After World Cup, Germany once again center-stage in EU economy

A photograph taken using long exposure shows a goalpost which has been illuminated with torches at a leisure facility in front of the European Central Bank (ECB) headquarters in Frankfurt June 1, 2014. REUTERS/Ralph Orlowski

A photograph taken using long exposure shows a goalpost which has been illuminated with torches at a leisure facility in front of the European Central Bank (ECB) headquarters in Frankfurt June 1, 2014.

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A week on from its World Cup soccer victory, Germany may return to center stage, though this time not with fan celebrations but concerns over the health of Europe’s economic motor.

Investors saw dark clouds building on Friday after a Malaysian airlines jet was shot down at the Ukraine-Russia border and Israel launched a ground offensive in Gaza. That depressed shares and other risk assets, but the events are yet to disturb economic forecasts.

"We’ve seen a delayed impact of China and the Ukraine crisis," said ING economist Carsten Brzeski. "This is an explosive cocktail, but right now with limited impact on growth. The Ukraine/Russia issue was already there."

In a week relatively light on U.S. indicators, economists are looking for further signs that Europe’s recovery and even German growth may be stalling, putting more pressure on the European Central Bank to act.

Across the Channel, minutes from the Bank of England may be the last to show unanimous backing for a stable bank rate of 0.5 percent. The case for tightening may then be reinforced by second quarter GDP estimates likely to show solid growth.

For Germany, the views of purchasing managers (PMIs) on Thursday and of company chiefs surveyed for Friday’s influential Ifo report should show whether a slowdown of Europe’s largest economy detected in the second quarter has spread to the third.

Weakness in German industrial output and both domestic and foreign orders have pointed to a poor April-June period after 0.8 percent expansion in the first three months of the year, the fastest rate in three years.

Last week’s ZEW index of analyst and investor morale for July, which dropped this month to its lowest level since December 2012, suggested that the third quarter had also started shakily.

Forecasts for German manufacturing and services PMIs are broadly stable this month from last, with a third consecutive decline expected for Ifo’s business sentiment index, albeit only a slight dip following a sharper than expected fall in June.

"Latest data have been on the soft side and it has really raised people’s attention," said Reinhard Cluse, chief European economist at UBS. "But we believe the German economy is still very solid and healthy and we believe this is a breather, not the first signs of a clear deceleration."


The Bank of England publishes minutes of its July meeting on Wednesday which will be scrutinized for any signs of growing unease among policymakers at the prospect of keeping interest rates at a record low while Britain’s economy recovers quickly.

The bank last month expressed surprise at some financial market prices it said implied a relatively low probability of a rate increase this year.

Many economists expect some members of the Monetary Policy Committee to break ranks and vote for a rate hike, especially if a jump in inflation in June proves not to have been a blip.

British inflation surged to a five-month high of 1.9 percent in June and house prices rose at their fastest pace in a year, prompting investors to increase bets on a rate rise before the end of 2014. The consensus is for a first hike in November.

Gross domestic product data due on Friday is expected to show that Britain’s economy finally regained its pre-crisis size in the second quarter of this year, much later than the United States and other big European economies.

A Reuters poll of 25 economists forecasts a repeat of the 0.8 percent quarterly expansion of the first three months of 2014, though some economists have said growth may fail to match that level after some weaker than expected data in recent weeks.


Across the Atlantic, consumer price inflation is seen pulling back to 0.3 percent month-on-month in June from 0.4 percent in May.

May’s price rises, the largest in more than a year, may have reassured Fed officials who had expressed concerns that inflation was too low.

However, Federal Reserve Chair Janet Yellen told the Senate last week that early signs of a pickup in inflation were not enough for the Fed to accelerate its plans to raise interest rates, a move currently expected in mid-2015.

While data on economic activity and jobs have been broadly positive, there are mixed signs from the housing market, struggling since a rise in mortgage rates caused it to stall in late 2013.

New home starts fell in June to a nine-month low, but permits are running ahead of starts, which suggests building activity will pick up in the months ahead.

Housing price figures for May are due on Tuesday after declines of annual home price inflation for eight of the nine months to April.


In China, the first round of monthly PMIs, due on Thursday, should show whether the world’s second largest economy is stabilizing thanks to Beijing’s measures to shore up growth.

The preliminary HSBC PMI survey showed in June that factory activity expanded for the first time in six months.

The July index will come a week after data showing China’s economy grew slightly faster than expected in the second quarter while new home prices fell in June for a second straight month, prompting speculation about further state stimulus.

For actual central bank action, New Zealand offers the best hope. Its Reserve Bank increased rates in March for the first time since 2010 and is seen carrying out a 0.25 percentage point hike on Thursday, although a dip in inflation could make it a close call.

Thousands flee Gaza as Israel escalates battle

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GAZA CITY, Palestine — Escalating their ground offensive, Israeli troops backed by tanks and warplanes battled Hamas militants in a crowded neighborhood of Gaza City on Sunday. The fighting, including heavy Israeli tank fire, killed scores of Palestinians, forced thousands to flee their homes and left dozens of homes destroyed.

Palestinian health officials reported at least 50 dead in air and artillery strikes that echoed across the city for hours and sent panicked residents fleeing, many carrying small children and waving white flags. Gaza officials said 35,000 people fled their homes Sunday.

The nearly two-week conflict has killed more than 400 Palestinians and seven Israelis, and appeared to be escalating as U.N. chief Ban Ki-moon headed to the region to try to revive cease-fire efforts.

After daybreak, dozens of wounded from Shijaiyah were rushed to Gaza City’s central Shifa Hospital. Frantic parents carried children bloodied by shrapnel, and the emergency room quickly overflowed, forcing doctors to treat some patients on mattresses in a hallway.

"The gate of hell has opened, and shrapnel came through the windows," said Shijaiyah resident Jawad Hassanain, speaking by phone. He said he and his family sought shelter in a nearby building after their house shook from the explosions.

"From 12:30 a.m. until 4 a.m., all you could hear is heavy bombardment, the smell of fire and the smell of death. By 4:30, and after the call for the prayer, we were able to get in an ambulance," which took them to his sister’s neighborhood, he said.

Following a request by the Red Cross, Israel and Hamas said they agreed to a brief, local cease-fire to enable rescue services to attend to the dead and wounded. The truce did not last for the designated period, and each side blamed the other for violating it.

Israeli troops pushed into Gaza late Thursday after more than a week of airstrikes failed to halt unrelenting Palestinian rocket fire that has increasingly targeted major Israeli cities. Israel has said the operation is aimed at halting the rockets as well as destroying tunnels that militants have used to stage cross-border raids.

The military said it has hit more than 2,500 targets in Gaza, including 1,100 rocket launchers, during the 13 days of fighting. It said that some 70 militants were killed and another 13 brought to Israel for questioning.

Gaza militants have fired more than 1,760 rockets at Israeli cities since July 8, the military said.

Throughout the night, loud explosions shook Gaza as Israeli flares lit up the sky and fighter jets flew low over the coastal territory.

The Hamas military wing said its fighters exchanged fire with Israeli forces in Shijaiyah and a nearby neighborhood. The sound of gunfire could be heard from the city center.

In a separate confrontation, Islamic Jihad fighters ambushed Israeli troops near the southern Gaza city of Khan Younis, the group said, adding that Israeli helicopter gunships had joined the battle.

The heavy fighting came as Ban headed to Qatar to try to push stalled cease-fire efforts forward. He was set to meet Western-backed Palestinian President Mahmoud Abbas in the Gulf state, according to Abbas’ spokesman. Abbas also plans to meet Hamas’ top leader Khaled Mashaal.

Hamas last week rejected an Egyptian call on both sides to halt hostilities, saying it first wants guarantees that Israel and Egypt will significantly ease their border blockade of Gaza, which has been ruled by the Islamic militant group since 2007.

Hamas has sought involvement of other countries, such as Qatar, in any cease-fire negotiations. The militant group is deeply distrustful of Egypt’s rulers, who last year deposed a Hamas-friendly government in Cairo.

Since the start of Israel-Hamas fighting almost two weeks ago, 410 Palestinians have been killed and 3,000 wounded, according to Gaza Health Ministry official Ashraf al-Kidra. More than one-fourth of the deaths have been reported since the start of the ground offensive late Thursday.

Two Israeli soldiers died in the Gaza fighting late Saturday and early Sunday morning, bringing the Israeli military death toll to five in the three days since ground operations began. Two Israeli civilians have perished from Hamas rocket and mortar attacks on Israeli territory.

Dozens of Israeli soldiers have been wounded since the start of the ground operation, according to Israeli hospitals treating them.

The Israel military meanwhile said it was establishing a field hospital at a crossing with Gaza to treat wounded Palestinians.

In Shijaiyah, the heavy shelling began around midnight as tanks reached the edge of the neighborhood, residents said. In the first hours of shelling, it was too dangerous for ambulances to approach and residents said they saw dead and wounded in the streets. Casualties were later evacuated.

Hundreds of residents began fleeing the neighborhood after daybreak, including a woman in a wheelchair who waved a white flag. Columns of smoke rose from the neighborhood as the sound of shelling echoed from inside.

A man walking in the street said his son was trapped in the family house and that he needed someone to help rescue him. He then got into an ambulance to reach his house, but tank fire hit nearby and the ambulance quickly turned around to get away.

The bodies of a man and a woman could be seen in the rubble of a house that had been completely destroyed.

Among those killed in Shijaiyah on Sunday was Osama al-Haya, a son of senior Hamas leader Khalil al-Haya. Osama al-Haya’s wife and two children, ages four and six, were also killed, Palestinian health officials said.

Some residents tried to find refuge with relatives, while others went to U.N. schools that have been serving as temporary shelters since the start of the fighting.

Some 63,000 Palestinians are already staying in United Nations shelters, according to UNRWA, the U.N. refugee agency for Palestinians. The number of people who have fled their homes has more than tripled since the start of Israel’s ground operation and the agency said it planned to open more schools.

Train loaded with plane crash bodies for rebel city

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HRABOVE, Ukraine — Armed rebels forced emergency workers to hand over all 196 bodies recovered from the Malaysia Airlines crash site and had them loaded Sunday onto refrigerated train cars bound for a rebel-held city, Ukrainian officials and monitors said.

The surprising, rapid-fire developments Sunday morning came after a wave of international outrage over how the bodies of plane crash victims were being handled and amid fears that the armed rebels who control the territory where the plane came down could be tampering with the evidence.

Ukraine and the separatists accuse each other of firing a surface-to-air missile Thursday at Malaysia Airlines Flight 17 as it flew from Amsterdam to Kuala Lumpur some 33,000 feet (10,000 meters) above the battlefields of eastern Ukraine. Both deny shooting down the plane. All those onboard the flight - 283 passengers and 15 crew - were killed.

Ukraine says Russia has been sending sophisticated arms to the rebels, a charge that Moscow denies.

The U.S. embassy in Kiev issued a strong statement pointing to Russian complicity in arming the rebels, saying it has concluded “that Flight MH17 was likely downed by a SA-11 surface-to-air missile from separatist-controlled territory in eastern Ukraine.” It said over the weekend of July 12-13, “Russia sent a convoy of military equipment with up to 150 vehicles, including tanks armored personnel carriers artillery, and multiple rockets launchers” to the separatists. The statement also said Russia was training separatist fighters in southwest Russia, including on air defense systems.

The rebels have been strictly limiting the movements of international monitors and journalists at the crash site, which is near the Russian border, and Ukraine’s Emergency Ministry said its workers were laboring under duress, overseen by the armed rebels.

BBC News journalists saw reeking bodies baking in the summer heat Saturday, piled into body bags by the side of the road or still sprawled where they landed in the verdant farmland in eastern Ukraine after their plane was shot out of the sky.

By Sunday morning, AP journalists saw no bodies and no armed rebels at the crash site. Emergency workers were searching the sprawling fields only for body parts.

It was immediately not clear Sunday if the rebels and the Ukrainian government were working together or at odds with each other on recovering the bodies - and from their comments, many of officials didn’t appear to know either.

Separatists were not immediately available to comment Sunday. Despite the restrictions seen by journalists and observers at the crash site, separatist leader Alexander Borodai insisted Saturday the rebels have not interfered with the work of observers.

Nataliya Khuruzhaya, a duty officer at the train station in Torez, 15 kilometers (9 miles) from the crash site, said she saw emergency workers loading plane victims’ bodies Sunday morning into five sealed, refrigerated train cars.

She said the train was scheduled to head to the town of Ilovaysk, 35 kilometers (22 miles) further east toward the Russian border, but no instructions had been given about when it would leave or any possible destinations beyond Ilovaysk.

Russian news agencies said the bodies were heading to the rebel stronghold of Donetsk. Ukrainian officials say they expected to have the bodies eventually delivered to government-held city of Kharkiv, but it’s unclear if the rebels will agree to do so.

Vasily Khoma, deputy of governor of the Kharkiv region where Ukraine has set up a crisis center to handle the disaster, said the Ukrainian state railway company had provided the refrigerated train cars. Kharkiv is 300 kilometers (185 miles) north of the crash site.

He said no information was available on when airplane parts would be brought to the city and that the priority now was on recovering bodies. He said a mobile lab to handle DNA analysis was being delivered from Dnipropetrovsk.

Residents in Kharkov have been inundating a special call center to offer their services as volunteers. Ten hotels in Kharkiv have said they will provide free rooms for relatives of the victims.

Earlier, Ukrainian Emergency Ministry spokeswoman Nataliya Bystro said workers at the crash site were forced to hand over the 196 bodies they had recovered to the armed rebels.

"Where they took the bodies - we don’t know," Bystro told the AP, adding she had no information about the other 102 victims’ bodies.

However, Michael Bociurkiw, a spokesman for monitors from the Organization for Security and Cooperation in Europe, said some bodies have likely been incinerated without a trace.

"We’re looking at the field where the engines have come down. This was the area which was exposed to the most intense heat. We do not see any bodies here. It appears that some have been vaporized," he told reporters in Kiev, speaking via phone from the crash site Sunday.

Alexander Pilyushny, an emergency worker combing the crash site for body parts Sunday morning, told the AP it took the rebels several hours Saturday to cart away the bodies. He said he and other workers had no choice but to hand over the bodies.

"They are armed and we are not," Pilyushny said.

In a blistering article for the Sunday Times, British Prime Minister David Cameron called the attack a “direct result of Russia destabilizing a sovereign state, violating its territorial integrity, backing thuggish militias and training and arming them.”

"We must turn this moment of outrage into a moment of action," he wrote.

In a coded rebuke of German Chancellor Angela Merkel and other European leaders who have blocked efforts to impose tougher sanctions on Russian President Vladimir Putin for Russia’s actions in Ukraine, Cameron said Europe must now “respond robustly.”

"For too long, there has been a reluctance on the part of too many European countries to face up to the implications of what is happening in eastern Ukraine," Cameron wrote.

A BBC News journalist saw a Buk missile launcher in rebel-held territory close to the crash site Thursday just hours before the plane was brought down.

Putin and Merkel agreed Saturday in a phone call that an independent commission led by the International Civil Aviation Organization should be granted swift access to the crash site.

Dutch Foreign Minister Frans Timmermans, speaking in Kiev, demanded that the culprits be found.

"Once we have the proof, we will not stop until the people are brought to justice," he said.

Monitors try to secure Ukraine plane crash site

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HRABOVE, Ukraine — International monitors moved gingerly Saturday through fields reeking of the decomposing corpses of the victims of a Malaysian airliner shot down over rebel-held eastern Ukraine, trying to secure the sprawling site in hopes that a credible investigation of the disaster can be conducted.

The crash that killed all 298 people aboard the plane two days earlier intensified the already-high animosity on all sides of the conflict.

The Ukrainian government and separatist rebels accuse each other of shooting down the Boeing 777 with a surface-to-air missile. Many see the hand of Russia, either for its alleged support of the insurgents or perhaps firing the missile itself. The crash site is near the Russian border.

Amid wide calls for an international investigation, doubts arose about whether the evidence was being compromised before inspectors ever reach the scene.

Russian President Vladimir Putin and German Chancellor Angela Merkel agreed in a phone call on Saturday that the sides should enter talks and stop fighting, according to a Kremlin statement. Russian Foreign Minister Sergey Lavrov and U.S. counterpart John Kerry took a similar view, a Foreign Ministry statement said.

At an emergency meeting of the U.N. Security Council on Friday, the U.S. pointed blame at the separatists, saying Washington believes the jetliner likely was downed by an SA-11 missile and “we cannot rule out technical assistance from Russian personnel.”

The government in Kiev said militiamen have removed 38 bodies from the crash site and have taken them to the rebel-held city of Donetsk. It said the bodies were transported with the assistance of specialists with distinct Russian accents.

The rebels are also “seeking large transports to carry away plane fragments to Russia,” the Ukrainian government said Saturday.

In Donetsk, separatist leader Alexander Borodai denied that any bodies had been transferred or that the rebels had in any way interfered with the work of observers. He said he encouraged the involvement of the international community in assisting with the cleanup before the conditions of the bodies worsens significantly.

Ukraine called on Moscow to insist that the pro-Russia rebels grant international experts the ability to conduct a thorough, impartial investigation into the downing of the plane - echoing a demand that President Barack Obama issued a day earlier from Washington.

On Saturday, in the village of Hrabove, one passenger’s body was seen still strapped into an airline seat, with bare toes peeking out under long jeans. Another body was flung face-up into a field of blue flowers.

Treatment of the victims’ remains, left in the open air under a hot summer sun punctuated by bursts of rainfall, has provoked outrage and distress.

"The news we got today of the bodies being dragged around, of the site not being treated properly, has really created a shock in the Netherlands," Dutch Foreign Minister Frans Timmermans told the Ukrainian president in Kiev. "People are angry, are furious at what they hear."

Timmermans demanded the culprits be found.

"Once we have the proof, we will not stop until the people are brought to justice," he said.

Merkel and Putin agreed on Saturday that an independent, international commission led by the International Civil Aviation Organization, ICAO, should be granted swift access to the crash site, German government spokesman Georg Streiter and the Kremlin said.

The commission should examine the circumstances of the crash and recover the victims, said Streiter, adding that Merkel urged Putin to use his influence over the separatists to make that happen.

British Foreign Secretary Philip Hammond said in a video statement the international community is demanding separatists provide free access to the crash site, that the victims’ bodies are properly recovered and the evidence is secured.

"Russia has a key role to play in that through its influence on the separatists and the world’s eyes will be on Russia to see that she delivers on her obligations over the next few hours," he said.

In the Netherlands, forensic teams fanned out across the country Saturday to collect material, including DNA samples, which will help positively identify the remains of the 192 Dutch victims.

Police said in a tweet that 40 pairs of detectives from the National Forensic Investigations Team would be visiting victims’ relatives over the coming days.

The location of the black boxes remains a mystery and the separatist leadership remained adamant Saturday that it hadn’t located them.

A spokesman for the Organization for Security and Co-operation in Europe’s monitoring mission in Ukraine, which has a 24-member delegation that was given limited access to the crash site, also said he had received no information on their whereabouts.

Aviation experts say, however, not to expect too much from the flight data and cockpit voice recorders in understanding how Flight 17 was brought down.

The most useful evidence that’s likely to come from the crash scene is whether missile pieces can be found in the trail of debris that came down as the plane exploded, said John Goglia, a U.S. aviation safety expert and former National Transportation Safety Board member.

The operation of Flight 17 doesn’t appear to be an issue, he said.

Obama called the downing of the plane “a global tragedy.”

"An Asian airliner was destroyed in European skies filled with citizens from many countries, so there has to be a credible international investigation into what happened," he said.

Malaysia Airlines, meanwhile, said Saturday it has no immediate plans to fly victims’ relatives to visit the crash site in Ukraine because of security concerns.

A spokesman for the airline says next of kin are being cared for in Amsterdam while a team from the carrier, including security officials, was in Ukraine assessing the situation.

In the Netherlands, travelers flying out of Amsterdam’s Schiphol Airport laid flowers and signed a condolence book before boarding their flights Saturday, including those on the latest Malaysia Airlines Flight 17 to Kuala Lumpur.


Without radar, Ukraine’s rebels may not have distinguished between military and civilian aircraft

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LONDON — If Ukrainian rebels shot down the Malaysian jetliner, killing 298 people, it may have been because they didn’t have the right systems in place to distinguish between military and civilian aircraft, experts said Saturday.

American officials said Friday that they believe the Boeing 777 was brought down by an SA-11 missile fired from an area of eastern Ukraine controlled by pro-Russian separatists. U.N. Ambassador Samantha Power said the Russians might have provided technical help to the rebels to operate the systems.

But to function correctly, an SA-11 launcher, also known as a Buk, is supposed to be connected to a central radar command - as opposed to acting alone - to be certain of exactly what kind of aircraft it is shooting at.

From the information that has come to light so far, the rebels don’t appear to have such systems, said Pavel Felgenhauer, a respected defense columnist for Novaya Gazeta, a Moscow-based newspaper known for its critical coverage of Russian affairs.

"They could easily make a tragic mistake and shoot down a passenger plane when indeed they wanted to shoot down a Ukrainian transport plane," he said.

On Friday, Russia’s state-owned RIA Novosti news agency also quoted Konstantin Sivkov, director of the Academy of Geopolitical Problems, as saying Buk missiles “should be provided with external systems of target identification, that is, radio-location systems. It’s an entire system. And the insurgents certainly don’t have radio-location.”

Without a backup, a missile can be fired by operators who are not totally sure of what they are aiming at.

"Just seeing a blip on a radar screen was in no away sufficient to make a targeting decision," said Keir Giles, associate fellow for international security and Russia and Eurasia programs at the Royal Institute of International Affairs. "You need an additional radar system to which these weapons systems can be connected for additional information."

Social media postings from the rebels in the immediate aftermath of Thursday’s Malaysia Airlines disaster also suggested they had assumed civilian aircraft were avoiding the area and that anything in the air was hostile.

If a missile was fired without attempting to identify the aircraft, the destruction of Malaysia Flight 17 would be an act of criminal negligence, said retired U.S. Air Force Maj. Gen. Robert Latiff. He said commercial airliners operate on known communications frequencies and emit signals that identify them and give their altitude and speed.

"It doesn’t sound like the separatists were using any of this (information), or tried for that matter," said Latiff, who oversaw advanced weapons research and development for the Air Force and now teaches at the University of Notre Dame.

"My guess is the system’s radar saw a return from a big `cargo’ plane flying at 30,000 feet or so and either automatically fired, or some aggressive, itchy operator fired, not wanting to miss an opportunity. It doesn’t seem they chose to seek any additional data before pulling the trigger," Latiff said.

A NATO military officer, speaking on condition of anonymity because he was not authorized to make public statements, said a Buk launcher, which is a self-propelled tracked vehicle resembling a tank, is ordinarily under the orders of a separate command post vehicle.

"In a totally textbook way of setting up, the command post vehicle assigns targets and designates the firing units - launcher 1 or launcher 2," the NATO officer said.

Once targeted by such a potent weapon, the Boeing wide-body twinjet would have had little chance. Edward Hunt, a senior consultant for IHS Jane’s, which provides news and analysis on defense and geopolitical issues, said a commercial plane is not a difficult target for someone who knows how to operate a surface-to-air missile system.

"Civilian aircraft fly in a straight line," Hunt said. "A civilian aircraft doesn’t try to take evasive action. It probably didn’t even know it was targeted."

In her remarks to the U.N. Security Council, Power said that a journalist had reported seeing an SA-11 system early Thursday in separatist-controlled territory near Snizhne, “and separatists were spotted hours before the incident with an SA-11 SAM system close to the site where the plane came down.”

Power didn’t identify the reporter. But on Thursday, AP journalists saw a rocket launcher near Snizhne.

Rebels also bragged in June 29 report carried by Russia’s Itar-Tass news agency that they had gotten hold of some Buk missile systems from Ukrainian stocks, though they did not say how many or describe their condition.

A few weeks later, rebels shot down a Ukrainian Antonov 26, a military transport plane that can fly at altitudes of up to 7,500 meters (24,750 feet).

If Thursday’s disaster was due to mistaken identity, it would not be the first.

Soviet air defenses in 1983 accidentally shot down Korean Airlines Flight 007, killing 269. In 1988, the USS Vincennes, a guided missile cruiser, brought down Iran Air Flight 655, with 290 people aboard, after mistaking it for an attacking warplane.

In October 2001, Siberian Airlines Flight 1812, traveling from Tel Aviv, Israel, to Novosibirsk, Russia, plunged into the Black Sea, killing all 78 aboard. The Ukrainian military at first denied responsibility, but later admitted its military mistakenly shot down the plane during a training exercise.

Ukraine crisis reveals divisions in old Soviet bloc

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WARSAW, Poland — Poland’s foreign minister had sharp words on the downing of the Malaysia Airlines jumbo jet in Ukraine - blaming the crash on Russia-backed “bandits.” But throughout most of central and eastern Europe, leaders withheld judgment, expressing shock but refusing to say more until more facts are in.

The caution is not surprising: Several former Soviet satellite states have developed closer economic ties to Russia in recent years, making them unwilling to take a strong stand against Moscow in the Ukraine conflict. Though all have condemned Russia’s annexation of Crimea, they are divided over what to do beyond that, differences dictated largely by the depth of those economic ties - and whether they feel at risk themselves from Moscow’s might.

With uncertainty surrounding Thursday’s plane crash, most have little to gain from pointing fingers, especially since the tragedy, which killed 298 people, is unlikely to blunt Russia’s growing clout in the region, experts say.

"No one should expect change in the relations between Russia and any of the central European countries unless clear evidence of Moscow’s involvement is presented," said Dariusz Kalan, an analyst with the Polish Institute of International Affairs. "Even then, a radical turn would be unlikely since the political, economic and energy contacts are so developed."

"A temporary and mostly rhetorical chill of relations with Russia is the heaviest reply that the region can afford," Kalan added.

Other experts argued, however, that confirmation of Russian involvement in the crash would force the region to take a harder stance against Moscow.

In some ways, divisions in the former Soviet bloc mirror tensions further West: France and Germany have continued to cultivate business ties with Russia, while the United States has taken a stronger line. On the plane crash, German Chancellor Angela Merkel said there’s still “no clarity,” showing more caution than the United States, with President Barack Obama linking the crash to “sophisticated equipment … coming from Russia.”

"We have to be careful not to impose Cold War cliches on the region," said Jakub Groszkowski, an analyst with the Center for Eastern Studies in Warsaw. "The governments in Prague or Bratislava are acting in a similar way to cabinets in Paris or Vienna."

But Russia’s old Soviet bloc neighbors do face uniquely wrenching choices. The region has a history of dependence on Russian oil and natural gas. Economic ties deepened further after the global financial crisis of 2008-09 pushed several countries to forge new economic deals with Russia. When Western markets shrank, export-oriented countries like the Czech Republic turned to Russia, China and elsewhere for new opportunities.

Those who back the toughest stance toward Russia are Poland, the three Baltic states and Romania - all countries that fear for their own safety due to proximity to Russia and which, unlike their neighbors, are trying to limit Russian influence at home. The large numbers of ethnic Russians in Estonia and Latvia - 25 and 30 percent of the populations respectively - add to Baltic anxieties.

After the plane crash, Baltic leaders called for an international investigation and many politicians there quickly blamed Moscow for its role as an alleged weapons supplier to the Ukrainian separatists. The disaster underscores “the need to put an end to the domineering of separatist armed groups backed by Russia,” Estonian President Toomas Hendrik Ilves said Friday.

Polish Foreign Minister Radek Sikorski said he was concerned about reports that the Ukrainians have captured recordings of phone conversations that indicate the pro-Russian separatists might be responsible for shooting down Malaysia Airlines Flight 17.

"This is how things end when you supply bandits with advanced weapons," Sikorski said.

His comments are consistent with Poland’s longstanding anxieties of Russia’s resurgence. Since the crisis broke out in Ukraine this year, Poland has been seeking more security protections from NATO and the United States, leaving Poles hugely relieved when Obama pledged to do more to protect the region during his visit to Warsaw last month.

But the relief was not universal across the former Soviet bloc. Czech and Slovak leaders made clear they don’t see a need for increased security and would not welcome NATO troops. Prime Minister Robert Fico of Slovakia, like Poland a NATO member, even likened “foreign troops” to the Soviet soldiers who invaded Czechoslovakia in 1968.

Hungary and Bulgaria have been pursuing new deals that increase their energy dependence on Russia. The most controversial is South Stream, a planned pipeline opposed by the EU that would bring Russian gas under the Black Sea to Bulgaria, Hungary, Serbia and Austria. Bulgaria tapped a consortium headed by Gennady Timchenko, an oligarch close to the Kremlin who is on the U.S. sanctions list, to build its part of the pipeline.

Bulgaria is probably the most pro-Russian country in the region, with sympathies born of a Slavic brotherhood rooted in past alliances. The current government and its supporters include former communists, adding to Western worries that some in the ruling circle could be working secretly for Russia’s interests from within NATO and the 28-nation European Union.

The shift toward Russia is more surprising in the Czech Republic. Only a few years ago it agreed to host a U.S. missile defense site, a plan that sparked Moscow’s anger. Obama has since dropped plans for the Czech site.

The left-wing Social Democrats, who opposed the missile defense plan all along, are now in power. In a change from the Vaclav Havel-era focus on human rights, Prime Minister Bohuslav Sobotka says it makes no sense to halt business with Russia because other countries would just take it over. He warns against creating “a new Iron Curtain between the European Union and Russia.”

"The Czechs feel safer than, say, the Baltic states since they are surrounded by NATO members and Austria," Groszkowski said. "But they worry their economy could worsen due to tensions between the EU and Russia."

In Slovakia, Fico, the prime minister, has repeatedly said he wants to remain “a reliable partner” for Russia, though he also vows the nation will meet its obligations as a NATO member.

Hungarian Prime Minister Viktor Orban has radically changed his tone toward Moscow since he entered the political scene as a young revolutionary in 1989 with a fiery speech calling on Soviet troops to leave. Since taking power in 2010, the 51-year-old has deepened his country’s energy ties with Russia, Hungary’s biggest trading partner outside the EU.

Orban tapped a Russian company, Rosatom, to expand the country’s only nuclear facility, a 12 billion-euro ($16.2 billion) deal granted without an open tender - but with the promise of a loan from Russia.


Gaza has become mired in the deep divisions within the Middle East

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CAIRO  — Even as the death toll mounts in the Gaza Strip, attempts to broker a cease-fire between Hamas and Israel have so far run aground - in part because they have become mired in the deep divisions between Mideast countries.

At the center of the problems is the bitter enmity between Egypt and its Gulf allies like Saudi Arabia on one side and Gaza’s Hamas rulers and its allies, Turkey and Qatar, on the other.

An Egyptian cease-fire proposal quickly fell apart the past week when Israel accepted it but Hamas rejected it. Hamas demanded greater guarantees for the lifting of the blockade of Gaza, enforced by Israel and Egypt. The Egyptian proposal called for both sides to halt hostilities unconditionally - dangling only a promise of further talks that could address the closure.

Qatar-based Hamas spokesman Hossam Badran described Cairo’s cease-fire proposal as “all but dead,” calling it a “surrender” to Israel.

He and other Hamas officials said they were instead turning to Qatar, which they said had an initiative that would address their demands, including release of prisoners and giving unfettered access to the densely populated strip. That quickly sparked accusations by Egypt that Hamas’ allies were undermining it.

"The Hamas-Qatar-Turkey axis is trying to abort Egypt’s role, which is the region bulwark in the face of a plot aimed at fragmenting the region into rival mini-states," Egypt’s Foreign Minister Sameh Shukri told reporters Thursday night, just before Israel announced the start of its ground assault into Gaza.

Shukri said Egypt is in a “very tense and difficult” relationship with Hamas, where reaching common ground is nearly “impossible.”

On Saturday, Shukri said he knows of no other initiative and that “the Egyptian initiative remains the initiative on the table” with international support.

Speaking next to visiting French Foreign Minister Laurent Fabius, Shukri said there was no intention to amend the proposal, which he said meets the demands of both sides.

The tensions are rooted in the turmoil in Egypt over the past year. Hamas spawned off the Muslim Brotherhood, which Egypt’s government has branded a terrorist organization since the military’s ouster of Islamist President Mohammed Morsi last summer. Egyptian authorities have been cracking down hard on Morsi’s Brotherhood and accuse Hamas of helping Islamic militants waging a campaign of violence in Egypt, a claim the group denies.

Egypt also has tightened the closure on Gaza by destroying smuggling tunnels under the border that were largely propping up the strip’s economy. That has thrown Hamas into a financial crisis.

Turkey and Qatar were also close allies of Morsi and the Brotherhood - and the result has been deep tensions between them and the government of Egyptian President Abdel-Fattah el-Sissi, the former army chief that ousted Morsi.

The cease-fire plan put forth by Egypt now is virtually identical to one presented by Morsi during the last round of Gaza fighting. At the time, both sides accepted the accord, and Morsi was lauded for his mediation. Now, however, there is not only deep mistrust in the way, but also increased Hamas expectations for an end to the stifling blockade.

Badran told The Associated Press that Hamas wants the permanent opening of the Rafah crossing with Egypt, an arrangement to allow Gazans to pray in Al-Aqsa mosque in Jerusalem and the release of political prisoners held by Israel.

Hamas and its allies Qatar and Turkey also are pressing for the opening of an airport and seaport in Gaza under international administration.

"We have to impose conditions and guarantees to prevent the recurring of this assault and lift this inhumane and illogical blockade on Gaza," Qatari Foreign Minister Khalid al-Attiya said in a speech last week.

Turkish Foreign Minister Ahmet Davutoglu has said the blockade must be lifted. “If a tunnel is closed, an airport has to be opened. There has to be a breathing space. The situation now is beyond a ghetto,” he said in an interview Thursday with Turkey’s NTV television.

However, Egypt - as well as Hamas’ rival Palestinian President Mahmoud Abbas - is wary of any moves that would give Hamas breathing room and strengthen its hold on Gaza.

"There is no way Egypt is going to let the crossing open for Hamas to come and go without control," an Egyptian foreign ministry official said. He said Egypt could agree to international observers - or forces from Abbas’ Palestinian Authority - controlling the crossing, as long as they are on the Gaza side.

The official spoke on condition of anonymity because he was not authorized to speak to journalists.

Sameh Seif al-Yazel, a security expert and one-time member of el-Sissi’s presidential campaign, said Egypt would accept arrangements giving free movement in and out of Gaza as long as they are endorsed by the Palestinian Authority. “Egypt is siding with the Palestinian Authority and the Palestinian people, not Hamas,” he said.

Abbas has backed the Egyptian proposal, saying it is identical to the 2012 cease-fire brokered by Morsi. After visiting Cairo, Abbas left to Turkey, where he is expected to meet with Hamas’ top leader, Khaled Mashaal, before heading to Qatar and other Gulf countries in an attempt to bridge the gaps.

Turkey meanwhile has denied undermining Egypt’s efforts. Turkish Prime Minister Recep Tayyip Erdogan angrily denounced el-Sissi, saying, he “is an oppressor, a coup leader. He is the person who has been blocking Hamas’ routes.”

Soon after Morsi’s ouster, Egypt and Turkey recalled their ambassadors. Egypt also shut down Qatar-owned satellite news network Al-Jazeera’s bureau there, accusing it of being a mouthpiece for the Brotherhood.

Throughout the current Gaza crisis, Egypt’s media - which is overwhelmingly supportive of el-Sissi - has been sharply critical of Hamas. TV stations have accused Hamas of wasting Palestinian blood and “commercializing” the Palestinian cause.

The editor in chief of the state-owned Al-Ahram on Saturday accused Hamas and its allies of seeking to “stir public opinion” against el-Sissi and his government by prolonging the conflict with Israel.

In one recent program, fiercely pro-military television presenter Tawfiq Okasha described Hamas and those who show any sympathy for it as “dogs” and waved his shoes in a show of contempt for “those who don’t appreciate Egypt’s weight.”


Uncertain fate awaits deported Honduran mother and child

TEGUCIGALPA Fri Jul 18, 2014 4:20pm EDT

Victoria Cordova and her daughter Genesis Zepeda, both recently deported from the U.S., sit at their home at the impoverished 21 de Marzo neighbourhood in Tegucigalpa July 15, 2014. REUTERS-Jorge Cabrera
Victoria Cordova and her daughter Genesis Zepeda, both recently deported from the U.S., pose for a picture outside their home at the impoverished 21 de Marzo neighbourhood in Tegucigalpa July 15, 2014.  REUTERS-Jorge Cabrera
Victoria Cordova (2nd R) and her daughter Genesis Zepeda (R), both recently deported from the U.S., stand outside their home alongside two unknown children at the impoverished 21 de Marzo neighbourhood in Tegucigalpa July 15, 2014.  REUTERS-Jorge Cabrera

1 of 7. Victoria Cordova and her daughter Genesis Zepeda, both recently deported from the U.S., sit at their home at the impoverished 21 de Marzo neighbourhood in Tegucigalpa July 15, 2014.

Credit: Reuters/Jorge Cabrera

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When 9-year-old Genesis stepped off a plane in Honduras after being deported from the United States, she was excited at the thought of seeing her cousins. For her mother, Victoria Cordova, the homecoming was terrifying: she fears being killed if she does not repay money she owes the wife of a local gang leader.

Cordova had used the money to pay a smuggler to get her and Genesis to the United States. But after a grueling 2,500 km (1,600 mile) overland trek, the pair were caught entering Texas in June, sent to a detention center and then flown home this week as part of a U.S. effort to speed up the expulsion of thousands of illegal migrants, many of them children.

Mother and daughter, who had fled rampant violence in the Honduran city of Tegucigalpa, returned to a situation even more precarious than the one they had left. Cordova, who is unemployed, does not know how she is going to repay the loan.

Their story is emblematic of a wider problem that has been little reported: threats, debts and despair often lie in wait for migrants deported back to violence-racked Honduras, El Salvador and Guatemala.

Deported migrants often become targets of the gangs they tried to escape, and their jobs prospects are grim. They face stigmatization upon return, being lumped in with people deported for more serious offenses than crossing the border illegally.

Genesis, who gave up her friends, her dog and her toys to travel 25 days north with her mother, sometimes sleeping in mud in pouring rain, was only too glad to be sent back.

"I’m happy to be going because I’m going to see my cousins," Genesis told Reuters after getting off a U.S. charter flight on Monday with 20 other children and 17 women in San Pedro Sula, the city with the highest murder rate in the world.

But the innocent comment belied the reality awaiting her mother in a country where gangs control the crushingly poor neighborhoods many migrants seek to escape.

A $6,000 DEBT

Thirty-year-old Cordova and Genesis arrived home at close to midnight. Within hours, she was visited by the wife of an imprisoned local gang lord, who reminded her that she still owed her $6,000.

"She told me to pay as soon as possible because she could get into problems," Cordova said, trying to hide the tears from Genesis as she related their story, surrounded by her large family in a dilapidated corrugated iron home in Tegucigalpa.

"If he (the gang leader) realizes, he could get annoyed with her or with me, and you know what that means - we’ll lose our lives."

She must find a job to pay off her debt, worth 21 months of work. Until she lost her job at a local bakery four months before leaving, Cordova earned 6,000 lempiras ($286) a month.

Reuters could not independently verify her account of the loan, but if true, it is a typical story told by returnees.

Lauren Heidbrink, an anthropologist at National Louis University in Chicago, said she had studied Guatemalan families who took out loans on their homes to pay smugglers, putting them $7,500-$10,000 in debt at interest rates as high as 15 percent.

Julio Pineda, a 21-year-old Honduran who was deported from Mexico this spring after failing to reach the United States, said unpaid debts were not tolerated for long.

"They’ll give you two or three months, and if you don’t find the money, you’ll go down," he said as he waited for his brother-in-law to return on a U.S. deportation flight.

Cordova said she spoke to her Honduran coyote, or smuggler, and asked if he would give her the money back. He said no, but that he would be willing to take her north again.

"I said to him, ‘No, why would I do that? So I can be sent back again?’," Cordova said.

Greeting Cordova and Genesis as they landed, Honduran First Lady Ana Garcia de Hernandez acknowledged the security situation in Honduras was still bad. “We’ve made efforts to improve it, but it’s not been enough.”

Home for Cordova and her daughter is the “21st of February”, a notoriously violent colonia, which clings to the hills around the Honduran capital.

Many of the young Hondurans flocking to the border are fleeing gangs like “Calle 18” and “Mara Salvatrucha” formed in the 1980s in the United States by Central American migrants.

"Some of the teenagers who were being recruited by gangs and narcotraficantes are now back in the crosshairs of those people who were wanting to recruit them and maybe now they’ll get penalized for having tried to leave," said Luis Zayas, dean of the School of Social Work at the University of Texas at Austin.

Later blossoming into international franchises as members were deported back to their native countries, the “maras” run drugs, extort and are constantly in search of new recruits in three of the most violent countries in the western hemisphere.


More than 57,000 unaccompanied minors from Central America have been apprehended at the U.S. border since last October.

On the car journey from the airport to their home on Monday, Cordova spoke of her fears for the future. Genesis was asleep on her mother’s shoulder, wearing the same pink trainers without laces she had on during their nearly month-long trip to the U.S. border.

Children not much older than Genesis are at risk from the gangs. Cordova said her nephew Henry was 12 when the maras tried to recruit him, ordering him to kill someone.

He refused, had to go into hiding, and could not even visit his mother for fear she would be killed. Cordova said he became a thief to survive and is now in the relative safety of prison.

Cordova’s neighbor, Javier Gonzalez, 23, was less fortunate. After being forced by gangs to sell drugs in a rival “colonia” or neighborhood, the “Calle 18” gang there found and killed him.


Exhausted and stressed, Cordova stopped the car on the three-hour journey home from the airport on Monday so that she could vomit on the side of the road. She spent the night lying awake with stomach cramps in the single bed she shares with Genesis.

Five adults and three children live in her house, a series of one-room shacks built around a rubble-strewn concrete square. Her painter father, 63, is the only one with a stable income.

Before she left, Genesis spent most of her free time playing hide-and-seek with her 11-year-old cousin Wenzel and their dog Lassie, who they like to dress up in girl’s clothes.

Genesis says she wants to be a teacher, and often uses one of her few prized possessions, a fake computer tablet, to give mock lessons to younger local girls.

The experience of being deported can have a lasting effect on young people, experts say.

"Psychologically, the children who are returned are often devastated because they left in hope of a better future and they returned to a stark reality that was often less than ideal," said Van Tran, a sociologist at Columbia University, who spent seven years in three different refugee camps in Thailand.

    The journey north has left negative memories for Genesis, who laughed nervously when asked about the trip that had forced her to sleep outside in the rain by the U.S. border. “It was cold, and I didn’t have (other) clothes in the mud,” she said.

Yet at the most dramatic moment, the little girl said she was brave. When the man smuggling them and more than a dozen others in an inflatable boat across the Rio Grande spotted a U.S. patrol vessel, he jumped overboard, causing a mass panic that nearly capsized the boat.

"I wasn’t crying," Genesis said, proudly.

Teasing gently, her mother corrected her: “Yes you were.”

Genesis will soon hit puberty, and Cordova frets she could begin taking drugs or become a gangster’s girlfriend.

"The truth is I don’t see a future for her," she said. "I’ve been deported, and that was the only hope I had, to educate my daughter and help my father. Now my future is just to find a job and pay off my debt. Our dreams are gone."

Police, medics: Five car bombs blast Baghdad kill 26:

BAGHDAD Sat Jul 19, 2014 8:26am EDT

by Sunita Kureishi and Biodun Iginla, BBC News

Residents gather at the scene of a car bomb attack in Baghdad July 19, 2014. REUTERS-Ahmed Malik
A member of the Iraqi security forces stands guard at the site of a car bomb attack in Baghdad July 19, 2014.  REUTERS-Ahmed Malik
A man helps a woman, whose son was killed in a car bomb attack, as they walk away from the scene of the attack in Baghdad July 19, 2014. REUTERS-Ahmed Malik

1 of 4. Residents gather at the scene of a car bomb attack in Baghdad July 19, 2014.

Credit: Reuters/Ahmed Malik

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Five car bombs killed 26 people in mostly Shi’ite Muslim neighborhoods in Baghdad on Saturday, police and medics said.

The first explosion, a suicide car bombing, killed seven people at a police checkpoint in the Abu Dsheer district in the south of the capital, the sources said.

Four other car bombs killed a total of 19 people: one in the Bayaa district in southwestern Baghdad, one in the western district of Jihad and two in northern Baghdad’s Kadhimiya, which boasts a major Shi’ite shrine.

The army and allied Shi’ite militia are trying to push back Sunni insurgents who swept through northern Iraq last month to within 70 km (45 miles) of Baghdad.

Militants fought off an army offensive to retake the northern city of Tikrit on Tuesday. The army was forced to pull back south of the city on the banks of the Tigris.

The fighting has exacerbated a political crisis in Baghdad, where Shi’ite caretaker Prime Minister Nuri al-Maliki is trying to form a government in the face of opposition from Sunnis, Kurds and some Shi’ites, three months after Iraq held a parliamentary election.

Iraq’s Shi’ite clergy as well as Western powers have pressed politicians to overcome their deadlock and agree a new unity government to help tackle the insurgency and prevent Iraq from splitting down ethnic and sectarian lines.

Israeli tanks at Gaza frontier as Palestinian deaths top 300

Israeli soldiers stand on top of their tanks and armoured personnel carriers (APCs) across from the northern Gaza Strip July 18, 2014. REUTERS- Baz Ratner
A Palestinian girl, who fled her family's house following an Israeli ground offensive, looks on as other children staying inside a classroom sleep at a United Nations-run school in Rafah in the southern Gaza Strip July 19, 2014.REUTERS-Ibraheem Abu Mustafa
A Palestinian man, who fled his house following an Israeli ground offensive, rides in a donkey cart loaded with his belongings as he arrives to stay at a United Nations-run school in Rafah in the southern Gaza Strip July 18, 2014 .  REUTERS-Ibraheem Abu Mustafa

1 of 9. Israeli soldiers stand on top of their tanks and armoured personnel carriers (APCs) across from the northern Gaza Strip July 18, 2014.

Credit: Reuters/ Baz Ratner

Israeli tanks and bulldozers dug in across a mile-wide strip of Gaza’s eastern frontier on Saturday, and Palestinian officials said military strikes had killed more than 300 people, most of them civilians.

Israel sent in ground forces on Thursday after 10 days of air and naval barrages failed to stop rocket fire from Gaza.

The military said its engineers were concentrating on a buffer zone 2.5 km (1.5 mile) wide and were looking to destroy concealed rocket launch pads and tunnels dug by Gaza’s dominant Hamas Islamists after the last big flare-up of violence in 2012.

Hamas said its fighters used one such tunnel to slip into Israel on Saturday, inflicting casualties. The Israeli military confirmed the incident near central Gaza, saying it killed one militant, repelled the rest, and four soldiers were wounded.

Palestinians also launched at least 18 rockets into Israel on Saturday, killing a man and wounding four people, including two children, in a southern Bedouin Arab village, police said.

Gaza officials said that at least 325 Palestinians, including 70 children, have been killed in the 12-day conflict.

On Israel’s side, a soldier and two civilians have died.

"I live in fear expecting death. I no longer know what’s more difficult - to die or to await death," said Ali Mahmoud, a 40-year-old resident of the northern Gaza town of Beit Hanoun from where from the Israeli ground action could be heard just 800 meters (yards) away.

Hostilities had escalated following the killing last month of three Jewish seminary students that Israel blames on Hamas. Hamas neither confirmed nor denied involvement. The apparent revenge murder of a Palestinian youth in Jerusalem, for which Israel has charged three Jews, further fueled tensions.

Military spokesman Lieutenant-Colonel Peter Lerner said 13 tunnels, at least one of them 30 meters (90 feet) deep, and 95 rocket launchers were found and destroyed in the Gaza sweep.

Searches were continuing what he described as an open-ended mission that had “severely impeded Hamas capabilities”.


Gaza medical officials said the attacks from Israel on Saturday killed 33 people, mostly civilians, in Beit Hanoun, neighboring Beit Lahiya and in Khan Younis in the south.

Khamis Shaath, a Khan Younis paramedic, rushed to attend to the casualties and discovered two of the dead were his nephews while his wife and son had been wounded, colleagues said. Collapsing in grief, he had to be taken to a hospital himself.

The military had no immediate word on the Beit Lahiya and Khan Younis incidents, though it confirmed attacking 37 sites on Saturday. Israel says it tries to avoid civilian casualties and that Hamas invites them by operating from within urban areas.

In Beit Lahiya, the military said, troops raided a house and killed a gunman after he wounded three soldiers. The Palestinian faction PRC said it ambushed the Israeli army unit. Islamic Jihad, another faction, said it was fighting alongside Hamas.

Israel says more than 1,500 rockets have been fired at its towns and cities during this month’s fighting. The Israeli death toll has been kept low due to the rockets’ relative inaccuracy, an extensive network of civilian air raid sirens and shelters and the Iron Dome rocket interceptor’s 90 percent success rate.

The escalation of hostilities, and its toll on Gaza’s 1.8 million Palestinians as well as on Israelis jarred by rockets that have reached Tel Aviv and beyond, have spurred so-far fruitless truce bids by Western powers and regional go-betweens.


Egypt has no plans to revise its ceasefire proposal, which Hamas has rejected, Cairo’s foreign minister said on Saturday.

U.N. Secretary-General Ban Ki-moon planned to travel to Israel and the Palestinian territories this weekend. Palestinian President Mahmoud Abbas is also looking to secure a ceasefire and was due to travel to regional power Qatar later in the day to see the emir of the Gulf state.

It was not clear whether he would also see Hamas’s leader, Khaled Meshaal, who lives in exile in Qatar.

France has also mooted mediation by Qatar, which has helped fund Gaza projects in the past, but Israel is cool to the idea.

The Israelis prefer Egyptian intercession. Yet with Egypt having cracked down on its Muslim Brotherhood - Hamas’s ideological kind - and viewing Hamas as a security threat, Cairo’s clout with the Palestinian Islamists is in doubt.

"There will be no truce without an end to the war that the Occupation (Israel) began, a lifting of the blockade and a halt to all violations and killings in Gaza and the West Bank," Hamas spokesman Sami Abu Zuhri said in Gaza.

The United Nations said more than 50,000 Palestinians had taken refuge from Israeli attacks in its various Gaza buildings.

"One or two days of F-16 strikes on our neighborhood and we’d had enough," Ahmed Abdel-Ahad, 42, said at a U.N. school in northern Jabalya, where he was camped out with his family.

Palestinian officials said 90 percent of Gaza’s electricity had been cut by Israel. The Israeli energy ministry had no immediate response. On Sunday, it said a Palestinian rocket had crippled a power line to Gaza from Israel and it would not endanger engineers by sending them to conduct repairs.

Hamas, Gaza’s dominant Islamist group, refuses to hold fire unless embargoes by Israel and neighboring Egypt are eased and other demands are met. The Israelis say they are ready to step up their Gaza assault, though they do not aim to topple Hamas.