The Jim Bakker Show

FBI paid more than $1.3 million to break into San Bernardino iPhone

By Julia Edwards

WASHINGTON (Reuters) – Federal Bureau of Investigation Director James Comey said on Thursday the agency paid more to get into the iPhone of one of the San Bernardino shooters than he will make in the remaining seven years and four months he has in his job.

According to figures from the FBI and the U.S. Office of Management and Budget, Comey’s annual salary as of January 2015 was $183,300. Without a raise or bonus, Comey will make $1.34 million over the remainder of his job.

That suggests the FBI paid the largest ever publicized fee for a hacking job, easily surpassing the $1 million paid by U.S. information security company Zerodium to break into phones.

Speaking at the Aspen Security Forum in London, Comey was asked by a moderator how much the FBI paid for the software that eventually broke into the iPhone.

“A lot. More than I will make in the remainder of this job, which is seven years and four months for sure,” Comey said. “But it was, in my view, worth it.”

The Justice Department said in March it had unlocked the San Bernardino shooter’s iPhone with the help of an unidentified third party and dropped its case against Apple Inc <AAPL.O>, ending a high-stakes legal clash but leaving the broader fight over encryption unresolved.

Comey said the FBI will be able to use software used on the San Bernardino phone on other 5C iPhones running IOS 9 software.

There are about 16 million 5C iPhones in use in the United States, according to estimates from research firm IHS Technology. Eighty-four percent of iOS devices overall are running iOS 9 software, according to Apple.

The FBI gained access to the iPhone used by Rizwan Farook, one of the shooters who killed 14 people in San Bernardino, California on Dec. 2.

The case raised the debate over whether technology companies’ encryption technologies protect privacy or endanger the public by blocking law enforcement access to information.

(Reporting by Julia Edwards in Washington; additional reporting by Julia Love in San Francisco; Editing by Simon Cameron-Moore)

Prospects for Syrian Peace Talks Bleak

Smoke rises after an airstrike in the rebel held area of old Aleppo

By John Irish and Tom Perry

GENEVA/BEIRUT (Reuters) – Prospects for reviving Syrian peace talks were bleak on Tuesday with the opposition saying the postponement was indefinite with a truce over, and the government ruling out any negotiations about the presidency of Bashar al-Assad.

The collapse of the Geneva talks leaves a diplomatic vacuum that could allow a further escalation of the war that is being fueled by rivalries between foreign powers including oil producers Iran and Saudi Arabia.

As fighting raged and air strikes on rebel-held areas intensified, the opposition urged foreign states to supply them with the means to defend themselves, a thinly veiled reference to the anti-aircraft weapons long sought by insurgents.

The United States, meanwhile, told Russia that Syria was starting to “fray more rapidly”, signaling concern about its possible fragmentation as the most serious peace-making effort in two years appeared to be falling apart.

The mainstream Western-backed opposition announced a pause on Monday, blaming Assad for violating a ceasefire. Damascus blamed rebels for breaking the cessation of hostilities.

Chief Syrian government negotiator Bashar Ja’afari said his team was pushing for an expanded government as a solution to the war, an idea rejected by the armed opposition which has fought for five years to oust Assad whose fortunes on the battlefield have been boosted by military backing from Iran and Russia.

The Geneva talks aim to end a war that has killed more than 250,000 people, created the world’s worst refugee crisis, allowed for the rise of the Islamic State group and drawn in regional and major powers. Russia’s intervention in the conflict swayed the war in Assad’s favor.

The opposition has blamed Damascus for using the talks to press their advantage militarily to regain territory.

Damascus has accused rebel groups of joining attacks by the al Qaeda-linked Nusra Front, which like the Islamic State group is not covered by the truce.

With fighting reported across much of northwest Syria on Tuesday, both sides were obdurate.

“Our mandate in Geneva stops at forming a national unity government,” Ja’afari told Reuters. “We have no mandate whatsoever either to address the constitutional issue meaning establishing a new constitution or addressing parliamentary elections or addressing the fate of the presidency.

“It’s not the business of anybody in Geneva. It happens when the Syrian people decide,” he said in an interview.

ASSAD IS “DREAMING”

Ahead of leaving Geneva, Riad Hijab, chief coordinator of the main opposition HNC bloc, said there was no chance of returning to talks while the government broke the truce, blocked humanitarian access and ignored the issue of detainees.

Clearly angry, Hijab dismissed any suggestion that Assad could stay in power, saying he was “dreaming.”

Major powers were paralyzed and needed to reevaluate the truce and the humanitarian situation through the International Syrian Support Group that includes the United States, Russia, European states and key regional powers, Hijab said.

As things stood, Hijab said the HNC could not return to formal talks while people were suffering, although they would leave experts in Geneva to discuss certain issues. The Syrian government side is staying on.

U.S. President Barack Obama said he told Russian President Vladimir Putin in their call on Monday that Syria is starting to fray more rapidly and that the war-torn country cannot move forward if the United States and Russia are not in sync.

De Mistura attempted to convene peace talks in January, but these failed before they had even started in earnest largely due to a worsening situation on the ground. The new effort, which began last month, came after the implementation on Feb. 27 of the partial truce brokered by the Washington and Moscow.

But the opposition is adamant that the Damascus government is not serious about moving toward a U.N.-backed political process they say would bring a transitional governing body with full executive powers without Assad.

A U.N. Security Council resolution in December called for the establishment of “credible, inclusive and non-sectarian governance”, a new constitution, and free and fair elections within 18 months.

De Mistura said both sides were “not yielding a comma” on their political demands, but said that was normal in a negotiation. He would take stock of progress on Friday.

The opposition was categoric the suspension was indefinite.

“There is no date, the date … is the implementation of matters on the ground, and likewise the correction of the path of negotiations. All the while that does not happen, the time period will remain open,” the opposition’s George Sabra said.

The opposition also had “big complaints” about U.S. policy which he said sought to carry on talks “without us obtaining anything real”, he said. He called on international powers to supply Syrians with the means to defend themselves.

FIGHTING RAGES ACROSS NORTHWEST

“Let’s be realistic. The escalation will start,” said Bashar al-Zoubi, a prominent rebel leader. Ahmed Al-Seoud, the head of another rebel group, said he hoped for more military support from Assad’s foreign enemies.

Syrian forces backed by Russian warplanes launched a counter-attack against rebels in the northwestern province of Latakia, a rebel group and a conflict monitor reported, as violence was reported across much of the northwest on Tuesday.

Targets included towns and villages where a partial truce agreement had brought about a lull in fighting.

Air strikes killed at least five people in the town of Kafr Nubl in the insurgent stronghold of Idlib province, and three others in nearby Maarat al-Numan, the Syrian Observatory for Human Rights monitoring organization reported.

Rockets fired by insurgents killed three children in nearby Kefraya, a Shi’ite town loyal to the government, it said. State media said the dead were members of one family.

Fighting in Latakia focused on areas where insurgent groups had launched an attack on government forces on Monday, and where battles had often erupted despite the cessation of hostilities.

“The regime is trying to storm the area, with the participation of Russian helicopters and Sukhoi (warplanes),” said Fadi Ahmad, spokesman for the First Coastal rebel group in the area. The Observatory said fighting had raged since morning.

Government air strikes and barrel bombing was reported in northern areas of Homs province that are under rebel control. The use of barrel bombs, or oil drums filled with explosives, has been denied by the Syrian government but widely recorded including by a U.N. commission of inquiry on Syria. The Syrian army could not immediately be reached for comment.

(Reporting by Tom Perry in Beirut, John Irish in Geneva, writing by Peter Millership)

Duo Storms Bring Potential Flooding and Snow to High Plains and Rockies

Duo storm systems over the Midwest and Rockies is likely to produce heavy rainfall capable of flooding, severe thunderstorms, and even snow.

The Weather Channel reports that the High Plains will see severe thunderstorms and even some flooding as the 4-5 day period of rain falls over the area. Some parts of the plains may even set all-time monthly records for April.

Many areas in the Plains from South Dakota to Texas could see at least 3 inches of rainfall through Tuesday evening. Parts of Kansas, Oklahoma, Nebraska, and Texas could see around 5-8 inches of rain over the next few days.

Additionally, this storm could produce severe thunderstorms with large hail, damaging winds, and possibly tornadoes.

And if that weren’t enough, the High Plains may also see snow as Winter Storm Vexo hits the Rockies this weekend.

The National Weather Service has issued winter storm warnings for parts of Utah, Colorado, and Wyoming. So far, The Weather Channel has reported that Nebraska and South Dakota will be the only states in the High Plains to possibly see snow.

Winter Storm Vexo will also bring strong winds that could reach gusting speeds of 30-50 mph and may cause power outages throughout the Rockies and High Plains.

Iran, France concerned with Syria violence

Residents inspect damages after an airstrike on the rebel held al-Maysar neighborhood in Aleppo

By Tom Perry, John Irish and Bozorgmehr Sharafedin

BEIRUT/PARIS/DUBAI (Reuters) – France and Iran voiced concern over escalating violence in Syria on Tuesday, echoing warnings from the United States and Russia as fighting near the city of Aleppo put more pressure on a fragile truce agreement.

The already widely violated “cessation of hostilities” agreement brokered by Russia and the United States has been strained to breaking point by an upsurge in fighting between Syrian government forces and rebels near Aleppo.

The escalation underlines the already bleak outlook for peace talks set to reconvene this week in Geneva. The United Nations says the talks will resume on Wednesday. The government delegation has said it is ready to join the talks from Friday.

With President Bashar al-Assad buoyed by Russian and Iranian military support, the Damascus government is due to hold parliamentary elections on Wednesday, a vote seen by Assad’s opponents as illegitimate and provocative.

Iran said an increase in ceasefire violations could harm the political process a day after Russia said it had asked the United States to stop a mobilization of militants near Aleppo, Syria’s biggest city until the conflict erupted in 2011.

Iranian Deputy Foreign Minister Hossein Amir-Abdollahian, speaking after a meeting with U.N. Special Envoy Staffan de Mistura in Tehran, blamed the “increasing activities of armed groups” for the violations.

France, which backs the opposition, also expressed concern, but blamed the other side. “It warns that the impact of the regime and its allies’ offensives around Aleppo and Eastern Ghouta are a threat to the cessation of hostilities,” government spokesman Romain Nadal said. The Eastern Ghouta is an opposition-held area near Damascus.

Syria’s civil war has killed more than 250,000 people, created the world’s worst refugee crisis, allowed for the rise of Islamic State and drawn in regional and international powers. The intervention of Russia swung the war in Assad’s favor.

WASHINGTON “VERY, VERY CONCERNED”

The United States, which also backs rebels fighting Assad, on Monday said it was “very, very concerned” about increased violence and blamed the Syrian government for the vast majority of truce violations.

Both the government and a large number of rebel groups had pledged to respect the cessation of hostilities agreed in February with the aim of allowing a resumption of diplomacy towards ending the five-year-long war. Jihadist groups including the Nusra Front and Islamic State were not part of the deal.

A senior official close to the Syrian government said the truce had effectively collapsed.

“On the ground the truce does not exist,” said the official, who is not Syrian and declined to be named because he was giving a personal assessment. “The level of tension in Syria will increase in the coming months.”

The eruption of fighting on the front lines south of Aleppo marks the most serious challenge yet to the truce.

The Syrian Observatory for Human Rights, a British-based organization that tracks the war, said dozens of government fighters had been killed in a big offensive to take the town of Telat al-Eis near the Aleppo-Damascus highway on Tuesday.

A rebel fighting in the area said the assault launched at dawn was backed by Russian air strikes and Iranian militias, adding that the attackers had suffered heavy losses. The Syrian military could not be reached for comment.

Iranian Revolutionary Guards and Lebanon’s Hezbollah have both deployed in the southern Aleppo area in support of the government, while the Nusra Front is also fighting in close proximity to other rebels.

The Syrian prime minister was quoted on Sunday as saying government forces were preparing a major operation in the region with Russian support.

Further south in Homs province, Russia said one of its attack helicopters had crashed in the early hours of Tuesday, killing both pilots. It said the helicopter had not been shot down and the cause of the crash was being investigated.

“PROVOCATIVE” ELECTION

De Mistura, speaking in Tehran, said he and Amir-Abdollahian had agreed on the importance of the cessation continuing, that aid should reach every Syrian and that “a political process leading to a political transition is now crucially urgent”.

De Mistura, whose two predecessors quit, has said he wants the next round of Geneva talks to be “quite concrete” in leading towards a political transition.

Ahead of the first round of talks, Damascus had ruled out any discussion of the presidency, calling it a red line.

A senior Iranian official on Saturday rejected what he described as a U.S. request for Tehran’s help to make Assad leave power, saying he should serve out his term and be allowed to run in a presidential election “as any Syrian”.

Some members of the main Syrian opposition alliance, the High Negotiations Committee (HNC), arrived in Geneva on Tuesday, and U.N. spokesman in Geneva Ahmad Fawzi said the talks were expected to begin on Wednesday.

De Mistura is working according to a U.N. Security Council resolution approved in December that sets out a political process including elections after the establishment of “credible” governance and the approval of a new constitution.

The Syrian government says it is holding Wednesday’s elections in line with the existing timetable that requires a vote every four years. Russia has said the vote does not go against the peace talks and is in line with the constitution.

French President Francois Hollande last month, however, said the idea was provocative and “totally unrealistic”.

(Additional reporting by Tom Miles in Geneva, and Samia Nakhoul and Laila Bassam; Writing by Tom Perry; Editing by Peter Millership and Giles Elgood)

U.S. posts $108 billion dollar deficit in March

U.S. Treasury Secretary Jack Lew holds a two dollar note as he speaks during an event about currency redesign hosted by the University of Maryland in College Park, Maryland

WASHINGTON (Reuters) – The U.S. government posted a $108 billion budget deficit in March, more than double the amount from the same period last year, the Treasury Department said on Tuesday.

The government had a deficit of $53 billion in March of 2015, according to the Treasury’s monthly budget statement. Analysts polled by Reuters had expected a $104 billion deficit for last month.

Accounting for calendar adjustments, March would have shown a $102 billion deficit compared with an adjusted $89 billion deficit in March 2015.

The current fiscal year-to-date deficit was $461 billion, up 5 percent from a $439 billion deficit this time last year.

Receipts last month totaled $228 billion, while outlays stood at $336 billion.

(Reporting by Megan Cassella; Editing by Andrea Ricci)

Ransomware: Extortionist hackers borrow customer-service tactics

By Jim Finkle

TEWKSBURY, Mass (Reuters) – When hackers set out to extort the town of Tewksbury, Massachusetts with “ransomware,” they followed up with an FAQ explaining the attack and easy instructions for online payment.

After balking for several days, Tewksbury officials decided that paying the modest ransom of about $600 was better than struggling to unlock its own systems, said police chief Timothy Sheehan.

That case and others show how cyber-criminals have professionalized ransomware schemes, borrowing tactics from customer service or marketing, law enforcement officials and security firms say. Some players in the booming underworld employ graphic artists, call centers and technical support to streamline payment and data recovery, according to security firms that advise businesses on hacking threats.

The advancements, along with modest ransom demands, make it easier to pay than fight.

“It’s a perfect business model, as long as you overlook the fact that they are doing something awful,” said James Trombly, president of Delphi Technology Solutions, a Lawrence, Massachusetts, computer services firm that helped three clients over the past year pay ransoms in bitcoin, the virtual currency. He declined to identify the clients.

In the December 2014 attack on Tewksbury, the pressure to pay took on a special urgency because hackers disabled emergency systems. That same is true of additional attacks on police departments and hospitals since then. But all sectors of government and business are targeted, along with individuals, security firms said.

The total cost of ransomware attacks is hard to quantify. But the Cyber Threat Alliance, a group of leading cyber security firms, last year estimated that global damages from CryptoWall 3 – among the most popular of dozens of ransomware variants – totaled $325 million in the first nine months of 2015.

Some operations hire underground call centers or email-response groups to walk victims through paying and restoring their data, said Lance James, chief scientist with the cyber-intelligence firm Flashpoint.

Graphic artists and translators craft clear ransom demands and instructions in multiple languages. They use geolocation to make sure that victims in Italy get the Italian version, said Alex Holden, chief information security officer with Hold Security.

While ransomware attacks have been around longer than a decade, security experts say they’ve become far more threatening and prevalent in recent years because of state-of-the-art encryption, modules that infect backup systems, and the ability to infect large numbers of computers over a single network.

Law enforcement officials have long advised victims against paying ransoms. Paying ransoms is “supporting the business model,” encouraging more criminals to become extortionists, said Will Bales, a supervisory special agent for the Federal Bureau of Investigation.

But Bales, who helps run ransomware investigations nationwide from the Washington, DC office, acknowledged that the payoffs make economic sense for many victims.

“It is a business decision for the victim to make,” he said.

Run-of-the-mill ransomware attacks typically seek 1 bitcoin, now worth about $420, which is about the same as the hourly rate that some security consultants charge to respond to such incidents, according to security firms who investigate ransomware cases.

Some attacks seek more, as when hackers forced Hollywood Presbyterian Hospital in Los Angeles to pay $17,000 to end an outage in February.

Such publicized incidents will breed more attacks, said California State Senator Robert Hertzberg, who in February introduced legislation to make a ransomware schemes punishable by up to four years in prison. The Senate’s public safety committee was scheduled to review that bill on Tuesday.

Some victims choose not to pay. The Pearland Independent School District near Houston refused to fork over about $1,600 in ransom demanded in two attacks this year, losing about three days of work from teachers and students. Instead, the district invested tens of thousands of dollars on security software, said Jonathan Block, the district’s desktop support services manager.

“This threat is real and something that needs to be dealt with,” Block said.

The town of Tewksbury has also upgraded its security technology, but Sheehan says he fears more attacks.

“We are so petrified we could be put into this position again,” he said. “Everybody is vulnerable.”

(Reporting by Jim Finkle. Additional reporting by Dustin Volz. Editing by Jonathan Weber and Brian Thevenot.)

Dollar drops to eight-month low as commodity currencies climb

By Jemima Kelly

LONDON (Reuters) – The dollar fell to its weakest since late August against a basket of currencies on Tuesday, while commodity-linked currencies climbed, as a rise in oil prices whetted investors’ appetite for riskier assets across financial markets.

The greenback has been subject to a heavy sell-off over the past month, losing 5 percent <.DXY> as investors have pushed back their expectations for when the Federal Reserve will raise U.S. interest rates after Chair Janet Yellen threw into doubt the view there could be two hikes this year.

Fed funds futures <0#FF:> imply barely one quarter point increase for the whole of 2016, with only about a 20 percent chance of a hike in June priced in.

The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, fell to as low as 93.627.

With a rise in commodity prices and rallying global stocks boosting investors’ assets for riskier assets, commodity-linked currencies such as the Australian dollar <AUD=D4> and Norwegian crown <NOK=> gained strongly against their U.S. counterpart, further bruising the greenback.

“It appears that for now, markets are turning their noses up at the prospect that more gloomy earnings that might trigger some more negative risk sentiment,” said Rabobank currency strategist Jane Foley in London, adding that the dollar’s sell-off looked a little “overdone”.

Against the safe-haven yen, though, the dollar strengthened 0.3 percent, having hit a 1-1/2-year low of 107.63 yen <JPY=D4> on Monday. The yen had its strongest start to a year since 2008 in the first quarter <JPY=> as shaky global markets boosted demand for the traditional safe-haven currency.

Those gains prompted Japanese officials to warn on Monday that the yen moves were “one-sided and speculative” and that the government stood ready to intervene to weaken the currency.

But with oil prices hitting a 2016 high above $43 per barrel on Tuesday and risk appetite on the rise, the yen needed no such intervention to drive it lower. [O/R]

“(Higher) oil prices … have got the dollar on the back foot, more than anything else, so we have the yen and the dollar at the bottom, and everything else at the top,” said Kit Juckes, macro strategist at Societe Generale in London.

“I think dollar/yen will get back to 120 at some point – we might want to sell it again there, but I think this move is way overdone,” he added.

As the dollar sold off, the euro touched a six-month high of $1.1465 <EUR=>.

(Additional reporting by Ian Chua in Sydney and Hideyuki Sano in Tokyo; Editing by Andrew Heavens)

As Islamic State is pushed back in Iraq, worries about what’s next

By Jonathan Landay, Warren Strobel and Phil Stewart

WASHINGTON (Reuters) – As U.S.-led offensives drive back Islamic State in Iraq, concern is growing among U.S. and U.N. officials that efforts to stabilize liberated areas are lagging, creating conditions that could help the militants endure as an underground network.

One major worry: not enough money is being committed to rebuild the devastated provincial capital of Ramadi and other towns, let alone Islamic State-held Mosul, the ultimate target in Iraq of the U.S.-led campaign.

Lise Grande, the No. 2 U.N. official in Iraq, told Reuters that the United Nations is urgently seeking $400 million from Washington and its allies for a new fund to bolster reconstruction in cities like Ramadi, which suffered vast damage when U.S.-backed Iraqi forces recaptured it in December.

“We worry that if we don’t move in this direction, and move quickly, the progress being made against ISIL may be undermined or lost,” Grande said, using an acronym for Islamic State.

Adding to the difficulty of stabilizing freed areas are Iraq’s unrelenting political infighting, corruption, a growing fiscal crisis and the Shiite Muslim-led government’s fitful efforts to reconcile with aggrieved minority Sunnis, the bedrock of Islamic State support.

Some senior U.S. military officers share the concern that post-conflict reconstruction plans are lagging behind their battlefield efforts, officials said.

“We’re not going to bomb our way out of this problem,” one U.S. official said, speaking on condition of anonymity.

(Graphic showing Islamic State’s territorial control: http://tmsnrt.rs/23aQU31)

Islamic State is far from defeated. The group still controls much of its border-spanning “caliphate,” inspires eight global affiliates and is able to orchestrate deadly external attacks like those that killed 32 people in Brussels on March 22.

But at its core in Iraq and Syria, Islamic State appears to be in slow retreat. Defense analysis firm IHS Janes estimates the group lost 22 percent of its territory over the last 15 months.

Washington has spent vastly more on the war than on reconstruction. The military campaign cost $6.5 billion from 2014 through Feb. 29, according to the Pentagon.

The United States has contributed $15 million to stabilization efforts, donated $5 million to help clear explosives in Ramadi and provided “substantial direct budget support” to Iraq’s government, said Emily Horne, a National Security Council spokeswoman.

Secretary of State John Kerry acknowledged the need for more reconstruction aid while in Baghdad last week.

“As more territory is liberated from Daesh, the international community has to step up its support for the safe and voluntary return of civilians to their homes,” Kerry said, using an Arabic acronym for Islamic State.

Kerry, who announced $155 million in additional U.S. aid for displaced Iraqis, said U.S. President Barack Obama planned to raise the issue at a summit of Gulf Arab leaders on April 21.

“PILE OF RUBBLE”

Ramadi’s main hospital, train station, nearly 2,000 homes, 64 bridges and much of the electricity grid were destroyed in fighting, a preliminary U.N. survey found last month. Thousands of other buildings were damaged.

Some 3,000 families recently returned to parts of the city cleared of mines, according to the governor, Hameed Dulaymi, but conditions are tough. Power comes from generators. Water is pumped from the Euphrates River. A few shops are open, but only for a couple of hours a day.

Ahmed Saleh, a 56-year-old father of three children, said he returned to find his home a “pile of rubble,” which cannot be rebuilt until the government provides the money. With no indication of when that might happen, authorities have resettled his family in another house whose owner is believed unlikely to return before this summer.

Saleh earns less than $15 a day cleaning and repairing other people’s homes. There are no schools open for his children, and he lacks funds to return to a camp for internally displaced outside Baghdad where he says life was better.

Obama administration officials say they have been working to help stabilize Iraq politically and economically since the military campaign against Islamic State began in 2014.

“The success of the campaign against ISIL in Iraq does depend upon political and economic progress as well,” Defense Secretary Ash Carter said on Monday. “Economically it’s important that the destruction that’s occurred be repaired and we’re looking to help the Iraqis with that.”

Asked about the upcoming $400 million U.N. request, Horne said the United States welcomed the new fund’s establishment and “will continue to lead international efforts to fund stabilization operations.” The United States hasn’t yet announced what it will contribute.

U.S. officials said Washington is also pushing for an International Monetary Fund arrangement that the head of the fund’s Iraq mission has said could unlock up to $15 billion in international financing. Baghdad has a $20 billion budget deficit caused by depressed oil prices.

Washington has helped train 15,000 Sunni fighters who are now part of the Iraqi government’s security forces.

But there has been little movement on political reforms to reconcile minority Sunnis, whose repression under former prime minister Nuri al-Maliki’s Shiite-led government led thousands to join Islamic State.

Unless that happens, and Sunnis see that Baghdad is trying to help them return home to rebuild, support for the militants will persist, experts said.

“If you don’t get reconciliation, the Sunnis will turn back to ISIS,” said former CIA and White House official Kenneth Pollack, who is now at the Brookings Institution think tank and conducted a fact-finding mission in Iraq last month.

“It’s just inevitable.”

The United States has prevailed militarily in Iraq before, only to see the fruits of the effort evaporate.

President George W. Bush invaded Iraq in 2003, deposed dictator Saddam Hussein and disbanded his army without a comprehensive plan for post-war stability. Civil war ensued.

REBUILDING GETS HARDER

International funding to rebuild towns and cities ravaged by Islamic State has always been tight, said Grande, deputy special representative of the UN Assistance Mission for Iraq.

“This meant we had to come up with a model that could be implemented quickly and at extremely low cost,” she said.

International donors contributed $100 million to an initial fund to jump-start local economies, restoring power and water and reopening shops and schools.

The model worked in Tikrit, the first major city reclaimed from Islamic State in March 2015, Grande said. After initial delays, most residents returned, utilities are on and the university is open. Total spending was $8.3 million.

But Ramadi, a city of some 500,000 people before the recent fighting, poses a much greater challenge.

“Much of the destruction that’s happening in areas that are being liberated … far outstrips our original assumptions,” Grande said.

Restoring normality to Mosul, home to about 2 million people before it fell to Islamic State, could prove even more difficult.

It remains to be seen whether Islamic State digs in, forcing a ruinous battle, or faces an internal uprising that forces the militants to flee, sparing the city massive devastation.

If Islamic State is defeated militarily, it likely will revert to the guerrilla tactics of its predecessor, al Qaeda in Iraq (AQI), current and former officials said.

AQI and its leaders, including Islamic State chief Abu Bakr al-Baghdadi, “survived inside Iraq underground for years and there’s no reason they couldn’t do it again,” a U.S. defense official said.

(Additional reporting by David Rohde, Lou Charbonneau and John Walcott. Editing by Stuart Grudgings.)

Global banking Fees Fall 29 Percent

A view of the exterior of the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City,

By Anjuli Davies

LONDON (Reuters) – Global investment banking fees fell 29 percent in the first quarter of 2016 from a year earlier as market volatility put a brake on dealmaking and equity and debt capital markets activity, Thomson Reuters data published on Monday showed.

Global fees for services ranging from merger and acquisitions advisory services to capital markets underwriting reached $16.2 billion by the end of March, the slowest first quarter for fees since 2009.

Regionally, fees in the Americas totaled $8.7 billion, down 32 percent from last year. Fees in Europe were down 27 percent at $3.9 billion and the Asia-Pacific region saw an 18 percent decline to $2.6 billion.

Investment banking income was dragged down across all products as global markets were hit by volatility sparked by global growth worries, geopolitical tensions in the Middle East and a China slowdown.

Company boards and their chief executives were deterred from pulling the trigger on big transformative deals, in contrast to the record levels of activity seen last year, although the quarter saw a flurry of Chinese companies seeking Western targets.

Equity capital markets fees saw the steepest decline of 48 percent compared to a year ago, followed by a 26 percent fall in debt capital markets fees and an 18 percent decline in M&A revenue.

JPMorgan <JPM.N> topped the global league table for fees, drawing in $1.2 billion during the quarter, a decline of 23 percent compared to a year earlier but gaining slightly in overall wallet share.

The top five banks were all American, but European banks Barclays <BARC.L> and Credit Suisse <CSGN.S> each gained one place to rank sixth and seventh respectively.

<<<For the full league table click on: http://trmcs-documents.s3.amazonaws.com/3501ec8eae589bfbef9cc1729a7312f0_20160404083831_1Q2016_Global_Investment_Banking_Review.pdf >>>

(Editing by Susan Fenton)

Dollar under pressure, on track for biggest quarterly fall in five years

By Anirban Nag

LONDON (Reuters) – The U.S. dollar fell to its lowest level in five months against the euro on Thursday in trade dominated by month-end rebalancing flows, putting the dollar index on track for its worst quarterly performance in five years.

These flows are caused by global portfolio managers adjusting their existing currency hedges, with many banks taking the view that they could weigh on the dollar.

The dollar index <.DXY> was on track for its biggest monthly fall since April 2015 and its largest quarterly loss since March 2011, as dovish comments from Federal Reserve Chair Janet Yellen continued to resonate, prompting investors and speculators to cut favourable bets in the greenback.

The index was down 0.2 percent at 94.555 <.DXY>, a five-month low. The dollar was flat against the yen at 112.25 yen <JPY=>, while the euro was up 0.3 percent at $1.1383 <EUR=>, its highest since October 2015.

The common currency was on track to post a quarterly gain of 4.7 percent.

“Things have settled down a bit after those comments from Yellen, with the focus turning to the U.S. jobs data on Friday,” said Nordea FX strategist Niels Christensen.

“More than the employment numbers, what will be important are the average earnings, and if that misses expectations, then we could see the dollar come under more pressure,” Christensen added. “Yellen has left the dollar vulnerable to the downside.”

INFLATION SIGNS

U.S. nonfarm payrolls are expected to show the world’s largest economy added 205,000 jobs in March, with the jobless rate steady at 4.9 percent. Average earnings, seen as signalling inflation trends, are expected to rise by 0.2 percent. <ECONUS>

Despite signs of inflation picking up in the United States, Yellen said on Tuesday the Fed would proceed cautiously in raising rates and she highlighted external risks such as slower global growth.

Chicago Fed President Charles Evans on Wednesday underscored that caution, saying a “very shallow” series of rate hikes over the next few years is appropriate to buffer the economy from outside shocks and the risk of inflation slipping too low.

In the European session, the euro zone inflation showed some signs of improvement, but traders were cautious about pushing the euro too much higher, given the European Central Bank’s ultra-accommodative policy stance. <ECONEZ>

“The euro is likely to enter a period of range trading around the $1.10 level for the rest of the year,” said Petr Krpata, currency strategist at ING.

“The range-trading argument is based on fading effecting monetary divergence between the Fed and the ECB. The ECB seems to be reluctant to cut the depo rate further into negative territory while the Fed is unlikely to embark on an aggressive tightening cycle.”

(Additional reporting by Hideyuki Sano; Editing by Gareth Jones)

Sign up for Jim Bakker Show