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WASHINGTON (AP) -- For the Obama administration, there's a new wrinkle that could further complicate ties with post-coup Egypt: the possible release of the country's jailed former leader, Hosni Mubarak.

For nearly three decades, the U.S. propped up Mubarak and the Egyptian military with financial and military support. In exchange, Egypt helped protect U.S. interests in the region, including a peace treaty with Israel.

But that long and tangled relationship is now casting a shadow over the Obama administration as it grapples for a coherent Egypt policy following the ouster of Mubarak's democratically elected successor, Mohammed Morsi. The U.S. has refused to call Morsi's ouster a coup - a step that would require President Barack Obama to suspend $1.3 billion in annual military aid.

The U.S. still has not sent $585 million of that aid, and the fiscal year ends Sept. 30.

But State Department spokeswoman Jen Psaki said that delay was not an indication that a policy decision about cutting off aid had been made.

Amid the tumult of Morsi's ouster, Egyptian judicial officials announced Monday that Mubarak could be released from jail later this week. The White House refused to take a position on the status of its former partner, saying it would be inappropriate to comment on a legal matter.

"President Mubarak is part of an ongoing Egyptian legal process right now," White House spokesman Josh Earnest said. "And because that is a process that is internal to Egypt, it's not something that I'm in a position to comment on from here."

The U.S. has frequently taken positions on legal matters in other countries, including the jailing of Ukraine's former Prime Minister Yulia Tymoshenko, the sentencing in Russia of the band Pussy Riot and the arrest of American aid workers in Egypt last year.

Mubarak's release likely would deepen the anger among Morsi's supporters in the Muslim Brotherhood, an Islamist political movement that was illegal under Mubarak.

Morsi, who was removed from power by the military last month, is also in custody. He is being held at an undisclosed location and is facing allegations that he conspired with the Palestinian militant Hamas group to escape from prison in 2011. On Monday, prosecutors also ordered his detention for 15 days in connection with allegations that he conspired to kill and torture protesters during mass demonstrations by the opposition outside his presidential palace in December 2012.

The White House has called for Morsi's release. Earnest on Monday said the detention was "politically motivated" and "not in line with the human rights standards that we expect other governments to uphold."

It's possible that Egyptian officials could keep Mubarak in custody given that the chaos that could result from his release would pose huge risks for the military-backed government. The 85-year-old has been in detention since April 2011 and was found guilty and sentenced to life in prison for his failure to stop the killing of some 900 protesters during the revolution that forced him from office.

Mubarak's sentence was overturned on appeal and he is now being retried. Two judicial officials, however, said there no longer will be any grounds to hold the former president if a court accepts a petition by his lawyer requesting his release in a corruption case later this week.

Mubarak's ouster cleared the way for Egypt's first democratic election. Voters backed Morsi, but just one year into his term Egyptians took to the streets to protest, alleging that he gave the Muslim Brotherhood undue influence and failed to live up to his economic promises.

Morsi's ouster has put the Obama administration in the awkward diplomatic position of choosing between U.S. national security interests and its democratic values, particularly given the military's deadly crackdown against Morsi supporters.

The administration seems unlikely to move toward a blanket suspension of its annual military aid. Instead, it appears to be opting for a more piecemeal approach, cutting off the delivery of four F-16 fighter jets and canceling joint U.S-Egyptian military exercises planned for next month.

The administration is also considering suspending about $250 million in annual U.S. economic aid for Egypt, officials said. Congressional notification by the administration could arrive in the next week, said the officials, who weren't authorized to speak publicly on the matter and demanded anonymity.

Congressional lawmakers are split over whether to cut off aid. Democrats were generally supportive of the president's approach, though Minnesota Rep. Keith Ellison, the first Muslim elected to Congress, joined a growing number of Republicans calling for the elimination of military aid.

Just over half of Americans say it is better for the United States to cut off military aid to Egypt in order to put pressure on the government, according to a new Pew Research Center poll. That's nearly double the percentage who prefer the U.S. continue sending military aid to Egypt in order to maintain influence there. ---

Follow Julie Pace on Twitter at HTTP://TWITTER.COM/JPACEDC © 2013 THE ASSOCIATED PRESS. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED. Learn more about our PRIVACY POLICY and TERMS OF USE.
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CAIRO (AP) — Egypt's military-backed authorities on Tuesday arrested the supreme leader of the country's Muslim Brotherhood, dealing a serious blow to the Islamist group at a time when it is struggling to keep up its street protests against the ouster of President Mohammed Morsi in the face of a harsh government crackdown.

The Brotherhood's spiritual guide, Mohammed Badie, was arrested in an apartment at the eastern Cairo district of Nasr City, close to the location of the six-week sit-in protest by supporters of Morsi, who also hails from the Islamist group. The encampment was cleared by security forces last Wednesday, along with another protest site in Giza, in a raid that killed hundreds of people.

Badie's arrest is the latest stage in an escalating crackdown by authorities on the Brotherhood in which hundreds have also been arrested. The Brotherhood's near daily protests since Morsi's ouster have somewhat petered out the last two days, with scattered demonstrations in Cairo and elsewhere in the country attracting hundreds, sometimes just dozens.

Morsi himself has been detained in an undisclosed location since the July 3 coup, prompted by days-long protests by millions of Egyptians demonstrating against the president and his rule. He is facing accusations of conspiring with the militant Palestinian Hamas group to escape from prison during the 2011 uprising and complicity in the killing and torture of protesters outside his Cairo palace in December.

Badie's last public appearance was at the sit-in protest last month, when he delivered a fiery speech from a makeshift stage in which he denounced the July 3 military coup that removed Morsi.

Badie's arrest followed the death of one of his children, son Ammar, who was shot dead during violent clashes between security forces and Morsi supporters in Cairo on Friday.

Also, Badie and his powerful deputy, Khairat el-Shater, are to stand trial later this month on charges of complicity in the killing in June of eight protesters outside the Brotherhood's national headquarters in Cairo.

Security officials said Badie was taken to Torah prison in a suburb just south of Cairo and that a team of prosecutors were to question him Tuesday. The officials spoke on condition of anonymity because they were not authorized to talk to the media.

Torah is a sprawling complex where the autocrat Hosni Mubarak, ousted in the 2011 popular uprising, is also held, along with his two sons. Several Mubarak-era figures are also imprisoned there, as are several Brotherhood leaders and other Islamists.

In the aftermath of last Wednesday's violence, the military-backed government is considering outlawing the Brotherhood, which has spent most of the 85 years since its creation as an illegal organization. The government has asked the judiciary for advice on how to go about a ban. It has also come under growing pressure from the pro-government media and a wide array of secular politicians to declare the Brotherhood a terrorist organization.

Brotherhood spokesman Ahmed Aref sought to downplay the significance of Badie's arrest, writing on his Facebook page on Tuesday simply: "Mohammed Badie is one member of the Brotherhood."

The private ONTV network showed footage of a man the network said was Badie after his arrest. In the footage, a somber looking Badie in an off-white Arab robe, or galabeya, sits motionless on a black sofa as a man in civilian clothes and carrying an assault rifle stands nearby.

Badie's arrest came after suspected Islamic militants ambushed two minibuses carrying off-duty policemen in Egypt's Sinai Peninsula early on Monday, forcing the men to lie on the sand and shooting 25 of them dead.

The daylight attack raised fears that the strategic desert region bordering Israel and the Gaza Strip could be plunged into a full-fledged insurgency. The policemen were given a funeral with full military honors late on Monday. The men's coffins, draped in red, white and black Egyptian flags, were jointly carried by army soldiers and policemen, and Egypt's interim President Adly Mansour declared a nationwide state of mourning to mark their deaths.

The Sinai Peninsula has long been wracked by violence by al-Qaida-linked fighters, some who consider Morsi's Brotherhood to be too moderate, and tribesmen who have used the area for smuggling and other criminal activity. Attacks, especially those targeting security forces, have been on the rise since Morsi's ouster.

Monday's attack targeting the policemen took place near the border town of Rafah in northern Sinai. A few hours later, militants shot to death a senior police officer as he stood guard outside a bank in el-Arish, another city in the largely lawless area, security officials said.

There was no immediate claim of responsibility for either attack. The United States condemned the slaying of the police officers and repeated its commitment to help Egypt combat terrorism in Sinai. U.N. Secretary-General Ban Ki-moon also denounced the attack.

The Sinai attack came a day after security forces killed 36 detainees during a riot on a prison-bound truck convoy north of Cairo. The killings came as police fired tear gas to free a guard who was trapped in the melee, security officials said.

Elsewhere, an Egyptian journalist working for a state-run daily was shot dead early Tuesday by soldiers at a military checkpoint, security officials said. Tamer Abdel-Raouf from Al-Ahram and a colleague were on the road after finishing a late-night interview with the recently appointed governor of Beheira province in the Nile Delta north of Cairo.

They were stopped at a checkpoint, asked for identification papers and told they had broken the dusk-to-dawn curfew. The two then drove off without permission and a soldier from the checkpoint opened fire, killing Abdel-Raouf. His colleague was injured when their car hit a tree, said the officials, speaking on condition of anonymity in line with regulations.
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   HARRISBURG, Pa. (AP) — Negotiations between Penn State and young men who claim they were abused by Jerry Sandusky have begun to bear fruit, with lawyers involved saying there will be more announcements of settlements in the coming days.

   The school's trustees have set aside some $60 million to pay claims, and on Monday a lawyer working for Penn State said the one settlement so far should be followed by 24 more this week. Thirty-one young men have come forward to Penn State.

   Attorney Michael Rozen said the pending agreements include most of the eight young men who testified last year against Sandusky, the school's former assistant football coach now serving a prison sentence for child molestation.

   Penn State said little over the weekend in response to an announcement by the lawyer for one of the eight, "Victim 5," that his case was fully settled and he expected payment within a month. The school is paying out the claims through its insurance coverage and from interest revenues on loans made by the school to its own self-supporting entities.

   Rozen said all of the deals are expected to include provisions that give the university the right to pursue claims against the university's insurer, The Second Mile charity founded by Sandusky and The Second Mile's insurer.

   Sandusky is serving a 30- to 60-year sentence in state prison after being convicted last summer of 45 counts of child sexual abuse. Witnesses testified that he met victims through The Second Mile, an organization established to help at-risk children that ran camps and offered other services.

   Rozen said the "value" of the claims depended in part on whether they happened after 2001, when top-ranking school officials were told by a graduate assistant about Sandusky with a child in a team shower, or before 1998, the earliest documented example of a Sandusky complaint.

   "It's what did Penn State know and what duty did they have?" Rozen said. "What did they know, when did they know it, and what duty — if any — did they have to act, and to what extent?"

   He said claims for abuse before 1998 also may fall outside the statute of limitations that put time limits on how long victims have to sue.

   Although some lawyers have said they were interested in settlements that require Penn State to make changes that might prevent such abuse from re-occurring, Rozen said those matters have been eclipsed by the widespread reforms the university has adopted or begun since a series of recommendations were made last summer in an internal report.

   "I don't think anybody could reasonably or rationally question the university's commitment to doing things differently in the future," Rozen said. "This was about trying to redress harm caused to young men by this really bad person, Sandusky."

   He declined to say how much the 25 cases are settling for, or provide a range of the settlements.

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