erupted early last year.

In the latest warning from the ECB, policymaker Yves Mersch said a "disorderly insolvency" would have devastating effects for the whole currency bloc and "a new financial crisis would be more than likely."

The European Union's top economic official, Olli Rehn, told a Finnish newspaper he was sure the EU and the International Monetary Fund would release a crucial 12 billion euro loan tranche in early July to keep Athens from defaulting.

Rehn acknowledged it would take longer to put together a second rescue package for the heavily indebted state, due to differences over how to involve private investors, but he called for decisions by mid-July rather than leaving the issue until September, as EU paymaster Germany is suggesting.

China weighed in, saying it had a vital interest in the euro zone overcoming its debt woes and had increased its holdings of euro debt, but gave no figures or timeframe.

"Whether the European economy can recover and whether some European economies can overcome their hardships and escape crisis, is vitally important for us," Vice Foreign Minister Fu Ying told a media briefing in Beijing.

Rehn said he expected euro zone finance ministers to take decisions on a successor program for Greece on July 11.

But two sources briefed by the German government said Berlin wanted to postpone agreement on a new 120 billion euro program, including 30 billion in privatization proceeds, until September due to disputes over how to involve private investors.

Backed by the Netherlands and Finland, Germany wants a "voluntary" debt swap in which bondholders would be given new bonds with a seven-year maturity, but credit rating agencies have warned they would treat that as a selective default.

That could prompt the ECB to refuse to accept Greek bonds as collateral, depriving Greek banks of vital liquidity on which it is totally dependent.

The European Commission, the ECB and France favor a softer form of private sector involvement under which banks would agree to roll over Greek bonds as they mature and are redeemed.

Fitch Ratings appeared to open the door to a possible compromise on Wednesday by saying that while it would treat such a rollover as a "restrictive default," it would keep Greek bonds rated at CCC.

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Rival to FIFA president drops candidacy

Mohammad bin Hammam of Qatar dropped out of the race to head FIFA.Mohammad bin Hamman says he's no longer running to become FIFA's presidentHe'd been the only person challenging incumbent Sepp Blatter, in office since 1998He says it is unrelated to his being accused of bribery, calling the claims "baseless"He and Blatter will be queried during Sunday's hearing of FIFA's ethics committee

(CNN) -- The Qatari man who had been the sole challenger to incumbent Sepp Blatter in the race to run FIFA announced early Sunday that he was dropping his candidacy, hours before the start of an ethics hearing involving both men.

Mohammad bin Hammam announced his decision on his blog, seemingly clearing the way for the 75-year-old Blatter to retain the position he's held as head of world football's governing body since 1998. The election is set for June 1.

"I set out my goals and ambitions clearly to further the cause of democracy within FIFA through a commitment to transparency and accountability," said bin Hammam, the head of the Asian Football Confederation. "In addition to this, I wanted to spark a debate about change in FIFA.

"However, recent events have left me hurt and disappointed -- on a professional and personal level," he added. "I cannot allow the (game) that I loved to be dragged more and more through the mud, because of competition between two individuals."

The Qatari man and Jack Warner, who runs the CONCACAF federation covering Central and North America, are scheduled to be questioned later Sunday by FIFA's ethics committee in Zurich, Switzerland. FIFA executive committee member Chuck Blazer has accused both of bribery related to a meeting they held with the Caribbean Football Union on May 10 and 11.

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Bin Hammam has denied any wrongdoing, claiming the allegations are all part of a conspiracy to discredit his bid to become FIFA president. Blatter, a Swiss national, wrote in his column for Inside World Football that he feels it is "ludicrous and completely reprehensible" to suggest he is behind the investigation.

Last Thursday, bin Hammam demanded that Blatter also be included in the probe, after claiming the FIFA president was also named in evidence handed to the ethics committee. FIFA confirmed on Friday that Blatter had a case to answer and would take questions at Sunday's ethics committee hearing.

In a statement, the sports association said bin Hammam claimed that Warner, a FIFA vice president, would have told Blatter in advance about alleged cash payments to delegations attending the Caribbean Football Union meeting, and that he "would have had no issue with these."

Again asserting his innocence, bin Hammam said Sunday he hoped his decision to pull out of the presidential race would not be tied to the probe.

"I will appear before the ethics committee to clear my name from the baseless allegations that have been made against me," he wrote, while also singling out Warner for thanks. "I promise those who stood by me that I will walk with my head high, and will continue to fight for the good of the game."

The Qatari man vowed to also fight "to restore FIFA's reputation to what it should be -- a protector of the game that has credibility through honesty, transparency and accountability." And he said he believed his presidential run helped further that cause.

"I believe my candidacy has been a catalyst for debate within FIFA and has brought change to the top of the agenda," bin Hammam said.

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FACT CHECK: Netanyahu speech ignores rival claims (AP)

JERUSALEM – Israeli Prime Minister Benjamin Netanyahu gave an impassioned defense of his approach to peace during a speech to Congress on Tuesday. But the address reflected the world view of Israel's nationalistic right wing, one of several conflicting narratives that divide Israelis and Palestinians.

Here is a sampling of Netanyahu's claims along with what he did not mention.

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NETANYAHU: "You don't need to send American troops to Israel. We defend ourselves."

THE FACTS: Israel is a leading recipient of American foreign aid, including more than $1 billion in military assistance each year.

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NETANYAHU: "In Judea and Samaria, the Jewish people are not foreign occupiers. We are not the British in India. We are not the Belgians in the Congo."

THE FACTS: While the West Bank, or Judea and Samaria, is promised to the Jewish people in the Bible, the international community considers the West Bank occupied territory. Israel captured the area in the 1967 Mideast war but has never annexed it. Its occupied status is underscored by the presence of tens of thousands of Israeli soldiers who protect Israeli settlements and control the movement of Palestinian residents in the name of security.

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NETANYAHU: "You don't need to export democracy to Israel. We've already got it."

THE FACTS: Israel does give its Arab minority full civil rights, including participation in elections. But Israeli Arabs suffer from systematic discrimination in housing and the workplace. Also, more than 2 million Palestinians living in the West Bank do not have Israeli citizenship and therefore cannot vote in Israeli elections.

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NETANYAHU: "The vast majority of the 650,000 Israelis who live beyond the 1967 lines reside in neighborhoods and suburbs of Jerusalem and greater Tel Aviv."

THE FACTS: Nearly all of these communities were built in the face of overwhelming international opposition and are considered illegal settlements by the world, including the U.S. There are 300,000 Israelis living in the West Bank and 200,000 in east Jerusalem, making a total of 500,000.

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NETANYAHU: "The Palestinian economy is booming. It's growing by more than 10 percent a year."

THE FACTS: The West Bank economy is indeed growing rapidly. But the World Bank has noted that the growth comes after years of contraction during fighting with Israel and has been fueled by huge amounts of foreign aid. It warns the growth is unsustainable unless Israel does more to encourage the Palestinian private sector.

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NETANYAHU: "Israel will not negotiate with a Palestinian government backed by the Palestinian version of al-Qaida."

THE FACTS: While Hamas and al-Qaida have killed hundreds of people in religious holy wars, they have no connection, and Hamas has in fact come under criticism from the global terror network for being too moderate. Al-Qaida preaches global jihad. Hamas says its struggle is solely against Israel, not the West at large. In its Gaza stronghold, Hamas has violently clashed with smaller armed groups that claim inspiration from al-Qaida.

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Josef Federman can be reached at http://www.twitter.com/joseffederman

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Rival factions of Yemen's military clash

Mohammed Huwais, AFP/Getty Images

A Yemeni soldier who defected to the opposition is carried by anti-government protesters demanding the resignation of Yemeni President Ali Abdullah Saleh in Sanaa on Wednesday.

EnlargeCloseMohammed Huwais, AFP/Getty Images

A Yemeni soldier who defected to the opposition is carried by anti-government protesters demanding the resignation of Yemeni President Ali Abdullah Saleh in Sanaa on Wednesday.

State media on Wednesday described the attack as a

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