Corruption probe shrouds Quebec in new darkness

MONTREAL (Reuters) – Half a century ago, a new crop of Quebec leaders sparked the so-called Quiet Revolution to eradicate the “Great Darkness” – decades of corruption that kept Canada‘s French-speaking province under the dominance of one party and the Catholic church.

The revolution’s reforms, including cleaning up the way lawmakers were elected and secularizing the education system, seemed to work, paving the way for decades of growth, progress and prominence as Canada emerged as a model of democracy.

Fifty years later, a public inquiry into corruption and government bid-rigging suggests the province’s politics are not as clean as Quebecers had hoped or believed.

Since May, when the inquiry opened in Montreal, Canadians have been getting daily doses of revelations of fraud through live broadcasts on French-language television stations. Corruption involving the Mafia, construction bosses and politicians, the inquiry has shown, drove up the average building cost of municipal contracts by more than 30 percent in Montreal, Canada’s second-largest city.

Last month, Montreal Mayor Gerald Tremblay resigned as did the mayor of nearby Laval, Gilles Vaillancourt. Both denied doing anything wrong, but said they could not govern amid the accusations of corruption involving rigging of municipal contracts, kickbacks from the contracts and illegal financing of elections.

Tremblay has not been charged by police. Vaillancourt’s homes and offices have been raided several times by Quebec’s anti-corruption squad, which operates independently of the inquiry, but no charges have been filed against him either. Police said the raids were part of an investigation but they would not release further details.

“Quebecers lived for several years under the impression that they had found the right formula, that their parties were clean,” said Pierre Martin, political science professor at the University of Montreal. Now, he said, “people at all levels are fed up.”

The inquiry must submit its final report to the Quebec government by next October. It has exposed practices worthy of a Hollywood noir thriller – a mob boss stuffing his socks with money, rigged construction contracts, call girls offered as gifts, and a party fundraiser with so much cash he could not close the door of his safe.

“Even though we are in the early days, what is emerging is a pretty troubling portrait of the way public contracts were awarded,” said Antonia Maioni, director of the McGill Institute for the Study of Canada in Montreal.

Quebec’s Liberals, the force behind the Quiet Revolution, launched the inquiry as rumors of corruption swirled. The government then called an election for September, a year ahead of schedule, in what was seen as an attempt to stop damaging testimony hurting its popularity.

The tactic did not help. Jean Charest’s Liberals lost to the Parti Quebecois, whose ultimate aim is to take the French-speaking province, the size of Western Europe, out of Canada.

‘IT WASN’T COMPLICATED’

According to allegations at the inquiry, the corruption helped three main entities: the construction bosses who colluded to bid on contracts, the Montreal Mafia dons who swooped in for their share, and the municipal politicians who received kickbacks to finance campaigns.

In Quebec, the Mafia has been dominated by the Rizzuto family, with tentacles to the rest of Canada and crime families in New York and abroad. But recently the syndicate has been facing challenges from other crime groups in Montreal, according to the Toronto-based Mafia analyst and author Antonio Nicaso.

The reputed godfather of the syndicate, Vito Rizzuto, has been subpoenaed to appear before the commission, but the date for his testimony has not been set.

The hearings have zeroed in on four construction bosses and how their companies worked with the Mafia, bribed municipal engineers and provided funds for mayoralty campaigns in Montreal, the business capital for Quebec’s 8 million people.

“It’s not good for the economy,” said Martin. “It’s not good for any kind of legitimate business that tries to enter into any kind of long-term relationship with the public sector.”

Quebec’s anti-corruption squad has arrested 35 people so far this year, staging well-publicized raids on mayoral offices and on construction and engineering companies. The squad has arrested civil servants and owners of construction companies, among others.

“I now must suffer an unbearable injustice,” Tremblay said in a somber resignation speech earlier this month after a decade as mayor of Montreal, saying he could not continue in office because the allegations of corruption were causing a paralysis at City Hall.

Some of the most explosive allegations at the inquiry, headed by Quebec Superior Court Justice France Charbonneau, came from Lino Zambito, owner of a now bankrupt construction company, and from a top worker for Tremblay’s political party, Union Montreal.

Zambito, who is seen as one of the smaller players and who also faces fraud charges, described a system of collusion between organized crime, business cartels and corrupt civil servants, with payments made according to a predetermined formula.

“The entrepreneurs made money, and there was an amount that was due to the Mafia,” Zambito told the inquiry. “It wasn’t complicated.”

Zambito said the Mafia got 2.5 percent of the value of a contract, 3 percent went to Union Montreal and 1 percent to the engineer tasked with inflating contract prices.

Tremblay did not respond to emails requesting comment on the allegations of corruption at city hall.

A former party organizer, Martin Dumont, alleged the mayor was aware of double bookkeeping used to hide illegal funding during a 2004 election.

Dumont said the mayor walked out of the room during a meeting that explained the double bookkeeping system, saying he did not want to know anything about it.

Dumont also described how he was called into the office of a fundraiser for Union Montreal to help close the door of a safe because it was too full of money.

“I think it was the largest amount I’d ever seen in my life,” Dumont said at the inquiry.

GOLF, HOCKEY, ESCORTS

The inquiry also saw videos linking construction company players with Mafia bosses. In one police surveillance video, a Mafia boss was seen stuffing cash into his socks.

A retired city of Montreal engineer, Gilles Surprenant, described how he first accepted a bribe in the late 1980s after being “intimidated” by a construction company owner. Over the years he said he accepted over $ 700,000 from the owners in return for inflating the price of the contracts.

Another retired engineer, Luc Leclerc, admitted to bagging half a million dollars for the same service. He said the system was well-known to many at city hall and simply part of the “business culture” in Montreal. He also got gifts and paid golf trips to the Caribbean with other businessmen and Mafia bosses.

Gilles Vezina, who is currently suspended from his job as a city engineer, concurred.

“It was part of our business relationships to get advantages like golf, hockey, Christmas gifts” from construction bosses, he told the inquiry in mid-November.

The gifts didn’t stop there. Vezina said he was twice offered the services of prostitutes from different construction bosses in the 1980s or early 1990s, which he said he refused.

The accusations are jarring for a country that prides itself on being one of the least corrupt places in the world, according to corruption watchdog Transparency International. But experts say corruption in Montreal was something of an open secret.

“The alarm signals have been going off here for 20 years and no one has done anything,” said Andre Cedilot, a former journalist who co-wrote a book on the Canadian Mafia.

Quebec’s new government has introduced legislation tasking the province’s securities regulator with vetting businesses vying for public contracts and allowing it to block companies that do not measure up.

Anti-corruption activist Jonathan Brun was not optimistic.

“You’ve got to use modern technology,” said Brun, a co-founder of Quebec Ouvert, a group that wants to make all information about contracts freely available rather than asking regulators to oversee individual companies. “You’ve got to change the entire system if you really want to fight corruption.”

(Writing by Russ Blinch; Editing by Janet Guttsman, Mary Milliken and Prudence Crowther)

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“Hobbit” actor McKellen has prostate cancer

LONDON (Reuters) – “The Hobbit” actor Ian McKellen said in an interview published on Tuesday that he had had prostate cancer for the last six or seven years, but added that the disease was not life-threatening.

McKellen, 73, played Gandalf in the hit “Lord of the Rings” movie trilogy, and reprises the role in three prequels based on J.R.R. Tolkien’s novel “The Hobbit”.

The first of those, “The Hobbit: An Unexpected Journey”, recently had its world premiere in New Zealand, where it was shot under the directorship of Peter Jackson.

“I’ve had prostate cancer for six or seven years,” McKellen told the Daily Mirror tabloid. “When you have got it you monitor it and you have to be careful it doesn’t spread. But if it is contained in the prostate it’s no big deal.”

His representatives in London were not immediately available to comment on the interview.

“Many, many men die from it but it’s one of the cancers that is totally treatable,” added McKellen, one of Britain’s most respected actors who is also well known in Hollywood for appearances in the X-Men franchise.

“I am examined regularly and it’s just contained, it’s not spreading. I’ve not had any treatment.”

He admitted he feared the worst when he heard he had the disease.

“You do gulp when you hear the news. It’s like when you go for an HIV test, you go ‘arghhh is this the end of the road?’

“I have heard of people dying from prostate cancer, and they are the unlucky ones, the people who didn’t know they had got it and it went on the rampage. But at my age if it is diagnosed it’s not life threatening.”

“The Hobbit” opens in cinemas later this week.

(Reporting by Mike Collett-White)

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Timeline: Key dates ahead as Congress confronts “fiscal cliff”

(Reuters) – Sharp U.S. tax increases and government spending cuts will take effect in January unless Congress and President Barack Obama can agree on a package of deficit reduction measures.

With lawmakers rushing to avert events that could trigger another recession, here is a look at key dates ahead, with estimated impacts based on research by the Tax Policy Center and the Bipartisan Policy Center, both non-partisan think tanks.

* December 14. This was the targeted adjournment date for the U.S. House of Representatives, but it has been postponed. The U.S. Senate has not set an adjournment date.

* December 17. Unofficial optimal date to have a “framework” for a deal in place, congressional aides say, in order to permit time for review and procedural delays in Congress. Congress can go beyond this time without much trouble, however.

* December 21. Target date for a final deal that would permit lawmakers a full holiday break, aides say.

The House could be in session through at least December 21 and will not adjourn “until a credible solution to the fiscal cliff has been found,” according to Republican House leadership.

* December 24. Some skeptical aides say Congress will work to Christmas Eve, possibly reaching a deal, or possibly not.

* December 25. Christmas holiday.

* December 26-31. If no deal has been reached by this time to raise the government’s debt ceiling of $ 16.4 trillion, the U.S. Treasury Department will have to take “extraordinary measures” to put off possible default, as it has done before.

If Congress does not have a “fiscal cliff” deal before Christmas, lawmakers may have to return to Washington this week.

* January 1. Expiration of low tax rates enacted under President George W. Bush and extended in 2010 under Obama. This event would raise taxes an estimated $ 1,600 per U.S. household annually.

Expiration of Obama payroll tax cut of 2011 and 2012. This would raise taxes an estimated $ 700 per household.

Deadline for dealing with “tax extenders” such as the corporate research and development tax credit. These and other items must be extended by year-end to be claimed in 2013.

Deadline for fix to the alternative minimum tax. Without action, the AMT will increase the tax bills for an estimated 27 million more Americans. The Internal Revenue Service will need to reprogram systems and delay refunds for millions of taxpayers until late March if the fix is not passed.

* January 1. New taxes take effect under Obama’s healthcare overhaul. One is a 0.9-percent increase in wage income tax for individuals earning more than $ 200,000 a year. The other is a 3.8-percent Medicare tax on investment income above the same level. These take effect regardless of the cliff outcome.

* January 2. Without congressional action to waive or postpone them, spending cuts of $ 1.2 trillion over 10 years begin. Known as “sequestration,” these were put in place in 2011 after a congressional “super committee” failed to devise a fiscal plan.

* January 3. The new Congress is scheduled to convene.

* January 7-11. Congress scheduled to be out of session.

* January 14. Congress scheduled to reconvene.

* January 20. Presidential inauguration day. A public ceremony is planned for the following day.

* February. White House releases annual proposed budget. Treasury exhausts its “extraordinary measures” and U.S. faces possible rating downgrade again.

* March. Funding of federal government expires with the expiration of a continuing resolution.

(Reporting by Kevin Drawbaugh, Richard Cowan and Kim Dixon; Editing by Fred Barbash and Eric Beech)

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TSX ends higher as financials gain; German data helps

TORONTO (Reuters) – Canadian stocks ended higher on Tuesday, helped by a strong showing from banks and other financial stocks as a German poll showed a sharp improvement in investor sentiment in Europe’s biggest economy.

The Toronto Stock Exchange‘s S&P/TSX composite index <.gsptse> added 51.89 points, or 0.42 percent, to close at 12,282.36.</.gsptse>

(Reporting by Alastair Sharp)

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Egypt army given temporary power to arrest civilians

CAIRO (Reuters) – Egypt’s Islamist president has given the army temporary power to arrest civilians during a constitutional referendum he is determined to push through despite the risk of bloodshed between his supporters and opponents accusing him of a power grab.

Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and their critics besieging Mohamed Mursi’s graffiti-daubed presidential palace. Both sides plan mass rallies on Tuesday.

The elite Republican Guard has yet to use force to keep protesters away from the palace, which it ringed with tanks, barbed wire and concrete barricades after last week’s violence.

Mursi, bruised by calls for his downfall, has rescinded a November 22 decree giving him wide powers but is going ahead with a referendum on Saturday on a constitution seen by his supporters as a triumph for democracy and by many liberals as a betrayal.

A decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians and refer them to prosecutors until the announcement of the results of the referendum, which the protesters want cancelled.

Despite its limited nature, the edict will revive memories of Hosni Mubarak’s emergency law, also introduced as a temporary expedient, under which military or state security courts tried thousands of political dissidents and Islamist militants.

But a military source stressed that the measure introduced by a civilian government would have a short shelf-life.

“The latest law giving the armed forces the right to arrest anyone involved in illegal actions such as burning buildings or damaging public sites is to ensure security during the referendum only,” the military source said.

Presidential spokesman Yasser Ali said the committee overseeing the vote had requested the army’s assistance.

“The armed forces will work within a legal framework to secure the referendum and will return (to barracks) as soon as the referendum is over,” Ali said.

Protests and violence have racked Egypt since Mursi decreed himself extraordinary powers he said were needed to speed up a troubled transition since Mubarak’s fall 22 months ago.

The Muslim Brotherhood has voiced anger at the Interior Ministry’s failure to prevent protesters setting fire to its headquarters in Cairo and 28 of its offices elsewhere.

Critics say the draft law puts Egypt in a religious straitjacket. Whatever the outcome of the referendum, the crisis has polarized the country and presages more instability at a time when Mursi is trying to steady a fragile economy.

On Monday, he suspended planned tax increases only hours after the measures had been formally decreed, casting doubts on the government’s ability to push through tough economic reforms that form part of a proposed $ 4.8 billion IMF loan agreement.

“VIOLENT CONFRONTATION”

Rejecting the referendum plan, opposition groups have called for mass protests on Tuesday, saying Mursi’s eagerness to push the constitution through could lead to “violent confrontation”.

Islamists have urged their followers to turn out “in millions” the same day in a show of support for the president and for a referendum they feel sure of winning with their loyal base and perhaps with the votes of Egyptians weary of turmoil.

The opposition National Salvation Front, led by liberals such as Mohamed ElBaradei and Amr Moussa, as well as leftist firebrand Hamdeen Sabahy, has yet to call directly for a boycott of the referendum or to urge their supporters to vote “no”.

Instead it is contesting the legitimacy of the vote and of the whole process by which the constitution was drafted in an Islamist-led assembly from which their representatives withdrew.

The opposition says the document fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.

But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill-equipped to deal with a looming economic crisis.

“Inevitability of referendum deepens divisions,” was the headline in Al-Gomhuriya newspaper on Monday. Al Ahram daily wrote: “Political forces split over referendum and new decree.”

Mursi issued another decree on Saturday to supersede his November 22 measure putting his own decisions beyond legal challenge until a new constitution and parliament are in place.

While he gave up extra powers as a sop to his opponents, the decisions already taken under them, such as the dismissal of a prosecutor-general appointed by Mubarak, remain intact.

“UNWELCOME” CHOICE

Lamia Kamel, a spokeswoman for former Arab League chief Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a “no” vote.

“Both paths are unwelcome because they really don’t want the referendum at all,” she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.

A spokeswoman for ElBaradei, former head of the U.N. nuclear watchdog, said: “We do not acknowledge the referendum. The aim is to change the decision and postpone it.”

Mahmoud Ghozlan, the Muslim Brotherhood’s spokesman, said the opposition could stage protests, but should keep the peace.

“They are free to boycott, participate or say no, they can do what they want. The important thing is that it remains in a peaceful context to preserve the country’s safety and security.”

The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a “dark tunnel”.

A military source said the declaration read on state media did not herald a move by the army to retake control of Egypt, which it relinquished in June after managing the transition from Mubarak’s 30 years of military-backed one-man rule.

The draft constitution sets up a national defense council, in which generals will form a majority, and gives civilians some scrutiny over the army – although not enough for critics.

In August Mursi stripped the generals of sweeping powers they had grabbed when he was elected two months earlier, but has since repeatedly paid tribute to the military in public.

So far the army and police have taken a relatively passive role in the protests roiling the most populous Arab nation.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by Philippa Fletcher)

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Tech guru McAfee’s legal appeals win him respite in Guatemala

GUATEMALA CITY (Reuters) – U.S. software pioneer John McAfee, facing deportation from Guatemala to Belize to answer questions over the death of a neighbor, has bought himself some time with legal appeals, the Guatemalan government said on Sunday.

McAfee’s lawyers have filed a request with a local court to grant him leave to stay in Guatemala until his legal appeals against deportation have been settled, which could take months.

“The government of Guatemala respects the courts and we have to wait for them to make a decision,” said Francisco Cuevas, a spokesman for the Guatemalan government.

The government initially said it would deport him straight away after rejecting McAfee’s request for asylum on Thursday.

Guatemala has been holding the former Silicon Valley millionaire since he was arrested on Wednesday for illegally entering the country with his 20-year-old Belizean girlfriend.

Officials in Belize want to question McAfee as a “person of interest” in the killing of fellow American Gregory Faull, his neighbor on the Caribbean island of Ambergris Caye.

The court has up to 30 days to rule on his request, but McAfee’s lawyers said on Sunday they expect a ruling in the American’s favor as early as Monday.

“We are filing a series of papers with the court to attempt to keep me here long enough for the world to see the injustice of sending me back to Belize,” McAfee said in an online news conference on Sunday evening.

McAfee has been evading Belizean officials for nearly a month, saying he fears they want to kill him, and that he is being persecuted for speaking out about corruption in the country’s ruling party. Belize’s prime minister has rejected McAfee’s claims, calling him paranoid and “bonkers.”

McAfee’s attorney, Telesforo Guerra, said that if his request with the court is successful, McAfee would be allowed to stay in the country until the legal suits have been resolved.

His lawyers have filed several injunctions against government officials, alleging McAfee’s rights were violated because his asylum request was not given proper consideration.

McAfee said on Saturday he wanted to return to the United States, and Guerra said he had filed a motion that would require Guatemalan authorities to deport him there and not to Belize.

The eccentric tech pioneer, who made his fortune from the anti-virus software bearing his name, has been chronicling life on the run in a blog, www.whoismcafee.com.

(Editing by Dave Graham; editing by Todd Eastham)

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Weight loss? There’s an app for that

NEW YORK (Reuters Health) – Mobile devices that let people track how much they eat and exercise may help them shed pounds over and above the benefits of a typical weight-loss program, a new study suggests.

Researchers found overweight and obese adults lost an average of over eight pounds more when they had personal digital assistants (PDAs) and occasional phone coaching to help them in addition to a group program.

There’s no reason to think the same wouldn’t hold true for smart phone apps that can log nutrition and activity information and give real-time feedback, they said.

“The number one mechanism through which people lose weight is self-monitoring, just watching what you eat and keeping a record of it,” said Dr. Goutham Rao, from the NorthShore University HealthSystem in Evanston, Illinois.

Rao, who wrote a commentary published with the new study, noted that programs for mobile devices are easily personalized – and readily available wherever people carry their phones or PDAs.

“I’m actually very optimistic that people who are motivated, who can couple the technology with in-person counseling and management are going to be very successful,” he told Reuters Health.

The new study included 69 overweight and obese people in their late 50s, on average, who were referred to a Veterans Affairs clinic for weight-loss support.

All were enrolled in 12 group sessions over six months, which focused on nutrition, exercise and behavioral changes to promote weight loss. Half of the participants were also given a PDA to record their food and activity throughout the day and had a coach who checked in with them by phone.

Most of the study subjects were men who didn’t know much about technology – which made them an extra hard group to reach, said lead researcher Bonnie Spring, from the Northwestern University Feinberg School of Medicine in Chicago.

After six months in the trial, people in the PDA group had lost an average of almost 10 pounds, and 41 percent of them had met the goal of losing at least five percent of their initial body weight. Those in the comparison group had dropped just over two pounds each, on average, and 11 percent had achieved the weight-loss goal.

And at the one-year mark – six months after the mobile devices were taken away – people who’d used the PDAs had managed to keep off most of the weight they initially lost, Spring’s team reported Monday in the Archives of Internal Medicine.

“The issue has always been that it’s possible to help anyone lose weight as long as you invest enough time or money into the effort,” Rao said.

The benefits of using an app on a mobile device, he said, are that it can be cheaper and widely available – and can help re-engage people who are having trouble, unlike an in-person program with a specific end date.

Although PDAs have mostly fallen out of fashion, the researchers said smart phones can serve the same purpose as the devices used in the study. Spring said most weight-loss apps on the market haven’t been scientifically tested but may still help people drop extra pounds.

However, Rao added, there’s evidence that apps alone don’t have much of an impact on weight loss. It may be more helpful to think of the technology as something that augments help from a primary care doctor or nutritionist, he said.

Spring agreed.

“An app and some human support, coaching, nutrition education – that combination of things will help,” she told Reuters Health.

“The most important thing is to use the app for decision support and keeping track, but also to get the social support.”

SOURCE: http://bit.ly/Rfk14F Archives of Internal Medicine, online December 10, 2012.

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Lawyer says Goldman failed speech software “geniuses”

BOSTON (Reuters) – Goldman Sachs bankers failed to raise red flags about Lernout & Hauspie‘s accounting irregularities more than a decade ago, costing speech recognition software pioneers at Dragon Systems nearly all of their life’s work and about $ 600 million, a lawyer told a jury on Monday in federal court.

“They were relying on Goldman to take care of them and whether or not they should be worried about these questions,” plaintiffs’ lawyer Alan Cotler said in his opening statement.

He kicked off what is expected to be a two-month courtroom battle in U.S. District Court in Boston.

The trial pits Janet and James Baker, a suburban Boston husband-and-wife team that launched Dragon from the living room of their home with $ 30,000, against Goldman Sachs, the iconic Wall Street bank whose reputation has been tarnished in more recent years on allegations it has treated some clients shabbily.

In the case brought by the Bakers, Goldman Sachs Group Inc denies civil claims that include gross negligence and breach of fiduciary duty. Opening statements from Goldman’s legal team could come later on Monday or early Tuesday when the trial resumes.

In 2000, just months after Belgium-based Lernout & Hauspie acquired Dragon for $ 580 million in an all-stock deal, the company collapsed in an accounting scandal that sent it reeling into bankruptcy.

The Bakers owned 51 percent of Dragon, but only sold a few million dollars worth of their stock because of restrictions, Cotler told a jury. He added that the couple later received a $ 70 million settlement from a group of companies that advised Lernout & Hauspie in the transaction with Dragon.

The Bakers and two other early Dragon employees are seeking at least several hundred million dollars in damages.

In 1999, Dragon Systems hired Goldman as its financial adviser. The company, started in 1982 in West Newton, Massachusetts, was struggling and Lernout & Hauspie emerged as a buyer when another suitor decided not to pursue a deal, according to Goldman’s defense in the case.

Cotler said a team of four Goldman bankers, led by Richard Wayner, gave favorable and positive advice about Lernout & Hauspie in the weeks before the deal closed. Goldman was about to earn $ 5 million for its work, court papers show.

Goldman’s team, however, had concerns about L&H’s exponential revenue growth in Asia. Cotler said Goldman did not even take one of most preliminary steps in vetting L&H’s revenue claims — contacting L&H customers in Asia.

In fact, the Goldman team internally was not satisfied with the answers it was getting from L&H on deal-critical red flag issues, particularly the company’s Asia revenue growth, Cotler said.

Still, during a conference call with Goldman’s Lernout & Hauspie expert in London, further positive assurances were given to Dragon’s leadership, Cotler said.

Only years later did the Goldman analyst from that call admit he wasn’t aware of the extent of Lernout & Hauspie’s Asian revenue growth. Had he known, he would have been skeptical, Cotler said.

“These were salt of the earth people who are geniuses at what they do,” Cotler said, describing the key figures at Dragon. But the world of Wall Street and high finance was unfamiliar terrain for them. It was the reason why they put their faith in Goldman, the best and biggest investment bank in the world, he added.

(Reporting By Tim McLaughlin; Editing by Nick Zieminski)

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EU leaders in Norway to pick up Nobel Peace Prize

OSLO, Norway (AP) — European Union leaders on Sunday hailed the achievements of the 27-nation bloc, but acknowledged they need more integration and authority to solve problems, including its worst financial crisis, as they arrived in Norway to pick up this year’s Nobel Peace Prize.

Conceding that the EU lacked sufficient powers to stop the devastating 1992-95 Bosnia war, European Commission President Jose Manuel Barroso said that the absence of such authority at the time is “one of the most powerful arguments for a stronger European Union.”

Barroso spoke to reporters with EU Council President Herman Van Rompuy and the president of the EU Parliament, Martin Schulz, in Oslo, where the three leaders were to receive this year’s award, granted to the European Union for fostering peace on a continent ravaged by war.

Nobel committee chairman Thorbjoern Jagland will present the prize, worth $ 1.2 million, at a ceremony in Oslo City Hall, followed by a banquet at the Grand Hotel, against a backdrop of demonstrations in this EU-skeptic country that has twice rejected joining the union.

About 20 European government leaders, including German Chancellor Angela Merkel, French President Francois Hollande and British Deputy Prime Minister Nick Clegg, will be joining the ceremonies. They will be celebrating far away from the EU’s financial woes in a prosperous, oil-rich nation of 5 million on the outskirts of Europe that voted in 1972 and 1994 in referendums to stay out of the union.

The decision to award the prize to the EU has sparked harsh criticism, including from three peace laureates — South African Archbishop Desmond Tutu, Mairead Maguire of Northern Ireland and Adolfo Perez Esquivel from Argentina — who have demanded the prize money not be paid out this year. They say the bloc contradicts the values associated with the prize because it relies on military force to ensure security.

The leader of Britain’s Independence Party, Nigel Farage, in a statement described rewarding the EU as “a ridiculous act which blows the reputation of the Nobel prize committee to smithereens.”

Hundreds of people demonstrated against this year’s prize winners in a peaceful torch-lit protest that meandered through the dark city streets to Parliament, including Tomas Magnusson from the International Peace Bureau, the 1910 prize winner.

“This is totally against the idea of Alfred Nobel who wanted disarmament,” he said, accusing the Nobel committee of being “too close to the power” elite.

Dimitris Kodelas, a Greek lawmaker from the main opposition Radical Left party, or Syriza, said a humanitarian crisis in his country and EU policies could cause major rifts in Europe. He thought it was a joke when he heard the peace prize was awarded to the EU. “It challenges even our logic and it is also insulting,” he said.

The EU is being granted the prize as it grapples with a debt crisis that has stirred deep tensions between north and south, caused soaring unemployment and sent hundreds of thousands into the streets to protest austerity measures.

It is also threatening the euro — the common currency used by 17 of its members — and even the structure of the union itself, and is fuelling extremist movements such as Golden Dawn in Greece, which opponents brand as neo-Nazi.

Barroso acknowledged that the current crisis showed the union was “not fully equipped to deal with a crisis of this magnitude.”

“We do not have all the instruments for a true and genuine economic union … so we need to complete our economic and monetary union,” he said, adding that the new measures, including on a banking and fiscal union, would be agreed on in coming weeks.

He stressed that despite the crisis all steps taken had been toward “more, not less integration.”

Van Rompuy was optimistic saying that EU would come out of the crisis stronger than before. “We want Europe to become again a symbol of hope,” he said.

The EU says it will donate the prize money to projects that help children in conflict zones and will double it with EU funds.

The European Union grew from the conviction that ever-closer economic ties would ensure century-old enemies like Germany and France never turned on each other again, starting with the creation in 1951 of the European Coal and Steel Community, declared as “a first step in the federation of Europe.”

In 60 years it has grown into a 27-nation bloc with a population of 500 million, with other nations eagerly waiting to join, even as its unity is being threatened by the financial woes.

While there have never been wars inside EU territory, the confederation has not been able to prevent European wars outside its borders. When the deadly Balkans wars erupted in the 1990s, the EU was unable by itself to stop them. It was only with the help of the United States and after over 100,000 lives were lost in Bosnia was peace eventually restored there, and several years later, to Kosovo.

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