GMR row: Diplomatic failure for India

NEW DELHI: The Maldives government and GMR are headed on a collision course, but India is the ultimate loser, exhibiting a stunning diplomatic failure and political naivete of a country crucial to India's security considerations.

Maldives has given GMR until Saturday December 8 to get out of the Male airport. GMR's CEO Andrew Harrison, in a statement said, "The injunction clearly prevents them from taking the action outlined in their notice issued to us stating that the airport would be taken over at the end of the 7 day period. We remain resolute in our position and there is no question of an offer being made and certainly no question of any alleged offer being accepted as we will simply not agree to our rights nor the injunction being undermined in any way."

This can only have an ugly ending. While there has been no communication with Maldives president, Waheed, the foreign minister told Salman Khurshid that they were determined to evict GMR. India can either look the other way, or adopt strong-arm tactics neither of which has any good implications.

When India fell over itself to recognize Waheed as president, who had overthrown Nasheed in February, he was an unknown quantity. But Indian government were happy to dump Nasheed for Waheed, including indicating that Nasheed was acting against Indian interests. The GMR deal was one of the big reasons behind the February events anyway, so it should have been incumbent on the Indian government to ensure that the problems were ironed out.

Ousted Mohamed Nasheed, wrote this week, "India should have foreseen the consequences its investments would later face in endorsing a regime consisting of elements that had previously shown its disapproval towards major Indian investments. India should have taken its time to assess the political situation of the country and should have confirmed the legitimacy of the controversial regime before accepting it. However, failure to do so resulted in the scrapping of its single largest investment by the very government it had recognised."

Maldives has lurched from protest to protest, even though India by and large protected the Waheed government from certain censure by the Commonwealth Ministerial Action Group (CMAG). But India failed to secure its own interests in return, because India wasn't actually engaged with the implications of what was clearly happening in Maldives.

Foreign minister Salman Khurshid, said India was keeping Maldives "at arms length" since the departure of Nasheed. India is now paying the price for that decision. Waheed's special advisor, Hassan Saeed wrote a letter to Manmohan Singh in September, asking India to assist in the termination. In his letter, he said, "The Indian Foreign Secretary's visit to our country in February failed to resolve the political crisis largely because India is no longer seen as a friendly and fair neighbour who could broker an honest and fair deal."

This was not just about GMR. Maldives complained that the government was being forced to pay GMR, that Maldivians were being charged for the airport fee. Indian officials said GMR was ready to make a deal with the Maldives government, which should have been facilitated. This vaccum gave Islamists like the Adhaalath party room to push Waheed on this issue.

Indian officials complained "outside" interests have muddied the waters __ which is not surprising. The Adhaalath party, said sources, has strong links with Pakistan, which is only now being acknowledged in India.

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CDC says US flu season starts early, could be bad

NEW YORK (AP) — Flu season in the U.S. is off to its earliest start in nearly a decade — and it could be a bad one.

Health officials on Monday said suspected flu cases have jumped in five Southern states, and the primary strain circulating tends to make people sicker than other types. It is particularly hard on the elderly.

"It looks like it's shaping up to be a bad flu season, but only time will tell," said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

The good news is that the nation seems fairly well prepared, Frieden said. More than a third of Americans have been vaccinated, and the vaccine formulated for this year is well-matched to the strains of the virus seen so far, CDC officials said.

Higher-than-normal reports of flu have come in from Alabama, Louisiana, Mississippi, Tennessee and Texas. An uptick like this usually doesn't happen until after Christmas. Flu-related hospitalizations are also rising earlier than usual, and there have already been two deaths in children.

Hospitals and urgent care centers in northern Alabama have been bustling. "Fortunately, the cases have been relatively mild," said Dr. Henry Wang, an emergency medicine physician at the University of Alabama at Birmingham.

Parts of Georgia have seen a boom in traffic, too. It's not clear why the flu is showing up so early, or how long it will stay.

"My advice is: Get the vaccine now," said Dr. James Steinberg, an Emory University infectious diseases specialist in Atlanta.

The last time a conventional flu season started this early was the winter of 2003-04, which proved to be one of the most lethal seasons in the past 35 years, with more than 48,000 deaths. The dominant type of flu back then was the same one seen this year.

One key difference between then and now: In 2003-04, the vaccine was poorly matched to the predominant flu strain. Also, there's more vaccine now, and vaccination rates have risen for the general public and for key groups such as pregnant women and health care workers.

An estimated 112 million Americans have been vaccinated so far, the CDC said. Flu vaccinations are recommended for everyone 6 months or older.

On average, about 24,000 Americans die each flu season, according to the CDC.

Flu usually peaks in midwinter. Symptoms can include fever, cough, runny nose, head and body aches and fatigue. Some people also suffer vomiting and diarrhea, and some develop pneumonia or other severe complications.

A strain of swine flu that hit in 2009 caused a wave of cases in the spring and then again in the early fall. But that was considered a unique type of flu, distinct from the conventional strains that circulate every year.

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Online:

CDC: http://www.cdc.gov/flu/weekly

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Alaska Serial Killer Buried Murder Kits Across US

Israel Keyes, the Alaskan man whoconfessed to seven murders before killing himself in a jail cell, told police that he traveled the country to find victims and buried caches of weapons, money and tools for disposing of bodies to use in future crimes.

The FBI also released an ominous list of 35 trips Keyes made around the U.S., Mexico and Canada over the last eight years.

Keyes, 34, the owner of an Anchorage construction company, was in jail charged with the February murder of Samantha Koenig, 18. While in jail he had been confessing to at least seven other killings in Washington, New York and Vermont. He was found dead in his Alaska jail cell on Sunday in an apparent suicide.

Investigators are now piecing together a deadly puzzle that is uncovering a macabre lifestyle of Keyes traveling to kill simply because he "liked to do it," prosecutors said.

"In a series of interviews with law enforcement, Keyes described significant planning and preparation for his murders, reflecting a meticulous and organized approach to the crimes," the Anchorage FBI office said in a statement.

The FBI has released a timeline of Keyes' travels that showed nearly three dozen trips between 2004 and 2012. The destinations of the trips are vague, described only by U.S. region in most cases, but span the entire country, including Hawaii. There are also trips to Canada and Mexico listed.

"Keyes also admitted traveling to various locations to leave supplies he planned to use in a future crime. Keyes buried caches throughout the United States," the FBI said.

Missing Alaska Barista Had Past Restraining Order Watch Video

Authorities have already recovered two caches, one in Alaska and one in New York, that contained money, weapons and items for disposing of bodies. Keyes indicated that there were other supply boxes buried across the country.

He funded his travel with the proceeds from bank robberies, authorities said.

"Investigators believe that Keyes did not know any of his victims prior to their abductions," the FBI said. "He described several remote locations that he frequented to look for victims--parks, campgrounds, trailheads, cemeteries, boating areas, etc."

Keyes told authorities that his victims received little if any media attention when they disappeared. Authorities said that "based on his own research," Keyes said that one of his victims had been recovered, but the death was ruled accidental. Investigators said they have not identified the victim or location of that alleged crime.

Before his death, Keyes indicated that, in addition to Koenig and a Vermont couple, he killed four people in Washington State and one person in New York, but did not give the victims' names, authorities said.

"It was not unusual for Keyes to fly into an airport, rent a car, and drive hundreds of miles to his final destination," the FBI said.

That is precisely what Keyes did in the murder of Bill and Lorraine Currier in Essex, Vt., last year. He flew from Alaska to Chicago in June 2011. He rented a car in Chicago and drove to Vermont where he spent three days looking for his next victims and planning the slaying.

"When [Keyes] left Alaska, he left with the specific purpose of kidnapping and murdering someone," Chittenden County State Attorney T. J. Donovan said at the press conference. "He was specifically looking for a house that had an attached garage, no car in the driveway, no children, no dog."

The Curriers, unfortunately, fit all of Keyes' criteria. He spent three days in Vermont before striking. He even took out a three-day fishing license and fished before the slayings.

Keyes abducted the couple from their home and murdered them in an abandoned barn he had located before breaking into the Curriers' home. After binding the couple with plastic cuffs, the beat the husband with a shovel and then shot him. The wife was raped and strangled.

"By all accounts, [the Curriers] were friendly, peaceful, good people who encountered a force of pure evil acting at random," an investigator said at today's news conference. Authorities called the ongoing investigation a "huge case, national in scope."

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NATO warns Syria not to use chemical weapons

BRUSSELS/BEIRUT (Reuters) - NATO told Syrian President Bashar al-Assad on Tuesday that any use of chemical weapons in his fight against encroaching rebel forces would be met by an immediate international response.

The warning from NATO Secretary-General Anders Fogh Rasmussen came as U.S. government sources said Washington had information that Syria was making what could be seen as preparations to use its chemical arsenal.

Syrian forces meanwhile bombarded rebel districts near Damascus in a sustained counter-attack to stem rebel gains around Assad's power base as the insurgency may be entering a decisive phase.

International concern over Syria's intentions has been heightened by reports that its chemical weapons have been moved and could be prepared for use.

"The possible use of chemical weapons would be completely unacceptable for the whole international community and if anybody resorts to these terrible weapons I would expect an immediate reaction from the international community," Rasmussen told reporters at the start of a meeting of alliance foreign ministers in Brussels.

The chemical threat made it urgent for the alliance to send Patriot anti-missile missiles to Turkey, Rasmussen said.

The French Foreign Ministry referred to "possible movements on military bases storing chemical weapons in Syria" and said the international community would react if they were used.

Britain has told the Syrian government that any use of chemical weapons would have "serious consequences", Foreign Secretary William Hague said.

U.S. President Barack Obama on Monday told Assad not to use chemical weapons, without saying how the United States might respond. The Foreign Ministry in Damascus said it would never use such weapons against Syrians.

CLASSIFIED INTELLIGENCE

The U.S. has collected what has been described as highly classified intelligence information demonstrating that Syria is making what could be construed as preparations to use elements of its extensive chemical weapons arsenal, two U.S. government sources briefed on the issue said.

One of the sources said that there was no question that the US "Intelligence community" had received information pointing to "preparations" under way in Syria related to chemical weapons. The source declined to specify what kind of preparations had been reported, or how close the intelligence indicated the Syrians were to deploying or even using the weapons.

Western military experts say Syria has four suspected chemical weapons sites, and it can produce chemical weapons agents including mustard gas and sarin, and possibly also VX nerve agent. The CIA has estimated that Syria possesses several hundred liters of chemical weapons and produces hundreds of tonnes of agents annually.

The fighting around Damascus has led foreign airlines to suspend flights and prompted the United Nations and European Union to reduce their presence in the capital, adding to a sense that the fight is closing in.

The army fightback came a day after the Syrian foreign ministry spokesman was reported to have defected in a potentially embarrassing blow to the government.

The Syrian Observatory for Human Rights said 200 people were killed across Syria on Monday, more than 60 of them around Damascus. Assad's forces bombarded districts to the south-east of the capital on Tuesday, near to the international airport, and in the rebel bastion of Daraya to the south-west.

Opposition footage posted on the Internet showed a multiple rocket launcher fire 20 rockets, which activists said was filmed at the Mezze military airport in Damascus.

Reuters could not independently verify the footage due to the government's severe reporting restrictions.

In central Damascus, shielded for many months from the full force of a civil war in which 40,000 people have been killed, one resident reported hearing several loud explosions.

"I have heard four or five thunderous blows. It could be barrel bombs," she said, referring to makeshift bombs which activists say Assad's forces have dropped from helicopters on rebel-dominated areas.

MORTAR ATTACK

The state news agency said that 28 students and a teacher were killed near the capital when rebels fired a mortar bomb on a school. Rebels have targeted government-held residential districts of the capital.

The mainly Sunni Muslim rebel forces have made advances in recent weeks, seizing military bases, including some close to Damascus, from forces loyal to Assad, who is from Syria's Alawite minority linked to Shi'ite Islam.

Faced with creeping rebel gains across the north and east of the country, and the growing challenge around the capital, Assad has increasingly resorted to air strikes against the insurgents.

A diplomat in the Middle East said Syrian Foreign Ministry spokesman Jihad Makdissi had left the country and defected, while the British-based Observatory said it had information that he flew from Beirut on Monday afternoon heading for London.

In Beirut, a diplomat said Lebanese officials had confirmed that Makdissi spent several days in Beirut before leaving on Monday, but could not confirm his destination.

"We're aware of reports that he has defected and may be coming to the UK. We're seeking clarification," a Foreign Office spokeswoman in London said.

Makdissi was the public face to the outside world of Assad's government as it battled the 20-month-old uprising. But he had barely appeared in public for several weeks before Monday's report of his defection.

He had little influence in a system largely run by the security apparatus and the military. But Assad's opponents will see the loss of such a high profile figure, if confirmed, as further evidence of a system crumbling from within.

The United Nations and European Union both said they were reducing their presence in Syria in response to the escalated violence around the capital.

A spokesman for U.N. humanitarian operations said the move would not stop aid deliveries to areas which remained accessible to relief convoys.

"U.N.-funded aid supplies delivered through SARC (Syrian Arab Red Crescent) and other charities are still moving daily where the roads are open," Jens Laerke told Reuters in Geneva.

"We have not suspended our operation, we are reducing the non-essential international staff."

Three remaining international staff at the European Union delegation, who stayed on in Damascus after the departure of most Western envoys, crossed the border into Lebanon on Tuesday after pulling out of the Syrian capital.

(Additional reporting by David Brunnstrom in Brussels, Khaled Yacoub Oweis in Cairo, Erika Solomon, Oliver Holmes and Ayat Basma in Beirut, Mark Hosenball, Mohammed Abbas and David Cutler in London, and Stephanie Nebehay in Geneva; Editing by Giles Elgood)

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Fugitive McAfee seeks asylum in Guatemala

GUATEMALA CITY: American Internet pioneer John McAfee, wanted for questioning over the murder of his neighbor last month in Belize, is seeking political asylum in Guatemala, his lawyer said Tuesday.

McAfee, 67, amassed huge wealth as a Silicon Valley entrepreneur in the 1990s, designing the hugely popular anti-virus software that bears his name and remains a leading industry product to this day.

In a plotline worthy of a Hollywood thriller, the multi-millionaire went on the run from his home on the idyllic Belize paradise island of Ambergris Caye hours after neighbour Gregory Faull was murdered on November 11.

With his 20-year-old girlfriend Sam Vanegas in tow, he managed to cross the border into Guatemala over the weekend and has secured the services of star lawyer Telesforo Guerra, a former Guatemalan attorney general.

"I have to manage his political asylum," Guerra told AFP after meeting McAfee early Tuesday at a hotel in Guatemala City.

McAfee "is persecuted in Belize, persecuted politically because he stopped financing the government. They accuse him of a common crime. So what I have to obtain is an authorization of asylum," the lawyer said.

Asked whether McAfee fears being assassinated, Guerra said: "Yes, he fears for his life, because after having helped and supported the current government in Belize, they now want more and more money, which they pocket and don't invest."

McAfee, who maintains his innocence, has left a confusing and often contradictory trail of information about his life on the run on his blog, whoismcafee.com.

"It was not easy to exit Belize and required many supporters in many countries," he wrote on Tuesday.

"I am in Guatemala and will be meeting with Guatemalan officials this morning. If all goes well I will do a press conference tomorrow (Wednesday)," he added.

Before fleeing south into Guatemala, he put out a false report saying he had been captured near the northern Mexican border and claimed to have sent a "double" with a North Korean passport to Mexico as another decoy.

Internet users tracked a photo from a magazine on Monday to Guatemala, but McAfee initially claimed to have encrypted it to throw police off the scent.

"I apologize for all of the misdirections over the past few days," McAfee, who is travelling with two reporters from Vice magazine, wrote on Tuesday.

"Yesterday was chaotic due to the accidental release of my exact co-ordinates by an unseasoned technician at Vice headquarters," he said.

"We made it to safety in spite of this handicap. I had to cancel numerous interviews with the press yesterday because of this and I apologize to all of those affected."

Vice magazine put out an article Tuesday with a photo showing Guerra and McAfee having breakfast and claiming that Sam, McAfee's partner on the lam, was actually the lawyer's niece.

"I have known Samantha for a year and a half. She is a remarkable young woman. I love her very much and we are getting married," McAfee is quoted as telling Guerra.

"Unfortunately you will have a potential criminal in the family. My apologies for that, and I will do the best I can to make it up to you," he added, reportedly prompting an amused response from Guerra.

Police say Faull, a 52-year-old Florida expatriate, was discovered by his housekeeper with a 9-mm slug in his head lying in a pool of his own blood.

Belize Prime Minister Dean Barrow has described McAfee as "bonkers," saying he is only wanted for questioning as a "person of interest" in the case and urging him to give himself up.

Prior to his murder, Faull had led neighbours in writing a letter to the mayor complaining that McAfee's "vicious" dogs and aggressive security guards were scaring tourists and residents alike.

McAfee shot dead four of his dogs before fleeing, claiming they had been poisoned, possibly by Faull.

Police said the dogs were exhumed last week and ballistics experts are seeing if the slugs match up with the one found in Faull's head.

McAfee decamped to Belize in 2009 after losing an estimated $96 million of his $100 million fortune due to bad investments and the financial crisis.

According to profiles in The New York Times and tech magazine Wired, his lifestyle became increasingly extreme as he descended into a drug-fuelled existence centred on young prostitutes.

McAfee was briefly incarcerated in April after police found him living with a 17-year-old girl and discovered an arsenal of seven pump-action shotguns, one single-action shotgun, and two 9-mm pistols.

- AFP/fa

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NRHM scam: CBI files chargesheet against Pradeep Shukla

GHAZIABAD: The CBI today filed chargesheet against senior IAS officer Pradeep Shukla in connection with alleged irregularities in upgrading of 89 district hospitals in the state, under National Rural Health Mission scheme, causing a loss of Rs 16 crore to the exchequer.

The agency had received sanction to prosecute Shukla, the then family welfare secretary, on November 30 from the Centre after that a chargesheet was filed before special CBI court today.

Shukla and officials of UP Processing and Construction Cooperative Federation Ltd (PACCFED), including its managing director V K Chowdhary, the then DG of family welfare S P Ram, Moradabad-based businessman Saurabh Jain, and his firms were booked by the agency in January this year.

While remaining accused were chargesheeted in May this year, the charge sheet against Shukla was pending because CBI was awaiting sanction for his prosecution.

The 55-year-old UP-cadre IAS officer, serving as member revenue board, was arrested by the agency in May but was released on bail.

After release, Shukla joined back as member revenue board but the UP government issued orders of him being "deemed suspended".

CBI alleged officials of PACCFED favoured ineligible firms and released payment of Rs 16.93 crore on the basis of forged documents.

In its chargesheet, the agency alleged Shukla along with Ram entered in criminal conspiracy with private firms and gave contract related to upgrading of district hospitals in Uttar Pradesh worth Rs 89 crore on the basis of forged documents.

Out of Rs 16 crore loss caused to exchequer, more than Rs 13 crore was allegedly cornered by Jain, close confidante of former family welfare minister Babu Singh Kushwaha, who used it to bribe public servants and also invested in various companies.

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US flu season starts early, could be bad, CDC says

NEW YORK (AP) — Health officials say flu season is off to its earliest start in nearly 10 years — and it could be a bad one.

The primary strain circulating is one that tends to cause more severe illness, especially in the elderly.

But officials with the Centers for Disease Control and Prevention said the nation seems to be fairly well prepared. More than a third of Americans have been vaccinated, and the vaccine is well matched to the strains of flu so far.

Officials said Monday that suspected flu cases have jumped in five southern states — Alabama, Louisiana, Mississippi, Tennessee and Texas. An uptick in flu reports like this usually doesn't occur until after Christmas.

The last time a typical flu season started this early was the winter of 2003-04.

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Kate Middleton Is Pregnant, in Hospital

Kate Middleton is pregnant.

The most eagerly awaited pregnancy was announced today by St. James Palace on behalf of Middleton and her husband Prince William.

The child, whether boy or girl, will eventually be heir to the British throne according to new legislation awaiting final approval.

The duchess was admitted to King Edward VII Hospital today in central London with hyperemesis gravidarum, an acute morning sickness which requires supplementary hydration and nutrients, the palace said.

Prince William is by his wife's side at the hospital, according to Britain's Press Association.

Click here for photos of Kate through the years.

"As the pregnancy is in its very early stages, Her Royal Highness is expected to stay in hospital for several days and will require a period of rest thereafter," the statement said.

The royal family was clearly delighted with the news.

"Their Royal Highnesses The Duke and Duchess of Cambridge are very pleased to announce that The Duchess of Cambridge is expecting a baby," the palace said in a statement today. "The Queen, The Duke of Edinburgh, The Prince of Wales, The Duchess of Cornwall and Prince Harry and members of both families are delighted with the news."

British Prime Minister David Cameron also reacted to the big news, telling BBC, "It's absolutely wonderful news and I'm sure everyone around the country will be celebrating with them tonight."

The prime minister told BBC that he found out when "I was handed a note in a meeting. And I have to say, it was difficult to keep it a secret."

The baby will be the queen's third great-grandchild.

Jonathan Nackstrand/AFP/Getty Images

Kate Middleton Pregnant, Admitted to Hospital Watch Video

Click here to vote for a royal name for a royal baby.

Robert Lacey, author of the definitive book "Majesty" said, "The British public and indeed the whole world will be delighted for the same, it keeps the monarchy going. The royal wedding brought a magic back to the monarchy and people are fascinated by William and Catherine."

The announcement follows relentless public and media speculation about when Prince William and his wife would have an heir. The guessing game began almost immediately after the couple said, "I do."

Click here for an interactive look at William and Kate's love story.

Tabloids began snapping close-ups of Middleton's stomach for any indication of a baby bump. Baby rumors abounded when the duchess held a baby at a press event and when she declined peanut butter at another event. British physicians are known to warn women against eating peanuts during pregnancy. When the couple got a dog, Lupo, headlines wondered if they were practicing for another addition to the family.

Click here for more on royal heirs around the world.

The palace, which rarely comments on speculation, took the unusual step of saying, "We would be the ones to make the announcement, not Hollywood."

"It is quite strange reading about it, but I try not to let it bother me," Prince William said in an interview with ABC News' Katie Couric in May 2012. "I'm just very keen to have a family and both Catherine and I are looking forward to having a family in the future."

Asked by Couric if there was anything else he wanted to share, he coyly answered, "You won't get anything out of me. Tight lipped."

Due to a dramatic change in the rules of succession, the royal couple's first-born will likely be the heir to the throne, regardless of the baby's gender.

Last year, the heads of 16 Commonwealth countries agreed to a change in the rules of succession so that first-born children of either gender can take the throne. Queen Elizabeth II was only eligible to be monarch because her father had no male children. The British Parliament must still amend existing law to make the succession change official.

"Put simply, if the Duke and Duchess of Cambridge were to have a little girl, that girl would one day be our queen," British Prime Minister David Cameron told reporters in 2011.

Royal babies have typically been born within one year of marriage. Princess Diana gave birth to William just 11 months after her wedding and the queen gave birth to Prince Charles six days before her first wedding anniversary.

Prince William and Kate were married on April 29, 2011.

William, who has long been known for making privacy a priority, will now be faced with the inevitable fascination with his first child. And the scrutiny will doubtless be familiar to him.

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Israel says will stick with settlement plan despite European pressure

JERUSALEM (Reuters) - Israel rejected concerted criticism from the United States and Europe on Monday over Prime Minister Benjamin Netanyahu's decision to expand settlement building after the United Nations' de facto recognition of Palestinian statehood.

Washington urged Israel to reconsider its plan to erect 3,000 more homes in the occupied West Bank and East Jerusalem, saying the move hindered peace efforts with the Palestinians.

Britain, France, Spain, Sweden and Denmark summoned the Israeli ambassadors in their capitals to give similar messages.

An official in Netanyahu's office said Israel would not bend. "Israel will continue to stand by its vital interests, even in the face of international pressure, and there will be no change in the decision that was made," the official said.

Angered by the U.N. General Assembly's upgrading on Thursday of the Palestinians' status in the world body from "observer entity" to "non-member state", Israel said the next day it would build the new dwellings for settlers.

Such projects, on land Israel captured in a 1967 war, have routinely drawn world condemnation. Approximately 500,000 Israelis and 2.5 million Palestinians live in the two areas.

In a shift that raised the alarm among Palestinians and in world capitals, Netanyahu's pro-settler government also ordered "preliminary zoning and planning work" for thousands of housing units in areas including the "E1" zone east of Jerusalem.

Such construction in the barren hills of E1 has never been put into motion in the face of opposition from Israel's main ally, the United States. Building in the area could bisect the West Bank, cut off Palestinians from Jerusalem and further dim their hopes for a contiguous state.

Israeli television stations reported Jerusalem's district planning commission would soon approve plans for several thousand more housing units, including more than 1,000 Israel had shelved two years ago after angering Washington by publishing the plans before a visit by Vice President Joe Biden.

The settlement plan, U.N. Secretary-General Ban Ki-moon said, would deal "an almost fatal blow" to a two-state solution to the Israeli-Palestinian conflict.

"We don't want to shift into sanctions mode," French President Francois Hollande told a news conference with Italian Prime Minister Mario Monti. "We are more focused on persuading."

Washington made clear it would not back such Israeli retaliation over the U.N. vote, which Palestinians sought after peace talks collapsed in 2010 over settlement building.

"We urge Israeli leaders to reconsider these unilateral decisions and exercise restraint as these actions are counterproductive and make it harder to resume direct negotiations to achieve a two state solution," White House spokesman Jay Carney told a briefing.

A spokesman for British Prime Minister David Cameron played down what diplomatic sources said was the possibility of recalling Britain's ambassador in Tel Aviv, saying: "We are not proposing to do anything further at this stage".

A French Foreign Ministry official, responding to reports Paris might bring its Tel Aviv envoy home, said: "There are other ways in which we can express our disapproval."

Ahead of a Netanyahu visit this week, Germany, considered Israel's closest ally in Europe, urged it to refrain from expanding settlements, and Russia said it viewed the Israeli moves with serious concern.

RETALIATION

Israeli Finance Minister Yuval Steinitz said Israel could not have remained indifferent to the Palestinians' unilateral move at the United Nations.

"I want to tell you that those same Europeans and Americans who are now telling us 'naughty, naughty' over our response, understand full-well that we have to respond, and they themselves warned the Palestinian Authority," he said.

Palestinian chief negotiator Saeb Erekat said building in E1 "destroys the two-state solution, (establishing) East Jerusalem as the capital of Palestine and practically ends the peace process and any opportunity to talk about negotiations in the future".

The United States, one of the eight countries to vote alongside Israel against the Palestinian resolution at the General Assembly, has said both were counterproductive to the resumption of direct peace talks.

In Europe, only the Czech Republic voted against the status upgrade while many countries, including France, backed it. Netanyahu plans to visit Prague this week to express his thanks.

In the Gaza Strip, Sami Abu Zuhri, spokesman for the governing Hamas Islamist movement, called Israeli settlements "an insult to the international community, which should bear responsibility for Israeli violations and attacks on Palestinians".

In another blow to the Palestinian Authority, which exercises limited self-rule in the West Bank, Israel said it was withholding about $100 million in Palestinian tax revenues this month, arguing Palestinians owed $200 million to Israeli firms.

"These are not steps towards peace, these are steps towards the extension of the conflict," Spanish Foreign Minister Jose Manuel Garcia-Margallo said.

Only three weeks ago, Netanyahu won strong European and U.S. support for a Gaza offensive that Israel said was aimed at curbing persistent cross-border rocket fire.

Favored by opinion polls to win a January 22 national election, he brushed off the condemnation and complaints at home that he is deepening Israel's diplomatic isolation.

Netanyahu told his cabinet on Sunday that his government "will carry on building in Jerusalem and in all the places on the map of Israel's strategic interests".

But while his housing minister has said the government would soon invite bids from contractors to build 1,000 homes for Israelis in East Jerusalem and more than 1,000 in West Bank settlement blocs, the E1 plan is still in its planning stages.

"No one will build until it is clear what will be done there," the minister, Ariel Attias, said on Sunday.

Israel froze much of its activities in E1 under pressure from former U.S. President George W. Bush, and the area has been under the scrutiny of his successor, Barack Obama.

Most world powers consider Israel's settlements to be illegal. Israel cites historical and Biblical links to the West Bank and Jerusalem and regards all of the holy city as its capital, a claim that is not recognized internationally.

(Additional reporting by Crispian Balmer, Dan Williams, Nidal al-Mughrabi in Gaza, Jihan Abdalla in Ramallah, Steve Gutterman in Moscow, Gareth Jones in Berlin, John Irish and Elizabeth Pineau in Paris and Tim Castle in London; writing by Jeffrey Heller; editing by Philippa Fletcher)

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US calls Israel to 'reconsider' settlements decision

WASHINGTON: The United States called on Israel Monday to "reconsider" a decision to allow 3,000 more homes for Jewish settlers in east Jerusalem and the occupied West Bank.

"We urge Israeli leaders to reconsider these unilateral decisions and exercise restraint as these actions are counter-productive and make it harder to resume direct negotiations," White House spokesman Jay Carney said.

His comments came amid intensifying international pressure on Israel in the wake of Israeli Prime Minister Benjamin Netanyahu's decision last week.

The areas opened for settlement construction included E1, a corridor east of Jerusalem where Jewish settlements would effectively split the occupied West Bank, further complicating the creation of a contiguous Palestinian state.

The State Department warned in an earlier statement that the E1 area "is particularly sensitive and construction there would be especially damaging to efforts to achieve a two-state solution."

Israel announced the decision on settlements after the UN General Assembly voted to upgrade the Palestinian status to a UN observer state, over vehement Israeli and US objections.

A source in Netanyahu's office said Israel would not bend to the international pressure.

- AFP/fa

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