U.S., Africa say Mali action counters growing Islamist threat

DIABALY/SEGOU, Mali (Reuters) - The United States and African leaders threw their full diplomatic weight on Wednesday behind a campaign to expel Islamist rebels from Mali, as French air strikes harried the al Qaeda-allied fighters in their strongholds.

For nearly two weeks, French jets and helicopters have been hitting carefully selected targets around rebel-held Malian towns such as Gao and Timbuktu, while African troops gather for a planned ground offensive against the Islamist forces.

Last week's bloody seizure of a gas plant in neighboring Algeria by Islamist guerrillas opposing the French action in Mali - in which at least 37 foreign hostages were killed - heightened fears in Africa and the West that Mali's north could become a launchpad for international attacks by al Qaeda.

After halting a surprise Islamist offensive southwards towards Mali's capital Bamako, French ground troops and Malian army soldiers backed by French armored vehicles are securing locations recaptured from the rebels in the last few days.

At one of these, Diabaly, a town of mud-brick homes 350 km (220 miles) north of Bamako, jubilant residents welcomed foreign reporters and showed them munitions abandoned by the fleeing Islamist fighters, including several six-foot long shells.

Charred rebel pick-up trucks destroyed by the French air strikes were also visible amid the mango trees.

The U.N.-mandated intervention in Mali was originally conceived as "African-led, African-owned", but with the Malian army in disarray and African neighbors scrambling to deploy troops, France has taken the lead in the operation.

Amid widening international support for the Mali operation, the European Union is preparing a 450-member mission to help train the Malian army while the United States and European governments are helping fly in French troops and equipment.

Voicing U.S. backing, Secretary of State Hillary Clinton described the internationally-backed intervention in Mali as a response to "a very serious, ongoing threat" posed by the regional affiliate of al Qaeda and its local allies.

"We are in for a struggle but it is a necessary struggle. We cannot permit northern Mali to become a safe haven," she said in Washington, referring to Malian elements of al Qaeda as not only a "terrorist syndicate" but also a "criminal enterprise".

African governments, critical in the past of what they saw as meddling by former colonial powers like France, are now embracing the French-led action as a way to avoid a broadening Islamist insurgency in Africa.

"All of the African continent, all its heads of state, are happy about the speed with which France acted and with France's political courage," African Union Chairman Thomas Boni Yayi, who is president of Benin, said during a visit to Germany.

Nigeria, Africa's No. 1 oil producer, is contributing 1,200 troops to the Mali intervention force, even though it is struggling to control a bloody Islamist insurgency at home by the sect Boko Haram. U.S. and African military officials say Boko Haram has links with al Qaeda and its allies in Mali.

"If it is not contained, definitely it will spill into West Africa... It is one of the reasons we have to move fast," Nigerian President Goodluck Jonathan told a panel at the World Economic Forum in Davos, Switzerland.

South African President Jacob Zuma, who leads Sub-Saharan Africa's biggest economy, said the Mali situation would figure high on the agenda of an African Union summit this weekend.

"It is not just Mali. It is Chad, it is Niger, it is Mauritania," Zuma told Reuters in an interview in Davos, adding that South Africa could play a role in Mali if asked to by the African Union as the continent's top representative body.

TIMBUKTU "GADDAFI HOUSE" HIT

Among the rebel targets in Timbuktu hit by French airstrikes in the last few days was a house built there by the late Libyan leader Muammar Gaddafi, which Islamist militants were using as a base, local residents said.

The Islamist alliance in the north, which groups al Qaeda in the Islamic Maghreb and the Malian militant groups Ansar Dine and MUJWA, holds the major towns of Timbuktu, Gao and Kidal.

Mali's state radio reported that, besides the Gaddafi house in Timbuktu, rebel fuel and weapons depots around the fabled Saharan trading town were also bombarded in the French raids.

With these keeping the rebels on the defensive, military experts say the swift and effective deployment of African ground forces is crucial to sustain the momentum of an offensive against the Islamists and prevent them melting away into empty desert or rugged mountains near the Algerian border.

"The recovery of Mali's sovereignty is under way," French Defense Minister Jean-Yves Le Drian told France 24 TV, adding that the African force for Mali, known as AFISMA and expected to number more than 5,000, was being deployed.

Around 1,600 of its members were already in the West African state, a French official said.

These came so far from Benin, Nigeria, Senegal, Togo and Niger. Chad, a Central African state whose troops are experienced in desert warfare, was also moving troops towards Mali's border in neighboring Niger to assist in the mission.

Ivory Coast said on Wednesday it was sending a 500-strong logistical support contingent to Mali, but no combat troops. Ghana and Guinea were also contributing to the African force, French Prime Minister Jean-Marc Ayrault said.

The European Union's military training mission in Mali (EUTM) would be launched in mid-February and led by a French general, but would have no combat role.

WHO WILL PAY?

International donors are due to meet in the Ethiopian capital Addis Ababa on January 29 to discuss the African military operation in Mali, and France said they would be asked to provide about 340 million euros ($452 million.

France's Le Drian told France 24 that the 12-day-old French military operation in Mali had cost 30 million euros so far.

Despite the widespread declarations of support for the Mali intervention, some analysts questioned whether western powers like the United States were following up on their words with sufficient concrete action and support to ensure its success.

"There is not much money for Africa... It's a low priority" for Barack Obama's U.S. administration, said Vicki Huddleston, who served as U.S. ambassador for Mali in 2002-2005.

"We have to come up with a really serious 'boots on the ground' strategy," she told Reuters, adding that Islamist militants in North and West Africa were "looking for their next target".

(Additional reporting by Emma Thomasson and Ben Hirschler in Davos, Stephen Brown in Berlin, Tiemoko Diallo in Bamako, Andrew Quinn in Washington, John Irish and Elizabeth Pineau in Paris, Joe Bavier in Abidjan, David Lewis, Daniel Flynn and Pascal Fletcher in Dakar; Writing by Pascal Fletcher; Editing by Tom Pfeiffer)

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Russian lower house backs bill to allow Putin to pick candidates to lead regions

MOSCOW (Reuters) - Russia's parliament has given preliminary backing to a bill that would enable the country's 83 regions to scrap popular elections of their leaders in favor of a system that would let President Vladimir Putin choose candidates instead.

Opponents said the bill, approved in a 403-10 vote late on Wednesday after the first of three readings in the lower house would be a step backwards for democracy in Putin's new term. The lower house is dominated by Putin's United Russia party.

Putin scrapped popular elections of regional governors as part of a drive to tighten his grip on the political system in his initial 2000-2008 presidency.

The elections were reintroduced last year amid a wave of opposition protests that drew tens of thousands of Russians tired of Putin's dominance and eager for a stronger political voice.

Critics of Putin say the rules favor United Russia as it is, and its candidates won all five governorships at stake in elections last October.

The proposed law would allow each region to abandon direct elections and put in place a system under which Putin would name three candidates and the regional legislature would elect one of them as governor.

Backers of the bill suggest it is mainly intended as a means to scrap popular elections in regions with ethnically mixed populations, such as the mostly Muslim provinces of the insurgency-plagued North Caucasus.

The Kremlin is concerned that votes in those regions could involve candidates whose loyalty is in question or spark unrest.

The financial daily Vedomosti reported on Thursday that Putin wants to use the legislation to choose the leaders of the North Caucasus provinces of Dagestan and Ingushetia, bordering war-scarred Chechnya, this autumn. The Kremlin declined immediate comment.

Critics of the president suspect the law will be used in any region where United Russia, which is far less popular than Putin himself and saw its Duma majority sharply reduced in the December 2011 parliamentary election, fears it could face a strong challenge.

Dmitry Gudkov, an opposition lawmaker and a leader of the protests against alleged fraud on behalf of United Russia in that election, called the proposed law undemocratic and discriminatory.

"What has happened to make you think that citizens of certain regions do not deserve direct elections of their governors, and why are you also trying to guarantee that United Russia candidates will take power in regions where its level of support has fallen?" he said during the Duma debate.

Putin has said he is improving democracy in his new six-year term, which began last May, citing plans for a system under which half the Duma's 450 deputies would be elected directly, instead of from party lists. Critics say the initiative will favor United Russia because it holds the levers of power nationwide.

(Reporting by Maria Tsvetkova; Writing by Steve Gutterman; Editing by David Brunnstrom)

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Insight: In Amenas attack brings global jihad home to Algeria

LONDON (Reuters) - A photo circulating on jihadi online forums says it all: a plane flying into the Eiffel Tower with September 11 written in Arabic in red letters alongside.

The French military intervention in Mali and an Islamist militant attack on the In Amenas gas plant in Algeria in which at least 38 workers died have re-energized international jihad.

These events also closed a loop which many thought had frayed over recent years linking North African insurgents with al Qaeda's central leadership and ideology.

It is those links, spanning regions and times, connected through the shadowy career of Algerian militant Mokhtar Belmokhtar, which are now coming under fresh scrutiny to assess whether the west underestimated the resilience of global jihad.

Back in 1994, Algerian militants fighting the French-backed government in Algiers hijacked an Air France plane. Though it was successfully stormed by French forces in Marseille, French intelligence believed they planned to fly it into the Eiffel Tower, foreshadowing the September 11 attacks on the United States.

But that Algerian phase of the jihad was overlooked by a focus on post September 11 history, by hopes that Osama bin Laden's death in Pakistan in 2011 had fatally wounded al Qaeda, and, crucially, by a view that Belmokhtar had drifted away into making money from smuggling and seizing hostages.

"There have been a lot of debates over whether Belmokhtar is a criminal or a jihadist, but this overlooks the possibility to be both," said Stephen Tankel, a professor at American University and non-resident scholar at the Carnegie Endowment and the author of a forthcoming book on the evolution of jihadist groups since 9/11.

SOPHISTICATED PLANNING

Algerian and western intelligence had been watching Afghan war veteran Belmokhtar for years, but they either misread his intentions or underestimated his capacity for the kind of sophisticated planning required to pull off the most dramatic terrorist act since the 2008 attack on Mumbai by the Pakistan-based Lashkar-e-Taiba militant group.

Yet the signs were there for all to read. In a post on the authoritative Jihadica website, North African specialist Andrew Lebovich noted that when Belmokhtar announced in December the creation of a new combat unit, al-Mouwakoune Bi-Dima ("Those Who Sign with Blood"), he threatened both France and Algeria.

The name he chose for his new combat unit was also the same one originally used by a group of the Algerian Armed Islamic Group (GIA) behind the hijacking of the Air France plane.

In a video in December, when he allegedly "split" from Al Qaeda in the Islamic Maghreb (AQIM), Belmokhtar also pledged his loyalty to Afghan Taliban leader Mullah Muhammad Omar and al Qaeda leader Ayman al Zawahiri, without mentioning the AQIM leadership.

"He gave me the impression that he now was working independently and behaving as though he is the true emir of AQ-linked groups in the Sahel," said Camille Tawil, a journalist at al Hayat and a leading authority on north African jihadism.

True to Belmokhtar's words in that video, the hostage-takers at In Amenas made the classic demands of al Qaeda's central leadership - for the release from U.S. prisons of Omar Abdel-Rahman, the blind Egyptian sheikh jailed for involvement in a 1993 attack on the World Trade Center, and Pakistani neuroscientist Aafia Siddiqui, whose uncle by marriage was September 11 mastermind Khaled Sheikh Mohammad.

And while it is possible the In Amenas attackers hoped to escape with foreign hostages who could be traded for money, it is equally plausible the primary motive was to re-energize global jihad at a time when French military intervention in Mali provides a powerful magnet for Islamist militants worldwide.

HOSTAGE-TAKING

"In both the Air France attack and last week's assault, hostage-taking may have been an ancillary instead of a primary goal," wrote Lebovich.

"In the Air France hijacking ... it later emerged that their true goal was always to detonate the plane over Paris," he said. At In Amenas, "Algerian authorities have said the group's goal was to destroy the facility, though they may have also hoped to escape with at least some hostages."

Whatever the truth, the relationship between Belmokhtar and global jihad goes back more than 20 years. Some time after the death in Pakistan in 1989 of Palestinian scholar Abdullah Azzam, bin Laden's mentor, he left Algeria for Afghanistan.

"We were able to confirm, from a reliable source, his presence in the (training) camps which the Pakistanis were running in Peshawar," wrote the former French intelligence analyst who blogs at Le Monde newspaper under the pen-name Abou Djaffar. "There, towards the end of the 1980s, or the beginning of the 1990s, he received paramilitary training which would be very useful to him in Algeria."

By the mid-1990s he was back in Algeria, part of the Armed Islamic Group which goes by its French acronym GIA and which had sprung up to fight the government after it suppressed elections in 1992 which the Islamists were poised to win.

"The GIA quickly emerged as the most potent insurgent force in the country and the cause célèbre for many in the international jihadist movement who initially saw great promise for the Algerian jihad," said Tankel.

BIN LADEN

Bin Laden - who by then had moved from Afghanistan to Sudan - sent several emissaries to the GIA to discuss whether they wanted to join up with his then still struggling al Qaeda.

Lawrence Wright, author of "The Looming Tower", claimed in his book that bin Laden sent $40,000 to the GIA before regretting it as Algerian group's reputation suffered because of its appetite for mass killing during the civil war which would eventually claim up to 200,000 lives.

With the GIA discredited, infiltrated by Algerian security services and looked upon with distaste even by the global jihadi movement, the group splintered. Its most successful offshoot became the Salafist Group for Preaching and Combat (GSPC), which eventually merged into al Qaeda as Al Qaeda in the Islamic Maghreb in 2007.

Over the years, the trail linking Algerian militants to core al Qaeda runs hot and cold, but recurs often enough to suggest a resilience in a movement which was deliberately designed with horizontal networks and an emphasis on unity of ideology which would allow it to survive the decapitation of its leadership.

According to al Hayat's Tawil, bin Laden sent an envoy, Ahmed Alwan, also known as Abu Mohamed Al-Yemeni, to the GSPC in the summer of 2001. Among the GSPC leaders he met in Algeria was Belmokhtar. "The aim of bin Laden envoy's visit was to establish links between AQ and the Algerian jihadi groups," he said.

With the GSPC running powerful networks among the North African diaspora in Europe, they may also have been linked to the assassination of Afghan Tajik anti-Taliban commander Ahmad Shah Massoud two days before the September 11 attacks. His killing was seen as a present from al Qaeda to the Taliban then in power in Kabul, meant to undercut their opponents ahead of the expected U.S. counter-attack.

The exact links between the GSPC and Massoud's assassination by two Belgian Tunisians remain murky, though they were connected to the same network through a mosque in Paris.

In a sign of the ties that bind across regions and across years, another member of that network was Willy Brigitte, a Frenchman later convicted of planning attacks for the Lashkar-e-Taiba. His minder in Pakistan was Sajid Mir, a man who Indian authorities say was also involved in the Mumbai attacks, which killed 166 people.

"All of these guys were floating around in the same milieu at the same time," said Tankel.

STRAINED, NOT SEVERED

The massive intelligence crackdown which followed September 11 largely broke apart the European networks; but then a new link was built - between al Qaeda in Iraq leader Abu Musab al Zarqawi, who was killed in 2006, and GSPC leaders, which eventually convinced them to join al Qaeda.

The chaotic aftermath of the fall of Libya's Muammar Gaddafi in 2011 - which helped AQIM acquire weapons and exploit discontent among Tuareg tribals in the region - allowed them to expand their operations, particularly in neighboring Mali.

But it would be a mistake to suggest they suddenly appeared out of nowhere as a new al Qaeda threat, given their long history with the group.

Daveed Gartenstein-Ross, author of a book on bin Laden's legacy, noted on U.S. security website Gunpowder and Lead that documents captured from bin Laden's compound in Abbottabad showed communications between AQIM and al Qaeda's leadership over four years, including discussion of strategic and operational issues.

"While it is possible that after bin Laden's death, when Ayman al Zawahiri became ... emir, these communications were crippled or otherwise ceased, there's no reason that this should be our a priori assumption," he wrote.

In an interview given to the Mauritanian news agency in 2011, Belmokhtar himself noted that GSPC member Younis al-Mauritani, arrested in the Pakistani city of Quetta in Sept 2011, had been sent to hold talks with al Qaeda leaders.

In the shadowy and often shifting alliances of global jihad, it will take time to trace all the different threads behind the attack on In Amenas.

For now though, the In Amenas raid has brought together two quite different decades - the 1990s attacks on French interests which included bombings in Paris and the Air France hijack, and the post September 11 U.S.-led assault on al Qaeda's capabilities in Afghanistan and Pakistan.

"Maybe the leadership approved it, maybe not," Lebovich said in a phone call from Dakar. "Al Qaeda core has been quite slow in their statements recently. It will be interesting to see if there is a statement from al Zawahiri."

(Editing by Giles Elgood)

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North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "sworn enemy".

The announcement by the country's top military body came a day after the U.N. Security Council agreed to a U.S.-backed resolution to censure and sanction North Korea for a rocket launch in December that breached U.N. rules.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

China, the one major diplomatic ally of the isolated and impoverished North, agreed to the U.S.-backed resolution and it also supported resolutions in 2006 and 2009 after Pyongyang's two earlier nuclear tests.

Thursday's statement by North Korea represents a huge challenge to Beijing as it undergoes a leadership transition with Xi Jinping due to take office in March.

China's Foreign Ministry called for calm and restraint and a return to six-party talks, but effectively singled out North Korea, urging the "relevant party" not to take any steps that would raise tensions.

"We hope the relevant party can remain calm and act and speak in a cautious and prudent way and not take any steps which may further worsen the situation," ministry spokesman Hong Lei told reporters at a regular press briefing.

North Korea has rejected proposals to restart the talks aimed at reining in its nuclear capacity. The United States, China, Russia, Japan and the two Koreas are the six parties involved.

"After all these years and numerous rounds of six-party talks we can see that China's influence over North Korea is actually very limited. All China can do is try to persuade them not to carry out their threats," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts said the North could test as early as February as South Korea prepares to install a new, untested president or that it could choose to stage a nuclear explosion to coincide with former ruler Kim Jong-il's Feb 16 birthday.

"North Korea will have felt betrayed by China for agreeing to the latest U.N. resolution and they might be targeting (China) as well (with this statement)," said Lee Seung-yeol, senior research fellow at Ewha Institute of Unification Studies in Seoul.

U.S. URGES NO TEST

Washington urged North Korea not to proceed with a third test just as the North's statement was published on Thursday.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul.

"We hope they don't do it. We call on them not to do it," Davies said after a meeting with South Korean officials. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

A South Korean military official said the concern now is that Pyongyang could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

North Korea's 2006 nuclear test using plutonium produced a puny yield equivalent to one kiloton of TNT - compared with 13-18 kilotons for the Hiroshima bomb - and U.S. intelligence estimates put the 2009 test's yield at roughly two kilotons

North Korea is estimated to have enough fissile material for about a dozen plutonium warheads, although estimates vary, and intelligence reports suggest that it has been enriching uranium to supplement that stock and give it a second path to the bomb.

According to estimates from the Institute for Science and International Security from late 2012, North Korea could have enough weapons grade uranium for 21-32 nuclear weapons by 2016 if it used one centrifuge at its Yongbyon nuclear plant to enrich uranium to weapons grade.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions that it sees as hostile.

Its long-range rockets are not seen as capable of reaching the United States mainland and it is not believed to have the technology to mount a nuclear warhead on a long-range missile.

The bellicose statement on Thursday appeared to dent any remaining hopes that Kim Jong-un, believed to be 30 years old, would pursue a different path from his father Kim Jong-il, who oversaw the country's military and nuclear programs.

The older Kim died in December 2011.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Additional reporting by Christine Kim in SEOUL, Ben Blanchard and Sui-Lee Wee in Beijing; Writing by David Chance; Editing by Raju Gopalakrishnan)

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North Korea says will boost nuclear deterrent after U.N. rebuke

UNITED NATIONS (Reuters) - The U.N. Security Council unanimously condemned North Korea's December rocket launch and expanded existing U.N. sanctions, and Pyongyang reacted with a vow to boost the North's military and nuclear capabilities.

While the resolution approved by the 15-nation council on Tuesday does not impose new sanctions on Pyongyang, diplomats said Beijing's support for it was a significant diplomatic blow to Pyongyang.

The resolution said the council "deplores the violations" by North Korea of its previous resolutions, which banned Pyongyang from conducting further ballistic missile and nuclear tests and from importing materials and technology for those programs.

It also said the council "expresses its determination to take significant action in the event of a further DPRK (North Korean) launch or nuclear test".

North Korea reacted quickly, saying it would hold no more talks on the de-nuclearization of the Korean peninsula and would boost its military and nuclear capabilities.

"We will take measures to boost and strengthen our defensive military power including nuclear deterrence," its Foreign Ministry said in a statement carried by state news agency KCNA.

The United States' special envoy on North Korea, arriving in Seoul on Wednesday to meet his South Korean counterparts, urged Pyongyang to back down from further provocative actions but left the door open for dialogue.

"If they can... begin to take concrete steps to indicate their interests in returning to diplomacy, they may find willing partners in that process," Glyn Davies told reporters.

Six-party talks aimed at halting North Korea's nuclear program have involved North Korea, the United States, China, Japan, Russia and South Korea. They have been held intermittently since 2003 but have stalled since 2008.

Russia's foreign minister said on Wednesday that North Korea should pay heed to the international community and adhere to limits on its missile and nuclear programs.

South Korea says the North is technically ready for a third nuclear test, and satellite images show it is actively working on its nuclear site. However, political analysts said they viewed a test as unlikely in the near-term.

"North Korea will likely take a sequenced strategy where the first stage response would be more militarily aggressive actions like another missile launch," said Yang Moo-jin of the University of North Korean Studies in Seoul.

There are concerns that North Korea could stage a test using highly enriched uranium for the first time, which would give it a second path to a nuclear bomb and enable it to preserve its stocks of plutonium, which are believed to be sufficient for about 12 nuclear devices.

The U.N. resolution added six North Korean entities, including Pyongyang's space agency, the Korean Committee for Space Technology, and the man heading it, Paek Chang-ho, to an existing U.N. blacklist.

BLACKLISTED

The firms and individuals will all face an international asset freeze, while Paek and the others blacklisted by Tuesday's resolution -- the manager of the rocket launch center and two North Korean banking officials -- will face a global travel ban.

In addition to the space agency, the council blacklisted the Bank of East Land, Korea Kumryong Trading Corp., Tosong Technology Trading Corp., Korea Ryonha Machinery Joint Venture Corp., and Leader (Hong Kong) International.

Leader, based in Hong Kong, is an agent for KOMID, a North Korean mining and trading company that was sanctioned in 2009 and is the North's main arms dealer, the resolution said.

U.S. Ambassador to the United Nations Susan Rice welcomed the resolution, describing it as introducing "new sanctions" against North Korea. "This resolution demonstrates to North Korea that there are unanimous and significant consequences for its flagrant violation of its obligations under previous resolutions," she said.

Other diplomats, however, said on condition of anonymity that describing the measures in Tuesday's resolution were new sanctions would be an exaggeration.

China, the North's only major diplomatic ally, said on Monday the Security Council needed to pass a cautious resolution on North Korea, adding that this was the best way to ensure regional tensions did not escalate further.

Chinese Ambassador Li Baodong said certain elements in the resolution's original draft, which in China's view would "jeopardize" normal trade between North Korea and other countries, had been removed, the official Xinhua news agency reported.

"Sanctions and resolutions alone do not work," Xinhua quoted him as saying. "Resolutions must be completed and supplemented by diplomatic efforts."

Several diplomats said Beijing's decision to back the resolution sent a strong message to Pyongyang.

"It might not be much, but the Chinese move is significant," a council diplomat told Reuters. "The prospect of a (new) nuclear test might have been a game changer (for China)."

The United States had wanted to punish North Korea for the rocket launch with a Security Council resolution that imposed entirely new sanctions against Pyongyang, but Beijing rejected that option. China agreed to U.N. sanctions against Pyongyang after North Korea's 2006 and 2009 nuclear tests.

December's successful long-range rocket launch, the first to put a satellite in orbit, was a coup for North Korea's young leader, Kim Jong-un.

North and South Korea are still technically at war because their 1950-53 conflict ended in a truce, not a treaty.

(Additional reporting by Jumin Park, David Chance and Jack Kim in SEOUL, and Ben Blanchard in BEIJING; Editing by Raju Gopalakrishnan)

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Netanyahu turns focus to Iran after narrow election win

JERUSALEM (Reuters) - Hawkish Prime Minister Benjamin Netanyahu has claimed victory in Israel's parliamentary election, shrugging off surprise losses to centre-left challengers and vowing to stop Iran from acquiring nuclear weapons.

However, Tuesday's vote, which also disappointed religiously inspired hardliners, may deflect the premier's focus on confronting Tehran and resisting Palestinian demands as Israel's secular middle-class demanded new attention on domestic issues.

That in turn might draw Netanyahu toward a less fractious relationship with his key ally, U.S. President Barack Obama, who himself embarked on a new term this week with great ambitions.

Interim vote count results on Wednesday showed the Israeli leader's right-wing Likud and the ultra-nationalist Yisrael Beitenu would remain the biggest bloc in the 120-member assembly, but with only 31 seats, 11 fewer than the 42 the two parties held in the last parliament.

That put Netanyahu on course for a third term in office, perhaps leading a hardline coalition that would promote Jewish settlement on occupied land.

But his weakened showing in the ballot, which he had called nine months early in the hope of a strong mandate for his struggle with Iran, could complicate his efforts to forge an alliance with a stable and substantial majority in parliament.

"I am proud to be your prime minister, and I thank you for giving me the opportunity, for the third time, to lead the state of Israel," the 63-year-old leader told a cheering crowd in the early hours of Wednesday at his campaign headquarters.

Netanyahu said he planned to form as broad a governing coalition as possible, suggesting he would seek partners beyond his traditional ultra-nationalist and religious allies. His first call may be to Yair Lapid, a former television anchorman whose centrist, secular party came from nowhere to second place.

"The first challenge was and remains preventing Iran from obtaining nuclear weapons," Netanyahu said.

Iran denies it is planning to build an atomic bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

Netanyahu views Tehran's nuclear program as a threat to Israel's existence and has stoked international concern by hinting at possible Israeli military action to thwart it.

He has shunted Palestinian peacemaking well down the agenda despite Western concern to keep the quest for a solution alive.

Wednesday's count forecast an even split between right-wing parties and the centre-left, with each bloc taking 60 of parliament's 120 seats.

Lapid's Yesh Atid (There is a Future) party should have 19 seats, the interim count showed - a stunning result for a newcomer to politics in a field of 32 contending parties.

Lapid won support amongst middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.

He urged Netanyahu "to build as broad a government as possible so that we can bring about real change in Israel".

The once dominant Labour party led by Shelly Yachimovich was projected to take third place with 15 seats. She described Likud victory claims as "ridiculous" before final results were in.

"There is a very good chance, a very good chance, that tomorrow morning Benjamin Netanyahu will not be able to form a government," she declared at her party headquarters.

Reconciling views to build a cabinet will certainly be hard.

"YESH ATID SWEEP"

Some in Netanyahu's party acknowledged that the election had gone somewhat awry. "We anticipated we would lose some votes to Lapid, but not to this extent. This was a Yesh Atid sweep," Likud-Yisrael Beitenu campaign adviser Ronen Moshe told Reuters.

Lapid said before the election he would consider joining a Netanyahu-led government. If that happens, the ultra-Orthodox religious parties which often hold the balance of power in parliament might lose some of their leverage.

After a lackluster campaign, Israelis voted in droves on a sunny winter day, registering a turnout of 66.6 percent, the highest since 2003. That buoyed centre-left parties which had pinned their hopes on energizing an army of undecided voters against Netanyahu and his nationalist-religious allies.

"A big majority of middle class Israelis have voted strongly against the priorities of the last government," said Dan Avnon, a political science professor at Hebrew University.

"These are the people who pay the taxes and serve in the army," he said. "I don't think they can be ignored."

Opinion polls before the election had predicted an easy win for Netanyahu, although the last ones suggested he would lose some votes to the Jewish Home party, which opposes a Palestinian state and advocates annexing chunks of the occupied West Bank.

Wednesday's interim count gave 11 seats to Jewish Home.

The biggest casualty was the centrist Kadima party, which teetered between a minimum parliamentary showing of 2 seats and political extinction, depending on the final vote tally due later on Wednesday.

Kadima had gained the highest number in the previous election in 2009, although its then leader Tzipi Livni failed to put together a governing coalition.

Official vote results will be announced on January 30. After that, President Shimon Peres is likely to ask Netanyahu, as leader of the biggest bloc in parliament, to try to form a government.

WESTERN ANXIETY

Whatever permutation finally emerges, a Netanyahu-led government is likely to resist any push for a peace deal with the Palestinians that would come anywhere near satisfying the moderates who seek a viable independent state alongside Israel.

Naftali Bennet, high-tech millionaire son of American immigrants who leads the hard-right, pro-settler Jewish Home party, was a likely coalition partner despite his election showing, which was less than surging opinion polls had predicted.

Bennet, who advocates annexing West Bank land to Israel, told cheering supporters: "There is only one truth and it is simple. The Land of Israel belongs to the people of Israel."

Britain warned Israel on Tuesday it was losing international support, saying Jewish settlement expansion had almost killed off prospects for a two-state solution.

U.S.-brokered peace talks broke down in 2010 amid mutual acrimony. Since then Israel has accelerated construction in the West Bank and east Jerusalem - land the Palestinians want for their future state - much to the anger of Western partners.

Netanyahu's relations with Obama have been notably tense and Martin Indyk, former U.S. ambassador to Israel, told the BBC the election was unlikely to change that.

"President Obama doesn't have high expectations that there's going to be a government in Israel committed to making peace and is capable of the kind of very difficult and painful concessions that would be needed to achieve a two-state solution," he said.

But Aaron David Miller, once a senior U.S. adviser on the peace process, said a weakening of the right might improve ties: "The fact is, if (Netanyahu) goes with Lapid and he reaches out to the centre, you're going to end up with an American-Israeli rapprochement to a certain degree," Miller told CNN.

Tuesday's vote was the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu has said the turbulence, which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt, shows the importance of strengthening national security.

Foreign policy issues barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

A major problem for the next government, which is unlikely to take power before mid-March, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(Reporting by Jerusalem bureau; Editing by Alastair Macdonald and David Brunnstrom)

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Cameron promises Britons straight choice on EU exit

LONDON (Reuters) - Prime Minister David Cameron promised on Wednesday to give Britons a straight referendum choice on whether to stay in the European Union or leave, provided he wins an election in 2015.

Cameron ended months of speculation by announcing in a speech the plan for a vote sometime between 2015 and 2018, shrugging off warnings that this could imperil Britain's diplomatic and economic prospects and alienate its allies.

Cameron said Britain did not want to pull up the drawbridge and retreat from the world but that public disillusionment with the EU is at "an all-time high".

"It is time for the British people to have their say. It is time for us to settle this question about Britain and Europe," Cameron said. His Conservative party would campaign for the 2015 election promising to renegotiate Britain's EU membership.

"When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether. It will be an in-out referendum."

Whether Cameron will ever hold the referendum remains as uncertain as the Conservatives' chances of winning the next election due in 2015.

They trail the opposition Labour party in opinion polls, and the coalition government is pushing through painful public spending cuts to try to reduce Britain's large budget deficit, likely to upset voters in the meantime.

Cameron's promise looks likely to satisfy much of his own party, which has been split on the issue, but may create uncertainty when events could put his preferred option - a looser version of full British membership - out of reach.

The move may also unsettle other EU states, such as France and Germany. European officials have already warned Cameron against treating the bloc as an "a la carte menu" from which he can pick and choose membership terms.

His speech in London is also likely to raise concerns in the United States, a close ally, which has said it wants Britain to remain inside the EU with "a strong voice".

Nor is it likely to help heal rifts with his pro-European Liberal Democrat junior coalition partners.

Cameron said he would prefer Britain, the world's sixth biggest economy, to remain inside the 27-nation EU but he also made clear he believes the EU must be radically reformed.

A new EU must be built upon five principles, he said: competitiveness, flexibility, power flowing back to - not just away from - member states, democratic accountability and fairness.

The euro zone debt crisis is a main reason why Britain must reassess its relationship with the wider EU, Cameron said, adding that ever closer union was not Britain's objective.

"WAFER THIN" CONSENT

Cameron said the EU faced three main problems: the debt crisis, competitiveness and faltering public support.

Democratic consent for the EU in Britain was now "wafer thin", reflecting the results of many opinion polls that have shown a slim majority would vote to leave the bloc and the rise of the UK Independence Party that favors complete withdrawal.

"Some people say that to point this out is irresponsible, creates uncertainty for business and puts a question mark over Britain's place in the European Union," said Cameron. "But the question mark is already there: ignoring it won't make it go away."

Avoiding a referendum would make an eventual British exit more likely, not less, he said. This would risk bottling up resentment towards the EU, compounding people's feeling that "the EU is heading in a direction that they never signed up to".

"Simply asking the British people to carry on accepting a European settlement over which they have had little choice is a path to ensuring that when the question is finally put - and at some stage it will have to be - it is much more likely that the British people will reject the European Union."

Many Britons resent the EU's interference in their daily lives and its "unnecessary rules and regulations", he added.

Cameron's speech has been marked by long delays, diplomatic rows and the postponement due to the Algerian hostage crisis.

"The Curse of TutanCameron's Europe speech" was how one political magazine summed up the repeated delays in a headline over a picture of a golden-faced Cameron superimposed on the death mask of ancient Egyptian pharaoh Tutankhamen.

(Editing by Guy Faulconbridge and Peter Graff)

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Russia says U.S. rights law "odious" but wants constructive ties

MOSCOW (Reuters) - Russia wants constructive relations with the United States despite disputes over U.S. legislation designed to punish Russian human rights abusers and other difficulties in ties, Russian Foreign Minister Sergei Lavrov said on Wednesday.

Lavrov spoke during an annual news conference after a year during which relations between the former Cold War foes have deteriorated following improvements under U.S. President Barack Obama's "reset" policy.

A major irritant has been the Magnitsky Act, a law signed by Obama last month that denies visas to Russians accused of human rights violations and freezes their assets in the United States.

Russia President Vladimir Putin has responded by signing a law that imposes similar measures on Americans it says have abused the rights of Russians and also bans adoptions of Russian orphans by Americans, further increasing tension.

Lavrov called the Magnitsky Act "odious" and also criticized a U.S. judge's recent ruling in a dispute over a collection of Jewish writings held in Russia. He also said the sides remain at odds over U.S. plans for a anti-missile shield in Europe.

However, he said, "We are interested in constructive dialogue and the development of stable, mutually beneficial cooperation, particularly in the area of investment, in trade and economic relations and in contacts between people."

(Reporting by Timothy Heritage; Writing by Steve Gutterman; Editing by Douglas Busvine)

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U.S. circulates draft North Korea resolution at U.N.

UNITED NATIONS (Reuters) - The United States has circulated a draft resolution to the U.N. Security Council that would condemn North Korea for its December rocket launch and calls for tightening existing U.N. sanctions, diplomats said on Monday.

The draft was the result of a deal between the United States and China, the envoys said on condition of anonymity. Even though the draft does not call for any new sanctions against Pyongyang, diplomats said China's support for the resolution represented a significant diplomatic blow to Pyongyang.

"We hope to have a vote midweek," one diplomat told Reuters on condition of anonymity.

China said earlier on Monday that the Security Council needed to pass a cautious resolution on North Korea, adding that this was the best way to ensure regional tensions did not escalate further.

Russian U.N. Ambassador Vitaly Churkin voiced Moscow's backing for the draft text last week.

"I expect we will support it," Russia's state-run RIA Novosti news agency quoted Churkin as saying. "I don't expect that the U.N. Security Council members will have any serious problems (with the resolution)."

"Our position is that the North Korean rocket launch is a violation of a U.N. Security Council resolution, so the council should react," Churkin said.

The draft, which was sent to the 15 council members, calls for sanctioning a number of additional North Korean entities, including Pyongyang's space agency, diplomats said on condition of anonymity.

North and South Korea are still technically at war because their 1950-53 conflict ended in a truce, not a treaty.

The United States had wanted to punish North Korea for the rocket launch with a U.N. Security Council resolution that imposed new sanctions against Pyongyang, but Beijing rejected that option.

Beijing had wanted the council to merely issue a statement calling for its North Korea sanctions committee to expand the existing U.N. blacklists, diplomats said.

COUNCIL CONDEMNS THE MOVE

The U.S.-Chinese deal, they said, was that Washington would forgo the idea of immediate new sanctions, while Beijing would accept the idea of a resolution instead of a statement. This makes the rebuke more forceful.

After North Korea's April 2012 rocket launch, the council passed a "presidential statement" that condemned the move and urged the Security Council sanctions committee to tighten the existing U.N. sanctions regime.

The committee then blacklisted additional North Korean firms and broadened a list of items Pyongyang was banned from importing.

China is the North's only major diplomatic ally, although it agreed to U.N. sanctions against Pyongyang after North Korea's 2006 and 2009 nuclear tests.

North Korea is already banned under Security Council resolutions from developing nuclear and missile technology. But it has been working steadily on its nuclear test site, possibly in preparation for a third nuclear test, satellite images show.

December's successful long-range rocket launch, the first to put a satellite in orbit, was a coup for North Korea's young leader, Kim Jong-un.

(Reporting By Louis Charbonneau; Editing by Peter Cooney and Christopher Wilson)

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Israel goes to polls, set to re-elect Netanyahu

JERUSALEM (Reuters) - Israelis voted on Tuesday in an election widely expected to win Prime Minister Benjamin Netanyahu a third term in office, pushing the Jewish State further to the right, away from peace with Palestinians and towards a showdown with Iran.

Netanyahu has vowed to pursue the settlement of lands seized during the 1967 Middle East war if he stays in power, a policy that would put him at odds with his international partners and worsen already tense ties with U.S. President Barack Obama.

Polls predict Netanyahu's Likud party, which has forged an electoral pact with the ultra-nationalist Yisrael Beitenu group, will take the most seats in the parliamentary election, albeit considerably fewer than they had originally hoped.

"We want Israel to succeed, we vote Likud-Beitenu ... The bigger it is, the more Israel will succeed," Netanyahu said after casting his ballot alongside his wife and two sons.

Some 5.66 million Israelis are eligible to vote, with polling stations staying open until 10 p.m. Full results are due by Wednesday morning, opening the way for coalition talks that could take several weeks to wrap up.

No Israeli party has ever secured an absolute majority, meaning that Netanyahu, who says that dealing with Iran's nuclear ambitions is his top priority, will have to bring various allies onboard to control the 120-seat Knesset.

The former commando has traditionally looked to religious, conservative parties for backing and is widely expected to reach out to the surprise star of the campaign, self-made millionaire Naftali Bennett who heads the far-right Jewish Home party.

Bennett's youthful dynamism has struck a chord amongst Israelis, most of whom no longer believe in the possibility of a Palestinian peace deal, and has eroded Netanyahu's support base.

Surveys suggest he may take up to 14 seats, many at the expense of Likud-Beitenu, which was projected to win 32 in the last round of opinion polls published on Friday -- 10 less than the two parties won in 2009 when they ran separate lists.

Such a result might embarrass Netanyahu, but would still leave him in pole position to form the next government. Acknowledging the threat, Netanyahu's son Yair urged young Israelis not to abandon the old, established Likud.

"Even if there more trendy parties, there is one party that has a proven record," he said on Tuesday after voting.

Portraying himself as a natural partner for the prime minister, Bennett has alarmed those who want to see an independent Palestinian state created alongside Israel, by calling for the annexation of chunks of the occupied West Bank.

"I pray to God to give me the power to unite all of Israel and to restore Israel's Jewish soul," Bennett said on Monday at a final campaign appearance before Jerusalem's Western Wall.

However, some political analysts have speculated that Netanyahu might seek to project a more moderate image for Israel on the world stage and look to share power with centrist parties, such as Yesh Atid (There is a Future) - a newly formed group led by former TV host Yair Lapid.

ARAB UPRISING

Israel's main opposition party, Labour, which is seen capturing up to 17 seats, has already ruled out a repeat of 2009, when it initially entered Netanyahu's cabinet, promising to promote peace negotiations with the Palestinians.

U.S.-brokered talks collapsed just a month after they started in 2010 following a row over settlement building, and have laid in ruins ever since. Netanyahu blamed the Palestinians for the failure and says his door remains open to discussions.

Palestinian President Mahmoud Abbas says he won't return to the table unless there is a halt to settlement construction.

That looks unlikely, with Netanyahu approving some 11,000 settler homes in December alone, causing further strains to his already notoriously difficult relations with U.S. President Barack Obama, who was sworn in for a second term on Monday.

Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu has said the turbulence - which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt - shows the importance of strengthening national security.

If he wins on Tuesday, he will seek to put Iran back to the top of the global agenda. Netanyahu has said he will not let Tehran enrich enough uranium to make a single nuclear bomb - a threshold Israeli experts say could arrive as early as mid-2013.

Iran denies it is planning to build the bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

The issue has barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

One of the first problems to face the next government, which is unlikely to take power before the middle of next month at the earliest, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(This story has been corrected to add dropped word in paragraph four)

(Additional reporting by Ori Lewis, Editing by Peter Graff)

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