North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "sworn enemy".

The announcement by the country's top military body came a day after the U.N. Security Council agreed to a U.S.-backed resolution to censure and sanction North Korea for a rocket launch in December that breached U.N. rules.

North Korea is not believed to have the technology to deliver a nuclear warhead capable of hitting the continental United States, although its December launch showed it had the capacity to deliver a rocket that could travel 10,000 km (6,200 miles), potentially putting San Francisco in range, according to an intelligence assessment by South Korea.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un, who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

China, the one major diplomatic ally of the isolated and impoverished North, agreed to the U.S.-backed resolution and it also supported resolutions in 2006 and 2009 after Pyongyang's two earlier nuclear tests.

Thursday's statement by North Korea represents a huge challenge to Beijing as it undergoes a leadership transition, with Xi Jinping due to take office in March.

China's Foreign Ministry called for calm and restraint and a return to six-party talks, but effectively singled out North Korea, urging the "relevant party" not to take any steps that would raise tensions.

"We hope the relevant party can remain calm and act and speak in a cautious and prudent way and not take any steps which may further worsen the situation," ministry spokesman Hong Lei told reporters at a regular press briefing.

North Korea has rejected proposals to restart the talks aimed at reining in its nuclear capacity. The United States, China, Russia, Japan and the two Koreas are the six parties involved.

"After all these years and numerous rounds of six-party talks we can see that China's influence over North Korea is actually very limited. All China can do is try to persuade them not to carry out their threats," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts said the North could test as early as February as South Korea prepares to install a new, untested president or that it could choose to stage a nuclear explosion to coincide with former ruler Kim Jong-il's Feb 16 birthday.

"North Korea will have felt betrayed by China for agreeing to the latest U.N. resolution and they might be targeting (China) as well (with this statement)," said Lee Seung-yeol, senior research fellow at Ewha Institute of Unification Studies in Seoul.

U.S. URGES NO TEST

Washington urged North Korea not to proceed with a third test just as the North's statement was published on Thursday.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul.

"We hope they don't do it. We call on them not to do it," Davies said after a meeting with South Korean officials. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

A South Korean military official said the concern now is that Pyongyang could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

North Korea's 2006 nuclear test using plutonium produced a puny yield equivalent to one kiloton of TNT - compared with 13-18 kilotons for the Hiroshima bomb - and U.S. intelligence estimates put the 2009 test's yield at roughly two kilotons

North Korea is estimated to have enough fissile material for about a dozen plutonium warheads, although estimates vary, and intelligence reports suggest that it has been enriching uranium to supplement that stock and give it a second path to the bomb.

According to estimates from the Institute for Science and International Security from late 2012, North Korea could have enough weapons grade uranium for 21-32 nuclear weapons by 2016 if it used one centrifuge at its Yongbyon nuclear plant to enrich uranium to weapons grade.

North Korea has not yet mastered the technology needed to make a nuclear warhead small enough for an intercontinental missile, most observers say, and needs to develop the capacity to shield any warhead from re-entry into the earth's atmosphere.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions that it sees as hostile.

The bellicose statement on Thursday appeared to dent any remaining hopes that Kim Jong-un, believed to be 30 years old, would pursue a different path from his father, Kim Jong-il, who oversaw the country's military and nuclear programs.

The older Kim died in December 2011.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Additional reporting by Christine Kim in SEOUL, Ben Blanchard and Sui-Lee Wee in Beijing; Writing by David Chance; Editing by Raju Gopalakrishnan and Ron Popeski)

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N.Korea threatens South over UN sanctions

SEOUL: North Korea on Friday threatened "physical counter-measures" against rival South Korea over a tightening of UN sanctions against Pyongyang following its recent rocket launch.

"If the South Korean puppet regime of traitors directly participates in the so-called UN 'sanctions', strong physical countermeasures would be taken," the North's Committee for Peaceful Reunification of Fatherland said.

The warning, carried by the official Korean Central News Agency, came a day after North Korea threatened to conduct its third nuclear test and boost its capacity for a military strike on the United States.

"Sanctions amount to a declaration of war against us," said the committee, which is the prime state body responsible for inter-Korean dialogue and exchange.

While Thursday's threat had firmly targeted the United States, the latest warning focused Pyongyang's anger on the capitalist South.

"As long as the South Korean puppet traitors' regime continues with it's anti-DPRK (North Korea) hostile policy, we will never sit down with them," it said.

- AFP/fa

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NRI initiative raises millions for educating India’s children

NEW DELHI: A group of Indian-Americans in New York attended an unusual black-tie dinner gala one November evening last year. Over a video link they chatted with students of a Pune slum school. This was one of many fundraisers hosted by voluntary organization Pratham USA. Its mission: Mobilize Indians in the US to get involved in its work.

The dinner was a success. More than 400, mostly those of Indian origin, pledged support to Pratham USA. On a single night, they donated $1.4million to educate tiny tots in India's impoverished pockets.

Pratham USA is an overseas arm of Pratham (India), working to ensure that "every child is in school and learning well". It's created a circle of giving where NRIs chip in with funds and expertise to strengthen the parent body's educational initiatives. One of the best-known names in education, NGO Pratham has been working with the government in 21 states to improve pre-school education, provide additional learning support to in-school and out-of-school children, mainstream school dropouts, provide vocational training and computer literacy to those from vulnerable backgrounds. It touches the lives of over 2 million students annually.

For many like Atul Varadhachary (50), one of Pratham USA's founders, the visible impact of Pratham's work and its dedicated staffers are motivating factors. "Many of us have family in India. It's satisfying when you go back and see the difference your support is making," Varadhachary, who moved to the US in 1987, said.

He brought his daughters, aged 15 and 11, from Houston to visit a Pratham school in Mumbai last year. Like him, many initial members such as Vijay Goradia, founder of Vinmar International, a $ 3billion global distributor of chemicals and polymer are involved in Pratham programmes. "We often network Pratham board members with educationists in the US. There are many commonalities in terms of challenges faced by students and principals and dialogue helps," says Varadhachary.

What started out as an informal network with a few hands in 2000 has now grown into a formal initiative involving 10,000 people across 14 US cities. They collectively generate over $11mn annually towards Pratham's work.

They have also roped in GenNext. Second-generation Indian migrants intern in Pratham balwadis and schools, volunteer ideas or money. Sharing his experience on the organization's website, 16-year-old Dhruv Kothari admits that a brush with the project made him realize how much he took for granted his education in a US school. He has been raising funds every time family and friends drop by at home and collected over $420 in a week. He followed it up with a fundraiser in his father's office which raked $550.

Madhav Chavan, co-founder of Pratham says the US body, has been a constant support. "When you interact with them you realize they are genuinely interested in the concrete impact of their work."

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Penalty could keep smokers out of health overhaul

WASHINGTON (AP) — Millions of smokers could be priced out of health insurance because of tobacco penalties in President Barack Obama's health care law, according to experts who are just now teasing out the potential impact of a little-noted provision in the massive legislation.

The Affordable Care Act — "Obamacare" to its detractors — allows health insurers to charge smokers buying individual policies up to 50 percent higher premiums starting next Jan. 1.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-year-old could wind up paying nearly $5,100 on top of premiums.

Younger smokers could be charged lower penalties under rules proposed last fall by the Obama administration. But older smokers could face a heavy hit on their household budgets at a time in life when smoking-related illnesses tend to emerge.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don't come with health insurance and would therefore depend on the new federal health care law. Smoking increases the risk of developing heart disease, lung problems and cancer, contributing to nearly 450,000 deaths a year.

Insurers won't be allowed to charge more under the overhaul for people who are overweight, or have a health condition like a bad back or a heart that skips beats — but they can charge more if a person smokes.

Starting next Jan. 1, the federal health care law will make it possible for people who can't get coverage now to buy private policies, providing tax credits to keep the premiums affordable. Although the law prohibits insurance companies from turning away the sick, the penalties for smokers could have the same effect in many cases, keeping out potentially costly patients.

"We don't want to create barriers for people to get health care coverage," said California state Assemblyman Richard Pan, who is working on a law in his state that would limit insurers' ability to charge smokers more. The federal law allows states to limit or change the smoking penalty.

"We want people who are smoking to get smoking cessation treatment," added Pan, a pediatrician who represents the Sacramento area.

Obama administration officials declined to be interviewed for this article, but a former consumer protection regulator for the government is raising questions.

"If you are an insurer and there is a group of smokers you don't want in your pool, the ones you really don't want are the ones who have been smoking for 20 or 30 years," said Karen Pollitz, an expert on individual health insurance markets with the nonpartisan Kaiser Family Foundation. "You would have the flexibility to discourage them."

Several provisions in the federal health care law work together to leave older smokers with a bleak set of financial options, said Pollitz, formerly deputy director of the Office of Consumer Support in the federal Health and Human Services Department.

First, the law allows insurers to charge older adults up to three times as much as their youngest customers.

Second, the law allows insurers to levy the full 50 percent penalty on older smokers while charging less to younger ones.

And finally, government tax credits that will be available to help pay premiums cannot be used to offset the cost of penalties for smokers.

Here's how the math would work:

Take a hypothetical 60-year-old smoker making $35,000 a year. Estimated premiums for coverage in the new private health insurance markets under Obama's law would total $10,172. That person would be eligible for a tax credit that brings the cost down to $3,325.

But the smoking penalty could add $5,086 to the cost. And since federal tax credits can't be used to offset the penalty, the smoker's total cost for health insurance would be $8,411, or 24 percent of income. That's considered unaffordable under the federal law. The numbers were estimated using the online Kaiser Health Reform Subsidy Calculator.

"The effect of the smoking (penalty) allowed under the law would be that lower-income smokers could not afford health insurance," said Richard Curtis, president of the Institute for Health Policy Solutions, a nonpartisan research group that called attention to the issue with a study about the potential impact in California.

In today's world, insurers can simply turn down a smoker. Under Obama's overhaul, would they actually charge the full 50 percent? After all, workplace anti-smoking programs that use penalties usually charge far less, maybe $75 or $100 a month.

Robert Laszewski, a consultant who previously worked in the insurance industry, says there's a good reason to charge the maximum.

"If you don't charge the 50 percent, your competitor is going to do it, and you are going to get a disproportionate share of the less-healthy older smokers," said Laszewski. "They are going to have to play defense."

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Online:

Kaiser Health Reform Subsidy Calculator — http://healthreform.kff.org/subsidycalculator.aspx

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North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "enemy".

The announcement by the country's top military body came a day after the United Nations Security Council agreed a U.S.-backed resolution to censure and sanction the country for a rocket launch in December that breached U.N. rules.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul as KCNA released its statement.

"We hope they don't do it. We call on them not to do it," Davies said. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

The concern now is that Pyongyang, whose only major diplomatic ally, China, endorsed the latest U.N. resolution, could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

Its previous tests have been viewed as limited successes and used plutonium, of which the North has limited stocks.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions.

Its long-range rockets are not seen as capable of reaching the United States mainland and it is not believed to have the technology to mount a nuclear warhead on a long-range missile.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Writing by David Chance; Editing by Raju Gopalakrishnan)

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Taiwanese activists head for Japan-controlled isles

TOKYO: A boatload of Taiwanese activists protected by the island's coastguard was on Thursday heading for Japanese-held islands at the centre of a bitter international wrangle involving Tokyo, Beijing and Taipei.

The seven activists left port in Taiwan on a fishing vessel in the early hours and were expected to arrive in the area around the uninhabited islands about noon (0400 GMT), Taiwanese coastguard spokesman Shih Yi-che said.

A coastguard official in Japan said the vessel was "sailing towards the Senkakus".

The islands in the East China Sea, whose seabed is believed to harbour valuable mineral reserves, are known as Senkaku in Japanese and Diaoyu in Chinese. Both China and Taiwan claim them.

The group said it was on its way to plant a statue of a sea goddess believed by coastal communities in the region to have the power to protect seafarers, but it was not clear if the activists would attempt to land.

It also intended to "maintain sovereignty" against Japan's control, said Hsieh Mang-lin, the Taiwanese chairman of the Chinese Association for Protecting the Diaoyutais (Diaoyu Islands), in a short statement.

Japanese broadcaster NHK reported that Taipei had dispatched six patrol boats to "monitor" the ship, adding it was the same one that had entered waters off the islands in July.

Taiwan's coastguard denied it was an organised flotilla.

"Coastguard ships that patrol the area routinely will protect the boat," said spokesman Shih, who declined to give the number of official Taiwanese vessels in the area.

"The coastguard will protect our people's voluntary actions to defend the Diaoyu islands. Coastguard vessels will go wherever the fishing boat is... to defend our sovereignty and protect our fishing rights," a statement said.

In September, coastguard vessels from Japan and Taiwan duelled with water cannon after dozens of Taiwanese boats were escorted by patrol ships into the islands' waters.

Earlier, Japanese media reports had said there were Hong Kong activists on board the boat, but a spokesman for the southern Chinese territory's main Diaoyu protest group told AFP it was not involved.

Previous activist landings have resulted in the arrest and deportation of those setting foot on what Japan says has been its indisputable territory for more than a century.

The rocky island outposts have been the scene of a diplomatic tussle between Japan and China for months.

Japan's government nationalised three of them in September by taking them out of private Japanese ownership.

Since then, Beijing has repeatedly sent government ships into the waters. In December, a Chinese government plane flew over them, leading Japan to scramble fighter jets.

Earlier this month, both militaries had jets in the area and Japanese newspapers have reported that Tokyo is mulling allowing its pilots to fire warning shots.

While most commentators believe Asia's two largest economies will find some way to work around the problem, which has rattled relations for decades, some are warning that a mis-step could lead to armed confrontation.

- AFP/al

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Is Akbaruddin Owaisi in a bad way?

HYDERABAD: In a development which could give the government sleepless nights, doctors attending on Akbaruddin Owaisi, the jailed MIM legislator, said his health was failing and the 41-year-old leader should be moved, at least, to a prison facility which is close to a multi-speciality hospital.

Owaisi junior is being treated at the Adilabad district hospital, which doctors said did not have modern medical facilities. "According to the last ultrasound done a few months ago, several abdominal adhesions, which are basically fibrous bands between tissues and organs were found and if this is not checked, it can quickly turn into sub-acute obstruction, which would need surgery," said Dr Verghese Muthai, a colorectal surgeon at Yashoda Hospital, Somajiguda.

"If left untreated for a long time, this can lead to full intestinal obstruction which is fatal," he added. Owaisi, who has been arrested for a hate speech delivered in Nirmal town last month, has been made to travel for hundreds of kilometres across three districts to appear before different courts after doctors in Adilabad said he was fit for travel.

Off late, his lawyers are moving bail petition on health grounds, which some observers say is quite common and the fact that he had happily attended party meetings regularly before he was jailed could be a further testimony to his fitness. "His health is not bad. He is okay. The stories of his bad health are being spread to get a quick bail," said a doctor who did not want to be named.

But what is perhaps making the government nervous is the absence of quality healthcare facilities in Adilabad and sources said that perhaps prompted authorities to move him to a guest house from the subjail where he was initially lodged.

Owaisi's case-sheet

Akbar suffering from abdominal adhesions.

Is due for three surgeries: For adhesions and hernia, tendon replacement in left arm and removal of bullet in thigh

Both kidneys working at sub-optimal levels

Also suffers from uticaria, a skin infection

Prone to drug allergies

Doc says should be shifted to a prison facility which is close to a multi-speciality hospital

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Women have caught up to men on lung cancer risk

Smoke like a man, die like a man.

U.S. women who smoke today have a much greater risk of dying from lung cancer than they did decades ago, partly because they are starting younger and smoking more — that is, they are lighting up like men, new research shows.

Women also have caught up with men in their risk of dying from smoking-related illnesses. Lung cancer risk leveled off in the 1980s for men but is still rising for women.

"It's a massive failure in prevention," said one study leader, Dr. Michael Thun of the American Cancer Society. And it's likely to repeat itself in places like China and Indonesia where smoking is growing, he said. About 1.3 billion people worldwide smoke.

The research is in Thursday's New England Journal of Medicine. It is one of the most comprehensive looks ever at long-term trends in the effects of smoking and includes the first generation of U.S. women who started early in life and continued for decades, long enough for health effects to show up.

The U.S. has more than 35 million smokers — about 20 percent of men and 18 percent of women. The percentage of people who smoke is far lower than it used to be; rates peaked around 1960 in men and two decades later in women.

Researchers wanted to know if smoking is still as deadly as it was in the 1980s, given that cigarettes have changed (less tar), many smokers have quit, and treatments for many smoking-related diseases have improved.

They also wanted to know more about smoking and women. The famous surgeon general's report in 1964 said smoking could cause lung cancer in men, but evidence was lacking in women at the time since relatively few of them had smoked long enough.

One study, led by Dr. Prabhat Jha of the Center for Global Health Research in Toronto, looked at about 217,000 Americans in federal health surveys between 1997 and 2004.

A second study, led by Thun, tracked smoking-related deaths through three periods — 1959-65, 1982-88 and 2000-10 — using seven large population health surveys covering more than 2.2 million people.

Among the findings:

— The risk of dying of lung cancer was more than 25 times higher for female smokers in recent years than for women who never smoked. In the 1960s, it was only three times higher. One reason: After World War II, women started taking up the habit at a younger age and began smoking more.

—A person who never smoked was about twice as likely as a current smoker to live to age 80. For women, the chances of surviving that long were 70 percent for those who never smoked and 38 percent for smokers. In men, the numbers were 61 percent and 26 percent.

—Smokers in the U.S. are three times more likely to die between ages 25 and 79 than non-smokers are. About 60 percent of those deaths are attributable to smoking.

—Women are far less likely to quit smoking than men are. Among people 65 to 69, the ratio of former to current smokers is 4-to-1 for men and 2-to-1 for women.

—Smoking shaves more than 10 years off the average life span, but quitting at any age buys time. Quitting by age 40 avoids nearly all the excess risk of death from smoking. Men and women who quit when they were 25 to 34 years old gained 10 years; stopping at ages 35 to 44 gained 9 years; at ages 45 to 54, six years; at ages 55 to 64, four years.

—The risk of dying from other lung diseases such as emphysema and chronic bronchitis is rising in men and women, and the rise in men is a surprise because their lung cancer risk leveled off in 1980s.

Changes in cigarettes since the 1960s are a "plausible explanation" for the rise in non-cancer lung deaths, researchers write. Most smokers switched to cigarettes that were lower in tar and nicotine as measured by tests with machines, "but smokers inhaled more deeply to get the nicotine they were used to," Thun said. Deeper inhalation is consistent with the kind of lung damage seen in the illnesses that are rising, he said.

Scientists have made scant progress against lung cancer compared with other forms of the disease, and it remains the leading cause of cancer deaths worldwide. More than 160,000 people die of it in the U.S. each year.

The federal government, the Canadian Institutes of Health Research, the Bill and Melinda Gates Foundation, the cancer society and several universities paid for the new studies. Thun testified against tobacco companies in class-action lawsuits challenging the supposed benefits of cigarettes with reduced tar and nicotine, but he donated his payment to the cancer society.

Smoking needs more attention as a health hazard, Dr. Steven A. Schroeder of the University of California, San Francisco, wrote in a commentary in the journal.

"More women die of lung cancer than of breast cancer. But there is no 'race for the cure' for lung cancer, no brown ribbon" or high-profile advocacy groups for lung cancer, he wrote.

Kathy DeJoseph, 62, of suburban Atlanta, finally quit smoking after 40 years — to qualify for lung cancer surgery last year.

"I tried everything that came along, I just never could do it," even while having chemotherapy, she said.

It's a powerful addiction, she said: "I still every day have to resist wanting to go buy a pack."

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Online:

American Cancer Society: http://www.cancer.org

National Cancer Institute: http://www.cancer.gov/cancertopics/tobacco/smoking and http://www.cancer.gov/cancertopics/types/lung

Medical journal: http://www.nejm.org

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Al Qaeda Commander Killed for the 3rd Time

The second in command of al Qaeda's Yemen affiliate was reportedly killed in an airstrike in Yemen in December, according to a news report by Arabic television network Al Arabiya, the third time the former Guantanamo detainee has been reported dead since 2010.

According to the report, Said al-Shihri died last month after sustaining severe injuries from a joint U.S.-Yemeni airstrike that targeted a convoy in which he was riding. The al Arabiya account, based on information from "family sources," said that the airstrike left al-Shihri in a coma. He allegedly died soon after and was buried in Yemen.

On Tuesday afternoon, hours after the initial report, a Yemeni government official denied having any information regarding the death of al-Shihri, according to Arabic news site al-Bawaba.

No photos of a body have yet surfaced and no mention of his death has appeared on jihadi forums.
This is the third time al-Shihri, the second in command of al Qaeda in the Arabian Peninsula (AQAP), has been reported killed since 2009. In 2010, the Yemeni government claimed it had captured him. In September 2012, Yemeni news sites reported he was killed in an American drone strike.

PHOTOS: Terrorists Who Came Back from the Grave

READ: Gitmo Detainee turned terror commander killed: Reports

Al-Shihri, a "veteran jihadist," traveled to Afghanistan shortly after the Sept. 11, 2001 terror attacks to fight coalition troops, only to be captured weeks later, according to West Point's Combating Terrorism Center. He was sent to the U.S. prison in Guantanamo Bay, Cuba, where he stayed for six years before being released to Saudi Arabia. There, he entered a so-called "jihadi rehab" program that attempted to turn terrorists into art students by getting them to get "negative energy out on paper," as the program's director told ABC News in 2009.

READ: Trading Bombs for Crayons: Terrorists Get 'Art Therapy'

But just months after he supposedly entered the fingerpainting camp, al-Shihri reappeared in Yemen where he was suspected to have been behind a deadly bombing at the U.S. embassy there.

At the time, critics of the "jihadi rehab" program used al-Shihri as evidence that extremists would just go through the motions in order to be freed.

Click Here for the Blotter Homepage.

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Netanyahu turns to Iran after narrow election win

JERUSALEM (Reuters) - Hawkish Prime Minister Benjamin Netanyahu claimed victory in Israel's parliamentary election, shrugging off surprise losses to centre-left challengers and vowing on Wednesday to stop Iran from acquiring nuclear weapons.

However, Tuesday's vote, which also disappointed religiously inspired hardliners, may deflect the premier's focus on confronting Tehran and resisting Palestinian demands as Israel's secular, middle-class demanded new attention to domestic issues.

That, in turn, might draw Netanyahu toward a less fractious relationship with his key ally, U.S. President Barack Obama, who himself embarked on a new term this week with great ambitions.

Exit polls showed the Israeli leader's right-wing Likud and the ultra-nationalist Yisrael Beitenu would remain the biggest bloc in the 120-member assembly, but with only 31 seats, 11 fewer than the 42 the two parties held in the last parliament.

If the exit polls compiled by three local broadcasters prove correct - and they normally do in Israel - Netanyahu would be on course for a third term in office, perhaps leading a hardline coalition that would promote Jewish settlement on occupied land.

But his weakened showing in a vote which he had called nine months early in the hope of a strong mandate for his struggle with Iran, could complicate his efforts to forge an alliance with a stable and substantial majority in parliament.

"I am proud to be your prime minister, and I thank you for giving me the opportunity, for the third time, to lead the state of Israel," the 63-year-old leader told a cheering crowd in the early hours of Wednesday at his campaign headquarters.

Netanyahu said he planned to form as broad a governing coalition as possible, suggesting he would seek partners beyond his traditional ultra-nationalist and religious allies. His first call may be to Yair Lapid, a former television anchorman whose centrist, secular party came from nowhere to second place.

"The first challenge was and remains preventing Iran from obtaining nuclear weapons," Netanyahu said.

Iran denies it is planning to build an atomic bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

Netanyahu views Tehran's nuclear program as a threat to Israel's existence and has stoked international concern by hinting at possible Israeli military action to thwart it.

He has shunted Palestinian peacemaking well down the agenda despite Western concern to keep the quest for a solution alive.

The projections showed right-wing parties with a combined strength of 61-62 seats against 58-59 for the centre-left.

Lapid's Yesh Atid (There is a Future) party should have 18 or 19 seats, exit polls showed - a stunning result for a newcomer to politics in a field of 32 contending parties.

Lapid won support amongst middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.

He urged Netanyahu "to build as broad a government as possible so that we can bring about real change in Israel".

The once dominant Labor party led by Shelly Yachimovich was projected to take third place with 17 seats. She described Likud victory claims as "ridiculous" before final results were in.

"There is a very good chance, a very good chance, that tomorrow morning Benjamin Netanyahu will not be able to form a government," she declared at her party headquarters.

Reconciling views to build a cabinet will certainly be hard.

"YESH ATID SWEEP"

Some in Netanyahu's party acknowledged that the election had gone somewhat awry. "We anticipated we would lose some votes to Lapid, but not to this extent. This was a Yesh Atid sweep," Likud campaign adviser Ronen Moshe told Reuters.

Lapid said before the election he would consider joining a Netanyahu-led government. If that happens, the ultra-Orthodox religious parties which often hold the balance of power in parliament might lose some of their leverage.

After a lackluster campaign, Israelis voted in droves on a sunny winter day, registering a turnout of 66.6 percent, the highest since 2003. That buoyed centre-left parties which had pinned their hopes on energizing an army of undecided voters against Netanyahu and his nationalist-religious allies.

"A big majority of middle class Israelis have voted strongly against the priorities of the last government," said Dan Avnon, a political science professor at Hebrew University.

"These are the people who pay the taxes and serve in the army," he said. "I don't think they can be ignored."

Opinion polls before the election had predicted an easy win for Netanyahu, although the last ones suggested he would lose some votes to the Jewish Home party, which opposes a Palestinian state and advocates annexing chunks of the occupied West Bank.

The exit polls projected 12 seats for Jewish Home.

The biggest casualty was the centrist Kadima party, which was projected to win no seats at all. It had gained the highest number in the previous election in 2009, although its then leader Tzipi Livni failed to put together a governing coalition.

Full election results are due by Wednesday morning and official ones will be announced on January 30. After that, President Shimon Peres is likely to ask Netanyahu, as leader of the biggest bloc in parliament, to try to form a government.

WESTERN ANXIETY

Whatever permutation finally emerges, a Netanyahu-led government is likely to resist any push for a peace deal with the Palestinians that would come anywhere near satisfying the moderates who seek a viable independent state alongside Israel.

Naftali Bennet, high-tech millionaire son of American immigrants who leads the hard-right, pro-settler Jewish Home party, was projected to win 12 seats - disappointing for him but still making his group a likely member of a coalition.

Bennet, who advocates annexing West Bank land to Israel, told cheering supporters: "There is only one truth and it is simple. The Land of Israel belongs to the people of Israel."

Britain warned Israel on Tuesday it was losing international support, saying Jewish settlement expansion had almost killed off prospects for a two-state solution.

U.S.-brokered peace talks broke down in 2010 amid mutual acrimony. Since then Israel has accelerated construction in the West Bank and east Jerusalem - land the Palestinians want for their future state - much to the anger of Western partners.

Netanyahu's relations with Obama have been notably tense and Martin Indyk, former U.S. ambassador to Israel, told the BBC the election was unlikely to change that.

"President Obama doesn't have high expectations that there's going to be a government in Israel committed to making peace and is capable of the kind of very difficult and painful concessions that would be needed to achieve a two-state solution," he said.

But Aaron David Miller, once a senior U.S. adviser on the peace process, said a weakening of the right might improve ties: "The fact is, if (Netanyahu) goes with Lapid and he reaches out to the centre, you're going to end up with an American-Israeli rapprochement to a certain degree," Miller told CNN.

Tuesday's vote was the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu has said the turbulence, which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt, shows the importance of strengthening national security.

Foreign policy issues barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

A major problem for the next government, which is unlikely to take power before mid-March, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(Reporting by Jerusalem bureau; Editing by Alastair Macdonald)

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