Syrian rebels make slow headway in south

AMMAN (Reuters) - The revolt against President Bashar al-Assad first flared in Deraa, but the southern border city now epitomizes the bloody stalemate gripping Syria after 22 months of violence and 60,000 dead.

Jordan next door has little sympathy with Assad, but is wary of spillover from the upheaval in its bigger neighbor. It has tightened control of its 370-km (230-mile) border with Syria, partly to stop Islamist fighters or weapons from crossing.

That makes things tough for Assad's enemies in the Hawran plain, traditionally one of Syria's most heavily militarized regions, where the army has long been deployed to defend the southern approaches to Damascus from any Israeli threat.

The mostly Sunni Muslim rebels, loosely grouped in tribal and local "brigades", are united by a hatred of Assad and range from secular-minded fighters to al Qaeda-aligned Islamists.

"Nothing comes from Jordan," complained Moaz al-Zubi, an officer in the rebel Free Syrian Army, contacted via Skype from the Jordanian capital Amman. "If every village had weapons, we would not be afraid, but the lack of them is sapping morale."

Insurgents in Syria say weapons occasionally do seep through from Jordan but that they rely more on arsenals they seize from Assad's troops and arms that reach them from distant Turkey.

This month a Syrian pro-government television channel showed footage of what it said was an intercepted shipment of anti-tank weapons in Deraa, without specifying where it had come from.

Assad's troops man dozens of checkpoints in Deraa, a Sunni city that was home to 180,000 people before the uprising there in March 2011. They have imposed a stranglehold which insurgents rarely penetrate, apart from sporadic suicide bombings by Islamist militants, say residents and dissidents.

Rebel activity is minimal west of Deraa, where military bases proliferate near the Israeli-occupied Golan Heights.

Insurgents have captured some towns and villages in a 25-km (17-mile) wedge of territory east of Deraa, but intensifying army shelling and air strikes have reduced many of these to ruin, forcing their residents to join a rapidly expanding refugee exodus to Jordan, which now hosts 320,000 Syrians.

However, despite more than a month of fighting, Assad's forces have failed to winkle rebels out of strongholds in the rugged volcanic terrain that stretches from Busra al-Harir, 37 km (23 miles) northeast of Deraa, to the outskirts of Damascus.

Further east lies Sweida, home to minority Druze who have mostly sat out the Sunni-led revolt against security forces dominated by Assad's minority, Shi'ite-rooted Alawite sect.

"KEY TO DAMASCUS"

As long as Assad's forces control southwestern Syria, with its fertile, rain-fed Hawran plain, his foes will find it hard to make a concerted assault on Damascus, the capital and seat of his power, from suburbs where they already have footholds.

"If this area is liberated, the supply routes from the south to Damascus would be cut," said Abu Hamza, a commander in the rebel Ababeel Hawran Brigade. "Deraa is the key to the capital."

Fighters in the north, where Turkey provides a rear base and at least some supply lines, have fared somewhat better than their counterparts in the south, grabbing control of swathes of territory and seizing half of Aleppo, Syria's biggest city.

They have also captured some towns in the east, across the border from Iraq's Sunni heartland of Anbar province, and in central Syria near the mostly Sunni cities of Homs and Hama.

But even where they gain ground, Assad's mostly Russian-supplied army and air force can still pound rebels from afar, prompting a Saudi prince to call for outsiders to "level the playing field" by providing anti-tank and anti-aircraft weapons.

"What is needed are sophisticated, high-level weapons that can bring down planes, can take out tanks at a distance," Prince Turki al-Faisal, a former intelligence chief and brother of the Saudi foreign minister, said last week at a meeting in Davos.

Saudi Arabia and its fellow Gulf state Qatar have long backed Assad's opponents and advocate arming them, but for now the rebels are still far outgunned by the Syrian military.

"They are not heavily armed, properly trained or equipped," said Ali Shukri, a retired Jordanian general, who argued also that rebels would need extensive training to use Western anti-tank or anti-aircraft weapons effectively even if they had them.

He said two powerful armored divisions were among Syrian forces in the south, where the rebels are "not that strong".

It is easier for insurgents elsewhere in Syria to get support via Turkey or Lebanon than in the south where the only borders are with Israel and Jordan, Shukri said.

Jordan, which has urged Assad to go, but seeks a political solution to the crisis, is unlikely to ramp up support for the rebels, even if its cautious policy risks irritating Saudi Arabia and Qatar, financial donors to the cash-strapped kingdom.

ISLAMIST STRENGTH

"I'm confident the opposition would like to be sourcing arms regularly from the Jordanian border, not least because I guess it would be easier for the Saudis to get stuff up there on the scale you'd be talking about," said a Western diplomat in Amman.

A scarcity of arms and ammunition is the main complaint of the armed opposition, a disparate array of local factions in which Islamist militants, especially the al Qaeda-endorsed Nusra Front, have come to play an increasing role in recent months.

The Nusra Front, better armed than many groups, emerged months after the anti-Assad revolt began in Deraa with peaceful protests that drew a violent response from the security forces.

It has flourished as the conflict has turned ever more bitterly sectarian, pitting majority Sunnis against Alawites.

Since October, the Front, deemed a terrorist group by the United States, has carried out at least three high-profile suicide bombings in Deraa, attacking the officers' club, the governor's residence and an army checkpoint in the city centre.

Such exploits have won prestige for the Islamist group, which has gained a reputation for military prowess, piety and respect for local communities, in contrast to some other rebel outfits tainted by looting and other unpopular behavior.

"So far no misdeeds have come from the Nusra Front to make us fear them," said Daya al-Deen al-Hawrani, a fighter from the rebel al-Omari Brigade. "Their goal and our goal is one."

Abu Ibrahim, a non-Islamist rebel commander operating near Deraa, said the Nusra Front fought better and behaved better than units active under the banner of the Free Syrian Army.

"Their influence has grown," he acknowledged, describing them as dedicated and disciplined. Nor were their fighters imposing their austere Islamic ideology on others, at least for now. "I sit with them and smoke and they don't mind," he said.

The Nusra Front may be trying to avoid the mistakes made by a kindred group, Al Qaeda in Iraq, which fought U.S. troops and the rise of Shi'ite factions empowered by the 2003 invasion.

The Iraqi group's suicide attacks on civilians, hostage beheadings and attempts to enforce a harsh version of Islamic law eventually alienated fellow Sunni tribesmen who switched sides and joined U.S. forces in combating the militants.

Despite the Nusra Front's growing prominence and its occasional spectacular suicide bombings in Deraa, there are few signs that its fighters or other rebels are on the verge of dislodging the Syrian military from its southern bastions.

Abu Hamza, the commander in the Ababeel Hawran Brigade, was among many rebels and opposition figures to lament the toughness of the task facing Assad's enemies in the south: "What is killing us is that all of Hawran is a military area," he said.

"And every village has five army compounds around it."

(Writing by Alistair Lyon; Editing by Alastair Macdonald)

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France backs possible U.N. force in Mali

PARIS (Reuters) - French Defence Minister Jean-Yves Le Drian on Thursday backed the idea of sending a United Nations peacekeeping force into Mali, saying France would play a role in any such plan.

The U.N. Security Council is to begin discussing the possibility of deploying U.N. troops in the stricken West African nation, envoys said of an idea it had previously been uncomfortable with before France's recent military intervention.

The French military on Wednesday took control of the airport in Kidal, the last town held by al-Qaeda-linked rebels, and is planning to quickly hand over to a larger African force, whose task will be to root out insurgents in their mountain redoubts.

U.N. envoys have said sending in a peacekeeping force would offer clear advantages over an African-led force, as it would be easier to monitor human rights compliance and the United Nations could choose which national contingents to use in the force.

"This development is extremely positive and I want this initiative to be carried through," Le Drian said on France Inter radio, adding that France would "obviously play its role".

French has deployed some 4,500 troops in a three-week ground an air offensive, aimed at breaking Islamists' 10-month hold on towns in northern Mali.

After taking back the major Saharan towns of Gao and Timbuktu at the weekend, Le Drian confirmed that troops were still stuck at the airport in Kidal, where bad weather was preventing them from entering the town.

Many are now warning of the risk of ethnic reprisals as displaced black Malians take up arms to return to their liberated towns.

(Reporting By Vicky Buffery; editing by Mark John)

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Egypt politicians renounce violence at crisis talks

CAIRO (Reuters) - Egypt's feuding politicians renounced violence on Thursday after being summoned by the country's most influential Muslim scholar to talks to end the deadliest unrest since President Mohamed Mursi took power.

It remains to be seen whether the pledge to end confrontation will halt a week of bloodshed on the streets that killed nearly 60 people. Opposition groups did not cancel new demonstrations scheduled for Friday.

But participants at the meeting, including leaders of Mursi's Muslim Brotherhood and its secular rivals, described their joint statement as a major step towards ending a conflict that has made the most populous Arab state seem all but ungovernable two years after an uprising toppled autocrat Hosni Mubarak.

The meeting was convened by Sheikh Ahmed al-Tayyeb, head of the thousand-year-old al-Azhar university and mosque, one of the few institutions still seen as neutral in a society that has become increasingly polarized.

He told politicians that a national dialogue, "in which all elements of Egyptian society participate, without any exclusion, is the only tool to resolve any problems or differences.

"Political work has nothing to do with violence or sabotage and the welfare of everyone and the fate of our nation depends on respect for the rule of law," the sheikh said.

Participants signed a document pledging to renounce violence and agreed to set up a committee of politicians from rival groups to work out a program for further talks.

"We come out of the meeting with a type of optimism," liberal politician Mohamed ElBaradei said. "Each of us will do what we can, with goodwill, to build trust once again among the factions of the Egyptian nation."

Saad el-Katatni, head of the Brotherhood's Freedom and Justice Party, called it "an historic day".

"Everyone in the meeting expressed readiness to make concessions to make this experiment succeed," he said.

Al-Azhar, one of the main seats of learning in Sunni Islam worldwide, has tended to keep itself above Egypt's political fray. Its extraordinary intervention follows a warning by the army chief on Tuesday that street battles - which erupted last week to mark the second anniversary of the uprising that toppled Mubarak - could bring about the collapse of the state.

SPIRIT OF THE REVOLUTION

The opposition accuses Mursi of betraying the spirit of the revolution by concentrating too much power in his own hands and those of the Brotherhood, a decades-old underground Islamist movement banned under Mubarak. The Brotherhood accuses its foes of trying to topple Egypt's first elected leader.

Participants at Thursday's meeting included Katatni and the Brotherhood's deputy leader Mahmoud Ezzat. Television footage showed them sitting opposite liberals ElBaradei and Amr Moussa, respectively former heads of the U.N. nuclear watchdog and the Arab League, and leftist Hamdeen Sabahi.

The streets have grown quieter in the past few days, and on Wednesday authorities scaled back a curfew imposed on three Suez Canal cities where most of the week's blood was spilt.

Nevertheless, even as Thursday's meeting was under way, a statement issued by opposition parties including Sabahi's Popular Current reiterated a call for demonstrations at the presidential palace in Cairo on Friday.

"The wave of revolutionary anger that erupted in the Egyptian provinces to express the Egyptian people's rejection of the continuation of the same policies - even if the faces have changed - will continue and go on to stress its legitimate demands in achieving the goals of the revolution," it said.

Attending the meeting was a partial reversal for the opposition alliance, which had previously spurned Mursi's call for talks, demanding that the president first agree to include opponents in a national unity government.

"Discussions concluded that there is no solution to the problems of the nation's democratic transition other than through dialogue, and dialogue must have foundations and guarantees, and not preconditions," the Brotherhood's Katatni said.

The secularists are nonetheless likely to continue to press for inclusion in a national unity government, a call also backed by the hardline Islamist Nour party in an unlikely alliance of Mursi's critics from opposite ends of the political spectrum.

The Brotherhood rejects a unity government as an attempt by Mursi's foes to take power they could not win at the ballot box.

The crisis forced Mursi to cut short a visit to Europe on Wednesday that had been intended to lure investment to Egypt. While in Berlin, the president sidestepped calls for a unity government, saying the next cabinet would be formed after parliamentary elections due in April.

UNREST TARNISHES MURSI'S RISE

The rise of an elected Islamist president in the Arab world's most populous state after generations of secularist military rule is probably the most important outcome of the wave of Arab revolts over the past two years.

But Mursi's seven-month rule has been tarnished by the civil unrest, worsening an economic crisis that forced Cairo to sell off most of its reserves to keep its currency from crashing.

The past week's violence followed weeks of demonstrations last year against a new constitution, as Mursi failed to unite Egyptians despite the Brotherhood winning repeated elections.

Ejijah Zarwan, who analyses Egyptian politics for the European Council on Foreign Relations, said Thursday's intervention by al-Azhar was important, but it was far from clear whether it would be enough to calm the streets.

"It's a good first step. Certainly it will help the formal opposition to be very clearly on record as opposing violence," he said. But he added: "The people fighting the police and burning buildings are not partisans of any political party. They might not even vote."

"There's a political crisis and there's a social and economic crisis. A negotiated solution to the political crisis will certainly help but it's just a necessary first step towards resolving the social and economic crisis."

(Reporting by Tom Perry; Additional reporting by Omar Fahmy and Yasmine Saleh; Writing by Peter Graff; Editing by Paul Taylor)

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Spain's Rajoy, ruling party deny secret payment scheme

MADRID (Reuters) - Prime Minister Mariano Rajoy and Spain's ruling People's Party denied on Thursday that the party passed payments from business donors secretly to the premier and other party leaders after a newspaper published what it said were unofficial party accounts.

El Pais published images of excerpts of almost two decades of handwritten accounts that it said were maintained by People's Party treasurers. El Pais said the accounts showed 11 years of payments to Rajoy of 25,200 euros ($34,200) a year.

The accounts - which the newspaper said amounted to a parallel unofficial bookkeeping system - indicate donations from companies, mostly builders, and regular payments of thousands of euros to a number of party leaders.

The report is the latest twist in a scandal over alleged secret cash payments to PP leaders that has hit Rajoy's popularity amid a deep recession, high unemployment and a fiscal crisis that could push Spain into an international bailout.

"The People's Party only has one set of accounts and it is clean, transparent and submitted to the official accounting authority," PP Secretary General Maria Dolores de Cospedal told a news conference, denying allegations of corruption in El Pais.

"We have absolutely nothing to hide."

Cospedal was one of many top party officials, along with former Economy Minister and IMF chief Rodrigo Rato, named by El Pais as receiving secret payments. Rato did not immediately respond to a request for comment.

An earlier statement by the PP said the party's payments to its leaders and staff were always legal and followed tax rules. The party also denied that there were systematic payments to people other than their official paychecks.

A spokeswoman from Rajoy's office told Reuters the prime minister stood by comments he has made recently that he has not engaged in improper conduct.

High Court Judge Pablo Ruz, who is investigating a four-year-old corruption case involving the PP, has asked prosecutors to look into the new allegations and could open another line of investigation, court sources told Reuters.

The party has ordered an external audit of its accounts.

A recent poll by Metroscopia showed that 96 percent of Spaniards believe corruption is widespread in politics in Spain, after dozens of cases have emerged in recent years, most notably an ongoing judicial investigation into alleged embezzlement of public funds by King Juan Carlos' son-in-law.

"This does not help to calm down the difficult moments that we are going through, economically, politically and the climate on the street. This is a time for maximum transparency," Jose Antonio Monago, the president of the region of Extremadura, told reporters at a news conference unrelated to the party scandal.

The alleged payments may not necessarily be illegal if the party leaders declared the income in tax statements.

Until recently, Spanish political parties were allowed to receive anonymous donations. However, it would have been illegal not to book those donations in the book's official, regulated accounts, a People's Party source told Reuters.

BUILDING BOOM

A People's Party source, who asked not to be named, said the allegations raise serious ethical questions about party operations, especially because many of them occurred during Spain's building boom, in which politicians granted large numbers of development contracts.

"It looks like bribes, the nature of the document is very incriminating, if it's true," the source said.

Among the companies named in the El Pais story is builder and infrastructure and energy company FCC. FCC declined to comment. A source close to the company told Reuters that FCC would carry out an internal investigation regarding possible donations.

El Pais also said the president of another builder, OHL, Juan Miguel Villar Mir, was one of the donors. OHL declined to comment.

The accounts published in El Pais were allegedly from two former PP treasurers. One of them is Luis Barcenas, who stepped down as party treasurer in 2009 when judges began to investigate his possible involvement in alleged illegal payments and kickbacks to party officials from builders and other businesses that won government contracts.

The ongoing judicial investigation of Barcenas has revealed recently that he had a Swiss bank account which at one point held as much as 22 million euros. His lawyer has said previously that the money is from legitimate businesses and that Barcenas has now declared taxes on the income.

Press officials from Spain's High Court confirmed that Barcenas' lawyer has provided to the court a document showing that in 2012 his company applied for a tax amnesty on funds in the Swiss bank account.

Barcenas' lawyer was not immediately available for comment. ($1 = 0.7370 euros)

(Additional reporting by Jose Elias Rodriguez, Blanca Rodriguez and Iciar Reinlein; editing by Tracy Rucinski and Philippa Fletcher)

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Tunisian police protesters say ill-prepared for Islamist threat

Tunis (Reuters) - Thousands of policemen protested outside the Tunisian prime minister's office on Thursday demanding better pay, equipment and protection, as the birthplace of the Arab Spring faces a growing security threat from radical Islamists.

Tunisia's moderate Islamist government has said al Qaeda-linked militants have been accumulating weapons with the aim of creating an Islamic state, two years after the revolution that inspired uprisings across the Arab world.

Police say they do not have the appropriate resources to deal with the threat from al-Qaeda in the Islamic Maghreb and domestic Islamist militants who have easy access to weapons from neighboring Libya.

Around 3,000 uniformed officers gathered in Kasabah Square in front of the office of Prime Minister Hamadi Jebali, chanting slogans demanding higher salaries, more equipment and legal protection if they fire their weapons in the line of duty.

"This protest aims to bring to the attention of the prime minister all the risks to the security forces... including the threat from al Qaeda," said Montassar Materi, Secretary General of the Security Forces Syndicate, a union of police officers.

The ruling Ennahda party that won Tunisia's first post-Arab Spring election in October 2011 has struggled to restore stability following the ousting of dictator Zine El Abidine Ben Ali.

Tunisian Interior Minister Ali Laryed said in December that police had arrested 16 Islamist militants who had been accumulating weapons. Earlier this month, authorities said they had seized a big arms cache in the south of the country and made several arrests.

This week Tunisia's state news agency reported that the government had deployed special combat units to its borders with Algeria and Libya to protect its oil and gas installations from potential attacks from Islamist militants. That followed the al Qaeda-linked attack at an Algerian gas plant.

Despite moves to combat militant threats, Tunisia's secularist groups have accused the Ennahda party of being too soft on extremists.

The Ennahda government has also faced many protests over economic hardship. Hampered by declining trade with the crisis-hit euro zone, it has struggled to deliver the better living standards that many Tunisians had hoped for.

(Reporting By Tarek Amara; Editing by Rosalind Russell)

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Analysis: Italy's Monti struggles as Berlusconi takes revenge

ROME (Reuters) - Little more than a year ago Silvio Berlusconi was hounded out of office by a baying crowd and economics professor Mario Monti stepped in as prime minister, hailed as Italy's savior.

Now Berlusconi has performed an astonishing comeback to return to the spotlight, exacting his political revenge while Monti is struggling badly to make a breakthrough in the campaign for a February 24-25 election.

For most of 2012 Monti, a former European commissioner, dominated Italy, pushing politicians to the sidelines and restoring the country's battered reputation after Berlusconi had taken the country to the brink of a Greek-style crisis.

Monti, already a Brussels insider, was feted in European halls of power for his austerity policies after the banishing of Berlusconi. Businessmen clamored for him to stand for a second term.

But since Monti responded to huge domestic and international pressure in December and dived into Italy's murky politics as leader of a centrist coalition, his trajectory has flattened as Berlusconi and other seasoned politicians strike back.

"Monti is not a politician at all. He was good at trying to govern this complicated country but he is definitely unable to campaign," said Gianfranco Pasquino, a political science professor at Bologna University.

"A professor of economics who has spent all his life in European activities, or teaching, or giving advice to banks cannot become a good campaigner in less than a month."

Monti's popularity has fallen from 70 percent when he took over as premier in November 2011 to as low as 30 percent now.

His failure to gain traction is down to a combination of factors including the extreme difficulty of occupying the centre in Italy's bipolar system and the short time he had to campaign.

But he has also made errors including a bad choice of allies, that reveal his lack of political experience, while his popularity with foreign leaders is a hindrance rather than boon in the campaign, prompting him this week to sharply tell EU officials to stop intervening on his behalf.

In fact it is arguable that Monti may have had a greater chance of influencing Italy's future if he had not entered the campaign at all and remained above the fray to line himself up as state president or another independent role.

"He has lost his political virginity and cannot be used any more as an impartial savior," said Professor James Walston of Rome's American University.

BERLUSCONI COMEBACK

Berlusconi's trajectory has been in the opposite direction. After withdrawing to the shadows for much of 2012, by the autumn he looked like an old, weary man, pushing his PDL party towards disintegration by his indecision.

But the billionaire showman has staged an extraordinary bounce-back in the last month, blitzing television programs in a remarkable display of media savvy and stamina for a man of 76.

"It was a great surprise. I didn't believe he was capable of it at his age ... On the technical level of communication he is very good," said prominent pollster Renato Mannheimer.

Despite being harried by a lurid sex scandal, Berlusconi has added from three to five percentage points to his People of Freedom party's support - some polls say more - although his progress has now slowed and may have peaked.

With the centre-left parties hanging on to a clear lead, there still seems only a small chance that Berlusconi will win the election, experts say, and he is fighting a bitter battle with Monti to control the balance of power.

While it is undoubted that Berlusconi has revived the centre-right, Monti has struggled to meet extravagant expectations that he could sweep away a deeply discredited political system and set Italy on a radical new path of renewal.

Support for his centrist alliance looks stuck around 15 percent, well short of his target of 20 percent. "He will get even less than 15 percent," Maurizio Pessato, vice president of SWG polling company, told Reuters.

Monti is under threat for third place from the anti-establishment 5-Star Movement of Beppe Grillo, the comedian who has exploited deep voter anger over Monti's taxes, economic hardship and a string of political scandals.

The raging scandal over the world's oldest bank, Monte dei Paschi di Siena, has hurt the center-left Democratic Party with which it has historic links, but also damaged Monti, seen by some voters as a member of an elitist financier class.

As a technocrat savior, Monti's aloof, professorial manners incurred respect, but they are much less suited to the cut and thrust of politics.

POLITICAL MASTER

In contrast, Berlusconi is a political master, with enviable communications skills and an ability with a ready quip to exploit his image among many conservative voters as a lovable rogue.

Monti seems to have difficulty finding the right tone, veering between his trademark "English" politeness and aggressively attacking his opponents while never departing from a dry monotonous tone, earning a nickname among some politicians as "Dr Jekyll and Mr Hyde."

He called Berlusconi a Pied Piper tricking Italians. Berlusconi shot back that Monti would try to tax his flute.

"Monti's biggest error is to have changed his style. To start criticizing his opponents using words that do not really belong to the lexicon of a competent technocrat, that an austere professor of economics should not say," said Pasquino.

Berlusconi has attracted support with a constant mantra of attacking the "little professor" over a hated housing tax and calling him a puppet of German Chancellor Angela Merkel.

But whereas Monti is seen as justified in giving as good as he gets from Berlusconi, his attacks on the mild mannered centre-left leader Pier Luigi Bersani, especially over Monte dei Paschi, often sound sour and could be counterproductive.

Monti's suggestions that Bersani is dominated by the unions, should "clip the wings" of extremists and dump his leftist ally Nichi Vendola because he would spook markets have pushed even the centre left leader into angry responses.

This could be damaging because Monti's best hope is to win enough power to oblige Bersani to invite him into a coalition government - something which advances by Berlusconi in the Senate could ironically make more likely.

Monti's real mistake may be that he took on a near impossible task, trying to turn Italian politics upside down in barely two months after launching his bid too late, and making a fundamental mistake in how he chose his allies.

Monti announced he would stand in December with his heterogeneous civil list allied to the centrist UDC of Pier Ferdinando Casini and the FLI of Gianfranco Fini.

Allying with Casini, who has barely got above 5-6 percent of the vote in 20 years in politics, and house speaker Fini who commands even less, may have been a fatal error because it blew Monti's chances of appearing as something radically new.

"Proposing himself as different from the others and from outside politics is denied by the fact that he is allied with two representatives of very old politics," Pessato said.

He said Monti and his political outsider backers, including Ferrari boss Luca Cordero di Montezemolo, "should have had the courage to go for it without getting in the same boat as Fini and Casini. They were too timid, both Monti and Montezemolo."

But even without these mistakes, Monti would have faced a desperately uphill task to change the postwar Italian division between a broad right and broad left.

"He found himself trying to navigate in the centre of a canal without getting too close to either bank ... his position was very, very difficult," Pessato said.

(Writing by Barry Moody; Editing by Giles Elgood)

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Greek transport workers, doctors strike over austerity

ATHENS (Reuters) - Greek trains and ferries ground to a halt and hospital staffing was cut to a minimum on Thursday as transport workers and doctors went on strike to protest austerity measures demanded by the country's foreign lenders.

Greece has seen a recent surge in demonstrations and strikes as public anger threatens to boil over in reaction to wage and spending cuts that are deepening hardship in a country suffering through its sixth consecutive year of recession.

Public transport in Athens was disrupted as bus, trolleybus and railway workers walked off the job while ships and ferries stayed docked at ports after seamen began a 48-hour strike.

Hundreds of doctors, medical staff, teachers and municipal workers rallied in central Athens to protest what they say are "dangerous" austerity measure that have drained the nation's health system of supplies and staff.

They later marched to parliament chanting "We will strike until we win!" and holding up banners reading "We'll kick the troika out," referring to the country's European Union, International Monetary Fund and European Central Bank lenders.

Greece's main public sector union ADEDY also called a work stoppage in solidarity with the striking health care workers.

"The belt-tightening is killing the people and destroying the national health system," said ADEDY's head Costas Tsikrikas.

In a separate protest, about 1,000 supporters of the Communist-affiliated PAME group gathered outside an Athens court to show solidarity with activists arrested for storming the labor ministry's office on Wednesday.

HARD LINE

Prime Minister Antonis Samaras has sought to maintain a hard line against strikes in a bid to show the country's foreign lenders - as well as the public - that he is determined to push through unpopular reforms.

A nine-day walkout by metro workers led to a standoff with his government this month and paralyzed transport across the Greek capital. The strike ended only after the government invoked an emergency law and threatened to arrest the workers.

The lenders' decision to disburse long-delayed aid last month eased fears that Greece could go bankrupt and be forced to leave the euro zone, but the country still faces deep challenges from a volatile social climate and opposition to the reforms.

"We'll keep fighting," said Tsikrikas. "We demand that Europe's heavyweights change their dead-end policy."

(Reporting by Angeliki Koutantou and Tatiana Fragou; Writing by Deepa Babington and Renee Maltezou; Editing by John Stonestreet)

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Gunman kills Pakistani Sunni leaders in apparent tit-for-tat

KARACHI (Reuters) - A gunman on a motorcycle shot dead three Pakistani Sunni Muslim leaders on Thursday, police said, in the latest apparent tit-for-tat killing in the southern financial hub of Karachi.

Conflict between Sunni and Shi'ite militants has been blamed for many recent killings in Pakistan's largest city.

At least 217 people have been killed this month, police sources say, but they do not know how many qualify as "target killings", the official term for assassinations.

"Three persons riding a bike intercepted (the victims')vehicle ... and one of them shot at persons sitting inside the car through the window pane," Deputy Inspector General of Police Abdul Aleem Jaffry said of the latest killings, which were caught on CCTV and broadcast on television.

He described them as target killings.

"We have no expectations of getting justice," said Qari Mohammad Islam, the Karachi chief of Jamiat-Ulema-e-Islam, one of the largest Sunni political parties.

"This entire nation, the citizens of Karachi, the students and clerics are exhausted from carrying the bodies of our elders... The time is near when we will give a call for everyone to come out into the streets."

Interior Minister Rehman Malik told the Senate on Monday: "I want to alert the people of Pakistan to a possible disaster in Karachi as three groups have planned large-scale militancy."

(Reporting by Imtiaz Shah in Karachi, Mubasher Bukhari in Islamabad and Reuters TV; Writing by Nick Macfie; Editing by Ruth Pitchford)

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Syria warns of "surprise" response to Israel attack

BEIRUT/AMMAN (Reuters) - Syria warned on Thursday of a possible "surprise" response to Israel's attack on its territory and Russia condemned the air strike as an unprovoked violation of international law.

Damascus could take "a surprise decision to respond to the aggression of the Israeli warplanes", Syrian ambassador to Lebanon Ali Abdul-Karim Ali said a day after Israel struck against Syria.

"Syria is engaged in defending its sovereignty and its land," Ali told a website of the Lebanese militant group Hezbollah. Syria and Israel have fought several wars and in 2007 Israeli jets bombed a suspected Syrian nuclear site, without a military response from Damascus.

Diplomats, Syrian rebels and regional security sources said on Wednesday that Israeli jets had bombed a convoy near the Lebanese border, apparently hitting weapons destined for Hezbollah. Syria denied the reports, saying the target had been a military research center northwest of Damascus.

Hezbollah, which has supported Syrian President Bashar al-Assad as he battles an armed uprising in which 60,000 people have been killed, said Israel was trying to thwart Arab military power and vowed to stand by its ally.

"Hezbollah expresses its full solidarity with Syria's leadership, army and people," said the group which fought an inconclusive 34-day war with Israel in 2006.

Israel has remained silent on the attack and there has been little reaction from its Western backers, but Syria's allies in Moscow and Tehran were quick to denounce the strike.

Russia, which has blocked Western efforts to put pressure on Syria at the United Nations, said that any Israeli air strike would amount to unacceptable military interference.

"If this information is confirmed, then we are dealing with unprovoked attacks on targets on the territory of a sovereign country, which blatantly violates the U.N. Charter and is unacceptable, no matter the motives to justify it," the Foreign Ministry said in a statement.

Iranian deputy foreign minister Hossein Amir Abdullahian said the attack "demonstrates the shared goals of terrorists and the Zionist regime", Fars news agency reported. Assad portrays the rebels fighting him as foreign-backed, Islamist terrorists, with the same agenda as Israel.

"It is necessary for the sides which take tough stances on Syria to now take serious steps and decisive stances against this aggression by Tel Aviv and uphold criteria for security in the region," Abdullahian said.

An aide to Supreme Leader Ayatollah Ali Khamenei said on Saturday that Iran would consider any attack on Syria as an attack on itself, but Abdullahian made no mention of retaliation.

Hezbollah said the attack showed that the conflict in Syria was part of a scheme "to destroy Syria and its army and foil its pivotal role in the resistance front (against Israel)".

BLASTS SHOOK DISTRICT

Details of Wednesday's strike remain sketchy and, in parts, contradictory. Syria said Israeli warplanes, flying low to avoid detection by radar, crossed into its airspace from Lebanon and struck the Jamraya military research centre.

But the diplomats and rebels said the jets hit a weapons convoy heading from Syria to Lebanon, apparently destined for Assad's ally Hezbollah, and the rebels said they - not Israel - hit Jamraya with mortars.

The force of the dawn attack shook the ground, waking nearby residents from their slumber with up to a dozen blasts, two sources in the area said.

"We were sleeping. Then we started hearing rockets hitting the complex and the ground started shaking and we ran into the basement," said a woman who lives adjacent to the Jamraya site.

The resident, who declined to be named because of the sensitivity over Israel's reported strike on Wednesday morning, said she could not tell whether the explosions which woke her were the result of an aerial strike.

Another source who has a relative working inside Jamraya reported that a building inside the complex had been cordoned off after the attack and that flames were seen rising from the area after the attack.

"It appears that there were about a dozen rockets that appeared to hit one building in the complex," the source, who also asked not to be identified, told Reuters. "The facility is closed today."

Israeli newspapers quoted foreign media on Thursday for reports on the attack. Journalists in Israel are required to submit articles on security and military issues to the censor, which has the power to block any publication of material it deems could compromise state security.

Syrian state television said two people were killed in the raid on Jamraya, which lies in the 25-km (15-mile) strip between Damascus and the Lebanese border. It described it as a scientific research centre "aimed at raising the level of resistance and self-defense".

Diplomatic sources from three countries told Reuters that chemical weapons were believed to be stored at Jamraya, and that it was possible that the convoy was near the large site when it came under attack. However, there was no suggestion that the vehicles themselves had been carrying chemical weapons.

"The target was a truck loaded with weapons, heading from Syria to Lebanon," said one Western diplomat, echoing others who said the convoy's load may have included anti-aircraft missiles or long-range rockets.

The raid followed warnings from Israel that it was ready to act to prevent the revolt against Assad leading to Syria's chemical weapons and modern rockets reaching either his Hezbollah allies or his Islamist enemies.

A regional security source said Israel's target was weaponry given by Assad's military to fellow Iranian ally Hezbollah.

"This episode boils down to a warning by Israel to Syria and Hezbollah not to engage in the transfer of sensitive weapons," the source said. "Assad knows his survival depends on his military capabilities and he would not want those capabilities neutralized by Israel - so the message is this kind of transfer is simply not worth it, neither for him nor Hezbollah."

Such a strike or strikes would fit Israel's policy of pre-emptive covert and overt action to curb Hezbollah and does not necessarily indicate a major escalation of the war in Syria. It does, however, indicate how the erosion of the Assad family's rule after 42 years is seen by Israel as posing a threat.

Israel this week echoed concerns in the United States about Syrian chemical weapons, but its officials say a more immediate worry is that the civil war could see weapons that are capable of denting its massive superiority in airpower and tanks reaching Hezbollah; the group fought Israel in 2006 and remains a more pressing threat than its Syrian and Iranian sponsors.

(Additional reporting by Mariam Karouny and Oliver Holmes in Beirut, Gabriela Baczynska in Moscow and Marcus George in Dubai; editing by David Stamp)

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U.N. rights inquiry says Israel must remove settlers

GENEVA (Reuters) - U.N. human rights investigators called on Israel on Thursday to halt settlement expansion and withdraw all half a million Jewish settlers from the occupied West Bank, saying that its practices could be subject to prosecution as possible war crimes.

A three-member U.N. panel said private companies should stop working in the settlements if their work adversely affected the human rights of Palestinians, and urged member states to ensure companies respected human rights.

"Israel must cease settlement activities and provide adequate, prompt and effective remedy to the victims of violations of human rights," Christine Chanet, a French judge who led the U.N. inquiry, told a news conference.

The settlements contravened the Fourth Geneva Convention forbidding the transfer of civilian populations into occupied territory and could amount to war crimes that fall under the jurisdiction of the International Criminal Court (ICC), the United Nations report said.

"To transfer its own population into an occupied territory is prohibited because it is an obstacle to the exercise of the right to self-determination," Chanet said.

All U.N. member states must comply with their duty under international law on the settlements, she said. "We have highlighted states' responsibility because the facts we denounce are known. The problem is nobody is doing anything about it."

In December, the Palestinians accused Israel in a letter to the United Nations of planning to commit what they said were further war crimes by expanding Jewish settlements after the Palestinians won de facto U.N. recognition of statehood, and said Israel must be held accountable.

Israel has not cooperated with the probe set up by the Human Rights Council last March to examine the impact of settlements in the territory, including East Jerusalem. Israel says the forum has an inherent bias against it and defends its settlement policy by citing historical and Biblical links to the West Bank.

Israel's foreign ministry swiftly rejected the report as "counterproductive and unfortunate". Palestinians welcomed the report saying it vindicated their struggle against Israel.

"The only way to resolve all pending issues between Israel and the Palestinians, including the settlements issue, is through direct negotiations without pre-conditions. Counterproductive measures - such as the report before us, will only hamper efforts to find a sustainable solution to the Israel-Palestinian conflict," Israel's Yigal Palmor said.

But Hanan Ashrawi, a senior PLO official, told Reuters in Ramallah: "This is incredible. We are extremely heartened by this principled and candid assessment of Israeli violations."

The independent U.N. investigators interviewed more than 50 people who came to Jordan in November to testify about confiscated land, damage to their livelihoods including olive trees, and violence by Jewish settlers, according to the report.

"The mission believes that the motivation behind this violence and the intimidation against the Palestinians as well as their properties is to drive the local populations away from their lands and allow the settlements to expand," it said.

"CREEPING ANNEXATION"

About 250 settlements in the West Bank, including East Jerusalem, have been established since 1967 and they hold an estimated 520,000 settlers, according to the U.N. report. The settlements impede Palestinian access to water and farmland.

The settlements were "leading to a creeping annexation that prevents the establishment of a contiguous and viable Palestinian state and undermines the right of the Palestinian people to self-determination," it said.

Chanet said firms working in the territories must uphold human rights. France's Veolia, which built Jerusalem's light rail linking the western side of the city to the eastern side annexed by Israel after the 1967 war, won a case brought against it in a Nanterre court, whose ruling that it had not violated the Geneva Conventions is now on appeal, she said.

After the General Assembly upgraded the Palestinians status at the world body, Israel said it would build 3,000 more settler homes in the West Bank and East Jerusalem - areas Palestinians wanted for a future state, along with the Gaza Strip.

"I think that maybe it will help in the negotiation just to see that now, and especially when Palestine has been recognized as a state, things might change. Maybe, we hope. And now there is a new government in Israel," Chanet said.

"So things are moving. So we hope that our report will be in the middle of this movement."

(Reporting by Stephanie Nebehay in Geneva; additional reporting by Ori Lewis in Jerusalem and Noah Browning in Ramallah; Editing by Stephen Powell)

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