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News Briefs 1

Israeli Troops Kill Two Palestinians in Hamas Safehouse

Los Angeles Times
JERUSALEM

Continuing its campaign against the Islamic extremist movement Hamas, Israeli troops on Friday killed two Palestinians holed up in a safehouse in the West Bank town of Hebron.

They were not part of the Hamas cell that carried out Monday's fatal bus bombing in Jerusalem but belonged to another unit expected to launch revenge attacks for Israel's arrest of about 30 Hamas members in the last week, Israeli officials said.

Israeli radio reported that Hamas issued a statement early Friday vowing to increase terrorist attacks on Israel, despite this week's arrests.

Israeli Gen. Ilan Biran, the West Bank's army commander, congratulated his troops for the urban assault. It was unclear, however, if the Israeli army made any effort in Hebron to take the Palestinian militants alive.

"This is a very important operation. It prevented murderous terrorism against Jews in the Judea and Hebron regions," Biran said. "In the course of a search, the Cherry Unit has carried out an excellent, model operation."

Russia Pumps $295 Million Into Insolvent Banking System

Los Angeles Times
MOSCOW

Russia's commercial banking system, a dynamic but shaky pillar of the post-Soviet economy, has been paralyzed by its first insolvency crisis, prompting the government Friday to commit nearly $300 million to revive it.

Officials said they had avoided a systemwide collapse but still face the politically risky task of forcing a shakeout that could close as many as 100 banks, along with enterprises they have kept afloat with unsound loans.

The crisis is one inevitable downside of a long-awaited achievement by free-market advocates in President Boris N. Yeltsin's government - the sustained drop in Russia's inflation rate and the shoring up of the ruble.

In the high-inflation climate of recent years, banks were able to augment unpredictable cash flows from risky loans to unsound Russian businesses by engaging in currency speculation. Many of Russia's 3,000 or so banks are little more than currency-exchange houses.

Banks most dependent on currency trading suffered as inflation dropped steadily, from 18 percent in January to 5.4 percent last month. They got more bad news on July 5, when the government set a narrow, fixed range for the ruble's value against the dollar and vowed to maintain it until Oct. 1.

"The crisis is not over yet; it is only suspended," said Mikhail Berger, an economic commentator for Izvestia. "The leading bankers are in genuine panic and hysteria. These are not small banks. These are banks of the first dozen."

Fed Policymakers Leaned Strongly Toward Rate Cut

The Washington Post
WASHINGTON

When Federal Reserve policymakers decided to cut short-term interest rates by a quarter of a percentage point early last month, most of them anticipated that further cuts would follow, according to minutes of their meeting released Friday.

While one of the 11 members of the policymaking group, the Federal Open Market Committee (FOMC), wanted no cut at all, the other 10 also voted to give Chairman Alan Greenspan added authority to reduce rates between then and the next meeting, which was held Tuesday.

This lean toward lower rates "was consistent with the view shared by most members that the risks to the (economic) expansion were biased to the downside," the Fed release said.

Many analysts said after last month's rate cut that they expected additional cuts before the year is over. The minutes generally tend to support that view.

On the other hand, the minutes show that there were substantial differences last month among the policymakers both about the likely course for the economy in the second half of this year and the extent to which inflation will subside after an upward blip early this year.