Trump adopts aggressive posture toward Iran after missile launch

A file photo shows a ballistic missile launched and tested at an undisclosed location in Iran. REUTERS/Mahmood

By Steve Holland and Matt Spetalnick

WASHINGTON (Reuters) – The White House put Iran “on notice” on Wednesday for test-firing a ballistic missile and said it was reviewing how to respond, taking an aggressive posture toward Tehran that could raise tensions in the region.

While the exact implications of the U.S. threat were unclear, the new administration signaled that President Donald Trump intended to do more, possibly including imposing new sanctions, to curb what he sees as defiance of a nuclear deal negotiated in 2015 by then-President Barack Obama.

The tough talk commits the administration to back up its rhetoric with action, which could cast doubt on the future of the Iran agreement and sow further uncertainty in an already chaotic Middle East, experts said.

Trump has frequently criticized the Iran nuclear deal, calling the agreement weak and ineffective.

Officials declined to say whether the military option was on the table, although Pentagon spokesman Christopher Sherwood said: “The U.S. military has not changed its posture in response to the Iranian test missile launch” on Sunday.

A fiery statement from Trump’s national security adviser, Michael Flynn, marked some of the most aggressive rhetoric by the administration that took office on Jan. 20, making clear that Obama’s less confrontational approach toward Iran was over.

Flynn said that instead of being thankful to the United States for the nuclear deal, “Iran is now feeling emboldened.”

“As of today, we are officially putting Iran on notice,” he told reporters in his first appearance in the White House press briefing room.

He said the launch and an attack on Monday against a Saudi naval vessel by Iran-allied Houthi militants off the coast of Yemen underscored “Iran’s destabilizing behavior across the Middle East.”

Iran confirmed it had tested a new missile but said it did not breach a nuclear accord reached with world powers or a U.N. Security Council resolution that endorsed the pact.

‘HOW WOULD U.S. RESPOND?’

Analysts said Iran could interpret Flynn’s warning as bluster given that the Trump administration is still formulating a response.

“It’s a vague way of drawing a line in the sand,” said Mark Fitzpatrick, executive director of the International Institute for Strategic Studies-Americas. “Taken literally, it could mean: ‘You do this one more time and you’ll pay for it.’ But how would the U.S. respond?”

The warning could foreshadow more aggressive economic and diplomatic measures against Iran.

Three senior U.S. officials, speaking on condition of anonymity, said a range of options, including economic sanctions, was being considered and that a broad review was being conducted of the U.S. posture toward Iran.

One official said the intent of Flynn’s message was to make clear the administration would not be “shy or reticent” toward Tehran.

“We are in the process of evaluating the strategic options and the framework for how we want to approach these issues,” the official said. “We do not want to be premature or rash or take any action that would foreclose options or unnecessarily contribute to a negative response.”

“Our sincere hope is that the Iranians will heed this notice today and will change their behavior,” he said.

Iran has test-fired several ballistic missiles since the nuclear deal in 2015, but the latest test was the first since Trump became president.

RISK OF MISCALCULATION

The issue came to the forefront on the same day that the U.S. Senate confirmed former Exxon Mobil Corp Chief Executive Rex Tillerson as secretary of state.

Trump told Tillerson at his swearing-in ceremony that “although you inherit enormous challenges in the Middle East and around the world, I believe we can achieve peace and security in these very, very troubled times.”

Simon Henderson, a Gulf expert at the Washington Institute for Near East Policy, said there was a danger of a miscalculation by Washington or Tehran.

“The question now is will the Iranian logic be: ‘My goodness, this guy is serious, we’d better behave ourselves?’” he said. “Or do they say: ‘Why don’t we tweak him a bit more to see what he really means, maybe test him.’”

The administration’s tough statement came midway through a three-day exercise by 18 U.S., French, British and Australian warships and an undisclosed number of aircraft close to Iranian waters in the Gulf, according to a statement by U.S. Central Command.

Trump is due to hold talks with Israeli Prime Minister Benjamin Netanyahu, a strident critic of the Iran nuclear deal, at the White House on February 15.

The U.S. president and Saudi Arabia’s ruler, King Salman, spoke by phone on Sunday and were described by the White House as agreeing on the importance of enforcing the deal and “addressing Iran’s destabilizing regional activities.”

Sunni Muslim-dominated Saudi Arabia, home to Mecca and other Islamic holy sites, and Shi’ite Muslim-majority Iran are regional rivals.

(Additional reporting by Jonathan S. Landay, Roberta Rampton, Idrees Ali, Yeganeh Torbati, Lesley Wroughton, Yara Bayoumy and Arshad Mohammed; Editing by Jonathan Oatis and Peter Cooney)

Saudi Arabia warns on cyber defense as Shamoon resurfaces

man on keyboard graphic

KHOBAR, Saudi Arabia (Reuters) – Saudi Arabia on Monday warned organizations in the kingdom to be on the alert for the Shamoon virus, which cripples computers by wiping their disks, as the labor ministry said it had been attacked and a chemicals firm reported a network disruption.

An alert from the telecoms authority seen by Reuters advised all parties to be vigilant for attacks from the Shamoon 2 variant of the virus that in 2012 crippled tens thousands of computers at oil giant Saudi Aramco.

Shamoon disrupts computers by overwriting the master book record, making it impossible for them to start up. Former U.S. Defense Secretary Leon Panetta said the 2012 Shamoon attack on Saudi Aramco was probably the most destructive cyber attack on a private business.

In the 2012 hacks, images of a burning U.S. flag were used to overwrite the drives of victims including Saudi Aramco and RasGas Co Ltd. In the recent attacks, an image of the body of 3-year-old drowned Syrian refugee Alan Kurdi was used in recent attacks, according to U.S. security researchers.

The Shamoon hackers were likely working on behalf of the Iranian government in the 2012 campaign and the more-recent attacks, said Adam Meyers, vice president with cyber security firm CrowdStrike. “It’s likely they will continue,” he said.

State-controlled Al Ekhbariya TV said on Twitter, using the hash tag #Shamoon, that several Saudi organizations had been targeted in recent cyber attacks.

The state news agency, meanwhile, said the labor ministry had been hit by a cyber attack, but that it did not impact its data.

Jubail-based Sadara Chemical Co, a joint venture firm owned by Saudi Aramco and U.S. company Dow Chemical, said it had experienced a network disruption on Monday morning and was working to resolve the issue.

The company made the disclosure on its official Twitter account after the warning by Al Ekhbariya TV, which cited the telecoms authority.

It did not say whether the disruption was due to a cyber attack but said as a precautionary measure it had stopped all services related to the network.

Other companies in Jubail, the hub of the Saudi petrochemicals industry, also experienced network disruptions, according to sources who were not authorized to publicly discuss the matter.

Those companies sought to protect themselves from the virus by shutting down their networks, said the sources, who declined to identify specific firms.

(Reporting by Reem Shamseddine. Additional reporting by Jim Finkle.; Writing By Maha El Dahan; Editing by Mark Potter and Andrew Hay)

U.S. to halt some arms sales to Saudi, citing civilian deaths in Yemen campaign

A Saudi soldier fires a mortar towards Houthi movement position, at the Saudi border with Yemen

By Phil Stewart and Warren Strobel

WASHINGTON (Reuters) – The United States has decided to limit military support to Saudi Arabia’s campaign in Yemen because of concerns over widespread civilian casualties and will halt a planned arms sale to the kingdom, U.S. officials told Reuters.

The United States will also revamp future training of the kingdom’s air force to focus on improving Saudi targeting practices, a persistent source of concern for Washington.

The decision reflects deep frustration within President Barack Obama’s government over Saudi Arabia’s practices in Yemen’s 20-month-old war, which has killed more than 10,000 people and sparked humanitarian crises, including chronic food shortages, in the poorest country in the Middle East.

It could also further strain ties between Washington and Riyadh in the remaining days of Obama’s administration and put the question of Saudi-U.S. relations squarely before the incoming administration of President-elect Donald Trump, who takes office on Jan. 20.

A Saudi-led military coalition intervened in Yemen’s civil war in March 2015 and has launched thousands of air strikes against the Iran-allied Houthi movement.

Rights groups say attacks on clinics, schools, markets and factories may amount to war crimes. Saudi Arabia has either denied the attacks or cited the presence of fighters in the targeted areas and has said it has tried to reduce civilian casualties.

An Obama administration official, who spoke on condition of anonymity, said “systemic, endemic” problems in Saudi Arabia’s targeting drove the U.S. decision to halt a future weapons sale involving precision-guided munitions.

“We’ve decided not to move forward with some foreign military sales cases for air-dropped munitions, PGMs (precision-guided munitions),” the official said.

“That’s obviously a direct reflection of the concerns that we have about Saudi strikes that have resulted in civilian casualties,” the official said. A second official confirmed the decision to suspend the sale of certain weaponry.

The officials declined to offer details. But a specific case put on hold appeared to involve the sale of hundreds of millions of dollars worth of guidance systems manufactured by Raytheon Co that convert dumb bombs into precision-guided munitions that can more accurately hit their targets.

At the same time, the United States has decided to increase efforts to address long-standing Saudi concerns by focusing more on border security, the official said. The kingdom has been subject to cross-border attacks by the Iran-allied Houthis.

“They’ve made a very strong request for greater intelligence sharing and more support for their border,” the official said.

There was no immediate comment from Saudi embassy officials.

The White House launched a review of U.S. assistance for the Saudi-led coalition after planes struck mourners at a funeral in the capital, Sanaa, in October, killing 140 people, according to one U.N. estimate.

The United Nations human rights office said in August that the Saudi-led coalition was responsible for roughly 60 percent of the 3,800 civilians killed since March 2015.

Human rights groups have criticized the United States for supporting the Saudi war effort by selling the kingdom arms and refueling coalition jets. The United States says it has not vetted or selected Saudi targets in Yemen.

The Obama administration official said the United States would not halt refueling of the Saudi-led coalition planes.

“For now that’s not going to be touched. Again, the review could continue and people could make a different decision in the coming weeks,” the official said.

SMART VERSUS DUMB BOMBS

The decision to suspend the arms sale to the Saudis marks a reversal for the administration. Officials have long argued that supplying so-called “smart weapons” helped in reducing civilian casualties.

Last year, the Obama administration even had the U.S. military send precision-guided munitions from its own stocks to replenish dwindling Saudi-led coalition supplies, a source close to the Saudi government has said.

But that argument ultimately failed to convince the Obama administration during its review, which the first official said was still ongoing.

“It’s not a matter of how smart or dumb the bombs are, it’s that they’re not picking the right targets. The case in point … is the one on the funeral,” the official said.

The airstrikes on the funeral took place after the Saudi-led coalition received incorrect information from Yemeni military figures that armed Houthi leaders were in the area, an investigative body set up by the coalition said in October.

In an effort to reduce civilian casualties, the United States gave the Saudis detailed lists of sites to avoid bombing, Reuters has previously reported. But jets in the Saudi-led coalition have hit at least one target on that list.

US STILL SELLING HELICOPTERS

Earlier this year, the U.S. military reduced the number of U.S. military personnel coordinating with the Saudi-led coalition’s air campaign, slashing it to six people from a peak of 45 personnel.

“Their responsibilities are being adjusted and limited so that they are less enmeshed in some of the offensive operations in Yemen,” the official said.

Reuters reported earlier this year on concerns by some U.S. officials that the United States could be implicated in possible Saudi violations of the laws of war.

In the view of some officials, U.S. refueling and logistical support of Riyadh’s air force – even more than the arms sales – risked making the United States a party to the Yemen conflict under international law.

In May, Washington suspended sales to Riyadh of cluster munitions, which release dozens of bomblets and are considered particularly dangerous to civilians.

Last week, the State Department announced plans to sell Saudi Arabia CH-47F Chinook cargo helicopters and related equipment, training and support worth $3.51 billion. U.S. officials said the weaponry would help Saudi defend its border, not conduct offensive operations in Yemen.

(Editing by Yara Bayoumy and Ross Colvin)

Oil surges to one-and-a-half-year high, Fed rate increase looms

A gas station attendant pumps fuel into a customer's car at PetroChina's petrol station in Beijing, China,

By Marc Jones

LONDON (Reuters) – Oil prices surged to their highest since mid-2015 and U.S. Treasury yields hit a more than two-year peak on Monday after the world’s top crude producers agreed to the first joint output cut since 2001.

Coming at the start of a week when the United States is expected to raise interest rates for the only the second time since the global financial crisis, the weekend agreement between the Organization of Petroleum Exporting Countries and key non-OPEC states set the markets alive.

Brent oil futures soared 5 percent to top $57 a barrel for the first time since July 2015 and U.S. crude leapt above $54 a barrel to send global inflation gauges spiking as well.

There was particular surprise as Saudi Arabia, the world’s number one producer, said it may cut its output even more than it had first suggested at an OPEC meeting just over a week ago.

“The original OPEC deal pointed to a fairly lumpy 3 percent cut (in production), so this suggests there is a bit more upside for oil prices,” said Neil Williams, chief economist at fund manager Hermes.

On the rise in bond yields, which tend to set global borrowing costs, he added: “The Fed hike is mostly baked in so when we do get it, it will be more about the statement.”

European oil companies jumped more than 2 percent on the oil surge and helped the pan-regional STOXX 50 index add 0.1 percent, having just had its best week in exactly five years.

Bond markets in contrast were under heavy pressure. Euro zone government bond yields were sharply higher with German Bunds up 5 basis points at 0.40 percent as U.S. yields topped 2.5 percent for the first time since October 2014.

“We have seen OPEC and non-OPEC producers agreeing, which is boosting reflation expectations around the world,” said Chris Weston, an institutional dealer with IG Markets.

In another sign of the reflation trade, breakeven rates –the gap between yields of five-year U.S. debt and a matching tenor in inflation-protected securities — were at two-month highs.

Wall Street futures, meanwhile, pointed to the main U.S. indexes barely budging when they resume, having enjoyed an uninterrupted gain of nearly 4 percent over the past six sessions.

FED UP

Focus was also on the currency markets as the dollar rose to its highest since February against the Japanese yen, before what is almost certain to be the first rate hike of the year from the U.S. Federal Reserve on Wednesday.

Japan’s yen also tends to suffer when oil prices rise, since the country is a major importer.

The Norwegian crown, Canadian dollar and Russia rouble were the big gainers from the oil deal. The rouble rose almost 2 percent against both the dollar and euro as Russia shares, which have rocketed almost 90 percent since January, hit the latest in a string of record highs.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent after posting its biggest weekly rise in nearly three months last week.

China stocks suffered their biggest fall in six months as blue chips were knocked by fresh regulatory curbs to rein in insurers’ aggressive stock investments and rising bond yields prompted profit-taking in equities.

The blue-chip CSI300 index fell 2.4 percent, to 3,409.18 points, while the Shanghai Composite Index lost 2.5 percent to 3,152.97 points.

China’s insurance regulator, which recently warned it would curb “barbaric” acquisitions by insurers, said late on Friday it had suspended the insurance arm of China’s Evergrande Group from conducting stock market investment.

Concerns were also rumbling about U.S.-Sino relations after Donald Trump re-ignited controversy over Taiwan.

“I fully understand the ‘one China’ policy, but I don’t know why we have to be bound by a ‘one China’ policy unless we make a deal with China having to do with other things, including trade,” Trump said in an interview with Fox News.

Emerging markets are already bracing for a difficult run if U.S. rate hikes push up the dollar and global bond yields.

Turkey’s lira has borne the brunt of much of the pressure in recent weeks, and it took another 1 percent hit alongside a sharp fall in Turkish bonds after data showed the country’s economy suffering its first contraction since 2009.

Gold, meanwhile, which had a bumper first half of 2016, hit its lowest level since early February at $1,152 an ounce.

(Additional reporting by Saikat Chatterjee in Hong Kong, editing by Larry King)

Islamic State leader says ‘no retreat from Mosul assault’

Military vehicles of Iraqi army take part in an operation against Islamic State militants in Qaraqosh, near Mosul, Iraq,

By Stephen Kalin and Dominic Evans

KOKJALI/BAGHDAD, Iraq (Reuters) – With Iraqi troops battling inside the Islamic State bastion of Mosul, the militants’ leader told his followers there could be no retreat in a “total war” against the forces arrayed against them.

Expressing confidence that his Islamic State fighters would prevail against Shi’ite Islam, Western “crusaders” and the Sunni “apostate” countries of Turkey and Saudi Arabia, Abu Bakr al-Baghdadi called on the jihadists to “wreak havoc”.

“This raging battle and total war, and the great jihad that the state of Islam is fighting today only increases our firm belief, God willing, and our conviction that all this is a prelude to victory,” Baghdadi said in an audio recording released online by supporters on Thursday.

Iraqi regular troops and special forces, Shi’ite militias, Kurdish peshmerga fighters and other groups backed by U.S.-led air strikes launched a campaign two weeks ago to retake Mosul.

Winning back the country’s second biggest city would mark the defeat of the Iraq wing of a crossborder caliphate which Baghdadi declared from the pulpit of a Mosul mosque two years ago. Islamic State also holds large parts of neighboring Syria.

In his first audio message released in nearly a year, Baghdadi called on the population of Mosul’s Nineveh province “not to weaken in the jihad” against the “enemies of God”.

He also called on the group’s suicide fighters to “turn the nights of the unbelievers into days, to wreak havoc in their land and make their blood flow as rivers”.

Addressing those who might consider fleeing, he said: “Know that the value of staying on your land with honor is a thousand times better than the price of retreating with shame.”

ROCKET FIRE

Shortly after Baghdadi’s speech was released at around 2 a.m., residents said heavy explosions shook eastern Mosul. One said the militants fired dozens of rockets toward the Intisar, Quds and Samah districts where soldiers have been closing in.

“We heard the sounds of rockets firing one after the other and saw them flashing through the air. The house was shaking and we were terrified, not knowing what was taking place.”

Fighters were on the street, unusually showing their faces, he said. “They were saying ‘We will fight till death. The caliph gave us a morale boost to fight the infidels’,” he said.

Another witness from the Hadba neighborhood of north Mosul said that Islamic State vehicles patrolled the area and blasted out Baghdadi’s speech, urging fighters to hold their positions.

Outside the city’s eastern limits, hundreds of civilians streamed away from the conflict, packed into cars, pickups and trucks, waving white flags and hooting horns. Cows and sheep also filled the road from Kokjali, on the eastern edge of Mosul.

Many were from Kokjali itself, which was cleared of Islamic State fighters by Iraq’s elite Counter Terrorism Service troops earlier this week.

Fleeing residents said there had been heavy mortar fire launched by retreating Islamic State fighters.

By mid-morning, a Reuters correspondent in the Kokjali district of the city saw smoke rising from inside Mosul but there were no sounds of fighting.

Lieutenant-General Talib Shaghati said CTS troops were on the edge of the eastern Karama, Intisar and Samah districts.

The exact location of Baghdadi, an Iraqi whose real name is Ibrahim al-Samarrai, is not clear. Reports have said he may be in Mosul itself, or in Islamic State-held land to the west of the city, close to the border with Syria.

British Foreign Secretary Boris Johnson said intelligence suggested that Baghdadi had “vacated the scene”, but he did not say where the Islamic State leader might be.

The authenticity of the 31-minute-long recording could not be immediately verified, but the voice and style closely resembled those of previous speeches Baghdadi has delivered.

The recording appeared to be recent as it focused on the Mosul offensive, although he did not mention the city by name.

Mosul still has a population of 1.5 million people, much more than any of the other cities captured by Islamic State two years ago in Iraq and neighboring Syria.

Iraqi troops and Kurdish peshmerga fighters have been advancing on Mosul for two weeks from the north, from the eastern Nineveh plains and up the Tigris river from the south.

The Hashid Shaabi (Popular Mobilisation) forces of mainly Shi’ite militias joined the campaign on Saturday, launching an offensive to cut off any supply or escape to the west.

The leader of the Badr Organisation, the largest of the Popular Mobilisation militias, said his forces would cut off the main western supply route on Thursday, leaving Islamic State surrounded.

Brett McGurk, U.S. President Barack Obama’s counter-Islamic State envoy, said the Mosul campaign was ahead of schedule. “Iraqi forces enter eastern neighborhoods of Mosul this morning. New advances on all axes,” McGurk tweeted.

Senior Kurdish politician Hoshiyar Zebari said in a tweet that Islamic State blew up parts of a bridge linking the eastern and western sides of the city to try to prevent its fighters abandoning the eastern districts. Residents said there had been an explosion at the bridge but said the cause was not clear.

TARGETING TURKEY AND SAUDI

In a sectarian speech, Baghdadi called for attacks on both Turkey and Saudi Arabia, saying the Sunni countries had both sided with the enemy in a war he said was targeting Sunni Islam.

Islamic State fighters should “unleash the fire of their anger” on Turkish troops fighting them in Syria, and take the battle into Turkey.

“Turkey entered the zone of your operations, so attack it, destroy its security, and sow horror within it. Put it on your list of battlefields. Turkey entered the war with the Islamic State with cover and protection from Crusader jets,” he said referring to the U.S.-led air coalition.

Baghdadi also told his followers to launch “attack after attack” in Saudi Arabia, targeting security forces, government officials, members of the ruling Al Saud family and media outlets, for “siding with the infidel nations in the war on Islam and the Sunna (Sunni Muslims) in Iraq and Syria”.

Islamic State has been on the retreat since last year in both Iraq and Syria, in the face of a myriad of different forces seeking to crush the ultra-hardline group.

In addition to the forces marching on Mosul, it faces a broad range of foes in neighboring Syria. There it is fighting Turkish-backed Syrian rebels opposed to President Bashar al-Assad and U.S.-backed Kurdish fighters, as well as Russian- and Iranian-backed Syrian army units loyal to Assad and foreign Shi’ite militias.

(Additional reporting by Ahmed Tolba and Mostafa Hashem in Cairo, and Maher Chmaytell and Saif Hameed in Baghdad; editing by David Stamp)

Rivals, regional powers grow uneasy with Palestinian leader

Palestinians take part in a rally in support of Palestinian President Mahmoud Abbas in the West Bank city of Ramallah

By Ali Sawafta and Nidal al-Mughrabi

RAMALLAH/GAZA (Reuters) – Saudi Arabia, Egypt and other Arab states are piling pressure on Palestinian President Mahmoud Abbas to resolve divisions in his Fatah party and with the rival Hamas movement, amid growing concerns about whether Palestinian democracy is under threat.

Neighboring states, diplomats and major funders fear the festering divisions could lead to conflict, and say the lack of a clear transition process raises questions about what would happen if the 81-year-old Abbas, in power since 2005 despite his mandate expiring, were to die in office.

In a non-binding paper circulated last month, Saudi Arabia, Egypt, Jordan and the United Arab Emirates made recommendations for tackling splits that have deepened over the past year, while strengthening Palestinian leadership and trying to keep the stalled peace process with Israel alive.

“Efforts to unite Fatah and empower it are aimed at balancing the Palestinian internal arena and this falls under the responsibilities of the head of the movement, Abu Mazen,” the two-page paper said, referring to Abbas by his nickname.

Among the recommendations was the holding of “free and fair” elections for parliament and the presidency by July 2017, although there are no indications that will happen. They would be the first parliamentary elections since January 2006.

“The primary reasons are Abbas’s systematic mismanagement of such relationships, and a weakness of leadership that has opened greater opportunities for Arab and foreign interference in Palestinian internal affairs,” said Mouin Rabbani, a senior fellow with the Institute for Palestine Studies.

In a clear signal of its growing frustration, Saudi Arabia, which normally provides around $20 million a month to the Palestinian budget, has not made any contributions since April, according to the Palestinian finance ministry’s website.

Palestinian officials say Riyadh is withholding the funds because it first wants to see progress on unity within Fatah and with Hamas, the Islamist group that controls Gaza.

With the United States, the European Union and individual EU member states having already cut their contributions, the Palestinian budget faces a severe shortfall this year, which the World Bank puts at around $600 million.

Asked about the pressure from Arab states, Abbas’s spokesman Nabil Abu Rdainah declined to comment directly but said the focus of Fatah and the Palestine Liberation Organization, which Abbas also chairs, has always been on Palestinian unity.

“Any attempt to intervene in the independence of Palestinian national decision-making will fail, just as it has failed throughout the past 40 years,” he said. Abbas himself has said nothing in public about the political process in months.

POLITICAL JOSTLING

Rabbani said it was increasingly clear the race to succeed Abbas had begun, with a number of rivals positioning themselves for the day he is gone.

Abbas faces several challenges. Opinion polls show Palestinians have lost confidence in his leadership, and if parliamentary elections were held tomorrow, it is possible Hamas would win in both Gaza and in the West Bank, where Fatah and Abbas have traditionally been stronger.

At the same time, factions within Fatah are growing more agitated, with rival groups emerging ahead of a party congress set to take place next month, the first since 2009.

Mohammed Dahlan, a former Fatah security chief who fell out with Abbas and now lives in self-imposed exile in the United Arab Emirates, is a staunch Abbas critic who retains influence within Fatah’s revolutionary council and central committee.

Some senior Fatah figures want Abbas to reconcile with Dahlan, but the president shows no such inclination. At the party congress, Abbas is expected to push for the election of a new central committee and revolutionary council – the equivalent of Fatah’s parliament – that would be free of Dahlan loyalists.

Dahlan, 55, said that if Abbas did try to push such changes through, it would be “illegitimate”.

It “will represent the most dangerous split in the history of Fatah and will be regarded as a palace coup,” he told Reuters in written comments, adding that there were legitimate reasons to worry about a collapse in the democratic process.

“It is time to implement the will of the people and implement the law by electing a new leadership and not a new leader. There is a historical and national need to hold parliament and presidential elections,” he said.

In an analysis last week, the Carnegie Endowment for International Peace described Fatah, which has dominated Palestinian politics for more than 50 years, as “tearing itself apart”, with worrying implications for the future.

“It is likely that the split within Fatah will further widen if Dahlan is excluded from holding a leadership position,” it wrote. “Furthermore, the dispute between the Dahlan and Abbas factions could evolve into open warfare, which could mean instability or even violence – especially where Dahlan wields considerable power in the Gaza Strip, the northern West Bank and Palestinian refugee camps in Lebanon.”

This week has already seen unrest in some West Bank refugee camps where Dahlan has a strong following.

Diplomats say Dahlan has good ties with Egypt as well as the Gulf states. Cairo sees him as a helpful interlocutor with Hamas in Gaza, where Dahlan is from, and as someone with the energy and strength to shake up Palestinian politics.

Others, though, see Dahlan as the power behind the throne. Officials who have met him think he may act as a kingmaker, rather than a future Palestinian president, throwing his support behind another senior Fatah figure as leader.

A number of names crop up in both Palestinian and Israeli assessments, including Nasser al-Qudwa, the nephew of late Palestinian leader Yasser Arafat, Jibril Rajoub, a former security chief who heads the Palestine Football Association, and Majid Faraj, the head of Palestinian intelligence.

Yet the most popular Palestinian politician, according to opinion polls, remains Marwan Barghouti, a leader of the first and second uprisings against Israel who was convicted of murder by an Israeli court in 2004 and is serving five life sentences.

(Additional reporting by Luke Baker; Writing by Luke Baker; Editing by Giles Elgood)

Saudi Arabia says prepared for ceasefire in Yemen if Houthis agree

A hole is seen during a visit by human rights activists to a community hall that was struck by an airstrike during a funeral on October 8, in Sanaa, Yemen,

By William James

LONDON (Reuters) – Saudi Arabia is prepared to agree to a ceasefire in Yemen if the Iran-allied Houthis agree, Saudi Foreign Minister Adel al-Jubeir said on Monday, adding that he was skeptical about efforts for peace after previous ceasefire attempts had failed.

The Saudi-led military campaign in Yemen has faced heavy criticism since an air strike this month on a funeral gathering in the Yemeni capital Sanaa that killed 140 people according to a United Nations’ estimate and 82 according to the Houthis.

The United States and Britain, which have both supported the Saudi-led campaign, called on Sunday for an immediate and unconditional ceasefire between Houthis and the Saudi-backed, internationally recognized government.

“We would like to see a ceasefire yesterday,” Jubeir told reporters in London. “Everybody wants a ceasefire in Yemen, nobody more so than the kingdom of Saudi Arabia and the coalition members.”

He accused the Houthis of reneging on previous deals.

“So yes, we come at this with a lot of cynicism. But we are prepared, the Yemeni government is prepared, to agree to a cessation of hostilities if the Houthis agree to it. The coalition countries will respect the desire of the Yemeni government,” Jubeir said.

British Foreign Secretary Boris Johnson, together with U.S. Secretary of State John Kerry, met Jubeir and officials from the United Arab Emirates on Sunday and said the conflict in Yemen was causing increasing international concern.

“The fatalities that we’re seeing there are unacceptable,” Johnson said. Britain’s Foreign Office said that Saudi Arabia’s approach to humanitarian law will be a factor in London’s continual assessment of arms sales to the kingdom, and it would look into the air strike on the funeral as part of that process.

HOUTHIS “LOSING GROUND”

Since March 2015 Saudi Arabia and several Gulf Arab allies have carried out air strikes in support of the government of Abd Rabbu Mansour al-Hadi against Houthi fighters, who are backed by troops loyal to ex-President Ali Abdullah Saleh. Gulf states have also deployed troops in Yemen.

Saudi Arabia and Hadi’s government accuse Shi’ite Iran of supplying weapons to the Houthis to help spread Tehran’s influence at the expense of Riyadh, its main regional rival. Iran denies the charge.

The Houthis still control Sanaa and large areas of northern and western Yemen, but Jubeir said it was a matter of time before they were defeated.

“The momentum is going against them in Yemen. They’re losing more territory, more people are mobilized against them. They are not paying their bills, businesses are not extending credit to them,” Jubeir said.

Jubeir said the Sunni Kingdom was being very careful to abide by humanitarian law in the Yemen conflict. He said that those responsible for the funeral bombing would be punished and victims would be compensated.

Asked about an offensive on Islamic State militants in the Iraqi city of Mosul, Jubeir said Islamic State would lose the war but he added that he was worried that Shi’ite militias would enter Mosul and “engage in bloodbaths”.

“This would have tremendously negative consequences and would further inflame the sectarian tensions in Iraq. That would be the greatest danger we see.”

(Reporting by William James, writing by Guy Faulconbridge; editing by Stephen Addison and Dominic Evans)

U.S. Navy ship targeted in failed missile attack from Yemen

The USS Mason (DDG 87), a guided missile destroyer, arrives at Port Canaveral, Florida

By Phil Stewart

WASHINGTON (Reuters) – A U.S. Navy guided missile destroyer was targeted on Sunday in a failed missile attack from territory in Yemen controlled by Iran-aligned Houthi rebels, a U.S. military spokesman told Reuters, saying neither of the two missiles hit the ship.

The attempted strike on the USS Mason, which was first reported by Reuters, came just a week after a United Arab Emirates vessel came under attack from Houthis and suggests growing risks to the U.S. military from Yemen’s conflict.

The U.S. government, which has become increasingly vocal about civilian casualties in the war, this weekend announced a review of its support to a Saudi Arabia-led coalition battling the Houthis after a strike on mourners in the capital Sanaa that killed up to 140 people.

The failed missile attack on the USS Mason began around 7 p.m. local time, when the ship detected two inbound missiles over a 60-minute period in the Red Sea off Yemen’s coast, the U.S. military said.

“Both missiles impacted the water before reaching the ship,” Pentagon spokesman Captain Jeff Davis said. “There were no injuries to our sailors and no damage to the ship.”

Saudi Arabia and the United States blame Shi’ite Iran for supplying weapons to the Houthis. Tehran views the Houthis, who are from a Shi’ite sect, as the legitimate authority in Yemen but denies it supplies them with weapons.

A U.S. defense official, speaking on condition of anonymity, said the first missile triggered counter-measures from the USS Mason. It was not immediately clear whether those defenses may have helped prevent a direct hit on the ship.

The USS Mason did not return fire, the official said, adding that the incident took place just north of the Bab al-Mandab strait off Yemen’s southern coast.

Last week’s attack on the UAE vessel also took place around the Bab al-Mandab strait, in what the UAE branded an “act of terrorism.”

In 2013, more than 3.4 million barrels of oil passed through the 20 km (12 mile)-wide Bab al-Mandab each day, the U.S. Energy Information Administration says.

It was unclear what actions the U.S. military might take, but Davis stressed a commitment to defend freedom of navigation and protect U.S. forces.

“We will continue to take all necessary steps to ensure the safety of our ships and our service members,” he said.

The attack also came the same day that Yemen’s powerful former president, Ali Abdullah Saleh, a key Houthi ally, called for an escalation of attacks against Saudi Arabia, demanding “battle readiness at the fronts on the (Saudi) border”.

An estimated 10,000 people have been killed in Yemen’s war. The United Nations blames Saudi-led coalition strikes for 60 percent of some 3,800 civilian deaths since they began in March 2015.

(Reporting by Phil Stewart; Editing by Paul Tait)

Iran tells Saudi vessels to avoid its waters

Members of Royal Saudi Navy takes part in ÒGulf Shield 1Ó exercise, east of Saudi Arabia, in this handout photo received October 4, 2016. Saudi Press Agency/

DUBAI (Reuters) – Iran’s powerful Revolutionary Guards (IRGC) warned Saudi naval vessels taking part in military exercises in the Gulf on Wednesday not to get close to Iranian waters, in a sign of heightened tensions between the two regional rivals.

Saudi Arabia began naval war games including live fire exercises on Tuesday in the Gulf and Strait of Hormuz, the world’s most important oil route.

Tehran and Riyadh are fighting several proxy wars in the Middle East, including in Syria and Yemen, but both have been cautious about direct military confrontation.

“The Revolutionary Guards naval forces believe this war game is mainly to create tension and destabilize the Persian Gulf,” the IRGC said in a statement published on Tasnim news agency.

About 17 million barrels per day, or about 30 percent of all seaborne-traded oil, passed through the Strait of Hormuz in 2013, according to the U.S. Energy Information Administration.

The United States, the kingdom’s leading non-Arab ally, said in August and September that IRGC vessels “harassed” U.S. warships several times in the Gulf in incidents that Washington described as “unsafe and unprofessional.”

(Reporting by Bozorgmehr Sharafedin, Editing by William Maclean and Andrew Heavens)

U.N. calls Aleppo a slaughterhouse as Russia, Syria forces bomb hospitals

Medics inspect the damage outside a field hospital after an airstrike in the rebel-held al-Maadi neighbourhood of Aleppo, Syria,

By Ellen Francis and Tom Perry

BEIRUT (Reuters) – Russian or Syrian warplanes knocked two hospitals out of service in the besieged rebel sector of Aleppo on Wednesday and ground forces intensified an assault in a battle which the United Nations said had made the city worse than a slaughterhouse.

Two patients died in one of the hospitals and other shelling killed six residents queuing for bread under a siege that has trapped 250,000 people with food running out.

The week-old assault, which could herald a turning point in the war, has already killed hundreds of people, with bunker-busting bombs bringing down buildings on residents huddled inside. Only about 30 doctors are believed to be left inside the besieged zone, coping with hundreds of wounded a day.

“The warplane flew over us and directly started dropping its missiles … at around 4 a.m.,” Mohammad Abu Rajab, a radiologist at the M10 hospital, the largest trauma hospital in the city’s rebel-held sector, told Reuters.

“Rubble fell in on the patients in the intensive care unit.”

M10 hospital workers said oxygen and power generators were destroyed and patients were transferred to another hospital.

Photographs sent to Reuters by a hospital worker at the facility showed damaged storage tanks, a rubble strewn area, and the collapsed roof of what he said was a power facility.

There were no initial reports of casualties there, but medical charity Médecins Sans Frontières (MSF) said two patients had been killed at the other hospital, in shelling which took it out of service as well, leaving east Aleppo with only seven doctors in a position to undertake surgery.

“And this comes at a time when east Aleppo has been under siege since July and is suffering the bloodiest indiscriminate bombing since the beginning of the war,” MSF’s Syria head Carlos Francisco said.

The government of President Bashar al-Assad, backed by Russian air power, Iranian ground forces and Shi’ite militia fighters from Iran, Iraq and Lebanon, has launched a massive assault to crush the rebels’ last major urban stronghold.

Syria’s largest city before the war, Aleppo has been divided for years between government and rebel zones, and would be the biggest strategic prize of the war for Assad and his allies.

Taking full control of the city would restore near full government rule over the most important cities of western Syria, where nearly all of the population lived before the start of a conflict that has since made half of Syrians homeless, caused a refugee crisis and contributed to the rise of Islamic State.

UNPRECEDENTED BOMBING

The offensive began with unprecedentedly fierce bombing last week, followed by a ground campaign this week, burying a ceasefire that had been the culmination of months of diplomacy between Washington and Moscow.

Washington says Moscow and Damascus are guilty of war crimes for targeting civilians, hospitals, rescue workers and aid deliveries, to break the will of residents and force them to surrender. Syria and Russia say they target only militants.

Asked by a reporter at the United Nations whether Syria had bombed the two hospitals hit on Wednesday, the Syrian ambassador to the world body, Bashar Ja’afari, appeared to laugh.

The Syrian army said a Nusra Front position had been destroyed in Aleppo’s old quarter, and other militant-held areas targeted in “concentrated air strikes” near the city.

U.N. Secretary-General Ban Ki-moon said those using “ever more destructive weapons” were committing war crimes. Describing the situation in Aleppo, he said: “This is worse. Even a slaughterhouse is more humane.”

France’s Foreign Minister Jean-Marc Ayrault said he was working to put forward a United Nations Security Council resolution to impose a ceasefire in Aleppo, and that any country that opposed it would be deemed complicit in war crimes.

“This resolution will leave everyone facing their responsibilities: those who don’t vote it, risk being held responsible for complicity in war crimes,” he said.

Another hospital, M2, was damaged by bombardment in the al-Maadi district, where at least six people were killed while queuing for bread at a nearby bakery, according to the Syrian Observatory for Human Rights monitoring body and residents.

Food supplies are scarce in the besieged area, and those trapped inside often line up before dawn for food.

The collapse of the peace process leaves U.S. policy on Syria in tatters and is a personal blow to Secretary of State John Kerry, who led talks with Moscow despite scepticism from other top officials in President Barack Obama’s administration.

Kerry spoke to Lavrov on Wednesday and Russia said later that it was ready to continue diplomacy on Syria and would soon send experts to Geneva for talks with U.S. counterparts on normalizing the situation in Aleppo and elsewhere.

The U.S. State Department said non-diplomatic options to halt the violence had been discussed within the administration, but declined to say what the options might be.

BATTLEFIELD VICTORY

Assad’s Iranian and Lebanese Hezbollah allies have said in recent days the war will be won in combat.

But the rebels remain a potent military force even as they have lost control of urban areas. The collapse of peace efforts ends a proposed scheme to separate Western-backed fighters from hardened jihadists.

It has also raised the question of whether the rebels’ foreign backers, states including Saudi Arabia, Turkey and the United States, will increase military backing to rebels who have long said weapons they provide are inadequate.

The rebels’ main demand has long been for the provision of anti-aircraft missiles, but Washington has resisted this, fearing they could end up in the hands of jihadists.

U.S. officials told Reuters in Washington that the collapse of the Syrian ceasefire had heightened the possibility that Gulf states, particularly Saudi Arabia, might arm rebels with shoulder-fired anti-aircraft missiles.

A senior rebel commander, speaking on condition of anonymity, said it was not out of the question that this could happen. “The Americans might thinking about doing something, but nobody knows how big it will be,” the commander said.

Another rebel commander told Reuters his group had received deliveries of a new type of Grad surface-to-surface rockets. The rockets, with a range of 22-40 km, had arrived in “excellent quantities” and will be used on battlefronts in Aleppo, Hama and the coastal region, Colonel Fares al-Bayoush said.

Fierce fighting accompanied by air strikes was reported on Wednesday in northern Hama province between Syrian government and allied forces trying to recapture territory lost to insurgents this week, and rebels who made some advances, the Observatory and a rebel group said.

MORE GROUND ATTACKS

A senior official in Aleppo-based rebel group said pro-government forces were mobilizing in apparent preparation for more ground attacks in central areas of the city.

“There have been clashes in al-Suweiqa from 5 a.m. until now. The army advanced a little bit, and the guys are now repelling it, God willing,” a fighter in the rebel Levant Front group said in a recording sent to Reuters, referring to an area in the city center where there was also fighting on Tuesday.

Another rebel official said government forces were also attacking the insurgent-held Handarat refugee camp a few kilometers to the north of Aleppo.

“It doesn’t seem that their operation in the old city is the primary operation, it seems like a diversionary one so that the regime consumes the people on that front and advances in the camp,” the official, Zakaria Malahifij, head of the political office of the Fastaqim group, told Reuters from Turkey.

(Reporting by Tom Perry, Ellen Francis and Lisa Barrington in Beirut, Philip Pullella in Vatican City, John Irish in Paris and Stephanie Nebehay in Geneva, Lidia Kelly in Moscow, Michelle Nichols in New York and Arshad Mohammed in Washington, writing by Peter Graff, editing by Peter Millership and Philippa Fletcher)