Pakistan media warns of growing chaos as minister slain (Reuters)

ISLAMABAD (Reuters) – Pakistan is being swept toward violent chaos by a growing wave of Islamist extremism, newspapers said on Thursday, a day after Taliban militants killed the country's only Christian government minister.

The assassination of Minister for Minorities Shahbaz Bhatti in broad daylight in the capital Islamabad on Wednesday, threatens to further destabilize the nuclear-armed U.S. ally where secular-minded politicians are imperiled by a rising strain of violent religious conservatism in the society.

"Mr. Bhatti's brutal assassination has once again highlighted the fact that we are fast turning into a violent society," the liberal Daily Times said in its editorial.

"This is not the time to be frightened into silence. It is time to implement the law and not surrender in front of extremists."

Bhatti is the second senior official to be assassinated this year for challenging the country's controversial blasphemy law, which sanctions the death penalty for insulting Islam or its Prophet Mohammad. Punjab provincial governor Salman Taseer was shot dead by his own bodyguard in January for calling for curbing abuses in the law.

"Terrorists silence another voice of interfaith harmony," the daily Dawn ran a banner headline on its front page. "Shahbaz Bhatti silenced forever," said The News.

President Asif Ali Zardari told a party meeting on Wednesday he would resist the slide toward extremism.

"We have to fight this mindset and defeat them. We will not be intimidated nor will we retreat the official APP news agency quoted him as saying.

Mehbood Ahmed, a senior police official, said around 20 people had been detained for questioning, but police did not yet know who was responsible. "But we are confident we will get hold of culprits," he said.

Condemnation poured in from around the world after news of Bhatti's killing broke, with the Church of England and the Vatican decrying the violence against Christians in Pakistan.

"I hope the government of Pakistan will not only hold the killers to account, but reflect on how it can more effectively confront the extremism which is poisoning Pakistani society," United Nations human rights chief Navi Pillay said from Geneva on Wednesday.

These killings, along with frequent militant attacks and chronic economic problems have raised fears for the future of the U.S.-ally, where an unpopular coalition government is struggling to cope.

'THERE'S BLOOD ON THEIR HANDS'

Ties between the two old allies have hit new lows after the arrest in January of Raymond Davis, a U.S. Central Intelligence Agency contractor, who shot dead two armed men in the city of Lahore. The United States says Davis has immunity, but Pakistan has said it is for the courts to decide.

In the meantime, Davis was in court on Thursday for the second hearing of his murder trial. His immunity hearing is March 14.

The government of President Asif Ali Zardari has repeatedly said it would not change the blasphemy law, and officials have distanced themselves from anyone calling for amendments for fear of a backlash from extremists, a move that dismayed moderates and liberals.

"Of course the silent majority, which keeps silent over these things, also must bear responsibility," I.A. Rehman, director of the Human Rights Commission of Pakistan, told the Express 24/7 television channel Wednesday night. "There's blood on their hands also."

The law has been in the spotlight since last November, when a court sentenced a Christian mother of four to death after her neighbors complained she had insulted Prophet Muhammad. Both Taseer and Bhatti championed the cause of poor Christian woman.

Al Qaeda-linked Pakistani Taliban militants, fighting to bring down the state, had called for Bhatti's death because of his attempts to amend the law.

The funeral of Bhatti, a Catholic, is expected to take place on Friday or Saturday, his family friends said.

Christians and other religious minorities have staged protests in several cities, denouncing his death and have called on the government to provide them protection.

(Additional reporting by Chris Allbritton and Robert Evans in Geneva, editing by Andrew Marshall)

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Moody's warns of Japan ratings cut if no reforms (Reuters)

TOKYO (Reuters)- Moody's Investors Service warned Tuesday that it may cut Japan's sovereign credit rating if government policies fall short of comprehensive tax reform needed to bring ballooning public debt under control.

The ratings agency said Japan, where the fifth prime minister since 2006 is facing mounting pressure to quit after less than a year in office, needed stability at the top if it was to enact effective fiscal reform.

Japan's struggle to put a lid on the ever-rising public debt, which at double the size of the $5 trillion economy is the biggest among leading nations, has triggered a Standard & Poor's rating cut and a slew of warnings from other rating agencies.

"Effective fiscal reform most likely requires stability at the top levels of government," said Tom Byrne, Moody's senior vice president and regional credit officer.

He told a news conference that Japan has seen regular changes of leadership since Junichiro Koizumi left office in 2006 after more than five years as prime minister.

"Since Koizumi, there have been three Liberal Democratic Party prime ministers and one Democratic Party prime minister who have served for a year or less," Byrne said.

The dollar blipped up against the yen after Moody's changed the outlook on Japan's Aa2 rating to negative from stable, although government bond futures showed little reaction and maintained earlier gains.

Prime Minister Naoto Kan, who took office last June, has staked his career on fiscal reforms, including a rise in the 5 percent sales tax to fund bulging social security costs, and urged the opposition to join talks on the topic.

But the opposition has refused to come to the table and is instead piling pressure on the unpopular Kan to call a snap election by threatening to block budget-related bills, including one allowing the government to issue new bonds.

Kan also faces rebellion in his own party but said on Tuesday that Japan needed to press ahead.

"To firmly carry out the unified reform of tax and social security systems is the most important thing in gaining market confidence," he told reporters after Moody's announcement.

SOVEREIGN DEBT

Japan is not the only country with debt problems. The 2007/08 financial crisis prompted a dramatic rise in developed world sovereign debt, as governments spent billions on economic stimulus packages and bank rescues.

In Europe, Greece and Ireland have been driven by the bond markets to take bailouts, frightening many other governments into adopting austerity measures.

But Japan and the United States have faced criticism from the IMF and ratings agencies for lacking credible plans to bring their deficits under control.

Analysts point out that Japan's reliance on domestic investors, who hold about 95 percent of its debt, shields it from the sort of turmoil that has rattled high-debt euro zone economies and explains the subdued market response to rating agencies' stern messages.

But mounting welfare costs and shrinking savings as a result of a rapidly aging population raise questions about the longer term sustainability of Japan's debt burden.

Moody's acknowledged that a funding crisis was unlikely in the medium-run, but warned that without urgent government action debt pressures would pile up over time to reach a dangerous tipping point.

"Although a JGB funding crisis is unlikely in the near to medium term, pressures could build up over the longer term which should be taken into account in the rating, even at this high end of the scale," it said in a statement.

Echoing the point, Byrne said a fall in household savings could create a risk premium on Japanese government bonds in the longer term.

Neither Japan's Economics Minister Kaoru Yosano nor Finance Minister Yoshihiko Noda would comment on Moody's action.

Some analysts say that Moody's outlook cut and last month's rating downgrade by S&P's may play into the hands of Kan and his allies by highlighting the dire state of Japan's finances.

"Credit downgrades by international rating agencies will raise awareness among the Japanese population on the seriousness of the Japanese public sector finance. Such perception by the Japanese population may help Japanese politicians get their act together in fixing fiscal problem," said Takuji Okubo, chief Japan economist at Societe Generale.

One concern of rating agencies and economists alike is that a political deadlock in the divided parliament may stump Kan's efforts to get public finances in order. Another worry is that even if the government manages to overcome the impasse its action may prove not ambitious enough.

"The markets may take a body blow from the downgrade in the mid-term if not in the short term," said Koichi Haji, chief economist at NLI Research Institute in Tokyo.

"If there is uncertainty over the passage of the next fiscal year's budget and related bills, there may be some repercussions such as domestic investors' reluctance to buy Japanese government bonds by the end of the fiscal year."

POLITICAL SQUABBLES

Moody's said the rating action was prompted by heightened concern that the government's economic and fiscal policies may get bogged down in political squabbles and prove not strong enough to achieve its deficit reduction targets.

Under long-term fiscal plans announced last June, the government aimed to return the primary budget, which excludes bond sales and debt servicing costs, to the black by 2020.

As if to underline the point, a tiny party that was formerly in the ruling coalition confirmed it would oppose key bills to enact a workable budget.

Standard & Poor's downgraded its rating on Japanese debt last month, its first cut in nine years, citing similar reasons. That brought S&P's rating for Japan one notch below Moody's but to the same level as Fitch, another ratings agency.

Moody's said that if the government managed to present comprehensive tax reform proposals in June as promised it would monitor its effectiveness in stabilizing public finances.

It also said that while the sheer size of the world's third-largest economy and the depth of its financial markets allowed it to absorb economic shocks, the rise in government debt could not continue unchecked.

It listed a lack of tax reform, a possible decline in household savings and the shift to a current account deficit from a surplus as possible tipping points that could put severe downward pressure on ratings.

(Writing by Tomasz Janowski and Alex Richardson; Editing by Neil Fullick)

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China official warns of domestic unrest and "hostile" West (Reuters)

BEIJING (Reuters) – The Chinese government faces a turbulent time of domestic unrest and challenges from "hostile Western forces" that it will fight with more sophisticated controls, a Communist Party law-and-order official said.
Chen Jiping, deputy secretary general of the Communist Party's Political and Legal Affairs Committee, gave the toughly worded warning in this week's issue of Outlook Weekly, and blamed Western democratic countries for fomenting unrest.
He did not mention the protests that have rocked authoritarian governments in the Middle East, and his words reflect the Communist Party's own homegrown fears.
But the uprisings that deposed Egypt's long-time president Hosni Mubarak and are now threatening Libya's strongman Muammar Gaddafi are likely to reinforce the views of Chinese security officials like Chen.
"The schemes of some hostile Western forces attempting to Western and split us are intensifying, and they are waving the banner of defending rights to meddle in domestic conflicts and maliciously create all kinds of incidents," Chen told the magazine, which is published by the official Xinhua news agency.
"Mass incidents continue at a high rate," Chen said, using the Party euphemism for protests, riots, strikes and mass petitions.
"Our country is in a period of magnified conflicts within the populace, high crime rates and complex struggle against foes, and these features are most unlikely to change any time soon," he said. The magazine reached subscribers on Tuesday.
To counter such worries, Chinese leaders have promoted more of the stringent security steps that they brandished over the weekend, when police snuffed out feeble attempts to emulate the "Jasmine Revolution" street protests that have bloomed across the Middle East.
Chen said the government was honing policies to defuse and smother unrest and crime. Those policies include more monitoring of citizens to nip threats in the bud.
"That will include comprehensive roll-out of a social stability risk assessment system that covers major projects and policies that have a direct bearing on public interests," he said.
"Before decisions are made, there'll be a double assessment -- of their economic outcome and risks to social stability."
The Party Political and Legal Affairs Committee that Chen helps run oversees the courts, police and prosecutors. Chen is also a senior official of an office that develops and enforces anti-crime and domestic security policies.
The Communist Party already spends heavily on domestic security, and experts have said that budget now rivals spending on the military, crimping outlays for welfare.
Even most dissidents and other critics of China's one-party rule see scant prospect of serious challenges to it soon. Police regularly detain or confine dissidents at sensitive times.
In 2007, China had more than 80,000 "mass incidents," up from more than 60,000 in 2006, according to sociologists at the Chinese Academy of Social Sciences. More up to date estimates are not available, but some experts think improved welfare and the abolition of a hated tax on farmers have reduced the number.
(Reporting by Chris Buckley; Editing by Robert Birsel)
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Gaddafi son warns of civil war as turmoil spreads (Reuters)

TRIPOLI (Reuters) – Libya's Muammar Gaddafi will fight a popular revolt to "the last man standing," one of his sons said on Monday, after protests broke out in the capital for the first time following days of unrest in the city of Benghazi.
Anti-government protesters rallied in Tripoli's streets, tribal leaders spoke out against Gaddafi, and army units defected to the opposition as oil exporter Libya endured one of the bloodiest revolts to convulse the Arab world.
Gaddafi's son Saif al-Islam Gaddafi appeared on national television in an attempt both to threaten and calm people, saying the army would enforce security at any price.
"Our spirits are high and the leader Muammar Gaddafi is leading the battle in Tripoli, and we are behind him as is the Libyan army," he said.
"We will keep fighting until the last man standing, even to the last woman standing ... We will not leave Libya to the Italians or the Turks.
Wagging a finger at the camera, he blamed Libyan exiles for fomenting the violence. But he also promised dialogue on reforms and wage rises.
The cajoling may not be enough to douse the anger unleashed after four decades of rule by Gaddafi -- mirroring events in Egypt where a popular revolt overthrew the seemingly impregnable President Hosni Mubarak 10 days ago.
"People here in Benghazi are laughing at what he is saying, it is the same old story (on promised reform) and nobody believes what he says," a lawyer in Benghazi told the BBC after watching the speech.
"He is liar, liar, 42 years we have heard these lies."
The United States said it was weighing "all appropriate actions" in response to the unrest.
"We are analyzing the speech ... to see what possibilities it contains for meaningful reform," a U.S. official said.
Libya's ambassador to India told the BBC he was resigning in protest at the violent crackdown that has killed more than 200. Ali al-Essawi also accused the government of deploying foreign mercenaries against the protesters.
In the coastal city of Benghazi, protesters appeared to be largely in control after forcing troops and police to retreat to a compound. Government buildings were set ablaze and ransacked.
"Security now it is by the people" the lawyer said.
In the first sign of serious unrest in the capital, thousands of protesters clashed with Gaddafi supporters. Gunfire rang out in the night and police used tear gas to disperse demonstrators, some of whom threw stones at Gaddafi billboards.
South Korea said hundreds of Libyans, some armed with knives and guns, attacked a South Korean-run construction site in Tripoli, injuring at least 4 foreign workers.
Human Rights Watch said at least 223 people have been killed in five days of violence. Most were in Benghazi, cradle of the uprising and a region where Gaddafi's grip has always been weaker than elsewhere in the oil-rich desert nation.
Habib al-Obaidi, a surgeon at the Al-Jalae hospital, said the bodies of 50 people, most of them shot, were brought there on Sunday afternoon. Two hundred wounded had arrived, he said.
"One of the victims was obliterated after being hit by an RPG (rocket-propelled grenade) to the abdomen," he said.
Members of an army unit known as the "Thunderbolt" squad had brought wounded comrades to the hospital, he said. The soldiers said they had defected to the cause of the protesters and had fought and defeated Gaddafi's elite guards.
"They are now saying that they have overpowered the Praetorian Guard and that they have joined the people's revolt," another man at the hospital, lawyer Mohamed al-Mana, told Reuters by telephone.
BENGHAZI THE CRADLE
If Gaddafi had hoped to dismiss Benghazi as a provincial problem, he faced an alarming development on Sunday night as crowds took to the streets of Tripoli.
One resident told Reuters he could hear gunshots and crowds.
"We're inside the house and the lights are out. That's what I hear, gunshots and people. I can't go outside," he said.
An expatriate worker said anti-government demonstrators were gathering in residential complexes.
"The police are dispersing them. I can also see burning cars," he said.
Support for Gaddafi, the son of a herdsman who seized power in 1969, among Libya's desert tribes was also waning.
The leader of the eastern Al-Zuwayya tribe threatened to cut oil exports unless authorities halted what he called the "oppression of protesters."
Speaking to Al Jazeera television, Shaikh Faraj al Zuway said: "We will stop oil exports to Western countries within 24 hours" if the violence did not stop.
Libya is Africa's fourth biggest oil exporter. It produces 1.6 million barrels of oil a day of which 1.1 million barrels are exported, according to Libyan data.
Oil jumped by more than $1 a barrel to $103.5 a barrel on fears the unrest could disrupt supplies.
Akram Al-Warfalli, a leading figure in the Al Warfalla tribe, one of Libya's biggest, told Al Jazeera: "We tell the brother (Gaddafi), well he's no longer a brother, we tell him to leave the country."
The Libyan uprising is one of series of revolts that have raced like wildfire across the Arab world since December, toppling the long-time rulers of Tunisia and Egypt and threatening entrenched dynasties from Bahrain to Yemen.
The West has watched with alarm as long-time allies and old foes have come under threat, appealing for reform and urging restraint.
REVILED AND REVERED
Gaddafi has been one of the most recognizable figures on the world stage in recent history, reviled by the West for many years as a supporter of militants and revolutionary movements while at the same time cutting a showmanlike figure with his flowing robes, lofty pronouncements and bevy of glamorous female assistants attending him in his Bedouin tent.
Former U.S. President Ronald Reagan once called him "the Mad Dog of the Middle East" and in 1986 unleashed air raids against Tripoli in response to the bombing of a Berlin disco frequented by U.S. servicemen, an attack the United States blamed on Libya.
The 1988 destruction of a Pan Am airliner over Lockerbie, Scotland, by Libyan agents in which 270 people were killed brought him fresh notoriety and led to U.N. sanctions.
But recent years have seen a rapprochement with the West as countries such as Britain and Italy sought a slice of its oil wealth and other lucrative commercial deals.
Though portrayed overseas as a ruthless despot, Gaddafi has enjoyed some popular support at home. After toppling King Idriss in 1969, he forged a middle road between communism and capitalism and oversaw rapid development of the poor country.
While using ruthless tactics against dissidents, he also spent billions of oil dollars to improve living standards.
(Reporting by Tarek Amara and Christian Lowe; Writing by Angus MacSwan; Editing by Matthew Jones and Robert Birsel)
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Vt. Guard chief warns he's target of Facebook scam (AP)

MONTPELIER, Vt. – A Facebook and Skype scammer used the name and photo of a high-ranking Vermont National Guard general to steal $3,000 from a Canadian woman in what's believed to be one of a number of frauds that exploit the authority of the military.

The Toronto woman made two wire transfers to London, believing she was helping Maj. Gen. Michael Dubie pay for a shipment of money to Canada after a tour in Iraq. At least two other women, in Taiwan and Germany, have responded to pleas from someone they believed to be Dubie, the guard said.

In October, a Skype user claiming to be Dubie asked the Toronto woman to be friends, she said Tuesday, asking that her name not be used because she fears for the safety of her family.

"I was kind of in awe of the whole thing, that someone like that was contacting me," she said. "I wanted to help someone like that who is an honest, trustworthy person."

The person claiming to be Dubie refused to talk on the phone or video chat.

"He was so adamant that it was him," she said. "He said no, he can't talk to me because he is in Iraq."

Members of the military are frequent targets of such online frauds, said Rick Breitenfeldt, a spokesman for the online and social media branch of the National Guard Bureau at the Pentagon.

People "have a soft spot in their heart for service members," he said.

The woman, a mother of one, started getting calls from a heavily accented man claiming to be a United Nations diplomat representing Dubie. In exchange for the money, she was promised help setting up a business.

A third wire transfer of about $1,500 was blocked after an employee at the wire transfer company became suspicious.

Finally, just before Thanksgiving, she contacted the Vermont National Guard and learned she was not dealing with the real Dubie, though the contacts lasted until just before Christmas.

Though the person's claims didn't add up — paying to ship money, the London address, the refusal to voice verify — the woman said she wanted to help the military.

"I am very naive. I am too honest and trusting of people," she said. "Now I am extremely cautious. It's made me question my whole Internet usage."

Facebook closed several fake accounts purporting to be Dubie at the request of the Vermont National Guard, but at least five were still active Monday. After being asked about the fake pages, Facebook took them down.

"It has come to my attention that there are people using my identity to solicit money on FB and Skype," Dubie wrote Friday on his legitimate Facebook page. "I will never ask for money from anyone in cyberspace."

Breitenfeldt said the Dubie case is the highest-ranking target he's dealt with, but he's had about a dozen such cases since June 2008 and suspects there are more.

"Sometimes it's like playing whack-a-mole," said Breitenfeldt.

Facebook officials do all they can to protect users' identities, "but there is always room for improvement," spokesman Frederic Wolens said in an e-mail.

Using a fake name or identity is a violation of Facebook's policies, he said, and encouraged users to report such activity.

Skype offers communication methods including video chat and instant messaging that scammers have also used.

"User protection is very important to Skype," the company said in an e-mail. "That's why we help you control your online experience by providing easy-to-use and effective online security options."

The scam that targeted Dubie is a variation of old Internet scams like phishing e-mails, Breitenfeldt said.

"Facebook is such a newer platform," he said. "People haven't trained themselves to look at things with a critical eye."

To experienced Facebook users, the fake pages are easy to spot. The profiles have just a handful of friends, use improper grammar and cite details that don't square with the real person's background.

Maj. Juanita Chang, the Army's social media chief, said she encouraged high-ranking soldiers to post real profiles just so their names couldn't be co-opted by impostors.

Vermont National Guard 1st Lt. Dyana Allen said that by studying the messages sent in Dubie's name, she's come to believe it was carried out by a single person.

"He's charming and he tries to get people to trust him first," she said. "It's a very simple scam."

Ultimately all three women contacted the Vermont National Guard headquarters and were told the correspondence was a fraud.

Vermont guard spokesman Lt. Col. Lloyd Goodrow said the case has been referred to the FBI. Dubie, through Goodrow, declined to comment.

"He is quite upset by this," said Goodrow.

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