U.S. Unveils $2 Billion Aid Package for Egypt

WASHINGTON — Few game-changing proposals are emerging to defuse tensions in the Middle East as a busy week of diplomacy unfolds with President Obama’s address to the region and his meeting with Israel’s prime minister.

Against the backdrop of Middle East uprisings that have intensified animus toward Israel and growing momentum for global recognition of a Palestinian state, American and Israeli officials are struggling to balance national security interests against the need to adapt to a transformative movement in the Arab world.

The White House unveiled a $2 billion multiyear economic aid package for Egypt, which officials say would largely shift existing funds. Prime Minister Benjamin Netanyahu of Israel prepared to arrive in Washington with a package that he hoped would shift the burden of restarting the peace process to the Palestinians.

Mr. Obama, who is set to address Americans — and, more significantly, Muslims around the world — from the State Department on Thursday morning, may yet have something surprising up his sleeve. One administration official said that there remained debate about whether Mr. Obama would formally endorse Israel’s pre-1967 borders as the starting point for negotiations over a Palestinian state, a move that would send an oratorical signal that the United States expected Israel to make concessions.

But Mr. Obama did not plan to present an American blueprint for peace, White House officials said, and it remained unclear if he would even endorse a Palestinian state on pre-1967 lines, a move opposed, administration officials said, by his chief Middle East adviser, Dennis Ross. Mr. Obama did seek to increase pressure on Syria by imposing largely symbolic sanctions on its leader, President Bashar al-Assad, in the wake of the bloody crackdown there.

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State finances threaten recovery: Whitney
By Chip Barnett
NEW YORK | Wed May 18, 2011 3:13pm EDT

(Reuters) – The dire condition of state and local finances threatens the country’s economic recovery and must be addressed immediately, prominent analyst Meredith Whitney wrote in an op-ed column in The Wall Street Journal on Wednesday.

In a separate interview on Bloomberg radio, she stuck by her prediction that more municipal bond defaults lie ahead, but added a qualification. "I never gave precise estimates or a specific period of time," she said.

Whitney made her reputation by correctly predicting in 2007 that Citigroup would need a massive capital infusion. Last year, she rocked the $2.9 trillion municipal bond market by her forecast of massive numbers of bond defaults this year.

But with the economy strengthening, there were only nine muni defaults in the first three months of 2011, half the total in the year-ago period. The recent defaults were worth a total of $245 million, down from more than $1 billion at the same point last year, according to data provided to Reuters by Income Securities Advisors in April.

The first-quarter data suggests defaults for all of 2011 would shrink compared with last year’s 84, which totaled $3 billion, said Richard Lehmann, the president of ISA, an investment advisory and research firm based in Florida.

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