Sink or sell? Russia spat leaves France with warships to spare

For sale: two French-built helicopter carriers, tested by Russians. Buy now for only 1.2 billion euros($1.33 billion). Shipping extra.

Tensions between the West and Russia over Ukraine have blocked a deal in which Moscow was to buy the ships, leaving Paris trying to negotiate a face-saving compromise and work out CAwhat to do with two unwanted warships.

"There are three possibilities: deliver the boats to Russia, sell them to someone else or destroy them," said a source close to the matter.

It is an embarrassment that is not of French President Francois Hollande's making. The deal stems from his predecessor Nicolas Sarkozy's decision in 2011 to make the West's first major foreign arms sale to Russia since the fall of the Soviet Union.

But it will be difficult for Hollande politically and underlines the difficulty for France to reconcile its ambitions as a global arms supplier - a sector on which thousands of French jobs depend - with commitments to NATO allies.

It may also be very costly.

At present the delivery of the ships remains indefinitely suspended rather than formally canceled. But even Russian officials say now that they are not interested in taking the Mistral-class carriers.

Moreover France's NATO allies, notably the United States and Poland - with whom Paris is negotiating 6 billion euros of defense deals - would be outraged if France tried to get the deal back on track with the crisis in Ukraine far from resolved.

That leaves the Russians demanding not only a full refund but also the penalties that go for pulling the deal.

"That Russia won’t take them (the ships) - that's a fait accompli," Oleg Bochkaryov, deputy head of Russia's Military Industrial Commission, told daily Kommersant last week. "There is only one discussion going on now: the amount of money that should be returned to Russia."

SINK OR SELL?
The first carrier, the Vladivostok, had been due for delivery in 2014; the second, named Sebastopol after Crimea's crucial seaport, was supposed to be delivered by 2016.

Russia and French sources say Moscow wants 1.163 billion euros ($1.29 billion) which includes what it has already disbursed - about 800 million euros - plus compensation for costs incurred for the purchase of equipment and training of sailors.

France's special envoy Louis Gautier, who has been shuttling between the two capitals since end-March, has offered just 785 million euros, according to Russian media citing officials who also described the offer as "unacceptable."

Gautier has asked Russia to either contribute to the cost of dismantling them or allow France to sell the Mistrals to another country. Canada and Singapore have been mooted, as has Egypt which has just bought French fighter jets and naval frigates.

Yet senior defense ministry official Yury Yakubov, quoted by Interfax news agency, argued they could not be sold on because the carriers were built to specific Russian navy requirements and therefore it was a "matter of state security."

That may turn out to be just a bargaining position. But even if Russia relents, there would be a cost to France.

For one thing, it is already costing 5 million euros a month to maintain them at their current port on the Atlantic.

The Mistral is known as the Swiss army knife of the French navy for its versatility. But DCNS, the 65-percent state-owned manufacturer, nonetheless estimates any adaptation for another country would cost hundreds of millions of euros - and it would seek compensation.

An intriguing outside bet might involve China.

Amid a warming of Paris-Beijing ties under Hollande, the Dixmude - another Mistral-class vessel - attracted speculation when it docked in Shanghai earlier this month for a week.

But for now, analysts suggest the geopolitical context is just too dicey to contemplate a sale to China.

With growing tensions in the South China Sea, France is not seen willing to risk alienating Japan, with which it has just signed a defense cooperation deal, let alone suffer the displeasure that such a move would incur in Washington.

Said General Christian Quesnot, chief military adviser to Hollande's mentor, the late president Francois Mitterrand: "The cheapest thing would be to sink them."

(Additional reporting by Cyril Altmeyer and Gabriela Baczynska in Moscow; editing by Mark John/Jeremy Gaunt)

Missile maker says Russia did not shoot down Malaysian plane over Ukraine

The Russian company that makes the BUK air defense system that was used to shoot down a Malaysian airliner in east Ukraine said on Tuesday the plane was hit by a missile deployed by Ukraine and not widely used by Russia's military.

State-run Almaz-Antey said its own analysis of the wreckage of the Malaysia Airlines plane brought down on July 17 last year, killing 298 people, indicated it was hit by a BUK 9M38M1 surface-to-air missile armed with a 9H314M warhead.

Shrapnel holes in the plane were consistent with that kind of missile and warhead, it said.

Such missiles have not been produced in Russia since 1999 and the last ones were delivered to foreign customers, it said, adding that the Russian armed forces now mainly use a 9M317M warhead with the BUK system.

"Neither the company nor its enterprises could have supplied these rockets in the 21st century," Almaz-Antey's chief executive, Yan Novikov, told a news conference run by the Kremlin press service at which the company used 3D visuals and computer animation.

After a company presentation translated simultaneously into three languages, he said Ukraine's armed forces had still had nearly 1,000 such missiles in its arsenal in 2005, when it held talks with Almaz-Antey on prolonging their lifespan.

Criticizing sanctions imposed on Almaz-Antey by the European Union, he said: "The corporation was not involved in the Malaysian Boeing catastrophe. Correspondingly, the economic sanctions applied to the corporation for that are ... unjust."

When it imposed the sanctions on Almaz-Antey, the EU said the firm produced anti-aircraft weaponry which the Russian authorities have supplied to pro-Russian separatists fighting Kiev's forces in east Ukraine.

Moscow is trying to deflect blame for the shooting down of the airliner and denies sending arms and soldiers to support the rebels, though the West and Kiev say they have overwhelming proof of the latter.

Russian officials initially said flight MH17 was shot down by a Ukrainian fighter jet but that version was widely ridiculed abroad. They now say it was probably hit by a missile fired from the ground by Ukrainian forces.

Ukraine has denied its forces shot the plane down.

Dutch investigators who are leading an international investigation say their "leading scenario" is that it was hit by a Russian-made BUK.

(Editing by Timothy Heritage)

Mexican teachers protest education reform after government weakens stance

Thousands of Mexican teachers protested on the streets of Mexico City on Monday against a crucial part of President Enrique Pena Nieto's education reform, sensing that government support for it was crumbling.

On Friday, the Education Ministry said it would suspend the planned teacher evaluations opposed by militant teaching unions in Mexico, which fear it will curb their power.

The decision followed months of agitation from union members, and sparked condemnation from opposition lawmakers and supporters of the law, who said it would gut the reform.

Buoyed by the retreat, 10,000 teachers and opponents of what Pena Nieto has argued is his most important piece of legislation massed on the Paseo de la Reforma, one of the capital's main boulevards, in an effort to kill off evaluations altogether.

"The evaluations are punitive," said Juan Carlos Lopez, 42, a primary school teacher. "It's a justification to fire teachers on a massive scale."

Supporters of the reform said it was urgently needed to improve flagging educational standards and root out corruption in teaching unions. Its critics argue that many poorer teachers lack the financial support to meet required standards.

Opposition to education reform has been strongest among teachers in the southwest of Mexico, where some surrounded a facility of state oil company Pemex in Oaxaca state with cargo trucks and burnt ballot papers in state capital Oaxaca City.

Some protesters have threatened to interfere with nationwide elections due to be held next Sunday, and opposition lawmakers accused the government of sacrificing the reform to protect the ruling Institutional Revolutionary Party, or PRI.

The need for improvement is clear, and only two weeks ago, Pena Nieto hailed the education reform as the one that would "without doubt" have the biggest impact on Mexico's future.

In the World Economic Forum's latest annual competitiveness survey, Mexico ranked 118th out of 144 countries in quality of primary education, behind many poorer countries, including Honduras, El Salvador, Bolivia, Bangladesh and Sierra Leone.

The government's reasons for suspending the teacher evaluations have not been clearly explained. The Education Ministry said only that it had "new elements to consider" and declined to comment further when contacted on Monday.

Its decision had sent out a "terrible message" about the government and was a betrayal of teachers backing reform, said Juan Carlos Romero, head of the Senate education committee and a member of the center-right National Action Party (PAN).

"We're going from illusion to disillusionment," he said. "Once you've lost confidence it's very hard to re-establish it."

(Writing by Dave Graham; Editing by Richard Chang, Toni Reinhold)

Leader in Afghan north dismisses Kabul government as a 'show'

Atta Mohammad Noor, a powerful governor in northern Afghanistan, visited a local amusement park last week and grabbed a video arcade gun. Firing on fictional aliens made a break from the frequent target of his ire: the government in Kabul.

Noor, a former general hardened in wars against the Soviets and Taliban but now suited and affluent, complains of a lack of leadership by President Ashraf Ghani and is angry his warnings of rising militant violence in the north were not heeded.

"They told me that they will take action, but unfortunately they didn't," the governor of Balkh province told Reuters, recalling a warning he gave Kabul several months ago to prepare for more Taliban violence in the north.

The dissatisfaction is one of Ghani's main challenges; he must contain the Taliban, rally various strongmen behind a single cause and bridge differences with his partner in power, Chief Executive Abdullah Abdullah.

Noor has emerged as one of the government's biggest critics. He questions how the armed forces are being run, the handling of peace talks with the Taliban and Ghani's relationship with Abdullah.

Ghani and Abdullah fought bitterly over the outcome of last year's presidential election which they contested, and despite forming a unity government, mutual suspicion has slowed policy decisions, diplomats and analysts say.

Noor, 51, said neither the president nor the CEO had done much to solve the country's problems.

"Whatever they do is a show," Noor said in the interview at his palatial party offices in Mazar-i-Sharif, capital of Balkh. "Instead, they should work honestly."

Noor strongly backed Abdullah in the election, at one point threatening civil unrest over the outcome. Ultimately Ghani was deemed the winner, and Noor has distanced himself from the rivalry.

Asked what he thought was the government's most significant achievement so far, he chuckled. "I cannot remember any successes at the moment."

DEADLY ATTACKS

Ghani and Abdullah are aware of the grumblings of Noor and other regional power brokers. Both leaders declined to comment for this article.

Tensions between Kabul and the provinces are likely to grow if security deteriorates in the north, which had until recent years escaped the worst of the Taliban insurgency.

In April, militants stormed a court in Mazar-i-Sharif, killing eight people including the district police chief.

Nine Afghan employees of a Czech-backed aid group were killed in Balkh on Tuesday. People in Need said it was suspending all operations in Afghanistan.

In Kunduz, near Balkh, Afghan National Security Forces have been struggling for weeks to drive out Taliban fighters, leading the government to fall back on militias controlled by local commanders.

Noor said he believed Afghan security forces could fight on their own, provided they had better leadership, support and equipment. Most NATO troops withdrew at the end of 2014, significantly weakening Afghan defense options.

The governor, who has commanded his own militia in the past,

has been increasingly vocal on security matters and recently appeared on Afghan television wearing his old military uniform.

He said former resistance fighters should be recruited into official forces if they wanted to fight, and that if security worsened, militias could be an option "of last resort."

One source of weakness in Afghan security has been the absence of a defense minister.

Tensions within the government between rival ethnic and regional interests have played out in the tortuous process to agree on a candidate.

Ghani has chosen a third nominee after the first was rejected by parliament and the second dropped out amid controversy. Masoom Stanikzai could face a similar fate, with Noor and some lawmakers deeply skeptical.

"He doesn't have military qualifications and hasn't done anything in the peace process," Noor said of Stanikzai, who has been closely involved in a faltering attempt to negotiate peace with the Afghan Taliban.

"I'm sure he will not be a successful (defense) minister."

"NO VOTE"

Others agree. Tribal elders, lawmakers and other influential Afghans from across the country filed into Noor's ornate offices to pay their respects and discuss affairs of state, and some had similar complaints to his.

"My vote is a no vote," said Saifora Niazi, a parliamentarian from Balkh province. "The national unity government is imposing people like him (Stanikzai)."

Mawlawi Shahzada Shahid, spokesman for the High Peace Council of which Stanikzai is a member, defended his colleague's record.

"He held several peace meetings inside and outside Afghanistan. Most of those meetings proved very successful. He brought hundreds of Taliban into normal lives," said Shahid.

After evening prayers, Noor led visitors to a room in his compound for a feast, the table adorned with gold-plated cutlery and plates embossed with the insignia of the Jamiat-e-Islami party dominated by anti-Soviet "mujahideen" figures.

The walls of the corridors were lined with photographs of Noor and fellow mujahideen, including Ahmad Shah Masood, revered leader of the anti-Taliban resistance assassinated two days before the September 11, 2001 attacks.

Later, a convoy of SUVs took Noor and his guests to the amusement park. The host grinned as he lined the aliens up in his sights.

(Additional reporting by Mirwais Harooni in Kabul; Editing by Mike Collett-White)

PRESS DIGEST- British Business - June 3

June 3 - The following are the top stories on the business pages of British newspapers. GNN has not verified these stories and does not vouch for their accuracy.

The Times

Greece's creditors are putting the final touches to a package of economic reforms for Athens to deliver in exchange for unlocking 7.2 billion euros ($8.03 billion) of rescue loans that would stave off default. (thetim.es/1KBQZ5T)

The head of Anheuser in Germany has lost his job after just five months for drink driving. Till Hedrich, head of German operations for Anheuser-Busch Inbev, crashed his car while travelling on an autobahn near Munich at the end of April while under the influence of alcohol. (thetim.es/1ALGg8N)

The Guardian

Tom Hayes, the trader accused of trying to rig a key interest rate behind trillions of dollars in financial deals, was allowed to keep a 2.2 million stg ($3.37 million) bonus despite being sacked by his then employer, Citigroup, for "attempting to manipulate" financial markets. (bit.ly/1FSmFD7)

Euro zone inflation turned a corner in May, posting a 0.3 percent increase after four months of flat or falling prices. The measure of core inflation, which strips out food, energy and other volatile elements of the consumer prices index, jumped even higher to 0.9 percent, signalling a resurgence in demand across the euro zone. (bit.ly/1G37yrG)

The Telegraph

Former Barclays Chairman David Walker has called on the Chancellor to review the legislation surrounding bank ring-fencing, claiming it will simply burden customers with extra costs and harm competition. (bit.ly/1K85FM5)

IMF economists cited research by Moody's Analytics that suggested countries such as the UK, U.S. and Canada could afford to live "forever" with relatively high debt shares compared with their pre-crisis averages. (bit.ly/1eNHoyX)

Sky News

Royal Mail will on Wednesday name travel industry veteran Peter Long as its next chairman, handing him the delicate task of navigating the likely sale of UK taxpayers' remaining shareholding in the company. (bit.ly/1Fsq8FT)

Sky News has learnt that Caledonia Investments, which traces its roots to the shipping empire established by Charles Cayzer in 1878, is close to agreeing the purchase of a controlling stake in Seven Investment Management. (bit.ly/1eNzNAA)

The Independent

Shares in British and American tobacco companies have been hit by a Canadian court ruling requiring three tobacco companies to pay billions to Quebec smokers who claimed they were not warned about the health risks of smoking. (ind.pn/1FSmZ4D)

($1 = 0.8969 euros) ($1 = 0.6520 pounds) (Reuters)(Compiled by Mirza Mohammed Ali Khan in Bengaluru)

FOREX-Dollar mauled as euro leads vicious short squeeze

1. Dollar speculators squeezed out of crowded positions
2. Euro rallies as EU yields spike, Greek creditors make offer
3. ECB meets later in day, Australia GDP a test for Aussie

By; Wayne Cole

SYDNEY, June 3 (GNN) - The U.S. dollar was broadly lower on Wednesday as hopes for progress in Greek debt talks and a huge spike in European yields combined to give the euro its biggest gain in three months.

The dollar index, which measures it against a basket of six major currencies, was down at 95.943 having shed 1.5 percent on Tuesday in its biggest one-day drop since July 2013.

The euro was enjoying the view at $1.01150, having climbed 2 percent overnight, while the dollar lapsed back to 124.08 yen and away from a 12-1/2-year peak of 125.070.

CitiFX head G10 strategist, Steven Englander, said the violence of the shift reflected just how much speculators had been long of dollars and short of euros.

"Today's EUR move started as a rates move and looks now to be a position unwind. We estimate that a third of the EURUSD move is driven by the change in rates, and 67 percent by positioning unwinds."

The initial catalyst was EU data showing a surprisingly large increase in headline and core inflation which suggested the European Central Bank's latest easing campaign was gaining traction. [TOP/CEN}

German 10-year Bund yields surged 16 basis points to 0.68 percent, the biggest jump in about three years, while Spanish, Italian and Portuguese yields hit 2015 highs.

The central bank holds a policy meeting later Wednesday and will likely reaffirm its commitment to the trillion euro asset purchase programme.

The euro got another leg up when the ECB, the European Commission and the International Monetary Fund agreed on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude four months of debt stalemate.

It was far from clear if the leftist government of Prime Minister Alexis Tsipras would accept the plan, but the market took it as an encouraging step forward.

Dealers said the speed and size of the euro rally argued for consolidation in the very term, while the technical background looked better after a break of the 20-day moving average at $1.1132. The next major chart target was $1.1210/20 and a breach there could trigger a move to the $1.1325/40 zone.

Still, there is a host of U.S. economic data yet to come this week, including the payrolls report on Friday, and any signs of strength could revive dollar bulls.

For now, the dollar's retreat has lifted commodities and related currencies.

The Australian dollar shot to $0.7762, having jumped 2.2 percent on Tuesday, with the New Zealand dollar not far behind at $0.7175.

The Australian currency faces a hurdle in the form of gross domestic product data later in the session, where an outcome of less than the expected 0.7 percent gain could cause a pullback. (Reuters)(Editing by Eric Meijer)

UPDATE 2-California Senate votes to raise smoking age to 21 from 18

(Adds details on other states)

By: Alex Dobuzinskis

(GNN) - The California Senate voted on Tuesday to raise the legal smoking age in the most populous U.S. state to 21 from 18, in a move that could make California one of the states with the highest smoking age.

The measure was approved by the Senate 26-8 and must now be approved by the state Assembly.

"We will not sit on the sidelines while big tobacco markets to our kids and gets another generation of young people hooked on a product that will ultimately kill them," Senator Ed Hernandez, a Democrat and the bill's author, said.

"Tobacco companies know that people are more likely to become addicted to smoking if they start at a young age," Hernandez added in a statement.

The Institute of Medicine, the health arm of the National Academy of Sciences, has said that increasing the smoking age to 21 would result in more than 200,000 fewer premature deaths nationally for those born between 2000 and 2019.

The Cigar Association of America opposed the bill, contending that 18-year-olds can serve in the military, vote and sign contracts and should thus enjoy the right to smoke, according to the Los Angeles Times.

David Sutton, a spokesman for Altria Group Inc, the parent of Philip Morris USA, said in an emailed statement that Altria believed states should defer to the federal government and "allow FDA and Congress the opportunity to think through this issue further before enacting different minimum age laws."

Representatives for R.J. Reynolds Tobacco Company, a unit of Reynolds American Inc, did not return calls seeking comment.

Hawaii lawmakers approved a measure in April to raise the smoking age to 21, and that is awaiting the state governor's signature. Democratic Governor David Ige has not indicated whether he will sign the measure, and has until June 29 to decide whether to veto it, a spokeswoman for his office said.

Since 2013, New York City has required tobacco purchasers to be 21 or older, according to the National Conference of State Legislatures. No state has a smoking age that high, but Alabama, Alaska, Utah and New Jersey set it at 19. (Reuters)(Reporting by Alex Dobuzinskis and Cynthia Johnston; Editing by Sandra Maler)

Privacy app maker files EU antitrust complaint against Google

U.S. tech firm Disconnect has filed a complaint to EU antitrust regulators against Google's ban on its privacy app, accusing the Silicon Valley giant of abusing its dominant market position.

Disconnect, set up four years ago by former Google engineers, says its app protects users of the Android operating system from invisible tracking and malware distributed through advertisements.

It said Google had abused its position by blocking the app from the Google Play store last year, and had gained an unfair advantage over competitors by integrating its own privacy and security services into its own products.

"They said we interfered with the ability of third parties to serve ads. Google was not willing to engage in a dialogue," Disconnect Chief Executive Casey Oppenheim told Reuters on Tuesday.

Google said Disconnect's complaint was groundless.

"Our Google Play policies have long prohibited apps that interfere with other apps - such as altering their functionality, or removing their way of making money. We apply this policy uniformly and Android developers strongly support it," spokesman Al Verney said.

The European Commission, which opened a probe into Google's agreements with smartphone and tablet makers using its Android operating system in April, confirmed it had received the complaint on Tuesday and said it would assess it.

The EU competition authority's Android investigation is one of two into Google's business practices. The other, more advanced, inquiry focuses on whether the company distorts web search results to favor its own shopping service.

(Reporting by Foo Yun Chee; Editing by Pravin Char)

HP CEO says split effective from November 1

Hewlett-Packard Co Chief Executive Meg Whitman said the separation of HP Inc and Hewlett-Packard Enterprise would be effective on Nov. 1.

Whitman made the announcement during the company's technology event, HP Discover 2015, in Las Vegas on Tuesday.

The world's No. 2 personal computer maker said in October it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.

(Reporting By Arathy S Nair in Bengaluru; Editing by Maju Samuel)

U.S. plan to cede Internet domain control on track: ICANN head

A controversial Obama administration plan to cede oversight of the non-profit that manages the Internet's infrastructure is on track to gain government approval by next year's presidential elections, the organization's chief said in an interview.

Some Republican lawmakers have raised concerns about the plan to hand over the stewardship of the Internet Corporation for Assigned Names and Numbers (ICANN) to a global multi-stakeholder body, worried that it may allow other countries to capture control.

But ICANN CEO Fadi Chehadé said such opposition was fading and that some opponents would come around once they see the accountability mechanisms and other assurances put in place.

"I think they see now that this is actually a good thing for the Internet. The fragmentation of the Internet is bad for everyone," he said.

"I'm never comfortable, but I am optimistic and I believe that all interests are now aligned... Everybody sees that this makes sense."

Since 1998, the United States, which gave birth to the Internet, has contracted out, through the Commerce Department, the management of the master database for top-level domain names like .com and .net and their corresponding numeric addresses to ICANN.

The Commerce Department has long expected to phase out its oversight and planned to do it at the end of the current ICANN contract in September, though the timing may slip slightly and may require an extension.

ICANN members are working to draft a proposal for how the group would operate as an independent body run by stakeholders from across the world, including academics and business and government representatives.

Chehadé, who plans to leave ICANN in March, said the community should produce the proposal by the end of the year for the U.S. government, including the administration and Congress, to review. He said the review process, according to government estimates, would take 60 to 90 days.

Chehadé said he remained optimistic that those steps could be concluded before the U.S presidential election in November 2016, which may result in a Republican hostile to an ICANN power shift controlling the White House.

Once the review process was completed, ICANN members would work to implement the plan. It remains unclear how long that process would take.

The White House on Tuesday issued a veto threat to a bill proposed in the Republican-controlled House of Representatives that would restrict the Commerce Department's ability to use its funding to relinquish ICANN oversight.

(Reporting by Alina Selyukh; Editing by Christian Plumb)

Deutsche Bank to launch three tech startup labs in 2015: source

Deutsche Bank aims to launch three technology innovation labs in Berlin, London and Silicon Valley this year designed to accelerate development of so-called "fintech" companies which could aid the banking sector and its clients.

Germany’s largest lender, grappling with an overhaul of its own technology infrastructure, aims to get the three operations up and running by the end of the year, a source with knowledge of the matter told Reuters.

The bank, which unveiled broad plans in April to overhaul its strategy and modernize its tech infrastructure, hopes to screen some 500 fintech start-ups per year, with some seeking to develop security, payments, efficiency, organization or process applications.

A spokesman for Deutsche Bank declined comment.

The move follows similar initiatives by rivals including Swiss bank UBS and Commerzbank to turbocharge tech developments that will help banks work more efficiently and stay close to clients.

American Express also recently opened a tech lab in Palo Alto, California, to focus on cloud computing and mobile infrastructure.

Deutsche Bank has not set aside a specific sum of money to invest in the firms, the source said, rather it aims to partner with chosen start-ups by either using the technology itself, fostering development, or perhaps channeling it into clients or other portions of the financial sector, the source said.

Deutsche wants to partner and work with start-ups, give them feedback on their ideas and find ways to employ their technology, not try to benefit solely from a financial perspective, said the source. “This is primarily about innovation, not investments.”

The launch, which comes weeks after board member Henry Ritchotte was named chief digital officer, marks a bigger commitment to developing a field where the banking sector fell behind similar tech advances in manufacturing following the financial crisis.

(Additional reporting by Eric Auchard; Editing by Andreas Framke and Kirsti Knolle)

Instagram takes steps to open platform to advertisers

Instagram said on Tuesday that it is taking steps to make its ads available to all types of businesses, not just hand-selected brands.

Starting in June, Instagram this year is rolling out to advertisers the ability to more closely direct campaigns by zip code and other data sets like interests in the same ways that brands can target consumers on its parent company Facebook Inc.

In addition it will let advertisers link to external websites or app stores with buttons such as "shop now," "sign up," "learn more," and "install now."

Currently, it works closely with only a handful of brands like Levi's, Banana Republic and Ben & Jerry's. Ads can only be targeted by gender, age and country.

"The quality of the ad experience remains a very important point of differentiation for us," Instagram's global head of business and brand development James Quarles said in an interview.

The move to widen and sharpen the ad platform is a significant one for the popular mobile photo app that has more than 200 million daily active users across the world. It has carefully allowed advertising on its platform starting a year and a half ago. Facebook acquired Instagram for $1 billion in 2012.

Quarles added that making ads more relevant and delivering them to the right target is the next stage of development.

Still, by opening up to all advertisers, including hundreds of thousands of small businesses, Instagram risks losing quality control of campaigns and potentially irking users.

"People are used to seeing beautiful brand imagery in their feeds," said Debra Aho Williamson, principal analyst at eMarketer. "Now they will see some direct response ads and we all know the baggage that comes with that."

Still, Williamson expects a "strong ramp-up" from advertisers long eager to do more with the platform.

Facebook does not break out Instagram revenue but Pivotal Research estimates it is in the hundreds of millions of dollars.

Kfir Gavrieli, co-founder and CEO of Tieks, an online-only retailer known for its ballet flats, said it's currently "clumsy and awkward" for an Instagram user to get from a post to a landing page.

"The shop now button," he said, "will be much more seamless."

(Reporting by Jennifer Saba in New York; Editing by Christian Plumb)

Boost.vc Diversifies With A Push Into VR

Startup accelerator Boost.vc is diversifying its next cohort of startups, shifting its line-up of accepted startups from focusing solely on Bitcoin to include those working on virtual and augmented reality.

In a chat with TechCrunch last week, Boost.vc co-founder Adam Draper explained the accelerator’s reasoning. “We’re good at building communities around early tech sectors. We bring together investors, entrepreneurs, and builders, and by focusing investments on a category over time, we ourselves become experts in the subject, and thus more valuable to startups that might want to join.”

After two and half years investing in Bitcoin-related startups, Draper says the team decided they didn’t need to only apply those strengths to a single ecosystem. So with their next cohort, or “tribe,” of startups, the accelerator plans to accept a roughly equal number of virtual reality startup as those working to solve problems with Bitcoin.

In addition to mentorship from investors and entrepreneurs with experience in the virtual reality scene, startups that join up in the next group get free housing (for teams of 1-4 people) and $15-25,000 in capital in exchange for ~6% of their company. It’s like the living arrangement on HBO’s “Silicon Valley,” except without an investor hanging around with a bong all day.

As for the kinds of virtual reality startups the accelerator will be investing in, Draper says Boost will not be backing teams working on hardware. Instead, they’re looking for companies building a software infrastructure around the creation and consumption of experiences in virtual reality.

Draper thinks that outside of gaming, the earliest successful VR products will show up on Google’s Cardboard and Samsung’s Gear VR. And with applications like Google’s Expeditions popping up, Draper says he’s “very excited about VR and education technology.”

Source: TC

Obama: Netanyahu's Palestine stance erodes Israel's credibility

U.S. President Barack Obama said Israeli Prime Minister Benjamin Netanyahu's terms for diplomacy that might lead to a Palestinian state meant Israel had lost international credibility as a potential peacemaker.

Obama also suggested that continued U.S. diplomatic defense for Israel at the United Nations over the Palestine dispute may be reviewed, while reaffirming U.S. support for Israeli security in a conflict-riven Middle East.

In an interview with Israeli television aired on Tuesday, he offered a bleak outlook for decades of negotiations on Palestinian statehood bearing any fruit during the 18 months he has left in office.

"I don't see the likelihood of a framework agreement," Obama said in an interview with Uvda, a current-affairs program produced by Israel's top-rated Channel Two and Keshet television. "The question is how do we create some building blocks of trust and progress."

While Obama has acknowledged the geographical and ideological divisions among Palestinians that have bedeviled peace efforts, in the interview -- taped in the White House on Friday -- he focused on Netanyahu's policies.

On the eve of his March 17 election to a fourth term, Netanyahu said there would be no Palestinian state if he remained premier. He argued that any withdrawals from occupied territory by Israel would embolden hardline Islamist guerrillas arrayed on its borders.

Netanyahu has since sought to row back from those remarks but his peace overtures have met with scepticism from the Palestinians as well as Western diplomats.

Obama said Netanyahu's position "has so many caveats, so many conditions that it is not realistic to think that those conditions would be met at any time in the near future.

"So the danger is that Israel as a whole loses credibility. Already, the international community does not believe that Israel is serious about a two-state solution."

The last round of U.S.-sponsored talks stalled more than a year ago, with Palestinians blaming Israeli settlement-building in the occupied West Bank and East Jerusalem, among the territories where they seek an independent state.

Obama said now was the time for a re-evaluation of "how we approach defending Israel on the international stage around the Palestinian issue".

He cited pro-Palestinian resolutions at the United Nations that Washington has long blocked in the name of encouraging direct diplomacy between the sides. Asked whether such U.S. vetoes would continue, Obama sounded circumspect.

"Well, here's the challenge. If in fact there is no prospect of an actual peace process, if nobody believes there is a peace process, then it becomes more difficult to argue with those who are concerned about settlement construction, those who are concerned about the current situation," he said.

"It is more difficult for me to say to them, 'Be patient, wait, because we have a process here.'"

Israelis and Palestinians both, Obama said, should work with the United States to "move off what appears right now to be a hopeless situation and move it back toward a hopeful situation". He did not offer more concrete solutions.

Netanyahu's office did not immediately comment on the Obama interview. Speaking at an Israeli missile defense drill earlier on Tuesday, Netanyahu stressed the need for self-sufficiency: "When it comes to Israel's security, I rely, first of all, on ourselves."

(Writing by Dan Williams; Editing by Mark Heinrich)

Tim Kendall, Pinterest’s GM Of Monetization, Talks Buyable Pins

Following Pinterest’s unveiling of Buyable Pins — a way for merchants to sell things that users can buy directly within Pinterest — I had an opportunity to sit down with the company’s general manager of monetization Tim Kendall to talk a little bit more about it.

The first thing he made clear was that, for now, brands will not be able to promote Buyable Pins. To be sure, around two-thirds of the content on Pinterest is made by businesses, but those businesses are going to have to rely on organic traffic to drive sales for their products for the time being. Around 87 percent of Pinterest users have bought a product after discovering it on Pinterest, Kendall said.

“This isn’t an ad offering, it’s an experience for pinners,” he said. “Pinners tell us, ‘I discover great things from Pinterest every day, I stumble across it, I wish I could buy it on Pinterest without leaving — it’s about addressing that pain point. Basically we’ve been told for five years, it’s the No. 1 request from pinners. For partners it’s a way to reach customers already on Pinterest, sell products but continue to own the customer relationship.”

Still, Kendall left the door open for it as a possibility in the future: “It’s not an advertising offering — we hope to offer that at some point but we did not announce that.”

Like any feature, users are going to have to slowly be introduced to how it works. Kendall said during the development process, not much about the design changed, but as things often work in design, “If you look up there and it seems simple and elegant it was really hard to get there.”

“It was pretty similar to what you saw today,” he said. “Blue?” he said after a pause — which I’m guessing is referring to what the color of the button should be.

Once Buyable Pins launch later this month on the iPhone and iPad, Pinterest will walk users through how it works, much like other new features it rolls out. Users will either have to enter a credit card number or use Apple Pay, and they’ll still have to enter their address once.

But the company was trying to figure out a way to make it have as little friction as possible, because the drop-off in conversion to a sale between desktop and mobile devices is around 75  percent, Kendall said. Around 80 percent of Pinterest’s users access it through mobile devices.

Right now, new merchants will have to go through Shopify or Demandware in order to get their products for sale on Pinterest. Kendall said tens of thousands of merchants are already working through those platforms. While it’s partnered with big retailers like Macy’s, that’s still likely the fastest way to get products on Pinterest that users can buy right away.

If a Shopify merchant opts in to placing Buyable Pins on Pinterest, those existing products that have been pinned on Pinterest will become available for purchase. And for those products not on Pinterest, the company adds them to its corpus of pins, Kendall said. Otherwise, that retailer will have to do some kind of a direct integration, and right now Pinterest isn’t creating a sort of platform that any merchant or retailer can use to add Buyable Pins to Pinterest.

“We’re gonna continue to build those solutions that make this as easy as possible for as many partners as possible,” he said. “But we have nothing specific to talk about yet.”

Still, this is another step that could convince more merchants to put content on Pinterest. The more content there is on Pinterest — and users are surprisingly tolerant and accepting of business content, unlike many platforms — the more pins there are for pinners to search out and discover. And if they’re able to buy things on Pinterest, they’re more likely to come back to buy things, giving advertisers more of an opportunity to get other ads in front of those users.

FEATURED IMAGE: PINTEREST

U.S. says senior diplomat met with Yemen's Houthi in Oman

Senior U.S. diplomats met representatives of Yemen's Houthi rebels in the capital of Oman for a day last week to press for the release of American hostages and discuss a political solution to the country's conflict, the State Department said on Tuesday.

The department said on Monday that American journalist Casey Coombs, a journalist held by Houthi rebels in Yemen, had arrived in the Omani capital, Muscat, and was in a stable condition. Three other Americans are still believed held by the Houthi militia - two of Yemeni and one of Somali origin.

"These meetings in general were part of our broad engagement with elements of the Yemeni political spectrum," State Department spokeswoman Marie Harf told a briefing.

"We used that meeting to reinforce our view that there can only be a political solution to the conflict in Yemen, and that all parties, including the Houthi, should commit to participation in the U.N.-led political process," she added.

The meeting was led by U.S. Assistant Secretary of State for Near-Eastern Affairs Anne Patterson, who also traveled to Jordan and Saudi Arabia to discuss a cease-fire in Yemen, she said.

While in Riyadh, Patterson also met with exiled Yemeni President Abd-Rabbu Mansour Hadi and other senior Yemeni officials on the conflict that has killed more than 2,000 people.

A Saudi-led coalition of Gulf Arab states has bombed Iranian-backed Houthi militia since March to try to restore Hadi to power.

Harf said the meetings were "trying to get the parties, including the Houthis, to commit to participating in this U.N.-led political process and encouraging them to attend the planned talks in Geneva."

U.S. Secretary of State John Kerry briefly discussed the situation in Yemen with his Iranian counterpart on the sidelines of nuclear talks in Geneva on Saturday.

Harf did not elaborate on what was discussed, but said she did not believe the American hostages issue was addressed.

(Reporting by Lesley Wroughton, editing by G Crosse)

Syrian insurgent advances put Assad under pressure

Steady advances by insurgents on key fronts in Syria mean President Bashar al-Assad is under more military pressure than at any point in the four-year-old war.

Losses in the north, east and south to groups including al Qaeda's Syrian arm and Islamic State may test Assad's hold over western parts of the country that are the most crucial to his survival.

After his loss of Palmyra, a symbolic and militarily strategic city, and nearly all of Idlib province, he appears to be circling his wagons more closely to a western region that includes Damascus, Homs, Hama and the coast.

Sources familiar with the thinking in Damascus acknowledge that pressure is growing but say the government is confident the army can defend crucial territory with the help of its allies.

Assad still controls areas in more far-flung parts of Syria, but these are dwindling in number. His decision to maintain forces in places such as in Deir al-Zor, Hasaka and Aleppo suggests he still wants to preserve a nationwide presence, rejecting Syria's de facto partition.

Sources familiar with the government's thinking say Assad is confident about standing his ground: extra support is expected from Iran, his strongest ally, which said on Tuesday it would continue to stand by Syria. The Lebanese group Hezbollah, which is backed by Iran, is more widely deployed in Syria than ever.

And Assad still believes the West will eventually rehabilitate him as a partner in the fight against Islamic State - a shift that shows no sign of happening but which he thinks is inevitable given the risk of a full jihadist takeover.

"The summer will be tough on the ground, but red lines will not be breached," said one source familiar with the thinking in Damascus, declining to be named because he was discussing private conversations with Syrian officials.

Assad has survived such pressure before, notably at the end of 2012 when the West thought his government was near collapse. But the difference now is that the insurgents have grown in strength while government forces have been weakened after more than four years of fighting.

Assad has also lost Iraqi Shi'ite militiamen who had been fighting alongside Syrian forces. They went home to fight Islamic State after it captured Mosul and other Iraqi cities last June. The sudden advances also added to the military pressures facing Iran both in Syria and Iraq.

Insurgent groups in the north and south of Syria have emerged as the war's most dynamic force in the past two months. They are better organized and armed than before and are believed to have received new support from Assad's regional enemies.

"Clearly the trends right now are working against the regime, but it appears the regime's backers - and Iran in particular - may increase their support in an attempt to reverse those trends," said Noah Bonsey, senior analyst with the International Crisis Group thinktank.

"It is too early to tell what such an escalation could achieve," he said. "The regime is still seeking to maintain as much of its geographic reach as it can."

Lebanon's As-Safir newspaper on Tuesday said more than 20,000 Iraqi, Iranian and Lebanese fighters had entered Idlib province in readiness for a counter attack. Reuters was not able to independently verify the report.

WHERE IS THE SUPPORT?
Public concern about the war has surfaced in government-held areas where most of the population still lives. The Syrian lira has weakened.

Foreign Minister Walid al-Moualem fielded tough questions during a televised news conference in Damascus last week, including whether Syria was now in fact partitioned.

One journalist put it to him that Iranian and Russian statements of support were failing to halt insurgent advances. People were asking why this support was not more apparent on the ground, the journalist said.

"This question is certainly asked in the popular opinion," Moualem said. The relationship with Russia and Iran "is deeper than some think", he added.

A diplomat who tracks Syria said the tone reflected a new government willingness to admit vulnerability.

"It's a change in their attitude," the diplomat said. "The general mood is black."

The deputy head of Israel's armed forces said this week the Syrian military had "ceased to exist, de facto", while Hezbollah was investing in thousands of its fighters in Syria.

Others describe the situation in less dire terms, and say the army is still able to defend government-held areas.

State TV airs videos reassuring Syrians the army is in good shape, displaying its weapons and showing bare-chested soldiers breaking concrete with their arms.

"We believe in the capacity of the army to restore security for every inch of Syria," the headline of a recent state media report read, citing Prime Minister Wael al-Halaki.

TACTICAL WITHDRAWAL
Assad is still determined to hold on to energy installations needed to supply government-held areas, including gas and oil fields east of Homs. Last week he despatched Halaki on a visit to the Sha'ar gas field, which had previously fallen to Islamic State but was recaptured after fierce battles.

An offensive by the army and Hezbollah against insurgents including the Nusra Front in the Qalamoun mountain range north of Damascus is also crucial.

The diplomat said: "It will be very difficult for armed groups to take (Damascus), because it will be a battle not just for land, but a fight for survival." But Latakia on the coast and Homs could be harder to defend.

The Syrian government views the fall of Palmyra as a tactical defeat but a strategic gain, said Salem Zahran, a Lebanese pundit with close ties to Damascus.

Islamic State's capture of the city and its UNESCO World Heritage site should encourage Washington to review its Syria policy, would make U.S.-allied Jordan take greater notice of the Islamic State threat, and force Iraq to cooperate more with Syria, he said, reflecting the view in Damascus.

Damascus is also counting on Syria climbing up Iran's list of priorities once Tehran signs a nuclear deal with world powers, Zahran said.

But previous assumptions that Assad could not be defeated due to his superior military strength underpinned by the air force were no longer valid, the diplomat said. The insurgents were building on their momentum and had more recruits.

"For every 100 soldiers lost by the regime, there are not 100 more coming in," the diplomat said.

(Additional reporting by Tom Perry and Laila Bassam; Editing by Giles Elgood)