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Hackers struck computers in Canadian government

OTTAWA — A federal Cabinet minister said Thursday that hackers, perhaps from China, compromised computers in two Canadian government departments in early January, leaving bureaucrats with little or no Internet access for nearly two months.

Stockwell Day, president of the Treasury Board, told reporters that hackers had infiltrated computers in his department, which supervises the bureaucracy and government operations, as well as in the Department of Finance, which is responsible for the government’s budget and fiscal policy.

“Every indication we have at this point is that our sensors and our cyber-protection systems got the alerts out in time, that the information doors were slammed shut,” Day said.

He added that the attack, the latest in a series of confirmed assaults on government computer systems, was more directly focused than were previous strikes against Canada.

After the attack was discovered in early January, the government largely isolated computers in the two departments from the Internet. The computers have, for the most part, remained disconnected while security officials search individual computers for evidence in case of a criminal investigation and to remove the compromising software.

While the attack was not confirmed until late Wednesday, shortly before a Canadian Broadcasting Corp. report about it, signs that something was wrong have been evident for some time. For the past six weeks, thousands of public servants employed by the two departments have either been staying home to use Internet connections or using wireless Internet connections at nearby cafes.

Consumer prices rise, but inflation seems to be in check

Higher energy costs helped push up consumer prices in the United States last month, according to government statistics released Thursday, but inflation remained subdued. Economists said the new data showed that the risk of a protracted decline in prices had receded.

The Labor Department said its Consumer Price Index was up a seasonally adjusted 0.4 percent in January, and showed a 1.6 percent rise over the previous 12 months. Analysts surveyed by Bloomberg had expected an increase of 0.3 percent in January. Rising energy prices also led to a rise in prices for December, when the index was up 0.4 percent, a revision based on seasonally adjusted data.

In another report, the Philadelphia Federal Reserve Bank said factory activity in the mid-Atlantic region rose to its highest level in seven years.

The Fed’s business activity index rose to 35.9 in February, from 19.3 the month before. It was the highest reading since January 2004. Economists surveyed by Reuters had forecast a reading of 20.9.

Energy prices were the most striking feature of the Labor Department’s price report for a second month. Gasoline was up 3.5 percent in January, compared with 6.7 percent in December. Fuel oil was up 6.8 percent in January after a 4.9 percent rise in December. Food rose 0.5 percent in January, a sharper rate than in the last several months.

“It is pretty clear that right now the worst of deflationary concerns are behind us,” said Dan Greenhaus, the chief economic strategist for Miller Tabak & Co.

“There has been a rebound pretty much across the board,” he added. “Going forward, increases in commodity prices, improvements in the labor market and a stabilization in the housing component lends an upward bias to CPI during the course of the year.”

Egypt’s military discourages economic change

CAIRO — The Egyptian military defends the country, but it also runs day care centers and beach resorts. Its divisions make television sets, jeeps, washing machines, wooden furniture and olive oil, as well as bottled water under a brand reportedly named after a general’s daughter, Safi.

Since the ouster last week of President Hosni Mubarak, of course, the military also runs the government. And some scholars, economists and business groups say it has already begun taking steps to protect the privileges of its gated economy, discouraging changes that some argue are crucial if Egypt is to emerge as a more stable, prosperous country.

“Protecting its businesses from scrutiny and accountability is a red line the military will draw,” said Robert Springborg, an expert on the Egyptian military at the Naval Postgraduate School. “And that means there can be no meaningful civilian oversight.”

Field Marshal Mohamed Hussein Tantawi, the minister of defense and military production who now leads the council of officers ruling Egypt, has been a strong advocate of government control of prices and production. He has consistently opposed steps to open up the economy, according to U.S. diplomatic cables made public by WikiLeaks.

And already there are signs that the military is purging from the Cabinet and ruling party advocates of market-oriented economic changes, like selling off state-owned companies and reducing barriers to trade.

As the military began to take over, the government pushed out figures reviled for reaping excessive personal profits from the sell-off of public properties, most notably Mubarak’s younger son, Gamal, and his friend the steel magnate Ahmed Ezz.

But the military-led government also struck at advocates of economic openness, including the former finance minister Youssef Boutros-Ghali, who was forced from his job, and the former trade minister Rachid Mohamed Rachid, whose assets were frozen under allegations of corruption. Both are highly regarded internationally and had not been previously accused of corruption.

“That mystified everybody,” said Hisham Fahmy, chief executive of the American Chamber of Commerce in Egypt.