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The Argentine government warns it will crack down on currency speculators who, it says, are undermining economic recovery. The government warning comes as Argentina moves closer to meeting the demands by the International Monetary Fund for obtaining a new loan.

Argentine Cabinet Chief Alfredo Atanasov says currency speculation threatens to derail the progress made by the government in attempting to stabilize the country's tattered economy. Speaking to reporters Monday, Mr. Atanasov said the government will take action against currency speculators.

He says, "We are going to act very firmly against those who are speculating on the rise of the dollar, and against those who are not liquidating their hard currency earnings." The Argentine official went on to say the warning is not aimed at individuals who are trading pesos for dollars, but against major exporters who are delaying exchanging their dollar earnings in the hope of getting a more favorable rate later.

The Argentine peso has lost more than 70 percent of its value against the dollar since it was devalued in January. Prior to the devaluation, the peso had been pegged one-to-one to the dollar for ten years.

Mr. Atanasov also says Argentina has made good progress in meeting the conditions imposed by the International Monetary Fund for obtaining a new loan. Last week, the Argentine Senate repealed an economic measure from the 1970s, which the IMF had opposed.

Also, most of Argentina's provinces have agreed to slash spending as required by the IMF, and Mr. Atanasov says he expects the others to follow suit. Overspending by the provinces, which the federal government was obliged to cover, is seen as one of the main reasons Argentina was forced to default on its debts.

In another development key to winning IMF approval, the government Saturday unveiled a plan to phase out over time an unpopular freeze on citizens' bank deposits. The plan offers depositors the choice to convert their frozen money into bonds that mature between three and ten years.

The Argentine government is seeking an IMF loan to help stabilize the economy. Argentina is struggling to emerge from a four-year recession that has left the country bankrupt and millions of people unemployed.

The foreign ministers of all but five nations in the Americas have signed a sweeping anti-terrorism treaty, nearly nine months after the September 11 attacks in New York and Washington.

The "Inter-American Convention Against Terrorism" was signed Monday at a summit of the 34-nation Organization of American States, held in the Caribbean nation of Barbados.

The document commits signatory nations to band together to prevent terrorist attacks and to cooperate in bringing perpetrators to justice. The treaty focuses on the financial dealings of terrorists with a special emphasis on detecting and uprooting money laundering schemes. To that end, signatories are to create financial intelligence units to monitor banking activities as a whole and international cash flows in particular. The assets of terrorist networks are to be frozen and seized.

The treaty also commits signatory nations to strengthen border controls, boost consultation and cooperation among law enforcement officials, and facilitate extradition of terrorist suspects.

Representing the United States, Secretary of State Colin Powell praised the treaty, saying the nations of the Americas are united in their resolve to fight terrorism and defend democracy.

Canada, Trinidad and Tobago, Dominica and the Dominican Republic say they must alter domestic banking and other regulations before they are able to sign the treaty. Cuba is not an OAS member and did not take part in the summit.

In addition to terrorism, the foreign ministers addressed trade issues, the battle against drug-trafficking and political upheaval in Venezuela and Haiti.

The Organization of American States has reaffirmed its commitment to democratic rule in Venezuela in the wake of the country's failed coup attempt in April. During a general assembly meeting in Barbados, the OAS also gave its backing to a probe of violence committed during the episode that briefly drove President Hugo Chavez from office.

The OAS declaration, adopted Tuesday, constitutes a hemispheric endorsement of President Chavez' continued rule in Venezuela. For its part, Venezuelan officials pledged to work to resolve lingering political upheaval and instability in the country, and left open the possibility of a role for the OAS in pursuing that goal.

The populist Mr. Chavez' leftist policies had alienated his country's business sector, and his outreach to Cuba and Libya rankled the United States. But several OAS members stated that the region must stand united in defense of democratic rule, regardless of who the ruler may be.

Belize's foreign minister, Assad Shoman, stressed the OAS's Democratic Charter must be applied consistently throughout the hemisphere.

"Whether we like the regime or not, that is not our business," he said. "As they say about freedom of expression, we should fight for the right of people to speak freely, especially when we do not like what they say. And so it is, especially when we do not like a regime, that we must apply the principles of the Charter."

The Democratic Charter, adopted last year, states that the people of the Americas have a right to democracy and their governments have an obligation to promote and defend it.

Venezuela's ambassador to the OAS, Jorge Valero, said his government appreciates the international backing it has received. Mr. Valero also said he wishes to express the gratitude of Venezuela's democratic government to the hemispheric community, where so many countries without hesitation have expressed their solidarity with a legal and legitimate government.

The OAS General Assembly also examined Haiti's protracted political impasse, where the failure to seat an internationally-recognized legislature has led to a cut-off of hundreds of millions of dollars worth of foreign aid. OAS Secretary-General Cesar Gaviria said he hopes an agreement between the Haitian government and the opposition for new elections will be forthcoming.

"Haiti desperately needs an agreement, and we hope all sides of political life and civil society will help to finalize this agreement and solve this critical problem," he went on to say. "It will not solve all the problems of Haiti. But it will help create a better environment for the elections, politically and economically - and also an environment of good security for the elections."

Mr. Gaviria added, if all goes well, Haiti could hold the legislative contests by the end of the year.

Monday, 30 of 34 OAS member states signed a hemispheric convention against terrorism. The treaty aims to interrupt the financing of terrorist activities, strengthen border controls, boost cooperation among law enforcement officials and facilitate the extradition of terrorist suspects.

The OAS' assistant secretary-general, Luigi Einaudi, a former U.S. ambassador to the body, said the convention is more than just diplomatic talk.

"The focus of the convention is on practical cooperation and on getting agencies that can exchange information and work together in the money laundering and financial aspects that are so much a part of building up a terrorist network," explained.

The treaty comes less than nine months after the September 11 terrorist attacks in New York and Washington.

One of the space station's four gyroscopes failed Saturday, leaving three to control the orbiter's position. Only two gyros, called CMGs, are required for the task, but the failure means there is only one spare.

Shuttle flight director Paul Hill says that if two more CMSs fail, the Russian module's jet thrusters would have to take over positioning the station, using precious fuel to do so. "Losing a CMG is a big deal," he explains. "This is a major component. But from a risk perspective right now, we're in good shape. We're two failures away still from really having a technical problem that we need to jump through hoops for. But this is a major component that's failed and we are going to do the best we can to get the next CMG ready to fly and into an orbiter and get it changed."

But Mr. Hill says it may be six to nine months before the gyro gets to the space station because the next two shuttle flights are already dedicated to other equipment. That could be advanced, however, if another gyro fails, requiring rescheduling of shuttle payloads.

In the meantime, mission officials are concentrating on the next major task for the current shuttle crew at the station. French astronaut Philippe Perrin and Franklin Chang-Diaz, a Costa Rica native, will don their space suits Sunday to begin installing a new platform on the station's rail flatcar.

The base will enable the station's robot arm to ride a railway the length of the outpost for future assembly tasks.

Two more spacewalks are required Tuesday and Wednesday to complete the installation and replace a faulty joint on the arm.

U.S. Attorney General John Ashcroft says the United States has arrested a known terrorist who was planning a radioactive "dirty bomb attack."

Mr. Ashcroft said Abdullah Al Muhajir is in the custody of the U.S. military and has been declared an enemy combatant. He said the suspect, who is an American citizen, was arrested at Chicago's O'Hare International Airport on May 8, after he flew in from Pakistan.

The Attorney General said the FBI, CIA and the Defense Department had worked together to disrupt an unfolding terrorist plot to attack the United States by exploding a radioactive bomb.

Mr. Ashcroft is in Moscow for talks with Russian officials about the U.S.-led war on terrorism.

U.S. officials have announced the arrest of an alleged al-Qaida terrorist who they believed was planning to detonate a radioactive dirty bomb in the United States.

Mr. al Muhajir was formerly known as Jose Padilla, an American citizen who served jail time in the early 1990s. Authorities say the suspect is a former Chicago street gang member who converted to Islam while in prison.

Attorney General Ashcroft says the government's suspicions about his alleged plans to explode a so-called dirty bomb came from "multiple, independent, corroborating sources."

"Subsequent to his release from prison, he traveled to Afghanistan and Pakistan," said Mr. Ashcroft. "On several occasions in 2001, he met with senior al-Qaida officials. While in Afghanistan and Pakistan, al Muhajir trained with the enemy, including studying how to wire explosive devices and researching radiological dispersion devices.

"Al-Qaida officials knew that as a citizen of the United States holding a valid U.S. passport, al Muhajir would be able to travel freely in the U.S. without drawing attention to himself," said the attorney-general.

American officials say it is possible that Abdullah al Muhajir intended to detonate a so-called dirty bomb in Washington. But FBI Director Robert Mueller says authorities foiled the plot at an early stage and that makes it difficult to say what the intended target may have been.

A so-called dirty bomb consists of conventional explosives laced with radioactive material. Detonation of such a device would initially kill victims in the immediate vicinity but could also cause mass death and injuries by spreading toxic radioactive material over a wider area.

Deputy Defense Secretary Paul Wolfowitz says that even though Mr. al Muhajir is an American citizen, U.S. officials now consider him "an unlawful enemy combatant"

The arrest was welcome news at the White House. "We have a man detained who is a threat to the country and that," said President George W. Bush, thanks to the vigilance of our intelligence gathering and law enforcement, he is now off the streets where he should be."

President Bush signed papers on Sunday that allowed the transfer of Mr. al Muhajir from Justice Department custody in New York to a high security U.S. Navy lockup in Charleston, South Carolina.

The chairmen of a joint congressional committee probing the September 11 attacks on the United States have asked the Justice Department to investigate possible leaks of classified information by the panel.

The chairmen of the joint House-Senate Intelligence Committee are clearly troubled and embarrassed by the apparent leaks.

At issue is the disclosure that the National Security Agency intercepted two Arabic-language messages on the eve of the September 11 attacks.

News reports say the messages read 'tomorrow is the zero hour' and 'the match is about to begin,' but they were not translated until after the attacks.

The disclosure is believed to have been leaked from classified testimony before the joint congressional panel, which is investigating intelligence failures prior to September 11.

Vice President Cheney called the committee chairmen earlier Thursday to express his concern.

"We are entrusted to keep these secrets," said Porter Goss, a Republican from Florida and chairman of the House Intelligence Committee. "So any time I hear or read from the vice president or anybody else that there is a leak of classified information that is attributed to the United States Congress, or came from our committee in a session that was a closed session, it is a matter of concern."

Just weeks after the attacks, he directed that classified briefings to Congress be limited to top leaders of the House and Senate and their intelligence panels. He dropped the restrictions after getting assurances from Mr. Graham and Mr. Goss that their committee members would protect sensitive information.

Retired Venezuelan Soldiers In Anti-Chavez march

Many officers carried their uniforms on clothes hangers, Thursday, as they marched toward the presidential palace. They were joined by hundreds of supporters.

Police set up a security cordon around the palace to prevent the marchers from clashing with Chavez supporters gathered in the area. The march ended without incident.

The anti-government demonstrators oppose what they say is the president's politicization of the armed forces.

One retiree, Miguel Angel Arevalo, told the Reuters news agency President Chavez is placing people in the armed forces who agree with the government so that he can control them.

As the rally was taking place, President Chavez was visiting a working-class district in Caracas, telling supporters there to be alert for opposition efforts to topple him.

President Chavez was briefly ousted in a short-lived coup in April. Since reclaiming his presidency, there have been persistent rumors of another coup attempt.

In Colombia, the internal war has taken a new turn as left-wing rebels attempt to create a leadership crisis in the countryside by forcing local mayors out of office at gun point. This weekend more than two dozen mayors resigned from office after receiving death threats from the country's largest left-wing rebel group, the FARC. The rebels are now extending their threats to local leaders across the country.

When Mayor Orlando Giraldo announced his resignation Saturday, he had 22 fellow mayors standing behind him. Half of one of the most powerful provinces in Colombia, Antioquio, had just been thrown into leadership void.

The 23 mayors were given little choice. If they had not resigned by midnight Saturday, the FARC had threatened to kill them. And on Sunday, the guerrillas sent notice to the mayors of at least eight other provinces giving them until next Wednesday to resign or die.

Local governments in rural Colombia have been in the cross-hairs of the of country's of the country's armed insurgents for years, targeted either by the left-wing guerrillas or right-wing paramilitaries.

But in the past, the rebels tried to share power, forcing local leaders into paying them kickbacks from contracts or hiring rebel supporters in government jobs.

But now, the FARC is trying a new strategy. Instead of co-leadership, the armed guerrillas want no local leadership, hoping they will fill the political vacuum.

According to municipal leader Gilberto Toro, many mayors also face a counter threat from the rival right-wing paramilitaries.

Any mayor who leaves office because of guerrilla pressure, says Mr. Toro, will become a target of the paramilitaries as punishment for caving in to the FARC.

Since peace talks with the rebels broke down earlier this year, the FARC has turned to strategies that destabilize the economy and every day lives of Colombians.

So far, the central government's only response to this current crisis has been a promise of more military protection for local leaders. That will force the army to spread itself ever more thinly across the country.

Scores of mayors and other local officials have resigned en masse across Colombia after rebels said they would kill them if they stayed in office.

State control in several provinces has been thrown into disarray after the threats to officials by the Revolutionary Armed Forces of Colombia (FARC) to quit or be designated "military targets".


We decided the best thing to do was present our resignations, although we know this will generate chaos - but we must save our own lives
Mayor Jose Oscar Gonzalez

The national government has promised army support and told mayors not to be intimidated and another rebel group has said it will kill anyone who does leave their job.

But many local officials have resigned anyway, some saying they have been targeted for supporting President-elect Alvaro Uribe, and all fearful for their lives in Colombia's continuing 38-year civil war.

Mayor murder

In the north-western Antioquia state, 23 mayors handed their resignations to the acting governor.

FARC, which has about 17,000 guerrillas and controls large parts Colombia, killed one of the state's mayor's earlier this month - the eighth civic leader to die this year.


Resignations
Antioquia: 23 mayors Caldas: 3 mayors Arauca: 97 officials

The mayors issued a statement saying: "We are being forced to jointly and publicly resign."

Acting Governor Eugenio Prieto was deciding whether to accept the resignations.

"It is difficult, because their lives and [state] institutions are at stake," he said.

Mr Prieto is serving as head of the state because elected Governor Guillermo Gaviria was kidnapped by FARC rebels as he led a peace march in April.

In the northern Santander state, provincial police commander Colonel Jorge Daniel Castro went on the radio to plead with mayors to ignore the threats.


President-elect Alvaro Uribe has pledged cash to fight rebels and poverty

But in Caldas to the west, the mayors of Pensilvania, Samana and Victoria left their jobs.

Pensilvania Mayor Jose Oscar Gonzalez said: "We decided the best thing to do was present our resignations, although we know this will generate chaos.

"But we must save our own lives."

In the north-eastern Arauca province, 97 local officials said they would resign just before the FARC deadline.

But 11 councilmen from Cravo Norte, an oil-producing region of Arauca, said right-wing paramilitaries of the United Self-Defence Forces of Colombia (AUC) had warned them to stay in office or die.

Peace failure

The government of President Andres Pastrana gave up three years of peace talks with FARC in February after the left-wing rebels staged a spectacular plane hijack to kidnap a senator.

Popular disgust at the failed peace efforts helped Mr Uribe to win the presidential election on 26 May.

Mr Uribe, whom aides say has survived 15 assassination attempts, has promised big increases in spending on defence and to reduce the poverty which feeds violence.

He is scheduled to take office in August.

Colorado firefighters are struggling to contain blazes ravaging the state - the largest wildlife fire in the US state's history.

About 4,000 people have fled their homes and officials have drawn up evacuation plans for up to 40,000 residents of the state's capital, Denver, as the fire approaches the city's south-western suburbs.

A slurry bomber is dwarfed by huge smoke clouds above the Hayman forest fire north of county road 77 outside Lake George in the Pike National Forest

The fire - stretching 24 kilometres across the Rocky Mountain foothills - was started by a camp fire on Sunday

In some areas even firefighters were told it was too dangerous to work

Larry Landis (left) puts his arm on the shoulder of his wife, Rea, as they watch the fire approach their new home west of Colorado Springs

Officials said the fire was devouring about one-and-a-half kilometres of woodland an hour

Fire and smoke loom rise behind the Twin Creek Ranch just north of Highway 24 in Florissant, Colorado

They said the fire destroyed 21 homes and was threatening another 2,500

Smoke from forest fires fills the air in Woodland Park on the edge of Colorado caused street lights to come on Sunday

Emergency plans were put in place to evacuate residents of Denver if the blazes continued its destructive course

Horse Creek Cafe and Saloon on Highway 67 near Deckers are one of a handful of structures that were destroyed by the Hayman Fire

Colorado's governor Bill Owens said the disaster area resembled a nuclear winter

A fire set by the Flathead Hotshot crews burns on Horse Mountain

Firefighters tried to limit the spread of another major fire started by an underground coal fire

Burned out vehicles above the Storm King Mobile Home Park in West Glenwood Springs

It is estimated that recent fires in Colorado has destroyed more than 600,000 acres (24820 hectares) of land

Authorities in the American state of Arizona are struggling to contain two huge forest fires which have joined into one inferno.

The smaller Chediski fire - started when an injured hiker tried to signal a helicopter for help - has merged with the Rodeo fire, which is also believed to have been started by man.

Firefighters' fears were realised and the two blazes became one (AP)

Twenty-five thousand people across the state have been evacuated

About 200 homes have been destroyed

The 8,000 residents of Show Low were evacuated at the weekend

Airtankers are dropping water and fire retardants on to the flames (AP)...

... while on the ground, firefighters are risking their lives

For much of the time, they are powerless in the face of this force of nature (AP)

Satellite image of Arizona fires and smoke

The flames and smoke can be seen from space (AP)

The Colombian Government has offered bodyguards and bulletproof vests to town mayors, after left-wing rebels threatened to kill any who do not resign.

The country's largest rebel group, the Revolutionary Armed Forces of Colombia (FARC), has contacted more than 100 town mayors, warning them to quit or become targets.


It is a double sabotage of both the economy and the democratic institutions
Mayor Antanas Mockus

Around 25 of them have already resigned, saying their lives and families are more important than the job.

Our South America correspondent says the FARC seems to be changing tactics to drive out civilian authority from the areas it controls.

Colombia's national human rights ombudsman, Eduardo Cifuentes, has called the threat the gravest by leftist rebels in Colombia's history.

'Reinforcing security'

Eight mayors have already been killed this year, including one who was on his way to talk to his colleagues about the threats.

The defence minister has offered to let mayors work from within their local barracks, but many of them say they and their staff - who have also received threats - cannot do the job unless they are among the people.


Large areas of the countryside are under FARC control

The mayor of the capital, Bogota, said the FARC's new tactic was a "double sabotage of both the economy and the democratic institutions".

But unlike some of his colleagues Mayor Antanas Mockus has vowed to stay on.

"I am reinforcing security and minimising public appearances," he told the Associated Press news agency.

The outgoing President, Andres Pastrana, has now promised to provide mayors with bulletproof vests, armoured cars and bodyguards.

The American Embassy in Bogota said much of the protection would be paid for by the United States, according to AP.

The FARC controls vast areas of the countryside, where they are locked in battles with right-wing paramilitaries, and correspondents say it is almost impossible for the government to guarantee security.

The president-elect, Alvaro Uribe - who is due to take office in August - has pledged to take a crack down hard on the rebels in a bid to end four decades of civil war.

The electoral authorities in Mexico have ordered the release of details of President Vicente Fox's election campaign following allegations of illegal fund-raising.

The Federal Electoral Tribunal set a 10-day deadline for the Banking and Securities Commission to hand over financial records of Mr Fox's campaign spending.

Opposition parties have accused Mr Fox of receiving funding from overseas, in violation of Mexican law.

His election victory two years ago ended seven decades of unbroken rule by the Revolutionary Institutional Party, which is itself facing a separate investigation into illegal fund-raising.

From the newsroom of the BBC World Service

The United Nations' nuclear watchdog agency says governments need to take urgent steps to prevent and detect the theft of radioactive materials.

The International Atomic Energy Agency (IAEA) warns that more than 100 countries have inadequate security programs for such materials. The agency urged all governments, including the United States, to improve security and to recover missing supplies.

Agency director Mohamed El Baradei says governments need to exercise complete control of radioactive materials to protect them against theft or terrorism.

The warning comes just weeks after U.S. authorities arrested a man suspected of involvement in an al-Qaida terrorist plot to set off a so-called "dirty bomb" in the United States. A dirty bomb is a device using conventional explosives to spread dangerous radioactive substances over a wide area.

The the U.N.'s Atomic Energy Agency did not list the countries with inadequate security programs.

But it noted that American companies have lost track of 1,500 sources of radioactive materials in the past six years. It also quoted a European Union study showing that about 70 sources of radiation are lost from regulatory control every year in EU countries.

Many sources are used in everyday life in the fields of medicine, agriculture and industry and are not as large and well protected as nuclear power plants.

The U.N. nuclear watchdog says it will lead efforts to hunt for lost radioactive material across the former Soviet Union, where the problem is especially bad. U.S. and Russian scientists say their two countries will join forces with the U.N. in the recovery operation.




By Peter Greste in Buenos Aires

Feeding centres have been springing up in Argentina as the economic crisis pushes people towards starvation.

Millions were plunged into poverty after the government posted the biggest sovereign debt default in history, devalued the peso by over two thirds and froze millions of bank accounts last year.


Even beggars are struggling

And now there are numerous reports across the country of people suffering severe malnutrition.

In the Pilar district of the capital, Buenos Aires, a group of volunteer women run a feeding centre for the children who would otherwise starve.

The meal of pasta and tinned peaches has to stretch to some 70 children.

One of the volunteers, Rosa Mina, said: "The parents don't have work, they don't have food, so for many of the children, the only opportunity they have to eat is what we provide here in the kitchen.

"And apart from that the families are very large - seven or 10 children - so its very difficult for them to have food every day."

Medical problems

Like 80% of people in the district, she and her husband are unemployed. But they work with the volunteers to run the feeding centre for the children who would otherwise starve.


Looted food is distributed in Buenos Aires last year

By late morning, the first of the youngsters are seated at a long bench as they tuck into the steaming plates, some show signs of serious medical problems.

Nearly all are desperately hungry - some to the point of malnutrition.

"Ultimately we get lots of infections in the kids," said Rosa.

"Rashes on the face, scabs, lots of points of infection, particularly because this area is very low and it floods a lot.

"The mud, the dust, the water I think are all the cause of the problems."

Argentina's Health Minister Ginez Gonzalez Garcia acknowledges the paradox of children living in a country that was once the breadbasket of South America, relying on food handouts.


The family ask for bread all the time, but we have nothing. It makes me crazy to see them this way
Adolfo Alarcone

But the crisis that exploded last December has hit so fast that he does not even have any figures on the size of the problem.

He said: "The state of the population's health hasn't been impacted so far.

"But I'm very afraid that we'll experience something similar to Russia when they lost seven years off the average life expectancy in their last macro-economic crisis.

In places like Pilar, all the signs are there. Adolfo Alarcone and his wife, six children and his mother live in a dirt-floor two-roomed shack hammered out of salvaged timber and tin.

He spends his days chopping wood for the back-yard fire that they used to cook on, when they had food.

Mr Alarcone said: "Of course the family's hungry. They ask for bread all the time, but we have nothing.

"It makes me crazy to see them this way, but what can I do?

"Sometimes I think I should go and steal, but I haven't got the guts for that. But maybe robbing is the only alternative."

Food scavengers

With no prospects for work locally, he sees no way out.

"No, there's no solution. The only thing a lot of people do is go to the city to look for food, or newspapers and bottles to sell, you've got to go through the rubbish to survive."


Argentinian web site porloschicos.com donates food for every hit it gets

Plenty of people do. While buskers try to earn a few pesos from the Buenos Aires shoppers, thousands more rummage through the bags of rubbish that line the streets in the commercial district.

Some are old hands, but many more are not. Joaquin has come up from the south of the country, with his family of six.

"We look for anything we can use - paper, cans, cartons, food, bread, clothes. It all has value for us. And if it's no good for us, there's somebody else who can use it."

But in Buenos Aires now, there are fewer and fewer shoppers to throw their coins at the guitarists, and more and more people searching through the garbage.

The thing nobody knows is if or when the rubbish people are throwing out is no longer enough to sustain those who depend on it to survive.

Wednesday, 26 June, 2002, 18:54 GMT 19:54 UK

US warns of Palestinian sanctions

Arafat is under both diplomatic and military pressure

President George W Bush has warned the Palestinians that the United States will cut off investment if they fail to heed his calls for change.


If there's leadership compromised by terror, we won't be along the path to peace. I've got confidence in the Palestinians when they understand fully what we're saying
George W Bush

"The status quo is quite simply unacceptable," Mr Bush told a news conference at the G8 summit in Canada.

Repeating a theme from his policy speech on the Middle East earlier in the week, the president called for the Palestinians to elect a new leadership "not compromised by terror".

Mr Bush was speaking after the Palestinians announced that presidential and parliamentary elections were to be held between 10 and 20 January of next year.

Aid threat

The Palestinians must reform their institutions, constitution and security and financial services, Mr Bush said at the conference held jointly with UK Prime Minister Tony Blair.

He said the US should not put money into "a society which is not transparent" but "corrupt", adding: "I suspect other countries won't either".


The US wants to see Arafat removed

"The road map I've laid out is one that calls upon all our friends and allies to join and bind together against terror," he said.

Asked what his policy would be if Mr Arafat was re-elected, Mr Bush said: "If there's leadership compromised by terror, we won't be along the path to peace. I've got confidence in the Palestinians when they understand fully what we're saying, that they'll make right decisions as to how we get down the road for peace."

Correspondents say that while the US does not provide any direct assistance to the Palestinian Authority, it does channel funds to it through the United Nations and non-government organisations.

Mr Blair also urged Palestinians to elect a leader who is "serious about peace and resists and totally rejects terrorism".

"It's for the Palestinians to elect the people that they choose to elect," he said. "But it's for us to say the consequences of electing people who aren't serious negotiating partners is that we can't move this forward."

Election date

Saeb Erekat, the aide to Mr Arafat who announced the Palestinian elections on Wednesday, denied the timing was linked to Mr Bush's Mid-East speech.

But in an apparent reference to the call for Mr Arafat's replacement, he said that Palestinians would not wait for their leaders "to be parachuted in from Washington or elsewhere".

A report by one of Mr Arafat's top officials, Nabil Shaath, that the veteran leader would stand for election again himself was quickly dismissed as premature by a colleague.

"This is absurd, absurd - talking about swimming before you have a pool or water," said Information Minister Yasser Abed Rabbo.

Hebron siege

Israel has continued its security operation in the West Bank, maintaining a siege of a Palestinian security facility in Hebron for the second day running.

Israeli radio says 20 wanted militants are inside the Hebron facility, along with 130 other Palestinians.

Troops, the radio says, are preparing to storm the building which has been under fire from tanks and has had its entrance demolished by an army bulldozer.

Four Palestinian policemen were killed when Israeli troops first moved in on Tuesday.

With the exception of Jericho, Israel now controls all the main towns in the West Bank as a result of operations launched after suicide attacks on Jerusalem killed 26 Israelis.

Wednesday, 26 June, 2002, 22:56 GMT 23:56 UK

Regulators move against WorldCom

The US financial watchdog, the Securities and Exchange Commission, has begun a fraud action against US telecommunications giant WorldCom.

The company has admitted that its profits had been inflated by $3.8bn (£2.5bn) between January 2001 and March 2002.

SEC chairman Harvey Pitt said that the agency was seeking a court order to prevent WorldCom disposing of assets, destroying documents or making payments to senior officers.

President George W Bush has condemned the fraud as "outrageous" and vowed to address the problems shaking corporate America.


The scandals that shook Wall Street
Enron's accounts turned out to be an elaborate scam Andersen approved the WorldCom and Enron accounts Other firms under fire: Xerox, Adelphia, Tyco, Global Crossing click here for more details

In an immediate attempt to salvage some of its business, the firm has announced 17,000 redundancies and sacked its chief financial officer, Scott Sullivan.

The fraud is far bigger in money terms than Enron's misdeeds, and will further undermine the trust of investors in corporate America.

The US dollar lost strength and share prices around the world plummeted on Wednesday, although the greenback and Wall Street later recovered lost ground.

The SEC said WorldCom's accounting improprieties were of "unprecedented magnitude".

The news is also another damning indictment of auditor Andersen which was responsible for approving the accounts of WorldCom as well as Enron.

Trouble at the top

WorldCom was one of the pioneers of the 1990s telecoms boom.

An aggressive acquisition spree saw it grow from a small-time regional operator in the early 1980s to a huge international business, but also saddled it with $30bn of debt.


Founder Bernie Ebbers was forced to quit in April

The firm was already shrouded in scandal after the departure of its founder and chief executive, Bernie Ebbers, in April.

Mr Ebbers borrowed hundreds of millions of dollars from the firm to underwrite the inflated prices he had paid for the company's own shares.

WorldCom shares have tumbled from a high of more than $60 in 1999 to 83 cents this week.

Trading on the stock on the Nasdaq market was suspended on Wednesday,

The shares had hit a mere 10 cents in pre-opening trade.

Secret actions

The scandal broke on Tuesday, when the company said it had not actually made the $1.4bn of profits it reported in 2001, nor the $130m stated during the first three months of 2002.


This is the age where wheeler-dealers get called for who they are
Frank Dzubeck Telecoms consultant

WorldCom said its chief financial officer Scott Sullivan improperly booked expenses as investment in order to make the company look much healthier than it actually was.

John Sidgmore, who took over from Mr Ebbers at the top, said executives were "shocked by the discoveries".

Andersen is protesting its innocence, saying Mr Sullivan did not let on what he was doing.

The SEC added: "We are ordering the company to file, under oath, a detailed report of the circumstances and specifics of these matters."

Game's up

Bankruptcy now looks like a serious possibility for the telecoms firm as its refinancing talks will be thrown into disarray.

But some observers were unsurprised by the company's news.

"When you look at the history of WorldCom, and their acquisition trail, you have a classic wheeler-dealer," said Frank Dzubeck, president of the Communications Network Architects consultancy.

"Now this is the age where wheeler-dealers get called for who they are," he said.