IMF calls for dollar alternative

IMF calls for dollar alternative

chart_ws_currency_usd_eur.top.pngBy Ben Rooney, staff reporter

 

NEW YORK (CNNMoney) — The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs

While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.

Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some “technical hurdles” involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.

“Over time, there may also be a role for the SDR to contribute to a more stable international monetary system,” he said.

The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.

In addition to serving as a reserve currency, the IMF also proposed creating SDR-denominated bonds, which could reduce central banks’ dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.

Oil prices usually go up when the dollar depreciates. Supporters say using SDRs to price oil on the global market could help prevent spikes in energy prices that often occur when the dollar weakens significantly.

Fred Bergsten, director of the Peterson Institute for International Economics, said at a conference in Washington that IMF member nations should agree to create $2 trillion worth of SDRs over the next few years.

SDRs, he said, “will further diversify the system.”

Dollar firms after starting 2011 weak

The dollar has been drifting lower so far this year as the global economy improves and investors regain their appetite for more risky assets such as stocks and commodities.

After rising above 81 in early January, the dollar index, which measures the U.S. currency against a basket of other international currencies, eased below 77 earlier this week.

However, the dollar was higher Thursday against the euro, pound and yen as disappointing corporate results weighed on stock prices following several days of gains on Wall Street. The rally in the commodities market also cooled, with the price of oil and metals backing off recent highs.

In addition, renewed concerns about the debt problems facing troubled European economies put pressure on the euro and supported the dollar. The yield on Portugal’s benchmark bond rose to a record high Wednesday, and borrowing costs for Ireland, Spain and Greece remain elevated.

“The market is shedding risk, with equities and commodities weakening and the U.S. dollar broadly stronger” said Camilla Sutton, currency strategist at Scotia Capital.

Traders were also digesting comments from Federal Reserve chairman Ben Bernanke, who told Congress Wednesday that despite a strengthening economic recovery, the unemployment rate remains high while inflation is “still quite low.”

Those remarks reaffirmed the view that “the Fed would be very slow to tighten policy given its dual mandate of price stability and employment,” analysts at Sucden Financial wrote in a research report.

Bernanke also urged lawmakers to come up with a “credible plan” to bring down “unsustainable” federal budget deficits.

“We expect that the outlook for the U.S. fiscal position will weigh heavily on the U.S. dollar in the quarters ahead,” said Sutton. In the near-term, however, she said “a strengthening growth profile” could help provide “a temporary period of dollar strength.” To top of page

Obama Fires Pakistan’s Foreign Minister Qureshi Over Raymond Davis Confrontation

It’s not a rumour, Americans did get Qureshi’s scalp


By: Mohammad Malick

The News

12 February 2010

When powerful men meet to discuss explosive issues, things can change in a big way. And that is precisely what happened after a highly secretive and immensely important meeting at the Presidency a few days back. The subject, not unexpectedly, being the fate of American killer Raymond Davis and that of Pakistan-US relations. Little did anyone know at the time that the huddle would instead end up deciding the fate of Foreign Minister Shah Mehmood Qureshi.

The meeting, convened by the president was attended by Prime Minister Gilani, Babar Awan, Rehman Malik, Shah Mehmood Qureshi and the DG ISI Gen Shuja Pasha. The president was given an exhaustive overview of the entire situation but quite early in the meeting it became evident that two of the men were standing on the wrong side of the prevalent dominant wisdom and desire of somehow finding a way to retrospectively cough up diplomatic immunity for Davis and to just wish away all the four deaths and the lingering crisis. But since one of the ‘erring’ two dared not be arbitrarily fired, poor Qureshi’s fate stood sealed.

Extreme pressure was exerted in the meeting on the former foreign minister to renege from his earlier stance and simply tell the court that the Foreign Office was in consonance with the American interpretation of Davis being a genuine diplomat and enjoying full immunity under Vienna Convention 1961. Facts be damned. According to highly reliable sources, interior ministry’s immense resources were also offered to cause any necessary change of documentation or any exceptional service warranted under these exceptional circumstances.

An adamant Qureshi, who had strongly argued the case that Raymond did not enjoy unlimited diplomatic immunity under law, flatly refused and even said that if need be, he’d rather resign than become an accessory to multiple murder. The meeting ended on a rather unsavoury and unexpected note. It was a surprising outcome for all the others because Qureshi had always been perceived, and even pilloried by the media, as being an American lackey and was not expected to dig in his heels over an issue so vital for the US administration.

But Qureshi’s latest run in with the Americans did not begin or end inside the Presidency. It had actually begun much earlier on January 28, a day after the deadly Raymond Davis incident in Lahore. He was in Karachi when he first received a call from US Ambassador to Pakistan, Cameron Munter and then had a conversation with US Secretary of State, Hillary Clinton. Munter requested him for immediate councillor access to Davis and his immediate handover to US Consulate authorities. Qureshi asked Foreign Secretary Salman Bashir to talk to Munter and while authorising immediate councillor access to Davis made it clear to the foreign secretary that the matter of release would only be decided by the court as the legal process had already been kicked into motion in Punjab. Then came Hillary’s call.

An understandably perturbed Hillary wanted the immediate handover of Davis and insisted that Pakistan was violating the Vienna Convention by the illegal incarceration of a “US diplomat”. Confirming the contents of that conversation to The News, Shah Mehmood said that he had patiently explained to Hillary that while he understood her anxiety she too had to understand the highly emotive and sensitive nature of the incident. And also that since the judicial process had been kick-started in Lahore, the Foreign Office and the US had little option but to submit to the due process of law. Anyway, the two decided to discuss the matter on the sidelines of the then forthcoming Munich Security Conference, and the line went silent.

Since then, Ambassador Munter and other senior embassy officials remained busy with engaging Pakistani authorities and the Foreign Office, blowing hot or cold, depending upon the level of their own frustration and the pressure coming their way from Washington. A few days prior to the Munich Conference, Qureshi received a call from Ambassador Munter who said that he had been directed to convey the message that unless Qureshi signed the diplomatic immunity paper prior to the conference, the scheduled meeting between him and Hillary would stand cancelled. The message was starkly clear a la George Bush: You are either with us or against us. So be it, Qureshi is reported to have told the ambassador and even cancelled his trip altogether. The chief of the army staff went instead to Munich and that is an appointment that even the US secretary of state cannot cancel, Davis or no Davis.

Once Qureshi ignored the latest Hillary communique, the Americans stopped talking to him altogether because it had now become evident that Qureshi was not going to budge on his stance of Davis not being eligible for full diplomatic immunity. Qureshi was no longer a welcome dinner guest and neither could he be allowed to remain in office. The last thing Washington can afford is his having a Pakistani foreign minister with a reawakened conscience.

According to highly reliable sources, the next claimed scalp may be that of the equally intransigent (from American perspective), Foreign Secretary Salman Bashir who is now the only remaining top level hurdle in the apprehended shameless handover of Davis by a compromised political leadership. The foreign secretary is also of the considered firm view that Davis does not qualify for full immunity. And there are legitimate causes for this argument, which were further exposed by glaring inconsistencies in the forever changing US stance on the issue.

Owing to the paucity of space, irrefutable arguments proving Davis’ ineligibility are not being reproduced here and also because a lot has already been written on the legal aspects of the subject, including the highlighted fact that in the initial reaction by US authorities, Raymond Davis was identified as merely an “employee” of the US Consulate in Lahore, but never as a diplomat. He was referred to as an employee and not a consulate general official. “It was a simple clerical error” was the incredulous justification offered by two senior members of the Islamabad embassy in an off-the-record conversation with the scribe. But it gets even better.

A lot is being made by the Americans and their interlocutors of the January 20, 2010 communication of the Islamabad embassy wherein the FO had been asked for the issuance of a non-diplomatic identity card for Davis. It is being argued that this communication clearly identifies Raymond Davis as being administrative and technical staff of Islamabad embassy and therefore automatically eligible for diplomatic immunity. But this is only half the story.

Certain discrepancies in 2010 had already caused the Foreign Office to seek clarifications. In Sept 2009, the US State Department had originally identified him as technical advisor (contractor) going on “official business” while applying for his visa. Later he was attached to US Consulate Lahore as an employee. So when his name popped up again in January 2010, identifying him as being attached with the US Embassy Islamabad, the FO wanted answers to some very pertinent questions. The relevant FO officials repeatedly asked the US embassy to provide the details of Davis’ new responsibilities along with those of his past postings. When weeks had passed with the embassy avoiding a categorical clarification on this count, the FO finally sent a formal Note Verbale to the US embassy on July 8, 2010. It bore ref no: P(1-A)/2009-ID(USA). This note pertained to a total of ten Americans about whom similar details were being sought from the embassy but no response had been forthcoming from the US end. Davis was listed as Note No:252/HR. When FO authorities were asked about the presence of 2009 in the reference number of the note verbale otherwise sent on July 8, 2010, they clarified that it was perfectly in accordance with their internal filing sequence and did not reflect any anomaly.

Unable to cover this critical gap in their argument to secure Davis’ release on the afterthought alibi of diplomatic immunity, the US embassy has adopted the rather incredulous argument of denying outright the existence of this critical correspondence. The FO has been told at the highest level that the US embassy never received this Note Verbale. The two senior functionaries stuck to the denial mantra when asked by The News about the embassy’s refusal to divulge the real assignments and other details of Davis and nine others. They insisted that all the embassy records had been thoroughly checked but there was no evidence of the cited note verbale ever being received. When they were told that the July 8 note was present in FO records and its existence and its having been sent to US embassy was recorded in more than one place and constituted a process that could not be tampered with within hours of an event taking place, the duo took the reference number of the ‘missing note’ to ostensibly try locating it from their records. This raises an interesting question: if they still needed the reference number at this stage, then how did they even check their records earlier?

Can you name a single other incidence where prior to this particular note verbale or since, any note verbale sent by FO to the US embassy has ever gone missing? the two functionaries were asked. Not surprisingly, the duo could not cite a single such incidence.

Interesting coincidence one must say, where the entire US administration makes critical clerical errors which only expose Davis as being a non-diplomat. Another interesting coincidence again, when only one specific official communication out of hundreds of similar exchanges goes missing, and which once again stood to expose Raymond Davis for being anything but a legitimate diplomat on a legitimate diplomatic assignment.
NOTE:This is a cross post from THE NEWS:

Pakistani Court Issues Arrest Warrant for Busharraf In Bhutto Case

(Reuters) – A Pakistani anti-terrorism court has issued an arrest warrant for exiled former president Pervez Musharraf in connection with the 2007 assassination of former Prime Minister Benazir Bhutto, a spokesman for Musharraf said on Saturday.

Bhutto was killed in a gun and suicide bomb attack after an election rally in the city of Rawalpindi on December 27, 2007, weeks after she returned toPakistan after years in self-imposed exile.

Her assassination was one of the most shocking events in Pakistan’s turbulent history and remains shrouded in mystery.

“The court has issued an arrest warrant and asked that he should be produced before the court during the next hearing on February 19,” said Musharraf spokesman Saif Ali.

Ali said the decision was apparently based on a report by the Federal Investigation Agency, which linked Musharraf to the case. The public prosecutor was not immediately available.

Musharraf, a former military chief who came to power in a bloodless coup in 1999, has lived in self-imposed exile since he stepped down under threat of impeachment in 2008. He spends most of his time in London and Dubai.

He has, however, expressed his intention to return to Pakistan and said he aimed to establish offices for his new political party by March.

The warrant for Musharraf’s arrest follows a similar court order in December for the arrest of two senior police officers on allegations they failed to provide adequate security for Bhutto before her assassination.

A report by a United Nations commission of inquiry released in New York last year said any credible investigation into Bhutto’s killing should not rule out the possibility that members of Pakistan’s military and security establishment were involved.

It heavily criticized Pakistani authorities, saying they had “severely hampered” the investigation. The initial investigation blamed a Pakistani Taliban leader and al Qaeda ally, Baitullah Mehsud, for Bhutto’s murder.

Musharraf, himself the target of at least two bomb attacks, has repeatedly dismissed suggestions he, the security agencies or military were involved in killing his old rival.

(Reporting by Augustine Anthony and Sheree Sardar; Editing by Miral Fahmy)

Gaza Celebrates Mubarak Exit, Hamas Demands Open Border

[Whether Israel embraces or recoils from new govt. will speak volumes about “whose revolution” this really is.]

Gaza celebrates Mubarak exit; Hamas demands change

By Nidal al-Mughrabi

GAZA (Reuters) – Palestinians in Gaza let off fireworks and shot into the air to celebrate the resignation of Egyptian President Hosni Mubarak on Friday, and the Islamist group Hamas called on Egypt’s new rulers to change his policies.

“The resignation of Egyptian President Hosni Mubarak is the beginning of the victory of the Egyptian revolution,” said Hamas spokesman Sami Abu Zuhri.

“Such a victory was the result of the sacrifices and the steadfastness of the Egyptian people,” he told Reuters.

Gaza residents heard gunfire erupt across the city when news of Mubarak’s departure spread, and fireworks lit up the sky.

The coastal enclave of Gaza shares a border with Israel and Egypt. Both countries have imposed strict limitations on the movement of people and goods since Hamas took control of the territory, hampering its economy. The limits, they say, are to keep out weapons and materials that could be used in combat.

Abu Zuhri called on the new Egyptian leadership to permanently open its border with Gaza to allow free movement.

Mubarak’s departure was also welcomed in the West Bank, which is controlled by Hamas’s rival, Western-backed Palestinian President Mahmoud Abbas.

“What’s happening in Egypt represents strength to us and to all Arabs. This is a peaceful revolution that did not vandalize anything,” said Nabil Shaat, a senior member of Abbas’ Fatah faction.

Though welcoming the change, authorities in both territories have been swift in recent weeks to crack down on fledgling protests in their own territories, anxious to prevent any contagion from Tunisia or Egypt.

Some 300 Palestinians celebrated Mubarak’s resignation in Ramallah where Abbas lives, singing nationalistic Arab songs.

In Gaza, thousands of people waving Egyptian flags and chanting “long live Egypt!” rallied in the streets, stopping traffic.

Hamas, which seized control of the Gaza Strip from Abbas’s forces in 2007, had blocked a Fatah rally earlier on Friday to prevent focus from shifting onto the inner-Palestinian divide. Though several thousand Hamas members later gathered in Gaza, calling for Abbas’s ouster.

Hamas’s leader in Gaza, Ismail Haniyeh, spoke by phone with the leader of the Muslim Brotherhood, Egypt’s largest opposition party which shares Hamas’s Islamist ideology, and congratulated him on the “success of the revolution.”

Hamas, which does not recognize Israel’s right to exist, also urged Egypt to reconsider its peaceful ties with Israel. Egypt was the first Arab country to sign a peace accord with Israel in 1979.

(Additional reporting by Mohammed Assadi in Ramallah; writing by Crispian Balmer; editing by Diana Abdallah)

© Thomson Reuters 2011 All rights reserved.

Ex-C.I.A. Agent Goes Public With Story of Mistreatment on the Job

Ex-C.I.A. Agent Goes Public With Story of Mistreatment on the Job

By CHARLIE SAVAGE

But this was no ordinary case. The employee, Kevin M. Shipp, was a veteran Central Intelligence Agencyofficer. His home was at Camp Stanley, an Army weapons depot just north of San Antonio, in an area where the drinking water was polluted with toxic chemicals. The post includes a secret C.I.A. facility.

Declaring that its need to protect state secrets outweighed the Shipps’ right to a day in court, the government persuaded a judge to seal the case and order the family and their lawyers not to discuss it, and to later dismiss the lawsuit without any hearing on the merits, Mr. Shipp said.

More than half a decade later, Mr. Shipp is going public with his story. He contends that the events broke up his marriage and destroyed his career, and that C.I.A. officials abused the State Secrets Privilege doctrine in an effort to cover up their own negligence.

Jennifer Youngblood, a C.I.A. spokeswoman, denied any wrongdoing by the agency. “The C.I.A. takes great care to help protect the health and welfare of its employees,” she said.

Mr. Shipp recently completed a memoir filled with unclassified documents that he said backed up his assertions. He says that he submitted the manuscript to the agency for the required prepublication review but that it blacked out swaths of information, like accounts of his children’s nosebleeds, strange rashes, vomiting, severe asthma and memory loss.

Citing a confidentiality agreement he signed with the government, Mr. Shipp would not discuss where the secret facility was located, what its purpose was, which agency he worked for or what his duties were.

Still, he said, he was free to say that he worked at C.I.A. headquarters in Langley, Va., both before and after his stint at the facility. And public documents from a separate lawsuit, which he filed against his insurance carrier over a claim for his family’s destroyed belongings, make clear that he was stationed at Camp Stanley.

Mr. Shipp’s ex-wife, Lorena Shipp, and one of his sons, Joel Shipp, now 28, said in interviews that the C.I.A. had assigned Mr. Shipp to a high-ranking job at the facility to uncover suspected security breaches. The family moved to an Army-owned house at Camp Stanley in June 1999 and left in May 2001.

It is not clear what took place at the C.I.A. facility. But the camp had been used as a weapons depot for generations. Joel and Lorena Shipp described bunkers and many old weapons, including Soviet weaponry. They also said that they occasionally saw officials performing tactical drills, and that sometimes items were burned or buried there.

“The house that our family was moved into was planted on top of a lot of buried ammunition,” Joel Shipp said. “One time me and my little brother dug up a mustard gas shell.”

The Shipps soon began to get sick. First they got nosebleeds, then they developed symptoms that doctors said resembled H.I.V. infection or exposure to radiation, according to family members. Eventually, Kevin Shipp said, he discovered that the house was full of a spreading black substance.

Camp Stanley has a troubled environmental record. In August 2001, according to local news reports, military officials began distributing bottled water to residents nearby after it was discovered that toxins from the camp had polluted an aquifer in the area, contaminating the drinking water.

The Shipps said they were twice evacuated from the house after expressing concern about their sudden health troubles. But, Kevin Shipp said, his supervisor played down the problems, declaring that the house was fine after its air was tested — although the windows and doors were open at the time, Mr. Shipp said.

Suspicious of a cover-up, Mr. Shipp said he sent samples from the house to a scientist atTexas Tech University. His manuscript includes a Texas Tech report showing that the samples tested positive for toxic mold.

Eventually, the Shipps sued the C.I.A. using pseudonyms. Meanwhile, Mr. Shipp was transferred to the agency’s headquarters, where he became a polygraph operator. But his relationship with the agency was deteriorating, and the family began to suspect that they had been placed under surveillance.

Mr. Shipp said he quit in 2002 after he was accused of using a government credit card to pay for personal expenses; he says he paid the money back, but had been told by a supervisor to use the card for clothes and lodging after his family had to leave the house and their old clothes were destroyed.

A federal judge overseeing the case ordered the family and the C.I.A. into mediation. Mr. Shipp’s memoir includes a December 2003 settlement agreement — signed by a government counsel — under which the family would be paid $400,000 and would have to stay silent about the matter.

But two days later, he said, one of his attorneys, Clint Blackman, called him to say that the government had withdrawn the settlement. The case would be fought out in court.

The case was already sealed, and the Justice Department invoked the State Secrets Privilege — a judicially created doctrine that the government has increasingly used to win the dismissal of lawsuits related to national security, shielding its actions from judicial review.

A federal judge dismissed the case, and an appeals court in New Orleans, in a secret ruling, later upheld that dismissal, Mr. Shipp said. Mr. Shipp’s manuscript mentions several other lawyers who helped him in the case, including Mark Zaid of Washington, who has represented many intelligence officials in lawsuits against the government, and Jonathan Turley, a George Washington University law professor who has filed several lawsuits challenging claims of executive secrecy.

Mr. Blackman and Mr. Zaid confirmed that Mr. Shipp had been a client, but they declined to discuss any sealed lawsuit. Mr. Turley confirmed that he had been asked to consult on the case, but said he was never given details about it.

Mr. Shipp has moved to Florida and tried to rebuild his life. But angry at what had happened to his family, he says he has decided to go public, no matter the risk of talking about a sealed case.

“I decided to just sacrifice myself for the public to know what they did, how illegal it was, how flawed the State Secrets Privilege is, and how they used it to cover up the destruction of my family,” he said. “It’s just abominable what they did.”

Camp Stanley Storage Activity
Boerne, TX

Located northwest of San Antonio, Camp Stanley, a separate activity of Red River Army Depot, is a weapons and munitions supply, maintenance, test and storage activity. The post supports locations throughout CONUS and selected overseas areas. The post includes 4,000 acres with 630,000 square feet of storage space.

In 1990 the Leon Springs Military Reservation consisted of Camp Stanley, largely used for ammunition storage and testing, and Camp Bullis, utilized for firing ranges, maneuver areas for army, air force, and marine combat units, and for field training of the various medical units from Brooke Army Medical Centerqv at Fort Sam Houston.

The old San Antonio Arsenal, originally built in 1859, was poorly located and by 1919 had been surrounded by the downtown area. It was moved to Camp Stanley and by 1937 required an area of 1,760 acres. At this time Camp Stanley was devoted to storage and testing of ordnance materials, and all other military activities at the Leon Springs Military Reservation were conducted at Camp Bullis.

Camp Stanley, originally Camp Funston, was a subpost of the San Antonio Arsenalqv and operated as an ammunition storage depot. It was named Camp Stanley on October 2, 1917, for Brig. Gen. David Sloane Stanleyqv and designated at first as an infantry cantonment. It was located at Leon Springs Military Reservation, twenty miles northwest of San Antonio. Chinese refugees brought from Mexico in 1916 by Gen. John J. Pershingqv were transferred from Fort Sam Houston to Camp Stanley after World War I. They were finally registered as legal immigrants in 1922. In 1922 the camp became a subpost of Camp Travis and was to be used as a temporary garrison at peace strength.

In September 1933 Camp Stanley was transferred to the jurisdiction of the Ordnance Department, and new buildings were constructed to eliminate hazards. Magazine and igloo space totaled 232,100 square feet. On July 1, 1947, Camp Stanley was consolidated with the San Antonio General Distribution Depot and on July 1, 1949, was designated the Camp Stanley Area of Red River Arsenal, Texarkana, a class-two installation under the jurisdiction of the chief of ordnance. In 1985 Camp Stanley was a subpost of nearby Camp Bullis.

Recovered chemical warfare materiel (CWM) includes items recovered from range-clearing operations, chemical weapons burial sites, and other locations. When suspected recovered CWM is found, specially trained personnel are called to the site to assess the content and condition of the materiel and determine if it is safe for storage or transportation. Recovered CWM is currently stored at eight locations throughout the United States and on Johnston Island in the Pacific Ocean. The Non-Stockpile Chemical Materiel Project is developing transportable treatment systems to destroy recovered CWM, since U.S. law prohibits the destruction of non-stockpile chemical materiel at stockpile destruction facilities in the continental United States. Records show that in 1942 at least three mustard-filled shells were buried on site, but were recovered and destroyed in 1948. The Army is fairly sure no other chemical weapons exist, although the area has other hazardous wastes.

Camp Stanley has eliminated the operations of disposing of waste munitions in their land based open burning/open detonation unit. Another Department of Defense (DOD) facility, which is permitted, will dispose of waste munitions for Camp Stanley.

Phosphate-induced metal stabilization (PIMS) is a technology developed to treat the contamination in place, either by mixing the treatment amendments directly into the soil or by emplacing the amendments within a permeable reactive barrier to passively treat groundwater. A demonstration of an in-situ process using PIMS for remediation of lead-contaminated soil from training ranges was conducted at the U.S. Army’s Camp Stanley Storage Activity, a subinstallation of Red River Army Depot, in Boerne, Texas. The demonstration at Camp Stanley Storage Activity was the first field-scale demonstration of this technology.

 

Mubarak steps down after million Egyptians march

Mubarak steps down after million Egyptians march

Egyptians celebrate the news of the resignation of President Hosni Mubarak Egyptians celebrate the news of the resignation of President Hosni Mubarak

CAIRO – Cairo’s streets exploded in joy on Friday when President Hosni Mubarak stepped down after three-decades of autocratic rule and handed power to a junta of senior military commanders.

A grim-faced and ashen Vice President Omar Suleiman announced the handover on state television after an extraordinary national outpouring of rage brought more than a million furious demonstrators onto the streets.

“Taking into consideration the difficult circumstances the country is going through, President Mohammed Hosni Mubarak has decided to leave the post of president of the republic and has tasked the Supreme Council of the Armed Forces to manage the state’s affairs,” Suleiman said.

Earlier, the 82-year-old strongman had flown out of Cairo to his holiday retreat at Sharm el-Sheikh on the Red Sea, his ruling party said.

As news spread cries of “Allahu Akbar” — God is greatest! — and howls of victory rang out in the streets of the capital and firecrackers exploded.

In Tahrir Square several protesters fainted with the emotion of the moment following two weeks of protest.

The plaza has become a focal point of the revolt since it was occupied by protesters in late January, and earlier in the day had been thronged by hundreds of thousands of Egyptians, who prayed and chanted abuse at Mubarak.

“People here don’t care if he’s in the palace or not. We want him to quit the presidency,” said 40-year-old Mohammed Hamdan, who works for an oil firm, as he joined the protest outside Mubarak’s palace in the Cairo suburbs.

“He has to leave the country, our demands are clear, we want the entire NDP to be dissolved and to get out because they have destroyed the country,” said Magdi Sabri, a smartly dressed middle-aged man outside state television.

In a show of solidarity in at least lower levels of the army, three Egyptian officers shed their weapons and uniforms and joined the protesters.

An impassioned preacher addressed the military in his sermon, exhorting them to “act in a way that will be acceptable to God on judgement day,” shortly before fainting and being carried away through the crowd.

On Thursday night, hundreds of thousands had crowded into Tahrir Square to hear a speech that was widely expected to be Mubarak’s last as president.

Instead, he delegated some of his powers to his ally and Egypt’s former intelligence supremo, Omar Suleiman, while vowing he would stay in office until September and one day die in Egypt, ruling out a flight into exile.

Mubarak had also been on a collision course with the international community, and in particular Egypt’s key ally and donor, Washington.

In his speech on Thursday, he took a swipe at the United States and other countries that want a faster transition to democracy in the Arab world’s most populous nation, vowing: “I have never bent to foreign diktats.”

US President Barack Obama reacted with a flash of anger of his own, saying Mubarak had failed to map out “meaningful or sufficient” change, or to speak clearly enough to Egypt and the world.