Russia 'ends Georgia operation'
 Thousands of people have fled Gori in fear of Russian air attacks |
Russian President Dmitry Medvedev has ordered an end to military operations against Georgia, the Kremlin says.
He told officials he had decided to end the campaign after restoring security for Russian citizens and peacekeepers in South Ossetia.
Before Mr Medvedev's statement, there were fresh reports of Russian warplanes bombing the Georgian town of Gori.
The conflict began last Thursday, when Russia responded to Georgian military action in South Ossetia.
But Russia has also bombed areas outside the breakaway region - including Gori, which is less than 80km (50 miles) from the Georgian capital Tbilisi.
On Tuesday, witnesses told the BBC that several people had been killed when a bomb hit a hospital in the town.
A reporter for Reuters news agency said several bombs exploded in front of his vehicle, while a Reuters photographer spoke of seeing dead and injured people lying in the streets.
Officials in the Netherlands, meanwhile, confirmed that a Dutch TV cameraman was among those killed in Gori and another journalist was wounded.
 |  Should centres of resistance or other aggressive attempts arise, you must take the decision to destroy them  Dmitry Medvedev Russian president  |
The BBC's Gabriel Gatehouse, near Gori, reported seeing sporadic artillery fire around the town right up until shortly before the Russian announcement.
But our correspondent later said military action in the area appeared to have stopped.
After Mr Medvedev's statement, tens of thousands of Georgians gathered in Tbilisi's main square to hear President Mikhail Saakashvili speak.
He told the crowd Russia was continuing its "ruthless, heartless destruction" of Georgian citizens - although the Kremlin denied his claims.
He also pledged to take Georgia out of the Commonwealth of Independent States (CIS), a group which includes most of the former Soviet republics.
In Georgia's other breakaway region, Abkhazia, separatist rebels continued an offensive against Georgian troops in the Kodori Gorge region - the only area of Abkhazia still under Georgian military control.
And British oil firm BP closed a key pipeline that runs through Georgia in response to the crisis. A larger pipeline, which runs from Azerbaijan through southern Georgia into Turkey, had shut earlier.
'Safety restored'
According to a statement, Mr Medvedev told his defence minister and chief of staff that "the goal has been attained".
Russian President Dmitry Medvedev announces the end of military operations
"I've decided to finish the operation to force the Georgian authorities to peace. The safety of our peacekeeping forces and civilian population has been restored," he said.
"The aggressor has been punished, having sustained considerable losses. Its armed forces have been disorganised."
The BBC's James Rodgers, in Moscow, says there is no sign yet that Russia is willing to engage in talks with the government in Tbilisi.
Russia's Foreign Minister, Sergei Lavrov, has insisted that Georgia must sign a legally binding document on the non-use of force.
And Mr Medvedev warned that Russia would not tolerate any further Georgian military activity in South Ossetia, saying: "Should centres of resistance or other aggressive attempts arise, you must take the decision to destroy them."
Georgia also remained sceptical, the country's prime minister telling Reuters that troops would remain "mobilised... ready for anything" until a binding agreement was signed between the two countries.
Foreign influence
News of Mr Medvedev's decision emerged as French President Nicolas Sarkozy arrived in Moscow expecting to press Russia on the need for a ceasefire.
Mr Sarkozy said the Russian announcement was "good news" and called for an immediate implementation of the ceasefire.
| Russia has invaded a sovereign neighbouring state and threatens a democratic government elected by its people US President George W Bush |
The BBC's diplomatic correspondent Bridget Kendall says the timing of the Russian president's announcement is important.
Mr Sarkozy is currently serving as president of the European Union, our correspondent notes, and arrived in Moscow to speak on behalf of the entire bloc.
The Russian move also followed strong comments from US President George W Bush, in which he spoke directly of concerns that Russia was planning to topple Georgia's pro-Western president.
"Russia has invaded a sovereign neighbouring state and threatens a democratic government elected by its people," he said.
"Such an action is unacceptable in the 21st Century."
Our correspondent says Mr Medvedev's announcement must be seen in the light of the US president's words.
The five-day-old conflict began late on 7 August when Georgian forces bombarded South Ossetia, where a majority of people hold Russian passports.
Russia quickly became involved, bombing targets throughout Georgia and sending troops in to recapture South Ossetia.
Some 100,000 people are estimated to have been displaced by the conflict.
Pakistan
Wishing you a speedy exit
The enemies of Pervez Musharraf, Pakistan’s president, smell blood
PERVEZ MUSHARRAF, Pakistan’s president, celebrated his 65th birthday on Monday August 11th. On the same day, the ruling coalition, led by the Pakistan People’s Party (PPP), launched a plot to ensure his retirement follows swiftly. Parliament was convened for the express purpose of impeaching Mr Musharraf, who ran Pakistan for eight years, more or less outright, before he resigned as army chief last November.
In a related move, meanwhile, the assembly of Punjab province, which is dominated by the PPP and its main coalition partner, the Pakistan Muslim League (N), voted to demand that Mr Musharraf face a confidence vote. The motion was passed by 321 to 25—signalling that over half the representatives of Mr Musharraf’s erstwhile ally, the Pakistan Muslim League (Q), voted against the president.
The same motion is set to be voted on in Pakistan’s other three provincial houses, starting in southern Sindh, on Tuesday or Wednesday. These votes are not directly related to the impeachment proceedings. They are intended to pile pressure onto Mr Musharraf, and so encourage him to quit, as many Pakistanis expect that he soon will. For now, however, the former commando says he is staying put.
Mr Musharraf’s best hope of survival would be to use his the powers he awarded himself to dissolve parliament. He has made similar interventions before. Having seized power in a 1999 coup, he clung to it last November by declaring a state of emergency to safeguard his presidential re-election. But these acts had the support of the army; and it is unlikely that Mr Musharraf would have this now. America, a staunch erstwhile ally of the unpopular president, is also reluctant to stick up for him. When the leaders of the PPP and PML(N), Asif Zardari and Nawaz Sharif, declared their intention to impeach Mr Musharraf on August 7th, a State Department spokesmen called it an “internal matter”.
Mr Musharraf must now hope to beg or buy more parliamentary support than he currently seems to have. It will be tough. The impeachment, which will based on allegations of unconstitutional misrule and misconduct by the president, would require two-thirds support in a joint vote of Pakistan’s two-tier assembly. The PPP thinks it can command such a majority. If others follow the lead of Mr Musharraf’s fleeing friends in Punjab, it may be right. Failing any coup-like interruptions, or Mr Musharraf ’s resignation, the government is expected to impeach the president over the next week or so.
Meanwhile, by uniting against a common foe, the PPP and PML(N) have done much to improve their own flagging relations. Traditional rivals, they entered into an alliance after routing Mr Musharraf’s supporters in a general election in February. But cracks appeared in May, after the PPP failed to honour a promise to reinstate some 60 judges, who were sacked by Mr Musharraf during the emergency. In response, Mr Sharif withdrew the PML(N)’s nine ministers from the cabinet, but not its support. As a mark of a renewed co-operation, four of these ministers are expected to return to work this week. The other five will join them after the judges are restored—as both party leaders say they will be, once Mr Musharraf is gone.
Perhaps this will all came about. But, given a legacy of mutual back-stabbing and continued mistrust between the parties, it may not happen smoothly. If Mr Musharraf is removed, the government will in theory have a month to elect a replacement president. But it would first try to pare back the powers of that office, by changing the constitution. This would require two-thirds support in each house of parliament; which, for now, with the PML(Q) dominating the upper house, the government does not have. With the three main parties likely to disagree on how the presidential office should be tweaked, and who should fill it, a protracted round of squabbling might ensue.
Given that Pakistan has one or two other matters in need of attention—including a mounting economic crisis and a spiralling Taliban insurgency—bickering over the presidency would be inadvisable.
Aug. 12 (Bloomberg) -- Russian President Dmitry Medvedev halted five days of military action in Georgia, Russia's first foreign offensive since the Cold War ended in 1991, defusing a dispute that threatened to draw in the West.
``The aggressor has been punished,'' Medvedev said today. Russia has secured the safety of its peacekeepers and citizens in the disputed regions of South Ossetia and Abkhazia, Medvedev said on state television.
Russia sent tanks, troops and warplanes into Georgia on Aug. 8 in what it said was a response to a Georgian offensive on South Ossetia, which won de facto independence from Georgia after a war in the early 1990s. Russian forces crossed into Georgia's heartland for the first time yesterday and took several towns and a military base, drawing criticism from President George W. Bush. More than 2,000 people were killed in the fighting, according to Russian estimates. The United Nations Refugee Agency said almost 100,000 people have fled the conflict.
The military thrust threatened to drag the U.S. into confrontation with its former Cold War foe. Bush backs Georgia's bid to join the North Atlantic Treaty Organization, which Russia views as a security threat. The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets and bypasses Russia.
``Russia has come out looking like a victor,'' said Alexei Malashenko, an analyst from the Moscow Carnegie Center. ``If it had continued, the war wouldn't have been popular in Russia, not to speak of the negative reaction in the West.''
Fighter Jet Strikes
As Russian troops kept control of territory inside Georgia, Georgian Deputy Interior Minister Eka Zhguladze said two districts near the central city of Gori were under attack by Russian fighter jets as of 3 p.m. local time. While Russia has stopped offensive operations, sporadic strikes are continuing, Anatoly Nogovitsyn, the deputy head of Russia's General Staff, said earlier. Medvedev ordered Russian forces to destroy any ``pockets of resistance.''
The ruble surged the most in seven years, Russia's Micex Index climbed, and the cost of protecting the country's bonds fell after Medvedev halted the Georgian military operation.
The 30-stock Micex erased a decline of as much as 2 percent and oil extended its drop after Medvedev said military action in Georgia had achieved the country's goals.
Bush criticized Russia yesterday for pushing into central Georgia. ``I am deeply concerned by reports that Russian troops have moved beyond the zone of conflict,'' Bush said. ``It now appears that an effort may be under way to depose Georgia's duly elected government.''
Sarkozy in Moscow
Georgia welcomed Medvedev's decision, which came as French President Nicolas Sarkozy, whose country holds the rotating European Union presidency, arrived in Moscow to seek a cease- fire agreement.
``It's great, if that's what they said,'' Georgian Deputy Foreign Minister Grigol Vashadze said by phone in Tbilisi. ``I just hope that it's because they realize just how badly their name and reputation were damaged in the eyes of the world by doing what they've done.''
In an indication that Russia intends to impose tough terms on Georgia, Russian Foreign Minister Sergei Lavrov called for a de-militarized zone on the Georgian side of the border with Abkhazia and South Ossetia. Abkhazia also broke away from central Georgian control in the early 1990s. This followed the break-up of the Soviet Union in 1991 that brought an end to its political, economic and military opposition to the West.
Sarkozy told Medvedev at the start of their Kremlin talks that it was important to implement the cease-fire and that Russia now must withdraw its troops from Georgia to their positions prior to the conflict. Russia must be a ``force for peace,'' Sarkozy said.
Withdraw Forces
Russia says that Georgia must sign a legally binding non- aggression pact with South Ossetia, a self-proclaimed republic of 70,000 people, most with Russian passports. Georgia must also withdraw its forces from military bases it used to stage its attack on the disputed region, which is about half the size of Kosovo, Lavrov said. Georgian peacekeepers would not be allowed to return to South Ossetia.
The Russian minister also said that U.S.-backed Georgian President Mikheil Saakashvili should step down. Russia refuses to negotiate with Saakashvili because it has ``no trust'' in him and because he's a ``criminal,'' Lavrov said. ``It will be best if he left.''
Saakashvili, a 40-year-old U.S.-educated lawyer who came to power in 2003, forged an alliance with the U.S. and pursued a goal of joining NATO, ignoring Russian warnings. In April, NATO leaders promised Georgia and fellow former Soviet republic Ukraine eventual membership, while declining to offer them fast- track status.
Russia's Upper Hand
In a sign of Russia's upper hand, Russian forces are continuing reconnaissance activities in Georgia and disarming Georgian police in the town of Zugdidi, just across the border from Abkhazia, Nogovitsyn told reporters in Moscow.
The Russian military still controls the Georgian air base of Senaki, 40 kilometers (25 miles) from Abkhazia, he said.
Russian warplanes attacked a section of BP Plc's Baku- Tbilisi-Ceyhan pipeline in Georgia today, said Kakha Lomaia, head of Georgia's National Security Council. BP said it was unaware of any bomb damage and the Russian Defense Ministry denied the claim.
Medvedev has defended Russia's campaign as an obligatory response to what it terms the ``genocide'' waged by Georgia in South Ossetia. Most of the dead were civilians killed by Georgian military action, according to Russia. Saakashvili accused Russia of carrying out a ``well-planned'' invasion and pleaded for Western help throughout the conflict.
Aug. 12 (Bloomberg) -- The U.S. trade deficit unexpectedly narrowed in June as the biggest jump in exports in more than four years overcame record imports of petroleum.
The gap shrank 4.1 percent to $56.8 billion from a revised $59.2 billion in May that was smaller than previously estimated, the Commerce Department said today in Washington.
The increase in demand from overseas signals manufacturers like Caterpillar Inc. may be better able to withstand a slump in U.S. sales and an increase in oil prices. Slowing demand for imported goods excluding petroleum means trade will keep helping the economy after making its biggest contribution to growth in 28 years last quarter.
``This is decidedly good news for the U.S. economy,'' said David Resler, chief U.S. economist at Nomura Securities International Inc. in New York, in an interview with Bloomberg Radio. ``It shows that the U.S. economy is still deriving considerable strength from foreign trade,'' with gross domestic product in the second quarter probably growing ``well north of 2 percent.''
Economists had forecast the gap would widen to $62 billion from an initially reported $59.8 billion in May, according to the median of 71 estimates in a Bloomberg News survey. Projections of the deficit ranged from $58 billion to $65.7 billion.
A weaker dollar has helped stoke American exports. The currency has slumped 24 percent versus the euro in the past five years. The dollar has recouped some losses in the past four weeks as the outlook for Europe's economy dimmed. It was little changed after today's figures, at $1.4941 at 8:40 a.m. in New York.
Biggest Since 2004
Exports increased 4 percent, the biggest percentage jump since February 2004, to $164.4 billion, led by record overseas sales of food, industrial supplies, capital goods and consumer goods.
Imports rose 1.8 percent to $221.2 billion after increasing 0.3 percent in May. The import figures reflected a record $44.5 billion in purchases of foreign petroleum as well as record purchases of industrial supplies from overseas and increased demand for foreign-made autos and parts.
A barrel of imported crude oil cost $117.13 in June, up from $106.28 the previous month.
Price Changes
After eliminating the influence of price changes, the trade deficit narrowed to $39.1 billion, the lowest since December 2001, from $43.5 billion in May. Those are the numbers used to calculate gross domestic product and may prompt economists and the government to increase their estimates of second-quarter growth.
Excluding the effect of prices, non-petroleum imports declined during June.
``You've got a weak economy so businesses aren't importing as much and consumers aren't buying as many goods,'' Jay Bryson, global economist at Wachovia Corp. in Charlotte, North Carolina, said before the report.
Commerce estimated on July 31 that the narrowest trade deficit in seven years added 2.42 percentage points to growth, the most since 1980, and prevented the U.S. economy from shrinking in the second quarter. Excluding the effect of trade, the economy would have contracted at a 0.5 percent pace, instead of expanding 1.9 percent.
The trade gap with China widened to $21.4 billion from $21 billion in the prior month.
Boost Exports
Some U.S. lawmakers accuse China of keeping its currency undervalued to boost exports.
U.S. Treasury Secretary Henry Paulson, writing this month on the Web site of Foreign Affairs magazine, said yuan strengthening still has ``much further to go.'' Of the advance since a fixed-exchange rate ended in July 2005, Paulson said 70 percent has come about after he initiated semiannual economic talks with China in 2006.
The deficit with the Organization of Petroleum Exporting Countries expanded by $200 million to a record $18.1 billion.
The U.S. trade deficits with Canada, Japan and the European Union widened. The gap with Mexico shrank as exports to that country reached a record.
U.S. manufacturers have received a boost from export orders as economies overseas grew and the dollar weakened.
Caterpillar, the world's largest maker of earthmoving equipment, said July 22 that second-quarter profit climbed 34 percent, helped by demand in China and the Middle East. Developing markets this year may grow more than six times as fast as in North America, where the U.S. may find it hard ``to avoid a recession,'' Chief Executive Officer Jim Owens said in a statement.
Dollar's Rebound
As economic growth in Japan, Germany and other major trading partners weakens and the dollar rebounds, the outlook for exports has softened. The trade-weighted dollar index yesterday rose to the highest level since February.
Harvard University economist Martin Feldstein, a member of the committee that charts the American business cycles, said yesterday the U.S. dollar is cushioning the slowing in the economy and the currency has further to fall.
``Market pressures over time are going to put downward pressure on the dollar,'' Feldstein, who retired in June as president of the National Bureau of Economic Research, said in a Bloomberg Radio interview. ``A more competitive dollar has been the driving force in keeping'' gross domestic product expanding.
The Institute for Supply Management's index of new export orders for manufacturers fell to 54 last month, the lowest level this year. Fifty is the dividing line between expansion and contraction.
Aug. 12 (Bloomberg) -- The ruble surged the most in seven years, Russia's Micex Index climbed, and the cost of protecting the country's bonds fell the most in six weeks after President Dmitry Medvedev ordered a halt to military operations in Georgia.
The 30-stock Micex erased a decline of as much as 2 percent and oil extended its drop after Medvedev said military actions in Georgia had achieved the country's goals. The yield on Russia's benchmark 30-year bond decreased.
Investors shunned Russian assets on Aug. 8, sending stocks to a 22-month low, as the country sent tanks, troops and warplanes into Georgia in what it said was a response to an offensive on South Ossetia. Medvedev's comments today eased concern the conflict would draw Russia into confrontation with the U.S. and NATO.
``Medvedev's decision to halt Russia's military operations triggered some frenzied buying,'' said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London. ``There has also been some institutional money sitting on the sidelines waiting for the moment to commit, and the news headline provided it.''
The Micex added 3.2 percent to 1,457.64 at 3:41 p.m. in Moscow, trimming its 2008 drop to 23 percent. The dollar- denominated RTS Index rose 3.8 percent to 1,809.21.
The RTS Index is still the second-worst performer this quarter among 88 global equity indexes tracked by Bloomberg, sliding 21 percent since June 30. Only Peru's Lima General Index has posted a biggest decline.
Oil's Retreat
The Russian gauge tumbled 27 percent from a May 19 peak as oil retreated 23 percent from its July record and concern grew that the country's economy will slow as inflation accelerates.
Russian forces rolled deep into Georgia proper yesterday and took several towns and a military base. Georgian television showed footage today of burning buildings that it reported was a result of Russian bombing of the central city of Gori.
``The aggressor has been punished,'' Medvedev said on state television. Russia has secured the safety of Russian peacekeepers and citizens in the disputed Georgian regions of South Ossetia and Abkhazia, the president said.
Russia's currency rose as much as 1.2 percent to 24.1447 per dollar, its biggest jump since Jan. 4, 2001. It was recently at 24.2836 in Moscow, from 24.4246 late yesterday. Against the euro, the ruble rose as much 1.4 percent, the steepest gain since 2005.
Credit-default swaps on Russian debt dropped 9 basis points to 108, according to CMA Datavision prices at 11:06 a.m. in London. Contracts on Moscow-based OAO Gazprom, the world's biggest natural-gas producer, fell 9 basis points to 223.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality; a decline, the opposite.
The yield on Russia's benchmark 30-year bond dropped 3 basis points to 5.63 percent.
Crude oil for September delivery fell as much 1.7 percent to $112.48 a barrel in after-hours electronic trading on the New York Mercantile Exchange after Medvedev's comments.
OAO Sberbank, Russia's biggest bank, rose 7.1 percent to 68.80 rubles on the Micex Stock Exchange. Gazprom advanced 5.5 percent to 271.62 rubles.
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