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Q&A: Can powers revive nuclear fuel deal with Iran?

VIENNA (Reuters) – Major powers are expected to test whether Iran might be ready to start addressing their concerns about its nuclear plans at a meeting in Istanbul this week, possibly by exploring ways to reduce deep mutual mistrust.

Both sides have in recent months indicated willingness to resume talks about a plan to swap atom fuel which that more than a year ago and is seen by the West as a potential step to build confidence for broader negotiations on Iran's nuclear program.

The issue may come up at the January 21-22 session between Iran and the six world powers in the Turkish city, even though expectations of any breakthrough in the long-running dispute over Tehran's atomic ambitions are low.

They still differ on how such an exchange of Iranian low-enriched uranium (LEU) for higher-refined reactor fuel from abroad would take place. A tentative pact struck in October 2009 fell apart after Iran backed away from its terms.

Western diplomats have suggested the idea could be revived if Iran also accepts wider discussions they hope will lead to it agreeing to curb nuclear work which they fear has military aims.

They say any new accord must be updated to take into account Iran's growing LEU stockpile, material which can be used for bombs, and escalating enrichment activity since last February. Iran has rejected any toughening of the terms.

Senior fellow Greg Thielmann of the Washington-based Arms Control Association said a fuel swap could increase confidence and help set the stage for a solution to the core dispute.

"A step to rejuvenate this concept would be a concrete symbol of progress," he said.

The following looks at the plan's main elements and how it fits into the broader nuclear row between Iran and the powers:

WHAT WAS THE IDEA BEHIND THE FUEL SWAP PLAN?

Under the initial agreement brokered by the U.N. nuclear watchdog between Iran, the United States, France and Russia in 2009, Iran would send 1,200 kg of its LEU abroad -- roughly the amount needed for a bomb if refined to a high degree.

The material would first be enriched to 20 percent fissile purity by Russia and then turned into fuel assemblies by France before its return to Iran for use in a medical research reactor, which is running out of fuel provided by Argentina in the 1990s.

For the West, which suspects Iran is seeking covertly to develop nuclear weapons, the proposal offered a way to restore a degree of trust in relations with Tehran and help in the search for a diplomatic solution to the eight-year nuclear dispute.

At the time, 1,200 kg of LEU represented about 75 percent of Iran's stockpile so it would also have ensured that it did not have enough left over for a weapon, at least temporarily.

For Iran, it would have provided fuel for a reactor it says helps in treating hundreds of thousands of cancer patients.

President Mahmoud Ahmadinejad would also have been able to hail it as a foreign policy success, with Iran striking a deal with the powers without backing down over its enrichment work.

The U.S. envoy to the International Atomic Energy Agency (IAEA), Glyn Davies, has described it as a "beautiful" agreement for Iran.

SO WHY DID THE DEAL COLLAPSE?

Analysts and diplomats believe it fell victim to Iran's internal power rivalries. Ahmadinejad's opponents, keen to deny him a diplomatic victory, said it would have forced Iran to part with the bulk of a strategic asset and a strong bargaining chip.

Iranian politicians raised new conditions for the swap, saying it must take place on Iranian soil and simultaneously.

This was unacceptable for the West as it would fail to remove potential bomb material from Iran, which says its nuclear program is a peaceful drive to generate electricity.

Iran, Turkey and Brazil resurrected parts of the original plan last May in a bid to avert a tightening of sanctions on Tehran. Under this proposal, Iran would still send out 1.2 tons of LEU, this time to Turkey, in return for reactor fuel.

But the United States, Russia and France -- known as the Vienna Group -- voiced deep concerns about Iran's new offer and the move failed to prevent the introduction of more sanctions.

Their main worries included Iran's growing LEU stockpile -- which now amounts to more than 3 tons -- and its decision in February to escalate enrichment to 20 percent itself, an advance

toward weapon-grade material.

Iran said it was forced to take this step to prepare the way for producing reactor fuel itself. But many analysts doubt its technical ability to convert the uranium into special fuel rods, heightening suspicions.

COULD IT BE REVIVED?

Ahmadinejad said in December Iran was prepared to discuss a possible fuel swap again. [ID:nLDE6B716F] But Iran later said the idea was losing its appeal because it would soon be able to make the fuel itself. [ID:nLDE70702U]

Western diplomats stress that even if the fuel exchange arrangement is revived, Iran must also agree to address their core concerns about its nuclear activities.

They fear that Iran may use any fuel swap talks as a way to distract attention from the West's main worry -- the uranium enrichment program -- and buy time to perfect the process.

In October, the New York Times reported that intelligence analysts had concluded last year's deal was scuttled by Iran's supreme leader, Ayatollah Ali Khamenei, and that many officials therefore suspected any new effort would also fail.

The Times said Washington and its European allies have prepared a new swap offer to Iran, which would require Iran to send about 2,000 kg of LEU out of the country.

Tehran quickly dismissed the report, saying it only needed reactor fuel for the equivalent of 1,200 kg [ID:nLDE6A122Z] and this month, announced that it will make its own fuel for the research reactor later in 2011.

If Iran "is confident that it can make reliable fuel elements, it will have no motivation to go through with the complex swap deal offered by France, Russia and the United States," nuclear expert Ivanka Barzashka of Federation of American Scientists (FAS) said.

(Editing by Mark Heinrich)

Potential RNC candidates ding Michael Steele over finances

If a theme song were chosen for the first Republican National Committee chairman debate it would’ve been the O’Jays ditty “For The Love of Money” that goes “Money! Money! Money! Money!”

Though current RNC Chairman Michael Steele was not present at the first debate among RNC chairman hopefuls, the state of the committee’s finances and spending under his tenure played a starring role.

Former Michigan GOP chairman Saul Anuzis suggested Steele hasn’t worked hard enough to reach out to big donors. Recalling conversations with those donors who didn’t make donations this year, Anuzis said “the amazing thing is, 8 of 10 of them said, ‘We weren’t asked.’”

Former RNC political director Gentry Collins, who worked for Steele until resigning recently, said more races could’ve been won if the committee had raised more money. He said the only way to fix that problem is to have a chairman who is “laser focused” on raising funds for essential “get out the vote” programs.

Collins, who has not announced a candidacy but says he’s seriously considering one, elaborated: “The problem in 2010 is we did not have the resources to deploy that ground game...the next chairman has got to do that.”

Former Missouri RNC committee member Ann Wagner, who announced her candidacy Tuesday, said she views the role of chairman asљ “money first, it’s money second, it’s money third.”

“The kind of resources we receive are the difference in winning presidential election or not,” she said. “It’s the difference between winning a Senate race or not.”

Former RNC chairman Mike Duncan said the chairman has many roles, and the first is being a fundraiser.

Throughout his tenure as chair since January 2009, Steele has faced criticism for the committee’s fundraising and spending under his leadership. The committee’s most recent filings with the Federal Election Committee are expected to be released Thursday, which will give a glimpse of the RNC’s finances in the weeks leading up to November’s elections.

Other potential candidates, like Steele, Connecticut GOP chairman Chris Healy, former Bush administration official Maria Cino and former Minnesota Sen. Norm Coleman did not attend the National Republican Conservative Caucus and FreedomWorks forum.

FreedomWorks, a group affiliated with the Tea Party movement, billed the event as “the first time in RNC history” when an outside organization had “direct access to potential party leadership to ask the tough policy questions that will determine the future of the Republican Party.”

The National Republican Conservative Caucus, a conservative group within the RNC that has developed 13 points of criteria for selecting a chairman, will privately interview the candidates Thursday.

The four candidates at the Washington Hilton sat at a single table on a stage with both the American Flag and the Gadsden flag, a symbol embraced by the Tea Party movement.

FreedomWorks’ Max Pappas said those who attended signified they respected the “importance of the Tea Party movement.” Many of the questions came from Tea Party activists in the audience.

Asked about the threat potential third party challengers pose to Republicans, Duncan said he was disappointed in Alaska’s Sen. Lisa Murkoswki, who lost to a Tea Party Republican in the GOP primary but went on to run as a write-in.

“I was personally disappointed,” he said about Murkowski.

Wagner said the chairman should always “go with the will of the people in the outcome of those primaries” and Collins said the RNC should “respect the will of the primary electorate in every case.” Anuzis called third party challenges “really harmful.”

The 168 members of the RNC will elect a chairman and other committee officers at their January winter meeting.

Read more stories from The Daily Caller

Vehicle fuel efficiency up in 2009 model year

WASHINGTON – Cars and trucks made the biggest year-to-year increase in fuel efficiency in nearly three decades in the 2009 model year, averaging 22.4 miles per gallon, the Environmental Protection Agency said Wednesday.

The government reported that new vehicle fuel efficiency improved 6 percent last year from 21.0 mpg during the 2008 model year, the largest jump since 1980-1981. EPA said the gains were largely tied to the economic recession as vehicle production fell more than 30 percent to 9.2 million vehicles and more fuel-efficient passenger cars took a larger share of sales.

As the car market recovers, EPA estimates fuel efficiency will improve slightly to 22.5 mpg in the 2010 model year. The figures are based on estimates for city and highway mileage found on window stickers in dealer lots.

Toyota Motor Corp. led the industry in 2009 with an overall fleet of 25.4 mpg, followed by Hyundai Motor Co. with 25.1 mpg and Honda Motor Co. with 24.6 mpg. South Korean automaker Kia Motors Corp. averaged 24.2 mpg, followed by Volkswagen AG with 23.8 mpg, Nissan Motor Corp. with 23.6 mpg and Mitsubishi Motors Corp. with 23.5 mpg.

U.S. automakers lagged behind their competitors. General Motors Co. averaged 20.6 mpg, followed by Ford Motor Co. with 20.3 mpg and Chrysler LLC with 19.2 mpg. GM and Ford were projected to show modest improvements in the next model year while Chrysler was expected to hold steady.

The Obama administration has pushed forward more stringent fuel efficiency requirements that will force carmakers to improve well into the next decade.

Environmental groups said the latest EPA data underscored the need for the tough requirements because sales conditions in 2009 were unusual and an improving economy might boost sales of larger vehicles. The new standards aim to bolster fuel efficiency across the lineup of new cars and trucks.

"Strong fuel economy standards can help guarantee that consumers get what they need when it comes to size and performance and get better fuel economy to fight high gas prices," said David Friedman, research director for the clean vehicles program of the Union of Concerned Scientists.

Wade Newton, a spokesman for the Alliance of Automobile Manufacturers, said the report showed that automakers are producing more vehicles that use less fuel. He said the improvement was "a direct result of consumers' willingness to purchase automakers' more fuel-efficient models in greater numbers."

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Retailers lift S&P, Nasdaq, but Europe weighs

NEW YORK (Reuters) – The S&P 500 and Nasdaq indexes were modestly higher on Wednesday, led by gains among retailers after a bullish outlook from Target, but Europe's debt crisis kept investors cautious.

Discount chain Target Corp (TGT.N) jumped nearly 4 percent to $55.62 after it forecast its best same-store sales in three years during the upcoming holiday season. The outlook sparked a 1 percent rise in the S&P retail index (.RLX).

Costco Wholesale Corp (COST.O), another major retailer, was one of the top percentage gainers on the Nasdaq 100 (.NDX), rising 2 percent to $67.04.

It was the market's second day of positive news from retailers. Wal-Mart Stores Inc (WMT.N) and Home Depot Inc (HD.N) raised their profit forecasts for the year on Tuesday.

But the overall market struggled to rebound from a drop of nearly 2 percent on Tuesday as investors kept a close eye on the situation in Ireland. Dublin agreed to work with a European Union-International Monetary Fund mission on urgent steps to shore up its shattered banking sector.

"I think the market is in a deterioration trend. It's worrisome at this point, considering that we had a selloff yesterday with pretty big volume and poor advance-decline numbers," said Frank Gretz, market analyst and technician at the Shields & Co brokerage in New York.

"The market is certainly vulnerable, and I think it is in fact headed for a correction."

The Dow Jones industrial average (.DJI) was down 0.03 points, or 0.00 percent, at 11,023.47. The Standard & Poor's 500 Index (.SPX) was up 2.48 points, or 0.21 percent, at 1,180.82. The Nasdaq Composite Index (.IXIC) was up 13.91 points, or 0.56 percent, at 2,483.75.

The S&P 500 is up 6.5 percent from a year ago.

Commodity prices fell after the Chinese government said it will take forceful measures to stabilize consumer prices, which is expected to slow demand in the fast-growing economy.

U.S. crude oil futures were down 2.6 percent at $80.17 per barrel, and shares of aluminum producer Alcoa Inc (AA.N) fell 0.8 percent to $12.93, weighing on the Dow.

The CBOE Volatility index (.VIX), Wall Street's so-called fear gauge, declined 4.7 percent but remained above 20. On Tuesday, it closed at its highest point since October 4, breaking above its 50-day moving average and facing resistance at the 200-day moving average.

In the latest U.S. economic data, housing starts slumped to their lowest level in more than a year in October, while consumer prices rose, but the annual increase in core CPI was the smallest on record.

General Motors Co (GM.UL) set the terms for a landmark initial public offering that could be the largest in U.S. history and raise up to $22.7 billion. The IPO is scheduled to debut on Thursday.

(Reporting by Angela Moon; additional reporting by Doris Frankel; editing by Kenneth Barry and Jeffrey Benkoe)

New York Fashion Week kicks off in new digs

NEW YORK (AFP) – Designers from around the world start unveiling their creations Thursday at New York's Spring-Summer 2011 Fashion Week, held for the first time at the city's prestigious Lincoln Center.

The fashion world was in buoyant mood for the start of the event, which runs to September 16, celebrating both the new venue and what insiders see as an economic turnaround in the luxury sector.

Shows were due to get underway Thursday in tents set up in Damrosch Park within the Lincoln Center, a huge complex permanently hosting The Metropolitan Opera, New York City Ballet and New York Philharmonic Orchestra.

The New York event is the first of the leading, twice-yearly fashion weeks also held in London, Milan and Paris.

"Starting tomorrow, one of the world's most eye-catching events comes to one of the world's greatest cultural institutions, as we kick off Mercedes-Benz Fashion Week at Lincoln Center," Mayor Michael Bloomberg said Wednesday.

"For years, the famed fashion tents have drawn people from all over the world to New York city, and the buzz is even greater this year with it debuting at its new home at Lincoln Center."

Part of the buzz undoubtedly centers around what is being billed as Fashion Week's first-ever plus-size only runway show, featuring women who far more closely resemble the average American female figure than their super-slender runway counterparts.

With 27 percent of American adults now considered obese, the show, hosted by OneStopPlus.com, could also be a nod to the steadily expanding market in plus-size fashion.

Fashion Week in New York is attended by some 230,000 people and brings an estimated 770 million dollars in economic activity to a city where 175,000 people are employed in the fashion industry, the mayor's office says.

Until this year, Fashion Week had taken place in more cramped conditions at Bryant Park, near Times Square.

"Lincoln Center is an ideal location for the semi-annual events, with more outdoor space than was available at Bryant Park and terrific transit access, including the Number One subway line, or as it will be called this week: The Fashion Line," Bloomberg said.

The mayor was accompanied at the opening ceremony by designer and Council of Fashion Designers of America (CFDA) president Diane von Furstenberg, whose collection will be shown Sunday.

Friday will feature "Fashion Night Out" when city stores stay open late and fashionistas are encouraged to shop and party into the wee hours.

Fashion Week will hold about 100 events, from straightforward design shows to a celebration of legendary fashionista Karl Lagerfeld to an invitation-only "Victoria's Secret VIP Suite."

There are definite signs of a return to the good times for fashion, even if the US economy as a whole is only barely reemerging from recession.

The September issues of Vogue, Elle, Harper's Bazaar and W are thicker and glossier than they have been in a long time, providing an instant indication of healthy advertising revenues.

The doorstopper Vogue issue is only slightly thinner than the famous pre-recession issue of September 2007, the subject of a documentary.

In the warm-up to the main events, young designers have already been busy showing off their wares at the CFDA Fashion Incubator workshops.

"It's interesting because we each have four mentors specialized in the fashion industry to give us advice on avoiding the classic slip-ups in new businesses," said Alice Ritter, a young French designer.