Slower growth may see EU ease deficit reduction timetable: Rehn

BRUSSELS: EU countries struggling to bring their public deficits back to within EU limits may win more time to meet the target if economic growth slows, European Economic Affairs Commissioner Olli Rehn said Wednesday.

Rehn said in a letter addressed to EU finance ministers that the deficit situation varies greatly across the 27 member states, even if there is a gradual improvement in public finances generally.

The average annual deficit was above 6.0 per cent of Gross Domestic Product in 2009-10, he said, but for 2012 it should be "somewhat above 3.0 per cent," the EU ceiling.

Because of the variations in states meeting the target, "the Commission applies a differentiated approach to consolidation, taking into account" specific circumstances, Rehn said.

"If growth deteriorates unexpectedly, a country may receive extra time to correct its excessive deficit" as long as it has put in place a programme to correct the public finances, he said.

"Such decisions were taken last year for Spain, Portugal and Greece," Rehn added.

French Finance Minister Pierre Moscovici signalled earlier Wednesday that France might revise is targets for growth of 0.8 per cent this year and for reducing the public deficit to less than 3.0 per cent.

Saying that the targets were being held for the moment, Moscovici said the situation was difficult and that "if necessary we are able to have another look, to re-examine the different targets" for growth and for reduction of the public deficit.

Nearly all EU member states have had problems sticking to the deficit limit of 3.0 per cent, having regularly overspent, especially in efforts to boost their economies at the height of the 2008-09 global financial crisis.

Accordingly, many are under Excessive Deficit Procedures whereby Brussels closely monitors their efforts to correct their public finances and may impose fines or other sanctions if they fail to do so by the date set.

- AFP/jc

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A startup takes on publishing, with help of Atari's founder

Atari's Nolan Bushnell.

(Credit:
Courtesy of Nolan Bushnell)

If there's an industry more stuck in the past than the music industry, it has to be book publishing.

It's with that in mind that a Pasadena, Calif. startup is trying to upend the traditional, often unpleasant publishing model that's more like a gauntlet than a process.

An author typically has to beg an agent for representation, then has to beg a publisher to take their book, hopes for an advance that covers expenses, writes the book, in many cases finds his or her own editors because the publisher's editors are too busy to pay attention, do his or her own marketing and promotion if they're not a big name, and, at the end of all that, hope to make a little money from sales since the publisher will take the bulk of money from sales.

Net Minds, which is make the rounds with press this week, is sort of an Amazon self-publishing service on steroids. A prospective author, say, an executive, creates a project file on Net Mind's system. On that, the author explains the book and, if they are looking for a ghost writer, shop it to roughly 500 freelance writers who have joined. They can also also find editors, designers for the cover and illustrators, a sales and marketing team for promotion, while publishing of the actual book is outsourced. The physical books are distributed through a partnership with the publishing giant Ingram.

The author starts with 80 percent to 90 percent of the royalties and sets up his or her own publishing team from that list of prospects. They can be paid a flat rate or through a share of the royalties.

"It's your show," said Net Minds CEO Tim Sanders.

Sanders knows a little bit about publishing. A former Yahoo exec who came into that company through the acquisition of Mark Cuban's Broadcast.com, he's written four business-related books. He said his experience in the publishing industry made it clear just how ripe book publishing is for disruption through Amazon, other self-publishing outfits, and his own, self-financed startup.

"I really keep thinking that what's really lacking in publishing is transparency at every level," he said. "It's a big old black box." His company, he believes, could put control in the hands of the writer.

That appealed to Nolan Bushnell, the founder of gaming pioneer Atari and a serial entrepreneur whose other businesses include Chuck E. Cheese's.

"I am and I am not a control freak," Bushnell said. "I like to understand all the moving pieces. If people are screwing up, I like to be able to fire them. You have no recourse in traditional publishing."

Bushnell is also known as the guy who gave young Steve Jobs a job. Bushnell's first book, Finding the Next Jobs, which he said collection of personal anecdotes and discussion on innovation, will be available next month.

"Too many people believe innovation is about a thunderclap and a light goes on...It's not that at all," Bushnell said. "It's about putting together an environment and an ecosystem in a company that fosters and nurtures creative ideas wherever they come from."

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American, US Airways set to clinch merger

(MoneyWatch) American Airlines and US Airways (LCC) are set to announce a merger that would create the world's biggest carrier.

Under the deal, which is expected to be unveiled Thursday if the timeline isn't moved up sooner and there are no last-minute snags, the combined airline would keep the "American" name. It would still require federal approval, although that is virtually ensured. US Air CEO Doug Parker is expected to lead the combined company.

A merger of US Air and American would surpass a 2010 tie-up between United Airlines (UAL) and Continental and a 2008 deal joining Delta (DAL) and Northwest. The merged American would be the largest carrier and sport a market valuation of roughly $10 billion.

Although airlines tout such consolidation as a way to cut costs and expand service amid intense competition, whether industry mergers raise fares is an open question. Many analysts say yes because reduced competition in any business often results in higher prices. One study found that ticket prices went up more than 20 percent between Detroit and Atlanta after Delta bought Northwest. Fares went up more than 30 percent on routes between Chicago and Houston, as well as Newark to San Francisco, after the United-Continental deal.

In seeking to run more efficiently, merging airlines also often cut capacity and eliminate routes. 

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American close to merger with U.S. Airways

Other analysts are more optimistic about the potential benefits to travelers. They say the three largest U.S. airlines still must compete with discount carriers such as Southwest (LUV), which has flourished for years by offering low-cost flights and no-frills service.

The consolidation trend is largely blamed on the price of fuel. Oil now costs so much more per barrel than it did 10 years ago that one analyst says the margin of profit on many flights has shrunk to the value of a single seat. That means an airline can lose money if it flies with one single empty middle seat. The days of elbow room are over.

American Airlines has been operating under court supervision since declaring bankruptcy in November 2011.

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Dorner Hid Just Steps From Command Center

Christopher Dorner, the fugitive ex-cop who authorities believe died in a fiery standoff with police Tuesday night, was apparently holed up in a snow-covered cabin in the California mountains just steps from where police had set up a command post and held press conferences during a five-day manhunt.

The charred remains of a body believed to be Dorner was removed from another cabin, high in the San Bernadino Mountains near Big Bear, Calif., the site of Dorner's last stand. Cornered inside the mountain cabin, the suspect shot at cops, killing one deputy and wounding another, before the building was consumed by flames.

Police are working to officially identify the body, but "have reason to believe that it is him," said San Bernardino County sheriff's spokeswoman Cynthia Bachman.

The manhunt for Dorner, 33, one of the biggest in recent memory, led police to follow clues across the West and into Mexico, but it ended just miles from where Dorner's trail went cold last week.

Residents of the area were relieved today that after a week of heightened police presence and fear that Dorner was likely dead.

"I'm glad no one else can get hurt and they caught him. I'm happy they caught the bad guy," said Ashley King, a waitress in the nearby town of Angelus Oaks, Calif.

Hundreds of cops scoured the mountains near Big Bear, a resort area in Southern California, since last Thursday using bloodhounds and thermal-imaging technology mounted to helicopters, in the search for Dorner. The former police officer and Navy marksman was being hunted as the suspect who had killed a cop and cop's daughter and had issued a "manifesto" declaring he was bent on revenge and pledged to kill dozens of LAPD cops and their family members.

Carjacking Victim Says Christopher Dorner Was Dressed for Damage Watch Video

Christopher Dorner Manhunt: Inside the Shootout Watch Video

Chris Dorner Manhunt: Fugitive Ex-Cop in Shootout With Police Watch Video

But it now appears that Dorner never left the area, and may have hid out in an unoccupied cabin just steps from where cops had set up a command center.

It was at the cabin Tuesday morning where two women arrived to find a man matching Dorner's description inside. He took the women hostage, tying them up and stealing their car. At 12:20 p.m. PT, one of the woman broke free and called police.

Dorner crashed that car and hijacked a pickup truck as officials from the state Fish and Game Department pursued him.

"I saw some movement in the trees and it was Christopher Dorner and he came out onto the road, out of the snow, and he was dressed in all camouflage and had a big assault, sniper-type rifle and he had a vest on, like a ballistics vest," Rick Heltebrake, the pickup's driver, told ABC News.

"He was dressed up to do some damage it looked like. He said, 'I don't want to hurt you. Just get out and start walking up the road and take your dog with you,'" Heltebrake said.

Dorner then took off into the woods on foot, where sheriff's deputies pursued him to a rental cabin in which he barricaded himself and began firing.

Two deputies were wounded in the firefight and airlifted to a nearby hospital, where one died, police said. The second deputy received non-life threatening injuries, police said.

Some local television stations broadcast police scanner traffic of the firefight, punctuated by the sound of automatic gunfire.

"It was horrifying to listen to that firefight and to hear those words. 'Officer down' is the most gut-wrenching experience that you can have as a police officer," said LAPD spokesman Lt. Andrew Neiman.

Over the course of the next five hours, heavily armed SWAT teams with tank-like vehicles surrounded the cabin, even firing tear gas inside, but never entered the building.

Cops said they heard a single gunshot go off from inside the cabin just as they began to see smoke and fire. Later they heard the sound of more gunshots, the sound of ammunition being ignited by the heat of the blaze, law enforcement officials said.

Dorner is accused of killing four people, including the deputy shot on Tuesday. Last Thursday he allegedly gunned down Riverside police officer Michael Crain, who was laid to rest today.

Crain's shooting and the discovery of an online manifesto pledging to kill dozens of cops launched the dragnet.

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Pope confident his resignation will not hurt Church

ROME (Reuters) - A visibly moved Pope Benedict tried to assure his worldwide flock on Wednesday over his stunning decision to become the first pontiff in centuries to resign, saying he was confident that it would not hurt the Church.

The Vatican, meanwhile, announced that a conclave to elect his successor would start sometime between March 15 and March 20, in keeping with Church rules about the timing of such gatherings after the papal see becomes vacant.

"Continue to pray for me, for the Church and for the future pope," he said in unscripted remarks at the start of his weekly general audience, his first public appearance since his shock decision on Monday that he will step down on February 28.

It was the first time Benedict, 85, who will retire to a convent inside the Vatican, exchanging the splendor of his 16th century Apostolic Palace for a sober modern residence, had uttered the words "future pope" in public.

Church officials are still so stunned by the move that the Vatican experts have yet to decide what his title will be and whether he will continue to wear the white of a pope, the red of a cardinal or the black of an ordinary priest.

His voice sounded strong at the audience but he was clearly moved and his eyes appeared to be watering as he reacted to the thunderous applause in the Vatican's vast, modern audience hall, packed with more than 8,000 people.

In brief remarks in Italian that mirrored those he read in Latin to stunned cardinals on Monday he appeared to try to calm Catholics' fears of the unknown.

He message was that God would continue to guide the Church.

EXAMINATION OF CONSCIENCE

"I took this decision in full freedom for the good of the Church after praying for a long time and examining my conscience before God," he said.

He said he was "well aware of the gravity of such an act," but also aware that he no longer had the strength required to run the 1.2 billion member Roman Catholic Church, which has been beset by a string of scandals both in Rome and round the world.

Benedict said he was sustained by the "certainty that the Church belongs to Christ, who will never stop guiding it and caring for it" and suggested that the faithful should also feel comforted by this.

He said that he had "felt almost physically" the affection and kindness he had received since he announced the decision.

When Benedict resigned on Monday, the Vatican spokesman said the pontiff did not fear schism in the Church after his decision to step down.

Some 115 cardinals under the age of 80 will be eligible to enter a secret conclave to elect his successor.

Cardinals around the world have already begun informal consultations by phone and email to construct a profile of the man they think would be best suited to lead the Church in a period of continuing crisis.

The likelihood that the next pope would be a younger man and perhaps a non-Italian, was increasing, particularly because of the many mishaps caused by Benedict's mostly Italian top aides.

Benedict has been faulted for putting too much power in the hands of his friend, Secretary of State Cardinal Tarcisio Bertone. Critics of Bertone, effectively the Vatican's chief administrator, said he should have prevented some papal mishaps and bureaucratic blunders.

ILL-SERVED POPE

"These scandals, these miscommunications, in many cases were caused by Pope Benedict's own top aides and I think a lot of Catholics around the world think that he was perhaps ill-served by some of the cardinals here," said John Thavis, author of a new book The Vatican Diaries.

Benedict's papacy was rocked by crises over sex abuse of children by priests in Europe and the United States, most of which preceded his time in office but came to light during it.

His reign also saw Muslim anger after he compared Islam to violence. Jews were upset over rehabilitation of a Holocaust denier. During a scandal over the Church's business dealings, his butler was accused of leaking his private papers.

"When cardinals arrive here for the conclave ... they are going to have this on their mind, they're going to take a good hard look at how Pope Benedict was served, and I think many of them feel that the burden of the papacy that finally weighed so heavy on Benedict was caused in part by some of this in-fighting (among his administration)," Thavis told Reuters.

Vatican spokesman Father Federico Lombardi urged the faithful to remain confident in the Church and its future.

"Those who may feel a bit disorientated or stunned by this, or have a hard time understanding the Holy Father's decision should look at it in the context of faith and the certainty that Christ will support his Church," Lombardi said.

Lombardi said that on his last day in office, Benedict would receive cardinals in a farewell meeting and after February 28 his ring of office, used to seal official documents, would be destroyed just as if he had died.

Later on Wednesday, an Ash Wednesday Mass that was originally scheduled to have taken place in a small church in Rome, has been moved to St Peter's Basilica so more people can attend.

Unless the Vatican changes the pope's schedule, it will be his last public Mass.

(Reporting By Philip Pullella; Editing by Giles Elgood)

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Pre-pregnancy folic acid linked to lower autism risk

WASHINGTON: Children born to women who started taking folic acid supplements four to eight weeks before pregnancy appear to be at a lower risk of autism, a study showed on Tuesday.

Pal Suren of the Norwegian Institute of Public Health and colleagues looked into the use of folic acid supplements before and during early pregnancy, and any impact on the later risk of various disorders on the autism spectrum.

"Our main finding was that maternal use of folic acid supplements around the time of conception was associated with a lower risk of autistic disorder," the authors wrote in the Journal of the American Medical Association.

The journal recalled that many countries recommend flour be enriched with folic acid to lower the risk of birth defects, and that women are often advised to take folic acid supplements before and during pregnancy.

Despite the practice, European and North American studies have found that many pregnant women take less folate in their diet than is necessary to prevent neural tube defects.

Suren's research appears to confirm that the advice to take folic acid supplements is well-founded.

The 85,176 Norwegian children who took part in the study were born between 2002 and 2008.

Among the sample, 270 children, or 0.32 percent, were diagnosed with autism spectrum disorders, and researchers found that there was an inverse association between folic acid use and subsequent autism risks.

About 1 in 88 children, or 1.14 percent, in the United States have been identified with an autism spectrum disorder, according to the US Centres for Disease Control and Prevention.

Mothers who took folic acid supplements in early pregnancy had a 40 percent lower risk of having children with autistic disorder compared with mothers who did not take folic acid, the researchers found.

Folic acid is found in naturally high levels in foods such as dark leafy greens, asparagus and broccoli, as well as citrus fruits.

- AFP/de

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Mayer: Yahoo's future is personalization for content, ads

SAN FRANCISCO --The future of Yahoo will be providing personalized user experiences both on mobile and the desktop, according to the company's chief executive officer, Marissa Mayer.

Speaking at the 2013 Goldman Sachs Technology and Internet Conference this morning, Mayer offered another glimpse into the search company's evolving mobile strategy, which will include some consolidation for the existing product portfolio.

Marissa Mayer

(Credit:
James Martin/CNET)

"The core of Yahoo's business is to personalize content," affirmed Mayer. But within that content, she continued, is also advertising, which she said can improve the experience when done right.

Mayer suggested that smartphones offer a better glimpse at user context (i.e. where they are, where they have gone in the past) better than anything else.

She explained simply that if users are willing to make that data available through signing up with a mobile app or logging into a service, then Yahoo can use that information -- with permission, she specified -- and deploy it in a way that makes sense to the individual user.

While Mayer touted some of the more consumer-related features and partnerships (i.e. Facebook, ABC News) funneling content, she briefly hinted at some potential business use cases, highlighting that mobile devices are much more "ideal" for group communication and collaboration.

But while Mayer repeatedly discussed new growth opportunities for Yahoo -- especially when it comes to mobile -- she acknowledged that there will need to be some trimming too.

Citing that Yahoo has 200 million monthly active mobile users, Mayer also noted that the Cupertino, Calif.-based corporation has "a scattered product portfolio" with "somewhere between 60 and 75 mobile apps."

Mayer admitted that some of those apps will "go away" because "they don't make sense for us" and some don't have enough users on them. She added that the goal is to narrow that portfolio down to just 12 to 15 apps.

However, Mayer refrained from naming any specific apps or products that might be affected.

To get an idea of where Yahoo might be making cuts and consolidating resources, Mayer said that Yahoo's product portfolio is reflective of Internet users' "daily habits." That includes e-mail, online news, checking stocks, and more.

Remarking that search -- Yahoo's backbone -- is integrated with all of this, Mayer said that Yahoo will be working heavily on the design of Yahoo's products and interface for both mobile devices and PCs.

This story originally appeared at ZDNet's Between the Lines under the headline "Marissa Mayer: Yahoo's future is personalization for content, advertising."

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Prosecutor: Fugitive ex-cop still looking for revenge

LOS ANGELES A prosecutor who filed a murder charge against a fugitive former Los Angeles police officer that could result in the death penalty said he believes the man hasn't finished carrying out his vendetta.

"Just read his manifesto and look at his actions," Riverside County District Attorney Paul Zellerbach said. "He's trying to send a message, and it would be my belief that his message is not completed yet."

Zellerbach filed charges Monday against Christopher Dorner for the murder of Riverside police Officer Michael Crain and the attempted murder of three other officers.

The manhunt for Dorner, 33, began last Wednesday when he was named the suspect in the Orange County killings of a former Los Angeles police captain's daughter and her fiance the previous weekend. Hours after police announced they were looking for him, Dorner allegedly fired at two LAPD officers then ambushed the Riverside officers.

"By both his words and conduct, he has made very clear to us that every law enforcement officer in Southern California is in danger of being shot and killed," Zellerbach said at a news conference guarded by four officers armed with rifles.

21 Photos

Manhunt for suspected LAPD cop killer

Play Video

Fugitive officer goes from hunter to hunted

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Miller on Dorner manhunt: "They got a lot of tips"

Police said Dorner wrote a lengthy manifesto that was posted to Facebook after the double killing. The manifesto vowed deadly revenge on those in the LAPD responsible for his firing years earlier, and their families. Police now are providing protection for some 50 families thought to be targets.

The search for Dorner remained focused in the mountains near Big Bear Lake about 80 miles east of Los Angeles after his burned-out truck was found there last Thursday. Authorities are searching more than 30 square miles day and night in the ski resort area and checking on roughly 600 cabins.

Police urged area residents with security cameras to review images to see if Dorner was recorded.

Police and other officials believe a $1 million reward, raised from public and private sources, will encourage residents to stay vigilant. More than 1,000 tips had come in since the reward was announced, Lt. Andrew Neiman, an LAPD spokesman, said Tuesday. CBS Los Angeles affiliate KCAL reports that the city council is considering raising the reward by $100,000.

"Now it's like the game show `Who Wants to be a Millionaire,"' said Anthony Burke, supervisory inspector for the U.S. Marshals regional fugitive taskforce. "Instead of one contestant, we've got 100,000, and there's only one question you have to answer. All they have to answer is where he's at, and we can take it from there."

Neiman also said investigators obtained new security video from a Sport Chalet sporting goods store in suburban Torrance but had not determined whether it shows Dorner. The video posted earlier on TMZ.com recorded a man resembling Dorner arrive with two small scuba tanks then leave with both those tanks and a larger one.

The wide-ranging search has created unusually heavy traffic backups at California border crossings into Mexico, as agents more closely inspect each car. State police in Mexico's Baja California were given photographs of Dorner and warned to consider him armed and extremely dangerous.

A U.S. Marshals Service affidavit used to obtain a federal arrest warrant on Feb. 7 cited probable cause to believe Dorner went to Mexico, but Neiman said Tuesday that it "in no way indicates one way or the other" whether Dorner is in that country.

Authorities have obtained a no-bail arrest warrant, which allows Dorner to be apprehended anywhere, Zellerbach said.

Dorner was fired from the LAPD five years ago, when a department board determined that he falsely claimed another officer had kicked a suspect. Randal Quan represented him during the proceeding.

Quan's daughter, Monica, and her fiance, Keith Lawrence, were found shot dead Feb. 3 in a car in the parking structure of their Irvine condominium. Last Wednesday, after discovery of the manifesto, Irvine police announced they were searching for Dorner.

Early Thursday in the Riverside County city of Corona, Dorner shot at two LAPD officers who had been dispatched to protect a possible target of Dorner, police said. One officer's head was grazed by a bullet; the other was unharmed.

Minutes later, Dorner used a rifle to ambush two Riverside officers, killing one and seriously wounding another, authorities said. The slain officer was identified as the 34-year-old Crain. The other officer's identity was not released to protect his family.

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Fort Hood Hero Says President 'Betrayed' Victims

Three years after the White House arranged a hero's welcome at the State of the Union address for the Fort Hood police sergeant and her partner who stopped the deadly shooting there, Kimberly Munley says President Obama broke the promise he made to her that the victims would be well taken care of.

"Betrayed is a good word," former Sgt. Munley told ABC News in a tearful interview to be broadcast tonight on "World News with Diane Sawyer" and "Nightline."

"Not to the least little bit have the victims been taken care of," she said. "In fact they've been neglected."

There was no immediate comment from the White House about Munley's allegations.

Thirteen people were killed, including a pregnant soldier, and 32 others shot in the November 2009 rampage by the accused shooter, Major Nidal Hasan, who now awaits a military trial on charges of premeditated murder and attempted murder.

Tonight's broadcast report also includes dramatic new video, obtained by ABC News, taken in the immediate aftermath of the shooting, capturing the chaos and terror of the day.

WATCH Exclusive Video of Fort Hood's Aftermath

Munley, since laid off from her job with the base's civilian police force, was shot three times as she and her partner, Sgt. Mark Todd, confronted Hasan, who witnesses said had shouted "Allahu Akbar" as he opened fire on soldiers being processed for deployment to Afghanistan.

As Munley lay wounded, Todd fired the five bullets credited with bringing Hasan down.

Charles Dharapak/AP Photo

Despite extensive evidence that Hasan was in communication with al Qaeda leader Anwar al-Awlaki prior to the attack, the military has denied the victims a Purple Heart and is treating the incident as "workplace violence" instead of "combat related" or terrorism.

READ a Federal Report on the FBI's Probe of Hasan's Ties to al-Awlaki

Al-Awlaki has since been killed in a U.S. drone attack in Yemen, in what was termed a major victory in the U.S. efforts against al Qaeda.

Munley and dozens of other victims have now filed a lawsuit against the military alleging the "workplace violence" designation means the Fort Hood victims are receiving lower priority access to medical care as veterans, and a loss of financial benefits available to those who injuries are classified as "combat related."

READ the Fort Hood Victims' Lawsuit

Some of the victims "had to find civilian doctors to get proper medical treatment" and the military has not assigned liaison officers to help them coordinate their recovery, said the group's lawyer, Reed Rubinstein.

"There's a substantial number of very serious, crippling cases of post-traumatic stress disorder exacerbated, frankly, by what the Army and the Defense Department did in this case," said Rubinstein. "We have a couple of cases in which the soldiers' command accused the soldiers of malingering, and would say things to them that Fort Hood really wasn't so bad, it wasn't combat."

A spokesperson for the Army said its policy is not to comment on pending litigation, but that it is "not true" any of the military victims have been neglected and that it has no control over the guidelines of the Veterans Administration.

Secretary of the Army John McHugh told ABC News he was unaware of any specific complaints from the Fort Hood victims, even though he is a named defendant in the lawsuit filed last November which specifically details the plight of many of them.

"If a soldier feels ignored, then we need to know about it on a case by case basis," McHugh told ABC News. "It is not our intent to have two levels of care for people who are wounded by whatever means in uniform."

Some of the victims in the lawsuit believe the Army Secretary and others are purposely ignoring their cases out of political correctness.

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North Korean nuclear test draws anger, including from China

SEOUL (Reuters) - North Korea conducted its third nuclear test on Tuesday in defiance of U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

Pyongyang said the test was an act of self-defense against "U.S. hostility" and threatened stronger steps if necessary.

The U.N. Security Council held an emergency meeting at which its members, including China, "strongly condemned" the test and vowed to start work on appropriate measures in response, the president of the council said.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

North Korea said the test had "greater explosive force" than those it conducted in 2006 and 2009. Its KCNA news agency said it had used a "miniaturized" and lighter nuclear device, indicating it had again used plutonium, which is suitable for use as a missile warhead.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its reclusive neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was "strongly dissatisfied and resolutely opposed" to the test and urged North Korea to "stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible".

Analysts said the test was a major embarrassment to China, which is a permanent member of the Security Council and North Korea's sole major economic and diplomatic ally, because it cast doubt on the extent of Beijing's influence over its ally.

U.S. President Barack Obama called the test a "highly provocative act" that hurt regional stability and pressed for new sanctions.

"The danger posed by North Korea's threatening activities warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies," Obama said.

U.S. Ambassador to the United Nations Susan Rice said Washington and its allies intended to "augment the sanctions regime" already in place due to Pyongyang's previous atomic tests. North Korea is already one of the most heavily sanctioned states in the world and has few external economic links that can be targeted.

Japanese Prime Minister Shinzo Abe said the test was a "grave threat" that could not be tolerated. U.N. Secretary-General Ban Ki-moon said the test was a "clear and grave violation" of U.N. Security Council resolutions.

Russian Foreign Minister Sergei Lavrov urged North Korea to abandon its nuclear arms program and return to talks. NATO condemned the test as an "irresponsible act" that posed a grave threat to world peace.

South Korea, still technically at war with North Korea after a 1950-53 civil war ended in a mere truce, also denounced the test.

MAXIMUM RESTRAINT

North Korea's Foreign Ministry said the test was "only the first response we took with maximum restraint".

"If the United States continues to come out with hostility and complicates the situation, we will be forced to take stronger, second and third responses in consecutive steps," it said in a statement carried by the official KCNA news agency.

North Korea often threatens the United States and its "puppet", South Korea, with destruction in colorful terms.

North Korea told the U.N. disarmament forum in Geneva that it would never bow to resolutions on its nuclear program and that prospects were "gloomy" for the denuclearization of the divided Korean peninsula because of a "hostile" U.S. policy.

Suzanne DiMaggio, an analyst at the Asia Society in New York, said North Korea had embarrassed China with the test. "China's inability to dissuade North Korea from carrying through with this third nuclear test reveals Beijing's limited influence over Pyongyang's actions in unusually stark terms," she said.

Mark Fitzpatrick of the International Institute for Strategic Studies think tank, said: "The test is hugely insulting to China, which now can be expected to follow through with threats to impose sanctions."

The magnitude of the explosion was roughly twice that of the 2009 test, according to Lassina Zerbo, director of the international data center division of the Vienna-based Comprehensive Nuclear-Test Ban Treaty Organization. The U.S. Geological Survey said that a seismic event measuring 5.1 magnitude had occurred.

North Korea trumpeted the announcement on its state television channel to patriotic music against a backdrop of its national flag.

"It was confirmed that the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than previously did not pose any negative impact on the surrounding ecological environment," KCNA said.

North Korea linked the test to its technical prowess in launching a long-range rocket in December, a move that triggered the U.N. sanctions, backed by China, that Pyongyang said prompted it to take Tuesday's action.

The North's ultimate aim, Washington believes, is to design an intercontinental ballistic missile capable of carrying a nuclear warhead that could hit the United States. North Korea says the program is aimed merely at putting satellites in space.

Despite its three nuclear tests and long-range rocket tests, North Korea is not believed to be close to manufacturing a nuclear missile capable of hitting the United States.

It used plutonium in previous nuclear tests and before Tuesday there had been speculation that it would use highly enriched uranium so as to conserve its plutonium stocks, as testing eats into its limited supply of materials to construct a nuclear bomb.

"VICIOUS CYCLE"

When Kim Jong-un, who is 30, took power after his father's death in December 2011, there were hopes that he would bring reforms and end Kim Jong-il's "military first" policies.

Instead, North Korea, whose economy is smaller than it was 20 years ago and where a third of children are believed to be malnourished, appears to be trapped in a cycle of sanctions followed by further provocations.

"The more North Korea shoots missiles, launches satellites or conducts nuclear tests, the more the U.N. Security Council will impose new and more severe sanctions," said Shen Dingli, a professor at Shanghai's Fudan University. "It is an endless, vicious cycle."

Options for the international community appear to be in short supply. Diplomats at the United Nations said negotiations on new sanctions could take weeks since China is likely to resist tough new measures for fear they could lead to further retaliation by the North Korean leadership.

Beijing has also been concerned that tougher sanctions could further weaken North Korea's economy and prompt a flood of refugees into China.

Tuesday's action appeared to have been timed for the run-up to February 16 anniversary celebrations of Kim Jong-il's birthday, as well as to achieve maximum international attention.

Significantly, the test comes at a time of political transition in China, Japan and South Korea, and as Obama begins his second term. The U.S. president will likely have to tweak his State of the Union address due to be given on Tuesday.

Japanese Prime Minister Shinzo Abe is bedding down a new government and South Korea's new president, Park Geun-hye, is preparing to take office on February 25.

China too is in the midst of a once-in-a-decade leadership transition to Xi Jinping, who takes office in March. Both Abe and Xi are staunch nationalists.

The longer-term game plan from Pyongyang may be to restart international talks aimed at winning food and financial aid. China urged it to return to the stalled "six-party" talks on its nuclear program, hosted by China and including the two Koreas, the United States, Japan and Russia.

Its puny economy and small diplomatic reach mean that North Korea struggles to win attention on the global stage - other than through nuclear tests and attacks on South Korea, the last of which was made in 2010.

"Now the next step for North Korea will be to offer talks... - any form to start up discussion again to bring things to their advantage," predicted Jeung Young-tae, senior research fellow at the Korea Institute for National Unification in Seoul.

(Additional reporting by Jack Kim, Christine Kim and Jumin Park in SEOUL; Linda Sieg in TOKYO; Louis Charbonneau and Michelle Nichols at the UNITED NATIONS; Fredrik Dahl in VIENNA; Michael Martina and Chen Aizhu in BEIJING; Mette Fraende in COPENHAGEN; Adrian Croft, Charlie Dunmore and Justyna Pawlak in BRUSSELS; Roberta Rampton in WASHINGTON; Editing by Nick Macfie, Claudia Parsons and David Brunnstrom)

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