Titles:

• Moody's Now Threatening Downgrade on 5 U.S. States
• French FM: Gaddafi can stay, but to leave power
• Iran-Egypt ties serve regional security
• Germany 'trying to convince Saleh to stand down'
• Pak embassy in US biggest spender among missions
• China tells US to respect its territorial claims

News Details:

Moody's Now Threatening Downgrade on 5 U.S. States
Ratings agency Moody's, which in recent weeks has warned that it will downgrade its AAA on the debt of the United States Federal Government, has now issued a new slate of threats to individual states. Today the "investor's service" released a statement announcing that it has placed five states, Maryland, New Mexico, South Carolina, Tennessee, and the Commonwealth of Virginia, on review for possible downgrade from their current AAA bond ratings. The agency cites the states' high federal employment and medicaid exposure as reasons for the review, which will affect a total $24 billion of rated debt. "While all states are indirectly linked to the U.S. government to some degree, we have identified the five Aaa-rated states that are most vulnerable to changes in the U.S. government rating," said Nicholas Samuels, a Vice President in Moody's State Ratings Team.

French FM: Gaddafi can stay, but to leave power
Over four months now since the war broke on Libya, France says Libyan leader Muammar Gaddafi can stay in his country as long as he commits to relinquishing power. Alain Juppe, French Foreign Minister, said, "Gaddafi has to leave power. He has to clearly give up any civil and military responsibility. For us, that is a condition that could lead to a cease-fire and to resume a national dialogue. Whether he stays in Libya or not? That's for Libyans and nobody else to decide. Now, I am aware of the fact that the National Transition Council has its own views about it." Juppe made the remarks after a meeting with his Spanish counterpart, Trinidad Jimenez, in the Spanish capital, Madrid. As the chief instigator of the intervention against Gaddafi, France has been keen to prevent NATO-led military action dragging on interminably. Juppe's latest stance echoes growing calls for a non-military solution to the conflict in Libya.

Iran-Egypt ties serve regional security
Iran's Foreign Minister Ali Akbar Salehi has stressed the importance of better relations with Egypt to serve the interests of the Middle East region. "The expansion of diplomatic ties between Iran and Egypt to ambassadorial level will be beneficial to regional peace and security, as both sides desire stability and tranquility in the region," Salehi said in an interview with IRNA in the capital Tehran on Thursday. The senior Iranian official also pointed to historical bonds and cultural commonalties between the Islamic Republic and Egypt and said, "The two countries have great potential to promote bilateral relations, especially in the fields of industry, science and technology." Salehi had earlier reiterated the resolve of Tehran and Cairo to reestablish their bilateral relations following the ouster of Egyptian President Hosni Mubarak. "The two countries have expressed their explicit willingness and interest to resume ties," the Iranian minister said in early May. Salehi further explained that Iranian and Egyptian officials are holding talks to open a new page in their bilateral relations. Egyptian authorities have stated that post-Mubarak Egypt is looking to improve relations with most countries in the world, including the Islamic Republic.

Germany 'trying to convince Saleh to stand down'
Germany is serving as an intermediary in a bid to convince Yemeni President Ali Abdullah Saleh to stand down amid a popular revolt against his three-decade rule, a newspaper report said Thursday. Germany's daily Frankfurter Allgemeine Zeitung reported in a front-page article that Berlin had sent an envoy to appeal to Saleh to accept a proposal by the Gulf Cooperation Council and head off further bloodshed in the country. Saleh has been hospitalised in Saudi Arabia since a bomb attack on June 3. The report said a diplomat at the German foreign ministry, Michael Klor-Berchtold, delivered on behalf of Foreign Minister Guido Westerwelle the message to Saleh "that the GCC initiative is currently the only way to prevent a possible escalation of tensions to armed conflict". The stalled GCC initiative would see Saleh step aside 30 days after an agreement was signed in exchange for immunity from prosecution, and a presidential election to be held within 60 days. A German foreign ministry spokesman confirmed that a "high-ranking diplomat" had conducted "political talks on behalf of" Westerwelle in Saudi Arabia and Yemen but declined to provide further details. A German diplomatic source said Berlin was monitoring developments in Yemen with "great concern" as "political stasis presents significant risks for the country". The official, who spoke on condition of anonymity, said Westerwelle strongly backed the GCC initiative as "the way to a peaceful and orderly transition" in Yemen. The newspaper cited Yemeni sources as saying that Saleh was open to the initiative but that his family had dissuaded him from signing. Klor-Berchtold was the second high-ranking diplomat to see Saleh in Riyadh after the chief counterterrorism advisor at the White House, John Brennan, visited earlier this month, the report said.

Pak embassy in US biggest spender among missions
The Pakistan embassy in Washington leads in terms of annual expenditures among all 121 foreign missions which the country maintains throughout the world, the National Assembly was informed on Thursday.  In reply to a question by Mr Muhammad Ali Khan, the lower house of the parliament came to know that during 2009-2010, the Pakistan embassy in Washington spent Rs775.172 million. A written answer submitted by Foreign Minister Hina Rabbani Khar further said the embassy had consumed Rs 474 million till March this year. Complete data on expenditures for 2010-2011 have yet to be collected. Besides the embassy in Washington, the foreign ministry has a healthy presence in a number of other American cities as well. In Chicago, the government spent Rs38 million in 2009-2010 and Rs39 million up to March this year. The expenditure at Houston was Rs39 million in 2009-2010 and Rs26 million up to March 2011, for Los Angeles the amounts were Rs74 million and Rs59 million, for New York (consul general`s office) Rs122 million and Rs 90 million New York, Rs270 million in 2009-2010 and Rs229 million till March 2011. These figures show that despite Pakistan`s stop-start relationship with the United States, the Foreign Office has a substantial presence in that country. And their annual expenditures prove that the country`s diplomats in the US have busy lives. An official of the Foreign Office defended the heavy presence in the US, saying the large Pakistani community benefited from it.

China tells US to respect its territorial claims
China told the United States on Friday to respect Chinese "territorial integrity", amid simmering tensions focused on the South China Sea. Chinese Foreign Minister Yang Jiechi made the comments to US Secretary of State Hillary Clinton during a bilateral meeting on the Indonesian resort island of Bali, according to a spokesman from China's delegation. "The Chinese side raised its own concerns, which is that it is important to respect the sovereignty and territorial integrity of China," spokesman Liu Weiming said. "And to respect China's major concerns in the issues of Tibet and some other sensitive issues. I sense that the US side understands the sensitivity of these issues and they agreed to further promote dialogue and mutual understanding." Liu said Yang and Clinton specifically discussed the South China Sea, which China claims as its own. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims to parts of the South China Sea, believed to be rich in oil and gas deposits and home to shipping lanes vital to global trade. Tensions in the decades-long dispute flared in recent months amid accusations by the Philippines and Vietnam that China was being increasingly aggressive in staking its claim to the sea. China and the 10 members of the Association of Southeast Asian Nations (ASEAN) announced on Wednesday in Bali a "breakthrough" in the dispute, endorsing a set of guidelines designed to reduce tensions in the waters. In brief comments ahead of her meeting with Yang on Friday, Clinton praised China and ASEAN for working to defuse the tensions.