Washington Extra – A glass half full, or half empty

September 2, 2010

hillary_middleastWell at least no-one walked out, as one Middle East veteran remarked to me after the meeting between Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas today. In fact, as our chief blogger Toby Zakaria observed, the public atmospherics between the two men were not too bad.

Seventeen years ago, President Bill Clinton practically forced Israeli Prime Minister Yitzhak Rabin and Palestinian leader Yasser Arafat to shake hands at the White House while observers held their collective breath. No such nudges were needed this week. Not only were there several, lingering handshakes, but even a brief animated conversation and a whispered aside.

But before we get carried away, my colleague Matt Spetalnick reminded us of all the obstacles facing the latest effort to forge peace in the Middle East. In decades of halting peace efforts, rarely has an Israeli-Palestinian peace process started with lower expectations. There were soaring words in public about the need for difficult compromises, but behind closed doors, the biggest tangible achievement was apparently an agreement to talk again.

Entrenched differences, the long history of mistrust, the looming expiration of a partial Israeli freeze on settlement-building, the threat from hardliners, and, perhaps above all, the political dynamics both men face at home: all reasons a breakthrough seems unlikely. Indeed many experts believe Netanyahu and Abbas have only come to the negotiating table, at least in part, to avoid being seen by President Barack Obama as the spoiler.

On the economy, it was a similar story, a glass half full or half empty depending on your mood. True there was better news from the housing and jobs markets,  and from retailers, suggesting the economy might not after all be heading for a double dip recession.  Nor, though, are we out of the woods or enjoying a Summer of Recovery. Indeed, most economists think tomorrow’s all important monthly labor market report could make for more grim reading.

Here are our top stories from today…

Israelis and Palestinians agree to more peace meetings

Israeli and Palestinian leaders opened direct peace talks under U.S. auspices and agreed to meet every two weeks to try to forge a deal within a year to end a conflict that has boiled for six decades. Secretary of State Hillary Clinton, who hosted the talks between Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas, expressed confidence that this effort could succeed where so many others have failed.
Read Andrew Quinn and Jeffrey Heller full story here, and Matt Spetalnick’s analysis here.

U.S. data dampen fears of new recession

Pending sales of previously owned homes rebounded unexpectedly in July and new claims for jobless benefits fell last week, helping dampen fears the economy could face a double dip recession. The data, including sturdy sales from retailers last month, followed a report on Wednesday showing a surprising gain in manufacturing activity and suggested the economy retained some underlying strength.

For more of this story by Lucia Mutikani, read here.

Bernanke takes blame for muddling message on Lehman

Federal Reserve Chairman Ben Bernanke said he was partly to blame for leaving the wrong impression that the central bank could have saved Lehman Brothers from failure in 2008. Bernanke, testifying before a congressional commission examining the causes of the worst financial crisis in 80 years, said he thought it “very likely” the investment bank was insolvent and lacked sufficient collateral to borrow enough from the central bank to avert collapse.

For more of this story by Mark Felsenthal and Dave Clarke, read here.

‘Quote stuffing’ a focus in flash crash probe

Regulators probing the May flash crash are focusing on a trading practice known as “quote stuffing”, in which large numbers of rapid-fire orders to buy or sell stocks are placed and canceled almost immediately. CFTC commissioner Scott O’Malia told Reuters that the futures regulator was reviewing data from Nanex LLC, a trade database developer that issued a study suggesting that computer algorithms used quote stuffing to gain an edge during the May 6 crash.

For more of this story by Roberta Rampton, Rachelle Younglai and Jonathan Spicer, read here.

U.S. sues Arizona sheriff in immigration probe

The Justice Department sued an Arizona sheriff for refusing to cooperate with its investigation into allegations the sheriff discriminates against Hispanics in his program to crack down on illegal immigrants.

For more of this story by Jeremy Pelofsky, read here.

Workers see higher health costs, less care

Companies are cutting healthcare costs further amid a continuing sour economy, scaling back benefits and shifting a greater share of the expense to employees. The findings come as the congressional campaign heats up over the nation’s stagnant economic growth and whether recently passed healthcare reforms should be repealed.

For more of this story by Susan Heavey, read here.

What we are blogging…

Mideast peace veterans and handshake diplomacy

Secretary of State Hillary Clinton repeatedly referred to them as “veterans” of the Middle East peace process. That description is probably one thing everyone can agree on. The process to bring Israelis and Palestinians to a lasting peace agreement has been going on for decades and every U.S. president hopes he’s the one who will finally achieve what those before him tried and failed.

For Toby Zakaria’s full blog, click here.

From elsewhere…

God did not create the universe, says Hawking

God did not create the universe and the “Big Bang” was an inevitable consequence of the laws of physics, the eminent British theoretical physicist Stephen Hawking argues in a new book.

For the full story, click here.

Hurricane Earl bears down on East Coast

Hurricane Earl took aim at North Carolina and was on track to lash its barrier islands with dangerous winds and pounding surf before cutting a path up the East Coast to Canada.

For the full story, click here.

For more stories from our Washington correspondents visit www.reuters.com and stay informed.

Photo Credits: REUTERS/Jason Reed (Clinton (L) and George Mitchell, U.S. Special Envoy for Middle East Peace (2nd L),  Netanyahu (R), Abbas (2nd R) at the State Department)

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