The president of Iran opened his remarks by objecting to the scolding he got from Columbia University's president.

After sitting through the blistering introduction by Lee Bollinger - in which he was lambasted for calling for the annihilation of Israel, denying the Holocaust and supporting the execution of children - Ahmadinejad said it was insulting to be spoken about that way.

"At the outset, I want to complain a bit about the person who read this political statement made against me," Ahmadinejad said. "In Iran, we don't think it's necessary to come in before the speech has already begun with a series of complaints ... It was an insult to information and the knowledge of the audience here."

In his scathing introduction to the much-anticipated on-campus event, Bollinger told the leader of Iran that he resembled "a petty and cruel dictator."

Bollinger levied repeated criticisms against Ahmadinejad, calling on him to answer a series of challenges about his leadership, blasting his views about the "myth" of the Holocaust "absurd" and saying that he doubted he "will have the intellectual courage to answer these questions."

"Mr. President, you exhibit all the signs of a petty and cruel dictator," Bollinger said, to loud applause.

He said Ahmadinejad's denial of the Holocaust might fool the illiterate and ignorant.

"When you come to a place like this it makes you simply ridiculous," Bollinger said. "The truth is that the Holocaust is the most documented event in human history."

Ahmadinejad rose, also to applause, and after a religious invocation, said Bollinger's opening was full of "insults and claims that were incorrect, regretfully."

*****

On the Holocaust - which the Iranian leader has called a "myth" - he said that "if the Holocaust is a reality, why don't we let more research be done on it? ... Where did the Holocaust happen to begin with? It happened in Europe, and given that, why is it that the Palestinian people should be displaced? Why should they give up their land?"

And the Iranian leader denied that homosexuality exists in his country when asked to explain the execution of homosexuals in Iran.

"In Iran we don't have homosexuals like in your country," he said, to laughter and boos from the audience. 'In Iran we do not have this phenomenon. I don't know who's told you that we have this."

Ryan Crocker, the U.S. ambassador to Iraq, told reporters after the session that his four-hour meeting with Iranian Ambassador Hassan Kazemi Qomi had been business-like and "proceeded positively" and that both sides wanted to move toward a stable, federal Iraq. But he said at a press conference that he made clear that the United States wants "Iranian actions on the ground to come into harmony with their described principles."

"I laid out to the Iranians direct, specific concerns about their behavior in Iraq and their support for militias that are fighting Iraqi and coalition forces," including the imports of explosives from Iran into Iraq that have been used against U.S. and Iraqi forces, Crocker said. He added that the Iranians accused the United States, which invaded Iraq in March 2003 to topple the government of Saddam Hussein, of acting as a colonial power.

The Iranians, Crocker disclosed, have suggested a tri-lateral security mechanism that would include U.S., Iraqi and Iranian efforts. Crocker gave few details about that proposal but said he was referring it to Washington for consideration. In a separate meeting with reporters, Qomi said he told Crocker that Tehran would train and equip the Iraqi army and police to create "a new military and security structure," the Associated Press reported. He did not provide details of that plan or how the Americans responded to the offer.

Crocker said the meeting focused solely on the situation in Iraq. No other matters were on the agenda, including the contentious issue of Iran's nuclear program or Iran's recent detention of a handful of U.S. citizens. Crocker also added that the Iranian ambassador proposed a second meeting. The United States will consider that, he said, but the "purpose of this meeting was not to arrange other meetings." Qomi told an AP reporter after his news conference, that he expected such a meeting within the month. The meeting took place in the offices of Iraqi Prime Minister Nouri al-Maliki in Baghdad's heavily fortified Green Zone--the walled, high security enclave in the center of the capital that is the seat of the Iraqi government and headquarters for U.S. forces.

*****

The United States and Iran have not had diplomatic relations since the country's 1979 Islamic Revolution, when revolutionaries led by Ayatollah Ruhollah Khomeini overthrew the U.S.-backed shah and established an Islamic state in Iran. Khomeini supporters sacked the U.S. Embassy and held 52 Americans hostage for 444 days. The two countries have numerous complaints against each other, fueled by years of hostility and suspicion. In particular, the United States accuses Tehran of seeking to develop nuclear weapons and is leading an international effort to force Iran to stop enriching uranium. Iran claims that it has the right to develop peaceful nuclear technologies and says its nuclear programs is strictly for electric power.

Iranian police have warned barbers against offering Western-style hair cuts or plucking the eyebrows of their male customers, Iranian media said Sunday. The report by a reformist daily, later confirmed by an Iranian news agency, appeared to be another sign of authorities cracking down on clothing and other fashion deemed to be against Islamic values. "Western hairstyles ... have been banned," the newspaper Etemad said in a front-page headline.

It came a week after police launched a crackdown against the growing number of young women testing the limits of the law with shorter, brighter and skimpier clothing ahead of the summer months. Under Iran's Islamic Sharia law, imposed after the 1979 revolution, women are obligated to cover their hair and wear long, loose-fitting clothes to disguise their figures. Violators can receive lashes, fines and imprisonment.

The student news agency ISNA quoted a police statement as saying: "In an official order to barbershops, they have been warned to avoid using Western hair styles and doing men's eyebrows." Iranian young men have in recent years started paying more attention to the way they look and dress, especially in affluent parts of the capital Tehran. Spiked up hair, by using gel, is known as the Khorusi (Rooster) style and some also use make-up.

Several hairdressers for men in Tehran offer cuts in the style of Hollywood movie stars and other Western celebrities. Clients can also have their eyebrows plucked. The head of the barbers' union, Mohammad Eftekharifard, said police had instructed it to "exercise specific regulations in barbershops that work under its supervision." Barbers who do not follow these rules might be closed down for a month and even lose their permits to operate, Etemad quoted him as saying. "Currently some barbershops apply make-up and use (hair) styles that are in line with those in European countries and America," Eftekharifard said.

King Abdullah denounced the American military presence in Iraq on Wednesday as an "illegitimate foreign occupation" and called on the West to end its financial embargo against the Palestinians. The Saudi monarch's speech was a strongly worded lecture to Arab leaders that their divisions had helped fuel turmoil across the Middle East, and he urged them to show unity. But in opening the Arab summit, Abdullah also nodded to hardliners by criticizing the U.S. presence in Iraq.

"In beloved Iraq, blood is flowing between brothers, in the shadow of an illegitimate foreign occupation, and abhorrent sectarianism threatens a civil war," said the king, whose country is a U.S. ally that quietly aided the 2003 U.S.-led invasion of Iraq. U.S. allies at the summit are trying to win support from other Arab governments to promote an Arab peace initiative that Washington hopes could revive the peace process with Israel. Arab hard-liners fear Saudi Arabia, Egypt and Jordan will bow to U.S. pressure to water down the land-for-peace offer in an attempt to win Israeli acceptance.

"In wounded Palestine, the mighty people suffers from oppression and occupation," Abdullah said. "It has become vital that the oppressive blockade imposed on the Palestinians end as soon as possible so the peace process will get to move in an atmosphere without oppression." The United States has so far rejected calls to end the financial embargo imposed on the Hamas-led Palestinian government formed after elections last year. Saudi Arabia and Arab states have called for an end to the sanctions after Hamas formed a new government last month that includes members of the moderate Fatah party.

Abdullah insisted that only when Arab leaders unite will they be able to prevent "foreign powers from drawing the region's future." "The real blame should be directed at us, the leaders of the Arab nation," he said. "Our constant disagreements and rejection of unity have made the Arab nation lose confidence in our sincerity and lose hope." The two-day summit plans to revive a 2002 initiative offering Israel peace with the Arab world if it withdraws from lands it seized in the 1967 Mideast war, a proposal the United States and Europe hope can build efforts to resume the long-stalled peace process.

The war in Iraq has become a primary recruitment vehicle for violent Islamic extremists, motivating a new generation of potential terrorists around the world whose numbers may be increasing faster than the United States and its allies can reduce the threat, U.S. intelligence analysts have concluded.

A 30-page National Intelligence Estimate completed in April cites the "centrality" of the U.S. invasion of Iraq, and the insurgency that has followed, as the leading inspiration for new Islamic extremist networks and cells that are united by little more than an anti-Western agenda. It concludes that, rather than contributing to eventual victory in the global counterterrorism struggle, the situation in Iraq has worsened the U.S. position, according to officials familiar with the classified document.

*****

The NIE, whose contents were first reported by the New York Times, coincides with public statements by senior intelligence officials describing a different kind of conflict than the one outlined by President Bush in a series of recent speeches marking the fifth anniversary of the Sept. 11, 2001, attacks. "Together with our coalition partners," Bush said in an address earlier this month to the Military Officers Association of America, "we've removed terrorist sanctuaries, disrupted their finances, killed and captured key operatives, broken up terrorist cells in America and other nations, and stopped new attacks before they're carried out. We're on the offense against the terrorists on every battlefront, and we'll accept nothing less than complete victory."

But the battlefronts intelligence analysts depict are far more impenetrable and difficult, if not impossible, to combat with the standard tools of warfare. Although intelligence officials agree that the United States has seriously damaged the leadership of al-Qaeda and disrupted its ability to plan and direct major operations, radical Islamic networks have spread and decentralized.

Many of the new cells, the NIE concludes, have no connection to any central structure and arose independently. The members of the cells communicate only among themselves and derive their inspiration, ideology and tactics from the more than 5,000 radical Islamic Web sites. They spread the message that the Iraq war is a Western attempt to conquer Islam by first occupying Iraq and establishing a permanent presence in the Middle East. The April NIE, titled "Trends in Global Terrorism: Implications for the United States," does not offer policy prescriptions. "What these guys at NIC are supposed to do is to lay it out in very clear, understandable terms," said the intelligence official. "It's not the role of the NIC to offer recommendations." Rather, it "basically states the conditions" as the intelligence community sees them, he said.

"The devil came here yesterday," Chavez said, referring to Bush, who addressed the world body during its annual meeting Tuesday. "And it smells of sulfur still today." Chavez accused Bush of having spoken "as if he owned the world" and said a psychiatrist could be called to analyze the statement.

"As the spokesman of imperialism, he came to share his nostrums to try to preserve the current pattern of domination, exploitation and pillage of the peoples of the world. An Alfred Hitchcock movie could use it as a scenario. I would even propose a title: 'The Devil's Recipe.' " Chavez held up a book by Noam Chomsky on imperialism and said it encapsulated his arguments: "The American empire is doing all it can to consolidate its hegemonistic system of domination, and we cannot allow him to do that. We cannot allow world dictatorship to be consolidated."

Chavez also blasted the United Nations, calling the General Assembly "merely a deliberative organ" that meets once a year. "We have no power, no power to make any impact on the terrible situation in the world," he said. Chavez called the veto power shared by the five permanent members of the Security Council "anti-democratic," and cited the U.S. veto of a resolution that would have demanded the Israelis halt their bombing of Lebanon this summer.

That move "allowed the Israelis with impunity to destroy Lebanon in front of us all as we stood there watching," Chavez said. He recommended that the world body's headquarters be moved to another country and offered Venezuela as a possible new home. He noted that he recently returned from a summit of more than 50 heads of state from nonaligned nations in Havana, Cuba, and urged his audience to support their efforts for "a world of peace."

At a news conference after the speech, he further lambasted the United States and U.N., saying of the latter, "There is no way to save it." The U.N. was founded in an era of two superpowers, he said. "The Soviet Union collapsed. The United States empire is on the way down and it will be finished in the near future, for the good of all mankind." He also said the U.S. government was the "first enemy" of its people. "Their freedoms are restricted through the Patriot Act. They are sent to die in Iraq for no reason. The people of the United States are being deceived," he said.

But Egypt's Muslim Brotherhood said the statement did not go far enough and called on the pontiff to apologise in person. "The Vatican Secretary of State says that the Pope is sorry because his statements had been badly interpreted, but there is no bad interpretation," Abdel Moneim Abul Futuh, a senior official from the opposition party told AFP.

*****

In his speech at Regensburg University on Tuesday, the German-born Pope quoted Emperor Manuel II Paleologos of the Orthodox Christian Byzantine Empire. Stressing that they were not his own words, he quoted the emperor saying: "Show me just what Muhammad brought that was new and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." He also said that violence was "incompatible with the nature of God and the nature of the soul".

Reactions to the speech have come from such leaders as Pakistani President Pervez Musharraf, who said efforts to link Islam and terrorism should be clearly opposed. Street protests have been held in Pakistan, India, Turkey and Gaza. In the West Bank city of Nablus, two churches were firebombed on Saturday in attacks claimed by a group which said it was protesting against the Pope's remarks. But German Chancellor Angela Merkel has come to the pontiff's defence, saying the aim of the speech had been misunderstood.

The report, released Friday by the Senate Select Committee on Intelligence, provides details to support the committee's earlier, July 2004 conclusion that much of the intelligence that led up to the Iraq war was flawed, and the report did not turn up any new evidence to support the administration's claim that Iraq was trying to acquire weapons of mass destruction.

Republican Sen. Pat Roberts of Kansas, the committee's chairman, sought to minimize the political fallout of his committee's findings by noting that doubts about intelligence on Iraq are nothing new. "The long-known fact is that the prewar intelligence was wrong," Roberts said. "That flawed intelligence was used by policymakers, both in the administration and in Congress, as one of numerous justifications to go to war in Iraq."

But committee Democrats, presaging a certain campaign theme this fall, said the new report substantiates suspicions that the White House trumped up the case against Iraq. "The Bush administration's case for war in Iraq was fundamentally misleading," said Sen. Jay Rockefeller of West Virginia, the committee's ranking Democrat. "The administration pursued a deceptive strategy of using intelligence reporting that the intelligence community had already warned was uncorroborated, unreliable and, in critical instances, fabricated."

Since the invasion of Iraq, the conflict has devolved into an extended battle among anti-American Iraqi insurgents and U.S. and British forces, and, increasingly, fighting between Sunni and Shiite Muslim militias and death squads, according to a recent Pentagon assessment. As of midmorning Friday, 2,662 Americans have died in Iraq operations, and more than 19,945 have been wounded, according to the Pentagon. No weapons of mass destruction have been found by U.S. forces in Iraq, with the exception of some older chemical weapons shells. After the U.S. invasion, the CIA and Pentagon dispatched a substantial team of experts to search for such weapons.

The Air Force recently tapped Triton Systems, out of Chelmsford, Mass, to develop such a "Modular Disc-Wing Urban Cruise Munition." "The 3-D maneuverability of the Frisbee-UAV [unammned aerial vehicle] will provide revolutionary tactical access and lethality against hostiles hiding in upper story locations and/or defiladed behind obstacles," the company promises.

The circular drones will be lanuched "from munitions dispensers or by means of a simple mechanism similar to a shotgun target (skeet) launcher," Triton adds. Once in the air, they'll be tele-operated by soldiers on the ground. Or, if needed, the fightin' frisbees will pilot themselves as they hunt for guerrillas.

Once they catch up to the baddies, the drones will use a series of armor-piercing explosives, shooting jets of molten metal, to eliminate their targets. And these MEFP [Multiple Explosively Formed Penetrator] "warheads will be controllable so as to provide a single large fragment (bunker-buster) or tailorable pattern of smaller fragments (unprotected infantry or light utility vehicles)." The decision of whether to go bunker-buster or infantry-annihilator mode can either be determined by the drones' human operators, "or autonomous target classification routine built into the UAV."

Now, Triton's Frisbee-UAV concept isn't the first time roboticists have looked into disc-shaped drones. From 1992 to 1998, the Navy experimented with a set of unmanned, 250-pound, six-foot-diameter flying saucers. In 2002, Norweigan researchers showed off plans for a circular flying robot "inspired at least partly by the design of Star Trek's USS Enterprise," New Scientist noted.

Around the same time, at the University of Manchester, Jonathan Potts studied how best to control UAVs "based on the Frisbee TM sports disc shape." "The Frisbee disc has proven its potential on the sports field as a platform for short free-flights," Potts wrote back in an '01 paper. Without "predefined flight orientation," a Frisbee drone "offers novel flight characteristics and manoeuvrability. It is potentially suitable for a variety of mission objectives fulfilling surveillance, communications, munitions and/or airborne radar warning systems."

The British security service, known as MI5, disclosed last month that it had about 1,200 Islamic militants under surveillance who were considered capable of carrying out violent attacks. Peter Clarke, the head of Scotland Yard's anti-terrorism branch, said police were engaged in 70 separate terrorism investigations, the most ever. "This is unprecedented and the flow of new cases shows no sign of abating," Clarke said. "If anything, it is accelerating."

Since the July attacks, Blair's government has toughened anti-terrorism laws, making it a crime to "glorify" terrorism and easing procedures for deporting clerics and others who advocate violence. The government has increased the number of Muslim police officers on the beat and conducted extensive outreach in Britain's Muslim community, which officially numbers 1.6 million people but is widely believed to be 2 million or more.

The attacks last summer, and this week's disclosure of a plot to bomb jumbo jets from the sky, have created a sense of unease not often seen in a nation that stoically endured some of World War II's worst bombings and a 30-year campaign of violence by the Irish Republican Army. Being a target of a new kind of terror -- one without specific demands, that seems to many here to be motivated by vengeance and hate -- has created a new uncertainty.

As their anger against Israel and America swells, protesters across the Middle East are also increasingly venting their frustration at their Arab rulers, especially in moderate countries whose governments have been reliable U.S. allies. Nearly four weeks of fighting between Hezbollah and Israel have aggravated a summer of discontent over the bloodshed in Iraq, stalled democratic reforms and price increases. Angry at their governments, demonstrators are praising a new hero: Hezbollah leader Sheik Hassan Nasrallah.

"The whole region has been engulfed in anger since the war on Iraq more than three years ago," said Diaa Rashwan, an Egyptian analyst with the Al-Ahram Center for Political and Strategic Studies. "The frustration is just huge." The rising resentment is weighing heavily on Arab leaders as their foreign ministers gather in Beirut on Monday for an emergency meeting. Moderates like Egypt, Jordan and Saudi Arabia may want a halt to the fighting, but they can't be seen as backing a U.S.-promoted cease-fire plan that Hezbollah has depicted as a surrender.

Even more worrisome for Arab leaders is the possibility violence may turn on them. On Saturday, al-Qaida announced that an Egyptian militant group had joined the terror network. While the group denied it, many fear that public anger could nonetheless boost militants around the region. Demonstrators have denounced leaders of Egypt, Jordan and Saudi Arabia for blaming Hezbollah — sometimes implicitly, sometimes overtly — for starting the fighting by snatching two Israeli soldiers in a July 12 cross-border raid.

Three straight days of protests broke out last week among the normally quiet Shiite minority in Saudi Arabia, where demonstrations are rare, though protesters were cautious not to criticize the ruling family. Hundreds of Shiites waved posters of Nasrallah, chanting "Oh Nasrallah; oh beloved one; destroy, destroy Tel Aviv." Cairo has seen nearly daily demonstrations against Egyptian President Hosni Mubarak for what protesters see as his failure to support Hezbollah. On Sunday, demonstrators held up a poster of Mubarak with a Star of David on his forehead, labeling him "the enemy of the Egyptian people."

Last week, more than 1,000 protesters rallied in downtown Cairo, burning Israeli and American flags. "Arab majesties, excellencies and highnesses, we spit on you," one banner read. Similar protests have erupted in Jordan and Kuwait, where anti-U.S. demonstrations are rare. Lebanon may be the spark, but there's plenty of tinder for the discontent, particularly the situation in Iraq and domestic economic strains.

The fighting, which killed 57 people, was a dramatic escalation in the battle between Israel and Hezbollah, an Islamic militant group which has a free hand in southern Lebanon and holds seats in parliament. The Lebanese government, caught in the middle, pleaded for a cease-fire. But Israel said it was determined to beat Hezbollah back and deny the militant fighters positions they traditionally held along the northern border.

"If the government of Lebanon fails to deploy its forces, as is expected of a sovereign government, we shall not allow Hezbollah forces to remain any further on the borders of the state of Israel," Israeli Defense Minister Amir Peretz said. Israel's offensive was its heaviest in Lebanon in 24 years, launched after Hezbollah guerrillas snatched two Israeli soldiers in a brazen cross-border raid Wednesday. Two days of Israeli bombings killed 45 Lebanese and two Kuwaitis and wounded 103. Two Israeli civilians and eight Israeli soldiers have also been killed, the military's highest death toll in four years.

With the airport closed, many tourists were trapped while others drove over the mountains to Syria -- though Israeli warplanes struck the highway linking Beirut to the Syrian capital of Damascus early Friday, closing the country's main artery and further isolating Lebanon from the outside world. Beirut residents stayed indoors, leaving the streets of the capital largely empty. Others packed supermarkets to stock up on goods. Long lines formed on gas stations, with many quickly running out of gas.

Israel said its attacks were intended to prevent the movement of the captured soldiers and hamper Hezbollah's military capacity. It said it had information Hezbollah was trying to take the two soldiers to its ally, Iran. Fears mounted among Arab and European governments that violence in Lebanon could spiral out of control in a volatile region already torn by conflicts in Iraq and in Gaza. Israel has launched an offensive in Gaza against Hamas, whose fighters are holding another Israeli soldier captured two weeks ago.

World oil prices could double or triple over the current painful $70-per-barrel level if diplomacy failed and military conflict broke out over Iran's nuclear ambitions, Saudi Ambassador Prince Turki al-Faisal warned this morning.

"We don't know" what will happen if the United States chooses a military option in Iran, al-Faisal said, but "if there is military conflict, if bombs are dropped, ships are blown up, oil facilities on our side of the gulf are targeted . . . just the idea of somebody firing a missile at an installation somewhere would shoot up the price of oil astronomically." In such a scenario, he said, Saudi Arabia "hopefully would defend our oil installations as best as we can and seek an immediate resolution," but the risks would be grave. "Not just our installations, but the whole gulf would become an inferno of exploding fuel tanks and shut-up facilities," al-Faisal said.

Al-Faisal, who has served as Washington-based ambassador to the Saudi kingdom since last year, is the son of former Saudi King Faisal. Although he has warned against military conflict in Iran previously, his remarks today were his most specific yet on the consequences of an outbreak of violence.

Speaking this morning in Washington, D.C., at the U.S. Energy Association, an organization of public and private energy companies and agencies, Al-Faisal said that Saudi analysts estimate that a $20-to-$30 premium of today's world oil price is a result of fear in the marketplace over global political problems. When asked what would be the most important foreign policy step the United States could take to address these issues, Al-Faisal said, "I think they can fix the Middle East problem, fix the Iraqi problem, and carry through with the diplomatic process on the Iranian problem. All of these things are doable." He added that "the entire world community" must become more engaged, "but the United States has the leading role on all these issues."

Iran's president declared in a letter to President Bush that democracy had failed worldwide and lamented "an ever-increasing global hatred" of the U.S. government. Secretary of State Condoleezza Rice swiftly rejected the letter, saying it didn't resolve questions about Tehran's suspect nuclear program. "This letter is not the place that one would find an opening to engage on the nuclear issue or anything of the sort," Rice said in an interview with The Associated Press. "It isn't addressing the issues that we're dealing with in a concrete way."

Rice's comments were the most detailed response from the United States to the letter, the first from an Iranian head of state to an American president since the 1979 hostage crisis at the U.S. Embassy in Tehran. The letter from President Mahmoud Ahmadinejad made only an oblique reference to Iran's nuclear intentions, asking why "any technological and scientific achievement reached in the Middle East region is translated into and portrayed as a threat to the Zionist regime."

Otherwise, it lambasted Bush for his handling of the Sept. 11 attacks, accused the media of spreading lies about the Iraq war and railed against the United States for its support of Israel. It questioned whether the world would be a different place if the money spent on Iraq had been spent to fight poverty. "Would not your administration's political and economic standing have been stronger?" the letter said. "And I am most sorry to say, would there have been an ever- increasing global hatred of the American government?

Ahmadinejad on Tuesday called his letter "words and opinions of the Iranian nation" aimed at finding a "way out of problems" facing humanity, according to the official Iranian news agency. He spoke briefly before boarding a plane for Indonesia, where he was to attend a summit of developing nations.

*****

Most of Iran's newspapers devoted their front pages to Ahmadinejad's message on Tuesday. "Ahmadinejad's letter, an initiative in global diplomacy," read a headline in the hard-line daily Resalat. The moderate daily Shargh, or East, said the message may open a new page in relations with the United States. But a conservative lawmaker lambasted Ahmadinejad for failing to consult parliament before he sent the letter. "This message is the outcome of a series of taboo-breaking behaviors in Iran's foreign policy. ... That the parliament is not aware of (the contents of the) letter is questionable," Hashmatollah Falahatpisheh told an open session of the parliament broadcast live on state-run radio Tuesday.

The fortress-like compound rising beside the Tigris River here will be the largest of its kind in the world, the size of Vatican City, with the population of a small town, its own defense force, self-contained power and water, and a precarious perch at the heart of Iraq's turbulent future. The new U.S. Embassy also seems as cloaked in secrecy as the ministate in Rome. "We can't talk about it. Security reasons," Roberta Rossi, a spokeswoman at the current embassy, said when asked for information about the project.

A British tabloid even told readers the location was being kept secret — news that would surprise Baghdadis who for months have watched the forest of construction cranes at work across the winding Tigris, at the very center of their city and within easy mortar range of anti-U.S. forces in the capital, though fewer explode there these days.

The embassy complex — 21 buildings on 104 acres, according to a U.S. Senate Foreign Relations Committee report — is taking shape on riverside parkland in the fortified "Green Zone," just east of al-Samoud, a former palace of Saddam Hussein's, and across the road from the building where the ex-dictator is now on trial.

The Republican Palace, where U.S. Embassy functions are temporarily housed in cubicles among the chandelier-hung rooms, is less than a mile away in the 4-square-mile zone, an enclave of American and Iraqi government offices and lodgings ringed by miles of concrete barriers. The 5,500 Americans and Iraqis working at the embassy, almost half listed as security, are far more numerous than at any other U.S. mission worldwide. They rarely venture out into the "Red Zone," that is, violence-torn Iraq.

This huge American contingent at the center of power has drawn criticism. "The presence of a massive U.S. embassy — by far the largest in the world — co-located in the Green Zone with the Iraqi government is seen by Iraqis as an indication of who actually exercises power in their country," the International Crisis Group, a European-based research group, said in one of its periodic reports on Iraq.

*****

Original cost estimates ranged over $1 billion, but Congress appropriated only $592 million in the emergency Iraq budget adopted last year. Most has gone to a Kuwait builder, First Kuwaiti Trading & Contracting, with the rest awarded to six contractors working on the project's "classified" portion — the actual embassy offices.

A senior Pentagon adviser on the war on terror expressed a similar view. "This White House believes that the only way to solve the problem is to change the power structure in Iran, and that means war," he said. The danger, he said, was that "it also reinforces the belief inside Iran that the only way to defend the country is to have a nuclear capability." A military conflict that destabilized the region could also increase the risk of terror: "Hezbollah comes into play," the adviser said, referring to the terror group that is considered one of the world’s most successful, and which is now a Lebanese political party with strong ties to Iran. "And here comes Al Qaeda."

In recent weeks, the President has quietly initiated a series of talks on plans for Iran with a few key senators and members of Congress, including at least one Democrat. A senior member of the House Appropriations Committee, who did not take part in the meetings but has discussed their content with his colleagues, told me that there had been "no formal briefings," because "they’re reluctant to brief the minority. They’re doing the Senate, somewhat selectively."

The House member said that no one in the meetings "is really objecting" to the talk of war. "The people they’re briefing are the same ones who led the charge on Iraq. At most, questions are raised: How are you going to hit all the sites at once? How are you going to get deep enough?" (Iran is building facilities underground.) "There’s no pressure from Congress" not to take military action, the House member added. “The only political pressure is from the guys who want to do it." Speaking of President Bush, the House member said, "The most worrisome thing is that this guy has a messianic vision."

The first witness, Harry Samit, an F.B.I. agent in Minnesota who questioned Mr. Moussaoui at his arrest, firmly asserted that had he been given the truth "we would have several new leads to investigate," and the plot might have been thwarted. Instead, he said, Mr. Moussaoui's answers sent investigators on "wild goose chases."

Under cross-examination by Edward B. MacMahon Jr., a court-appointed lawyer for Mr. Moussaoui, Mr. Samit acknowledged that after the attacks he had written strongly worded reports saying his superiors had improperly blocked his efforts to investigate Mr. Moussaoui. He added that he was convinced that Mr. Moussaoui was a terrorist involved in an imminent hijacking plot.

That senior bureau officials dragged their feet on investigating Mr. Moussaoui by seeking search warrants from a special intelligence court or a more routine criminal search warrant was not new. But it had never been presented so vividly as a reluctant Mr. Samit was obliged to do under cross-examination.

He offered a devastating comment from a supervisor who said pressing too hard to obtain a warrant for Mr. Moussaoui would hurt his career. Mr. Samit also wrote that his superiors did not act because they were guilty of "criminal negligence" and they were gambling that Mr. Moussaoui had little to offer. The lost wager, Mr. Samit said, was paid in many lives. Mr. Samit was followed to the witness stand by Michael Rolince, a retired F.B.I. counterterrorism supervisor who similarly recited a list of actions that the bureau could have taken if Mr. Moussaoui had told them about Qaeda plans to take over planes with knives and fly into buildings.

But when Mr. MacMahon began reading from a document detailing many suspicions about Mr. Moussaoui's intentions, Mr. Rolince interrupted, "Can I ask what document that's coming from?" Mr. MacMahon obliged, noting that it was an urgent memorandum written by Mr. Samit on Aug. 18, 2001, hoping to attract the attention of headquarters. Mr. Rolince had inadvertently underlined that the agent's suspicions had never risen to his attention.

The Dubai oil sheiks who tried to buy New York's ports now want to snap up the popular Mohegan Sun casino in Connecticut and the glitzy Atlantis Resort in the Bahamas. The oil-money crowd from the United Arab Emirates is joining deep-pocketed New York developer Steve Ross of The Related Companies, along with high-powered real estate funds Whitehall Street, Colony Capital and Providence Equity Partners to buy up casino mogul Sol Kerzner's empire.

Kerzner has erected gargantuan resorts around the world, including Sun City off the southern tip of Africa and a 60-acre water park in the desert of Dubai. The group said it will buy out Kerzner's publicly traded company for about $3.6 billion - and allow Kerzner and his son Butch to run it with a stake of about 25 percent. Shares of Kerzner International Ltd. soared 13 percent to $79.43, up $9.07. The company manages the Mohegan Sun and built the $1 billion Atlantis resort with its spectacular 34-acre aquarium. The same Dubai firm that touched off a firestorm of protest at trying to acquire management business at America's major ports - Istithmar - is behind the Kerzner deal.

Kerzner and his partners would take their offshore company private and away from the scrutiny of public investors and regulatory agencies. The group would pay $76 a share, and assume $599 million of debt. Istithmar, a Dubai investment bank, is operated by the United Arab Emirates government holding company, called The Corporate Office, or TCO. TCO also owns Dubai Ports World, which in turn took over the firm that manages U.S. ports - Britain's Peninsular & Oriental Steam Navigation Co. - for $6.8 billion.

Dubai, which agreed this month to sell its interest in U.S. ports, said its $1.2 billion takeover of a U.K. company with U.S. plants that make military equipment is delayed while the authorities investigate security concerns. Dubai International Capital LLC, which is owned by the government of the Persian Gulf emirate, and Doncasters Group Ltd. agreed to delay the transaction by as many as two months from March 31 while government agencies review the purchase, Sameer Al Ansari, Dubai International's chief executive, said in an interview today.

"After what happened with Dubai Ports, the government is looking at this deal more closely," Al Ansari said after a press conference in Dubai announcing an agreement with HSBC Holdings Plc. Dubai's bid may ignite a political debate in the U.S. similar to that caused last month by the emirate's $6.8 billion purchase of London-based Peninsular & Oriental Steam Navigation Co. DP World had to agree to sell interests in six U.S. terminals. Revenue from Doncasters' nine U.S. plants, which make parts for tanks and military aircraft, account for about 40 percent of total sales.

"If this deal isn't approved by the U.S., it wouldn't proceed," said Angus Blair, chief executive of Mena Financial, a London-based company which advises foreign companies about doing business in the Middle East.

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The Committee on Foreign Investment, a federal body which considers the sale of U.S. assets to foreign companies, started a detailed 45-day investigation into the Doncasters agreement at the end of February, said Al Ansari. Al Ansari declined to comment on whether the transaction will go through.

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Kuwait's state-controlled PWC Logistics, which won a U.S. military contract last year worth as much as $14 billion to feed troops in Iraq, agreed in July to buy Santa Ana, California-based GeoLogistics Corp. for $454 million. GeoLogistics is an international freight management company with operations in more than 100 countries, according to its Web site.

Yet while one Dubai company may be giving up on U.S. ports, another one shows no signs of quitting the U.S.—or of giving up a contract with the Navy to provide shore services for vessels in the Middle East. The firm, Inchcape Shipping Services (ISS), is an old British company that last January was sold to a Dubai government investment vehicle for $285 million. ISS has more than 200 offices around the world and provides services to clients ranging from cruise ship operators to oil tankers to commercial cargo vessels. In the U.S., the company operates out of more than a dozen port cities, including Houston, Miami and New Orleans, arranging pilots, tugs, linesmen and stevedores, among other things. The firm is also a defense contractor which has long worked for Britain’s Royal Navy. And last June, the U.S. Navy signed on too, awarding ISS a $50 million contract to be the "husbanding agent" for vessels in most Southwest Asia ports, including those in the Middle East, according to an unclassified Navy logistics manual for the Fifth Fleet and a press release from ISS.

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No question, the husbanding contract provides the potential for mischief. Husbanding agents arrange everything from fuel to spare parts to fresh vegetables for vessels at ports of call. More critically, they often provide security, like erecting concrete barriers and what the military calls "force protection." Husbanding agents often learn weeks in advance of a ship’s schedule so as to be prepared when the vessel arrives, information that the Navy keeps closely guarded since it could be invaluable in the hands of terrorists. The suicide bombing of the Cole, for instance, occurred less than three hours after the ship had completed mooring in the harbor of Aden, Yemen. "It would have been much more difficult for the bombers to execute the attack without some previous knowledge of the ship's schedule and its intent to pull into Aden," says a former Navy officer.

Contacted by TIME, a spokesman for ISS confirmed the existence of the contract, but said that confidentiality terms prevented him from discussing it. A statement issued by the firm declared that "ISS has undergone rigorous external security checks" and has "comprehensive internal policies on security." Regarding its U.S. port operations, the company states that all port staff "are fully vetted and cleared and undergo a background check to enable them to work within the port limits."

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ISS, in fact, isn’t the only Dubai company that has won big business with the Pentagon. In December 2004, another such firm, Seven Seas Shipchandlers, won a $700 million contract to be the prime vendor for maintenance and repair operations for troops in the U.S. Central Command region, which includes the Middle East. Seven Seas has also provided food supplies to U.S. troops in Iraq. Another Dubai-based firm, MAC International, is under contract to deliver $67.2 million worth of police trucks to the Army.

"Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship ... DP World will transfer fully the U.S. operations of P&O Operations North America to a United States entity," Edward H. Bilkey, DP World's chief operating officer, said in a statement. The announcement did not specify which U.S. company would be involved.

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A source involved in talks between the White House, Congress and DP World said the exact meaning of the UAE firm's statement is unclear, in part because the details of the transaction have not been worked out. "The next steps are very hard to predict at this point, either in terms of who they'll actually sell to and in terms of what it means for U.S. relations in the region," the source said. A source told CNN that the White House believes DP World's American assets would be sold to a U.S. firm.

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Because of sparse information about the transaction, Senate Democrats reacted cautiously to the company's announcement and continued to press for a Senate vote that would kill the deal.

"If the U.S. operations are fully independent in every way, that could, indeed, be promising," said Democratic Sen. Charles Schumer of New York. "If, on the other hand, there is still ultimate control exercised by DP World, I don't think our goals would be accomplished, and obviously, we'll need to study this agreement carefully."

Lou Dobbs reported today that "Dubai Ports World" officials have tried to silence him and get CNN to suppress his reports.

Mark Dennis, spokesman for Dubai Ports World said: "CNN won't shut up Lou Dobbs." They are refusing to give any more interviews to CNN or allow them to video tape their operations overseas. To CNN's credit they have refused to comply with their demands.

From Egypt to Afghanistan, when terrorists and gangsters need a place to meet, to relax, maybe to invest, they head to Dubai, a bustling city-state on the Persian Gulf. The Middle East's unquestioned financial capital, Dubai is the showcase of the United Arab Emirates, an oil-rich federation of sheikdoms. Forty years ago, Dubai was a backwater; today, it hosts dozens of banks and one of the world's busiest ports; its free-trade zones are crammed with thousands of companies. Construction is everywhere--skyscrapers, malls, hotels, and, soon, the world's tallest building.

But Dubai also serves as the region's criminal crossroads, a hub for smuggling, money laundering, and underground banking. There are Russian and Indian mobsters, Iranian arms traffickers, and Arab jihadists. Funds for the 9/11 hijackers and African embassy bombers were transferred through the city. It was the heart of Pakistani scientist A. Q. Khan's black market in nuclear technology and other proliferation cases. Half of all applications to buy U.S. military equipment from Dubai are from bogus front companies, officials say. "Iran," adds one U.S. official, "is building a bomb through Dubai." Last year, U.S. Immigration and Customs Enforcement agents thwarted the shipment of 3,000 U.S. military night-vision goggles by an Iranian pair based in Dubai. Moving goods undetected is not hard. Dhows--rickety wooden boats that have plowed the Arabian Sea for centuries--move along the city center, uninspected, down the aptly named Smuggler's Creek.

U.A.E. rulers have taken terrorism seriously since 9/11, but Washington has a half-dozen extradition requests that they refuse to honor. The list includes people accused of rape, murder, and arms trafficking, and the last fugitive of the BCCI banking scandal. The country has put money laundering controls on the books but has made few cases. Interior Minister Sheik Saif bin Zayed Al Nahyan told U.S. News the U.A.E. has made great strides in cracking down, but he insists that the real problems lie elsewhere. "We are a neutral country, like Switzerland," he says. "Give us the evidence, and we will do something about it. Don't blame others." Not everyone agrees. "All roads lead to Dubai," says former treasury agent John Cassara, author of Hide and Seek, a forthcoming book on terrorism finance. Cassara tried explaining U.S. concerns about Dubai to a local businessman but got only a puzzled look: "Mr. John, money laundering? But that's what we do. "

The oil-rich United Arab Emirates is a major investor in The Carlyle Group, the private equity investment firm where President Bush's father once served as senior adviser and is a who's who of former high-level government officials. Just last year, Dubai International Capital, a government-backed buyout firm, invested in an $8 billion Carlyle fund.

Another family connection, the president's brother, Neil Bush, has reportedly received funding for his educational software company from the UAE investors. A call to his company was not returned.

Then there is the cabinet connection. Treasury Secretary John Snow was chairman of railroad company CSX/. After he left the company for the White House, CSX sold its international port operations to Dubai Ports World for more than a billion dollars.

In Connecticut today, Snow told reporters he had no knowledge of that CSX sale. "I learned of this transaction probably the same way members of the Senate did, by reading about it in the newspapers."

Another administration connection, President Bush chose a Dubai Ports World executive to head the U.S. Maritime Administration. David Sanborn, the former director of Dubai Ports' European and Latin American operations, he was tapped just last month to lead the agency that oversees U.S. port operations.

The president on Tuesday defended his administration's earlier approval of the sale of London-based Peninsular and Oriental Steam Navigation Co. to Dubai Ports World, despite concerns in Congress it could increase the possibility of terrorism at American ports.

The pending sale — expected to be finalized in early March — puts Dubai Ports in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. "If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward," Bush said.

"It sends a terrible signal to friends around the world that it's OK for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world," Bush said.

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Bush sought to quiet a political storm that has united Republican governors and Senate Majority Leader Bill Frist of Tennessee with liberal Democrats, including New York's two Democratic senators, Hillary Rodham Clinton and Charles Schumer. Frist said Tuesday, before Bush's comments, that he would introduce legislation to put the sale on hold if the White House did not delay the takeover. He said the deal raised "serious questions regarding the safety and security of our homeland.

House Speaker Dennis Hastert, R-Ill., asked the president for a moratorium on the sale until it could be studied further. "We must not allow the possibility of compromising our national security due to lack of review or oversight by the federal government," Hastert said.

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Bush said that protesting lawmakers should understand his approval of the deal was final. "They ought to listen to what I have to say about this," the president said. "They'll look at the facts and understand the consequences of what they're going to do. But if they pass a law, I'll deal with it with a veto."

Elected officials from New York and New Jersey are vowing to block a controversial plan that many say places our ports at risk. The Bush Administration is allowing an Arab company to assume control of several major ports including several in this area.

Governor Pataki wants the Port Authority to explore the state's legal options as the federal government goes ahead with plans to let a Saudi Arabian based company take over six major U.S. ports, including one in New York and one in New Jersey.

Senator Charles Schumer and Long Island Congressman Peter King are expected to announce emergency legislation to try and put a stop to this. Critics do point out that two of "9/11" hijackers did come from the United Arab Emirates. Rep. Peter King, (R) New York: "I'm confident, certainly very hopeful that if we speak loudly enough and really focus on this issue, we can get the contract delayed, get it frozen, get it held."

The port deal is said to be worth seven billion dollars.

The space travel agency, Space Adventures, has announced plans to develop a commercial "Spaceport" in the United Arab Emirates (UAE) to take tourists on sub-orbital flights. The proposed facility in Ras al-Khaimah, the most northern of the seven emirates that form the UAE, would be the first of several such spaceports under a global development project budgeted at more than 250 million dollars.

Other potential locations have been identified in Asia, specifically Singapore, and North America. The company said it had already received clearance from the UAE authorities to operate sub-orbital space flights in their air space. "The close proximity to Dubai, one of the worlds leading luxury tourist destinations, makes (Ras al-Khaimah) a choice location for Spaceflight operations," said space adventures president and CEO, Eric Anderson yesterday. "Suborbital flights will offer millions of people the opportunity to experience the greatest adventure available, space travel," Anderson said.

Currently the only operating space tourism agency, space adventures first made its name by sending US millionaire Dennis Tito into space in 2001. Since then, two other ultra-wealthy tourists have made similar trips, South African mark Shuttle worth in 2002 and last year another American millionaire businessman, Greg Olsen, who paid 20 million dollars to spend eight days aboard the international space station.