Texas school can force teenagers to wear locator chip: judge

SAN ANTONIO (Reuters) - A public school district in Texas can require students to wear locator chips when they are on school property, a federal judge ruled on Tuesday in a case raising technology-driven privacy concerns among liberal and conservative groups alike.
U.S. District Judge Orlando Garcia said the San Antonio Northside School District had the right to expel sophomore Andrea Hernandez, 15, from a magnet school at Jay High School, because she refused to wear the device, which is required of all students.
The judge refused the student's request to block the district from removing her from the school while the case works its way through the federal courts.
The American Civil Liberties Union is among the rights organizations to oppose the district's use of radio frequency identification, or RFID, technology.
"We don't want to see this kind of intrusive surveillance infrastructure gain inroads into our culture," ACLU senior policy analyst Jay Stanley said. "We should not be teaching our children to accept such an intrusive surveillance technology."
The district's RFID policy has also been criticized by conservatives, who call it an example of "big government" further monitoring individuals and eroding their liberties and privacy rights.
The Rutherford Institute, a conservative Virginia-based policy center that represented Hernandez in her federal court case, said the ruling violated the student's constitutional right to privacy, and vowed to appeal.
The school district - the fourth largest in Texas with about 100,000 students - is not attempting to track or regulate students' activities, or spy on them, district spokesman Pascual Gonzalez said. Northside is using the technology to locate students who are in the school building but not in the classroom when the morning bell rings, he said.
Texas law counts a student present for purposes of distributing state aid to education funds based on the number of pupils in the classroom at the start of the day. Northside said it was losing $1.7 million a year due to students loitering in the stairwells or chatting in the hallways.
The software works only within the walls of the school building, cannot track the movements of students, and does not allow students to be monitored by third parties, Gonzalez said.
The ruling gave Hernandez and her father, an outspoken opponent of the use of RFID technology, until the start of the spring semester later this month to decide whether to accept district policy and remain at the magnet school or return to her home campus, where RFID chips are not required.

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US sees Iran behind hostage photos of ex-FBI agent

WASHINGTON (AP) — Two years after a hostage video and photographs of retired FBI agent Robert Levinson raised the possibility that the missing American was being held by terrorists, U.S. officials now see the government of Iran behind the images, intelligence officials told The Associated Press.
Levinson, a private investigator, disappeared in 2007 on the Iranian island of Kish. The Iranian government has repeatedly denied knowing anything about his disappearance, and the disturbing video and photos that Levinson's family received in late 2010 and early 2011 seemed to give credence to the idea.
The extraordinary photos — showing Levinson's hair wild and gray, his beard long and unkempt — are being seen for the first time publicly after the family provided copies to the AP. The video has been previously released.
In response to Iran's repeated denials, and amid secret conversations with Iran's government, Secretary of State Hillary Clinton said in a statement in March 2011 that Levinson was being held somewhere in South Asia. The implication was that Levinson might be in the hands of terrorist group or criminal organization somewhere in Pakistan or Afghanistan.
The statement was a goodwill gesture to Iran, one that the U.S. hoped would prod Tehran to help bring him home.
But nothing happened.
Two years later, with the investigation stalled, the consensus now among some U.S. officials involved in the case is that despite years of denials, Iran's intelligence service was almost certainly behind the 54-second video and five photographs of Levinson that were emailed anonymously to his family. The tradecraft used to send those items was too good, indicating professional spies were behind them, the officials said, speaking on the condition of anonymity because they weren't authorized to talk publicly. While everything dealing with Iran is murky, their conclusion is based on the U.S. government's best intelligence analysis.
The photos, for example, portray Levinson in an orange jumpsuit like those worn by detainees at the U.S. prison at Guantanamo Bay. The family received them via email in April 2011. In each photo, he held a sign bearing a different message.
"I am here in Guantanamo," one said. "Do you know where it is?"
Another read: "This is the result of 30 years serving for USA."
Iranian President Mahmoud Ahmadinejad has personally and repeatedly criticized the U.S. over its detention facility at Guantanamo Bay.
U.S. operatives in Afghanistan managed to trace the cellphone used to send the photographs, officials said. But the owner had nothing to do with the photos, and the trail went cold.
It was that way, too, with the hostage video the family received. It was sent from a cyber cafe in Pakistan in November 2010. The video depicted a haggard Levinson, who said he was being held by a "group." In the background, Pashtun wedding music can be heard. The Pashtun people live primarily in Pakistan and Afghanistan, just across Iran's eastern border.
Yet the sender left no clues to his identity and never used that email address again.
Whoever was behind the photos and video was no amateur, U.S. authorities concluded. They made no mistakes, leading investigators to conclude it had to be a professional intelligence service like Iran's Ministry of Intelligence and Security.
Levinson's wife, Christine, provided the photos to The Associated Press because she felt her husband's disappearance was not getting the attention it deserves from the government.
"There isn't any pressure on Iran to resolve this," she said. "It's been much too long."
Though U.S. diplomats and the FBI have tried behind the scenes to find Levinson, of Coral Springs, Fla., and bring him home, both presidents George W. Bush and Barack Obama have said little about his case and have applied little public pressure on Iran for more information about Levinson's whereabouts.
Christine Levinson has watched more public pressure result in Iran's release of a trio of hikers, a journalist named Roxana Saberi and a team of British sailors captured by the Iranian Navy. Everyone has come home except her husband.
Washington's quiet diplomacy, meanwhile, has yielded scant results beyond the Iranian president's promise to help find Levinson.
"We assumed there would be some kind of follow-up and we didn't get any," Christine Levinson said. "After those pictures came, we received nothing."
In one meeting between the two countries, the Iranians told the U.S. that they were looking for Levinson and were conducting raids in Baluchistan, a mountainous region that includes parts of Pakistan, Iran and Afghanistan, U.S. officials said. But the U.S. ultimately concluded that the Iranians made up the story. There were no raids, and officials determined that the episode was a ruse by Iranian counterintelligence to learn how U.S. intelligence agencies work.
In a statement late Tuesday, Alireza Miryusefi, a spokesman for Iran's U.N. Mission, said the Iranian government has been assisting the Levinson family to find the ex-FBI agent. "Even his family traveled to Iran and were accommodated by the government. Further investigation proved that Levinson is not in Iran and there is no single evidence that he is in Iran."
The spokesman added: "It is a very important to find an FBI agent who had traveled to a free zone of Iran, which if he is found, then the U.S. should explain why the said agent has been sent to Iran and what was his mission."
An expert on Russian organized crime, Levinson retired from the FBI in 1998 and became a private investigator. He was investigating cigarette smuggling in early 2007, and his family has said that took him to the Iranian island of Kish, where he was last seen. Kish is a popular resort area and a hotbed of smuggling and organized crime. It is also a free trade zone, meaning U.S. citizens do not need visas to travel there.
FBI spokeswoman Jacqueline Maguire said: "As we near the sixth anniversary of his disappearance, the FBI remains committed to bringing Bob home safely to his family."
In an interview, Levinson's wife said that because her husband disappeared in Iran, she believes her husband is still being held there. She doesn't think the U.S. government has put enough pressure on Iran to release her husband.
"It needs to come front and center again," Levinson said. "There needs to be a lot more public outcry."
She said she has met with Obama and John Brennan, Obama's counterterrorism czar and nominee to run the CIA. She said that both men pledged to do everything they could to free her husband. Now, nearly six years after his disappearance, she thinks Iran is being let off the hook.
"He's a good man," she said. "He just doesn't deserve this."
Meanwhile, Robert Levinson will miss another family milestone when his oldest daughter Susan gets married in February.
"He's missed so many," his wife said. "It's very upsetting.

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Debt ceiling no place for stand on spending: Nasdaq's Greifeld

NEW YORK (Reuters) - The U.S. borrowing limit should not be used as leverage by members of Congress to force the Obama administration to cut spending as there will be other opportunities to make a stand, said Robert Greifeld, chief executive of Nasdaq OMX Group.
The debt ceiling, which could be hit as early as mid-February, has been dragged into a high-stakes fiscal battle snarling Washington, with Republicans refusing to raise it unless Democrats agree to deep spending cuts to tame the ballooning national debt. Neither side is giving much ground.
"The full faith and credit of the U.S. government is an important concept that we should not violate, because these are debts that have been incurred and are coming due, so it is just not right," Greifeld said in an interview on Tuesday.
A failure by Washington to reach a deal to increase the $16.4 trillion legal limit on the nation's debt raises the threat of a U.S. default, another credit downgrade and a panic in the financial markets.
Greifeld is one of more than 100 CEOs who are part of a group called "Campaign to Fix the Debt." The group has been pushing Congress to work together to create a long-term plan to get the federal deficit under control through both increased taxes and spending cuts.
TRIPLE FISCAL FIASCO
Fix the Debt mounted a media blitz in the two months leading up to the so-called fiscal cliff - a package of automatic tax increases and indiscriminate spending cuts scheduled to start at the beginning of the year that threatened to push the nation back into recession, until averted by last-minute legislation.
During the media campaign, the business leaders lined up to say it was okay to raise taxes on the wealthy, but that spending cuts in programs such as Medicare and Social Security were needed as well to put the United States on a more sound fiscal footing.
But the 11th-hour bill, which included tax hikes on household incomes over $450,000, pushed forward the decision on spending cuts, known as the "sequester," by two months, setting up another, possibly more damaging scenario.
In late February-early March, the delay in the sequester ends, the federal government hits its borrowing limit, and authorization for the federal budget runs out.
Erskine Bowles, a former chief of staff to Bill Clinton who along with former Republican senator Alan Simpson founded Fix the Debt, called it "a triple fiscal fiasco."
"If you think you saw uncertainty and concern when we were facing the fiscal cliff, man, you haven't seen anything yet," Bowles told reporters at a press conference at Nasdaq's MarketSite in New York.
SEVERELY DISAPPOINTED
Raising the debt ceiling periodically has not traditionally been a major issue, as government must account for the deficits resulting from its tax and spending decisions.
But last August was an exception. Congress attempted to make spending cuts a condition of raising the debt ceiling, causing volatility in the markets as the United States was pushed to the brink of default and its credit rating was cut.
Greifeld said he and other CEOs were "severely disappointed" that meaningful spending cuts were not addressed in the fiscal cliff negotiations, but that they are hopeful a more balanced approach will be taken in the near future. There will also be other opportunities to force the issue.
"The sequester - we kind of stand out there as the place to make a stand. The debt ceiling is not the place to do it," he said.

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Google executive chairman arrives in North Korea

PYONGYANG, North Korea (AP) — Google's chairman wants a firsthand look at North Korea's economy and social media landscape during his private visit Monday to the communist nation, his delegation said, despite misgivings in Washington over the timing of the trip.
Eric Schmidt, executive chairman of one of the world's biggest Internet companies, is the highest-profile U.S. executive to visit North Korea — a country with notoriously restrictive online policies — since young leader Kim Jong Un took power a year ago. His visit has drawn criticism from the U.S. State Department because it comes only weeks after a controversial North Korean rocket launch; it has also prompted speculation about what the businessman hopes to accomplish.
Schmidt arrived on a commercial Air China flight with former New Mexico Gov. Bill Richardson, who has traveled more than a half-dozen times to North Korea over the past 20 years.
Richardson, speaking ahead of the flight from Beijing, called the trip a private, humanitarian mission.
"This is not a Google trip, but I'm sure he's interested in some of the economic issues there, the social media aspect. So this is why we are teamed up on this," Richardson said without elaborating on what he meant by the "social media aspect."
"We'll meet with North Korean political leaders. We'll meet with North Korean economic leaders, military. We'll visit some universities. We don't control the visit. They will let us know what the schedule is when we get there," he said.
U.S. officials have criticized the four-day trip. North Korea on Dec. 12 fired a satellite into space using a long-range rocket. Washington condemned the launch, which it considers a test of ballistic missile technology, as a violation of U.N. Security Council resolutions barring Pyongyang from developing its nuclear and missile programs. The Security Council is deliberating whether to take further action.
"We continue to think the trip is ill-advised," State Department spokeswoman Victoria Nuland told reporters Monday, reiterating the U.S. position that the visit is badly timed. However she added that the government would be open to hearing from the delegation after they return from North Korea.
The trip was planned well before North Korea announced its plans to send a satellite into space, two people with knowledge of the delegation's plans told The Associated Press. AP first reported the group's plans last Thursday.
Schmidt, a staunch proponent of Internet connectivity and openness, is expected to make a donation during the visit, while Richardson will try to discuss the detainment of a U.S. citizen jailed in Pyongyang, members of the delegation told AP. They asked not to be named, saying the trip was a private visit.
"We're going to try to inquire the status, see if we can see him, possibly lay the groundwork for him coming home," Richardson said of the U.S. citizen. "I heard from his son who lives in Washington state, who asked me to bring him back. I doubt we can do it on this trip."
The visit comes just days after Kim, who took power following the Dec. 17, 2011, death of his father, Kim Jong Il, laid out a series of policy goals for North Korea in a lengthy New Year's speech. He cited expanding science and technology as a means to improving the country's economy as a key goal for 2013.
North Korea's economy has languished for decades, particularly after the collapse of the Soviet Union, which since the mid-1940s had provided the country with an economic safety net. North Korea, which has very little arable land, has relied on outside help to feed its people since a famine in the 1990s.
In recent years, North Korea has aimed to modernize its farms and digitize its factories. Farmers told the AP that management policies were revamped to encourage production by providing workers with incentives.
Computer and cellphone use is gaining ground in North Korea's larger cities.
However, most North Koreans only have access to a domestic Intranet system, not the World Wide Web. For North Koreans, Internet use is still strictly regulated and allowed only with approval.
Schmidt, who oversaw Google's expansion into a global Internet giant, speaks frequently about the importance of providing people around the world with Internet access and technology.
Google now has offices in more than 40 countries, including all three of North Korea's neighbors: Russia, South Korea and China, another country criticized for systematic Internet censorship.
Accompanying Schmidt is Jared Cohen, a former U.S. State Department policy and planning adviser who heads Google's New York-based think tank. The two collaborated on a book about the Internet's role in shaping society called "The New Digital Age" that comes out in April.
Also leading the delegation is Kun "Tony" Namkung, a Korea expert who has made frequent trips to North Korea over the past 25 years and has worked as a consultant for The Associated Press.

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Softer liquidity rules lift Europe's banks

LONDON (Reuters) - French and German bank shares rose on Monday after regulators softened draft rules aimed at preventing a Lehman Brothers-style collapse that critics said threatened to delay a European economic recovery.
Global regulators on Sunday gave banks four more years and greater flexibility to improve their funding positions, due to fears that an earlier plan for new liquidity rules would have made them reluctant to lend, particularly in Europe where credit conditions are already tough.
Europe's bank index <.sx7p> rose 1.1 percent to 172 points by 1600 GMT, after hitting 173.7, its highest in 17 months. France's Societe Generale and Credit Agricole , Germany's Deutsche Bank , Italy's Unicredit and Britain's Barclays all rose by more than 2 percent.
"This is a clear sign that regulators are adapting to the changing economic environment," said Carla Antunes-Silva, analyst at Credit Suisse.
Global financial regulators have tightened bank rules since the 2008 financial crisis and the liquidity coverage ratio (LCR) will be the first global liquidity standard when it comes into force from 2015. It aims to safeguard taxpayers by ensuring banks hold easily tradeable assets to keep them afloat if markets freeze up.
The pullback from an earlier draft at a meeting in Basel on Sunday went further than many analysts had expected.
The regulators decided to allow a wider pool of assets to count as highly liquid, including good quality corporate bonds, some equities and retail mortgage-backed securities (RMBS). They also changed their estimates for the outflow of deposits in a "stressed" situation and agreed that the standards will be phased in from 2015 and not fully implemented until 2019.
The changes could give a lift to earnings for banks across the board, with firms in a weaker funding position now under less strain to conform, and banks with better funding probably able to reduce their surplus liquidity and cut interest payments, analysts said.
LOW YIELD
European banks such as Societe Generale, Credit Agricole, Deutsche Bank and Commerzbank risked having to build up bigger holdings of low-risk and low-yielding government bonds, so the relaxation in the planned rules should cut the increase in interest rates they face.
The cost of holding those extra assets could have run to tens of billions of euros for the industry.
"This is significant progress which addresses issues already raised by the European Commission," said EU Commissioner Michel Barnier.
The rules will be formally implemented under EU law in 2015, he said.
The French Banking Federation said the changes were a "step in the right direction" and should reduce constraints on banks' ability to lend. German and British bank groups welcomed the changes, particularly the expansion of assets that can be used.
The changes should also allow stronger banks to cut surplus liquidity they hold, allowing them to benefit from shifting from cash or governments bonds into assets that pay higher interest.
Barclays, for example, had a liquidity pool of 160 billion pounds ($257 billion) at the end of September, giving it an LCR of just below 100 percent under the proposed rules. Under the relaxed rules, 30 billion pounds of that could be considered surplus liquidity and release about 300 million pounds in annual interest costs, analysts at Espirito Santo estimated.
A liquidity rule could have prevented the short-term funding freeze that brought down lenders like U.S. investment bank Lehman Brothers and UK mortgage lender Northern Rock during the 2007-09 crisis.
But banks and some regulators had warned the original plan could spark another huge wave of deleveraging.
Banks are still restructuring and shrinking their balance sheets. Euro zone banks are two-thirds through their deleveraging process and are likely to shed another 132 billion euros of assets this year, Ernst & Young estimated on Monday, and regulators want to stop that retreat being too aggressive.
The liquidity rules will run alongside tougher capital rules - covering the amount banks have to hold to absorb losses - and could have forced banks to cut back on domestic lending.
The Basel Committee, made up of financial regulators from nearly 30 countries, said Sunday's changes mean the average LCR at the world's top 200 banks would rise to 125 percent from 105 percent under the old rules, putting it well above full compliance.
But there is wide range of liquidity across the banks.
If the original plan had been in force at the end of 2011, banks would have needed 1.8 trillion euros more liquidity, or about 3 percent of their assets, the Basel Committee estimated. Two-thirds of that shortfall would have been in Europe.
Some 38 percent of the banks would have had a ratio of below 75 percent - above the 60 percent level they now need to reach by 2015, but below the 100 percent standard set for 2019.
Analysts said major banks are likely to remain under pressure from investors to fully meet the rules by 2015, so the main winners of the longer time-frame will be smaller euro zone banks who were struggling to get cheap funding.
Widening the pool of assets should boost the market for RMBS and ease the pressure on banks to hold government bonds, after the euro zone crisis showed their risks to banks and sovereigns.
But the changes may have a muted impact on attempts to kick-start economic growth, as there remains scant appetite to take on debt, economists warned.

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Egypt talking to IMF again about crucial loan

 Doubts are emerging about the Egyptian government's ability to implement painful austerity measures linked to the International Monetary Fund's critical $4.8 billion loan that could stop an economic collapse.
A top IMF official began talks in Cairo Monday, the latest in the drawn-out negotiations for the loan. The government is confident that the loan would not only cover part of its huge deficit, but also, it would signal to investors that Egypt is again a safe bet after two years of turmoil that started with the 2011 uprising that unseated longtime President Hosni Mubarak.
But the Islamist government that replaced Mubarak has already had to postpone final talks on the loan because it was unable to carry out the first steps required by the IMF. President Mohammed Morsi of the Muslim Brotherhood announced some of the measures, including tax increases, but quickly rescinded them over unrest surrounding his proposed constitution, perceived as pro-Islamist.
Now, with parliamentary elections upcoming, critics doubt Morsi will want to — or be able to — implement measures that could stoke new public anger, like cuts in subsidies for fuel and food that allow millions of Egyptians to survive despite their meager incomes.
Despite economic growth in Mubarak's last years in office, poverty deepened. About 40 percent of Egypt's people live near or under the international poverty line of $2 a day.
The head of the IMF's Middle East and Central Asia Department, Masood Ahmed, met Monday with Morsi and his prime minister ahead of the technical talks due to start soon.
Masood's visit comes a day after Prime Minister Hesham Kandil named a new finance minister, aiming to tackle Egypt's deteriorating economy.
The numbers are daunting. The budget deficit from July to November last year reached about $13 billion, compared to $9.5 billion in the same period last year.
The government admitted that its foreign currency reserves are at a critical level — enough for only three months of vital imports. Reserves have plummeted over the past two years, as foreign investment and tourism have dried up.
According to the new constitution, Morsi has to call for new parliamentary elections within the next two months. The parliament to be chosen would be the first to flesh out the constitution with legislation, making its composition — the proportion of Islamists to secular and liberal parties — crucial to the nation's future.
Critics warn that Morsi, as a politician, would be hesitant to impose austerity measures that could further inflame sentiment against the Brotherhood, already losing support because of Egypt's troubles an opposition suspicious of the group's attempt to monopolize power.
"They are in a very difficult situation," said Ahmed Shokr, a founding member of Drop Egypt's Debt Campaign. "They are trying to demonstrate to the IMF they are committed to this program, but on the other hand don't want to do it too quickly ahead of coming elections. I expect whatever they introduce will be very gradual."
Brotherhood officials acknowledge the seriousness of the economic situation and its impact on their popularity.
"The government must take these measures. They can't be postponed, even if they have a negative impact on the party," said Mohammed Gouda, an economic expert in the Brotherhood's political arm, the Freedom and Justice Party. He added, "I have to deal with" the consequences.
After Morsi rescinded the first round of tax hikes on items like cooking oil, alcohol and cigarettes, the government offered a social dialogue on the economy. Gouda predicted some of the taxation measures might be altered after discussion with those involved.
Already the government has introduced a system designed to control the devaluation of the currency, long propped up by foreign currency reserves that are now too depleted to continue. Under an auction system, Egypt's central bank sold $360 million, allowing the currency to lose about 5 percent of its value in recent days
A devaluation has been anticipated as part of the talks with the IMF, but it is likely to further harm Egypt's trade deficit, because the country relies on imports for much of its basic food, including wheat, sugar and tea.
Samer Atallah, a professor of economics at the American University in Cairo, warned of implications from the negotiations for the loan.
"The whole process has been lacking transparency, and they put themselves in a difficult position without the political consensus needed to sell this to the public," he said. "I think austerity measures are extremely difficult to carry out before any elections, even with the Brotherhood's ability to mobilize" voters.
Fady Mohammed, a 21-year-old student who works on awareness campaigns in low-income neighborhoods, said discussions with people there focus on frustration at lack of change in their living conditions, two years after the ouster of Mubarak.
"Many say neither the Brotherhood nor the revolutionaries have done them any good," Mohammed said. "People feel that the government never takes the side of the poor and is more concerned about establishing control."
Gouda had no good news for the impoverished. He said years of poor economic policies were bound to hit Egyptians hard.
"We will have to rely on local civil groups and charities to compensate some of the low-income groups," he said.

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Northern Irish militants seen hijacking flag protests

Pro-British militant groups are instigating riots that have rocked the Northern Irish capital Belfast in the past month, a police officers' representative said on Sunday as officers came under attack again.
The violence stems from protests over the removal of the British flag over Belfast City Hall. It has been among the province's worst since a 1998 peace accord ended 30 years of conflict in which Catholic nationalists seeking union with Ireland fought British forces and mainly Protestant loyalists.
Fireworks, bottles and bricks were flung at officers for a fourth successive night on Sunday although a police spokeswoman said the trouble was not on the scale of the previous night, when police came under attack with petrol bombs and gunfire.
By Sunday, 70 people had been arrested, including a 38-year-old man detained on Saturday on suspicion of attempted murder over the shooting.
Police had said that members of pro-British militant groups helped to orchestrate and had taken part in the first wave of violence in early December. The Police Federation for Northern Ireland (PFNI) said the recent attacks showed this was now clearly the case.
"What it quite clearly demonstrates is the fact that paramilitaries have hijacked this flags protest issue and they have now turned their guns on the police," federation chairman Terry Spence told BBC radio.
"It is very clear that there are leading members of the UVF (Ulster Volunteer Force) who are exploiting this and are organizing and orchestrating this violence against police officers who are out there trying to uphold the law and prevent anarchy on our streets."
Both the UVF and Northern Ireland's other main loyalist militant group, the Ulster Freedom Fighters, ceased hostilities in 2007 and decommissioned their stocks of weapons following the signing of the peace deal.
At least 3,600 people were killed in the 30 years of violence before the 1998 peace deal.
In scenes that recalled that earlier strife, pro-British loyalists began rioting in early December after a vote by mostly nationalist pro-Irish councilors to end the century-old tradition of flying Britain's Union flag from the city hall.
"NO STOMACH FOR THIS"
Analysts said that, although the violence was worrying, the small numbers of protesters indicated they might be unable to develop any strength.
"Clearly the violence is a step up in terms of what's happened more recently but they're simply not getting people out on the street," said Peter Shirlow, a professor at Queen's University who has spoken with protesters in recent days.
"Protestants are annoyed about the flag but they're even more annoyed about the violence. There's no stomach for this, that mass mobilization is just not there anymore."
The police federation's Spence said, however, that it was the most challenging time for police in a decade. Church leaders and community workers held talks behind the scenes on Sunday to try to quell the violence.
Militant Irish nationalists, responsible for the killings of three police officers and two soldiers since an increase in tensions from 2009, have also not reacted violently to the flag protests, limiting any threat to the 15 years of peace.
The British-controlled province's first minister, Peter Robinson, said on Friday that rioters were playing into the hands of nationalist groups who would seek to exploit every opportunity "to further their terror aims".
The moderate nationalist Social Democratic and Labour Party (SDLP) party said on Sunday that shots had been fired using a ball-bearing gun at the house of one its councilors in Belfast, shattering windows.

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Britain's coalition leaders seek to regain voters' trust

LONDON (Reuters) - The leaders of Britain's fractious coalition pledged on Monday to cap the cost of long-term care for the elderly and to improve state pensions in an effort to re-engage with electors midway into their five-year government.
Conservative Prime Minister David Cameron and his Liberal Democrat deputy, Nick Clegg, have seen popular support fall away as voters suffer squeezed incomes and the economy fails to stage a stable recovery from the 2008/2009 financial crisis.
Despite trailing behind the opposition Labour party in polls, the two leaders said their alliance remained "steadfast and united" on its key aim of cutting Britain's deficit and restoring the economy to health.
In a joint statement to mark the halfway point of Britain's first coalition government since World War Two, Cameron and Clegg set out a series of domestic policy initiatives designed to quash talk that the partnership had run out of steam.
"Our mission is clear: to get Britain living within its means and earning its way in the world once again," they wrote in a review of the government's actions since it came to power in May 2010.
Without giving details, they promised to limit the amount the elderly pay for long-term healthcare, to reform state pensions, build more houses, help parents with childcare costs and find ways to boost investment in transport infrastructure.
Labour dismissed the mid-term review as "another relaunch" of the coalition, seen by many at its birth as an unstable marriage between the center-right Conservatives and the smaller center-left Liberal Democrat party.
In spite of sharp differences over issues such as political reform and Britain's relationship with the European Union, the alliance has held together, bound by a joint commitment to an austerity programme that has kept interest rates low.
Political reality has also proved an effective bond, with Clegg's party at risk of a wipeout if they force an early election, after losing the backing of left-leaning voters angry at a partnership that returned the Conservatives to government.
Later on Monday the two leaders will address media at Cameron's Downing Street residence in London, in what is likely to be a somber echo of their relaxed joint appearance in the garden of the same building after sealing the coalition deal.
They will be speaking a day before a parliamentary vote to approve a real-terms cut in unemployment and tax-credit benefits, condemned by Labour, which the coalition believes will enjoy popular support at a time of low or frozen pay rises.
At the weekend, Cameron said he wanted to be re-elected in 2015 and serve another five-year term as prime minister, a move seen as dismissing suggestions that he was tiring of his role, and putting a lid on the ambitions of potential rivals.

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Egypt Copts mark Christmas with fear of future

CAIRO (AP) — Egypt's minority Christians were celebrating their first Christmas after the election of an Islamist president and a new pope — and following adoption of a constitution many argue has an Islamist slant.
Christians gathered in Cairo's main cathedral Sunday for Midnight Mass on the eve of Orthodox Christmas led by their new pope. Pope Tawadros II was elected in November to replace longtime Pope Shenouda III, who died in March after 40 years as the leader of the church.
Islamist President Mohammed Morsi called Tawadros with Christmas greetings and sent one of his aides to the Christmas mass.
Concerned for their future and their ancient heritage in Egypt, some Copts are reportedly considering leaving the country.
As Egypt struggles with the role of religion in society, many Copts are aligning themselves with moderate Muslims and secular Egyptians who also fear the rise of Islamic power.
Amir Ramzy, a Coptic Christian and a judge in Cairo's court of appeals, said Christmas is a chance to retreat and pray for a "better Egypt."
"Christians are approaching Christmas with disappointment, grief and complaints, fearing not only their problems but Egypt's situation in general," Ramzy said. "During the reign of (ousted President Hosni) Mubarak and the (military rulers), mainly Christians were facing problems, but now with the Muslim Brotherhood leaders, each and every moderate Egyptian is facing problems."
In one of his first public messages after his enthronement, Tawadros said the ouster of Mubarak opened the way for a larger Coptic public role, encouraging them to participate in the nation's evolving democracy.
Egypt's Coptic Christians, who make up about 10 percent of Egypt's 85 million people, have long complained of discrimination by the state and the country's Muslim majority. Clashes with Muslims have occasionally broken out, sparked by church construction, land disputes or Muslim-Christian love affairs.
Following the ouster of Mubarak in 2011, sectarian violence rose, and attacks on churches sent thousands of Coptic protesters into the streets. A protest in October 2011 was violently quelled by the country's military rulers, leaving 26 people dead and sparking further outrage.
Ereny Rizk, 34, whose brother George died in that incident, said it was the second Christmas without him, but that the election of a new pope has raised her spirits.
"I felt like he's my father. Having him lessened the severity of my grief," she said. "I definitely thought about leaving the country, but two things stopped me. First the churches and the monasteries in Egypt, our heritage that I'll be missing. Also, I decided not to let my brother's blood go in vain."
The violence has abated, and 2012 was characterized more by the struggle for political and religious rights, said Hossam Bahgat, the director of the Egyptian Initiative for Personal Rights.
"It is not actual frequent sectarian violence, it is fear of further marginalization and second class citizenship," he said, adding that Egypt has been deeply polarized as it drafted the constitution. Christians and liberals walked out of the committee writing it, complaining that their concerns were not being addressed by the Islamist majority.
Youssef Sidhom, the editor of Egypt's main Coptic newspaper, Watani, said Christians are more concerned for the identity of Egypt, saying that legislation based on the new constitution will be focus of attention out of fear of restrictions on the way of life of Christians and their freedom of worship and expression.
"Egypt is stepping into 2013 split and divided between Copts and moderate Muslims on one side confronting political Islam and fundamentalists on the other side," Sidhom said. "It will only be (resolved) through reconciliation, and this is the challenge that we will have to meet."
Ishak Ibrahim, a researcher with EIPR who monitors religious freedom cases in Egypt, said Coptic Christians are facing two new sets of problems: cases of insulting Islam and fear for their life style because of increasingly assertive radical Islamists.
In October, two Coptic boys were put in a juvenile detention after locals accused them of urinating on pages of the Quran, Islam's holy book. It was one in a series of cases against Coptic Christians in the same period, following the fury over an anti-Islam film produced in the United States. The case against the boys was later dropped after mediation.
Ibrahim said some wealthy Copts, who have connections abroad, have temporarily sought to leave Egypt.
"But the majority (of Christians) are also less fortunate," he said. "Like most Egyptians, they are with little education and have difficult economic conditions."
Verna Ghayes, a 21-year old arts student, also noted the deteriorating economic situation. Her father, an architect, lost his job because of a tight market. She felt the hardships, have, in turn, encouraged Christians to seek relief from God.
"With all the unfortunate events that are happening to Egypt, Christians came closer to God, they started to pray more, believing that only God could handle it," she said. "For me that's the good thing, and everything is according to God's plan," she said.

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"Fiscal cliff" deal a budget help or hindrance? Yes, says CBO

WASHINGTON (Reuters) - So does Congress' landmark deal to avert the "fiscal cliff" by canceling tax hikes on most Americans increase or decrease long-term U.S. budget deficits?
The answer is a definitive "yes," the Congressional Budget Office said on Friday. It all depends on the comparison. And by the way, it also helps - and hurts - the economy.
As it said earlier this week in its official budget scoring of the legislation passed on January 1, the deal adds $4 trillion to deficits over a 10-year period compared to allowing all income tax rates to jump back to their pre-2001 levels and allowing automatic spending cuts to bite -- effectively a leap off the fiscal cliff.
Add in the increased debt service costs through 2022, and you have $4.6 trillion in new debt burden. The main culprit is simple: the legislative deal brings in less revenue than called for by tax laws that would have reinstated the old rates.
But few in Washington believed it was realistic to allow a full return to Clinton-era tax rates, sharply lower Medicare payments to doctors and a failure to stop the dreaded alternative minimum tax from ensnaring ever-larger numbers of middle-class taxpayers.
So the CBO last year came up with an alternative scenario, which assumed that all tax rates were left unchanged and the AMT indexed for inflation. Had this been enacted, deficits would have risen $4.5 trillion, or $5.2 trillion including debt service costs, CBO estimated in August.
After making some adjustments in the agency's calculations due to the fiscal cliff legislation, CBO director Doug Elmendorf said in a blog posting that the deal would produce 10-year budget savings of $600 billion to $700 billion compared to this alternative tax-extension scenario.
Add in lower debt service costs, and the savings would be $700 billion to $800 billion.
CBO also had predicted that going over the fiscal cliff had dire consequences for the economy, plunging it back into recession. This would have caused U.S. gross domestic product to shrink by 0.5 percent in 2013 - a huge plunge from Federal Reserve forecasts of 2.3 percent to 3.0 percent growth.
An economy in recession generates less tax revenue and prompts higher spending on unemployment benefits, which widens a deficit and forces more borrowing.
But due to this week's deal, the CBO's estimate is now back in the black, with the office expecting 2013 GDP growth of around 2.5-2.75 percent. This could decline due to some further fiscal tightening still on the books for this year, however.
The CBO's analysis does not include any further spending cuts that Congress may make in the next two months as a looming battle over the federal debt limit heats up.
Longer term, however, CBO estimates that the fiscal cliff deal will reduce GDP output compared to allowing all of the tax rates to snap back to Clinton-era levels.
While some short-term pain will be avoided, it will do little to halt the growth of U.S. debt in the long run. The debt service costs and the lower national savings and reduced capital stock associated with this will eventually start to sap economic growth, the CBO said.

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