"You're working against yourself if your effort is to be inclusive," White House spokesman Jay Carney said.

UN chief Ban Ki-moon also warned against the exclusion of any party.

Rival rallies are expected in Cairo on Friday amid rising tensions over the army's overthrow of Islamist President Mohammed Morsi last week.

Supporters demanding Mr Morsi's reinstatement have continued to stage mass protests in Cairo this week near the barracks - where he is believed to be being held.

On Thursday, the Obama administration and UN both raised concerns about Egypt's decision to issue arrest warrants for the leader of the Muslim Brotherhood - to which Mr Morsi belongs - and nine senior figures of the movement.

"The only way this is going to work successfully... is if all parties are encouraged and allowed to participate and that's why we've made clear that arbitrary arrests are not anything that we can support,'' Mr Carney said.

Mr Ban "made clear that there is no place for retribution or for the exclusion of any major party or community in Egypt," in a telephone callwith Egypt's Foreign Minister Kamel Amr on Thursday.

Ramadan Friday

US state department spokeswoman Jen Psaki voiced even harsher criticism, saying the arrests contradicted reassurances they had received by the Egyptian military and authorities of inclusivity.

US policy makers would monitor the situation closely as they review decisions on assistance to Egypt, she added.

While the White House has not yet publicly confirmed comments by unnamed US officials that it will go ahead with a planned delivery of four F-16 fighter jets to Egypt, spokesman Jay Carney said that the administration did not believe it should immediately suspend aid to Egypt.

Meanwhile, tensions continue to rise as Brotherhood leaders urge supporters to attend mass rallies across Cairo on the first Friday of Ramadan.

Rival protests are planned for Tahrir Square, including a mass iftar - breaking the fast.

On Thursday the Muslim Brotherhood vowed to continue "peaceful resistance to the bloody military coup against constitutional legitimacy".

Mr Morsi's removal - a year after he was elected - followed protests by millions of people across Egypt.

While the new authorities have have not specified where Mr Morsi is, a foreign ministry spokesman has said he is in a "safe place" and being treated in a "very dignified manner".

However, dozens of people have died in deadly clashes in the aftermath of his ousting. On Monday alone more than 50 Morsi loyalists were killed in clashes with the army.

The Muslim Brotherhood's spiritual leader, Mohammed Badie, and nine other senior figures were charged on Wednesday with inciting Monday's violence, despite conflicting accounts of the incident.

Correspondents say the new warrants could scupper any attempts to persuade the Brotherhood - banned for decades under former President Hosni Mubarak - to participate in the transitional political process announced by interim President Adly Mansour this week.

The Brotherhood's political wing, the Freedom and Justice Party (FJP), says it will turn down a post in the cabinet being formed by the interim Prime Minister Hazem al-Beblawi.

Meanwhile, Mr Beblawi said on Thursday that he had still not ruled out offering posts to the FJP.

"I don't look at political association," he told the AFP news agency. "I'm taking two criteria for the next government. Efficiency and credibility."

The main liberal opposition coalition, the National Salvation Front (NSF), and the grassroots Tamarod protest movement, which co-ordinated the anti-Morsi protests, said they were not consulted on the constitutional decree and had concerns about it.

After talks with senior Chinese officials, US Deputy Secretary of State William Burns said Beijing's actions undermined "trust" in bilateral ties.

China said Hong Kong - which allowed to Mr Snowden to leave Russia - had acted in accordance with the territory's law.

Meanwhile, Microsoft has been accused of working with US intelligence bodies to help intercept users' data.

Citing the latest secret documents leaked by Mr Snowden, Britain's Guardian newspaper said the software giant had worked with the Federal Bureau of Investigation (FBI) and the National Security Agency (NSA) to facilitate access to information.

The newspaper claimed Microsoft allowed the NSA to circumvent its system of email encryption.

It also said information had been made available through access to cloud storage service SkyDrive and chat service Skype.

In response, the company said in a statement: "Microsoft does not provide any government with blanket or direct access to SkyDrive, Outlook.com, Skype or any Microsoft product."

It added that it had provided customer data only in response to lawful government requests.

Mr Burns was speaking after the two-day talks with the Chinese officials on trade and cyber security in Washington.

"We were disappointed with how the authorities in Beijing and Hong Kong handled the Snowden case, which undermined our effort to build the trust needed to manage difficult issues," he said.

In response, Chinese state councillor Yang Jiechi said Hong Kong's actions were in accordance with its law.

"Its approach is beyond reproach," Mr Yang added.

The row over Mr Snowden has strained relations between the US and China.

Washington wants to prosecute the former CIA contractor over the leaking of thousands of classified US intelligence documents.

Mr Snowden is believed to be currently staying at a Moscow airport.

He has sent requests for political asylum to at least 21 countries, most of which have turned down his request.

However, Bolivia, Nicaragua and Venezuela have indicated they could take him in.

James Dobbins, US special envoy for Afghanistan and Pakistan, also told a Senate hearing that the United States would reach an agreement with Afghanistan for keeping some American troops there after 2014 when the Nato combat missions ended.

“Without an agreement on our presence in Afghanistan, we would not remain. But we do not believe that that's the likely outcome of these negotiations,” he said.

Ambassador Dobbins acknowledged that Pakistan had recently become more cooperative in advancing the Afghan reconciliation process and hoped that this cooperation would increase.

“We do see an opportunity with the new civilian government with a clear mandate and majority in parliament,” he told the Senate Foreign Relations Committee.

Earlier, the committee’s Chairman Senator Robert Menendez asked him to explain if the United States and Pakistan could work together to advance the process after 2014.

The US envoy said that although Pakistan’s own internal security problems were “more acute than that of Afghanistan”, Islamabad had been cooperating with the international community in bringing peace to Kabul.

Mr Dobbins also said that terrorist attacks in Pakistan had increased recently and more civilians had been killed in these attacks than in Afghanistan.

This, he noted, had forced Pakistan to conduct “very significant military operations” against the militants and the United States supported those efforts.

“Unfortunately not against militants that are operating in Afghanistan but against the militants that are operating in Pakistan,” he said, but “they do have a substantive proportion of their military committed to counter-insurgency operations” along the Afghan border.

“This is a continued area of dialogue”, said the US envoy, confirming media reports that Washington wanted Islamabad to expand its military operations to include the Afghan militants as well.

Emphasising the need for combating both Afghan and Pakistani Taliban, Mr Dobbins said that the two groups worked closely with each other, killing innocent civilians in both countries.

“The insurgency has effective sanctuary and draws strength from that sanctuary in their operations in Afghanistan,” he said.

Similarly, the terrorists operating inside Pakistan were “closely linked to those operating in Afghanistan, and we keep stressing to the government of Afghanistan” to act against them as well, Mr Dobbins said.

The US envoy said that it was difficult to “distinguish between benign and malign militants” as the end objective of both the groups was to destabilise both Afghanistan and Pakistan.

“And I think that recognition is beginning to synch in” in both the countries, he said.

Mr Dobbins said that Secretary of State John Kerry would visit Pakistan “some time soon” and discuss these issues directly with the new Pakistani leaders.

The envoy noted that he had already visited Islamabad twice since June to meet the country’s new leaders.

“Peace and reconciliation is the only way forward to bring peace and stability in Afghanistan. There will be challenges like the one you are referring to, but we need patience and perseverance in the larger interest of peace in Afghanistan,” Foreign Office spokesman Aizaz Chaudhry said at his weekly media briefing on Thursday.

He was commenting on closure of the Doha office by the Taliban to protest against what they call “broken promises” about the name and use of flag at the office opened last month for serving as their political address. The setting up of the office was thought as the best chance to achieve peace in the over a decade-long war.

Row over the name — Islamic Emirate of Afghanistan — and raising of flag started immediately after the opening ceremony of the office. President Karzai protested over the controversial signs and they were removed by Qatari officials.

The Taliban decided to close the office after their leadership deliberated for about a month over the issue. During this period lot of behind-the-scenes activities took place to salvage the troubled process.

The United States is hopeful that the temporary snag in the bumpy road to peace would be overcome soon.

The FO spokesman reiterated Pakistan’s official stance that all stakeholders in the Afghan peace process should engage constructively.

“Pakistan wants to see peace and stability in Afghanistan. We are sincere in our approach and our efforts, and we hope that our sincerity will be reciprocated. Our leadership, all state institutions and the people of Pakistan want to see a united, prosperous and stable Afghanistan.”

He maintained that Pakistan observed restraint despite provocations from Kabul to prevent escalation of tensions with Afghanistan.

ABBOTTABAD COMMISSION: Mr Chaudhry said the Foreign Office had not initiated any follow-up on the recommendations made by the Abbottabad Commission which investigated Al Qaeda chief Osama bin Laden’s nine-year stay in Pakistan and his death in a US Special Forces raid in May 2011.

He said the implementation of recommendations could not take place because there were no instructions from the government in this regard.

The Chairman of the Abbottabad Commission, retired Justice Javed Iqbal, had presented his report to former prime minister Raja Pervez Ashraf in January.

The report, which was leaked to media earlier this week, made a number of recommendations and advised that “official channels” be used for addressing distortions in ties with the US, particularly the “alarming expansion and reconstruction” of the US embassy in Islamabad that was alleged to have compromised the diplomatic traditions and norms.

Mr Chaudhry, however, said that the government was already engaged with the US on “issues of mutual concern”.

ISLAMABAD: A lawyer representing the Military Intelligence said before a Supreme Court bench on Thursday that the armed forces enjoyed a special status in the constitution and their actions were also protected under the ‘green book’.

Advocate Ibrahim Satti argued before the three-judge bench headed by Justice Jawwad S. Khawaja that the law relating to the army could not be declared void by the apex court on the grounds that some of its provisions violated the fundamental rights. He said the oath of the armed forces required them to defend the constitution and also remain loyal and demonstrate true allegiance to Pakistan.

The bench had taken up an application of Abida Malik seeking a court order for production of her husband Tasif Ali alias Danish who went missing on Nov 23, 2011, and was allegedly picked up by Major Haider of the MI.

The matter was reported to the Sadiqabad police station on Dec 5. The Lahore High Court heard the case on March 19, but dismissed it.

In a reply submitted to the court, the MI had said that army personnel and a subject under the Army Act 1952 could not be investigated by any court, not even the apex court, or police.

The court observed that every citizen had a special status in the constitution and everyone was loyal to the state.

Mr Satti said more than 500 suicide attacks had taken place in the country and alleged that many of these suicide bombers might be the missing persons.

The court observed that the Criminal Procedure Code (CrPC) put no restriction on the police to register cases against serving officers of the armed forces.

The counsel said many applications on the missing persons pending before the Commission of Inquiry on Enforced Disappearance or the apex court were an attempt to ridicule the armed forces. The officers of the armed forces were performing their duties to safeguard the country’s borders.

Attorney General Muneer A. Malik is likely to argue on the application on Friday.

Meanwhile, Ziaullah who had visited his brother Saifullah at the internment centre in Lakki Marwat on Wednesday informed the court that he was living in a miserable condition.

He said Saifullah told him he remained hungry because he was given only one bread a day. “After seeing my brother in such a miserable condition I wish I had not met him,” he said.

Justice Ejaz Afzal Khan, a member of the bench, asked Additional Attorney General Tariq Khosa why he did not tell the authorities of internment centres to abide by law as it was their duty to provide basic facilities to the inmates.

The court indicated that it would order production of the detained persons for examining their conditions.

ISLAMABAD: The Supreme Court ordered law-enforcement agencies on Thursday to remain vigilant and take swift and strict action to ensure that girls and women were not exchanged to settle local disputes through the Jirga system.

A three-judge bench headed by Chief Justice Iftikhar Muhammad Chaudhry also asked the federal and provincial governments to ensure that people were protected against highhandedness by implementing the court’s previous judgments and relevant laws that discouraged the Jirga system.

Under the Criminal Law (Amendment) Act of 2005, section 310A was inserted into the Pakistan Penal Code (PPC) and the custom of giving women for the sake of peace was declared a crime. That section has now been replaced by the Prevention of Anti-Women Practices (Criminal Law Amendment) Act of 2011.

The Supreme Court in its April 24, 2006, verdict had also asked the government to amend section 310 of the PPC or make an insertion in the Family Act of 1964 to dissolve marriages conducted under ‘wani’. The court had asked the registrars of the high courts and the presidents and general secretaries of the district and tehsil bar associations to set up legal aid committees to help the victims whenever cases of wani or swara were reported to them.

On Thursday the court took up a July 6 incident of wani where a Jirga in village Bangla Gabool, 5km from Rajanpur, had ordered one Noor Hassan either to give the hands of his three sisters along with Rs1 million to the victim family in marriage for killing Mukhtar Hussain or undertake a test of being submerged in water for a considerable time. Otherwise, the opponents would be free to kill him in revenge, the Jirga said.

The incident was reported by the electronic media as a result of which police immediately arrested nine members of the Jirga.

Anthropologist Samar Minallah who has taken up a number of cases before the apex court against the custom of swara — exchanging women for settling disputes relating to offences of adultery or karo kari — praised the police for its prompt action.

She said that except for a few remote areas the old customs of wani and swara were diminishing because of courts’ intervention and the role played by the media and the NGOs. Now the people, particularly women, resist participating in Jirga assemblies.

The court said the government should launch an awareness campaign by involving educational institutions, the media and NGOs to ensure implementation of the laws against the Jirga system and protect the lives of victims of their decisions by enforcing their fundamental rights under Article 9 of the constitution (security of person).

The court disposed of the matter since the case had been registered by police.

Virtually the whole of Europe faces a crisis of escalating youth unemployment, and Britain is no exception. More than a million under-24s are out of work and not studying or training – over 15% of young people.

The low-skilled comprise the bulk of the unemployed. The OECD reported last week that 19% of 25- to 34-year-olds in the UK who left school at 16 are now unemployed in contrast to 9% in 2000, while for those with degrees the unemployment rate is only 4.7%. It is not being young that makes you unemployed, but being young and unskilled.

A striking exception to the European norm is Germany, with youth unemployment of only 7.5%. The German economy is the strongest in Europe, but Germany also has far fewer unskilled young people because of the success of its apprenticeship system, which embraces most school-leavers who do not go on to higher education.

Among Britain's school-leavers, one in three now go straight to higher education; barely one in 10 take an apprenticeship. Even these apprenticeships are often of questionable value. In recent years almost half of youth apprenticeships have lasted less than a year – many a matter of weeks – and barely a quarter of apprentices are studying at the equivalent of A-level or higher.

Britain needs to reform its apprenticeship system from top to bottom if youth unemployment is to be tackled. As Angel Gurria, the OECD secretary general, said of last week's statistics: "High youth unemployment is not inevitable, even during an economic crisis; it is the product of the interaction between economic context and particular policies." For decades, British governments – including the Blair-Brown government in which I was an education minister – have done a good job of enhancing higher education but paid too little attention to apprenticeships and technical education. This neglect continues. The number of youth apprenticeships fell last year.

Three key reforms are needed. First, the public and private sectors need to offer apprenticeships, and be funded by the state to do so, in far larger numbers. Barely one in three large companies, and one in 10 small companies, offer apprenticeships. The public sector is just as bad: the government department responsible for apprenticeships has only one apprentice under the age of 21, out of 2,500 employees. If the state does not take the lead, it cannot expect the private sector to follow.

Second, quality must improve. A staggering 11,775 apprenticeship qualifications are eligible for public funding. But employers rate very few; there is no proper test of competence for most of those who complete them; and although apprentices are expected to be "working towards" an acceptable standard of functional maths, English and information technology, it is unclear how often that is achieved. The businessman Doug Richard, in a recent report for the government, recommends there be one apprenticeship qualification per occupation, devised by employers. Literacy and numeracy should be embedded, and there should be a concluding test of competence – like a driving test – in place of the present box-ticking regime that many apprenticeships never even complete. These tests should be graded. In Germany, apprentices undergo a final examination in the vocational school and an oral examination and practical test in the workplace. The same should happen in Britain.

Third, information about apprenticeships is poor. The National Apprenticeships Service advertises some nationwide, but there is no marketing and co-ordination of places and applications on a par with theUniversities and Colleges Admissions Service for higher education. Ucas should become a clearing house for apprenticeships, starting with higher level apprenticeships, as well as for higher education places.

Another reason to reform? So short is Germany of apprentices that it has started recruiting from Britain. "Knowledge of some basic German is an advantage but not required," says the International Business Academy appointed for the task. They are particularly interested in young people with an aptitude for engineering, luring them with 170 hours of free German lessons and a net salary of €818 a month for three years to complete one of the best apprenticeships in the world. These are the very last teenagers Britain should want to lose.

Imagine a country where children do nothing but play until they start compulsory schooling at age seven. Then, without exception, they attend comprehensives until the age of 16. Charging school fees is illegal, and so is sorting pupils into ability groups by streaming or setting. There are no inspectors, no exams until the age of 18, no school league tables, no private tuition industry, no school uniforms. Children address teachers by their first names. Even 15-year-olds do no more than 30 minutes' homework a night.

The national curriculum is confined to broad outlines. All teachers take five-year degree courses (there are no fast tracks) and, if they intend to work in primary schools, are thoroughly immersed in educational theory. They teach only four lessons daily, and their professional autonomy is sacrosanct. So attractive (some might say cushy) is a teacher's life that there are 10 applicants for every place on a primary education course, and only 10-15% drop out of a teaching career.

It sounds like Michael Gove's worst nightmare, a country where some combination of teachers' union leaders and trendy academics, "valuing Marxism, revering jargon and fighting excellence" (to use the education secretary's words), have taken over the asylum.

Yet since 2000, this same country, Finland, has consistently featured at or near the top of international league tables for educational performance, whether children are tested on literacy, numeracy or science. More than 60% of its young people enrol in higher education, roughly evenly divided between universities and polytechnics.

Even the management consultancy McKinsey, which has spearheaded the global movement for testing, "accountability" and marketisation, acknowledges that Finland is top. The country's defiance of current political orthodoxies appears to do little economic harm.

According to the World Economic Forum, Finland ranks third in the world for competitiveness thanks to the strength of its schooling, which overcomes the nation's drawbacks, in the forum's view, such as restrictive labour market regulations and high tax rates.

The story, at least for Guardian readers, sounds too good to be true. Is it possible to pick holes in it? I met Pasi Sahlberg, a rather dour (though not, I am told, by Finnish standards) 53-year-old former maths teacher and education academic, during his recent visit to London.

Sahlberg, who now heads an international centre at the education ministry, was Finland's last chief inspector of schools in the early 1990s before politicians decided that teachers could be trusted to do their jobs without Ofsted-style surveillance. "I only ever inspected one school," he says.

Now he has emerged as the global spokesman for Finnish schooling. His book, Finnish Lessons, has been translated into 15 languages, including Chinese, Russian and Arabic, and each day he receives two or three invitations from across the planet to give talks or lectures.

I met him the day after Gove had announced his plans to transform GCSEs, restoring traditional three-hour exams to their former glory. He's never met Gove, but what would he say to him if he did? "I would say: 'I am afraid, Mr Secretary, that the evidence is clear. If you rely on prescription, testing and external control over schools, they are not likely to improve. The GCSE proposals are a step backwards'."

He is similarly dismissive about Gove's enthusiasm for academies and free schools, largely modelled on those in Finland's neighbour, Sweden. "In Sweden," Sahlberg says, "everybody now agrees free schools were a mistake. The quality has not improved and equity has disappeared. If that is what Mr Gove wants, that is what he will get."

Finland hasn't always been an educational superstar. Before the 1970s, fewer than 10% continued their education until the age of 18. The schools were similar to those of England in the 1950s, only worse. After taking tests at the age of 11, children whose results were in the top 25% went mostly to private grammar schools – if their parents could afford the fees. Sahlberg himself, initially educated in a tiny village primary in northern Finland, where both his parents were teachers, was one of the last to go through this system.

By the time he left school in the mid-1970s, the move towardsperuskoulu (or comprehensives), had begun, heavily influenced by British thinking. Mixed-ability teaching, teacher education reforms, abolition of the national curriculum (once 700 pages), and devolution of schooling to local authorities followed later.

While England began to dilute its comprehensive system almost as soon as it was established – in the early 1980s, the Tories introduced "parental choice" and offered subsidised places in elite private schools – Finland was further extending its ideal of the common school.

Like England, it had a vociferous lobby demanding a return to selection as well as Swedish-style free schools. Business leaders and rightwing politicians argued that comprehensives held back the gifted and talented and jeopardised the country's economic future.

But the critics were silenced early this century when the first results from the Programme for International Student Assessment (Pisa) emerged. All of a sudden, politicians and educators flocked to Finland in their hundreds, seeking the secret of its success. Finnish education became almost as big a global brand as Nokia. "Pisa stopped the arguments for privatisation and national testing," says Sahlberg. "Many say it saved the Finnish school system."

Sahlberg is reluctant to attribute Finland's economic success to its schools. "Some would say it's the other way round: we have educational success because we have economic success." To him and other Finns, equity is the schools' greatest achievement: the gap between high and low achievers is the smallest in the world and nobody talks of failing schools because there isn't that much difference between schools' results.

Sahlberg insists: "Pisa is not what we are about. League tables are not a good measure of a school system. We never aimed to be the best in education, only to have good schools for all. Equity came before a 'race to the top' mentality." Like many other educational researchers, he argues that most pupil achievement is explained by factors outside of school authorities' control and that, if politicians wish to elevate children out of poverty, they should look to other public policy areas.

Which leaves the question of whether Finnish schooling is exportable. Finland is an unusually homogeneous society: child poverty is low, and the ratio of income share between the richest 20% of the population and the poorest 20% is only a little over four-to-one, against nine-to-one in the UK. Its proportion of foreign-born citizens, moreover, is under 5%, and was much lower a decade ago.

All this, critics argue, makes it easy for Finland to put all children through comprehensives without social or educational strain. Other critics point to the Finnish language which, like Korean (South Korea is also near the top of the Pisa tables), is written almost exactly as it is pronounced. Young Finns and Koreans have little trouble with spelling, which not only makes reading and writing easier, but leaves more time for other subjects.

Sahlberg doesn't wholly dismiss either of these arguments, but suggests that other influences outside the schools are more important. Finnish adults, he says, are the world's most active readers. They take out more library books, own more books and read more newspapers than any other nation.

"Reading is part of our culture. At one time, you couldn't marry unless you could read. If you belonged to the Lutheran state church, you had to go a camp for two weeks before confirmation, as I did. I had to read the Bible and other religious books to the priest and answer questions to show I understood them. Only then could I be confirmed and only if I was confirmed could I get a licence to marry in church. That is still the case. Now, of course, you can get married anywhere, but 50 years ago there were very few options other than marrying in church and, 100 years ago, none at all."

There is another issue. Finnish education isn't quite what it seems. Exams and competitive pressures may have been eradicated from schools, leaving teachers and pupils free for the co-operative pursuit of cultural, creative and moral improvement. But this educational idyll eventually comes to an abrupt end.

Pupils who stay beyond 16, as more than 90% do, move into separate (allegedly self-selected) streams: "general" and "vocational" upper secondary schools. Though there is some crossover between the two, the vocational school students usually go to polytechnics or directly into jobs.

Only the general school – catering for what, in effect, is the academic stream – offers the 155-year-old national matriculation exam, a minimum requirement for university entry. Wholly financed from student fees (in a system in which everything else, including school meals, is completely free until university graduation), the exam comprises traditional essay-based external tests covering at least four subject areas. To study a particular subject at a particular institution, students must take yet more exams set by the universities themselves.

As Sahlberg acknowledges, Finland hasn't abolished competition; it has just moved it to a different part of the system. "It is getting tougher and tougher to reach the end points," he says. "It is the Finnish compromise."

In other words, although Finland unarguably achieves better results for more of its children than almost any other country in the world, success may (and I emphasise "may") be attributable less to its laid-back school regime than to the children's expectations of later competitive pressures. Exporting what appear to be educational success stories is a dubious enterprise, because it is so easy to misread how another country's system works and to discount its cultural background.

Sahlberg, I think, would agree. He is an odd, diffident sort of ambassador, spreading the message about "the Finnish miracle" but not really believing in the data that supposedly proves that it works. His fear now is that Finland's educational success is breeding complacency.

"Ask Finns about how our system will look in 2030, and they will say it will look like it does now. We don't have many ideas about how to renew our system. We need less formal, class-based teaching, more personalised learning, more focus on developing social and team skills. We are not talking about these things at all."

The Turkish Statistics Institute (TurkStat) released its foreign trade balances figures on Thursday, showing that the CAD in May also increased by 41.7 percent over the same month in 2012. May's CAD was at $7.8 billion, above an earlier market poll expectation of $6.8 billion.
Evaluating the figures in a written statement on Thursday, Economy Minister Zafer Çağlayan cited an increase in gold imports as the factor that brought the CAD up. “Turkey imported gold worth $4.8 billion in the months of April and May this year. This was due to an increase in domestic demand for the valuable metal following a decline in price in global markets. … We expect the trend of the surge in gold imports be temporary,” the minister explained. The government projects the year-end CAD to be around $60.7 billion; this figure was $48.8 billion in 2012. According to Çağlayan, the CAD should make it below the projected figure for the year-end.
A high foreign trade deficit remains the major factor responsible for Turkey's CAD. Turkey's foreign trade deficit arises predominantly from an import dependency on energy and intermediate goods, especially oil and natural gas.
In addition to metal and energy imports, the Turkish foreign trade is vulnerable to fluctuations in foreign exchange. The share of imported goods in Turkey's main manufacturing fields of automobiles, chemicals, mining, plastics, iron and steel is around 70 percent. Manufacturers at home buy these imported goods in US dollars. This means the more the Turkish lira loses against the greenback the more it adds to the country's foreign trade deficit, and thus to the CAD.
Tourism revenues, an important subgroup in the service sector, increased by $1.69 billion between January and May compared with the same months last year, reaching $8.27 billion. Turkey's tourism spending hit $1.9 billion in the same period.
Meanwhile, a total of $1.55 billion in foreign direct investment (FDI) exited Turkish markets in May, Turkey's central bank said on Thursday. The bank said a total of $2.87 billion in cash exited Turkish markets. In the month of May, Turkey saw $2.84 billion in US dollars enter markets.

Markets, lira pare gains after Fed minutes

On Wednesday night, the US Federal Reserve (Fed) released its meeting's minutes, suggesting a continuation in policy to inject cash to markets. In a statement following the meeting, Fed Chairman Ben Bernanke said that they would “continue to pursue a highly accommodative monetary policy for [the] foreseeable future.” Markets mostly read these latest statements as a recovery in sentiment from May 22, when Bernanke hinted that the Fed may look to slow stimulus.
With morale boosted after these words, European shares hit a five-week high on Thursday while Turkish main benchmark index Bourse İstanbul (BIST) gained 1.7 percent. The Turkish lira recouped losses as well, gaining around 1 percent against the US dollar following a $50 million forex sale by the Turkish central bank on Thursday afternoon. One US dollar was traded at 1.944 lira on Thursday afternoon, well below Monday's historic high of 1.974.
The lira has fallen almost 9 percent against the dollar since May. Turkey's central bank sold $1.3 billion on Wednesday to prop up the lira as foreign capital that had flooded in earlier this year continued to flee on fears concerning US monetary policy and domestic political uncertainties. Total sales for the year now stand at $6.2 billion. Also on Thursday, the central bank offered TL 9 billion in a one-week repo at 4.5 percent for the first time this week.
Turkey's two-year bond yield hovered around 9.59 percent on Thursday, its highest level since May of 2012.

Egypt's Muslim Brotherhood vowed on Thursday to continue its “peaceful” resistance in defiance of the military's ouster of the country's conservative President Mohammed Morsi.

A Brotherhood statement also distanced the group from an assassination attempt Wednesday against a senior army commander in the Sinai Peninsula.
The statement came a day after Egypt's military-backed government tightened its crackdown on the Brotherhood, ordering the arrest of its spiritual leader in a bid to choke off the group's campaign to reinstate Morsi, now held at an undisclosed Defense Ministry facility.
The Brotherhood is outraged by the overthrow of Morsi and demands nothing less than his release from detention and his reinstatement as president.
“We will continue our peaceful resistance to the bloody military coup against constitutional legitimacy,” the Brotherhood said. “We trust that the peaceful and popular will of the people shall triumph over force and oppression.”
Morsi was Egypt's first freely elected president. He was ousted by the military on July 3, following a wave of protests by millions of Egyptians who took to the streets to call for his removal.

Brotherhood denounces violence 

The Brotherhood's statement also denounced the assassination attempt against Maj. Gen. Ahmed Wasfi in the Sinai town of Rafah, near the border with Gaza, saying the group adheres to peaceful measures in line with what it says are the teachings of Islam.
Gunmen in a pickup truck opened fire on Wasfi's convoy late Wednesday, drawing fire from the accompanying troops, security officials said. The commander escaped unharmed but a 5-year-old girl was killed in the clashes, said the officials, speaking on condition of anonymity because they were not authorized to speak to the media. One gunman was arrested.
The Brotherhood denounced the warrants for the arrest of Mohammed Badie and nine other leading consevatives for inciting violence that left dozens dead in Cairo on Monday, saying “dictatorship is back” and insisting it will never work with the interim rulers.
Leaders of the Brotherhood are believed to be taking refuge somewhere near a continuing sit-in by the group's supporters at the Rabaah al-Adawiya Mosque in eastern Cairo, but it is not clear if Badie also is there.
Security agencies have already jailed five leaders of the Brotherhood, including Badie's powerful deputy, Khairat el-Shaiter, and shut down its media outlets.
The prosecutor general's office said Badie, another deputy, Mahmoud Ezzat, senior member Mohammed El-Beltagy and popular preacher Safwat Hegazy are suspected of instigating Monday's clashes with security forces outside a Republican Guard building that killed 54 people - most of them Morsi supporters - in the worst bloodshed since he was ousted.
The conservatives have accused the troops of gunning down protesters, while the military blamed armed backers of Morsi for attempting to storm a military building.
The arrest warrants highlight the armed forces' zero-tolerance policy toward the Brotherhood, which was banned under authoritarian leader Hosni Mubarak.
“This just signals that dictatorship is back,” said Brotherhood spokesman Ahmed Aref. “We are returning to what is worse than Mubarak's regime, which wouldn't dare to issue an arrest warrant of the general leader of the Muslim Brotherhood.”

Unrest could threaten food security

Meanwhile, civil unrest and dwindling foreign exchange reserves raise serious food security concerns in Egypt, the UN food agency said in a report on Thursday.
Cereal import requirements for 2013/14 in Egypt, the world's largest wheat importer, will remain similar to last year despite good prospects for its own harvest, the Food and Agriculture Organization said, pointing to an expanding population.
But FAO warned in its Crop Prospects and Food Situation report that declining foreign exchange reserves may result in increased restrictions on transactions by Egypt's Central Bank, thus curtailing the imports.
A week after Egypt's army toppled its first democratically elected leader, bloodshed has opened deep fissures in the Arab world's most populous country, with bitterness at levels unseen in its modern history.

One of the chiefs of the terrorist Kurdistan Workers' Party (PKK) has said that if the Justice and Development Party (AK Party) continues to behave as it has been in the past few months, the ongoing settlement process might be irrevocably damaged.

The PKK's larger network, the Kurdistan Communities Union (KCK), changed its top brass recently. It appointed Murat Karayılan, a long-term senior commander, to a body it calls the “executive council” of the KCK. In his initial statements following his new position, Karayılan said the settlement process began last year in October through talks between the government and the PKK's imprisoned leader, Abdullah Öcalan. In March, Öcalan ordered PKK militants to leave Turkish territories. However, the PKK and the pro-Kurdish Peace and Democracy Party (BDP) have complained that the government hasn't fulfilled its part in the process.
Speaking to the PKK-affiliated Fırat News Agency, Karayılan said the common opinion that came out of a recent meeting of Kongra-Gel, another organ of the PKK that is short for the Kurdish People's Congress, was that the settlement process has been blocked.
Karayılan said the PKK made important decisions during that meeting. “Kongra-Gel gave the authority to follow the settlement process to the Executive Council. It gave it the authority to decide on its own based on spontaneous developments. For example, if the government doesn't take any steps, it might decide to freeze the process or continue it.” Karayılan also reiterated the group's demands that an independent group of doctors go to İmralı, where Öcalan is imprisoned, and examine the PKK leader.
Karayılan also asserted that Öcalan's prison conditions should be improved. “He should be allowed to meet with delegations from abroad. He should have contact with the outside world. He should have assistants and a secretary. Only this way can he continue the settlement process.”
Karayılan said Öcalan had written letters to government officials, but the organization did not know what, if any, results these produced. “If the AK Party government doesn't make a move, the process will get blocked over the period ahead.”
He said the week ahead is crucial for the settlement process. “Prisons are full of Kurdish politicians. These are putting a strain on the process. Everyone should understand well that the week ahead is very important. If the attitude of the Turkish side continues as it is, the process will be blocked. It isn't completely blocked right now, but it is getting there. We are waiting to see steps in a short period of time that will convince us, and if these steps are not taken and the process is blocked, the responsibility will be on them.”
Karayılan said the military still put pressure on the people in the predominantly Kurdish regions of the east and Southeast. He said that the village guard system -- whereby some villages, usually entire clans, are armed to fight the PKK -- should end.” He said the village guard system is a major obstacle on the way to peace.
Kurdish intellectual Ümit Fırat said the PKK has been saying what Karayılan said to Fırat for quite a while, demanding further steps from the government to go on with the second stage of the settlement process. “What they are saying is: 'We have done our part, now it is the government's turn',” Fırat told Today's Zaman. According to him, the PKK will not withdraw from Turkish territories without seeing a step from the government. Likewise, the government expects the PKK to withdraw completely to continue with the settlement process. Fırat said the PKK wants to make it understood that it is not withdrawing unconditionally.
Economic Policy Research Foundation of Turkey (TEPAV) expert Nihat Ali Özcan describes Karayılan's latest statements as “costly signaling,” a term used in terrorist terminology as Özcan states. “In order to display that he is serious, Karayılan demands further steps from the government," Özcan told Today's Zaman. According to this view, Özcan tries to “pressure the government” to act. According to Özcan, the PKK is blatantly threatening the government with aborting the process unless its demands are met.

Karayılan's new position

Commentators who know the workings of the PKK well have suggested that Öcalan was appointed to the executive body of the terrorist group due to his influence over the PKK's armed wing, the People's Defense Forces (HPG). The decision to appoint Karayılan to the board was made by Öcalan, who appointed another long-term commander, Cemil Bayık, as head of the KCK. Experts also say that recent comments that the PKK is eliminating its members of Syrian origin are untrue. Some suggest that influential individuals of Syrian origin in the PKK, such as Bahoz Erdal and Sofu Nureddin, might have been given other work to mobilize Kurds in Syria.

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National Kurdish conference in Iraq

A conference that the Kurdistan Regional Government (KRG) of Iraq has been planning to hold for the past six years will finally be held in Arbil, northern Iraq, according to the latest news from the region.
Turkey's BDP and the Democratic Society Congress (DTK) will also attend the event, where in addition to the Kurds of Turkey and Iraq, those of Syria and Iran will also be represented. Massoud Barzani, the leader of the KRG, will be hosting the event, which will be held in September, although a date has not yet been set.
The conference will seek to find a common stance among Kurds and address the social, cultural and political issues facing Kurds who live across four different countries. It was initially planned in 2011, but it was canceled after 13 Turkish soldiers were killed in a PKK attack that year.

These mine dumps are testament to the millions of tonnes of earth that have been shifted in the search for gold around the city over the past 130 years.

But the gold mining industry that gave rise to one of Africa's biggest cities is now in crisis.

Costs, including wages, have escalated over the past two decades and the gold itself is getting harder to get to.

Some analysts describe the gold sector as in terminal decline - a sunset industry.

Crucial wage negotiations start in South Africa's gold mining sector on Thursday, the outcome of which, some analysts say, will determine the future of the whole industry.

Billions of dollars in exports and tens of thousands of jobs are at stake.

It's been a turbulent 18 months for South Africa's entire mining industry, not just gold, with workers across several sectors staging wildcat strikes.

The tensions over the mines has often boiled over into violence, including the most infamous day in South Africa's post-apartheid history last August, when 34 miners were shot dead by police near Lonmin's Marikana platinum mine.

The South African government is so concerned that it tasked Deputy President Kgalema Motlanthe to try to broker a stability pact for the industry. The ruling ANC faces elections next year and is keen to avoid another flare-up of violence.

While mining only contributes about 6% of South Africa's GDP (financial services and manufacturing command larger slices), it generates nearly 60% of the country's exports.

Poles apart

But the opening positions of the players involved seem to be so far apart that the negotiations are likely to be racked by tension, deadlock and possible walkouts.

The two big unions, the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU), have demanded pay increases of 60% and 100% respectively.

The gold mining companies say that double-digit increases are unaffordable.

Analysts expect months of industrial action on a scale that could be worse than that seen last year.

That would leave the entire sector in a precarious position and would have severe knock-on consequences for the South African economy as a whole.

The ratings agencies Standard & Poors and Moody's downgraded the country's debt last year, partly due to worries over the mining sector.

Sunset industry?

The Chamber of Mines, which represents the mining houses, says a widespread strike in the gold mines would mean a loss of 349m rand ($34m; £23m) for each day of lost production.

Meanwhile, the loss of miners' wages in a strike would result in the government losing 9m rand in tax revenues every day.

Much of the easily accessible gold has already been taken out of the ground. That which lies in the deeper reefs is becoming increasingly costly and dangerous to get at.

In addition to this, over the past five years, wages have increased by an average of 12.3% per year, compared with an average inflation rate of 5.9%.

During the same time, gold production fell by 21%. Last year, the average worker produced 1.18kg of gold. In 2007, that figure was 1.49kg.

'Ruse'

Last month, the World Gold Council released new guidelines for calculating the true cost of producing the metal.

The new "all-in" measure takes account of capital expenditure and licensing for the first time, as well as the day-to-day running costs.

This significantly raises the cost of producing an ounce of gold.

Gold Fields chief executive Nick Holland said the new method would mean an ounce of gold would cost nearly $1,400 to produce. At a time when the gold price has fallen to about $1,200, this makes many mines unprofitable.

But Loane Sharp, a labour analyst with Adcorp, says the complaints made by the mining companies about the price of gold (over which they have no control) are somewhat overdone. For example, 10 years ago the price of gold was closer to $300 an ounce and many mines were still profitable.

"In many cases complaints about the gold price are a ruse, since the uncontrollable gold price allows mine management to divert attention from their own role in mine profitability, namely control of costs," he says.

Mechanisation

Analysts say if the mining companies are forced to grant high wage increases, they will simply counter this with massive layoffs.

Firms have also embarked on programmes of mechanisation, basically replacing workers with machines.

Loane Sharp points out that while mine production between 1990 and 2012 increased, the labour force shank from 1.2 million to 514,000 - the result of mechanisation.

Both sides in the wage negotiations recognise the need to reach common ground.

"We believe the minerals of this country must now benefit the people," AMCU said in its demands to the gold companies.

"But unless the wage talks reach an outcome that reflects the balance sheet realities, neither companies nor workers can salvage a gold industry crushed between a toppling price and climbing costs."

While Mark Cutifani, chief executive of Anglo American and the president of the Chamber of Mines, said: "The future of the mining industry is in our collective hands and by working together we can ensure its sustainability and return it to profitability for the benefit of all South Africans."

But while the public statements by the players talk of solutions found collectively, there will be hard bargaining and tough decisions made in the coming months. Much is at stake in an industry that could be entering its twilight years.