Nurse Duped by 'Queen's' Prank Call Found Dead

The hospital receptionist who was hoaxed by a prank call from a DJ claiming to be the queen asking about Kate Middleton has been found dead.

"It is with very deep sadness that we confirm the tragic death of a member of our nursing staff," the hospital said in a statement released today.

The nurse was identified as Jacintha Saldanha. The hospital said that Saldanha worked at the hospital for more than four years. They called her a "first-class nurse" and "a well-respected and popular member of the staff."

"We can confirm that Jacintha was recently the victim of a hoax call to the hospital," the statement said. "The hospital had been supporting her throughout this difficult time."

The hospital extended their "deepest sympathies" to family and friends, saying that "everyone is shocked" at this "tragic event."

"She will be greatly missed," the hospital said.

Earlier this week, the hospital fell for a prank call from an Australian radio show where the hosts pretended to be Queen Elizabeth II and Prince Charles looking to speak to Kate Middleton, who had been admitted to the hospital for her pregnancy. The call was put through to a second nurse who told the royal impersonators that Kate was "quite stable" and hadn't "had any retching."

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Saldanha was the nurse who transferred the impersonators to the second nurse who gave information about Kate's condition.

"The Duke and Duchess of Cambridge are deeply saddened to learn of the death of Jacintha Saldanha," a spokesman from St. James Palace said in a statement.

"Their Royal Highnesses were looked after so wonderfully well at all times by everybody at King Edward VII Hospital, and their thoughts and prayers are with Jacintha Saldanha's family, friends and colleagues at this very sad time," the statement said.

Police were called to an address near the hospital at about 9:35 a.m. GT today to "reports of a woman found unconscious," according to a statement from Scotland Yard.

The woman was pronounced dead at the scene. "Inquiries continue to establish the circumstances of the incident. Next of kin have been informed," the statement said.

Circumstances of the death being investigated, but are not suspicious at this stage, according to police.

The duchess spent three days at the hospital undergoing treatment for hyperemesis gravidarum, severe or debilitating nausea and vomiting. She was released from the hospital on Thursday morning.

The Tuesday morning prank call came from Australian DJ's Mel Greig and Michael Christian. They impersonated the royals, complete with exaggerated accents. They even enlisted two co-workers to bark like the queen's pet corgis.

The Sydney radio station, 2DayFM, could not be immediately reached for comment.

The Twitter accounts of both radio personalities have been deactivated, but it is unknown when the accounts were shut down. The DJ's are being heavily criticized on Twitter, with many people calling for them to resign or be fired.

The queen impersonator asked for her granddaughter and was promptly transferred to another hospital employee.

"I'm just after my granddaughter, Kate. I want to see how her little tummy bug is going," the radio host said, suppressing laughter.

"She's sleeping at the moment, and she has had an uneventful night and sleep is good for her," the nurse said. "She's been getting some fluids to rehydrate her because she was quite dehydrated when she came in, but she's stable at the moment."

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Egypt struggle seen costing Mursi, even if he wins

CAIRO (Reuters) - The crisis unleashed by President Mohamed Mursi's bid to wrap up Egypt's transition on his own terms has eroded his nation's faith in their nascent democracy and will complicate the already unenviable task of government.

His effort to drive through a constitution against the wishes of major sections of society, including a Christian minority, has damaged prospects for building consensus needed to tackle challenges ahead, such as fixing a broken economy.

Having promised to be a president for all, Mursi stands accused of putting the interests of his group, the Muslim Brotherhood, ahead of others who say their aspirations are not reflected in the draft to be put to a December 15 referendum.

On the other side, suspicions harbored by Islamists towards their secular-minded opponents have only deepened as a result of the turmoil ignited by Mursi's effort to fast-track the final stage of the transition from Hosni Mubarak's rule.

With the more extreme among them opposed to the very notion of democracy, the Islamists say their rivals are not respecting the rules of the game that put them in the driving seat by winning free and fair elections.

People anxious to see Egypt recover from two years of turbulence fear bad blood could persist and squash hopes for cooperation needed to help Mursi rule smoothly and deliver much-needed reforms.

"If they succeed in the referendum, they will see that as a step forward, but not without cost," said a Western diplomat.

Though Mursi won international praise for mediating a truce in Gaza, the violence on his own streets worries the West and particularly the United States, which has given Cairo billions of dollars in military and other aid since Egypt made peace with Israel in 1979. U.S. President Barack Obama told Mursi on Thursday of his "deep concern" about casualties during protests.

A victim of the polarization could be the Brotherhood's plans to forge electoral alliances with liberals in forthcoming parliamentary polls. The head of the Brotherhood's Freedom and Justice Party told Reuters this week he saw such alliances as preferable to an ideological tie-up with other Islamists.

The divisions are now playing out in the streets. Seven people were killed and hundreds wounded this week in clashes between Islamists and their rivals. A call by Mursi for dialogue was rebuffed by activists who are to protest again on Friday.

"We said that this state of polarization, if it was not dealt with properly, would reach this point, and it has," said Ayman Al-Sayyad, who quit his post as a Mursi adviser on Wednesday following an eruption of violence.

"This was the scene that we were trying to avoid," he added in an interview with al-Hayat television.

The inclusive image Mursi had tried to build around his administration was one of the first victims of the crisis that mushroomed following a November 22 decree that expanded his powers and protected his decisions from judicial review.

RESIGNATIONS

A Christian and a woman were among the first to resign from his staff, as surprised by the decree as most Egyptians. Despite an early bout of violence, Mursi showed no sign of wavering and appeared to brush off his critics.

"I see things more than they do," he told Time.

With speculation swirling around how he took the decision, Egyptians long suspicious of the Brotherhood have concluded Mursi is running the country at the group's command.

In response, the Islamists complain that many of Mursi's attempts at outreach were rebuffed early on. Their view of the opposition has grown dimmer through the crisis. Brotherhood members have started to dismiss opponents as "feloul", meaning "remnants" - a pejorative implying loyalty to Mubarak.

"The really unfortunate side effect of the last two weeks is the political atmosphere has become really toxic. I fear that could endure long past the current crisis," said Elijah Zarwan, a fellow with the European Council on Foreign Relations.

"The next government is going to have to move very quickly to address many problems and it will need cooperation. In the current atmosphere, it is hard to imagine others cooperating."

Such cooperation will be at a premium for introducing policies aimed at reining in a crushing budget deficit and staving off a balance of payments crisis. Egypt's economy has lost $70 billion to $80 billion of economic output since Mubarak was ousted, in one economist's estimate.

Top of the economic to-do list are measures to cut back on fuel subsidies - one of the biggest drains on state finances. Tweaks to such support are bound to be unpopular in a nation where both rich and poor have grown used to cheap petrol.

"He has inherited an economy that is weak and needs serious surgery, so he is going to have to make controversial decisions over the next year or so," said Simon Kitchen, strategist at EFG-Hermes, an Egyptian investment bank.

"Ideally you want to do that in an environment where you have some sort of political consensus," he said.

"THEY BURNED THEIR BRIDGES"

Some subsidy reform and other steps to cut waste are part of a program agreed in principle with the International Monetary Fund for $4.8 billion loan designed to support the budget.

The IMF board meets on December 19 to discuss approval of the loan, which would be seen by investors as a seal of approval for the government's reform program.

Besides the economy, Mursi needs wider backing to tackle other problems including a judiciary which his opponents agree needs overhaul. But even when he sacked the unpopular, Mubarak-era prosecutor general, Mursi was criticized for showing an autocratic streak in the way he went about it.

In the new system of government outlined in the draft constitution, Egypt's next parliament will have a say over the shape of government. A parliamentary election would go ahead some two months later if the constitution is approved in the referendum.

With that in mind, the Freedom and Justice Party is already eyeing alliances to fight the parliamentary election.

FJP leader Saad al-Katatni said in an interview his preference was for an alliance with liberals, not the hardline Islamists whose backing has helped Mursi through the crisis. "Our preferred option is that the alliance not be ideological so that we don't have a split in the nation," he said.

The Brotherhood had kept the nascent hardline Salafi parties at arm's length as they emerged after Mubarak's political demise. That trend has gradually been reversed as the Brotherhood has looked to fellow Islamists for support.

"They burned their bridges with the secular camp and relied heavily on the Salafi camp. We don't feel that is where they naturally want to be right now," said the Western diplomat, speaking on condition of anonymity.

Sentiment from liberal parties suggests the Brotherhood will struggle to convince liberals that it is a trustworthy partner.

"I don't think the man realizes the degree of rebellion and rage the people have," said Ahmed Said, head of the liberal Free Egyptians Party, referring to Mursi. "The country is totally divided and polarized. You have two nations now."

(Writing by Tom Perry; Editing by Peter Graff)

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Football: City will benefit from European exit: Ferguson

MANCHESTER, United Kingdom: Manchester United manager Alex Ferguson says that Manchester City's European demise has given Roberto Mancini's side a clear advantage in the race for the Premier League title.

City, who host leaders United on Sunday, failed to clinch a place in the Europa League after finishing bottom of their Champions League group following defeat by German side Borussia Dortmund on Tuesday.

Yet Ferguson told a news conference in Manchester on Friday that fewer games and distractions would aid their neighbours as they look to defend the title they won last season.

"I honestly think it is an advantage to City," said the long-serving United manager.

"The less games, the less chance of injuries. It gives them a full week to prepare for games now, but on the other hand, you have to keep (players) happy.

"They have a big squad, probably a bigger squad than most teams. I think they would rather have European football. Any big team would want European football all the time, and that's the biggest disappointment to them.

"But out of that disappointment, the advantage is there for them in terms of use of players and time to prepare for games. So there's no question it's an advantage to them."

United will open up a six-point lead at the top of the table if they win at the home of their neighbours.

Yet the 19-time champions of England arrive at the Etihad Stadium having lost three of their last six league and cup games and with concerns about the performances of their defence.

In addition, memories of the 6-1 thrashing his players suffered at the hands of City in October 2011 remain fresh in Ferguson's mind.

"It did (have an impact), particularly the 6-1 defeat, because of the goal difference. It turned us right round and that's what cost us (the title)," he added.

United have managed just four clean sheets in 23 league and cup games this season, and Ferguson added: "It's not as though we are ignoring it.

"City will have expected us to have worked on that this week. We have lost, I think, 10 goals from set plays this season, which is a lot.

"We hope to find a solution and if you do find a solution, it makes a difference. It will be a tight game on Sunday, there won't be a lot in it and we have enough players to make an impact."

As for the prospect of opening up a six-point lead, Ferguson said: "It wouldn't mean a great deal because there is such a long time to go until the end of the season."

Ferguson believes either United or City will win the title, claiming Chelsea, Arsenal and Tottenham Hotspur have fallen too far behind in the table.

"I think it's going to be close between the two sides," he said.

"We have that gap over Chelsea, Arsenal and Tottenham. It would be difficult to think the two of us would collapse and allow another team to get in."

Ferguson reiterated his statement from last season that City were now United's biggest rivals in the league before questioning the number of penalties his rivals have been awarded in recent times.

"It's 21 in the last year, isn't it? Something like that. If we were to get that number of penalty kicks there would have been an inquiry in the House of Commons, and protests."

Captain Nemanja Vidic had hoped to return to the centre of defence after three months out with a knee injury.

But Ferguson says the Serbia defender is not ready, while Nani (hamstring) is a definite absentee.

Japan midfielder Shinji Kagawa (knee) is also a doubt, along with Tom Cleverley (calf).

- AFP/fa

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BJP has 15 leaders fit for PM job: MP minister

BHOPAL: We don't need Congress leader Digvijay Singh's certificate to decide who will be the BJP's Prime Ministerial candidate,'' Madhya Pradesh minister for industries Kailash Vijayavargiya said on Friday while reacting to AICC general secretary Digvijay Singh's observation on Thursday that Leader of Opposition Sushma Swaraj would be a better Prime Ministerial candidate that Gujarat chief minister Narendra Modi.

Digvijay Singh had compared Sushma Swaraj to former Prime Minister Atal Behari Vajpayee while calling her the moderate face'' in present BJP leadership.

Responding to that comment, Kailash Vijayavargiya, a front-line cabinet minister in Madhya Pradesh said: There is no dearth of Prime Ministerial candidates in the BJP. The party has more than 15 leaders who could fill-in for the top job.'' Vijayavargiya was speaking to journalists at the state assembly media lounge.

Asked if chief minister of Madhya Pradesh Shivraj Singh Chouhan was one of the 15 leaders who could be fit for the PM position, Kailash Vijayavargiya specified: Let us start from our veteran leader LK Advani, then Nitin Gadkari, Sushma Swaraj, Arun Jaitley, Rajnath Singh, Murli Manohar Joshi, Venkaiah Naidu, Uma Bharati. In the states, the BJP has chief ministers who could be Prime Ministerial candidates like Narendra Modi, Shivraj Singh Chouhan and Raman Singh.'' Vijayavargiya said that at the right time, the right person will be chosen for the job by the party.

Retorting further to AICC general secretary Digvijay Singh's comment, Vijayavargiya said: None take Digvijay Singh's statements seriously. Not even the Congress party. He just makes such disputable and controversial comments to remain in the media glare.''

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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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Winter Chill Descends on Frozen Fiscal Cliff Talks

A chill has descended on Washington just in time for tonight's lighting of the National Christmas Tree.

President Obama will preside over an evening festival of star-studded carols and sparkling displays of holiday cheer on the White House Ellipse.

But don't expect any of the holiday good will to warm the political frost over the fiscal cliff talks.

The White House is mandating that tax hikes for the wealthiest Americans must be part of any deficit-reduction deal with congressional Republicans, who stand equally opposed. Negotiations have ground to a standstill.

"There's no prospect for an agreement that doesn't involve those rates going up on the top 2 percent of the wealthiest," Treasury Secretary Timothy Geithner said Wednesday.

He also said the administration is "absolutely" willing to allow the package of deep automatic spending cuts and across-the-board tax hikes to take effect Jan. 1 if they don't get some increase in those tax rates.

Toby Jorrin/AFP/Getty Images

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Obama spoke by phone with House Speaker John Boehner on Wednesday, the first time both men had been in contact in one week. On Monday, Boehner attended a White House holiday party but did not greet Obama.

Republicans say Obama has fixated on tax hikes for the rich at the exclusion of entitlement program reforms to curb spending, which they are seeking as part of a "balanced" deal.

"The president talks about a balanced approach, but he's rejected spending cuts that he has supported previously and refuses to identify serious spending cuts he is willing to make today," Boehner said Wednesday. "This is preventing us from reaching an agreement."

As the showdown continues, Obama will take his tax argument on the road to Virginia, visiting the home of a middle class family to highlight the importance of lawmakers extending current, lower tax rates for 98 percent of U.S. earners.

Both parties agree they should be extended before they expire at the end of the year. But they remain tangled in the broader debate over spending cuts and upper-income tax rates.

The average American family of four would pay an estimated $2,200 more in taxes next year if the rates for middle-income earners are not extended.

Economists say a failure to resolve the standoff before Dec. 31 could thrust the U.S. economy back into a recession, a prospect many Americans are also worried about, according to a new poll.

Fifty-three percent of voters say lawmakers' failure to avoid the "cliff" would be "bad for their personal financial situation," compared to just 13 percent who said it wouldn't, according to the Quinnipiac University Polling Institute.

The same poll found a majority – 53 percent – trusting Obama and Democrats more than Republicans to work out a deal in the deficit negotiations.

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Military halts clashes as political crisis grips Egypt

CAIRO (Reuters) - Egypt's Republican Guard restored order around the presidential palace on Thursday after fierce clashes killed seven people, but passions ran high in a contest over the country's future.

President Mohamed Mursi had been due to address the nation, but a presidential source said the Islamist leader, criticized by his opponents for his silence in the last few days, might speak on Friday instead. He did not explain the possible delay.

Hundreds of Mursi supporters who had camped out near the palace overnight withdrew before a mid-afternoon deadline set by the Republican Guard, an elite unit whose duties include protecting the palace. Scores of opposition protesters remained, but were kept away by a barbed wire barricade guarded by tanks.

The military played a big role in removing President Hosni Mubarak during last year's popular revolt, taking over to manage a transitional period, but had stayed out of the latest crisis.

Mursi's Islamist partisans fought opposition protesters well into the early hours during dueling demonstrations over the president's November 22 decree to expand his powers to help him push through a mostly Islamist-drafted constitution.

Officials said seven people were killed and 350 wounded in the violence, for which each side blamed the other. Six of the dead were Mursi supporters, the Muslim Brotherhood said.

Prosecutors investigating the unrest said Brotherhood members had detained 49 wounded protesters and were refusing to release them to the authorities, the state news agency said.

The Brotherhood's spokesman Mahmoud Ghozlan denied this, saying all "thugs" detained by members of the Islamist group had been handed over to the police or the Republican Guard.

The street clashes reflected a deep political divide in the most populous Arab nation, where contrasting visions of Islamists and their liberal rivals have complicated a struggle to embed democracy after Mubarak's 30 years of one-man rule.

MILITARY'S ROLE

The United States, worried about the stability of an Arab partner which has a peace deal with Israel and which receives $1.3 billion a year in U.S. military aid, has urged dialogue.

The commander of the Republican Guard said deployment of tanks and troop carriers around the presidential palace was intended to separate the adversaries, not to repress them.

"The armed forces, and at the forefront of them the Republican Guard, will not be used as a tool to oppress the demonstrators," General Mohamed Zaki told the state news agency.

Hussein Abdel Ghani, spokesman of the opposition National Salvation Front, told Reuters more protests were planned, but not necessarily at the palace. "Our youth are leading us today and we decided to agree to whatever they want to do," he said.

Outside Cairo, supporters and opponents of Mursi clashed in his home town of Zagazig in the Nile Delta, state TV reported.

Egypt plunged into renewed turmoil after Mursi issued his November 22 decree and an Islamist-dominated assembly hastily approved a new constitution to go to a referendum on December 15.

Since then six of the president's advisers have resigned. Essam al-Amir, the director of state television quit on Thursday, as did a Christian official working at the presidency.

The Supreme Guide of the Brotherhood, to which Mursi belonged before he was narrowly elected president in June, appealed for unity. Divisions among Egyptians "only serve the nation's enemies", Mohamed Badie said in a statement.

BLOODY CLASHES

Rival factions used rocks, petrol bombs and guns in the clashes around the presidential palace.

"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."

Opposition protester Ehab Nasser el-Din, 21, his head bandaged after being hit by a rock the day before, decried the Muslim Brotherhood's "grip on the country", which he said would only tighten if the new constitution is passed.

Mursi's opponents accuse him of seeking to create a new "dictatorship". The president says his actions were necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.

U.N. Human Rights Commissioner Navi Pillay urged the Egyptian authorities to protect peaceful protesters and prosecute anyone inciting violence, including politicians.

"The current government came to power on the back of similar protests and so should be particularly sensitive to the need to protect protesters' rights to freedom of expression and peaceful assembly," Pillay said in Geneva.

Mursi has shown no sign of buckling under pressure from protesters, confident that the Islamists, who have dominated both elections since Mubarak was overthrown, can win the referendum and the parliamentary election to follow.

Mahmoud Hussein, the Brotherhood's secretary-general, said holding the plebiscite was the only way out of the crisis, dismissing the opposition as "remnants of the (Mubarak) regime, thugs and people working for foreign agendas".

As well as relying on his Brotherhood power base, Mursi may also tap into a popular yearning for stability and economic revival after almost two years of political turmoil.

Egypt's pound hit an eight-year low on Thursday, after previously firming on hopes that a $4.8 billion IMF loan would stabilize the economy. The stock market fell 4.6 percent.

Foreign exchange reserves fell by nearly $450 million to $15 billion in November, indicating that the Central Bank was still spending heavily to bolster the pound. The reserves stood at about $36 billion before the anti-Mubarak uprising.

(Additional reporting by Tom Perry, Edmund Blair and Marwa Awad; Writing by Alistair Lyon; Editing by Peter Graff)

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ECB slashes growth forecasts, keeps door open to rate cuts

FRANKFURT: The European Central Bank slashed its eurozone growth forecasts Thursday, keeping the door open to more interest rates cuts, even as it insisted it was up to governments to solve the debt crisis.

As widely expected, the ECB's decision-making governing council voted to leave the bank's main refinancing rate at a historic low of 0.75 percent at its last policy meeting this year.

But ECB chief Mario Draghi -- who last month had said further rate cuts were not discussed at all -- revealed there had been "wide discussion" of such a move this time round and the decision was anything but unanimous.

Nevertheless, "in the end the prevailing consensus was to leave the rates unchanged," the Italian central banker said.

The 23-member governing council traditionally likes any decisions to be unanimous or, failing that, by consensus.

And with economic gloom deepening over the 17 countries that share the euro, many ECB watchers believe there is room for additional monetary easing, even if none of them had predicted a cut in the bank's refi rate at this month's meeting.

The bank might be persuaded to act if economic prospects continue to deteriorate, analysts argued.

And the outlook looks gloomy indeed.

In its regular quarterly staff economic projections, the ECB forecast that the eurozone economy will contract both this year and next year and only return to growth in 2014.

According to the updated forecasts, the euro area economy is set to shrink by 0.5 percent in 2012 rather than by 0.4 percent as predicted earlier.

And it would shrink again by 0.3 percent in 2013, instead of growing by 0.5 percent.

Only in 2014 would the economy grow again, by an estimated 1.2 percent, the forecasts said.

The ECB governing council "continues to see downside risks to the economic outlook for the euro area," Draghi said.

"Over the shorter term, weak activity is expected to extend into next year."

Nevertheless, a gradual recovery should start "later" in 2013 as the ECB's low-interest rate policy and rising market confidence fed through into household spending, while a strengthening of foreign demand should support export growth, he argued.

Thus, the ball was very much in the governments' court to solve the two-year-old crisis, Draghi insisted.

By cutting interest rates and launching a raft of anti-crisis measures the ECB had "already done much that is needed," he said, even if he refused to explicitly rule out additional action further down the line.

"In order to sustain confidence, it is essential for governments to reduce further both fiscal and structural imbalances and to proceed with financial sector restructuring," he insisted.

A number of ECB watchers said they still expected the central bank to lower its rates early next year if the economy deteriorated still further.

"The ECB appears to have the door open for an interest rate cut, and we expect it to step through early in 2013," said Howard Archer at IHS Global Insight.

"With the eurozone clearly facing a difficult fourth quarter and beyond after moving into modest recession in the third quarter, and with the underlying inflation situation in the Eurozone looking relatively benign, we believe that the ECB has ample justification and scope to take interest rates down from 0.75 percent to 0.50 percent sooner rather than later," he said.

But others were not so sure.

Draghi "was quite clear that no further monetary policy action is to be expected in the near future," said Marie Diron at Ernst & Young Eurozone Forecast.

Commerzbank chief economist Joerg Kraemer said he "would forecast a lower refi rate if leading economic indicators declined in contrast to our expectations."

ING Belgium economist Carsten Brzeski felt that the fact that the ECB kept rates on hold "even after these strong downward revisions for growth and inflation in our view shows that the ECB prefers to stimulate the economy with non-standard measures and not with additional rate cuts."

A rate cut "might not entirely be off the table but would require an even worse weakening of the economy," Brzeski said.

-AFP/ac

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PMO pushes for hike in rail fares after nine years

NEW DELHI: Get ready to pay more for rail travel by next March as the government is trying to set up of an independent tariff regulator.

PM Manmohan Singh on Thursday stepped in to accelerate the much-awaited reforms in railways, which has been neglected for many years.

The Prime Minister's Office (PMO) has set deadlines for railways' top brass to set up independent tariff regulator and implement pending projects within a timeframe.

Singh has asked an inter-ministerial group (IMG), headed by chairman of Railway Board, to finalize the proposal for setting up a Rail Tariff Authority by December 31.

The regulator will suggest rationalization of passenger fares, which have not been touched for the past nine years, thanks to populist pressures. The PMO has sought to expedite the setting up of the regulator, directing the transporter to move a Cabinet note by January 15, 2013.

Soon after taking charge, railway minister Pawan Kumar Bansal has hinted at accelerating the proposal as the state-run transporter is cash-strapped due to the current practice of cross-subsidizing passenger fare with freight earning.

The regulator is expected to examine the operational expenditure, including diesel and power cost for running trains, and suggest passenger fare hike to absorb the escalated cost.

Faced with acute funds crunch, the government is aware that there is no other way than revising passenger fare to implement its safety and modernization efforts.

Worried over the political fallout, the ministry, under regional leaders for several years, could not rationalize passenger fares for long.

The setting up of a regulator will be a big step forward towards de-politicization of fare hike, which has not been rationalized since 2002-03, leading to a loss of around 24,000 crore annually .

The PMO has also directed railways to expedite setting up of long-pending Madhepura and Marhowra loco factories under the PPP mode. Railways has been instructed to invite bids for the Madhepura project by the end of this month, and award the project before the rail budget in March, 2013. "Timelines for the Marhowra project will be announced by December 15," it said.

To accelerate elevated rail corridor project in Mumbai, the PMO directed to sign the state support agreement with Maharashtra government within the next 15 days. Railways will finalize important milestones with timelines by December 31, 2012, and bids for the project will be invited before the upcoming rail budget.

UPA's ambitious project dedicated freight corridor was applauded as it is shaping up much better than other large ventures.

Railways was asked to submit revised estimates with details on source of funding for the dedicated freight corridor project by December 15. It will also provide timelines for Sonnagar-Dankuni project on the eastern corridor.

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Celebrations planned as Wash. legalizes marijuana

SEATTLE (AP) — Legal marijuana possession becomes a reality under Washington state law on Thursday, and some people planned to celebrate the new law by breaking it.

Voters in Washington and Colorado last month made those the first states to decriminalize and regulate the recreational use of marijuana. Washington's law takes effect Thursday and allows adults to have up to an ounce of pot — but it bans public use of marijuana, which is punishable by a fine, just like drinking in public.

Nevertheless, some people planned to gather at 12:01 a.m. PST Thursday to smoke in public beneath Seattle's Space Needle. Others planned a midnight party outside the Seattle headquarters of Hempfest, the 21-year-old festival that attracts tens of thousands of pot fans every summer.

"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."

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.

That law also takes effect Thursday, when gay and lesbian couples can start picking up their wedding certificates and licenses at county auditors' offices. Those offices in King County, the state's largest and home to Seattle, and Thurston County, home to the state capital of Olympia, planned to open the earliest, at 12:01 a.m. Thursday, to start issuing marriage licenses. Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

The Seattle Police Department provided this public marijuana use enforcement guidance to its officers via email Wednesday night: "Until further notice, officers shall not take any enforcement action — other than to issue a verbal warning — for a violation of Initiative 502."

Thanks to a 2003 law, marijuana enforcement remains the department's lowest priority. Even before I-502 passed on Nov. 6, police rarely busted people at Hempfest, despite widespread pot use, and the city attorney here doesn't prosecute people for having small amounts of marijuana.

Officers will be advising people to take their weed inside, 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."

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" — a non-issue, since the measures passed in Washington and Colorado don't "nullify" federal law, which federal agents remain free to enforce.

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.

Colorado's measure, as far as decriminalizing possession goes, is set to take effect by Jan. 5. That state's regulatory scheme is due to be up and running by October 2013.

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

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