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UPDATE 5-Bush says committed to Middle East peace efforts

Reuters: [2008-05-17 19:23:00]

(Updates throughout with Bush, Abbas, Gheit comments)

By Matt Spetalnick and Tabassum Zakaria

SHARM EL-SHEIKH, Egypt, May 17 (Reuters) - U.S. President George W. Bush, responding to Arab dismay about his praise for Israel, said on Saturday he was confident a deal on Palestinian statehood could be reached before he leaves office.

Despite scepticism over his chances of securing a peace agreement by the end of his term in January, Bush expressed optimism that a deal could be done.

Speaking after a meeting with Palestinian President Mahmoud Abbas in the Red Sea resort of Sharm el-Sheikh, Bush said he told Abbas that he was "absolutely committed" to working with Palestinians and Israelis to get a Palestinian state defined.

"I do so for a couple of reasons. One, it breaks my heart to see the vast potential of the Palestinian people really wasted," he said.

"It'd be an opportunity to end the suffering that takes place in the Palestinian territories," Bush said. "And the second reason I'm for it is because it's the only way for lasting peace."

Palestinians say the Israeli occupation in the West Bank has created great hardship for them.

Abbas did not mention Bush's speech to Israel's parliament on Thursday in which he heaped praise on Israel but made only one reference to Palestinians' aspirations for a state of their own.

"We know very well that you personally as well as your administration are committed to reach peace before the end of 2008," Abbas said. "We are delighted to continue our engagement with you."

Bush, who will address Palestinian issues in a speech Sunday to the World Economic Forum, said the creation of a Palestinian state would be "an opportunity to end the suffering in the Palestinian territories."

ANNIVERSARY VISIT

Egyptian President Hosni Mubarak had raised the issue of Bush's speech to the Knesset in a meeting earlier on Saturday.

"We detect on the American side some optimism and we told them that we have the same information but it is results that will reveal whether this progress which the parties speak of is real," Egyptian Foreign Minister Ahmed Aboul Gheit told reporters.

"Time will tell how able the U.S. administration is to achieve its objectives but we must keep trying. We cannot leave the Palestinians in this tragic situation which we see in Gaza, or the West Bank," he said.

On the way from the airport on the last leg of his Middle East tour, Bush's motorcade passed a "peacemakers" mural on the side of the road, a reminder of past efforts on diplomacy in the region by his predecessors.

Bush's visit to Israel to celebrate its 60th anniversary raised fresh doubts in the Arab world over his ability to act as an even-handed broker between Israel and the Palestinians.

He hailed Israel as a "homeland for the chosen people" and pledged that Israelis could forever count on American support against enemies like Hamas and Iran.

Abbas, who wants Bush to put more pressure on Israel, has little leverage and is weak at home, governing only in the West Bank while the Islamists of Hamas control Gaza.

Israeli Prme Minister Ehud Olmert is also on the ropes, facing a corruption scandal that could force his resignation and possibly derail the peace process altogether.

Bush's Middle East tour, his second this year, follows a U.S.-hosted conference in Annapolis, Maryland, in November where Israeli and Palestinian leaders pledged to try to reach a peace agreement by the end of Bush's term.

Since then, talks have bogged down over Israeli settlement expansion in the occupied West Bank and violence in and around the Gaza Strip, where Hamas cross-border rocket fire has triggered a tough Israeli military response.

(Additional reporting by Jonathan Wright; Editing by Keith Weir) ((Reuters Messaging: matt.spetalnick.reuters.com@reuters.net; +1 202 898 8300, fax +1 202 898 8383))

Keywords: BUSH MIDEAST/

UPDATE 1-Election propels Dominican president to third term

Reuters: [2008-05-17 18:25:00]

(Adds near final results, details)

By Tom Brown

SANTO DOMINGO, May 17 (Reuters) - President Leonel Fernandez swept to a third term in the Dominican Republic, propelled back into office by what many see as his success in pulling the Caribbean country out of a deep economic slump.

With partial results giving the New York-raised lawyer and academic enough votes to avoid a runoff after Friday's election, Fernandez's main rival, real estate and construction magnate Miguel Vargas Maldonado of the center-left Dominican Revolutionary Party, conceded defeat.

"I accept and recognize the results of the elections," Vargas said in a speech at his campaign headquarters.

A triumphant Fernandez dedicated his victory to former President Juan Bosch, his leftist mentor who was elected in December 1962 but overthrown in a coup the following September.

The first-round win, he told cheering supporters, meant that "no time will be lost in the continuation of our work and progress."

The central elections board gave Fernandez of the centrist Dominican Liberation Party 53 percent of the vote, while Vargas of the center-left Dominican Revolutionary Party received 40 percent, after results from 99 percent of voting stations were tallied.

The rest of the vote was split among candidates of five tiny opposition parties.

Fernandez inherited a crumbling economy in 2004 when he became president for the second time. The collapse of a major bank in 2003 had sent inflation soaring, plunged the Dominican government deep into the red and provoked a sharp economic downturn.

With the help of loans from the International Monetary Fund, Fernandez managed to turn things around, although poverty remains widespread.

The election on Friday that catapulted Fernandez into his third term was marred by violence and accusations that his government dipped into the public purse to ensure it won enough votes for re-election.

More than a dozen people, including two ruling party officials, suffered gunshot wounds in the country, a leading Caribbean tourism destination once dominated by authoritarian rulers. And at least three, a former congressman among them, were shot and killed.

'DEMOCRATIC FIESTA'

But Fernandez, 54, who was first president from 1996 to 2000 before winning office again in 2004, told reporters after casting his own ballot in Santo Domingo that the voting was largely peaceful. "It's a democratic fiesta," he said.

Just under 6 million of the Dominican Republic's 9 million people were registered to vote.

The Dominican Republic is far wealthier than Haiti, its poor neighbor on the island of Hispaniola. But many Dominicans struggle to satisfy basic needs despite a tourism and real estate boom and economic growth that have made the country the envy of much of the Caribbean.

Fernandez had vowed to come up with a "social pact" to address poverty and expand government programs if he won. But coping with fallout from the stumbling U.S. economy and surging global oil, gas and food prices could soon take precedence.

One big challenge will be financing energy subsidies based on crude oil prices of $80 a barrel, given that oil now goes for more than $120 a barrel.

Eduardo Ganarra, a Latin American expert at Florida International University who works as an adviser to Fernandez, said there was no plan to slash energy subsidies despite their high cost.

"He (Fernandez) can't at this point think about cutting any subsidies without facing a serious social situation," said Gamarra.

"We're about to commit suicide because we're paying $4 at the pump in the U.S. and this is a poor country," said Gamarra, noting that gasoline prices in the Dominican Republic were already more than $5 per gallon. (Additional reporting by Manuel Jimenez, Editing by Cynthia Osterman) ((miami.newsroom@reuters.com; +1 305 810 2688; Reuters Messaging: thomas.brown.reuters.com@reuters.net)) Keywords: DOMINICAN ELECTION/

UPDATE 1-Ukraine May CPI to dip from April's 3.1 pct-minister

Reuters: [2008-05-17 17:34:00]

(adds quotes, details)

By Natalya Zinets

KIEV, May 17 (Reuters) - Ukraine's inflation rate will slow in May from April's 3.1 percent and the government will do everything it can to combat soaring prices, Economy Minister Bodan Danylyshyn told Reuters on Saturday.

His deputy, Iryna Kryuchkova, suggested price rises, which soared to just under 30 percent year-on-year last month, could even be negative in July and August given the prospect of a good harvest.

Fuelled by a record month-on-month rise of 3.8 percent in March, consumer price inflation has hit a cumulative 13.1 percent over the first four months of the year -- far exceeding a government target of 9.6 percent for the entire year.

"In May, it will be lower than it was in April," Danylyshyn said on the sidelines of an investment conference held in conjunction with the EBRD's annual meeting.

"And we will do everything so that it turns out that way."

Prime Minister Yulia Tymoshenko has said that price rises in the first two weeks of May stood at less than half the level recorded in the same period in April.

Officials attribute the steep increases to rises in food prices. Tymoshenko, who took office last December, also says she has inherited inflation patterns from the previous government and its pre-election increases in social benefits.

But a senior central bank official said steep rises in the price of gas imported from Russia and continued hikes towards a European market price had also impacted inflation. Ukraine now pays $179.5 per 1,000 cubic metres, from $50 in 2005.

Ihor Shumylo, director of executive director of economic issues at the central bank said he expected the gas price to rise by 50 percent in the coming years.

"Everyone knows that sooner or later Ukraine will have pay the European price," he told journalists.

Russia's gas export monopoly Gazprom <GAZP.MM> currently sells gas to its European customers at around $400. Prices fluctuate together with global prices for refined products with a lag of six to nine months.

Ukraine's inflation hit 16.6 percent throughout 2007 against 11.6 percent the pervious year. Consumer prices leapt in March, accelerating at their fastest pace since 1999. Between January and April year-on-year price growth reached 30.2 percent.

FOOD PRICES BLAMED

Prices began their rapid rise after a bad harvest last year, which boosted food costs -- 50-60 percent of the CPI basket.

Danylyshyn said the government was maintaining price controls to guard against "unjustified" increases. Other measures have included using Ukraine's state reserves of cheaper products to keep increases to a minimum.

With food prices accounting for 50-60 percent of the statistical consumer basket, the government believes a good harvest will bring down inflation figures.

"We have for the moment no reason to believe that we will have any problems with farm output. There is optimism about a good harvest," Kryuchkova said.

"This will affect food prices. We have had years with deflation in July and August and that may be the case this year. We have not ruled it out. It's in our forecasts."

But she said slow movement in extending credits to companies posed an even bigger threat to the economy.

"It is the stupor in routine credits to companies that is now slowing down normal economic development," she said. "It could be higher."

Kryuchkova said the growth forecast of 6.8 percent -- compared to 7.6 percent last year -- was unchanged.

"We will have the lowest GDP figures and the highest inflation figures in the first half. The situation can change in the second half," she said.

"I believe we will have some sort of stabilisation for several months and then growth rates will start moving up."

Experts polled by Reuters are less optimistic than the government in their forecasts -- predicting inflation of up to 21.6 percent for the year and growth of 6.0 percent. ((Kiev bureau; +380 44 244 9150; additional reporting by Sabina Zawadzki; writing by Ron Popeski; Editing by Nick Edwards; Reuters Messaging:ronald.popeski@reuters.com@reuters.net))