Obama offers faith groups new birth control rule

WASHINGTON (AP) — Facing a wave of lawsuits over what government can tell religious groups to do, the Obama administration on Friday proposed a compromise for faith-based nonprofits that object to covering birth control in their employee health plans.

Some of the lawsuits appear headed for the Supreme Court, threatening another divisive legal battle over President Barack Obama's health care overhaul law, which requires most employers to cover birth control free of charge to female workers as a preventive service. The law exempted churches and other houses of worship, but religious charities, universities, hospitals and even some for-profit businesses have objected.

The government's new offer, in a proposed regulation, has two parts.

Administration officials said it would more simply define the religious organizations that are exempt from the requirement altogether. For example, a mosque whose food pantry serves the whole community would not have to comply.

For other religious employers, the proposal attempts to create a buffer between them and contraception coverage. Female employees would still have free access through insurers or a third party, but the employer would not have to arrange for the coverage or pay for it. Insurers would be reimbursed for any costs by a credit against fees owed the government.

It wasn't immediately clear whether the plan would satisfy the objections of Roman Catholic charities and other faith-affiliated nonprofits nationwide challenging the requirement.

Kyle Duncan, general counsel for the Becket Fund for Religious Liberty, which is representing religious nonprofits and businesses in lawsuits, said many of his clients will still have serious concerns.

"This is a moral decision for them," Duncan said. "Why doesn't the government just exempt them?"

Neither the Catholic Health Association, a trade group for hospitals, nor the U.S. Conference of Catholic Bishops had an immediate reaction, saying the regulations were still being studied.

Some women's advocates were pleased.

"The important thing for us is that women employees can count on getting insurance that meets their needs, even if they're working for a religiously affiliated employer," said Cindy Pearson, executive director of the National Women's Health Network.

Policy analyst Sarah Lipton-Lubet of the American Civil Liberties Union said the rule appeared to meet the ACLU's goal of providing "seamless coverage."

Health and Human Services Secretary Kathleen Sebelius said in a statement that the compromise would provide "women across the nation with coverage of recommended preventive care at no cost, while respecting religious concerns."

The birth-control rule, first introduced a year ago, became an election issue, with some advocates for women praising the mandate as a victory but some religious leaders decrying it as an attack on faith groups.

The health care law requires most employers, including faith-affiliated hospitals and nonprofits, to provide preventive care at no charge to employees. Scientific advisers to the government recommended that artificial contraception, including sterilization, be included in a group of services for women. The goal, in part, is to help women space out pregnancies to promote health.

Under the original rule, only those religious groups that primarily employ and serve people of their own faith — such as churches — were exempt. But other religiously affiliated groups, such as church-affiliated universities, Catholic Charities and hospitals, were told they had to comply.

Catholic bishops, evangelicals and some religious leaders who have generally been supportive of Obama's policies lobbied fiercely for a broader exemption. The Catholic Church prohibits the use of artificial contraception. Evangelicals generally accept the use of birth control, but some object to specific methods such as the morning-after contraceptive pill, which they argue is tantamount to abortion, and is covered by the policy.

Obama had promised to change the birth control requirement so insurance companies — and not faith-affiliated employers — would pay for the coverage, but religious leaders said more changes were needed to make the plan work.

Since then, more than 40 lawsuits have been filed by religious nonprofits and secular for-profit businesses contending the mandate violates their religious beliefs. As expected, this latest regulation does not provide any accommodation for individual business owners who have religious objections to the rule.

Questions remain about how the services ultimately will be funded. The Health and Human Services Department has not tallied an overall cost for the plan, according to Chiquita Brooks-LaSure, an HHS deputy policy director.

However, in its new version of the rule, the department argues that the change won't impose new costs on insurers because it will save them money "from improvements in women's health and fewer child births."

The latest version of the mandate is now subject to a 60-day public comment period. The overall mandate is to take effect for religious nonprofits in August.

___

Zoll reported from New York. Associated Press writer David Crary in New York contributed.

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Ala. Hostage Suspect Had Court Date Scheduled

The retired Alabama trucker who shot a school bus driver and is now holding a kindergarten student in an underground bunker was scheduled to be in court Wednesday to answer for allegedly shooting at his neighbors in a dispute over a damaged speed bump.

Jimmy Lee Dykes, 65, has been holed up in a 6 by 8 foot bunker 4 feet underground with a 5-year-old autistic boy named Ethan since Tuesday, when he boarded a school bus and asked for two 6 to 8 year old boys. School bus driver Charles Albert Poland Jr., 66, was shot several times by Dykes, and died trying to protect the children.

Police said that they do not think that Dykes had any connection to Ethan, and that SWAT teams and police are negotiating with Dykes.

"I could tell you that negotiators continue to communicate with the suspect and that there's no reason to believe the child has been harmed," Sheriff Wally Olson said late Thursday.

PHOTOS: Worst Hostage Situations

Dykes' neighbor Claudia Davis told The Associated Press that he had yelled at her and fired his gun at her, her son James Davis, Jr. and her baby grandson after he claimed their truck caused damage to a speed bump in the dirt road near his property. No one was hurt, but Davis, Jr. told the AP that he believes the shooting and kidnapping are connected to the scheduled court hearing.

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"I believe he thought I was going to be in court and he was going to get more charges than the menacing, which he deserved, and he had a bunch of stuff to hide and that's why he did it," he said.

This was not Dykes' only run-in with people in the neighborhood, where he had come to be known as a menacing figure. Neighbor Ronda Wilbur told the AP that Dykes beat her 120-pound dog with a lead pipe when it entered the side of the dirt rode his trailer sits on. Wilbur said her dog died a week later.

Early last year, two pit bulls belonging to neighbors Mike and Patricia Smith escaped and got into his yard. Patricia Smith said that Dykes threatened to shoot her children when they went to retrieve them.

Neighbor Ronda Wilbur said that Dykes would be seen on his property at all hours of the day.

"It could be 2 o'clock in the morning, it could be midnight. He was out there either digging or moving dirt," she said.

As the underground standoff moved into its fourth day, tensions grow in this small community near Midland City, Ala., which is now enveloped by SWAT teams and police.

"That's an innocent kid. Let him go back to his parents, he's crying for his parents and his grandparents and he does not know what's going on," Midland City Mayor Virgil Skipper told ABC News. "Let this kid go."

Neighbor Jimmy Davis said that he has seen the bunker where Dykes has been known to hunker down for up to eight days.

"He's got steps made out of cinder blocks going down to it, Davis said. "It's lined with those red bricks all in it."

Police say he may have enough supplies to last him weeks.

Former FBI profiler and ABC News consultant Brad Garrett said there's a distinct reason why authorities are keeping details about Dykes under wraps.

"One of reasons they are keeping negations closed and not releasing his picture, is to try to insulate the situation, so they don't have a situation where they don't have to deal with his anger and rage," he said.

Meanwhile, children are trying to understand why this happened to their friend

"He always comes up to my house to play," 10-year-old Trisha Beaty told ABC News. "I miss him. I miss him a lot."

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Syria protests over Israel attack, warns of "surprise"

BEIRUT/AMMAN (Reuters) - Syria protested to the United Nations on Thursday over an Israeli air strike on its territory and warned of a possible "surprise" response.

The foreign ministry summoned the head of the U.N. force in the Israeli-occupied Golan Heights to deliver the protest a day after Israel hit what Syria said was a military research centre and diplomats said was a weapons convoy heading for Lebanon.

"Syria holds Israel and those who protect it in the Security Council fully responsible for the results of this aggression and affirms its right to defend itself, its land and sovereignty," Syrian television quoted it as saying.

The ministry said it considered Wednesday's Israeli attack to be a violation of a 1974 military disengagement agreement which followed their last major war, and demanded the U.N. Security Council condemn it unequivocally.

U.N. Secretary-General Ban Ki-moon expressed "grave concern". "The Secretary-General calls on all concerned to prevent tensions or their escalation," his office said, adding that international law and sovereignty should be respected.

Israel has maintained total silence over the attack, as it did in 2007 when it bombed a suspected Syrian nuclear site - an attack which passed without Syrian military retaliation.

In Beirut on Thursday Syria's ambassador said Damascus could take "a surprise decision to respond to the aggression of the Israeli warplanes". He gave no details but said Syria was "defending its sovereignty and its land".

Diplomats, Syrian rebels and security sources said Israeli jets bombed a convoy near the Lebanese border on Wednesday, apparently hitting weapons destined for Hezbollah. Syria denied the reports, saying the target was a military research centre northwest of Damascus and 8 miles from the border.

Hezbollah, which has supported Assad as he battles an armed uprising in which 60,000 people have been killed, said Israel was trying to thwart Arab military power and vowed to stand by its ally.

"Hezbollah expresses its full solidarity with Syria's leadership, army and people," said the group which fought an inconclusive 34-day war with Israel in 2006.

Russia, which has blocked Western efforts to put pressure on Syria at the United Nations, said any Israeli air strike would amount to unacceptable military interference.

"If this information is confirmed, we are dealing with unprovoked attacks on targets on the territory of a sovereign country, which blatantly violates the U.N. Charter and is unacceptable, no matter the motives," Russia's foreign ministry said.

Iranian deputy foreign minister Hossein Amir Abdullahian said the attack "demonstrates the shared goals of terrorists and the Zionist regime", Fars news agency reported. Syrian President Bashar al-Assad portrays the rebels fighting him as foreign-backed, Islamist terrorists, with the same agenda as Israel.

An aide to Supreme Leader Ayatollah Ali Khamenei said on Saturday Iran would consider any attack on Syria as an attack on itself.

In battle-torn Damascus, residents doubted Syria would fight back. One mother of five said she had heard retaliation would come later. "They always say that. They'll retaliate, but later, not now. Always later," she said, and laughed.

"The last thing we need now is Israeli fighter jets to add to our daily routine. As if we don't have enough noise and firing keeping us awake at night."

BLASTS SHOOK DISTRICT

Details of Wednesday's strike remain sketchy and, in parts, contradictory. Syria said Israeli warplanes, flying low to avoid detection by radar, crossed into its airspace from Lebanon and struck the Jamraya military research centre.

But the diplomats and rebels said the jets hit a weapons convoy heading from Syria to Lebanon and the rebels said they - not Israel - attacked Jamraya with mortars.

One former Western envoy to Damascus said the discrepancy between the accounts might be explained by Jamraya's proximity to the border and the fact that Israeli jets hit vehicles inside the complex as well as a building.

The force of the dawn attack shook the ground, waking nearby residents from their slumber with up to a dozen blasts, two sources in the area said.

"We were sleeping. Then we started hearing rockets hitting the complex and the ground started shaking and we ran into the basement," said a woman who lives adjacent to the Jamraya site.

The resident, who declined to be named because of the sensitivity over the strike, said she could not tell whether the explosions which woke her were the result of an aerial attack.

Another source who has a relative working inside Jamraya said a building inside the complex had been cordoned off and flames were seen rising from the area after the attack.

"It appears that there were about a dozen rockets that appeared to hit one building in the complex," the source, who also asked not to be identified, told Reuters. "The facility is closed today."

Israeli newspapers quoted foreign media on Thursday for reports on the attack. Journalists in Israel are required to submit articles on security and military issues to the censor, which has the power to block any publication of material it deems could compromise state security.

Syrian state television said two people were killed in the raid on Jamraya, which lies in the 25-km (15-mile) strip between Damascus and the Lebanese border. It described it as a scientific research centre "aimed at raising the level of resistance and self-defense".

Diplomatic sources from three countries told Reuters that chemical weapons were believed to be stored at Jamraya, and that it was possible that the convoy was near the large site when it came under attack. However, there was no suggestion that the vehicles themselves had been carrying chemical weapons.

"The target was a truck loaded with weapons, heading from Syria to Lebanon," said one Western diplomat, echoing others who said the convoy's load may have included anti-aircraft missiles or long-range rockets.

The raid followed warnings from Israel that it was ready to act to prevent the revolt against Assad leading to Syria's chemical weapons and modern rockets reaching either his Hezbollah allies or his Islamist enemies.

A regional security source said Israel's target was weaponry given by Assad's military to fellow Iranian ally Hezbollah.

Such a strike or strikes would fit Israel's policy of pre-emptive covert and overt action to curb Hezbollah and does not necessarily indicate a major escalation of the war in Syria. It does, however, indicate how the erosion of the Assad family's rule after 42 years is seen by Israel as posing a threat.

Israel this week echoed concerns in the United States about Syrian chemical weapons, but its officials say a more immediate worry is that the civil war could see weapons that are capable of denting its massive superiority in airpower and tanks reaching Hezbollah; the group fought Israel in 2006 and remains a more pressing threat than its Syrian and Iranian sponsors.

(Additional reporting by Mariam Karouny and Oliver Holmes in Beirut, Gabriela Baczynska in Moscow and Marcus George in Dubai; editing by David Stamp and Philippa Fletcher)

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French air strikes hit Islamist bases in north Mali

TIMBUKTU: France said Thursday its warplanes had hit Islamist command posts near the last militant stronghold in northern Mali, as the UN mulled a peacekeeping force to take over the fast-moving French-led operation.

Ground troops gathered at the gates of Kidal, a desert outpost that is the last rebel stronghold yet to be fully recaptured, as France said its fighter jets had blasted command centres, training camps and depots run by Islamist extremists in the mountains north of the town.

Many rebels are believed to have melted away into the desert hills around Kidal since France launched air strikes on January 11 in a surprise assault to block an advance towards the capital, Bamako, by Al-Qaeda linked extremists who have occupied the north for 10 months.

The latest air strikes were carried out over the past few days in the Aguelhok region near the border with Algeria, a French military spokesman told journalists.

To back up the ground troops already in place, a column of 1,400 Chadian soldiers was heading by road towards Kidal from the Niger border, he added.

Defence Minister Jean-Yves Le Drian said France's air attacks had hit the rebels hard.

"The jihadists suffered heavy losses," Le Drian said. "There were numerous strikes which hit their equipment and men.

"The French intervention has succeeded," he added, saying rebel fighters were now on the run.

But, in a sign the insurgents remain a threat, at least two Malian soldiers were killed when their vehicle drove over a landmine in central territory recaptured last week from the rebels, a security source said.

Paris has urged dialogue between "non-armed terrorist groups" and Mali's interim government for a long-term solution to the woes of the country, which straddles the Sahara desert and the region to the south known as the Sahel.

Tuareg desert nomads in the north have long felt marginalised by Bamako, and last January rebels launched the latest in a string of insurgencies, kickstarting Mali's rapid implosion.

Their National Movement for the Liberation of Azawad (MNLA), which had allied with the Islamist groups, rapidly overran the vast desert north.

They were soon thrust aside by the extremists, who imposed a brutal form of Islamic law on areas under their control, where offenders were punished by public whippings, amputations and executions.

Ex-UN chief Kofi Annan said Thursday there was evidence the crisis in Mali was driven by dangerous alliances between drug smugglers, criminal gangs and extremist groups operating across the region's porous borders.

"These developments threaten the stability of our region as we have witnessed so graphically in Mali in recent weeks," he said.

Interim president Dioncounda Traore said he was willing to talk to the secular Tuaregs from the MNLA, but would not meet any of the Islamist groups.

His comments came after a breakaway rebel faction, the Islamic Movement of Azawad (MIA), said it rejected "extremism and terrorism" and appealed to the international community to prevent the deployment of Malian and West African troops in its base, Kidal, 1,500 kilometres northeast of Bamako.

But Traore dismissed the apparent MIA olive branch, saying: "Because fear has now changed sides, they are looking for a way out."

And the Malian army said it already had a reconnaissance unit in the town to prepare the way for more troops.

France, Mali's former colonial ruler, is keen to hand over its military operation to nearly 8,000 African troops slowly being deployed.

UN officials said planning was at an advanced stage to gather those forces together under the umbrella of a formal UN peacekeeping operation.

France now has 3,500 troops on the ground and with support from the Mali army, has retaken several rebel strongholds, including the large regional town of Gao and the fabled desert trading post of Timbuktu, with no resistance.

French soldiers remained at Kidal's airport Thursday, after being blocked by a sandstorm. The defence ministry said they would secure the town when the weather cleared.

With the Islamists on the run, rights groups have voiced fears of widespread abuses and reprisals against Tuaregs and Arabs accused of supporting them, after reports of summary executions by Malian troops.

"All sides have committed very serious violations, and we believe that they should be investigated," said Human Rights Watch's Africa director, Tiseke Kasambala.

The European Union joined the United States and France in raising alarm over reprisal attacks against minorities.

- AFP/jc

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Gadkari advances ‘date’ with I-T officials, quizzed

NAGPUR: Former BJP president Nitin Gadkari made a discreet entry and quiet exit from the income tax office at Saraf Chambers here on Thursday. He was present in the office between 5pm and 9.20pm and was questioned by income tax officials about the alleged dubious investments in Purti Group.

Agency reports said that Gadkari was questioned by Geetha Ravichandran, the director of I-T (Investigations) here. Sunil Umap, the additional director of investigations, who followed Gadkari out of the building, refused to say anything. "I cannot comment," was all Umap told TOI.

Gadkari was slated to appear before I-T officials on Friday. It is learnt that he sought an appointment with Ravichandran for Thursday as he is set to fly out to New Delhi on Friday afternoon to attend the party's core committee meeting. The I-T top officials agreed to Gadkari's request.

Party workers informed that the ex-BJP chief was accompanied by his elder son Nikhil who is the joint MD of Purti Group.

A source in the IT office said that during the quizzing Gadkari was asked to explain about the several media reports about the queer money trail in Purti Group's shell companies. "It was more of an enquiry into the media reports than a questioning," said the source.

Earlier this month, Purti Group's chartered accountant Ravi Chinchwadkar had appeared before I-T officials and submitted a 25-page document in reply to questions regarding Gadkari's personal transactions and investments related to the Purti Group of companies. Gadkari's staff had then indicated that he may or may not appear before the I-T officials, who had issued summons, on February 1.

Gadkari has steadfastly denied allegations of any wrongdoing and said that he has resigned from the Purti Group. However, agency reports said that the taxmen have found details of almost 30 companies that have been "in transaction" with Purti Power and Sugar Limited, which is part of Purti Group.

On January 22, I-T officials had conducted on-field inquiries at 11 premises in Mumbai belonging to alleged shell companies related to Purti group and found no trace of these entities at their given addresses. The next day, Gadkari pulled out of the race for a second term as the BJP national president. On January 25 on his arrival in Nagpur, Gadkari also issued indirect threats to the taxmen that when BJP comes to power there would be nobody to take care of them. When the Indian Revenue Services' body expressed shock over Gadkari's statements and sought an apology, he did a volte face.

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Hagel, McCain Clash at Confirmation Hearing

Facing a rocky confirmation process, Chuck Hagel today defended his record before his former Senate colleagues, including an openly impatient Sen. John McCain.

"I'm on the record on many issues, but no one individual vote, no one individual quote, no one individual statement defines me," Hagel said in his opening statement at his first confirmation hearing for secretary of defense.

"My overall worldview has never changed: that America has and must maintain the strongest military in the world, that we must lead in the international community to confront threats and challenges together," Hagel said.

Who Is Chuck Hagel? Obama's Nominee for Secretary of Defense

A Vietnam veteran and former Republican senator from Nebraska who left office in 2009, Hagel, 66, is president Obama's nominee to replace Defense Secretary Leon Panetta. Despite his 12-year career in the Senate, Hagel faces opposition from many of his former Republican colleagues.

In the hearing's testiest exchange, McCain grilled Hagel on the former senator's opposition to the Iraq "surge," a stance that separated Hagel from most members of his party in 2007.

The Arizona senator championed the "surge" both as a senator and in his 2008 presidential campaign, while Hagel joined Democrats in vocally criticizing the strategy. McCain pressed Hagel at today's hearing to say whether he believes the surge was a mistake.

When Hagel declined to answer "yes" or "no," McCain told his former colleague, "I want to know if you were right or wrong. That's a direct question," repeatedly accusing Hagel of refusing to answer the question.

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"You're on the wrong side of it, and your refusal to answer whether you were right or wrong on it is going to have an impact on my judgment on whether to vote for your confirmation," McCain concluded

Hagel also underwent some tough, pointed questioning from Sen. Lindsey Graham, R-S.C., an ally of McCain's in the Senate. Graham pointed out Hagel's decision not to sign letters on Middle-East policy during his Senate career, at one point asking Hagel, "Do you think that the sum total of your record, all that together, that the image you've created is one of sending the worst possible signal to our enemies and friends at one of the most critical times in world history?"

Hagel said he did not.

Senate Republicans and pro-Israel groups have voiced grievances with Hagel's record, including opposition to unilateral sanctions against Iran, support for talks with Hamas, opposition to deeming Iran's Revolutionary Guard Corps as a terrorist organization, and a reference to Israel-backing groups as the "Jewish lobby."

Senate Armed Services Committee Chairman Carl Levin, D-Mich., acknowledged such concerns as he opened the committee's hearing, referencing "troubling statements [Hagel] has made about Israel and its supporters in the United States."

Hagel defended himself under questioning from multiple senators.

"When I voted against some of those unilateral sanctions on Iran, it was a different time," Hagel said, referring to votes in the early 2000s. "We were in a different place with Iran at that time. As a matter of fact, the Bush administration did not want a five-year renewal of [the Iran and Libya Sanctions Act] at that time because they weren't sure of the effectiveness of the sanctions."

Hagel said his record of public statements shows he has consistently referred to Hamas and Hezbollah as terrorist groups and Iran as a state sponsor of terrorism.

"The way I approached every vote I took in the Senate was what I thought would be the most effective," Hagel said, defending his vote against labeling Iran's guard corps as a terrorist group. "What was the situation at the time, how can we do this smarter and better?"

Sen. James Inhofe, R-Okla., the committee's top Republican, said he will oppose Hagel's nomination.

"Senator Hagel is a good man who has a record of service," Inhofe said of his former GOP colleague, while concluding, "He is the wrong person to lead the Pentagon.

Hagel was introduced at the hearing by former Sens. Sam Nunn, D-Ga., and John Warner, R-Va., two respected former members of the Armed Services Committee, both of whom lavished praise on Obama's nominee.

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Egypt curfew scaled back as Mursi seeks end to bloodshed

CAIRO/BERLIN (Reuters) - Egyptian authorities scaled back a curfew imposed by President Mohamed Mursi, and the Islamist leader cut short a visit to Europe on Wednesday to deal with the deadliest violence in the seven months since he took power.

Two more protesters were shot dead before dawn near Cairo's central Tahrir Square on Wednesday, a day after the army chief warned that the state was on the brink of collapse if Mursi's opponents and supporters did not end street battles.

More than 50 people have been killed in the past seven days of protests by Mursi's opponents marking the second anniversary of the uprising that toppled Hosni Mubarak.

Mursi imposed a curfew and a state of emergency on three Suez Canal cities on Sunday - Port Said, Ismailia and Suez. That only seemed to further provoke crowds. However, violence has mainly subsided in those towns since Tuesday.

Local authorities pushed back the start of the curfew from 9:00 p.m. to 2:00 a.m. in Ismailia and to 1:00 a.m. in Port Said and Suez.

"There has been progress in the security situation since Monday. Calm has returned," Suez Governor Samir Aglan said.

Mursi, speaking in Berlin before hurrying home to deal with the crisis, called for dialogue with opponents but would not commit to their demand that he first agree to include them in a unity government.

He sidestepped a question about a possible unity government, saying the next cabinet would be formed after parliamentary elections in April.

Egypt was on its way to becoming "a civilian state that is not a military state or a theocratic state", Mursi said.

The violence at home forced Mursi to scale back his European visit, billed as a chance to promote Egypt as a destination for foreign investment. He flew to Berlin but called off a trip to Paris and was due back home after only a few hours in Europe.

Chancellor Angela Merkel, who met him, echoed other Western leaders who have called on him to give his opponents a voice.

"One thing that is important for us is that the line for dialogue is always open to all political forces in Egypt, that the different political forces can make their contribution, that human rights are adhered to in Egypt and that of course religious freedom can be experienced," she said at a joint news conference with Mursi.

SPIRIT OF REVOLUTION

Mursi's critics accuse him of betraying the spirit of the revolution by keeping too much power in his own hands and those of his Muslim Brotherhood, the Islamist movement banned under Mubarak which won repeated elections since the 2011 uprising.

Mursi's supporters say the protesters want to overthrow Egypt's first democratically elected leader. The current unrest has deepened an economic crisis that saw the pound currency tumble in recent weeks.

Near Cairo's Tahrir Square on Wednesday morning, dozens of protesters threw stones at police who fired back teargas, although the scuffles were brief.

"Our demand is simply that Mursi goes, and leaves the country alone. He is just like Mubarak and his crowd who are now in prison," said Ahmed Mustafa, 28, a youth who had goggles on his head to protect his eyes from teargas.

Opposition politician Mohamed ElBaradei called for a meeting of the president, ministers, the ruling party and the opposition to halt the violence. But he also restated the precondition that Mursi first commit to seeking a national unity government.

The worst violence has been in the Suez Canal city of Port Said, where rage was fuelled by death sentences passed against soccer fans for roles in deadly riots last year.

After decades in which the West backed Mubarak's military rule of Egypt, the emergence of an elected Islamist leader in Cairo is probably the single most important change brought about by the wave of Arab revolts over the past two years.

Mursi won backing from the West last year for his role in helping to establish a ceasefire between Israel and Palestinians that ended a conflict in Gaza. But he then followed that with an effort to fast-track a constitution that reignited dissent at home and raised global concern over Egypt's future.

Western countries were alarmed this month by video that emerged showing Mursi making vitriolic remarks against Jews and Zionists in 2010 when he was a senior Brotherhood official.

German Foreign Minister Guido Westerwelle said ahead of Mursi's visit that the remarks, in which Mursi referred to Zionists as "descendants of apes and pigs" were "unacceptable".

"NOT AGAINST JEWS"

Asked about those remarks at the news conference with Merkel, Mursi repeated earlier explanations that they had been taken out of context.

"I am not against the Jewish faith," he said. "I was talking about the practices and behavior of believers of any religion who shed blood or who attack innocent people or civilians. That's behavior that I condemn."

"I am a Muslim. I'm a believer and my religion obliges me to believe in all prophets, to respect all religions and to respect the right of people to their own faith," he added.

Egypt's main liberal and secularist bloc, the National Salvation Front, has so far refused talks with Mursi unless he promises a unity government including opposition figures.

"Stopping the violence is the priority, and starting a serious dialogue requires committing to guarantees demanded by the National Salvation Front, at the forefront of which are a national salvation government and a committee to amend the constitution," ElBaradei said on Twitter.

Those calls have also been backed by the hardline Islamist Nour party - rivals of Mursi's Brotherhood. Nour and the Front were due to meet on Wednesday, signaling an unlikely alliance of Mursi's critics from opposite ends of the political spectrum.

Brotherhood leader Mohamed El-Beltagy dismissed the unity government proposal as a ploy for the Front to take power despite having lost elections. On his Facebook page he ridiculed "the leaders of the Salvation Front, who seem to know more about the people's interests than the people themselves".

In a sign of the toll the unrest is having on Egypt's economy, ratings agency Fitch downgraded its sovereign rating by one notch to B on Wednesday.

(Additional reporting by Tom Perry, Yasmine Saleh and Marwa Awad in Cairo, Yusri Mohamed in Ismailia and Stephen Brown and Gernot Heller in Berlin; Writing by Peter Graff)

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Germany drafts law on banking separation

BERLIN: Germany aims to introduce legislation on banking separation in order to protect customers' deposits from riskier areas of business, according to a draft law seen by AFP on Wednesday.

The government wants the law to come into effect in January 2014 and banks' activities to be separated by July 2015.

It will only apply to institutions with balances sheets over 1.0 billion euros or with risky positions worth 20 pe rcent of the balance sheet value, according to the law.

The rules would affect Germany's two biggest banks, Deutsche Bank and Commerzbank, as well as regional banking giant Landesbank Baden-Wuerttemberg (LBBW).

Banking separation is an idea floated by the head of the Finnish central bank and European Central Bank governing council member Erkki Liikanen as a measure for reducing risk in the banking sector.

But one of Deutsche Bank's co-chief executives, Anshu Jain, has repeatedly slammed the idea, saying it would "greatly harm the German economy and German companies."

He argues that if Deutsche Bank can no longer use deposits to refinance its activities in investment banking, the refinancing costs would automatically rise and that would narrow the financing possibilities of major companies.

At the same time, banks with high deposits would find it difficult to find attractive investments for customers, Jain said.

- AFP/jc

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Prithviraj Chavan seeks additional Rs 2,270cr drought fund for Maharashtra

NEW DELHI: Chief minister PrithvirajChavan has sought an additional financial assistance of Rs 2,270 crore from the Centre to overcome the drought crisis in the state.

Chavan, who was in Delhi since January 28, has made the demand to Prime Minister Manmohan Singh. The CM has also sought concessions in time period and funds provided by the Centre for fodder camps in drought-hit areas. He also met Congress leader Rahul Gandhi and union petroleum minister VeerappaMoily with a demand to remove fishermen and state transport buses from the category of "bulk consumers" of diesel.

Chavan sought lifting of moratorium for port development and certain other activities in the Sindhudurg belt. He also reiterated the state's demand for withdrawal of a union environment ministry's order imposing restrictions on high-rise activity in coastal areas in Mumbai.

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APNewsBreak: EPA moves to ban some rodent poisons

WASHINGTON (AP) — The Environmental Protection Agency is moving to ban the sale of a dozen rat and mouse poisons sold under the popular D-Con brand in an effort to protect children and pets.

The agency said Wednesday it hopes to reduce the thousands of accidental exposures that occur every year from rodent-control products. Children and pets are at risk for exposure because the products typically are placed on floors.

The agency had targeted a handful of companies two years ago, saying they needed to develop new products that are safer for children, pets and wildlife. All but Reckitt Benckiser Inc., manufacturer of D-Con, did so.

The company will have at least 30 days to request a hearing before an administrative law judge. If no hearing is requested, the ban will take effect.

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