US report faults Pakistan over Afghan war

WASHINGTON: Despite an easing of tensions with the United States, Pakistan is persistently undermining security in Afghanistan by permitting safe havens for insurgents, a Pentagon report said Monday.

In a twice-a-year war assessment mandated by Congress, the Defense Department said that the 68,000 US troops in Afghanistan and their allies had succeeded in preventing Taliban advances while limiting civilian casualties.

But Taliban havens across the border in Pakistan, the limited capacity of the Afghan government and "endemic corruption" pose the greatest risks as the United States prepares to pull out troops by the end of 2014, the Pentagon said.

The report noted the better US relations with Pakistan, which agreed in July to reopen Western forces' supply routes into Afghanistan. Pakistan had refused access after a US border strike killed 24 of its troops in November 2011.

"However, Pakistan's continued acceptance of sanctuaries for Afghan-focused insurgents and failure to interdict (explosive) materials and components continue to undermine the security of Afghanistan and pose an enduring threat to US, coalition and Afghan forces," the report said.

The report, which covered developments from April through September, said that Pakistan "has contributed to US interests while simultaneously falling short in other areas."

The Pentagon also reported modest progress between Afghanistan and Pakistan. Since then, Afghan President Hamid Karzai said that an attack last week on the Afghan intelligence chief was planned in Pakistan.

Islamabad denied Karzai's assertion. Many analysts believe Pakistan has sought to keep open ties to militants in Afghanistan in hopes of preserving influence after the NATO withdrawal.

The Pentagon report said that enemy attacks went up one percent from April-September 2011. But it attributed the rise to a shorter poppy harvest, which kept low-level insurgents busy for less time, and said life had improved in urban areas.

Enemy attacks "are now disproportionately occurring outside of populated areas, and the security of many of Afghanistan's largest cities increased substantially during the reporting period," it said.

However, the Pentagon figures showed that enemy attacks were higher than in 2009 before President Barack Obama ramped up troop numbers. The last of the 33,000 "surge" troops withdrew in September this year.

Opinion polls show that most Americans want to end their country's longest-ever war, which was launched following the September 11, 2001 attacks by Al-Qaeda militants living in Afghanistan under Taliban rule.

The Pentagon report described "substantial progress" by Afghans in taking the lead in their own security, but acknowledged logistical and management shortcomings in the national forces as well as corruption.

A Defense Department official, briefing reporters on the report on condition of anonymity, said that the goal remained for Afghan forces to be able to operate independently by 2014.

"Is it going to be a challenge? I agree with you, yes," he said. "Will there continue to be a need for training and advising after 2014? Yes."

The report recorded 66 insider attacks on NATO or Afghan national forces, a sharp rise from 43 the year earlier, but voiced hope that new countermeasures would reduce the threat.

The Pentagon gave a positive assessment to efforts to reduce civilian casualties, seen as a major cause of resentment toward the Western-backed government.

Civilian casualties caused by NATO forces decreased by 35 percent compared with the previous year, although overall civilian casualties rose due to attacks by insurgents, the report said.

-AFP/ac

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Shinde to examine Afzal's mercy plea after Parliament session

NEW DELHI: Union home minister Sushil Kumar Shinde will start examining mercy petition files, sent back to the MHA recently by the President, after the winter session of Parliament concludes on December 20.

Parliament attack convict Afzal Guru's file is among the seven files returned by President Pranab Mukherjee to the home ministry. Mukherjee has asked Shinde, who took charge of the home ministry on August 1, to take a relook at the MHA opinion tendered on these petitions during his predecessor P Chidambaram's tenure.

At a press conference here to present the MHA's report card for November, Shinde also said on Monday that no request had been received from either the family of Ajmal Kasab, the 26/11 convict who was hanged on November 21, or the government of Pakistan for his body.

To a question on the status of mercy plea of Guru, Shinde said a decision to reject his clemency application was taken earlier.

"(Subsequently) The file was sent to the President for consideration. But the President sent back to me seven cases (including Guru). When Parliament session is over, I will look into it. I can't tell you the date," he said.

"As soon as the file comes to me, I will not take much time," Shinde.

Guru was sentenced to death for the 2001 Parliament attack in which nine people, including security force personnel, were killed and another 16 were injured.

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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Banda Superstar Jenni Rivera's Plane Missing

Mexican officials have confirmed the disappearance of a private jet carrying regional Mexican music superstar Jenni Rivera that took off from the northern Mexican city of Monterrey at 3:15 a.m. local time on Sunday and fell off the radar 10 minutes or 62 miles after take-off.

The Learjet 25 jet is believed to have been carrying 7 people – 5 passengers and 2 pilots. It was headed for Toluca International Aiport, located outside of Mexico City. It was meant to arrive at 4:40 a.m., after which an official search for the jet was initiated.

Rivera's publicist Arturo Rivera is believed to have been on that flight. His most recent tweets are of photos from Rivera's concert in Monterrey on Saturday night.

The Mexican American singer's most recent tweet is a re-tweet of what appears to be a fan's message.

Rivera was due in Toluca this evening for the taping of a Mexican TV show, La Voz.

Known as La Diva de la Banda and beloved by fans on both sides of the border, Rivera, 43, has had a groundbreaking career in regional Mexican music, selling some 15 million records. Among her many feats in a male-dominated genre, she made history in September 2011 when she sold out Staples Center in Los Angeles, the first female regional Mexican artist to do so. Her reality show on mun2, I Love Jenni, is one of the network's highest rated shows. Rivera made her film debut at the 2012 Sundance Film Festival in the indie family drama Filly Brown, due in theaters in January 2013.

See Also: 'Filly Brown Gives Jenni Rivera a Chance to Grow and Gina Rodriguez a Chance to Shine

The Long Beach, Calif.-born singer's personal life has often called for as much attention as her career. A mother of five, Rivera had filed for divorce from baseball player Esteban Loaiza in October after two years of marriage, citing "irreconcilable differences." Soon after, rumors of an affair between Loaiza and Rivera's own daughter Chiquis surfaced, which Chiquis addressed on Twitter in October by saying, "I would NEVER do that, Ever! That's a horrible accusation."

The search for Rivera's jet continues. This is a developing story.

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Egypt's opposition rejects constitutional referendum

CAIRO (Reuters) - Egypt's main opposition coalition rejected on Sunday Islamist President Mohamed Mursi's plan for a constitutional referendum this week, saying it risked dragging the country into "violent confrontation".

Mursi's decision on Saturday to retract a decree awarding himself wide powers failed to placate opponents who accused him of plunging Egypt deeper into crisis by refusing to postpone the vote on a constitution shaped by Islamists.

"We are against this process from start to finish," Hussein Abdel Ghani, spokesman of the National Salvation Front, told a news conference, calling for more street protests on Tuesday.

The Front's main leaders - Nobel peace laureate Mohamed ElBaradei, former Foreign Minister Amr Moussa and leftist Hamdeen Sabahy - did not attend the event.

Hundreds of protesters milled around Mursi's palace, despite tanks, barbed wire and other barriers installed last week after clashes between Islamists and their rivals killed seven people.

"Holding a referendum now in the absence of security reflects haste and an absence of a sense of responsibility on the part of the regime, which risks pushing the country towards violent confrontation," a statement from the Front said.

The Muslim Brotherhood, which propelled Mursi from obscurity to power, urged the opposition to accept the referendum's verdict.

Islamists say the vote will seal a democratic transition that began when a popular uprising toppled Hosni Mubarak 22 months ago after three decades of military-backed one-man rule.

Their liberal, leftist and Christian adversaries say the document being fast-tracked through could threaten freedoms and fails to embrace the diversity of Egypt's 83 million people.

"ACT OF WAR"

Mursi had given some ground on Saturday when he annulled the fiercely contested decree issued on November 22 that gave him extra powers and shielded his decisions from judicial review.

But some measures taken under the decree remain in force and the president has insisted the referendum go ahead on December 15.

Liberal opposition leader Ahmed Said earlier described the race to a referendum as an "act of war" against Egyptians.

Egypt is torn between Islamists, who were suppressed for decades, and their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms. Many Egyptians just crave stability and economic recovery.

Brotherhood spokesman Mahmoud Ghozlan said the scrapping of Mursi's decree had removed any reason for controversy.

"We ask others to announce their acceptance of the referendum result," he said on the group's Facebook page, asking whether the opposition would accept "the basics of democracy".

The cancellation of Mursi's decree, announced after a "national dialogue" on Saturday boycotted by almost all the president's critics, has not bridged a deep political divide.

Prime Minister Hisham Kandil, a technocrat with Islamist leanings, said the referendum was the best test of opinion.

"The people are the makers of the future as long as they have the freedom to resort to the ballot box in a democratic, free and fair vote," he said in a cabinet statement.

But opposition factions, uncertain of their ability to vote down the constitution against the Islamists' organizational muscle, want the document redrafted before any vote.

"A constitution without consensus can't go to a referendum," said Hermes Fawzi, 28, a protester outside the palace. "It's not logical that just one part of society makes the constitution."

DIALOGUE

Egypt tipped into turmoil after Mursi grabbed powers to stop any court action aimed at hindering the transition. An assembly led by the Brotherhood and other Islamists then swiftly approved the constitution it had spent six months drafting.

Opponents, including minority Christians, had already quit the assembly in dismay, saying their voices were being ignored.

After the dialogue hosted by Mursi, a spokesman announced that the president had issued a new decree whose first article "cancels the constitutional declaration" of November 22. He said the referendum could not be delayed for legal reasons.

The decree ignited more than two weeks of sometimes violent protests and counter-rallies in Egypt. Mursi's foes have chanted for his downfall. Islamists fear a plot to oust the most populous Arab nation's first freely-elected leader.

Islamists reckon they can win the referendum and, once the new constitution is in place, a parliamentary election about two months later. The Islamist-led lower house elected this year was dissolved after a few months by a court order.

Investors appeared relieved after Mursi rescinded his decree, sending Egyptian stocks 4.4 percent higher on Sunday. Markets are awaiting approval of a $4.8 billion IMF loan later this month designed to support the budget and economic reforms.

The military, which led Egypt's transition for 16 turbulent months after Mubarak fell, told feuding factions on Saturday that only dialogue could avert "catastrophe". But a military source said these remarks did not herald an army takeover.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by David Stamp)

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Mass rival rallies called in Egypt as crisis sharpens

CAIRO: Rival mass protests have been called for next Tuesday in Egypt over a bitterly disputed constitutional referendum, raising the potential for more violent street clashes in a sharpening political crisis.

President Mohamed Morsi's chief foes, the opposition National Salvation Front, late Sunday called for huge protests in Cairo to reject the December 15 referendum on a new charter.

The Muslim Brotherhood, from which Morsi hails, told AFP that it and allied Islamist movements would counter with their own big rallies in the capital in support of the referendum.

If the duelling demonstrations go ahead, there is a risk of vicious further clashes like the ones that erupted between both sides outside the presidential palace last Wednesday, killing seven people and wounding hundreds.

Egypt's powerful army, which is trying to remain neutral in the deepening struggle, warned on the weekend it "will not allow" a worsening of the crisis. It said both sides must start dialogue.

Morsi has made a key concession to the opposition on the weekend by rescinding a decree giving himself wide-ranging powers free from judicial challenge.

But the opposition was unmoved, and maintained its position that no talks could happen while the referendum was going ahead.

"The Front calls for demonstrations in the capital and in the regions on Tuesday as a rejection of the president's decision that goes against our legitimate demands," National Salvation Front spokesman Sameh Ashour told a news conference.

"We do not recognise the draft constitution because it does not represent the Egyptian people," he said, reading a statement.

Going ahead with the referendum "in this explosive situation with the threat of the Brothers' militias amounts to the regime abandoning its responsibilities," he said.

The Brotherhood's spokesman, Mahmud Ghozlan, told AFP that the Alliance of Islamist Forces it belongs to was also "calling for a demonstration Tuesday, under the slogan 'Yes to legitimacy'," and in support of the referendum.

The almost nightly protests over the past two weeks have brought out thousands of people into the streets.

In recent days, the protesters have hardened their slogans, going beyond criticism of the decree and the referendum to demand Morsi's ouster.

Amid the protests and tensions, the army was watching nervously. Tanks and troops have been deployed outside the presidential palace but they have made no move to confront the demonstrators.

On Sunday, air force F-16 warplanes flew low over the city centre. The official MENA news agency described the unusually low flyover as an exercise against "hostile air attacks and to secure important state installations."

That did not prevent several hundred anti-Morsi protesters gathering outside his palace late Sunday, according to an AFP correspondent there.

The opposition sees the constitution, which was largely written up by Islamists, as a tool weakening human rights, the rights of women, religious minorities, and the judiciary's independence.

It dismisses arguments by Morsi aides that the referendum could not be delayed under constitutional rules requiring a plebiscite two weeks after it is formally presented to the president.

"The two-week deadline is just a date for organising the referendum, and you can postpone it without any problems," a Front leader, Munir Fakhri, told AFP.

Morsi's camp, though, argues that it is up to the people to accept or reject the draft constitution.

If it is rejected in the referendum, Morsi has promised to have a new one drawn up by 100 officials chosen by the public, rather than by the Islamist-dominated parliament as was the case for the current text.

Prime Minister Hisham Qandil has urged protesters from both sides to stop demonstrating, and to vote in next Saturday's referendum, MENA said.

Analysts said still-strong public support for Morsi, and the proven ability of his Muslim Brotherhood to mobilise Egypt's voters at the grassroots level, would likely help the draft constitution be adopted.

"The Muslim Brotherhood believes that it has majority support so it can win the constitutional referendum," said Eric Trager, analyst at the Washington Institute for Near East Policy.

If that happens, he warned, it would "set up the country for prolonged instability."

-AFP/ac

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India misguided, paranoid over China: Guha

Shreya Roy Chowdhury, TNN Dec 8, 2012, 06.12AM IST

MUMBAI: A good half-hour into the discussion on 'India, China and the World', historian Ramachandra Guha issued a disclaimer—all the three members on the panel had been to China only once. "We should learn their language, promote quality research, and have a panel on China driven by Chinese scholars," he said. And that was the general tenor of the debate—that the Indian attitude to China was influenced by a mix of ignorance, cautious optimism about partnerships and a whole lot of misguided paranoia. "Don't demonise the Chinese, please," Guha finally said in response to a question.

"China has existed in our imaginations," observed Sunil Khilnani, professor of politics and author of The Idea Of India. "There's been very little sustained engagement with the reality of China and very little of our own produced knowledge about China." It was after the events of 1962 ('war' in the popular imagination, 'skirmish' to the scholars participating in the discussion), explained Khilnani, that a miffed India "withdrew". It's the 50th anniversary of that exchange this year, and "what we haven't been able to do is learn from the defeat", observed Khilnani. Both could have benefited from greater engagement. "China has had a very clear focus on primary education and achieved high levels of literacy before its economic rise. It has also addressed the issue of land reform," said Khilnani. Guha added that China could learn from the "religious, cultural and linguistic pluralism" in India.

But China and India weren't always so out of sync with each other. Srinath Raghavan, a scholar of military history, got both Guha and Khilnani to talk about pre-1962 relations between the two when the picture was rosier. Tagore was interested in China and so was Gandhi. Both were very large countries with large populations and shared what Guha calls a "lack of cultural inferiority". "They were both," he continued, "also heavily dependent on peasant communities." Nehru was appreciative of China's will to modernize and industrialize and its adoption of technology to achieve those ends. In turn, Chinese politicians argued for Indian independence.

Things soured more, feel both Khilnani and Guha, after the Dalai Lama fled to India in 1959. "He was welcomed here as a spiritual leader but the intensification of the conflict dates to the Dalai Lama's flight," said Guha. Both Guha and Khilnani argued that Nehru's decision to not react aggressively to China's occupation of Tibet was, in the long run, the right one and prevented further "militarization" of the region. An audience member wondered if that didn't make India "China's puppet". Guha disagreed. "If there's a Tibetan culture alive today," he said, "it's not because of Richard Gere. Don't believe in the hypocrisy of the Western countries. Will they give them land, employment, dignified refuge? The Tibetans is one of the few cases in which our record is honorable."

But the difference in levels of development and the lopsided trade relations between the two countries have only fuelled the suspicions many Indians seem to harbour about China. People were worried, said Guha, even about cricket balls made in China. Audience questions reflected those worries. A member asked about China's "strategy to conquer the world" and its likely impact on India. Guha cautioned against stereotypes; Khilnani explained, "History is littered with the debris of states that have tried to dominate the world. What we're doing may be more long-lasting."

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

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Egypt Terror Leader Possibly Linked to Benghazi Attack Arrested

Dec 8, 2012 2:16pm

Mohammad Hannon/AP Photo

The leader of an Egyptian terrorist cell that planned attacks in Egypt and may be linked with the storming of the U.S. consulate in Benghazi, Libya on Sept. 11 has been arrested by Egyptian intelligence officers, according to an official close to Egypt’s intelligence agency and a senior U.S. official.

Mohammad Jamal Abdo Ahmed had become one of Egypt’s most dangerous terrorists and led a small cell of Egyptians that collected suicide vests, bombs and grenades before their Cairo safe house was raided by intelligence officials in late October, according to the U.S. official.

PHOTOS: Benghazi: US Consulate Attack Aftermath

Most of the cell’s targets were Egyptian, but both the U.S. and Egyptian officials said Ahmed admitted to traveling to Libya and assisting Ansar al Sharia, which U.S. officials suspect organized the attack on the consulate that killed U.S. Ambassador to Libya Chris Stevens.

READ: More on the Political Fallout From the Benghazi Attack

Until now, neither the United States nor Egypt has determined exactly what role Ahmed played in the attack in eastern Libya, according to both officials.

Ahmed may have also been planning attacks on U.S. targets in Egypt and neighboring countries, the U.S. official said, and had aspirations to join al Qaeda.

Ahmed, who is Egyptian, was arrested two weeks ago in eastern Egypt in the Sharqiyah province, the Egyptian official said.

Egyptian officials continue to question him and he will remain in custody for another 15 days, according to the Egyptian official.

His arrest was first reported by the Wall Street Journal.

READ: Four Americans Slain in Libya ‘Come Home’

SHOWS: World News

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Egyptian military says only dialogue can avert disaster

CAIRO (Reuters) - Egypt's military, stepping into a crisis pitting Islamist President Mohamed Mursi against opponents who accuse him of grabbing excessive power, said on Saturday only dialogue could avert "catastrophe".

State broadcasters interrupted their programs to read out an army statement telling feuding factions that a solution to the upheaval in the most populous Arab nation should not contradict "legitimacy and the rules of democracy".

That sounded like a swipe at protesters who have besieged the palace of the freely elected president and called for his removal, going beyond mainstream opposition demands for him to retract a decree that expanded his powers.

The statement also called for a "serious" national dialogue - perhaps one more credible than talks convened by Mursi on Saturday in the absence of opposition leaders. They insist he must first scrap his November 22 decree, defer next week's popular vote on a new constitution and allow the text to be revised.

Deep rifts have emerged over the destiny of a country of 83 million where the end of Hosni Mubarak's 30 years of military-backed one-man rule led to a messy army-led transition, during which the Muslim Brotherhood and its allies won two elections. Many Egyptians crave stability and economic recovery.

The spokesman for the main Islamist coalition demanded that the referendum go ahead on time on the constitution drafted by an Islamist-led assembly from which liberals had walked out.

The army, which ran Egypt for months after Mubarak fell in February 2011, again cast itself primarily as the neutral guarantor of the nation. A military source said there was no plan to retake control of the country or its turbulent streets.

"DARK TUNNEL"

"The armed forces affirm that dialogue is the best and only way to reach consensus," the statement said. "The opposite of that will bring us to a dark tunnel that will result in catastrophe and that is something we will not allow."

Mursi's office said the president opened his "national dialogue" with about 40 political and other public figures discussing "means to reach a solution to differences over the referendum...and the constitutional decree".

Prime Minister Hisham Kandil told an Egyptian television channel that the talks had led to creating a committee to review Mursi's November 22 decree and to work out legal ways to postpone the referendum. He said a new decree could be issued.

"All options are on the table to reach consensus," he said, adding that it was vital to take action to shore up Egypt's economy that has been battered by the turmoil.

The main opposition coalition, the National Salvation Front, which boycotted Mursi's dialogue repeated its call on Saturday for scrapping the decree and the referendum on the constitution.

Instability in Egypt worries the West, especially the United States, which has given Cairo billions of dollars in military and other aid since it made peace with Israel in 1979.

The army might be pushing the opposition to join dialogue and Mursi to do more to draw them in, said Hassan Abu Taleb of the Al Ahram Center for Political and Strategic Studies.

He discounted the chance of direct military intervention, adding: "They realize that interfering again in a situation of civil combat will squeeze them between two rocks."

However, the military did seem poised to take a more active role in security arrangements for the December 15 referendum.

A cabinet source said the cabinet had discussed reviving the army's ability to make arrests if it were called upon to back up police, who are normally in charge of election security.

According to the state-run daily al-Ahram, an expanded military security role might extend to the next parliamentary election and, at the president's discretion, even beyond that.

The army issued its statement while protesters were still camped out by the gates of the presidential palace.

The tens of thousands of Mursi foes who surged past tanks and barbed wire to reach the palace gates on Friday night had dispersed. But a hard core stayed overnight in a score of tents.

"LEAVE"

Some had spray-painted "Down with Mursi" on tanks of the elite Republican Guard posted there after clashes between rival groups killed at least seven people and wounded 350 this week.

Others draped the tanks with posters of Mursi and the word "Leave" scored across his face in red letters.

"We are no longer calling for scrapping the decree and delaying the referendum," Samir Fayez, a Christian protester at the palace, said. "We have one demand in five letters: leave."

Nearby, a Mursi supporter named Mohamed Hassan was quietly observing the scene. He suggested that the Muslim Brotherhood and its ultra-orthodox Salafi Islamist allies could easily overwhelm their foes if they chose to mobilize their base.

"The Brotherhood and Salafis by themselves are few but they have millions of supporters who are at home and haven't taken it to the streets yet," murmured the 40-year-old engineer.

The Muslim Brotherhood's supreme guide, Mohamed Badie, denounced opposition protests that have swirled around the walls of Mursi's palace, saying they "ruin legitimacy".

Badie said eight people, all of them Brotherhood members, had been killed this week and urged the interior minister to explain why police had failed to prevent assailants from torching the organization's headquarters and 28 other offices.

"Get angry with the Brotherhood and hate us as much as you like, but be reasonable and preserve Egypt's unity," he told a news conference. "We hope everyone gets back to dialogue."

The well-organized Brotherhood, which thrust Mursi from obscurity to power, remains his surest source of support.

(Additional reporting by Edmund Blair, Omar Fahmy and Yasmine Saleh; Editing by Stephen Powell)

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