Tuesday, May 8, 2012
China's Gold Imports Advance as Country May Become Biggest User
Mainland China's gold imports from Hong Kong surged more than sixfold in the first quarter, adding to signs that the country may displace India as the world's largest consumer of the precious metal on an annual basis.
Imports from Hong Kong were 135,529 kilograms (135.53 metric tons) between January and March, from 19,729 kilograms in the year-earlier period, according to data from the Census and Statistics Department of the Hong Kong government. Shipments in March rose 59 percent from February, yesterday's data showed.
Demand has climbed in the world's second-largest economy as rising incomes and curbs on property speculation boosted purchases. China may become the biggest user annually this year, according to a forecast from the producer-funded World Gold Council. Last year, total Indian demand including for jewelry and investment was 933.4 tons to China's 769.8 tons.
"We're looking at another solid year for Chinese demand based on these early numbers," said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd. "While it's largely related to price, negative real interest rates should keep demand strong."
Gold has lost 15 percent from its record $1,921.15 an ounce in September as the European debt crisis, combined with reduced expectations for further monetary easing by the Federal Reserve, boosted the dollar. Spot gold traded at $1,637.32 an ounce at 9:41 a.m. in Singapore, 4.7 percent higher this year.Largest Consumer
The prospect of China becoming the largest bullion user reflects the country's economic ascendance. Per capita gross domestic product has more than doubled since 2000, according to World Bank data. The country is already the world's top consumer of copper and biggest producer of steel.
Gold shipments to the mainland climbed for a third month in March to 62,913 kilograms, the Hong Kong data showed. That compares with 39,668 kilograms in February and 9,166 kilograms in March 2011. China doesn't publish gold-trade data. Last year, imports from Hong Kong more than tripled to 431,226 kilograms.
The purchases through Hong Kong may signal that the mainland is accumulating reserves, London-based brokerage Sharps Pixley Ltd. said in February. The nation last made its reserves known more than two years ago, stating them at 1,054 tons.
"Summer is usually the low season for gold consumption," said Liang Ruian, director at Pinpoint Investment Consulting Ltd. in Beijing. "If we can see growth even in the low season, it represents the resilient nature of China's gold consumption."
China expanded 8.1 percent in the first three months of 2012 from a year earlier in the fifth quarterly deceleration as authorities cracked down on property speculation. Inflation was 3.6 percent in March, below a government target of about 4 percent. So-called real interest rates are negative when the amount paid to savers on deposits is less than inflation.
Yahoo
Sciences have discovered the secret to natural cloning
Scientists from the Czech Academy of Sciences have discovered the secret to natural cloning, a revelation that could have future implications for replicating human organs.
In an April breakthrough, researchers at the academy's Institute of Animal Physiology and Genetics are the first to successfully replicate a natural cloning process by fish vertebrates under laboratory conditions.
"Understanding the nature of asexual reproduction at the cellular and whole organism level could allow for the production of vitally important human organs for transplantation," said Lukáš Choleva, one of the researchers involved.
Cloning has been common in nature for millennia, with some animal species able to self-clone, meaning females can create exact copies of themselves without fertilization by males. There are about 80 varieties of vertebrates able to produce identical descendents or clones of themselves in the wild. This phenomenon is hardly news to scientists, but none had previously been able to repeat the process in a controlled environment.
"We are the first ones who have actually managed to procreate the clones in laboratories in exactly the same way it happens in the wild," said Karel Janko, another member of the research team.
The team managed to reproduce the natural cloning of a small fish species called the Spiny Loach, which is native to Europe, including in Czech rivers. The fish engage in asexual reproduction even though males and females spawn among each other. The cloning process is triggered as a result of the male gametes penetrating female eggs, regardless of whether fertilization takes place.
"Identical daughters are the descendents," Choleva said. "The females virtually abuse their males for their own multiplication."
For some 12 years, Choleva and other scientists traveled Europe collecting different Spiny Loach species. They then recreated natural conditions in a laboratory setting.
The research team was able to reproduce clones through a process of interspecies breeding.
"What is really amazing about these different fish species is their tendency to reproduce among each other despite the fact that their evolutionary links are as far from each other as humans and chimpanzees would be," Janko said.
The scientists will further examine the individual processes in asexual reproduction, which they say could eventually lead to insights into how human organs could be naturally reproduced for transplants.
The process successfully completed by the Czechs scientists, which replicates natural cloning, differs from the famed 1996 experiment by Scottish researchers who famously cloned a sheep, which they named Dolly.
Dolly was cloned in a test tube by genetic manipulation with a cell taken from an adult sheep. She died six years later of a common lung disease.
The Prague Post
Russia and China are intensifying cooperation in the military sphere
Russian-Chinese war games "Naval Interaction-2012" in the Yellow sea entered their active phase on April 24. 25 warships, 13 aircrafts, 9 helicopters and 2 units of the special forces of the two countries participate in them. Taking into account the number of participating forces and the scenario, these manoeuvres are apparently the most large-scale in the modern history of bilateral relations.
According to "Interfax", the Russian party is represented in the war games by large antisubmarine ships "Admiral Tributz", "Marshal Shaposhnikov" and "Admiral Vinogradov", as well as logistics ships. The detachment is headed by the flagship of the Fleet - Guards' guided-missile cruiser "Varyag".
China is represented by 18 military ships, including the flagship missile destroyer "Harbin", and 5 missile frigates, including "Chzhoushan" and "Suyzhow", which were performing combat tasks on distant borders escorting ships in the Gulf of Aden.
The scenario includes joint crossing of a "dangerous" area, firing various weapons at sea and air targets, and rescue operations at sea. The ships will be covered from the air by deck helicopters Ka-27; and a sea infantry sub-unit of the Pacific Navy is placed under the detachment's commandin order to conduct special operations.
According to the RF Ministry of Defence message, the goal of the manoeuvres is strengthening and development of the Russian-Chinese relations and strategic partnership, and cooperation between the two countries and their armed forces.
At the same time one of the main aspects of any war games is a demonstration. Apparently, the necessity of such a large-scale demonstration of the Russian-Chinese strategic partnership possibilities has arisen after the promulgation of a new US military doctrine concerning the Asia-Pacific region.
Last November, during his Asian tour the US President Barack Obama outlined a number of tangible changes in the American geopolitical strategy. After the withdrawal of troops from Iraq and in the near future - from Afghanistan, the United States intends to redirect its security policy from Europe and the Middle East towards the Asia-Pacific region.
Russia, which, by the way, hosts an APEC summit in Vladivostok this year, is clearly aiming at the restoration of its role in the region. There's nothing China can do in this situation, all its main industrial areas being located in the coastal zone, and its export-import transportation passing through the Asian main sea communication lines in the South China Sea.
The US claim to dominance in the region, to put it mildly, confuses China and Russia, and contributes to their closer relations.
"The current maneuvers must demonstrate to the US that Russia and China are committed to military cooperation in the region. And both our countries confirm it to each other," - believes Viktor Litovkin, the chief editor of the "Independent Military Review".
In addition, according to the expert, it is important for China to show the level of naval interactions with Russia now, when territorial disputes between China and the Philippines and a number of other countries over the islands in the South China Sea has dramatically deteriorated.
Litovkin draws attention to the fact, that naval war games with the participation of the Philippines' and the US ships are under way in this same area in a similar demonstrative manner. The American warships calling at Viet Nam, which also puts in a claim for the debatable archipelago, attracts attention as well.
Maneuvers in the Yellow sea are becoming a background for political dialogue between the main powers of the Asia-Pacific region.
Another round of the Sino-American Dialogue on strategic and economic issues with the participation of the US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner is scheduled in the beginning of May in Beijing.
The participants in the dialogue will not be able to bypass the alignment of forces in the Asia-Pacific region. In turn the Russian-American summit with the participation of the newly elected President of Russia Vladimir Putin is planned at the end of May. The reset of the "reset" will hardly manage to avoid the discussion of the situation in Asia.
Space War
Fears increase of big earthquake near Tokyo in the foreseeable future
In a quiet room at Tokyo University, seismologist Shinichi Sakai points to steady, color-coded lines on a digital monitor. The screen displays real-time readings from Japan’s extensive network of seismometers.
This is one of the most seismically active countries in the world, and the flat lines show that all is quiet across the region, at least for the moment.
Then, as if on cue, two of the lines start to jump violently, splashing the screen with red and yellow pixels. They’re tracking a very small earthquake, centered just outside of Tokyo.
Sakai says small quakes like this happen about ten thousand times a year in Japan, and for geologists like him, even the small earthquakes are worth paying attention to. He says there’s been a fivefold increase in small tremors around Tokyo since the huge quake off Japan’s northeast coast in March last year. And that adds up to a mathematical omen for scientists like him.
In January, Sakai and the University’s Earthquake Research Institute crunched the new numbers and came up with a shocking prediction: There's a 70 percent chance a major earthquake will hit Tokyo within the next four years.
Sakai and his colleagues are among the country’s leading seismic authorities, so the prediction itself gave the country a jolt. The Japanese government has also predicted a similar chance of a major quake in the Tokyo area, but over a longer time period — sometime in the next 30 years.
Sakai’s new four-year timeframe has brought a huge backlash among both scientists and political leaders. Sakai hasn’t retracted his prediction, but he now refuses to quote specific timeframes.
“I cannot speak,” he said, with an ironic chuckle.
The last major earthquake to hit Tokyo was in 1923. It had an estimated magnitude of 7.9 and killed more than 140,000 people. Since then there’s been almost no significant seismic activity here, and Sakai says that means most people have forgotten the risk Japan’s capital city still faces.
But not everyone has forgotten.
Yasuji Kamiya, 97, remembers it like it was yesterday.
Kamiya is one of the few remaining survivors of what’s known as the Great Kanto quake. He was 7 in 1923, living with his family in what was then a farming area on the outskirts of Tokyo.
He was fishing in a river on a bright sunny day when the quake hit. He said it knocked him over and shook the ground so violently that it emptied the river onto its banks.
Kamiya said it wasn’t until nightfall that he realized how serious the situation really was. The sky in the direction of downtown Tokyo glowed red from the fires consuming the city. Evacuees began to stream past his home. Some without shoes, all with stunned, empty looks on their faces.
Of course today Tokyo is a radically different place, a sprawling metropolis of some 35 million people. Every day, millions pack into the city’s spotless train network on their way to its forests of glass and steel office towers.
Modern Japanese buildings are among the sturdiest in world. After the 1995 Kobe earthquake, the country spent billions developing the most advanced technology for protecting structures. Still, the government estimates that a powerful quake in Tokyo today would kill nearly 10,000 people, and leave more than half a million buildings in flames.
But Sakai said accurately predicting potential damage is extremely difficult. That’s because it’s not just a question of magnitude, which refers to the energy of the quake. The actual intensity on the ground can vary greatly, depending on whether the quake’s epicenter is deep or shallow.
New evidence suggests a major fault line under Tokyo is much closer to the surface than previously thought. That means a future earthquake here could cause more damage than the city has been planning for.
After last year’s massive quake caught the nation by surprise, the Tokyo government began scrambling to upgrade its disaster plans. So far that means providing more emergency shelter and urging citizens and companies to stockpile emergency supplies.
But these efforts offer little comfort for many people.
“We’re not ready for that yet,” said Toru Seno. Seno, 43, is an artist and electrician. Every day he navigates Tokyo’s labyrinth of elevated highways and corridors of glass towers in his small van.
“If I look up, there’s another highway above me, so if something happens, all I can do is just stay here and get crushed," he said.
Seno says not a minute goes by that he’s not planning his escape. But with last year’s disaster still fresh in everyone’s minds, the psychological toll of a major earthquake in Tokyo would be the hardest to recover from, he said.
“Probably the economy or industry somehow can be recovered,” Seno said. “But the damage for people would be hard. We would be feeling really weak.”
The government’s slow response to last year’s quake, tsunami and nuclear disaster has left trust in government here at all-time lows. For Seno, that means he’s more inclined to believe Sakai’s controversial prediction of a major quake in the next four years over the government’s longer timeframe.
And after recently visiting the fallout zone around the crippled Fukushima nuclear power plant, Seno says the most important message to remember here is that people need to protect themselves from earthquake risks, rather than wait for the government to do it for them.
PRI
Spain moves reluctantly to save major bank
Spain will swoop in with public money this week to clean up huge bad loans at the nation's fourth-biggest listed bank, Bankia, the government said Monday.
As news emerged of the impending rescue of Bankia, created in 2010 from a merger of seven savings banks, its executive chairman Rodrigo Rato announced his resignation.
Shares in the bank, which has the industry's largest exposure to the property market at 37.5 billion euros ($49 billion), closed down 3.26 percent at 2.375 euros on a day which saw Spain's main share index rise 2.72 percent.
Spain's banks are still struggling to emerge from a 2008 property bubble collapse, which eliminated millions of jobs and left the financial sector buried in risky assets.
Investors fear the unknown cost of rescuing the industry could derail efforts to stem a rapid rise in Spain's sovereign debt and avert a bail-out.
"We are finalising a plan to clean up the bank," said an economy ministry official, referring to Bankia, adding that the scheme would use public money and was likely to be announced by Friday.
The state was considering using contingent convertible bonds, he said. These bonds convert into equity in certain circumstances, for example if a bank's core capital falls below a set ratio.
The leading daily El Pais estimated Bankia would need 5-10 billion euros ($6.5-13 billion) to repair its balance sheet. Business daily Expansion put the figure at 5-7 billion euros.
Those reports were "not far off track", said the official, declining however to give any figure.
The bank's chairman said in a statement he would leave its future in other hands.
"I have decided to pass the baton to a new manager to decide what is best for this entity," said Rato, who was Spanish economy minister from 1996-2004 and managing director of the IMF until 2007.
Rato said he would propose the former chief executive of Spain's second-largest bank BBVA, Jose Ignacio Goirigolzarri, as his replacement.
Prime Minister Mariano Rajoy's conservative government, which swept to power in December, had previously refused to countenance the use of public money to rescue the banks.
Rajoy had already ordered Spanish banks to set aside 54 billion euros in provisions against property-related assets.
But the prime minister said Monday that he would use public money if necessary to avoid a systemic collapse.
"If it were necessary to prompt lending, to save the Spanish financial system, I would not decline to do as all the countries in the European Union have done and inject public money," he told Onda Cero radio.
"But that would be a last resort."
The premier said new legislation would be announced on Friday to help banks deal with their assets.
But the Spanish leader said he was "not in favour of a bad bank", an entity that would regroup bad assets and shift their risk away from commercial banks to the government.
He insisted that if any more public money had to go into the banks, it would not compromise the government's tough deficit targets.
"Public money will only be used in an extreme situation... this will not affect the public deficit," he said.
Rajoy is under pressure from eurozone neighbours and financial markets to lower Spain's deficit from 8.5 percent of gross domestic product last year to 5.3 percent this year and 3.0 percent in 2013.
The International Monetary Fund last month urged Spain to push further ahead with banking reforms.
Clearly targeting Bankia, the IMF said in a report: "To preserve financial stability, it is critical that these banks, especially the largest one, take swift and decisive measures to strengthen their balance sheets and improve management and governance practices."
The Bank of Spain said the banks' doubtful loans in February amounted to 143.8 billion euros ($188 billion), rising to 8.15 percent of total credits -- the highest ratio since 1994.
Yahoo News Canada
German Chancellor Angela Merkel faces a fight for the eurozone's future
There is little prospect of the German chancellor putting her hands up and losing the economic war she has been waging with her eurozone partners for two years now.
Austerity Rules OK might be the graffiti shorthand for the debt and public spending reduction programmes that have formed the core of the Merkel approach to keep the eurozone intact and the markets on side.
The message that came through strongly from France and Greece at the weekend was that austerity does not rule OK.
Mrs Merkel was effectively told to "get lost" by one of the new political leaders in Greece – Syriza party leader Alexis Tsipras – who's plea was to end the "bail-out barbarism".
Mrs Merkel or the markets are more likely to tell Greece to "get lost"
"A Greek eurozone exit is on the cards although the probability and timing of such an event is uncertain," said Tristan Cooper, sovereign debt analyst at Fidelity Worldwide Investment.
The election results were hardly a surprise for either the markets or European leaders.
Millions of voters decided they preferred to be travelling along the growth road rather than continue to experience the bumpy ride along the austerity track that has cost them jobs, money and resulted in misery for many.
The gulf between political leaders delivering the medicine and the voters having difficulty in swallowing it has become wider and reached the point where it is proving indigestible.
The bail-out programmes that have become the cornerstone of eurozone recovery have rapidly become millstones because they hit voters where it hurts, in the pocket.
David Cameron, hardly a disinterested bystander, feels that the eurozone has barely reached midpoint between downturn and recovery.
Brussels disagrees but the eurocrats have their own agenda and have been anxious to encourage the growth school of recovery.
But providing a mixture of austerity and growth that would keep the eurozone intact and the markets happy is comparable to seeing pigs take to the sky.
Markets have been making sympathetic noises about the growth case but they have exercised Merkel-style discipline in keeping tabs on any attempts to stray from fiscal salvation. Ask Spain and Holland.
François Hollande is well aware of the risks he would be taking if he went too far in redrafting the Nicolas Sarkozy manifesto, while markets went a long way in leading to a new French president before one arrived.
The expectation or the hope is that Mr Hollande will ditch part of his radical baggage. He cannot afford to be too radical because as Mr Normal he has built up expectations among his "normal" supporters.
Nicholas Spiro, managing director of Spiro Sovereign Strategy said: "The markets will remain suspicious of Mr Hollande.
"His programme gives investors reasons to be even more concerned about France's creditworthiness."
But can Mrs Merkel help and accept his demands for changes to the fiscal pact? She says she would welcome Mr Hollande with "open arms".
Whether the arms are only slightly or wide open will determine whether she is willing to see some tinkering done.
She cannot afford to be too generous because of the fragility of her coalition, German public opinion and market makers worried about any policy drift.
The danger is that a shift could well provide the wrong signals and encourage the bail-out countries to relax. And, if the recovery element in any revision fails to deliver, the problems of euroland will become even deeper and more intractable.
The seeds of a break-up were sown at the start of the crisis and on the current evidence there is no way that Greece can retain its euro membership. Athens has drifted into no man's land and there is no Heracles ready to come to the rescue.
The French-German relationship remains key but all the signs are that the euro's players will try to give themselves more time to find a way out of the economic mess. That could be fatal.
The Telegraph
Two quakes shake New Zealand
A magnitude 4.2 earthquake shook people in the Wellington region and parts of the top of the South Island at 11.33am (9.33am AEST).
The tremor was centred 10 kilometres southwest of Wellington, at a depth of 30km, GeoNet says.
The second quake, also measuring 4.2 on the Richter scale, struck at 12.31pm and was felt on the west coast of the South Island.
It was centred 10km south of Ross at a depth of 15km.
Police told AAP they had received no reports of damage.
The Australian News
New eurozone crisis looms as Spain prepares bail-out
Bankia, Spain's fourth biggest bank, is the first in line for state aid. Rodrigo Rato, chairman and former IMF managing director, swiftly resigned after it was disclosed the finance ministry was preparing to refinance the bank and introduce legislation to protect the balance sheets of others.
Spain, which also signalled it could dock its only aircraft carrier to save €30m a year, is already struggling to cope with an austerity drive that has pushed the jobless total up to nearly 25pc of the workforce.
Mr Rajoy insisted that any bank bail-out would not compromise the tough targets set by Brussels to reduce the budget deficit.
Peter Kenny, managing director at Knight Capital, said Spain's action was positive because "it's them taking ownership of their own issues".
Fears of a fall-out in financial markets after the election results in France and Greece were short-lived. Shares and the euro recovered after initial falls as investors reasoned any policy changes in the eurozone recovery programme were some way off.
But the turmoil in Greece produced by a backlash against a tough austerity programme and the failure of early efforts to form a coalition government heightened speculation the country would be forced out of the eurozone.
Citi's European economics team said there was a "rising risk of a Greek exit from the euro within the next 12 to 18 months."
Angela Merkel, the German chancellor, urged the Greek political parties to stick to the bail-out programme but her pleas fell on deaf ears.
Markets remain more interested in whether France's new president, François Hollande, will be able to persuade her to support policy changes that would meet demands for more emphasis on growth and economic recovery rather than austerity.
Mrs Merkel said she would welcome President Hollande with "open arms" and was willing to work with him but there was little sign she was ready to meet demands for a redrafting of the eurozone fiscal pact.
The two leaders are due to meet after Mr Hollande is sworn in next week. President Obama has offered to meet him before the G8 economic summit on May 18, when David Cameron is due to meet him for the first time.
Downing Street rejected suggestions that Britain could suffer because of the prime minister's support for former President Sarkozy.
Christine Lagarde, IMF chief executive, described the eurozone growth versus austerity battle a "false debate". She used a speech in Zurich to call for more flexibility for eurozone countries struggling to meet fiscal targets.
Thin trading in European markets exaggerated currency and share movements. The Euro STOXX 50 index dropped to a four-and-a-half month low at one stage but recovered to finish up 1.55pc. France's CAC-40 index ended 1.7pc higher, while Germany's DAX 30 index edged up by just 0.1pc.
Madrid benefited from the government's support for the banks, rising by 2.72pc, but there was no relief in Athens where the market slumped 6.7pc.
First reaction from London markets comes on Tuesday morning.
The Telegraph
Hollande's election may spell unilateral strike on Iran
Analysts in Israel believe the election of Francois Hollande could weaken the country's position as it faces a nuclear threat from Iran.
Francois Hollande won the 2012 French Presidential elections defeating Nicolas Sarkozy by just over a million votes in an election that some view as a turn to the left for France. However, in Israel the election of the socialist Hollande is troubling in regard to future policy on Iran in western capitals.
DEBKAfile a Jerusalem based military intelligence website reports that Israel has loss a key ally in it's conflict with Iran, over it's nuclear program. Sarkozy was considered tougher on Iran by hawks in Israel then President Obama, discussing the matter more openly and conceding that the issue would have to be tackled by military action according to DEBKAfile.
Prime Minister Benjamin Netanyahu has called for elections in the Jewish state just one year before they were scheduled to occur, according to the Boston Herald some believe that the Israeli prime minister is taking the unusual step to preempt any effort Obama could make to see Netanyahu defeated politically, if and when the U.S. President is re-elected. Netanyahu is popular with the Israeli public, and by dismantling his government now and holding elections most likely on September 4th he ensures that he will remain in office.
The question is will Netanyahu have western support if he decides his country must attack Iran's nuclear program?
France was key in overthrowing Muammar Qaddafi in Libya, with Sarkozy spending a million dollars in the NATO backed campaign according to DEBKAfile. However according to DEBKA's analysis the French could ill afford to get involved in the civil war in the northern African nation. This, and his strong support of the state of Israel could have been Sarkozy's undoing with France's Muslim and Leftist electorate, DEBKAfile reported.
The Jerusalem based website quoted Netanyahu in discussing Israel's early elections, as saying he didn't want "a year and a half of political instability accompanied by blackmail and populism". With Israeli polls stating Prime Minister Netanyahu is miles ahead of any possible contender ahead of elections for his third term, DEBKAfile reported the Israeli leader could decide that as international support for an Israeli attack on Iran erodes that the Jewish state may have to go it alone.
Read more: http://www.digitaljournal.com/article/324422#ixzz1uHocib5p
Digital Journal
Early Israeli elections canceled amid speculation of Iran attack
In a dramatic turn of events that could influence a possible Israeli strike on Iran, Israeli media reports early Tuesday indicate that Prime Minister Benjamin Netanyahu has reached an agreement with the Kadima opposition party for a unity government, canceling an early election.
There was no immediate comment from official sources on the decision that was reported at about 2 a.m.
The reports came as Israel's parliament held debates long into the night over whether to break up ahead of early elections called for the fall. Knesset spokesman Yotam Yakir said no final vote was taken and parliament is not dispersing.
Earlier Monday, the Israeli government proposed that the election be moved up to Sept. 4.
The election had originally been set for 2013.
According to the media reports, Netanyahu forged an agreement with opposition leader Shaul Mofaz of Kadima shortly before parliament was set to vote to disperse.
The appointment of Mofaz, a former military chief and defense minister, is significant in Israel's standoff with Iran as he has been a vocal critic of Israel striking Iran's nuclear sites on its own.
The call for early elections had renewed speculation that Israel might attack Iran's suspect nuclear program, perhaps within months.
Israel, like the West, thinks Iran is developing nuclear weapons, a charge Tehran denies. But it has repeatedly hinted it might strike Iran if it concludes that U.S.-led diplomacy and sanctions have failed.
Netanyahu has hinted at the possibility of an Israeli military strike on Iran's nuclear facilities but has not made an open threat.
Israel considers Iran a threat to its existence because of its nuclear and missile development programs, frequent reference to Israel's destruction by Iranian leaders and Iran's support of violent anti-Israeli groups in Lebanon and Gaza.
The reports said Kadima agreed to join Netanyahu's government on condition it supports a proposal about a military deferment for ultra-Orthodox Jews. The issue was one of the main reasons Netanyahu decided to bring forward the election date. The deal stipulates that Mofaz will serve as deputy prime minister and that two other key parties, Yisrael Beitenu and Shas, had agreed to the move, according to reports.
Kadima members will also serve as head of the parliament's powerful Security and Foreign Affairs Committee, reports said.
The current government is the most stable Israel has had in years. But disagreements on a variety of domestic issues such as drafting the ultra-Orthodox into the military and tearing down illegal structures in West Bank settlements have led Netanyahu to move up elections by more than a year.
Recent polls have suggested Netanyahu's Likud Party would win at least one-quarter of parliament's 120 seats to become the legislature's largest faction -- putting him in a comfortable position to form a majority coalition.
They also show he might be able to form a more moderate coalition than the hawkish lineup he now heads, in partnership with centrist parties more open to making concession to the Palestinians.
Israel's Labor party called the move "ridiculous" and said they would remain in the opposition.
Read more: http://www.foxnews.com/world/2012/05/07/early-israeli-elections-canceled-amid-speculation-iran-attack/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+foxnews%2Fworld+%28Internal+-+World+Latest+-+Text%29&utm_content=Google+Reader#ixzz1uHhfIjKj
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