NYT > Home Page: No Votes Disguise Yes Sympathies for Some in G.O.P.

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No Votes Disguise Yes Sympathies for Some in G.O.P.
Jan 17th 2013, 14:57

WILLIAMSBURG, Va. — House Republicans have their Tea Party Caucus. They have their G.O.P. Doctors Caucus. And, joining the list of varied special interest caucuses, they recently picked up another influential but much more unofficial group — the Vote No/Hope Yes Caucus.

These are the small but significant number of Republican representatives who, on the recent legislation to head off the broad tax increases and spending cuts mandated by the so-called fiscal cliff, voted no while privately hoping — and at times even lobbying — in favor of the bill's passage, given the potential harmful economic consequences otherwise.

Representative Tom Cole of Oklahoma, part of the Republican whip team responsible for marshaling support for legislation, said the current makeup of House Republicans could be divided roughly into a third who voted in favor of the bill because they wanted it to pass, a third who voted against the bill because they wanted it to fail, and a third who voted against the bill but had their fingers crossed that it would pass and avert a fiscal and political calamity.

One lawmaker, Mr. Cole said, told him that while he did not want to vote in favor of the bill, he also did not want to amend it and send it back to the Senate where it might die and leave House Republicans blamed for tax increases. "So I said, 'What you're really telling me is that you want it to pass, but you don't want to vote for it,'" recalled Mr. Cole, who voted yes.

As House Republicans gather here in Williamsburg on Thursday for their annual retreat, the Vote No/Hope Yes Caucus is likely to come in for serious attention as party leaders and members of the rank and file try to map out an approach to coming confrontations with President Obama and Congressional Democrats that are certain to leave Republicans with uneasy choices.

The Vote No/Hope Yes group is perhaps the purest embodiment of the uneasy relationship between politics and pragmatism in the nation's capital and a group whose very existence must be understood and dealt with as the Republican Party grapples with its future in the wake of the bruising 2012 elections.

Ron Bonjean, a Republican strategist and once the top spokesman for the former House speaker J. Dennis Hastert, a Republican, described the phenomenon thusly: "These are people who are political realists, they're political pragmatists who want to see progress made in Washington, but are politically constrained from making compromises because they will be challenged in the primary."

The New Year's Day tax vote was a case study in gaming out a position on a difficult bill that many Republicans knew had to pass but was also one they preferred not to have their fingerprints on.

The Republican leadership itself seemed to reflect the ambivalence of their membership; Speaker John A. Boehner voted in favor of the legislation, while Representative Eric Cantor of Virginia, the majority leader, voted no. Even Representative Kevin McCarthy of California, the No. 3 Republican charged with securing votes for bills, voted against the deal. (Ultimately, 85 Republicans joined with 172 Democrats to pass it.)

"I think it's important that leadership provide an example, so either you're for it and you want your members to vote for it, and when you have confusion at the top, that leads to confusion in the rest of the ranks," said John Feehery, a Republican lobbyist and also a former top spokesman for Mr. Hastert. "They have to be much more coordinated, and they have to do a much better job explaining to the rank and file what's going on here."

Explaining his own vote to his local newspaper at the time, Representative Paul D. Ryan of Wisconsin, the Budget Committee chairman and a former vice-presidential candidate, seemed to acknowledge that some members of his party were not voting for a bill that they privately wanted to to pass, saying, "If you think a bill should pass, you ought to vote for it."

The phenomena occurred again this week as the vast majority of House Republicans, many citing spending concerns, abandoned a measure to provide relief for states hit by Hurricane Sandy, even though Republicans clearly wanted the measure to ultimately pass.

At the two-day retreat, aides said, Republican leaders are expected to emphasize that a united conference going forward will offer House Republicans the strongest negotiating stance on crucial coming issues like the debt ceiling limit and spending cuts. Conservative rank-and-file members, meanwhile, plan to express their frustration at feeling largely cut out of the deal-making process, and to request more chances to offer input.

"I think there will be a lot of looking back on the fiscal cliff vote," Mr. Cole said. "I think there will be some discussion on the divided leadership, saying, 'You guys need to sort this out, you need to be willing to make a decision and lead.'"

Still, he added: "I can make a pretty good case that our problem is less one of leadership than of followership. I'd be happy to just have some people who would follow decently."

Part of the problem House Republicans are struggling with is philosophical: What does it mean to hold the majority in the House, but still be the minority in a town currently under Democratic control? What is ideal, what is achievable, and where does that fine line of compromise lie?

And what are the limits of their own conference?

"Look, the reality is we control one-half of one-third of the federal government in a Democratic-run town," said Michael Steel, a spokesman for Mr. Boehner.

Of course, legislators reluctant to take potentially unpopular votes are nothing new. A classic example occurs with Congressional pay raises, where, said David Dreier, a newly retired California Republican, the adage is, "Vote no and take the dough."

In late December, Republicans encountered a similar challenge when Mr. Boehner put forth his "Plan B," an alternative measure to avert the tax increases and spending cuts that ultimately failed because of lack of support in his own party. Republican aides and representatives said that while the House Republicans privately had nearly 230 members in favor of the plan, they were not able to muster commitments for the actual 218 votes necessary for a majority.

On both Plan B and the fiscal legislation, Republicans said that many of the representatives ultimately recognized that the compromises were probably as good a deal as they could expect, and ones that were necessary to avoid a financial meltdown. Yet opposing the bills proved a politically safer and more ideologically pure move.

"Some members are worried about being primaried from the right, and some members don't want to be hounded by their constituents," Mr. Feehery said. "It's always easier to vote no. No one will yell at you if you vote no. They'll only yell at you in the grocery store if you vote yes."

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NYT > Home Page: DealBook: Rio Tinto to Book $14 Billion Write-Down; C.E.O. Replaced

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DealBook: Rio Tinto to Book $14 Billion Write-Down; C.E.O. Replaced
Jan 17th 2013, 11:54

5:42 a.m. | Updated

LONDON – Rio Tinto, the Anglo-Australian mining giant, said on Thursday that its chief executive had stepped down because of a $14 billion write-down on the value of assets that he helped acquire.

Tom Albanese is leaving Rio Tinto after joining two decades ago and spending five years in the top job. He will be succeeded by Sam Walsh, head of the company's iron ore unit. Doug Ritchie, who led the purchase of coal assets in Mozambique whose value has dropped, also stepped down.

Jan du Plessis, Rio Tinto's chairman, said the scale of the write-down related to the assets in Mozambique was "unacceptable."

"We are also deeply disappointed to have to take a further substantial write-down in our aluminum businesses, albeit in an industry that continues to experience significant adverse changes globally," he said in a statement on Thursday.

The write-downs are linked to two of Rio Tinto's biggest acquisitions in recent years: Alcan and the coal producer Riversdale Mining. The company blamed falling aluminum prices for $10 billion to $11 billion of the noncash charge. Most of Rio Tinto's aluminum assets stem from its $38 billion acquisition of Alcan in 2007, which was led by Mr. Albanese.

The acquisition has weighed heavily on Rio Tinto's performance, and some investors had criticized the firm for paying too much in a buoyant market just to avoid becoming a takeover target. Rio Tinto already wrote down $8.9 billion on the value of these assets a year ago.

Another $3 billion of the write-down has been attributed to lowered estimates of the value of its coal business in Mozambique, after the company failed to secure crucial government approvals to ship coal it mined in the African country. Rio Tinto bought Riversdale Mining for around $4 billion in 2011 after having to increase its offer price because of a standoff with the company's shareholders.

Rio Tinto, the world's second-largest mining company after BHP Billiton, cited strong currencies and high energy and raw material costs as other factors leading to the write-down.

"The level of the write-down is very disappointing and it does come as a surprise," said Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers. "There have been some rash takeovers in the mining industry and I hope this continues to prove a lesson."

Rio Tinto's shares fell 1.9 percent in morning trading in London on Thursday. The company's shares have dropped more than 5 percent in the last 12 months compared with a 0.5 percent increase in the stock price of BHP Billiton in the same period.

Mr. Albanese said in the company's statement that he fully recognized "that accountability for all aspects of the business rests with the C.E.O."

Mr. Albanese will stay on until July 16 to help with the transition. He will not receive a bonus for this year and any outstanding remuneration in form of deferred stock bonuses would lapse, Rio Tinto said.

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NYT > Home Page: Pakistani Official Refuses Order to Arrest Prime Minister

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Pakistani Official Refuses Order to Arrest Prime Minister
Jan 17th 2013, 10:40

ISLAMABAD, Pakistan –  The country's top anti-corruption official told the Supreme Court on Thursday that he cannot comply with court orders to arrest Prime Minister Raja Pervez Ashraf, raising the prospect of fresh confrontation between the senior judiciary and the country's embattled leadership.

On Tuesday the chief justice, Iftikhar Muhammad Chaudhry, ordered the arrest of Mr. Ashraf and 15 other current and former officials as part of a year-old corruption prosecution relating to Mr. Ashraf's tenure as minister for water and power between 2008 and 2011.

The order coincided with a large protest march in Islamabad, led by a charismatic cleric, and government officials accused the judge of taking advantage of the chaotic situation to press his long-standing rivalry with the government.

But on Thursday Fasih Bokhari, the head of the National Accountability Bureau, the government's main anti-graft body, said that the investigation into Mr. Ashraf's case had been "inaccurate" and "hurried," and told the court that he needed more time to complete his work.

Chief Justice Chaudhry, who has pursued cases against both the political government and senior military generals with zeal, responded with ire. The three-judge bench he presides over chided Mr. Bokhari and his prosecutors for being overly timid, and accused them of behaving like defense counsel for the government. 

Justice Chaudhry then ordered K.K Agha, the prosecutor general of the anti-corruption body, to immediately present investigation documents before the court. Mr. Bokhari's team demurred, insisting the court should pass a written order if it wanted the the investigation documents brought before the court.

"An order is an order," one of the three judges replied tersely.

The timing of the arrest order is striking. General elections are expected to be announced in the comings weeks, perhaps earlier, and set for sometime in early May, according to senior government officials.

President Asif Ali Zardari, who is the co-chairperson of the ruling party, is unlikely to enter into a fresh round of finding and nominating a new prime minister if Mr. Ashraf is dismissed by the court.

Mr. Zardari's rivalry with Chief Justice Chaudhry reached its climax last June when the supreme court effectively dismissed Yousaf Raza Gilani as prime minister, convicting him of contempt of court in a different corruption case related to Mr. Zardari's finances.

Meanwhile, the preacher who has camped outside the parliament in Islamabad Muhammad Tahir-ul Qadri, has drawn thousands of his followers, and he gave Mr. Zardari until the afternoon to hold a dialogue with him. But he stopped short of announcing his next course of action if his demands were not met.

"Enough is enough," Mr. Qadri said as thousands of his followers stood, huddled together, under a pouring rain. 

"You do not have any more time," thundered Mr. Qadri, referring to the government. "We have to finish it by the end of this day today."

Mr. Ashraf, the prime minister, said he would form a four-member delegation of government officials to hold talks with Mr. Qadri. 

The interior minister, Rehman Malik, suggested Wednesday evening that the security forces could try to remove the protesters on Thursday. But the order was publicly countermanded shortly afterwards by Mr. Zardari, who is staying at his Karachi residence, highlighting the political sensitivity of the situation.

In any event, the weather was helping the government's cause by Thursday. Heavy rain swept the capital on Thursday morning, soaking the Qadri supporters, who are estimated to number at least 20,000 people. The miserable conditions failed to dampen their spirits – television pictures showed the protestors, many hailing from towns and villages in Punjab province, dancing and chanting in the rain.

But concerns are growing over an outbreak of chest and throat infections, particularly among young children who have accompanied their parents to the protests, and the deteriorating conditions could increase pressure on Mr. Qadri to end his action.

The 61-year-old preacher, who has vowed to remain peaceful despite his aggressive and increasingly threatening rhetoric, is demanding a complete overhaul of the electoral system.

His demand of an immediate dissolution of the country's election commission has been rejected by a majority of the ruling alliance and opposition political parties, leaving Mr. Qadri in a political no man's land.

 

Declan Walsh contributed reporting.

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NYT > Home Page: Bombs in Iraq Kill 22, Mostly Pilgrims

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Bombs in Iraq Kill 22, Mostly Pilgrims
Jan 17th 2013, 09:46

BAGHDAD (AP) — Insurgents unleashed a string of bomb attacks mainly targeting Shiite Muslim pilgrims across Iraq on Thursday, killing at least 22 people and extending a wave of deadly bloodshed into a second day.

The eruption of violence follows nearly two weeks of relative calm, and threatens to enflame rising tensions among Iraq's ethnic and sectarian groups.

The worst attack took place near Dujail, 80 kilometers (50 miles) north of Baghdad, where a pair of car bombs exploded near pilgrims who were traveling on foot to a shrine in the town of Samarra.

The head of the Salahuddin provincial health directorate, Raed Ibrahim, said 11 people were killed and more than 60 were wounded in that attack.

"We heard thunderous explosions, and everybody went outside and saw burning cars and several bodies on the ground. Market stalls on both sides of the road were on fire," said Naseer Hadi, who works in the Dujail post office.

The pilgrims were heading to Samarra to commemorate the death of two prominent Shiite Imams who are buried in the al-Askari shrine there.

A 2006 bombing at the gold-domed shrine that was blamed on al-Qaida in Iraq set off years of retaliatory bloodshed between Sunni and Shiite extremists that left thousands of Iraqis dead and pushed the country to the brink of civil war.

The attacks in Dujail came hours after a car bomb struck a bus carrying foreign pilgrims near the southern Shiite holy city of Karbala. Four people were killed and 12 were wounded in that attack, according to police and hospital officials.

The explosion tore through the undercarriage and blew out most of the windows of the white and blue tour bus that got hit. Nusaif al-Kitabi, deputy chairman of the Karbala provincial council, said the bus was carrying pilgrims from Afghanistan.

In the town of Qassim, 125 kilometers (78 miles) south of Baghdad, a parked car bomb exploded near a bus stop, killing five people and wounding 20. The casualties included Shiite pilgrims who were heading to Karbala, said police and hospital officials.

Shiite pilgrims are a favorite target for Sunni insurgents who seek to undermine the country's Shiite-led government and provoke a return to sectarian fighting.

In northeastern Baghdad, a roadside bomb apparently meant to hit an army patrol missed its target and struck a civilian car, killing 2 passengers and wounding two others, said police and hospital officials. Like most other officials, they spoke on condition of anonymity because they were not authorized to release the information to reporters.

Thursday's bloodshed comes a day after a wave of attacks killed at least 33 people across Iraq in the country's deadliest day in more than a month.

___

Associated Press writers Adam Schreck and Qassim Abdul-Zahra contributed to this report.

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NYT > Home Page: Regulators Around the Globe Ground Boeing 787s

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Regulators Around the Globe Ground Boeing 787s
Jan 17th 2013, 09:05

Kyodo News, via Reuters

The 787 that made an emergency landing in Japan on Wednesday. All 137 passengers and crew members were evacuated safely.

Regulators around the globe ordered the grounding of Boeing 787s on Thursday until they could determine what caused a new type of battery to catch fire on two planes in recent days.

Graphic

Passengers evacuated a Boeing 787 operated by All Nippon Airways on Wednesday. It made an emergency landing in Japan after smoke arose in the cockpit.

The Boeing jet's auxiliary power unit battery.

From left, Ali Bahrami and Randy Babbitt, representing the F.A.A.; Jim Albaugh, then Boeing's executive vice president; and Scott Fancher, then head of the 787 program, at an event in August.

The directives in Europe, India and Japan followed an order Wednesday by the U.S. Federal Aviation Administration grounding the planes operated by U.S. carriers.

The decisions are a result of incidents involving a plane that was parked in Boston and one in Japan that had to make an emergency landing Wednesday morning after an alarm warning of smoke in the cockpit.

In Japan on Thursday, the transportation ministry issued a formal order to ground all 787s indefinitely, until concerns over the aircraft's battery systems are resolved. All Nippon Airways and Japan Airlines had already voluntarily grounded their 787s on Wednesday.

European safety regulators also said they would ground Dreamliners, affecting LOT of Poland, the only carrier that operates the jets in that region. In India, the aviation regulator grounded all six of the 787s operated by the state-owned carrier Air India.

LAN Airlines of Chile said it was following suit, acting in coordination with the Chilean Aeronautical Authority.

The F.A.A.'s emergency directive, issued Wednesday night, initially applies to United Airlines, the only American carrier using the new plane so far, with six 787s.

Boeing, based in Chicago, has a lot riding on the 787, and its stock dropped nearly 3.4 percent Wednesday to $74.34. The company has outlined ambitious plans to double its production rate to 10 planes a month by the end of 2013. It is also starting to build a stretch version and considering an even larger one after that.

"We are confident the 787 is safe and we stand behind its overall integrity," Jim McNerney, Boeing's chief executive, said in a statement.

The grounding — an unusual action for a new plane — focuses on one of the more risky design choices made by Boeing, namely to make extensive use of lithium-ion batteries aboard its airplanes for the first time.

Until now, much of the attention on the 787 was focused on its lighter composite materials and more efficient engines, meant to usher in a new era of more fuel-efficient travel, particularly over long distances. The batteries are part of an electrical system that replaces many mechanical and hydraulic ones that are common in previous jets.

The 787's problems could jeopardize one of its major features, its ability to fly long distances at a lower cost. The plane is certified to fly 180 minutes from an airport. The U.S. government is unlikely to extend that to 330 minutes, as Boeing has promised, until all problems with the plane have been resolved.

For Boeing, "it's crucial to get it right," said Richard L. Aboulafia, an aviation analyst at Teal Group in Fairfax, Virginia. "They've got a brief and closing window in which they can convince the public and their flying customers that this is not a problem child."

The 787 uses two identical lithium-ion batteries, each about one and a half to two times the size of a typical car battery. One battery, in the rear electrical equipment bay near the wings, is used to start the auxiliary power unit, a small engine in the tail that is used most often to provide power for the plane while it is on the ground. The other battery, called the main battery, starts the pilot's computer displays and serves as a backup for flight systems.

The maker of the 787's batteries, GS Yuasa of Japan, has declined to comment on the problems.

Boeing has defended the novel use of the batteries and said it had put in place a series of systems meant to prevent overcharging and overheating.

In a conference call last week with reporters, Boeing's chief engineer for the 787, Mike Sinnett, said that the company had long been aware of possible problems with lithium-ion batteries but that it had built in numerous redundant features to keep any problems with the batteries from threatening the plane in flight. He said that the batteries had not had any problems in 1.3 million hours of flight and that Boeing was trying to understand what had caused the problems.

Mr. Sinnett said that if the lithium-ion batteries started a fire, it would be nearly impossible to put out because the batteries produce oxygen when burning. Mr. Sinnett said that the plane was designed to survive such an event in flight, when the cabin's air-pressure system protects passengers and allows the plane to vent the smoke outside. The plane is also designed, he said, to contain a fire to a small area.

"Fire suppressants just won't work on a situation like that," he said in the conference call. "So something like that is very difficult to put out."

Heat from the fire on the plane parked in Boston last week was so extreme that it melted the bolts holding the battery to the equipment rack. Firefighters had to use a hydraulic tool to cut it loose.

The solutions to the battery problem could be simple, analysts said, like encasing the battery in a stronger shell or monitoring the batteries more closely. But if Boeing had to switch to more conventional nickel-cadmium or lead-acid batteries, they would have to be larger, adding more weight to the plane and cutting into the plane's fuel-savings potential.

The emergency landing Wednesday was the latest in a string of incidents for the 787, which also included an electrical failure, fuel leaks and other smaller mishaps. But the latest event raised concerns that the 787's problems were potentially more serious than thought and led to doubts about the plane's safety and reliability.

Lithium-ion batteries provide power more quickly than conventional batteries and can be recharged quickly. They are increasingly used in cellphones, computers and electric cars but also have known risks of fires and explosions, particularly if they overheat or overcharge.

While the Federal Aviation Agency has recognized these hazards, it still decided in 2007 to allow Boeing to use them in the 787 as long as the company took a series of protective measures. At the time, the agency noted that "lithium ion batteries are significantly more susceptible to internal failures that can lead to self-sustaining increases in temperature and pressure" than conventional batteries.

As part of the emergency directive Wednesday, the U.S. government said it would "validate that the 787 batteries and the battery system on the aircraft are in compliance with the special condition the agency issued as part of the aircraft's certification."

Eight airlines now fly the 787, which entered service in November 2011. All Nippon Airways and Japan Airlines in Japan own 24 of them in total. The other operators are Air India, Ethiopian Airlines, LAN Airlines of Chile, LOT of Poland and Qatar Airways. Orders for about 800 additional 787s are in the pipeline.

The airplane's six power generators produce enough electricity to power 500 houses. By contrast, the Boeing 777, a larger aircraft, can generate only a fifth of the 787's electric power.

Replacing batteries on the 787 with different ones, like metal hydride batteries, is theoretically possible but would be costly, said Hans J. Weber, the president of Tecop International, an aviation consulting firm.

He estimated that different batteries could double the weight of the current systems and would be twice the size.

"It's not trivial, but it could be done," Mr. Weber said.

Boeing expects to sell 5,000 787s in the next 20 years. It is counting on the Dreamliner in the global sales battle with Airbus, its European rival, which plans to introduce its own carbon-composite plane, the A350, in the second half of 2014. Boeing has said that it outsourced too much of the work on the 787 to suppliers who were willing, collectively, to cover billions of dollars of the development costs, and that many parts needed reworking.

Boeing has said it expects profit percentages averaging in the low single digits on the first 1,100 planes, which could include deliveries into 2021. But David E. Strauss, an analyst at UBS, cautioned last month that Boeing's production costs might remain too high for it to make a profit on any of the plane sales before 2021.

While problems are common with the introduction of a new model — including the Airbus A380, the Boeing 777 and the Boeing 747 — analysts say the issue could become a growing embarrassment for Boeing if travelers or airlines began to lose confidence in the Dreamliner.

Hiroko Tabuchi contributed reporting from Tokyo, Sruthi Gottipati from New Delhi, Bettina Wassener from Hong Kong and Nicola Clark from Paris.

A version of this article appeared in print on January 18, 2013, in The International Herald Tribune.
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NYT > Home Page: Militants Seize Americans and Other Hostages in Algeria

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Militants Seize Americans and Other Hostages in Algeria
Jan 17th 2013, 08:55

Kjetil Alsvik/Statoil, via Reuters

An undated photo of the In Amenas gas field in Algeria, where Islamist militants took at least 20 foreign hostages on Wednesday.

BAMAKO, Mali — The French military assault on Islamist extremists in Mali escalated into a potentially much broader North African conflict on Wednesday when, in retribution, armed attackers in unmarked trucks seized an internationally managed natural gas field in neighboring Algeria and took at least 20 foreign hostages, including Americans.

Map

Algerian officials said at least two people, including a Briton, were killed in the assault, which began with an ambush on a bus trying to ferry gas-field workers to an airport.

The British Foreign Office confirmed that a British citizen had been killed in the attack but a spokeswoman declined to give details or identify the victim. Foreign Secretary William Hague said the hostages included "a number of British nationals. This is therefore an extremely dangerous situation."

Hundreds of Algerian security forces surrounded the gas-field compound, creating a tense standoff, and the country's interior minister said there would be no negotiations.

Algeria's official news agency said at least 20 fighters had carried out the attack and mass abduction. There were unconfirmed reports late on Wednesday that the security forces had tried to storm the compound and had retreated under gunfire from the hostage takers.

Many details of the assault on the gas field in a barren desert site near Libya's border remained murky, including the precise number of hostages, which could be as high as 41, according to claims by the attackers quoted by regional news agencies. American, French, British, Japanese and Norwegian citizens who worked at the field were known to be among them, officials said.

Defense Secretary Leon E. Panetta called the gas-field attack a terrorist act and said the United States was weighing a response. His statement suggested that the Obama administration could be drawn into a military entanglement in North Africa that it had been seeking to keep at arm's length — even as it has conceded that the region has become a new haven for extremists who threaten Western security and vital interests.

"I want to assure the American people that the United States will take all necessary and proper steps that are required to deal with this situation," Mr. Panetta said during a visit to Italy.

The gas-field attack, which seemed to take foreign governments and the British and Norwegian companies that help run the facility completely by surprise, appeared to make good on a pledge by the Islamist militants who seized northern Mali last year to sharply expand their struggle against the West in response to France's military intervention that began last week.

The hostage taking potentially broadened the conflict beyond Mali's borders and raised the possibility of drawing an increasing number of foreign countries into direct involvement, particularly if expatriates working in the vast energy extraction industries of North Africa become targets. It also doubled, at least, the number of non-African hostages that Islamist militants in northern and western Africa have been using as bargaining chips to finance themselves in recent years through ransoms that have totaled millions of dollars.

But there was no indication that the gas-field attackers wanted money, and no other demands or ultimatums were issued. In a statement sent to ANI, a Mauritanian news agency, they demanded the "immediate halt of the aggression against our own in Mali."

The statement, made by a group called Al Mulathameen, which has links to Al Qaeda in the Islamic Maghreb, the North African affiliate of Al Qaeda, claimed it was holding more than 40 "crusaders" — apparently a reference to non-Muslims — "including seven Americans, two French, two British as well as other citizens of various European nationalities."

Algeria's interior minister, Daho Ould Kablia, said, according to Reuters, that the raid was led by Mokhtar Belmokhtar, who fought Soviet forces in Afghanistan in the 1980s and recently set up his own group in the Sahara after falling out with other local Qaeda leaders.

Mr. Belmokhtar is known to French intelligence officials as "the Uncatchable" and to some locals as "Mister Marlboro" for his illicit cigarette-running business, the news agency said. His ties to Islamist extremists who seized towns across northern Mali last year are unclear.

The gas-field attack coincided with an escalation of the fight inside Mali, according to Western and Malian officials, as French ground troops, joined by soldiers of the Malian Army, engaged in combat with Islamist fighters. The officials said the French-Malian units had begun to beat back the Islamist militant advance southward from northern Mali, a move that had provoked the intervention ordered by President François Hollande of France.

The attackers seemed particularly incensed that Algeria's government had permitted the French to use Algerian airspace to fly warplanes and military equipment into Mali, according to their statement, which may explain why they chose Algeria for retaliation. Some Algerian military experts said the Algerian public also was unhappy about the government's decision.

"The setting in motion of a military machine in north Mali was going to have definite repercussions in Algeria," said Mohamed Chafik Mesbah, a former Algerian Army officer and political scientist, adding, . "There are going to be much worse consequences. There will be more attacks."

A senior Algerian official said the militants, who claimed to have come from Mali, had used three unmarked trucks to breach the gas-field compound, outside the town of In Amenas. An oil company official who had knowledge of the attack said the militants had shut down production at the site, an indication of carefully planning. But how and why they chose In Amenas, which is more than 700 miles from the Malian border and is much closer to Libya, were among the unknowns.

The facility is the fourth-largest gas development in Algeria, a major oil producer and OPEC member. The In Amenas gas compression plant is operated by BP of Britain, the Norwegian company Statoil and the Algerian national oil company Sonatrach.

Bard Glad Pedersen, a Statoil spokesman, said that of 17 Statoil employees who had been working in the field, four escaped to a nearby Algerian military camp, but he would not say how. The Sahara Media Agency of Mauritania, quoting what it described as a spokesman for the militants, said that they were holding five hostages in a production facility on the site and 36 others in a housing area, and that there were as many as 400 Algerian soldiers surrounding the operation. But that information could not be confirmed.

Islamist groups and bandits have long operated in the deserts of western and northern Africa, and a collection of Islamists have occupied the vast expanse of northern Mali since a government crisis in that country last March. Those groups, including Al Qaeda in the Islamic Maghreb, had pledged to strike against France's interests on the continent and abroad, as well as those of nations backing the French operations. In France, security has been reinforced at airports, train stations and other public spaces.

The militant groups are financed in large part through ransoms paid for the freeing of Western hostages, and regular kidnappings have occurred in the West African desert in recent years. At least seven French citizens are presently being held there, officials say.

Oil and gas are central to the Algerian economy, accounting for more than a third of the country's gross domestic product, over 95 percent of its export earnings and 60 percent of government financial receipts. Algeria is an important gas supplier to France, Spain, Turkey, Italy and Britain.

Algeria has also historically been known as a relatively secure place for foreign companies to work and invest. Sonatrach and the security forces had put tight security around oil and gas facilities during the struggle with Islamic militants in the 1990s, when energy infrastructure was never a major insurgent target.

Energy experts expressed concern that the Algerian raid could signal a new strategy by Islamic militants to attack the West by focusing on Western-operated oil and gas facilities in the region.

Helima Croft, a Barclays Capital senior geopolitical strategist,said if groups like Al Qaeda in the Islamic Maghreb "decide as a change in tactic they go after Western energy interests, then you have to look at a threat in all these countries, including Libya, Nigeria and Morocco."

She added: "This type of attack had to have advanced planning. It's not an easy target of opportunity."

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NYT > Home Page: DealBook: JPMorgan's Board Uses a Pay Cut as a Message

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DealBook: JPMorgan's Board Uses a Pay Cut as a Message
Jan 17th 2013, 04:07

Shortly after the markets closed on Tuesday afternoon, an emissary from JPMorgan Chase's board of directors walked two flights down to the 48th-floor corner office of the bank's chief executive, Jamie Dimon, to deliver a stark message. The board had voted to slash Mr. Dimon's annual compensation for 2012 by half.

At first blush, the move appeared to be a stinging rebuke of Mr. Dimon for his failures of leadership that contributed to the bank's multibillion-dollar trading loss last year.

But the pay cut was actually a message from the board to regulators and worried investors that it was a strong watchdog over the nation's largest bank, according to several people with knowledge of the matter.

After facing criticism for its lax oversight, the board wanted to assert its position as a check on top management, according to the people, who declined to be named because the discussions were not public.

Mr. Dimon, who was the highest paid chief executive at a large bank in 2011, was unfazed when he heard the news. On Wednesday, Mr. Dimon said the board "had a tough job" in assessing how to reduce his total compensation for the year. He called the trading episode an "embarrassing mistake" and said, "I respect their decision."

The decision came after back-to-back board meetings earlier this week where the head of the board's compensation committee, Lee R. Raymond, the former chief executive of Exxon Mobil who is known for his no-nonsense style, made a compelling pitch to his fellow directors. The group, Mr. Raymond argued, needed to take swift, decisive action.

While a few members were initially skittish about the depths of the proposed cuts, the board voted unanimously to reduce Mr. Dimon's pay to $11.5 million from $23.1 million a year earlier, according to the people. The directors also voted to release the results of internal investigations into the trading losses, which largely fault other top executives for the problems.

The extent of the cut took some JPMorgan executives by surprise when news of the compensation was disclosed on Wednesday along with the bank's earnings, which surged to an annual record of $21.3 billion.

"Mr. Dimon bears ultimate responsibility for the failures that led to losses," the board said in a statement. It added that upon learning the extent of the losses, he "responded forcefully."

Still, the trading losses, which have swelled to more than $6 billion, have cast a long shadow over the board and management of the bank. Many of JPMorgan's hallmarks that Mr. Dimon has trumpeted, from its deft management of risk to a deep bench of executive talent, have been partially undercut by the trading fiasco and ensuing upheaval.

Despite the board's move on pay, some federal regulators are skeptical that the directors have prowess to adequately police risk, according to several current and former regulators with knowledge of the matter. Mr. Dimon, 56, who successfully steered the bank through the turbulence of the 2008 financial crisis relatively unscathed, still maintains a tight grip on the bank.

Some federal regulators worry that the board, which largely exonerated themselves in their internal investigation of the losses, cannot sufficiently push back against the hard-charging Mr. Dimon. Others, the regulators said, are concerned that the directors lack the financial acumen to rein in risky activities.

At the time of the losses, the board's risk committee had three members, a smaller group than many of its major Wall Street rivals. Also troubling, the regulators said, the three included executives with little banking experience: the president of the American Museum of Natural History, Ellen V. Futter, and David M. Cote, the chief executive of the manufacturer Honeywell. Since the losses were disclosed, Timothy P. Flynn, formerly the chairman of the auditing firm KPMG, joined the risk committee.

Joseph Evangelisti, a JPMorgan spokesman, said, "This is the same board that brought us through the worst financial crisis in our history with flying colors."

Since revealing the trading losses in May from a soured bet on complex credit derivatives, Mr. Dimon has exerted his powerful influence over the shape and direction of the bank. He has reshuffled the upper echelons of its management, claiming the jobs of some of his most trusted lieutenants. Two notable casualties are Douglas L. Braunstein, who ceded his role as chief financial officer in November, and Barry L. Zubrow, a former chief risk officer, who resigned as head of regulatory affairs late last year. Mr. Braunstein is a vice chairman reporting to Mr. Dimon.

Adding to the turmoil at the top of the bank, Ina R. Drew resigned as head of the chief investment office shortly after the trading losses were announced. Her precipitous fall was followed this year by the departure of James E. Staley, once considered a potential heir to Mr. Dimon.

To replace them, Mr. Dimon has elevated a group of younger executives, most of whom are in their 40s. Some bank analysts and executives at JPMorgan worry that the group does not yet have the institutional knowledge or experience of their more seasoned predecessors, according to several people with knowledge of the matter.

At a conference in San Francisco earlier this month, Mr. Dimon called the current group of executives "the strongest leadership team we have ever had in place." He mixed his praise, however, with a sharp criticism of others at the bank in the aftermath of the trading losses. "Instead of helping, they were running around with their head chopped off," he said. Some "acted like children" and wondered "What does this mean for me personally? How's my reputation?"

At the same time, Mr. Dimon has emerged relatively unscathed. While critical of Mr. Dimon, an internal report, led by Michael J. Cavanagh, a head of the corporate and investment bank, leveled its most scathing attacks on the executives who directly oversaw the London traders who made increasingly outsize wagers in the bank's chief investment office. "Responsibility for the flaws that allowed the losses to occur lies primarily with C.I.O. management," the report, which was released on Wednesday, said. Also ensnared are Mr. Zubrow and Mr. Braunstein.

The cuts target Mr. Dimon's bonus compensation. While his salary remained the same from a year earlier at $1.5 million, his bonus was whittled down to $10 million, paid out in restricted stock.

Still, Mr. Dimon has accumulated much wealth in his years at the bank. He owns bank shares valued at $263 million.

Ben Protess contributed reporting.

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