His department will also get a new look - branded UK Aid - to try to raise the profile of British government spending on international development. BBC international development correspondent David Loyn says the government will double the amount it spends at the "harder end" of aid priorities.

This includes police, security and justice systems as well as funding to provide jobs as an alternative to war for ex-soldiers. The aim is to try to prevent conflicts in 20 fragile states where about one third of the poorest people in the world live.

The change in emphasis is based on what are seen as success stories in Sierra Leone and Nepal which are both coming out of long and bitter conflicts. Our correspondent says the challenge will be harder in places such as Democratic Republic of Congo, Sudan and Chad. But the view is that the goal of halving the number of people in the world living in poverty by 2015 will not be met without such a change, especially during the global economic downturn.

The president told the Catholic Italian newspaper Avvenire, one week before a scheduled meeting with the Pope in Italy, "It [the Middle East] is a subject I am keen to discuss with the Pope. I think he will share my approach." President Obama has dug in his heels in insisting that Israel stop all building for Jews in Judea and Samaria, and the State Department has indicated that the ban should include all of Jerusalem that was restored to Israel in the Six-Day War in 1967.

However, the President maintained that the United States should not impose on Israel and the Palestinian Authority a solution to the differences between them. "What the United States can do, without imposing a solution, is to hold a mirror up to both of the parties to show them the consequences of their actions," he told the newspaper.

"On one hand, it is not just Israel's fault," President Obama added, pointing out that the Arab world needs to understand that "the Jewish state has security needs like any country." HIS USE OF THE TERM "JEWISH STATE" AND NOT "ISRAEL" MAY HAVE BEEN A HINT THAT THE PA MUST ACCEPT PRIME MINISTER BINYAMIN NETANYAHU'S DEMAND FOR THE SAME RECOGNITION.

Biden opined that the US "CANNOT DICTATE TO ANOTHER SOVEREIGN NATION WHAT THEY CAN AND CANNOT DO." Speaking to interviewer George Stephanopolous during a three-day visit to Iraq, the US vice president said that ISRAEL CAN DETERMINE FOR ITSELF "WHAT'S IN THEIR INTEREST AND WHAT THEY DECIDE TO DO RELATIVE TO IRAN AND ANYONE ELSE."

When questioned if Israel could make that decision "whether [the US] agrees or not," Biden answered in the affirmative, noting, "Any sovereign nation is entitled to do that." He went on to say that the interests of the US are also the interests of Israel and "the whole world. If the Netanyahu government decides to take a course of action different than the one being pursued now, that is their sovereign right to do that. That is not our choice," he added.

Earlier this year Meir Dagan, Mossad's director since 2002, held secret talks with Saudi officials to discuss the possibility. The Israeli press has already carried unconfirmed reports that high-ranking officials, including Ehud Olmert, the former prime minister, held meetings with Saudi colleagues. THE REPORTS WERE DENIED BY SAUDI OFFICIALS. "The Saudis have tacitly agreed to the Israeli air force flying through their airspace on a mission which is supposed to be IN THE COMMON INTERESTS OF BOTH ISRAEL AND SAUDI ARABIA," a diplomatic source said last week.

Although the countries have no formal diplomatic relations, an Israeli defence source confirmed that Mossad maintained "working relations" with the Saudis. JOHN BOLTON, THE FORMER US AMBASSADOR TO THE UNITED NATIONS WHO RECENTLY VISITED THE GULF, SAID IT WAS "ENTIRELY LOGICAL" FOR THE ISRAELIS TO USE SAUDI AIRSPACE.

Bolton, who has talked to several Arab leaders, added: "None of them would say anything about it publicly but they would certainly acquiesce in an overflight if the Israelis didn't trumpet it as a big success." ARAB STATES WOULD CONDEMN A RAID WHEN THEY SPOKE AT THE UN BUT WOULD BE PRIVATELY RELIEVED TO SEE THE THREAT OF AN IRANIAN BOMB REMOVED, HE SAID.

The estimated number of people forced out of their homes had more than doubled from 150,000 Saturday, with 140,000 displaced in Hunan provine and 100,000 in Jiangxi province. A further 140,000 were affected in the region of Guangxi, where 62 schools were flooded. Xinhua said 300 students were trapped in one boarding school, but local authorities had managed to restore power supplies and deliver food and drinking water.

After four days of torrential downpours, the rain began to subside in some parts of Guangxi Sunday, but local authorities warned of more flooding as river levels remained high.

On Saturday, former President Akbar Hashemi Rafsanjani said that post-election events had caused bitterness. Britain said one of two UK embassy employees detained for "inciting protests" would be released. Hundreds of thousands of people took to the streets in the aftermath of the poll to protest at what they alleged was a fraudulent election.

The protests died down after the authorities deployed lethal force, killing at least 20 demonstrators. More than 1,000 were arrested. On Sunday, state news agency Irna quoted Iran's police chief as saying about two-thirds of those arrested had been released. The authorities have blamed the West, in particular the UK, for fomenting the unrest through the use of the media, including BBC Persian television which broadcasts to the country via satellite.

The head of Iran's judiciary, Ayatollah Mahmoud Hashemi-Shahroudi, has said "those who co-operate with such websites and television channels will face prosecution". The pro-reform clerics group said in a statement that the top legislative body, the Guardian Council, no longer had the right "to judge in this case." In a statement to the press, the Assembly of Qom Seminary Scholars and Researchers said some members of the Guardian Council had "lost their impartial image in the eyes of the public."

"In a lot of ways, terrible to say this I suppose, but apart from the fact that Hitler got taken away and persuaded to do things that I have no idea whether he wanted to do or not, he was in the way that he could command a lot of people, able to get things done," said Ecclestone. "In the end he got lost, so he wasn't a very good dictator because either he had all these things and knew what was going on and insisted, or he just went along with it. . so either way he wasn't a dictator."

HE ALSO SAID DEMOCRACY "HASN'T DONE A LOT OF GOOD FOR MANY COUNTRIES - including this one [Britain]," and voiced support for tyrannical regimes. "Politicians are too worried about elections," he said. "We did a terrible thing when we supported the idea of getting rid of Saddam Hussein. He was the only one who could control that country. It was the same [with the Taliban]. We move into countries and we have no idea of the culture. The Americans probably thought Bosnia was a town in Miami. There are people starving in Africa and we sit back and do nothing but we get involved in things we should leave alone."

The Board of Deputies of British Jews responded with fury to Ecclestone's remarks. "Mr Ecclestone's comments regarding Hitler, female, black and Jewish racing drivers, and dictatorships are quite bizarre. He says [in the interview], 'Politics is not for me', and we are inclined to agree." Jewish Chronicle editor Stephen Pollard said that "Mr Ecclestone is either an idiot or morally repulsive. Either he has no idea how stupid and offensive his views are or he does and deserves to be held in contempt by all decent people."

Whitehall mandarins have begun creating detailed dossiers containing reductions in expenditure that are far deeper than the more modest savings being proposed by Labour and Conservative politicians. SENIOR CIVIL SERVANTS HAVE LET IT BE KNOWN THAT THEY ARE SCEPTICAL ABOUT THE CLAIMS MADE BY BOTH MAIN PARTIES ON PUBLIC SPENDING.

WHILE LABOUR WANTS TO INCREASE EXPENDITURE despite the £175 billion budget deficit, the Tories, using figures from the Institute for Fiscal Studies (IFS), have acknowledged the need for cuts of up to 10%. Mandarins, fearing a prolonged recession and a collapse in tax revenue, have begun planning for more severe cuts of up to 20%. The dossiers will be handed to cabinet ministers the day after the next general election, whichever party wins.

Jonathan Baume, general secretary of the FDA, which represents senior civil servants, said: "It could be even worse for some departments than the IFS has predicted." Lord Turnbull, the former cabinet secretary, echoed the warning. "The civil servants will have to assume that whatever both parties are saying today, in the end they will have to be bolder. WHAT POLITICIANS SAY ON THE RECORD WILL UNDERESTIMATE THE MAGNITUDE OF THE TASK," he said.

Brighton and Hove Council has now told the mother it is reviewing its decision after her lawyer argued it was obliged to try to place the boy with foster parents of the same faith. The boy is a churchgoer and his mother, who is too ill to look after him, wanted him to be fostered by heterosexual parents in line with Catholic teaching on the family.

She said last night: 'I am so happy and relieved. So is my son. Our religion is very important to us.' Barrister Neil Addison argued that new equality laws that guarantee gays 'equal access to goods and services', including fostering, can be overruled by older laws designed to protect children. THE 1989 CHILDREN ACT REQUIRES COUNCILS TO 'GIVE DUE CONSIDERATION' TO THE CHILD'S RELIGION WHEN CHOOSING FOSTER PARENTS.

The council told her the gay couple were fully qualified, but a friend of the mother said there was no indication it made any effort to find a Catholic or conventional family for the boy. The council declined to comment.

THE FAILURE TO TEACH PRIMARY SCHOOL CHILDREN SCIENTIFIC TRUTH is playing into the hands of advocates of creationism - the belief that God created the world in six days, according to James Williams, lecturer in education at Sussex University. He warned that creationists go to great lengths to influence primary children with comics, magazines and videos that mix scientific misconceptions with proper science.

TV programmes such as The Flintstones and Barney & Friends, and films such as One Million Years BC, which stars Raquel Welch as a bikini-clad cavewoman, created a pop-culture cliché of interaction between humans and dinosaurs which is exploited by creationists, he told the Times Educational Supplement. He cited creationist literature which contained images of dinosaurs in the Garden of Eden or descriptions of dinosaurs dying out during the great flood.

'THIS WILFUL DISTORTION OF REAL SCIENCE IN FAVOUR OF PSEUDOSCIENCE is nothing less than intellectual abuse,' he said. 'While creationists have a right to publish and voice their views, NO MATTER HOW FAR FROM REAL SCIENCE THEY MAY BE, the science education community must respond by introducing evolution and the reality of how life developed and diversified much earlier in the curriculum to combat the establishment of creationist misconceptions.'

At a monthly meeting, the ministers are also likely to conclude that the current fall in consumer prices should not cause too much concern, and they will debate further when they should start cutting their budget deficits swollen by fiscal stimulus programmes. "When discussing the economic situation, the ministers will focus on the impact of the crisis on potential growth," one diplomat said, referring to a term describing the highest economic expansion sustainable over the long term.

European Union and euro zone officials believe that potential growth in the 16-nation region, which was already low before the crisis at 2 percent, will shrink while high unemployment would persist for long. "You can see that Europe will not have the growth potential it had before the crisis," EU Monetary Affairs Commissioner Joquin Almunia said this week. BUT THE MINISTERS ARE LIKELY TO STATE THAT THE WORST IS OVER FOR THE EURO ZONE, although a modest recovery would start only in 2010, with its scale also depending on whether the financial system could be healed.

ITS BALANCE SHEET HAS MORE THAN DOUBLED TO AN IMPOSING 14 PERCENT OF GROSS DOMESTIC PRODUCT, and President Obama wants to endow it with ever greater regulatory control. But there is one basic central banking prerogative that the Fed still lacks: the right to issue its own bonds. The reluctance of Congress to confer this authority may end up retarding America's economic recovery.

Bond issuing privileges will be increasingly important for central banks worldwide because they offer the neatest way of mopping up the vast amounts of liquidity they have pumped into the financial system. Bank chiefs with this right will find it easier to pivot when the economy revives, tightening monetary policy swiftly to avoid any inflationary threat. Knowing that they have this policy dexterity makes it easier to justify bold action now to stimulate growth.

Several months ago, Ben Bernanke and other Fed officials made no secret that they coveted the ability to issue bonds, which most other major central banks take for granted. SENSING PUSHBACK FROM LAWMAKERS - MANY OF WHOM ARE INTIMIDATED BY THE FED'S EXPANDING MUSCLE - they have discreetly dropped this request. This was a mistake.

There is strong evidence that the Fed may now have to rely on lesser tools when the time comes to drain liquidity. The Fed will face several challenges. First, it may not be immediately able to flog off THE MOUNTAIN OF ASSETS IT HAS ACCUMULATED BEFORE IT RAISES RATES. Many of these securities are illiquid and selling off Treasuries may unnerve markets and push up rates.

The short answer is no one knows. The only way they were ever going to find out was to leave Iraq's own forces to it and hope the whole thing doesn't come tumbling down. They started doing that on Tuesday when they pulled out of Iraqi cities.

It's been an encouraging start. A big bomb in Kirkuk cast a shadow over Iraq's celebrations of its new-found sovereignty, but since then things have been relatively quiet. Militants might try to take advantage by stepping up attacks, but for the moment they seem content with celebrating a "victory" over the occupation — and setting off the odd bomb, of course. The United States' coalition partners have for the most part long since departed. British forces handed over southern Iraq to the Americans in April, but since 2007 their 4,000 odd troops left had been largely confined to Basra airport anyway.

And one thing the crystal ball gazers have learned about Iraq's hugely complicated, many-sided conflict is that the past is rarely a reliable guide to the future. MANY IRAQIS SEEM CONVINCED THE INSURGENTS ARE JUST BIDING THEIR TIME, SHARPENING THEIR KNIVES AND STOCKPILING EXPLOSIVES WAITING TO REIGNITE THE CONFLICT. But whether or not Iraq can look after itself, at some point the Americans have to say: Look, we've done our best to get the lid back on Pandora's Box. Now it's over to you.

"The major part of INDIAN reserves is in dollars - that is something that's a problem for us," Tendulkar, chairman of the Prime Minister's Economic Advisory Council, said in an interview yesterday in Aix-en-Provence, France, where he was attending an economic conference.

Singh is preparing to join leaders from the Group of Eight industrialized nations - the US, Japan, Germany, Britain, France, Italy, Canada and Russia - at a summit in Italy next week which is due to tackle the global economy. China and Brazil will also send representatives to the summit.

As the talks have neared, CHINA AND RUSSIA have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.

"South Korea's military is fully prepared to deal with any threats and provocations by the North, based on a strong joint defense alliance with the US," the statements added. North Korea fired the missiles off its east coast, Yonhap news reported earlier, citing a government official. The missiles are estimated to have a range of as much as 500 kilometers (310 miles), enough for the North to strike most of South Korea, the Korean-language news agency said.

The communist nation fired four short-range missiles on July 2 in defiance of United Nations sanctions imposed after a nuclear test. North Korea has used such launches in the past to counter international condemnation of its nuclear program. The regime fired six short-range missiles in May, after its detonation of a nuclear bomb.