Sunday, August 10, 2008

RBS slumps to one of biggest losses in UK banking history

Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, insisted today that he was the right person to take the lender forward despite revealing one of the biggest losses in UK banking history.

RBS chief Sir Fred Goodwin has said he is still the right man to lead the bank forward
Sir Fred Goodwin plans to steer the bank forward

The owner of Natwest made the £691m loss, its first in 40 years, after the credit crisis left it nursing writedowns of £5.9bn.

Addressing the question of whether he was still the right man to do the job, he said: "I'm very focused on what we're doing here and what's right for our customers, shareholders and people. We've steered it through good times and we'll steer it through these times."

RBS swung to a £691m loss in the six months June 30, compared with a £5.1bn pre-tax profit in the first half last year.

"There is no one here that thinks that is in any way, shape or form satisfactory," Sir Fred said.

The bank has been hit by its exposure to the credit markets, which increased when it spent £10bn as lead partner on the acquisition of the Dutch bank ABN Amro at what turned out to be the top of the market last year.

In June RBS raised £12bn from its shareholders to shore up its balance sheet through a surprise record rights issue.

It is now cutting costs across the business, making savings "ranging from headcount reductions to economies as mundane as cutting the price paid for printer cartridges," the company said.

RBS shares have fallen by 61pc in the past year, but were up 1pc to 236p this morning after the bank had already warned the City to expect the huge writedown.

Looking ahead, Sir Fred, said: "It's a brave person that would try and predict this market through to the end of this year. The headwinds out there are not abating yet but there's business to be done."

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Bank Of America Subpoenaed Over Sale Of Securities

NEW YORK — Bank of America Corp. revealed Thursday that it has received subpoenas and requests for information from various state and federal regulators regarding its sale of auction-rate securities.

In a filing with the Securities and Exchange Commission, the Charlotte, N.C.-based bank said subsidiaries Banc of America Investment Services Inc. and Banc of America Securities LLC are cooperating fully with the requests.

Auction-rate securities are bonds whose interest rates are set at periodic auctions, on the basis of bids submitted. The market collapsed in February amid turmoil in the credit markets.

Regulators have been investigating some banks' involvement in the sale of the securities.

Earlier Thursday, Citigroup Inc. said it reached a settlement with the New York Attorney General and regulators to repurchase $7 billion in auction-rate securities and pay $100 million in fines.

Regulators claimed the investments were marketed as safe even when banks knew of liquidity risks during the downturn in the credit markets.

According to the SEC filing, four purported class action lawsuits have also been filed against Bank of America on behalf of purchasers of auction-rate securities. The cases relate to the sale of the investments between May 2003 and February 2008 and allege that the bank violated certain securities laws in regards to its marketing and sale of the securities.

The actions seek unspecified damages and attorneys' fees.

A related individual federal action as well as several related Financial Industry Regulatory Authority arbitrations have also been filed, the bank said.

A Bank of America representative was not immediately available for comment.

Bank of America shares tumbled $1.93, or 5.8 percent, to close at $31.52. Shares are down about 19 percent for the year.

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Al-Qaida Reports Loss of WMD Expert

ISLAMABAD, Pakistan (AP) — The killing of an al-Qaida chemical weapons expert in a missile strike two weeks ago on a Pakistani border village has dealt a heavy blow to the terrorist group's ambitions to build weapons of mass destruction, a former CIA case officer says.

Abu Khabab al-Masri was dubbed by terrorism analysts as al-Qaida's "mad scientist." His most notorious work, recorded on videotape, showed dogs being killed in poison gas experiments in Afghanistan when the Taliban ruled.

"If he is out of the picture, al-Qaida's weapons of mass destruction capability has been set back, which would make this one of the more effective strikes in recent years," Arthur Keller, an ex-CIA case officer in Pakistan, told The Associated Press. Keller led the hunt for al-Masri in 2006.

The U.S offered a $5 million bounty for the 55-year old Egyptian, and the CIA had been hunting him for years. Al-Qaida confirmed his death days after the July 28 attack by unmanned drones on a tribesman's compound in the village of Azam Warsak in South Waziristan.

Al-Masri, whose real name is Midhat Mursi al-Sayid Umar, got his chemical weapons training in the Egyptian army before defecting to the militant Islamic Jihad group, founded by al-Qaida's no. 2 leader, Ayman al-Zawahri.

The U.S. government says that since 1999, al-Masri had been distributing manuals for making chemical and biological weapons.

"I believe that al-Qaida has no shortage of people adept with explosives, and I know that al-Masri promulgated training manuals for poisons," Keller said, "but I'm not sure how skilled any of Al-Masri's proteges may be at synthesizing chemical weapons or toxins." It's not easy, he said. "You need both education and hands-on experience to produce decent-quality chemical weapons or toxins."

Chlorine has been used in bombings by militants in Iraq, but these were locally inspired, a U.S. counterterrorism official said on condition of anonymity, not being authorized to comment publicly on the sensitive issue.

Also, no evidence has surfaced that al-Masri continued the chemicals research after moving to Pakistan, although the U.S. government said he was likely carrying out training.

U.S. intelligence agencies tracking al-Masri viewed him as "frightening," said Brian Glyn Williams, an associate professor of Islamic history at the University of Massachusetts, who has just completed research for the U.S. government on weapons of mass destruction.

"From the U.S. government perspective, he was seen as a major threat. His potential to develop primitive weapons of mass destruction was not taken lightly by U.S. law enforcement and intelligence agencies," said Williams.

Al-Masri was also suspected of helping to train the suicide bombers who attacked the destroyer USS Cole in Yemen in 2000, killing 17 American sailors. More recently, he trained militants fighting Western troops in Afghanistan.

His death had already been wrongly reported in a 2006 strike. This time it was confirmed in an al-Qaida statement that said he and three other senior al-Qaida figures were killed, along with some of their children.

Al-Masri is the second senior al-Qaida leader to die in missile strikes in Pakistan this year. In January, Abu Laith al-Libi, a top strategist for the group in Afghanistan, was killed in North Waziristan.

A senior Taliban militant from Afghanistan, Qari Mohammed Yusuf, said al-Masri had returned to South Waziristan from fighting in Afghanistan's eastern Paktika province just hours before he was killed.

Al-Masri had spent 40 days in Paktika, which borders South Waziristan, leading a company of non-Afghans in assaults against Afghan and coalition forces, and had lost several fighters, Yusuf said.

He said the Egyptian took his instructions directly from al-Zawahri, his countryman, by e-mail or handwritten letters delivered by messenger.

Yusuf has family ties to al-Qaida and says his two eldest brothers died fighting with al-Zawahri against Northern Alliance soldiers during Taliban rule. Afghan authorities confirm Yusuf is a senior Taliban from northern Afghanistan - not the Taliban spokesman who goes by the same name.

A report by counterterrorism consultant Dan Darling said al-Masri was a scientist in the Egyptian military chemical weapons program, but turned against his government for making peace with Israel in 1979.

He joined al-Zawahri's Islamic Jihad group, and when it merged with al-Qaida, became head of Project al-Zabadi, its WMD program, Darling wrote in a report posted in the Long War Journal, a Web site on terrorism.

Only after the U.S.-led invasion of Afghanistan did evidence of al-Masri's chemical experiments emerge, at al-Qaida's Darunta complex 70 miles east of Kabul.

A videotape obtained by CNN in 2002 showed dogs being killed in gas experiments. Intelligence sources said a voice heard on the tape was al-Masri's, the cable network said at the time.

Experts believe the gas was hydrogen cyanide, used in gas-chamber executions. But NATO chemical weapons specialists said the compound has long been viewed as an unsatisfactory mass-casualty chemical weapon because of its instability and low density.

Still, Western officials worry that terrorists are using the regions that border Pakistan and Afghanistan as a base not just for insurgency but for planning another 9/11-scale attack.

"The death of Abu Khabab al-Masri has a short-term impact on al-Qaida's operations by eliminating a competent senior leader," said Seth Jones, analyst for the U.S.-based RAND Corporation. "Over the long run, however, al-Qaida has demonstrated an ability to replace most of its leaders that have been captured or killed."

Associated Press Writer Pamela Hess in Washington contributed to this report.

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Comcast Tech Accuses 74-Year-Old Man Of Stealing Cable Service

Pretend you're a Comcast tech who has been asked to transfer Ally's account and internet service to her 74-year-old grandfather's house. Your work order shows that Ally ordered only internet service, but when you shimmy up the pole, you see that the house is also set to receive cable service. Do you:
  • A) Connect the internet service and leave.
  • B) Connect the internet service and check to see if the 74-year-old man has a separate account for the cable service.
  • C) Accuse the 74-year-old man of stealing cable, and declare "I don't want to see your fucking bill" when the granddaughter tries to explain the situation.
Ally's story, after the jump...

So here's my story with Comcast:

My girlfriend and I were living in an apartment where we had Comcast Internet, Phone, and Digital Cable service. After our lease was up, we decided to move into my grandpa's house for a year or so to save some money to put down on a house. Anyways - I called Comcast and set a disconnect date at our apartment. My grandpa has basic extended cable through comcast, and for us, that's good enough. So I asked them to cancel the cable and phone line for us, and asked if they could just transfer the internet service and set an appointment for a tech to come out and hook up the internet at my Grandpa's. All went well. I was told a tech would be at my Grandpa's the following Tuesday between 10 and 1pm.

As most of us know, Comcast techs don't normally show up until about 2 minutes until that window is over, but this time - the guy actually showed up at about 10:05am. Great, I thought. I don't have to sit at home all day waiting for someone to show up. He pulls his truck into the alleyway and comes into the house to see where we want the line hooked up. I proceed to show him the spare bedroom where I'll be connecting the router. He obviously noticed my Grandfather watching cable tv in the living room.

He then tells me he's going outside to check the line on the poll. I go upstairs and about 5 minutes later, I come outside to witness my grandpa and the Comcast guy in a screaming match. The Comcast tech is threatening to leave and I ask "What the heck is going on?!" Well, my Grandpa starts telling me that he disconnected his cable and says we do not have a cable account with Comcast and basically accuses my Grandpa of hijacking cable. Okay, last time I checked, most 74 years old probably don't know how to hijack cable. So my Grandpa gets really upset and starts back for the house. I'm trying to find out from the Comcast tech what is going on and my Grandpa comes back out 2 seconds later with a Comcast bill in his hand. He goes to hand it to the Comcast tech and he rudely replies "Sir, I don't want to see your fucking bill. If you don't go back in your house and quit disrespecting me, I'm going to just leave."

Meanwhile, I ask my Grandpa to try and let me straighten it out and go inside for a minute because I could tell at this point he was getting really upset. So I continue to ask the guy what the hell is going on all the while he is telling me he isn't going back in the house to hook up my internet because he doesn't appreciate my Grandpa "disrespecting him". Well, from what I saw, my Grandpa didn't really deserve to get his cable turned off and treated in such a way. I finally talk him into hooking up the internet (I needed it for school as my homework is submitted online). But the issue still remains with my Grandpa's service. So I ask the tech why he thinks we don't have cable. He replies "When I look up the phone number on the account, it only shows internet, no cable television. That's a red flag mam."

So I immediately figure out what's going on. I tell him calmly "Okay, well you are looking under MY phone number. And yes, I only have internet service in my name seeing as I cancelled the phone and cable service. My grandfather has a SEPARATE Comcast account from me, on which he only has extended cable. If you would have let him show you the bill, maybe you would have noticed it is two separate account numbers!" I wanted it that way so then the internet bill comes in my name. It's just easier that way when paying bills.

He then rudely replies with "Mam, I don't really care. I'm doing my job, and I'm not stupid. Comcast will not allow two different accounts at the same address so I already know you are blatantly lying to me." Well obviously this was news to me. And he proceeds to just leave without turning back on my Grandpa's cable, which he PAYS for.

We have a Comcast center about 2 minutes from our house, so we drive over there. The lady proceeds to tell me she can't turn back on the cable because the account was flagged.

Alright, well obviously he saw 2 accounts if he specifically flagged my Grandpa's.

About six calls to Comcast later, and I finally get someone on the line willing to fix the situation. He tells me he has no idea what he was talking about and there isn't anything saying 2 Comcast accounts can't be at the same house. He turns my Grandpa's cable back on and gives him a $10 credit, which in all honesty, is kind of insulting for the crap the rep and the center gave us. Not only was the tech wrong, but he treated my Grandfather like crap.

Who the hell is Comcast hiring these days?

Original here

Relative of U.S. volleyball coach killed

By Deborah Charles

BEIJING (Reuters) - A Chinese man killed a relative of a U.S. men's volleyball coach and injured another family member in a stabbing at a popular tourist spot in Beijing on Saturday.

The dead man was a U.S. citizen and the injured victim was an American woman, police said, adding the attacker jumped to his death after the killing. The murder cast a shadow over the first day of sporting action at the Olympic Games.

"While at the Drum Tower in central Beijing, the two family members were stabbed during an attack by what local law enforcement authorities have indicated was a lone assailant. One of the family members was killed and the other seriously injured," the U.S. Olympic Committee said in a statement.

A Chinese tour guide was also injured in the attack carried out by a Chinese man just after midday. Assaults on foreigners are rare in Beijing, site of the 2008 Olympic Games.

Tang Yongming, 47, from the eastern city of Hangzhou, jumped to his death from the second storey of tourist site the Drum Tower after the attack, police said in a statement.

"We need further investigation to find out the motive since the man has killed himself. We have no more information to provide for the moment," a spokesman for the Beijing Public Security Bureau said.

A White House official said U.S. President George W. Bush, who is in Beijing for the start of the Games, was aware of the attack.

"The President has been informed and his heart goes out to the families of the victims," a White House official said.

"The White House and U.S. Embassy have offered whatever assistance the family needs. U.S. officials have also been in touch with Chinese authorities on the matter."

A U.S. embassy spokeswoman said diplomats had been dispatched to the Beijing hospital where the surviving tourist and the local tour guide had been rushed shortly after noon.

"We're actively following the situation right now and U.S. Embassy officials are already at the hospital," a U.S. embassy spokeswoman said.

Beijing has been calm in the run-up to the Summer Games, with security tight across the capital and thousands of security officials patrolling Games venues and streets.

A crowd had gathered around the Drum Tower, in bustling central Beijing, which had been closed off by police.

The U.S. volleyball team are due to play their opening game against Venezuela on Sunday.

For more stories visit our multimedia website "2008 Summer Olympics" at; and see our blog at

(Additional reporting by Jeremy Pelofsky, Guo Shipeng, Jason Subler, Lee Chyen Yee and Edwin Chan; editing by Keith Weir)

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Polite planetary system saved Earth from fiery end

f conditions had been slightly different when our solar system was formed, the Earth might have been engulfed by the sun or flung into deep space.

A new, large-scale computer simulation that traces how planetary systems are born shows just how special we are, says University of Guelph astrophysicist Edward Thommes, the lead author of a paper published in today's edition of the journal Science.

Planetary systems are formed from disc-shaped clouds of gas and dust that surround stars. But the process and final product vary wildly.

The birth of our solar system was relatively peaceful compared with the violent encounters between fledgling planets that shaped other systems in our galaxy.

"We think in most of these systems it was a turbulent and chaotic process, with planets getting into each other's personal space and elbowing each other.

"A nice peaceful and polite and well-behaved planetary system like our own only happens more rarely," Dr. Thommes said.

He and two colleagues from Northwestern University in Illinois, Soko Matsumura and Frederic Rasio, are the first to model the formation of planetary systems from beginning to end, a process that in real life can take 10 million years.

The researchers used data that astronomers have collected from exoplanets, the 300 planets discovered outside our solar system.

They combined it with information about the gas discs that give rise to planetary systems.

Powerful computers were used to see what kind of systems would have arisen from various types of gas discs. The results matched the kinds of planetary systems astronomers have discovered in the night sky.

Many of these systems look very different from our own and are home to bizarre planets.

One of the largest exoplanets, in the constellation Hercules, is about as dense as balsa wood.

Another is hotter than some stars, and absorbs so much starlight its surface is probably blacker than charcoal.

The computer simulations show that the chemical composition and mass of the gas disc makes a huge difference in what kind of planets form.

"There are some where we see one gas giant after another forming and cruising into the star, almost like a convoy. It is probably good that didn't happen in our solar system," Dr. Thommes said.

As one planet approaches another, the gravitational pull they exert changes their orbits. Sometimes planets will get flung into deep space.

But in our solar system, said Dr. Thommes, the planets, including the gas giants Jupiter and Saturn, were relatively spread out, and far enough from the sun.

"Everyone has their personal space."

Until the early 1990s, the only known planets in the universe were the nine circling the sun.

(Two years ago, Pluto was demoted and that number dropped to eight.)

Most of the 300 exoplanets that have been detected are gas giants, big enough for astronomers to find using space- or land-based telescopes.

One technique involves looking for a star that is wobbling because of the gravitational pull exerted by an unseen planet. Astronomers can measure the size of the planet from the size of the wobble.

The technology is evolving, but mostly bigger planets have been spotted. They may have smaller, rockier, Earth-like neighbours that can't yet be detected, Dr. Thommes said.

"We think that any disc will produce some number of these guys."

But it is unclear what kind of neighbourhood is required for a planet to be capable of sustaining life. Jupiter and Saturn, for example, protect the Earth from incoming comets. Some systems don't have gas giants, he said, and produce puny planets like Neptune or Earth.

"Could that still support life?"

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Did the U.S. Prep Georgia for War with Russia?

Georgia and Russia are careening towards war. And the U.S. isn't exactly a detached observer in the fight. The American military has been training and equipping Georgian troops for years.

The news thus far: Georgia, which has been locked in a drone war over the separatist enclave of Abkhazia, has launched an offensive to reclaim another breakaway territory, South Ossetia. Latest reports indicate that Georgian forces are laying siege to Tskhinvali, the South Ossetian capital. And Russia, which has backed the separatists, is sending in the tanks.

So why should we care? Oh, just the prospect of a larger regional war that could drag in Russia – and involve the United States as well. Since early 2002, the U.S. government has given a healthy amount of military aid to Georgia. When I last visited South Ossetia, Georgian troops manned a checkpoint outside Tskhinvali -- decked out in surplus U.S. Army uniforms and new body armor.

The first U.S. aid came under the rubric of the Georgia Train and Equip Program (ostensibly to counter alleged Al Qaeda influence in the Pankisi Gorge); then, under the Sustainment and Stability Operations Program. Georgia returned the favor, committing thousands of troops to the multi-national coalition in Iraq. Last fall, the Georgians doubled their contingent, making them the third-largest contributor to the coalition. Not bad for a nation of 4.6 million people.

Leaving aside the question of Russian interference (see below), the larger concern has been that Georgia might be tempted to use its newfound military prowess to resolve domestic conflicts by force.

As Sergei Shamba, the foreign affairs minister of Abkhazia, told me in 2006: “The Georgians are euphoric because they have been equipped, trained, that they have gained military experience in Iraq. It feeds this revanchist mood… How can South Ossetia be demilitarized, when all of Georgia is bristling with weaponry, and it’s only an hour’s ride by tank from Tbilisi to Tskhinvali?”

One of the U.S. military trainers put it to me a bit more bluntly. “We’re giving them the knife,” he said. “Will they use it?”

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Georgia and Russia Nearing All-Out War

Justyna Mielnikiewicz for The New York Times

Residents said people in a car were killed when a building was bombed. More Photos >


GORI, Georgia — The conflict between Russia and the former Soviet republic of Georgia moved toward full-scale war on Saturday, as Russia sent warships to land ground troops in the disputed territory of Abkhazia and broadened its bombing campaign across Georgia.

The fighting that had sharply escalated when Georgian forces tried to retake the capital of South Ossetia, a pro-Russian region that won de facto autonomy from Georgia in the early 1990s, appeared to be developing into the worst clashes between Russia and a foreign military since the invasion of Afghanistan in 1979.

Shortly before dawn on Sunday, Georgia’s Interior Ministry said that Russian bombers had begun striking military facilities adjacent to the civilian airport at Tbilisi. The explosions could be heard in the city, said Shota Utiashvili, a ministry official.

He said that Russia had built up large forces in Abkhazia and South Ossetia — breakaway regions that have support from Moscow — including as many as 300 artillery pieces in South Ossetia alone. Russian forces, he said, were also poised just over the border at Larsi, a checkpoint, where they could open a third line of ground attack.

As Russia moved more forces into the region and continued aerial bombing, it appeared determined to occupy both South Ossetia and Abkhazia.

Georgia’s president, Mikheil Saakashvili, said Russia’s ambitions were even more extensive. He declared that Georgia was in a state of war, and said in an interview that Russia was planning to seize ports and an oil pipeline and to overthrow his government.

Prime Minister Vladimir V. Putin of Russia left the Olympics in China and arrived Saturday evening in Vladikavkaz, a city in southern Russia just over the border. State-controlled news broadcasts showed Mr. Putin meeting generals, suggesting that he was directly in charge of military operations, eclipsing the authority of President Dmitri A. Medvedev.

Mr. Putin said that dozens of people had been killed in South Ossetia and hundreds wounded, and tens of thousands were reported to be fleeing. Georgia’s health minister said that more than 80 people had been killed, including 40 civilians who died in airstrikes in Gori, a city north of Tbilisi. Another Georgian official said at least 800 people, almost all of them civilians, had been injured. Each side’s figures were impossible to confirm independently, as was an earlier claim released by South Ossetians and repeated by some Russian officials that 1,500 people had been killed in the territory.

The fighting, and the Kremlin’s confidence in the face of Western outcry, had wide international implications, as both Russian and Georgian officials placed it squarely in the context of renewed cold war-style tensions and an East-West struggle for regional influence..

Western influence over Russia appeared minimal. The East and West were stuck in diplomatic impasse, even as reports of heavy civilian casualties indicated that the humanitarian toll was climbing. The United Nations Security Council was meeting Saturday to discuss the crisis, but with no resolution.

Georgian officials said their only way out of the conflict was for the United States to step in, but with American military intervention unlikely, they were hoping for the West to exert diplomatic pressure to stop the Russian attacks.

“Georgia is a sovereign nation, and its territorial integrity must be respected,” President Bush said at the Olympics in Beijing. “We have urged an immediate halt to the violence and a stand-down by all troops. We call for the end of the Russian bombings.”

Senior European Union officials were adamant on Saturday that both Russia and Georgia were to blame for the recent escalation of the conflict, and that finger-pointing was counterproductive. Cristina Gallack, a spokeswoman Javier Solana, the European Union’s foreign policy chief, said that the Union’s immediate objective was to reach a cease-fire, and European envoys were reported to be en route to the region.

Other Western officials monitored the movements with alarm. “The record is crystal clear,” said a Western official, who spoke on condition of anonymity. “Russia has launched a full-scale military operation, on air, land and sea. We have entered a totally new realm — politically, legally and diplomatically.”

Russia appeared to be opening a second front in Abkhazia, to the west of South Ossetia, and to be aiming to drive Georgian troops from the Kodori Gorge, a small mountainous area in Abkhazia that Georgia reclaimed by force in 2006. Georgian officials said 12 Russian jets were bombing the area, shortly after a Western official said United Nations peacekeepers had withdrawn from the area at the request of Abkhazia’s de facto government.

Russia also notified Western governments that it was moving ships of its Black Sea fleet to Ochamchire, a port on the Abkhaz coast. Georgian officials said they expected Russian troops to land there.

Mr. Putin made clear that Russia now viewed Georgian claims over the breakaway regions to be invalid, and that Russia had no intention of withdrawing. “There is almost no way we can imagine a return to the status quo,” he said in remarks on Russian state television.

Mr. Saakashivili, the Georgian president, said Russia’s oil riches and desire to assert economic leverage over Europe and the West had emboldened Kremlin country to attack. Georgia is a transit country for oil and natural gas exports from the former Soviet Union that threatens Russia’s near monopoly.

“They need control of energy routes,” Mr. Saakashvili said. “They need sea ports. They need transportation infrastructure. And primarily, they want to get rid of us. ”

In turn, Russian officials said that ties to the United States had emboldened Mr. Saakashvili, who wants to make Georgia part of NATO, into sparking the conflict. But there were signs that Mr. Saakashvili was feeling the limits of how much American help he could expect for his country’s assistance in the war in Iraq.

Pentagon officials said late on Friday that Georgia had requested assistance in airlifting home the approximately 2,000 Georgian troops now in Iraq. The request was under review, and standard procedures would indicate that the United States government would honor the request, officials said.

Alexander Lomaya, secretary of Georgia’s National Security Council, said conflict arose because Russia sought to “thwart its neighbors’ movement toward Western society and Western values” and framed the stakes in expansive terms that were reminiscent of the cold war.

“If the world is not able to stop Russia here, then Russian tanks and Russian paratroopers can appear in every European capital,” he said. Russian officials, however, blamed outside meddling for stoking the conflict, and said their goals were narrow.

President Medvedev said Russia was acting to restore peace and protect its citizens and peacekeeping troops who had come under Georgian attack.

In a news conference, Foreign Minister Sergey V. Lavrov of Russia said Georgian attacks on what he called “Russian citizens” in South Ossetia “amounted to ethnic cleansing.” He reserved some of his harshest language for Georgia’s allies, referring at one point to “Mr. Saakashvili and his Western friends” — an apparent reference to the United States, which has provided Georgia with extensive military aid since Mr. Saakashvili took office in 2004.

With Russia’s Black Sea fleet, warplanes and tanks bearing down on the small, mountainous country, Georgian officials acknowledged they were taken by surprise by the intensity of the Russian response.

But Russia, too, found itself facing resistance. Russia acknowledged that Georgian forces had shot down two Russian warplanes, while Mr. Lomaya said the Georgians had destroyed 10 Russian jets.

A close ally of Mr. Saakashvili’s, Gigo Bokarianot, a Parliament member, said Georgia was shifting its tactics to focus on air defenses.In Gori, people cheered as a Russian pilot ejected from an airplane that was shot down. Georgian television later showed a pilot’s bloody helmet and said a pilot had been captured.

Russian strategic bombers were seen over Georgia for the first time in the three-day conflict. Georgian tanks attacked the lone road linking South Ossetia to Russia, trying to cut off Russian supply routes. But Russia continued to flow forces into Georgia, and appeared on track to at least double the number of troops there. Georgian officials said at least 2,500 Russian troops were already in South Ossetia.

Along a military highway entering Georgia from Russia, military transports and armored vehicles were backed up for several miles. They were flying both Russian flags and plain red flags. The mood was buoyant.

“I am going to help our people,” said Zelimkhan Gagiev, 27, an irregular fighter in a maroon four-wheel drive who said he had family trapped in Tskhinvali. “If I can, I’ll fight to the death.”

The columns were headed to the Roki Tunnel, which gives access to South Ossetia.

Civilians came under fire on both sides. Georgian troops shelled the South Ossetian capital, Tskhinvali, with artillery. Russian television footage showed damaged houses and apartment buildings.

Russian warplanes struck at least five Georgian cities. Witnesses said they struck a train station in Tsenakhi, five apartment buildings in Gori, and the Black Sea port of Poti.

Georgian officials said that Russian warplanes had attacked the major Baku-Tbilisi-Ceyhan oil pipeline, operated by British Petroleum, that carries oil to the West from Asia, but that the pipeline had not been struck.

The Russian authorities said their forces had retaken the South Ossetian capital from Georgian control during the morning hours, while Georgian officials said they had withdrawn from the area voluntarily. But heavy fighting resumed there later Saturday, with Georgian tanks and heavy artillery attacking from the south, Russian television reported.

Twelve Russian troops were killed, according to Anatoly Nogovitsyn, a colonel general in the Ministry of Defense. When asked whether Russia was in a state of war with Georgia, General Nogovitsyn said it was not.

Roads were clogged with refugees, as South Ossetians fled north into Russia and Georgians from Gori fled southeast to Tblisi. Russia said 30,000 people had fled South Ossetia.

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