Is SC right in shutting our legal rights, asks 2G scam accused

NEW DELHI: A 2G scam accused on Monday questioned the Supreme Court's strict monitoring of the CBI investigation into alleged irregularities in spectrum allocation in 2008 under then telecom minister A Raja and challenged its orders asking other courts not to entertain appeals against trial court decisions.

Accused Asif Balwa's writ petition also questioned the legality of a two-judge bench's November 9 order, by which the SC had issued notices to all accused asking why their petitions in the Delhi High Court against the decision of the trial court to frame charges against them be not transferred to the apex court.

Senior advocate Ram Jethmalani mentioned the petition before a three-judge bench headed by Chief Justice Altamas Kabir and sought an urgent hearing on the ground that precious rights of the accused facing trial were being breached by the two-judge bench's orders. The CJI-headed bench said it would examine the contents of the petition and consider giving a hearing to the petitioner.

Balwa, who was a director of Swan Telecom (now known as Etisalat DB Telecom Pvt Ltd), also questioned the two-judge bench's method of monitoring the investigation, during which the judges had looked into the draft chargesheet of the CBI against the accused. "The role of constitutional courts in monitoring investigation and the jurisdiction to adjudicate issues arising there from have to be dealt with, in order to ensure that the prosecutor, investigator and the judge are not seen to be same person," he said.

Balwa said it was well-settled in law that on filing of chargesheet by the investigating agency, the monitoring by a constitutional court must come to an end to allow the trial to proceed under the statutory provisions.

"Merely because the Supreme Court has monitored the investigation does not mean that all the remedies available to the accused as well as the prosecution in accordance with law has been subverted," he said questioning the apex court's orders asking the HC not to entertain pleas of the accused facing trial in the case relating to alleged irregular allocation of spectrum.

Balwa also said the special bench, which monitored the 2G scam, had passed orders against the accused on a petition in which they were not even included as parties. "Thus, there is a complete failure of principle of natural justice as the orders and directions have been passed without giving an opportunity of hearing to the affected parties including the petitioner," he added.

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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New Evidence Suggests Biblical Flood Happened

The story of Noah's Ark and the Great Flood is one of the most famous from the Bible, and now an acclaimed underwater archaeologist thinks he has found proof that the biblical flood was actually based on real events.

In an interview with Christiane Amanpour for ABC News, Robert Ballard, one of the world's best-known underwater archaeologists, talked about his findings. His team is probing the depths of the Black Sea off the coast of Turkey in search of traces of an ancient civilization hidden underwater since the time of Noah.

Tune in to Christiane Amanpour's two-part ABC News special, "Back to the Beginning," which explores the history of the Bible from Genesis to Jesus. Part one airs on Friday, Dec. 21 and part two on Friday, Dec. 28, both starting at 9 p.m. ET on ABC. See photos from her journey HERE

Ballard's track record for finding the impossible is well known. In 1985, using a robotic submersible equipped with remote-controlled cameras, Ballard and his crew hunted down the world's most famous shipwreck, the Titanic.

Now Ballard is using even more advanced robotic technology to travel farther back in time. He is on a marine archeological mission that might support the story of Noah. He said some 12,000 years ago, much of the world was covered in ice.

"Where I live in Connecticut was ice a mile above my house, all the way back to the North Pole, about 15 million kilometers, that's a big ice cube," he said. "But then it started to melt. We're talking about the floods of our living history."

The water from the melting glaciers began to rush toward the world's oceans, Ballard said, causing floods all around the world.

"The questions is, was there a mother of all floods," Ballard said.

According to a controversial theory proposed by two Columbia University scientists, there really was one in the Black Sea region. They believe that the now-salty Black Sea was once an isolated freshwater lake surrounded by farmland, until it was flooded by an enormous wall of water from the rising Mediterranean Sea. The force of the water was two hundred times that of Niagara Falls, sweeping away everything in its path.

Fascinated by the idea, Ballard and his team decided to investigate.

"We went in there to look for the flood," he said. "Not just a slow moving, advancing rise of sea level, but a really big flood that then stayed... The land that went under stayed under."

Four hundred feet below the surface, they unearthed an ancient shoreline, proof to Ballard that a catastrophic event did happen in the Black Sea. By carbon dating shells found along the shoreline, Ballard said he believes they have established a timeline for that catastrophic event, which he estimates happened around 5,000 BC. Some experts believe this was around the time when Noah's flood could have occurred.

"It probably was a bad day," Ballard said. "At some magic moment, it broke through and flooded this place violently, and a lot of real estate, 150,000 square kilometers of land, went under."

The theory goes on to suggest that the story of this traumatic event, seared into the collective memory of the survivors, was passed down from generation to generation and eventually inspired the biblical account of Noah.

Noah is described in the Bible as a family man, a father of three, who is about to celebrate his 600th birthday.

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Egypt's opposition rejects constitutional referendum

CAIRO (Reuters) - Egypt's main opposition coalition rejected on Sunday Islamist President Mohamed Mursi's plan for a constitutional referendum this week, saying it risked dragging the country into "violent confrontation".

Mursi's decision on Saturday to retract a decree awarding himself wide powers failed to placate opponents who accused him of plunging Egypt deeper into crisis by refusing to postpone the vote on a constitution shaped by Islamists.

"We are against this process from start to finish," Hussein Abdel Ghani, spokesman of the National Salvation Front, told a news conference, calling for more street protests on Tuesday.

The Front's main leaders - Nobel peace laureate Mohamed ElBaradei, former Foreign Minister Amr Moussa and leftist Hamdeen Sabahy - did not attend the event.

Hundreds of protesters milled around Mursi's palace, despite tanks, barbed wire and other barriers installed last week after clashes between Islamists and their rivals killed seven people.

"Holding a referendum now in the absence of security reflects haste and an absence of a sense of responsibility on the part of the regime, which risks pushing the country towards violent confrontation," a statement from the Front said.

The Muslim Brotherhood, which propelled Mursi from obscurity to power, urged the opposition to accept the referendum's verdict.

Islamists say the vote will seal a democratic transition that began when a popular uprising toppled Hosni Mubarak 22 months ago after three decades of military-backed one-man rule.

Their liberal, leftist and Christian adversaries say the document being fast-tracked through could threaten freedoms and fails to embrace the diversity of Egypt's 83 million people.

"ACT OF WAR"

Mursi had given some ground on Saturday when he annulled the fiercely contested decree issued on November 22 that gave him extra powers and shielded his decisions from judicial review.

But some measures taken under the decree remain in force and the president has insisted the referendum go ahead on December 15.

Liberal opposition leader Ahmed Said earlier described the race to a referendum as an "act of war" against Egyptians.

Egypt is torn between Islamists, who were suppressed for decades, and their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms. Many Egyptians just crave stability and economic recovery.

Brotherhood spokesman Mahmoud Ghozlan said the scrapping of Mursi's decree had removed any reason for controversy.

"We ask others to announce their acceptance of the referendum result," he said on the group's Facebook page, asking whether the opposition would accept "the basics of democracy".

The cancellation of Mursi's decree, announced after a "national dialogue" on Saturday boycotted by almost all the president's critics, has not bridged a deep political divide.

Prime Minister Hisham Kandil, a technocrat with Islamist leanings, said the referendum was the best test of opinion.

"The people are the makers of the future as long as they have the freedom to resort to the ballot box in a democratic, free and fair vote," he said in a cabinet statement.

But opposition factions, uncertain of their ability to vote down the constitution against the Islamists' organizational muscle, want the document redrafted before any vote.

"A constitution without consensus can't go to a referendum," said Hermes Fawzi, 28, a protester outside the palace. "It's not logical that just one part of society makes the constitution."

DIALOGUE

Egypt tipped into turmoil after Mursi grabbed powers to stop any court action aimed at hindering the transition. An assembly led by the Brotherhood and other Islamists then swiftly approved the constitution it had spent six months drafting.

Opponents, including minority Christians, had already quit the assembly in dismay, saying their voices were being ignored.

After the dialogue hosted by Mursi, a spokesman announced that the president had issued a new decree whose first article "cancels the constitutional declaration" of November 22. He said the referendum could not be delayed for legal reasons.

The decree ignited more than two weeks of sometimes violent protests and counter-rallies in Egypt. Mursi's foes have chanted for his downfall. Islamists fear a plot to oust the most populous Arab nation's first freely-elected leader.

Islamists reckon they can win the referendum and, once the new constitution is in place, a parliamentary election about two months later. The Islamist-led lower house elected this year was dissolved after a few months by a court order.

Investors appeared relieved after Mursi rescinded his decree, sending Egyptian stocks 4.4 percent higher on Sunday. Markets are awaiting approval of a $4.8 billion IMF loan later this month designed to support the budget and economic reforms.

The military, which led Egypt's transition for 16 turbulent months after Mubarak fell, told feuding factions on Saturday that only dialogue could avert "catastrophe". But a military source said these remarks did not herald an army takeover.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by David Stamp)

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Football: Barca legend Messi beats Mueller record

MADRID: Lionel Messi surpassed Gerd Mueller's record of 85 goals in a calendar year with a first-half double that helped his side to an important 2-1 win at Real Betis on Sunday.

The Argentinian moved up to 86 goals in 2012 but was only given the go-ahead to play against Betis before the game after injuring his knee in the midweek Champions League game against Benfica.

He beats the German legend's record set in 1972, and now has 23 in the league this season, six more than Radamel Falcao who hit five goals for Atletico in their win.

It did not take long for Messi to equal Mueller's record with his side's first real attack on 16 minutes, making a diagonal run across the Betis defence before hitting a left footed shot into the right hand corner.

His history-making moment came nine minutes later when he struck from almost an identical position after good play from Adriano and Andres Iniesta.

Betis had started and finished the better side in Seville, Salva Sevilla had a header well saved by Victor Valdes on three minutes and they hit the woodwork on three occasions in the second-half.

Adrian in the Betis goal then made an acrobatic save to deny Xavi Hernandez, and the home side appeared out of the game until substitute Alvaro Vadillo played a clever pass to Ruben Castro who finished coolly to reduce Barca's lead before the interval.

Valdes saved Barca six minutes into the second period, plucking a left-wing volley from Sevilla from under the crossbar.

The game continued from end-to-end at a frantic pace without many clear-cut chances until Barca's Javier Mascherano struck his own post whilst trying to clear a corner with twenty minutes remaining.

Jorge Molina then hit a post with a fierce shot while at the other end Adrian blocked well from Pedro Rodriguez before Jordi Alba hit the bar when he should have scored.

Barca were in danger of conceding until the end but held on for a vital three points where rivals Real Madrid lost 1-0 only two weeks ago.

The win keeps Barca six points ahead of Atletico Madrid at the top of La Liga who had earlier thrashed Deportivo La Coruna 6-0.

Falcao became the first La Liga player in a decade to score five to keep the pressure on Barca.

He had already hit a double along with a Diego Costa header to put Atletico out of sight by half-time, his second smashed on the half-volley direct from a throw-in.

He completed his hat-trick with a second-half penalty before hitting two more to make him the first player to hit five in a La Liga game since Fernando Morientes for Real Madrid against Las Palmas in 2002.

It was Atletico's eighth straight home win of the campaign.

A hapless looking Deportivo side remain bottom of the table on 11 points, level with Espanyol.

Also on Sunday, Levante thrashed Mallorca 4-0 with goals from Obafemi Martins, David Navarro, Ruben Garcia and Vicente Iborra to move into sixth position.

A first-half header from Aritz Aduriz, his ninth of the season, was enough for Athletic to edge a competitive encounter with Celta Vigo.

On Saturday Real Madrid kept in touch with a 3-2 win at Valladolid, but remain five points behind Atletico in third.

-AFP/ac

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India misguided, paranoid over China: Guha

Shreya Roy Chowdhury, TNN Dec 8, 2012, 06.12AM IST

MUMBAI: A good half-hour into the discussion on 'India, China and the World', historian Ramachandra Guha issued a disclaimer—all the three members on the panel had been to China only once. "We should learn their language, promote quality research, and have a panel on China driven by Chinese scholars," he said. And that was the general tenor of the debate—that the Indian attitude to China was influenced by a mix of ignorance, cautious optimism about partnerships and a whole lot of misguided paranoia. "Don't demonise the Chinese, please," Guha finally said in response to a question.

"China has existed in our imaginations," observed Sunil Khilnani, professor of politics and author of The Idea Of India. "There's been very little sustained engagement with the reality of China and very little of our own produced knowledge about China." It was after the events of 1962 ('war' in the popular imagination, 'skirmish' to the scholars participating in the discussion), explained Khilnani, that a miffed India "withdrew". It's the 50th anniversary of that exchange this year, and "what we haven't been able to do is learn from the defeat", observed Khilnani. Both could have benefited from greater engagement. "China has had a very clear focus on primary education and achieved high levels of literacy before its economic rise. It has also addressed the issue of land reform," said Khilnani. Guha added that China could learn from the "religious, cultural and linguistic pluralism" in India.

But China and India weren't always so out of sync with each other. Srinath Raghavan, a scholar of military history, got both Guha and Khilnani to talk about pre-1962 relations between the two when the picture was rosier. Tagore was interested in China and so was Gandhi. Both were very large countries with large populations and shared what Guha calls a "lack of cultural inferiority". "They were both," he continued, "also heavily dependent on peasant communities." Nehru was appreciative of China's will to modernize and industrialize and its adoption of technology to achieve those ends. In turn, Chinese politicians argued for Indian independence.

Things soured more, feel both Khilnani and Guha, after the Dalai Lama fled to India in 1959. "He was welcomed here as a spiritual leader but the intensification of the conflict dates to the Dalai Lama's flight," said Guha. Both Guha and Khilnani argued that Nehru's decision to not react aggressively to China's occupation of Tibet was, in the long run, the right one and prevented further "militarization" of the region. An audience member wondered if that didn't make India "China's puppet". Guha disagreed. "If there's a Tibetan culture alive today," he said, "it's not because of Richard Gere. Don't believe in the hypocrisy of the Western countries. Will they give them land, employment, dignified refuge? The Tibetans is one of the few cases in which our record is honorable."

But the difference in levels of development and the lopsided trade relations between the two countries have only fuelled the suspicions many Indians seem to harbour about China. People were worried, said Guha, even about cricket balls made in China. Audience questions reflected those worries. A member asked about China's "strategy to conquer the world" and its likely impact on India. Guha cautioned against stereotypes; Khilnani explained, "History is littered with the debris of states that have tried to dominate the world. What we're doing may be more long-lasting."

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

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Johnson can be reached at https://twitter.com/GeneAPseattle

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Banda Superstar Jenni Rivera's Plane Missing

Mexican officials have confirmed the disappearance of a private jet carrying regional Mexican music superstar Jenni Rivera that took off from the northern Mexican city of Monterrey at 3:15 a.m. local time on Sunday and fell off the radar 10 minutes (or 62 miles) after take-off.

The Learjet 25 jet is believed to have been carrying seven people – five passengers and two pilots. It was headed for Toluca International Aiport, located outside of Mexico City, where it was meant to arrive at 4:40 a.m. An official search for the jet was initiated at sunrise.

Rivera's publicist Arturo Rivera is believed to have been on that flight. His most recent tweets are of photos from Rivera's concert in Monterrey on Saturday night.

The Mexican American singer's most recent tweet is a re-tweet of what appears to be a fan's message.

Rivera was due in Toluca this evening for the taping of a Mexican TV show, La Voz.

Known as La Diva de la Banda and beloved by fans on both sides of the border, Rivera, 43, has had a groundbreaking career in regional Mexican music, selling some 15 million records. Among her many feats in a male-dominated genre, she made history in September 2011 when she sold out the Staples Center in Los Angeles, the first female regional Mexican artist to do so. Her reality show on mun2, I Love Jenni, is one of the network's highest rated shows. Rivera made her film debut at the 2012 Sundance Film Festival in the indie family drama Filly Brown, due in theaters in January 2013.

See Also: 'Filly Brown Gives Jenni Rivera a Chance to Grow and Gina Rodriguez a Chance to Shine

The Long Beach, Calif.-born singer's personal life has often called for as much attention as her career. A mother of five, Rivera had filed for divorce from baseball player Esteban Loaiza in October after two years of marriage, citing "irreconcilable differences." Soon after, rumors of an affair between Loaiza and Rivera's own daughter Chiquis surfaced, which Chiquis addressed on Twitter in October by saying, "I would NEVER do that, Ever! That's a horrible accusation."

The search for Rivera's jet continues. This is a developing story.

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Egyptian military says only dialogue can avert disaster

CAIRO (Reuters) - Egypt's military, stepping into a crisis pitting Islamist President Mohamed Mursi against opponents who accuse him of grabbing excessive power, said on Saturday only dialogue could avert "catastrophe".

State broadcasters interrupted their programs to read out an army statement telling feuding factions that a solution to the upheaval in the most populous Arab nation should not contradict "legitimacy and the rules of democracy".

That sounded like a swipe at protesters who have besieged the palace of the freely elected president and called for his removal, going beyond mainstream opposition demands for him to retract a decree that expanded his powers.

The statement also called for a "serious" national dialogue - perhaps one more credible than talks convened by Mursi on Saturday in the absence of opposition leaders. They insist he must first scrap his November 22 decree, defer next week's popular vote on a new constitution and allow the text to be revised.

Deep rifts have emerged over the destiny of a country of 83 million where the end of Hosni Mubarak's 30 years of military-backed one-man rule led to a messy army-led transition, during which the Muslim Brotherhood and its allies won two elections. Many Egyptians crave stability and economic recovery.

The spokesman for the main Islamist coalition demanded that the referendum go ahead on time on the constitution drafted by an Islamist-led assembly from which liberals had walked out.

The army, which ran Egypt for months after Mubarak fell in February 2011, again cast itself primarily as the neutral guarantor of the nation. A military source said there was no plan to retake control of the country or its turbulent streets.

"DARK TUNNEL"

"The armed forces affirm that dialogue is the best and only way to reach consensus," the statement said. "The opposite of that will bring us to a dark tunnel that will result in catastrophe and that is something we will not allow."

Mursi's office said the president opened his "national dialogue" with about 40 political and other public figures discussing "means to reach a solution to differences over the referendum...and the constitutional decree".

Prime Minister Hisham Kandil told an Egyptian television channel that the talks had led to creating a committee to review Mursi's November 22 decree and to work out legal ways to postpone the referendum. He said a new decree could be issued.

"All options are on the table to reach consensus," he said, adding that it was vital to take action to shore up Egypt's economy that has been battered by the turmoil.

The main opposition coalition, the National Salvation Front, which boycotted Mursi's dialogue repeated its call on Saturday for scrapping the decree and the referendum on the constitution.

Instability in Egypt worries the West, especially the United States, which has given Cairo billions of dollars in military and other aid since it made peace with Israel in 1979.

The army might be pushing the opposition to join dialogue and Mursi to do more to draw them in, said Hassan Abu Taleb of the Al Ahram Center for Political and Strategic Studies.

He discounted the chance of direct military intervention, adding: "They realize that interfering again in a situation of civil combat will squeeze them between two rocks."

However, the military did seem poised to take a more active role in security arrangements for the December 15 referendum.

A cabinet source said the cabinet had discussed reviving the army's ability to make arrests if it were called upon to back up police, who are normally in charge of election security.

According to the state-run daily al-Ahram, an expanded military security role might extend to the next parliamentary election and, at the president's discretion, even beyond that.

The army issued its statement while protesters were still camped out by the gates of the presidential palace.

The tens of thousands of Mursi foes who surged past tanks and barbed wire to reach the palace gates on Friday night had dispersed. But a hard core stayed overnight in a score of tents.

"LEAVE"

Some had spray-painted "Down with Mursi" on tanks of the elite Republican Guard posted there after clashes between rival groups killed at least seven people and wounded 350 this week.

Others draped the tanks with posters of Mursi and the word "Leave" scored across his face in red letters.

"We are no longer calling for scrapping the decree and delaying the referendum," Samir Fayez, a Christian protester at the palace, said. "We have one demand in five letters: leave."

Nearby, a Mursi supporter named Mohamed Hassan was quietly observing the scene. He suggested that the Muslim Brotherhood and its ultra-orthodox Salafi Islamist allies could easily overwhelm their foes if they chose to mobilize their base.

"The Brotherhood and Salafis by themselves are few but they have millions of supporters who are at home and haven't taken it to the streets yet," murmured the 40-year-old engineer.

The Muslim Brotherhood's supreme guide, Mohamed Badie, denounced opposition protests that have swirled around the walls of Mursi's palace, saying they "ruin legitimacy".

Badie said eight people, all of them Brotherhood members, had been killed this week and urged the interior minister to explain why police had failed to prevent assailants from torching the organization's headquarters and 28 other offices.

"Get angry with the Brotherhood and hate us as much as you like, but be reasonable and preserve Egypt's unity," he told a news conference. "We hope everyone gets back to dialogue."

The well-organized Brotherhood, which thrust Mursi from obscurity to power, remains his surest source of support.

(Additional reporting by Edmund Blair, Omar Fahmy and Yasmine Saleh; Editing by Stephen Powell)

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Egypt's Morsi annuls controversial decree

CAIRO: Egyptian President Mohamed Morsi on Saturday annulled a decree he issued last month expanding his powers, an official told a Cairo news conference.

"The constitutional decree is annulled from this moment," said Selim al-Awa, an Islamist politician acting as spokesman of a meeting Morsi held earlier with other political leaders.

A referendum on a draft constitution would however still go ahead as planned on December 15, Awa said, explaining that constitutionally Morsi was unable to change the date.

The two issues -- the decree and the referendum -- were at the heart of anti-Morsi protests that have rocked Egypt in the past two weeks.

The controversial decree issued November 22 had put Morsi's decisions beyond judicial review -- a high-handed measure fiercely denounced as dictatorial by the opposition.

Opposition leaders demanded it be rescinded and the referendum be scrapped before they entered into any dialogue with Morsi to calm a crisis which exploded into street clashes this week that left seven people dead and hundreds injured.

Egypt's powerful military on Saturday warned Morsi and the opposition to sit down for talks, otherwise it would take steps to prevent a "disastrous" degradation of the situation.

- AFP/fa

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