FRANKFURT: The dollar sank to its lowest level ever against the euro Wednesday as fears about a steeper economic downturn in the United States intensified. President Nicolas Sarkozy of France, who has been the most vocal leader in Europe in decrying the impact on exports, told his new finance minister to seek an accord among euro-zone countries for managing exchange rates.

The euro, used by 13 countries from Ireland to Slovenia, traded as high as $1.3787 against the dollar, and was also up against the British pound, which hit a new 26-year high of $2.0363. The euro was also up sharply against the Japanese yen, to around 168 yen to the euro.

This picture of global currency gyrations - with the dollar the clear loser and the euro the only clear winner - reflects a similar conviction about economic fundamentals that has taken shape in recent weeks, economists said.

The rapid deterioration of the American housing market is being felt through higher interest rates and a rise in defaults hitting the complex financial instruments used to bankroll shaky mortgages. That has nurtured a view of a weaker U.S. economy.

Portugese Prime Minister Jose Socrates presented his agenda to the European Union parliament on Wednesday. The focus was on ending the impasse over a new EU treaty and appointing a new anti-terrorism coordinator.

Socrates told EU parliamentarians in Strasbourg that his country's tenure in the rotating six-month position would "mark the end of the deadlocks and blockages that have held the European project back too long.

 

"European citizens demand answers to questions which directly affect their everyday lives and where they recognize that Europe can produce concrete results that make a difference and contribute to improving their living conditions," Socrates said.

 

Socrates' chief task will be to get all the EU's 27 member states to agree to long-overdue procedural reforms to its basic treaty. But he may find it difficult to deliver on his words.

BOLOGNA, Italy (AP) - Tens of thousands of Italian farmers protested Wednesday against the lack of clear and detailed labels on agricultural products, saying cheap imports from China were hurting their bottom line.

Protesters marched through downtown Bologna demanding the implementation of a law approved by parliament last year that would force Italian companies to specify on labels the origin of the ingredients of foods and drugs.

The Coldiretti agriculture lobby, which organized the demonstration, said more 150,000 people participated.

Coldiretti said large-scale food-processing companies increasingly purchase raw foods abroad at low prices and mix them with Italian-grown products. The result is that it is becoming impossible to identify the origin of the contents of products such as fruits and vegetables, it said.

Such mixing has become a greater concern in light of recent scandals involving tainted products from China, a growing list that includes frozen fish to juice.

EUOBSERVER / BRUSSELS - The European Parliament is considering flying the EU flag and playing the EU anthem more often in its own buildings as part of a political message to member states who have scrapped the union's symbols from the proposed new EU treaty.

The parliament on Wednesday (11 July) adopted its opinion on the EU's reform treaty which was agreed by EU leaders last month and which will be subject to detailed negotiations in a so-called Inter Governmental Conference (IGC) in the coming months.

In Wednesday's opinion, MEPs welcomed the fact that the reform treaty blueprint "safeguards much of the substance" of the original EU constitution, which was rejected in popular referenda in France and the Netherlands in 2005.

But the EU assembly also "regrets" drafting changes in the new style treaty. It has been stripped of all constitutional elements while explicitly suggesting EU's powers can be limited and handed back to member states. It also gives the UK a special opt-out from the EU's charter of fundamental rights.

EUOBSERVER / STRASBOURG - The European parliament and EU governments are likely to clash over national postal monopolies, as the assembly has endorsed plans to open the EU market for delivering light-weigh letters and postcards to full competition from 2011.

On Wednesday (11 July), a broad majority of MEPs - 512 in favour and 155 against - set 31 December 2010 as the deadline for eliminating any remaining monopolies on mail weighing below 50 grams, the last category where postal companies face no rivals.

German conservative MEP Markus Ferber, in charge of the dossier, expressed satisfaction over the result, although he admitted making some concessions to have the idea flying.

For example, the twelve newest EU entrants as well as those with a particularly difficult topography including a large number of islands, such as Greece, will be granted two extra years to adapt to changes.

Italian pasta makers say bad harvests and competition from biofuel manufacturers have led to a durum disaster. Consumers will be paying for it by summer's end.

 Pasta prices are going up. And it's not just the truffles. Mamma mia! The price of a plate of pasta is expected to rise 20 percent this summer as a bad wheat harvest and increasing competition from biofuel manufacturers send the price of delicate, delicious durum wheat skyrocketing.

Italian consumers, accustomed to paying 70 euro cents ($1) for a pack of the good stuff -- half the cost of a cup of coffee -- will be the first to feel the pinch, but the Italian Pasta Manufacturer's Association will be passing the costs on to export customers as well. "Pasta producers have tried, with growing difficulty that has now become no longer sustainable, to absorb the high cost differentials," the Association announced last week. "But this situation cannot go on any longer in the face of the dynamics of the durum wheat market."

Italy's famous macaroni makers are the latest to find themselves at the wrong end of competition from the booming biofuel industry, which converts corn, sugar, wheat and other crops to fuel and energy. As biofuels catch on, governments are increasing subsidies. Farmers are finding themselves in an unfamiliar position: a seller's market. Courted by food manufacturers and energy firms alike, they're raising prices and shifting production to crops that can be used to make ethanol for cars, heat homes or generate electricity.

The European Commission has unveiled a white paper containing ideas that could lead to greater EU regulation of sport.

The paper says sport should only have limited immunity from rules governing the EU internal market.

It also announces a study to assess whether legislation is needed to govern the activities of agents.

Fifa president Sepp Blatter has said politicians should leave sport "in peace" - but Uefa described the white paper as a big step forward.

Libya's Supreme Court has upheld death sentences imposed in 2004 on five Bulgarian nurses and a Palestinian doctor for infecting children with HIV.

However, a mediating body is now said to have agreed a financial settlement with the children's families.

The High Judiciary Council, which can overrule the Supreme Court, is to meet on Monday to confirm, annul or amend the death penalty verdicts.

The imprisonment of the medics has caused an international outcry.

They insist they are innocent of deliberately giving tainted blood to the children at the Benghazi hospital in 1998.

EUOBSERVER / BRUSSELS - The European Commission is planning on making the promotion of a new treaty one of its main tasks in the coming months, after the previous more grandly name EU constitution was rejected in two founding member states.

EU communications commissioner Margot Wallstrom on Tuesday (10 July) said she wants to discuss the final treaty with citizens.

Communicating will be "one of the main political priorities", said the commissioner who is planning on highlighting the fight against climate change and energy solidarity as reasons why citizens should like the new document.

The new treaty - essentially a repackaging of most of the draft EU constitution - is set to be finalised by the end of the year with one year for ratification, and is to come into force by mid 2009.

EUOBSERVER / BRUSSELS - The European Commission is launching an EU-wide debate on what type of joint action the bloc should take to prevent the risk of biological materials and pathogens being used by terrorists.

Presenting the paper on Wednesday (11 July), Commissioner Franco Frattini, in charge of security issues, admitted that the threat of bio-terrorism is statistically low but that its consequences could be "devastating".

"I couldn't tell my daughter that the risk doesn't exist," he said, adding he could not be more specific about the commission's "sensitive intelligence information" on the subject because he did not want to "give indication to possible suspect people".

The commissions' paper points out that with the open borders inside the union and the global transport of goods, terrorists could get hold of materials that could potentially infect people and animals or contaminate soil and buildings.

EU health commissioner Markos Kyprianou stressed that such attacks could happen simultaneously in several member states which is the main problem the new strategy aims to tackle.

Britain is on the brink of a diplomatic crisis with Russia which could see the expulsion of several diplomats from London and tit-for-tat reprisals by Moscow. The Foreign Office and Downing Street are preparing to send a strong signal to the Kremlin following its refusal to extradite Andrei Lugovoi, the former KGB agent suspected of murdering Alexander Litvinenko last November. On Monday, Russian prosecutors formally announced that Mr Lugovoi would not be handed over to the UK, on the grounds that Russia's constitution prevents his extradition.

Article continues The government was last night considering counter-measures to show Britain's extreme displeasure at the Kremlin's decision, and the seriousness with which it takes the "terrible" murder of Mr Litvinenko - a British citizen and fierce critic of the Russian president, Vladimir Putin. The options include the possible expulsion of Russian diplomats from the London embassy, and the withdrawal of cooperation in several areas, including education, trade, social affairs and counter-terrorism.

Yesterday a spokesman for Russia's foreign ministry, Mikhail Kamynin, warned that London was in danger of jeopardising its relationship with Moscow. "I don't understand the position of the British government. It is prepared to sacrifice our relations in trade and education for the sake of one man," he said, adding: "Our position is clearly in line with Russia's constitution and legislation."

The Lib Dems want to cut the basic rate of income tax from 20p to 16p in tax changes they say will leave households earning up to about £68,000 better off.

"Green" taxes on cars and flights and the ending of £13.5bn of tax breaks for high earners would fund the cuts.

Council tax would be replaced by a local income tax and inheritance tax and stamp duty thresholds raised.

Leader Sir Menzies Campbell said: "Tax cuts for the majority will be paid for by the wealthy minority."

It is an axiom of American political life that the actions of the US military are beyond criticism. Democrats and Republicans praise the men and women in uniform at every turn. Apart from the odd bad apple at Abu Ghraib, the US military in Iraq is deemed to be doing a heroic job under trying circumstances.

That perception will take a severe knock today with the publication in The Nation magazine of a series of in-depth interviews with 50 combat veterans of the Iraq war from across the US. In the interviews, veterans have described acts of violence in which US forces have abused or killed Iraqi men, women and children with impunity.

The report steers clear of widely reported atrocities, such as the massacre in Haditha in 2005, but instead unearths a pattern of human rights abuses. "It's not individual atrocity," Specialist Garett Reppenhagen, a sniper from the 263rd Armour Battalion, said. "It's the fact that the entire war is an atrocity."

A number of the troops have returned home bearing mental and physical scars from fighting a war in an environment in which the insurgents are supported by the population. Many of those interviewed have come to oppose the US military presence in Iraq, joining the groundswell of public opinion across the US that views the war as futile.

His opening paragraphs restate, explicitly, America's role as self-appointed leader of the world and bearer of The Truth. That posture may have been bearable, if briefly demonstrably true, in the 1940s and early 1950s. But only Americans who refuse to hear the rest of the world still speak of the United States in Superman terms, as "Leader of the Free World." The United States is a leader. It isn't the leader: that's the inherent assumption of institutions like the G8, the UN's Security Council, even NATO, if NATO is to survive. No European Union nation considers the United Statesthe leader of the free world, especially not since the debacles those nations have witnessed and scorn they've endured from the Bush administration. So what's Obama doing when he's calling for a rebuilding of international institutions? "The mission of the United States is to provide global leadership grounded in the understanding that the world shares a common security and a common humanity"--as long as the world understands that America leads. Which means the rest follow. This is a restatement of the Bush doctrine in humbler terms, and without much substance behind it. A "common security and a common humanity" meets the objectives of a Sunday sermon. It doesn't tell us what Obama means by that common humanity, nor how he'd achieve it. What he does say angles away from "common humanity" and back to a staunchly America-centered world-view.

That world view restates the threats facing the United States in Bush's hyperbolic terms. The notion that al-Qaeda, for all its terrorism, represents a threat as vast and dangerous as fascism or communism has been a staple of the Bush doctrine. Al-Qaeda in particular and terrorism by definition could never amount to a threat on the level of fascism or communism. Terrorism is a crude and short-range method, not a program nor an ideology nor a sustainable enterprise. Yet here's Obama again, reinvigorating the absurd premise: "This century's threats are at least as dangerous as and in some ways more complex than those we have confronted in the past. They come from weapons that can kill on a mass scale and from global terrorists who respond to alienation or perceived injustice with murderous nihilism. They come from rogue states allied to terrorists and from rising powers that could challenge both America and the international foundation of liberal democracy. They come from weak states that cannot control their territory or provide for their people. And they come from a warming planet that will spur new diseases, spawn more devastating natural disasters, and catalyze deadly conflicts." That last, about global warming, is the closest he gets to an accurate comparison to global, existential threats. But conflating it with the threats of terrorism or rogue militarism confuses the issue to the point of sensationalism. Global warming aside, "this century's threats" are not as or more dangerous than the last. They've been made more dangerous than they are because of rhetorical exaggerations and catastrophic strategic mistakes: Bush calling the war on terror a war, and Bush fighting it by expanding it to Iraq while neglecting it in Afghanistan. If terrorism had been fought globally as effectively as it has been in the Philippines (for example), which is how some of us wanted it fought beginning on Sept. 12, 2001, the facile language of war that presidential candidates are using today, left and right, would have been shown to be folly. As it is, the language's folly pales compared to its ongoing execution.

Obama gets worse. Repeating his idea for a "phased withdrawal" from Iraq only to call it a "redeployment" in the same breath (the coy deflection from cutting and running, which is what this is and what it must be, dates back to Ronald Reagan calling the Marines' withdrawal from Beirut in 1984 a "redeployment"), he leaves open the door for a longer stay "if the Iraqi government meets the security, political, and economic benchmarks to which it has committed" and settles on the deceptive language of a permanent stay in the form of "a minimal over-the-horizon military force in the region to protect American personnel and facilities." Facilities? The previous line--I'm not kidding you--was this: "[W]e must make clear that we seek no permanent bases in Iraq." It isn't Obama's only blatant contradiction (more of those in a moment), although what Iraqis and other Mideasterners will read in this passage is nothing new under American policy's sun.

Skeletons are being removed from the site of an ancient Muslim cemetery in Jerusalem to make way for a $150m (£86m) "museum of tolerance" being built for the Los Angeles-based Simon Wiesenthal Centre.

Palestinians have launched a legal battle to stop the work at what was the city's main Muslim cemetery. The work is to prepare for the construction of a museum which seeks the promotion of "unity and respect among Jews and between people of all faiths".

Israeli archaeologists and developers have continued excavating the remains of people buried at the site - which was a cemetery for at least 1,000 years - despite a temporary ban on work granted by the Islamic Court, a division of Israel's justice system. Police have been taking legal advice on whether the order is legally binding. The Israeli High Court is to hear a separate case brought by the Al Aqsa Association of the Islamic Movement in Israel next week.

The project, which a spokesman said had been conceived in partnership with the Jerusalem municipality and the Israeli government, was launched at a ceremony in 2004 by a cast of dignitaries ranging from Ehud Olmert, who is currently the acting Prime Minister, to the governor of California, Arnold Schwarzenegger.

Yesterday, the pound and the euro hit their highest levels in a generation against the US dollar. The dollar, meanwhile, collapsed to a record low against an average of all the world's major currencies. It is tempting to interpret the flight from the dollar in financial markets as the clearest, most objective, indicator of America's relative decline.

Europe has long been derided as an ageing, sclerotic continent, doomed to irrelevance in a world dominated by America and Asia. But could it actually be America, not Europe, that is failing to compete in the globalised world economy and is now threatened with long-term decline?

Much that is happening in the world today certainly seems to belie the hubristic assumptions about American hegemony that were so prevalent a few years ago. It is not just the military debacle in Iraq and the geopolitical setbacks suffered by American diplomacy from the Middle East to Venezuela to North Korea. Less prominent in the media headlines, but in some ways more troubling, are the indicators of economic underperformance: the reliance on foreign borrowing (now equivalent to $2,000 annually for every American man, woman and child); the loss of Wall Street's global dominance in financial services to the City of London; and now to cap it all, the dollar collapsing to record lows. Surely this is the ultimate vote of no confidence in the US economy by people who are best placed to know?