* Medvedev to PM: We have special relations with Israel Netanyahu meets with Russian president to discuss Iranian threat. At start of meeting, two discuss special relations between their countries. Medvedev: Victory over Nazis is joint victory.

* Clinton warns Iran ‘becoming a military dictatorship’ Iran is “becoming a military dictatorship”, US Secretary of State Hillary Clinton has said.

* Obama names new US envoy to global Islamic body US President Barack Obama has named a new special envoy to the Organisation of the Islamic Conference (OIC).

* THE GREAT CLIMATE CHANGE RETREAT THERE has been no global warming for 15 years, a key scientist admitted yesterday in a major U-turn.

* Russia Says ‘Nyet” to Israel on Missile Sale to Iran Russia gave Prime Minister Binyamin Netanyahu the cold shoulder before he even landed in Moscow and said it will proceed with its sale of advanced S-300 missiles to Iran.

* Lieberman: Palestinian Authority behind campaign to smear Israel Much of the global effort to de-legitimize Israel is supported and sponsored by the Palestinian Authority, Foreign Minister Avigdor Lieberman said.

* New Ukraine leader unveils pro-Russia policies Ukraine’s emerging new leader, Viktor Yanukovych, at the weekend began the process of rebuilding the country’s relations with Russia, despite an ongoing challenge to his recent election victory.

* U.S. begins Mideast push for ideas on Iranian solution The top U.S. military officer and the secretary of state kicked off a series of visits throughout the Middle East Sunday, reaching out to the Arab world as the Obama administration pushes for tougher sanctions against Iran and its nuclear ambitions.

* Iran Analysis: A red light on Iran strike? If the US gives Israel a firm red, the gov’t will have to approach the oncoming fateful intersection with extreme caution.

* Taliban ‘forced from strongholds’ A joint Nato and Afghan military operation is succeeding in pushing Taliban fighters from their strongholds in Helmand province, officials say.

By: Philip Delves Broughton – Associated Newspapers Ltd

We have seen the Twin Towers collapse hundreds of times on TV. The steel and glass skyscrapers exploding like a bag of flour, the dust and smoke pluming out across Manhattan. But never like this, from above.

Nine years after the defining moment of the 21st century, a stunning set of photographs taken by New York Police helicopters forces us to look afresh at a catastrophe we assumed we knew so well.

You know but cannot see the 2,752 men, women and children who died at the World Trade Centre on September 11, 2001. None is visible here.

All we see is the spectacular moment of collapse, what film directors call the wide shot, showing the towers in their urban setting, before, during and after their fall.

Even for those who were there, like me, running from the cloud and choking in the dust, it is hard to believe. But what is all too evident to everyone is that this event changed the world, with consequences that will haunt us for decades.

With the Twin Towers collapsed the world we thought we knew.

These dramatic images were taken by police photographers in helicopters and it is the first time they have been seen, having been released under a Freedom of Information request made by America’s ABC News.

Burning buildings can be seen crumpling in on themselves as plumes of smoke rise up over the New York skyline that terrible September morning.

The images show how the police helicopter first began taking images from afar before moving in to reveal the devastation taking place underneath.

They also reveal the horror faced by those trapped in the burning buildings and then the walls of smoke and debris that enveloped the surrounding area as the towers came crashing down.

Released more than eight years after the deaths of 2,752 people on that day, they are powerful reminders of the attack that led to wars in Afghanistan and Iraq.

The legacy of the New York attack continues today with as British forces joining with Afghan soldiers and Nato to launch the biggest attack on the Taliban – accused of harbouring Al Qaeda who organised the 9/11 attack – since the initial 2001 offensive.

Meanwhile, in New York, work is continuing to build on the rubble of what became known as Ground Zero.

Structural steel for the 1,776ft tower, which will be known as 1 World Trade Centre, has already reached 200ft above street level.

Workers are now installing 16 steel nodes on the 20th-floor of the tower which will serve as joints between the steel framing for the building’s podium and the steel for the rest of the tower. The 104-storey skyscraper is due to be completed in 2013 and will be one of the tallest buildings in the U.S.

By: Niall Ferguson – The Financial Times Ltd

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

There is of course a distinctive feature to the eurozone crisis. Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.

That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.

Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.

By: Sean O’Grady and Vanessa Mock – independent.co.uk

The new President of the European Council, Herman Van Rompuy, is using the financial crisis sweeping the eurozone to launch an audacious grab for power over national budgets
, leaked documents reveal.

The Independent has seen a secret annexe to the letter being sent by Mr Van Rompuy to European Union heads of government inviting them to the summit to be held tomorrow in Brussels. In an early and muscular assertion of authority over national governments and over the EU Commission, the Van Rompuy note states: “Members of the European Council are responsible for the economic strategy in their government. They should do the same at EU level. Whether it is called co-ordination of policies or economic government, only the European Council is capable of delivering and sustaining a common European strategy for more growth and more jobs.”

Mr Van Rompuy states that “the crisis has revealed our weaknesses”, adding: “Budgetary plans, structural reform programmes and climate change reporting should be presented simultaneously to the Commission [his italics]. This will provide a comprehensive overview.”

An EU source explained: “It has become clear to everyone that this economic crisis can’t be solved by individual member states, such as Germany helping out Greece. What we need is the same kind of mechanism that we have now imposed on Greece in order to monitor and survey eurozone countries. So the idea is to put all European economies
under surveillance. You can expect some important decisions to be taken this week.”

In a highly unusual move, the president of the European Central Bank, Jean-Claude Trichet, has broken off from a meeting of central bank governors in Sydney to return to Europe. Pressure on the euro eased, on hopes that the presence of the EU’s senior economic policymaker would appease the markets.

Rumours that the French and German governments are ready to bail out Greece have been rife. The Greek Prime Minister George Papandreou will meet French President Nicolas Sarkozy tomorrow.

Mr Papandreou’s centre-left government has announced a four-year austerity plan to tame its vast budget deficit. However, doubts remain about its chances. In a tragic-comic touch, Greece’s tax collectors went on strike last week. Today all flights to and from Greece will be grounded by air-traffic controllers and strikes will also hit hospitals and schools.

Although not directly affected, as sterling is outside the eurozone, Gordon Brown will be worried that any weakness in the European economy could endanger the UK’s recovery.

The concern being felt in the highest circles of the EU about the “contagion” sweeping through Greece, Spain and Portugal is also clearly displayed in Mr Van Rompuy’s confidential note: “The crisis has revealed our weaknesses. Our structural growth rate is too low to create new jobs and to sustain our social systems.”

Referring to the fact that the EU has no way to resolve a budgetary crisis that affects other members states, Mr Van Rompuy goes on: “Recent developments in the euro area highlight the urgent need to strengthen our economic governance. In our intertwined economies, our reforms must be co-ordinated to maximise their effect.”

The European Stability and Growth Pact and the Maastricht Treaty were designed to prevent the sort of fiscal crisis that the eurozone is currently experiencing. Bailouts were ruled out as the treaty made it illegal for any nation to assume the debts of another.

The Maastricht rules – limiting member states to an annual budget deficit of 3 per cent a year and an overall national debt to a GDP ratio of 60 per cent – were swept away during the financial crisis. Even during the boom years, nations routinely disregarded them. In the future, Mr Van Rompuy states, “we will focus on the impact of national policies on the rest of the EU with special regard to macroeconomic imbalances and divergences of competitiveness”.

The financial crisis comes as the EU’s three presidents jockey for position. Mr Van Rompuy is permanent President of the European Council (the job once thought tailor-made for Tony Blair), while the Spanish premier, José Zapatero, is the President of the Council of the European Union and José Manuel Barroso is President of the European Commission. President Barack Obama recently snubbed a proposed spring EU-US summit out of frustration at having to deal with the confusing troika.

The summit will be held away from the usual redoubts of the Euro bureaucracy, in Brussels’ Solvay library. “Van Rompuy wanted to create a far more intimate atmosphere without an army of advisers,” a source said. “There are a lot of tensions between member states right now, which he is why he decided to get them to talk in an open, friendly setting, starting with aperitifs. The idea is to have a proper brainstorming session and hear everyone’s thoughts.”

By: Associated Newspapers Ltd

Iran is now a ‘nuclear state’, President Mahmoud Ahmadinejad announced this morning.

As Gordon Brown warned that the world’s patience is wearing thin, Ahmadinejad told scores of cheering Iranians that the Islamic Republic is capable of producing weapons-grade uranium.

He spoke as tens of thousands of people took to the streets in Tehran to mark the 31st anniversary of the Islamic revolution.

Despite fears of violence, opposition supporters found themselves largely overwhelmed by the clerical regime and pro-government demonstrators.

The massive security clampdown appeared to succeed in preventing protesters from converging into a cohesive demonstrations.

Large numbers of riot police, members of the Revolutionary Guard and Basij militiamen, some on motorcycles, deployed in back streets near key squares and major avenues in the capital to move against protesters.

He said it had produced its first batch of 20 per cent enriched uranium – and had the capability to enrich to far higher levels at its Natanz plant.

Enriching uranium produces fuel for a nuclear power plants but can also be used to create material for atomic weapons.

The international community has warned Iran against further enrichment activities, threatening new UN sanctions.

Today Gordon Brown again reiterated the threat of sanctions.

‘I believe the mood around the world is now increasingly one where, patience not being inexhaustible, people are turning to look at the specific sanctions we can plan on Iran,’ Mr Brown said.

‘This is a critical time for Iran’s relationship with the rest of the world.’

MrBrown said the international community did not want to impose sanctions but would do so if Iran did not cooperate more fully over its nuclear plans

The Iranian leader insisted the material was not intended to produce an atomic bomb, however.

‘We have the capability to enrich uranium more than 20 percent or 80 percent (the level needed to create an atomic bomb),’ he said in a speech broadcast live on state television.

‘But we don’t enrich (to this level) because we don’t need it…

‘When we say we do not manufacture the bomb, we mean it, and we do not believe in manufacturing a bomb,’ he told the crowd. ‘If we wanted to manufacture a bomb we would announce it.’

Thousands of supporters had been brought in on buses to hear Ahmadinejad speak as security forces threatened to crush any opposition protests.

Witnesses say security forces fired paint balls to disperse anti-government protesters in one of the first clashes of the day’s ceremonies.

The unrest began after protesters began to chant opposition slogans in Sadeqieh Square, which is about a half-mile (one kilometer) from a huge pro-government gathering where President Ahmadinejad delivered his speech.

Witnesses say there were no apparent injuries among the several hundred protesters.

Internet speeds around the capital dropped dramatically this morning as the government tried to foil demonstrations against the regime.

State television showed live footage of crowds carrying Iranian flags and pictures of Supreme Leader Ayatollah Ali Khamenei making their way to Azadi (freedom) Square in central Tehran, where the main gathering is being held.

Opposition members went on rooftops late Wednesday and shouted Allah-u-Akbar (‘God is greatest’) in protest – echoing similar cries after the disputed June election as well as anti-shah protests more than three decades ago.

‘There is a heavy presence of security forces everywhere. Police trucks are at every major intersection,’ said a witness in central Tehran. Police helicopters were flying over the city.

An opposition website, Iran Green Voice, reported large numbers of opposition supporters gathering in several cities, including Tehran and the northern city of Tabriz.

‘In some parts of Tehran, opposition supporters are chanting ‘Death to the Dictator” the website said.

Security forces are equipped with water cannon to disperse opposition protests, the opposition website Jaras reported.

Other opposition websites spoke of groups of protesters in the hundreds, compared to much larger crowds in past demonstrations

One protester told The Associated Press she had tried to join the demonstrations but soon left in disappointment.

‘There were 300 of us, maximum 500. Against 10,000 people,’ she told an AP reporter outside Iran. She said there were few clashes.

‘It means they won and we lost. They defeated us. They were able to gather so many people,’ she said. ‘But this doesn’t mean we have been defeated for good. It’s a defeat for now, today. We need time to regroup.’

Another protester insisted the opposition had come out in significant numbers, but ‘the problem was that we were not able to gather in one place because they (security forces) were very violent.’

‘Maybe people got scared,’ he said. ‘The idea wasn’t to lose or win today … But what is certain, today was not a good day.’

The opposition leaders have promised to join street rallies, including the Green movement founder and former presidential candidate Mir Hossein Mousavi.

Police chief Esmail Ahmadi-Moghaddam said on Wednesday the Revolutionary Guards and Basij Islamic militia were ready for any incident.

‘In case of any riots, public disturbance and disorder … police will detain and keep rioters in prison until April 9,’ an unnamed official told the semi-official Fars news agency on Thursday.

The Islamic state is facing its worst domestic crisis in three decades as opposition supporters have rallied round reformists who lost to Ahmadinejad in the election.

In recent months, the opposition has built its street protest strategy around days of important political or religious significance in attempts to embarrass authorities.

The tone of the rallies, however, has shifted from outrage over alleged fraud in President Ahmadinejad’s re-election to wider calls against the entire Islamic system, including Supreme Leader Ayatollah Ali Khamenei.

Neither side has shown much appetite for compromise in the eight months since the disputed June presidential vote, which the opposition says was rigged to secure Ahmadinejad’s re-election.

Iran faces growing Western calls for targeted sanctions against it after Ahmadinejad ordered production of higher-grade uranium, stirring fears that Tehran aims to make nuclear bombs, not just fuel for civilian use as it says is the case.

The authorities, who say the poll was fair, have struggled to suppress the protests, and opened trials in recent weeks of people charged in connection with bloody riots on December 27.

Opposition leaders have said the trials were an attempt to deter people from taking part in protests today.

Iranian authorities again tried to squeeze off text messaging and Web links in attempts to cripple protest organisers. The opposition has used internet and text messaging as its main communication channels.

Internet service was sharply slowed, mobile phone service widely cut and there were repeated disruptions in popular instant messaging services such as Google chat.

But several Iranians reached by The Associated Press said some messenger services, including Yahoo!, and mobile phone texting were still sporadically accessible. Many Internet users said they could not log into their Gmail account, Google’s e-mail service, since last week.

‘We have heard from users in Iran that they are having trouble accessing Gmail,’ said Google in a statement. ‘We can confirm a sharp drop in traffic and we have looked at our own networks and found that they are working properly.’

An Iranian opposition website claimed today that security forces attacked opposition leader Mehdi Karoubi when he attended a rally.

‘Karoubi was attacked by security forces in central Tehran… they shattered his car’s windows … Karoubi was not seriously injured,’ Jaras website reported. The same website said security forces also attacked former president Mohammad Khatami.

The Islamic Republic has survived many challenges, not least a 1980-88 war started by Iraq’s Saddam Hussein, whose forces were propped up by Gulf Arab oil money and Western weaponry.

But the national unity forged in that trauma has long given way to rifts within clerical and political elites that widened after the June election. Street protests have flared periodically ever since, sometimes around official rallies.

Attending February 11 events is a tradition for many in the country of 70 million, over half of whom have only ever known the Islamic Republic established by the revolution led by Ayatollah Ruhollah Khomeini.

‘If we all stay at home, our youngsters will be left alone on Bahman 22 (February 11). We should support them,’ said Laleh, a 67-year-old housewife. ‘I have nothing to lose.’

Iranian Nobel Peace laureate Shirin Ebadi said on Wednesday her country faced a catastrophe that would wreck peace in the whole Middle East if what she called government repression of the people were not halted.

Opposition leaders Mir Hossein Mousavi and Karoubi say the reform movement is alive despite pressure from the hardline rulers to disband. Karoubi predicted last month that Ahmadinejad would not be able to complete his four-year term.

‘Even if he stays in power until the end of his term, he will be the weakest president since the revolution,’ an Iranian analyst who did not want to be named said this week.

* Iran is now a ‘nuclear state’ says Ahmadinejad as thousands take to the streets Iran is now a ‘nuclear state’, President Mahmoud Ahmadinejad announced this morning.

* EU President’s secret bid for economic power The new President of the European Council, Herman Van Rompuy, is using the financial crisis sweeping the eurozone to launch an audacious grab for power over national budgets.

* Ahmadinejad warns Israel against any military move Iran’s President Mahmoud Ahmadinejad said Israel should be resisted and finished off if it launched military action in the region.

* A Greek crisis is coming to America It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies.

* Israel’s Netanyahu keeping mum about Obama’s virtual arms embargo Israel’s government has kept its silence during a year-long ban on weaopns sales imposed by the United States at the same time the administration has approved $10 billion in weapons sales to Arab states.

* Time Magazine Digging Up Trouble in Jerusalem The United States-based Time Magazine complained this week that the archaeological activities of the City of David Foundation, also known as “Ir David” or “Elad,” are making life difficult for President Barack Obama.

* EU deal ‘agreed’ on Greece debt woes EU leaders have reached a deal on helping Greece tackle its debt crisis.

* China to push aside Japan as No. 2 economy China is likely to soon overtake Japan to become the world’s second largest economy, a milestone that will only fuel growing fears about the economic might of the world’s largest country.

* Dramatic images of World Trade Centre collapse on 9/11 released for first time We have seen the Twin Towers collapse hundreds of times on TV. The steel and glass skyscrapers exploding like a bag of flour, the dust and smoke pluming out across Manhattan.

* Global bank tax near, says Brown Gordon Brown said on Wednesday the world’s leading economies were close to agreeing a global bank tax.