Healthspan Blog

By Matt Spetalnick

LONDON (Reuters) - President Barack Obama and President Dmitry Medvedev will hit the restart button on U.S.-Russian ties by agreeing to begin talks on a new nuclear arms treaty when they meet for the first time on Wednesday.

But many other contentious issues cloud the outlook, from missile defense to Iran and NATO expansion, before the relationship warms up again.

Their meeting before a G20 summit in London will be an early test for Obama, who is making his debut on the world stage with his first major trip abroad since taking office in January.

His predecessor George W. Bush claimed a personal chemistry with former Russian President Vladimir Putin, although that did not stop several policy disputes and a Kremlin clampdown widely seen as rolling back democratic reforms.

The two new presidents have both signaled a more pragmatic, business-like approach.

At least one major achievement is expected from the London encounter: agreement to start talks on a new treaty limiting long-range nuclear missiles to replace a pact that expires this year. Expectations are low for much progress on other fronts.

"Nobody should expect a 'Bush heart-to-heart with Putin' kind of experience," said Sarah Mendelson, a Russia expert at the Center for Strategic and International Studies in Washington. "These guys don't operate that way."

SIZING UP OBAMA

Like other leaders Obama will meet, Medvedev will be sizing him up. Obama also meets President Hu Jintao of China, another world power whose relations with Washington have been rocky.

Medvedev knows what it's like to be under such scrutiny. Since taking office last year, he has yet to put to rest questions whether Putin, who he named as his prime minister, still pulls the strings.

The White House brushed aside criticism from some U.S. conservatives that Obama seems too willing to make concessions to the Russians.

"Nobody believes that a change in our relationship means giving anybody all that they want," Obama spokesman Robert Gibbs said.

Medvedev said in an article in the Washington Post that the United States and Russia should rebuild ties because neither can afford "drift and indifference" in their relationship.

Medvedev and Obama are both former lawyers in their 40s. The Russian leader has welcomed Obama's intention to leave behind what Moscow saw as a confrontational U.S. approach over the past few years and has praised a letter from Obama outlining international priorities.

"Frankly speaking, when I was reading it I was surprised by the fact that many views outlined there coincided with my ideas," Medvedev said in a weekend BBC television interview.

Moscow had deplored Bush's drive for NATO membership for the former Soviet republics of Ukraine and Georgia, something Obama signaled would be less of a priority.

Obama has also left the door open to reconsidering the anti-missile system Russia bitterly opposes.

However, even while promising to "press the reset button," the Obama administration has made clear it will not recognize what Moscow sees as its "sphere of influence."

Obama also wants Russia to cooperate more in pressuring Iran on its nuclear program, and was expected to push the issue in his talks with Medvedev.

Whatever kind of relationship they forge, it will be nothing like the way Bush and Putin started theirs in 2001, with the U.S. leader saying he had gained "sense of his soul" and trusted his Russian counterpart.

SINGAPORE (Reuters) - President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, Bloomberg reported, quoting people familiar with the matter.

Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can't form an alliance with Fiat SpA, Bloomberg said, citing members of Congress who have been briefed on the subject and two other people familiar with the administration's deliberations.

Obama on Monday gave GM 60 days to come up with deeper cost and debt reductions than the biggest U.S. automaker had proposed in a viability plan submitted last month.

But a "quick and surgical" bankruptcy the Obama administration described as an option appears to be inevitable, the people familiar with the matter said in the Bloomberg report.

By Sumeet Desai and Lesley Wroughton

LONDON (Reuters) - France threatened on Tuesday to storm out of this week's G20 summit if it did not get the results it wanted, despite Britain's call for countries to unite and restore confidence to a broken world economy.

As leaders of the world's big powers converged on London for Thursday's crisis meeting to chart a way out of the worst global downturn since the Great Depression, the World Bank announced a $50 billion program to get international trade flowing again.

The International Monetary Fund also looks poised to get a huge cash boost to its ability to help countries being ravaged by the recession, and the leaders will likely announce common codes on financial regulation to prevent future crises.

"I want results," French president Nicolas Sarkozy told reporters. "We have to get results, there's no choice, the crisis is too serious to allow us to have a summit for nothing."

Shattering any impression of unity, his finance minister warned that Sarkozy would not sign the G20 communique if the summit failed to satisfy his objectives.

"(He) was very clear on that front. He said if the deliverables are not there, I won't sign the communique -- that means walking away," Christine Lagarde said in a TV interview.

A spokesman for summit host Gordon Brown said the British prime minister and French president had talked constructively on Monday and that Britain was looking forward to Sarkozy's participation.

Brown also desperately needs the summit to provide concrete results, just as much to revive his own political fortunes as to get the British economy out of recession.

But the run-up to the April 2 meeting have been marred by divisions between the United States and Britain on one side and the continental Europeans on the other over the right scale of fiscal stimulus and regulation.

Lagarde has said France may do more on the spending front if necessary, but that nations should wait to see the effect of current stimulus measures before taking any further action. Also, Europe has pushed for a strict overhaul of financial regulation while Britain and the United States appear to favor a lighter touch.

"Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," Brown said.

OBAMA TO EUROPE

The Organization for Economic Co-operation and Development (OECD) said on Tuesday the economies of its 30 members would shrink by 4.3 percent in 2009, costing 25 million jobs.

"The first major risk comes from a potential economic collapse of emerging markets," Australian Prime Minister Kevin Rudd said as he arrived in London. "The second major risk to global recovery is the process of deleveraging."

To prevent that, the G20 is expected to more than double the $250 billion available to the IMF to help struggling nations. Rudd said its funding should be tripled if necessary.

Speaking at a Thomson Reuters event, World Bank President Robert Zoellick announced measures to reverse a sharp drop in trade flows.

He said the $50 billion program would include funding from governments, starting with contributions from Britain and the Netherlands, regional development banks and private-sector banks such as Standard Chartered, Standard Bank and Rabobank.

A draft of the communique, obtained by Reuters this week, shows the G20 will pledge to avoid competitive devaluation of their currencies and other protectionist measures.

Lagarde told Reuters on Tuesday that currency imbalances will not be a feature of Thursday's meeting but the issue may require a separate summit.

China and Russia have started a debate about reserve currencies by raising the prospect of developing the IMF's Special Drawing Rights as the basis for a new global currency.

"We should think about creating a new currency system...The current system is not ideal,"" Russian President Dmitry Medvedev said. "We cannot develop in the next 10 years if we do not create a new infrastructure including new (currency) systems."

But for now the dollar's supremacy looks unchallenged.

The U.S. dollar is now and will remain the world's currency, a spokesman for the White House said as President Barack Obama's plane touched down at London's Stansted Airport for his first trip to Europe.

By David Morgan and Jonathan Thatcher

WASHINGTON/SEOUL (Reuters) - A missile North Korea could launch as soon as this weekend appears to have a bulb-shaped tip that gives credence to Pyongyang's claim it plans to put a satellite in space, U.S. defense officials said on Tuesday.

Washington and others have voiced concern the launch will be a test of a long-range missile that could carry a warhead as far as U.S. territory. Pyongyang's plans have alarmed the region and intensified pressure on the North not to launch its Taepodong-2. A Taepodong-2 test in 2006 failed.

U.S. Secretary of State Hillary Clinton has said the launch, which North Korea says will occur between April 4 and 8, would deal a blow to six-party talks to end Pyongyang's nuclear weapons program.

Further stoking tensions, North Korea said on Tuesday it would put on trial two U.S. journalists arrested this month on its border with China.

The reclusive state accused the two female reporters, Laura Ling and Euna Lee from the U.S.-based media outlet Current TV, of unspecified "hostile acts."

"The illegal entry of U.S. reporters into the DPRK (North Korea) and their suspected hostile acts have been confirmed by evidence and their statements, according to the results of intermediary investigation conducted by a competent organ of the DPRK," North Korea's KCNA news agency said.

U.S. officials, who spoke on condition of anonymity, said a commercial satellite image of the Musudan-ri missile test site showed a Taepodong-2 missile with a bulb-shaped payload cover, consistent with a satellite payload, rather than a warhead.

The image was posted on Sunday on the website of the Institute for Science and International Security, or ISIS, a Washington-based group devoted to informing the public on security issues including nuclear weapons.

The bulb shape is similar to the nose cone standard for military and commercial satellite launches, concluded officials, including analysts at the U.S. Air Force's National Air and Space Intelligence Center in Dayton, Ohio.

"They probably are launching a satellite. But the issue is that the steps they're going through to do that run parallel to them being able to have other capabilities," senior ISIS analyst Paul Brannan said.

U.S. DEPLOYMENT

One Seoul-based analyst said intelligence reports indicated North Korea appeared to have built nuclear warheads for its mid-range Rodong missiles, which can reach Japan.

"I have some intelligence assessments that indicate they have assembled nuclear warheads for Rodong missiles," said Daniel Pinkston, an analyst with the nongovernmental International Crisis Group. "No one can know this with 100 percent accuracy."

A U.S. official who spoke on condition he not be identified cast doubt on the report, saying, "I know of zero evidence to support that contention."

Many proliferation experts believe the North, whose only nuclear test in 2006 was seen as a partial success, does not have the technology to miniaturize a nuclear device for a warhead. It might be able to place a biological or a dirty bomb, where radiation is spread through conventional explosives.

North Korea's planned rocket launch is certain to feature on the sidelines of the G20 summit this week in London when U.S. President Barack Obama meets global leaders, including President Hu Jintao of China, the nearest the North has to a major ally.

China has avoided directly criticizing Pyongyang, urging all sides to exercise restraint.

The United States, Japan and South Korea are deploying missile-interceptor ships in the area.

All have said they would shoot down the rocket if it threatened their territory and that the launch would be in violation of U.N. resolutions. Both houses of Japan's parliament passed a resolution urging North Korea not to fire the rocket.

(Additional reporting by Arshad Mohammed in Washington, Isabel Reynolds in Tokyo, Jack Kim, Jon Herskovitz and Kim Junghyun in Seoul, Editing by Peter Cooney)

By Richard Cowan and Ayesha Rascoe

WASHINGTON (Reuters) - Democrats in the U.S. House of Representatives launched a sweeping effort on Tuesday to control greenhouse gas emissions and at the same time help industries that will struggle to meet the proposed environmental requirements.

The draft legislation, which will be considered by the House Energy and Commerce Committee in coming weeks along with other panels, marks the latest attempt by Congress to bring the United States into a global effort to curtail emissions of carbon dioxide and other pollutants.

Many scientists think the growing amounts of pollutants are contributing to extreme weather, melting polar ice and threats to humans, animals and plant species.

"This legislation will create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution," said House Energy and Commerce Committee Chairman Henry Waxman.

Chances for a climate change bill being enacted have improved with the election of Barack Obama as president and Democrats' growing majorities in Congress. But it is still likely to be a tough fight, especially in the Senate.

In February, Obama proposed his own climate change initiative and just last week his administration declared that climate-warming emissions are a danger to human health -- a move toward regulating the pollutants under the Clean Air Act.

But the proposal circulated on Capitol Hill by Waxman and Representative Edward Markey would establish a new "cap and trade" regime for reducing emissions of carbon dioxide and other harmful greenhouse gases separately from the Clean Air Act. Proponents think it would be a more targeted way of limiting emissions.

In a cap and trade system, owners of power plants and other industries that emit carbon dioxide would need permits for every ton they emit. Unused permits could be sold to other companies, but overall emissions would gradually drop.

83 PERCENT REDUCTION BY 2050

Under the Waxman-Markey proposal that uses 2005 as a base year, U.S. carbon emissions would have to be reduced by 20 percent by 2020, 42 percent by 2030 and 83 percent by 2050. Those goals are somewhat more aggressive than timetables Obama proposed.

The deep economic recession the United States is going through makes enacting a climate control bill all the harder.

Republicans, who will oppose the legislation in the House, have been eager to point out that at least in the short term, energy prices will rise, hitting consumers and resulting in more domestic job losses.

"Tuesday's cap and trade bill marks a triumph of fear over good sense and science and it couldn't come at a worse time because it proposes to save the planet by sacrificing the economy," said Representative Joe Barton, the senior Republican on the energy and commerce panel.

But Markey, who chairs a special committee to deal with global warming problems, countered: "We will create jobs by the millions, save money by the billions, and unleash energy investment by the trillions."

REBATES AND OFFSETS

Among the proposals aimed at protecting domestic industries are "rebates" to help them compete with overseas companies and up to 2 billion metric tons annually in "offsets" they could claim along with buying permits that push them to emit fewer greenhouse gases. The provision could be particularly important to heavy industry, such as steel, cement and glass.

Total U.S. emissions of carbon dioxide are now around 6 billion metric tons a year.

Such offsets could include an array of activities, such as installing energy-efficient measures, buying forests, investing in a farmer's commitment to non-polluting practices, or even closing a plant.

The legislation, according to the committee, would give the president the power to establish a "border adjustment" program if industry rebates prove insufficient. "Under that program, foreign manufacturers and importers would be required to pay for and hold special allowances to 'cover' the carbon contained in U.S.-bound products," the committee said.

It was unclear whether the proposal would be in line with U.S. commitments in global trade pacts.

Other initiatives in the House proposal are requirements on utilities to produce 25 percent of their electricity from renewable sources, like solar and wind, by 2025 and to take steps to reduce their energy consumption.

Waxman and Markey leave up to the committee the potentially controversial decision of how to allocate permits for industries' carbon emissions under the cap and trade program.

While opposition to the Waxman-Markey bill could ramp up as it moves through the House and more details are filled in, diverse groups gave their early support.

"The discussion draft provides a solid foundation to create a climate strategy that both protects our economy and achieves the nation's environmental goals," said the United States Climate Action Partnership, a coalition of industry and environmental groups ranging from Alcoa and Caterpillar to the Nature Conservancy and the Natural Resources Defense Council.

However, Lou Hayden, a senior policy analyst with the American Petroleum Institute, warned that lawmakers must be realistic with their goals, especially concerning the use of cleaner transportation fuels.

"We worry that if the timelines aren't practical, if they aren't reasonable, you may end up passing along a cost (to consumers) without achieving emissions reductions," Hayden told Reuters.

(Additional reporting by Timothy Gardner in New York; editing by Mohammad Zargham)