US scholar urges dramatic rethink on Taiwan

WASHINGTON: With Beijing growing in strength, a US scholar is calling for a major rethink on Taiwan in which the island would cut its troop numbers in half and rebrand its army as a self-defence force.

The proposal marks a rare break from the conventional view of American and Taiwanese policymakers that the island needs to close the military gap with Beijing, but its author said an opposite course could strengthen Taipei.

Scott Bates, president of the Washington-based Center for National Policy, said the balance was "irretrievably shifting" in China's favor and it was politically and economically unrealistic that Taiwan would commit enough to close the gap.

Instead, Taipei can take the lead by halving the size of its army, rebranding it as a Self-Defence Force in the style of Japan and renouncing any military action on mainland China's soil, he argued.

"If Taiwan were to take a bold step like this, that would change perceptions on the mainland and perhaps win some popular support for the Taiwanese position," said Bates, a former congressional aide.

"If there were a showdown, it might make (Beijing) think twice."

Taiwan should turn the new force into a disaster response team ready to deploy throughout Asia and also highlight the island's democracy through a major initiative that supports civil society across the continent, Bates said.

And instead of waging a battle to preserve a dwindling number of nations' recognition of Taipei instead of Beijing, Taiwan can use its diplomatic resources to seek solutions on Asia's bitter territorial disputes, he said.

The new Taiwanese approach would give the island the moral high ground, winning over global opinion and ensuring that China would appear to be the aggressor if it attacked, he argued.

"Mainland Chinese public opinion is beginning to matter more. The Chinese Communist Party cannot ignore its own people without repercussions," Bates said.

China considers Taiwan to be a territory awaiting reunification, by force if necessary. China's defeated nationalists fled to Taiwan after defeat by the communists in 1949, with the island developing into a self-ruling democracy.

The United States switched recognition from Taipei to Beijing in 1979 but at the same time Congress passed the Taiwan Relations Act, which requires Washington to provide the island with means to defend itself.

Bates said that his proposal would complement efforts by Taiwan President Ma Ying-jeou, who has sought to ease tensions with China by expanding economic ties, though domestic critics accuse Ma of jeopardising the island's de facto independence.

Bates supported the continuation of the Taiwan Relations Act, saying the island needed a credible deterrent. While cutting its army, Bates called for Taiwan to launch a major upgrade of its air defences and navy to show that any effort to gain supremacy over the island would be costly.

The Taiwan Relations Act enjoys virtually unanimous support in the US Congress, where lawmakers have pressed President Barack Obama to sell to the island new F-16 jets - a step that China strongly opposes.

Bates' ideas, however, are unlikely to win quick support.

Joseph Bosco, a former Pentagon official, sharply criticised the proposal, saying it went against accepted concepts of deterrence and that Taiwan already had the moral high ground.

"Taiwan does not need to disarm unilaterally in order to prove its moral or political legitimacy," Bosco said on Wednesday at an event where Bates presented his proposal.

Bates, who spoke last year at Taiwan's National Defence University and wrote an opinion piece in the Taipei Times, said he wanted to start a debate.

"It doesn't have to be my plan, but there does have to be a strategic rethink," he said.

- AFP

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India to test subsonic cruise missile Nirbhay in February

BANGALORE: Nirbhay, the subsonic cruise missile, will be flight-tested in February.

This was revealed by VK Saraswat, scientific adviser to the defence minister, at a briefing on Aero India 2013.

The six-metre-long missile that weighs a tonne has been designed and developed in Bangalore. "The missile has a good loitering capability, control and guidance with high degree of accuracy for maximum impact," Saraswat, who is also director-general of DRDO, said. The all-weather cruise missile will be inducted into the Navy, Army and Air Force over the next 12-18 months.

Nirbhay will supplement the Brahmos cruise missile by carrying warheads beyond the 300-km range, as it is capable of flying at different altitudes ranging from 500 metres to 4 kilometres.

Saraswat added that development of Advanced Medium Combat Role Aircraft is in lead phase and after a year, with required clearances, its design and development will be initiated. The aircraft is a single-seat, twin-engine fifth-generation stealth multi-role fighter, which will complement HAL Tejas, Sukhoi/HALs FGFA, Sukhoi Su-30MKI and Dassault Rafale.

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Penalty could keep smokers out of health overhaul

WASHINGTON (AP) — Millions of smokers could be priced out of health insurance because of tobacco penalties in President Barack Obama's health care law, according to experts who are just now teasing out the potential impact of a little-noted provision in the massive legislation.

The Affordable Care Act — "Obamacare" to its detractors — allows health insurers to charge smokers buying individual policies up to 50 percent higher premiums starting next Jan. 1.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-year-old could wind up paying nearly $5,100 on top of premiums.

Younger smokers could be charged lower penalties under rules proposed last fall by the Obama administration. But older smokers could face a heavy hit on their household budgets at a time in life when smoking-related illnesses tend to emerge.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don't come with health insurance and would therefore depend on the new federal health care law. Smoking increases the risk of developing heart disease, lung problems and cancer, contributing to nearly 450,000 deaths a year.

Insurers won't be allowed to charge more under the overhaul for people who are overweight, or have a health condition like a bad back or a heart that skips beats — but they can charge more if a person smokes.

Starting next Jan. 1, the federal health care law will make it possible for people who can't get coverage now to buy private policies, providing tax credits to keep the premiums affordable. Although the law prohibits insurance companies from turning away the sick, the penalties for smokers could have the same effect in many cases, keeping out potentially costly patients.

"We don't want to create barriers for people to get health care coverage," said California state Assemblyman Richard Pan, who is working on a law in his state that would limit insurers' ability to charge smokers more. The federal law allows states to limit or change the smoking penalty.

"We want people who are smoking to get smoking cessation treatment," added Pan, a pediatrician who represents the Sacramento area.

Obama administration officials declined to be interviewed for this article, but a former consumer protection regulator for the government is raising questions.

"If you are an insurer and there is a group of smokers you don't want in your pool, the ones you really don't want are the ones who have been smoking for 20 or 30 years," said Karen Pollitz, an expert on individual health insurance markets with the nonpartisan Kaiser Family Foundation. "You would have the flexibility to discourage them."

Several provisions in the federal health care law work together to leave older smokers with a bleak set of financial options, said Pollitz, formerly deputy director of the Office of Consumer Support in the federal Health and Human Services Department.

First, the law allows insurers to charge older adults up to three times as much as their youngest customers.

Second, the law allows insurers to levy the full 50 percent penalty on older smokers while charging less to younger ones.

And finally, government tax credits that will be available to help pay premiums cannot be used to offset the cost of penalties for smokers.

Here's how the math would work:

Take a hypothetical 60-year-old smoker making $35,000 a year. Estimated premiums for coverage in the new private health insurance markets under Obama's law would total $10,172. That person would be eligible for a tax credit that brings the cost down to $3,325.

But the smoking penalty could add $5,086 to the cost. And since federal tax credits can't be used to offset the penalty, the smoker's total cost for health insurance would be $8,411, or 24 percent of income. That's considered unaffordable under the federal law. The numbers were estimated using the online Kaiser Health Reform Subsidy Calculator.

"The effect of the smoking (penalty) allowed under the law would be that lower-income smokers could not afford health insurance," said Richard Curtis, president of the Institute for Health Policy Solutions, a nonpartisan research group that called attention to the issue with a study about the potential impact in California.

In today's world, insurers can simply turn down a smoker. Under Obama's overhaul, would they actually charge the full 50 percent? After all, workplace anti-smoking programs that use penalties usually charge far less, maybe $75 or $100 a month.

Robert Laszewski, a consultant who previously worked in the insurance industry, says there's a good reason to charge the maximum.

"If you don't charge the 50 percent, your competitor is going to do it, and you are going to get a disproportionate share of the less-healthy older smokers," said Laszewski. "They are going to have to play defense."

___

Online:

Kaiser Health Reform Subsidy Calculator — http://healthreform.kff.org/subsidycalculator.aspx

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Unplanned Pregnancies Hurt Military Women

Women in the military have access to some of the nation's best health care, which includes free birth control. But a new study shows that many women are not using it and the rate of unintended pregnancy is double that of the general population.

And today, with the Department of Defense having just ended its longtime ban on women serving in combat roles, an unplanned pregnancy could have wider ramifications not only for a woman's health, but for her opportunities for advancement.

An estimated 10.5 percent of active duty women, ages 18 to 44, reported an unplanned pregnancy in the prior 12 months in 2008, the last year for which there are statistics, according to researchers at Ibis Reproductive Health, a nonprofit organization that supports women's sexual and reproductive rights.

That number was higher than in 2005, when the rate was 9.7 percent.

In the non-military population, about 5.2 percent of women of reproductive age report an unintended pregnancy each year, according to the study, published this week in the February issue of Obstetrics and Gynecology.

The Ibis study was based on surveys of more than 7,000 active-duty women; the statistics were obtained from the Department of Defense under the Freedom of Information Act. Rates were equal among those women who were deployed and those serving stateside.

Women make up 202,400 of the U.S. military's 1.4 million active duty personnel; more than 280,000 women have deployed over the last decade to Iraq and Afghanistan.

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"It's terrific that women are getting recognition for their role in combat missions and are being considered for all types of promotions in the armed services," said lead author Kate Grindlay, senior project manager at Ibis. "But for women to reach their potential, they must be able to access birth control for their personal health and well-being."

Military warned to maintain readiness as women move toward combat.

About 900 women had been unable to deploy in the past year due to a pregnancy, either planned or unplanned, according to the study. The highest rates were among younger women with less education who were either married or cohabitating, researchers said.

The authors of the study say that an unwanted pregnancy not only disrupts a woman's military career, but takes a toll on military readiness because pregnant women cannot be deployed or must be evacuated from war zones. They say the military needs to take a more "comprehensive approach" to address the problem.

A July 2012 Ibis study, based on women deployed over the last decade, revealed they face a variety of barriers to accessing contraception.
Women said they did not speak with a military medical provider about birth control before they deployed overseas -- either it was never offered or the woman never asked.

Military policies that forbid sexual activity between fellow service members "led some women to think contraception was not available or not needed," said the report.

Others said they had trouble getting preferred types of birth control -- the IUD, for example -- or adequate supplies before deployment.

"In addition to these access barriers, the high rate of sexual assault in the military also puts women at risk of unintended pregnancy," said the July study.

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Abortions are only provided at military hospitals in cases of rape, incest or life endangerment. A woman must either risk an abortion at a local hospital during deployment or be sent home. Tricare, the military insurance plan, does not cover an abortion.

"Women who are deployed in Iraq wouldn't have any abortion options and must be evacuated and it could compromise confidentiality and access to care," said Grindlay.

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Violence flares on anniversary of Egypt uprising

CAIRO/ALEXANDRIA (Reuters) - Protesters clashed with police across Egypt on Friday on the second anniversary of the revolt that toppled Hosni Mubarak, taking to the streets against an elected Islamist president whose opponents say is trampling over the new democracy.

At least 61 civilians and 32 security personnel were hurt in violence in Cairo, Alexandria and Suez as police fired tear gas and protesters pelted them with stones, the Interior Ministry said.

Street battles also broke out in Ismaila, where the Muslim Brotherhood's political party offices were torched.

Thousands of opponents of Mursi and his Brotherhood allies massed in Cairo's Tahrir Square - the cradle of the uprising against Mubarak - to revive the demands of a revolution they say has been betrayed by Islamists.

The January 25 anniversary showcased the divide between the Islamists and their secular foes that is hindering President Mohamed Mursi's efforts to revive an economy in crisis and reverse a plunge in Egypt's currency by enticing back investors and tourists.

Inspired by Tunisia's popular uprising, Egypt's revolution spurred further revolts across the Arab world. But the sense of common purpose that united Egyptians two years ago has given way to internal strife that has only worsened and last month triggered lethal street battles.

Before dawn on Friday, police battled protesters who threw petrol bombs and firecrackers as they tried to approach a wall blocking access to government buildings near Tahrir Square.

Clouds of tear gas fired by police filled the air. At one point, riot police used one of the incendiaries thrown at them to set ablaze at least two tents erected by the youths, a Reuters witness said.

Clashes between stone-throwing youths and the police continued in streets around the square into the day. Ambulances ferried away a steady stream of casualties.

"Our revolution is continuing. We reject the domination of any party over this state. We say no to the Brotherhood state," Hamdeen Sabahy, a popular leftist leader, told Reuters.

There were similar scenes in Suez and Alexandria, where protesters and riot police skirmished near local government offices. Tear gas fouled the air and black smoke billowed from tyres set ablaze by youths.

Some protesters pledged to march to Mursi's Cairo palace.

The anniversary brought thousands of Mursi's opponents into the streets of other cities, including Port Said at the northern mouth of the Suez Canal and al-Mahalla al-Kubra in the Nile Delta.

The Brotherhood decided against mobilizing for the anniversary, wary of the scope for more conflict after violence in December that was stoked by Mursi's decision to fast-track an Islamist-tinged constitution rejected by his opponents.

"The Brotherhood is very concerned about escalation, that's why they have tried to dial down their role on January 25," said Shadi Hamid, director of research at the Brookings Doha Center.

"It's definitely tense on the ground, but so far there hasn't been anything out of the ordinary or anything that really threatens to fundamentally alter the political situation."

In Tahrir Square, protesters echoed the chants of 2011's historic 18-day uprising. "The people want to bring down the regime," they chanted. "Leave! Leave! Leave!" chanted others as they marched towards the square.

"We are not here to celebrate but to force those in power to submit to the will of the people. Egypt now must never be like Egypt during Mubarak's rule," said Mohamed Fahmy, an activist.

BADIE CALLS FOR "PRACTICAL, SERIOUS COMPETITION"

With its eye firmly on forthcoming parliamentary elections, the Brotherhood marked the anniversary with a charity drive across the nation. It plans to deliver medical aid to one million people and distribute affordable basic foodstuffs.

Writing in Al-Ahram, Egypt's flagship state-run daily, Brotherhood leader Mohamed Badie said the country was in need of "practical, serious competition" to reform the corrupt state left by the Mubarak era.

"The differences of opinion and vision that Egypt is passing through is a characteristic at the core of transitions from dictatorship to democracy, and clearly expresses the variety of Egyptian culture," he wrote.

Still, Mursi faces discontent on multiple fronts.

His opponents say he and his group are seeking to dominate the post-Mubarak order. They accuse him of showing some of the autocratic impulses of the deposed leader by, for example, driving through the new constitution last month.

"I am taking part in today's marches to reject the warped constitution, the 'Brotherhoodisation' of the state, the attack on the rule of law, and the disregard of the president and his government for the demands for social justice," Amr Hamzawy, a prominent liberal politician, wrote on his Twitter feed.

The Brotherhood dismisses many of the criticisms as unfair fabrications of their rivals, accusing them of failing to respect the rules of the new democracy that put the Islamists in the driving seat by winning free elections.

Six months into office, Mursi is also being held responsible for an economic crisis caused by two years of turmoil. The Egyptian pound has sunk to record lows against the dollar.

SOURCES OF FRICTION ABOUND

Other sources of friction abound. Little has been done to reform brutal Mubarak-era security agencies. A spate of transport disasters on roads and railways neglected for years is feeding discontent as well. Activists are impatient for justice for the victims of violence over the last two years.

These include hardcore soccer fans, or ultras, who have been rallying in recent days to press for justice for 74 people killed in a soccer stadium disaster a year ago in Port Said after a match between local side al-Masry and Cairo's Al Ahly.

The parties that called for Friday's protests listed demands including a complete overhaul of the constitution.

Critics say the constitution, which was approved in a referendum, offers inadequate protection for human rights, grants the president too many privileges and fails to curb the power of a military establishment supreme in the Mubarak era.

Mursi's supporters say that enacting the constitution quickly was crucial to restoring stability desperately needed for economic recovery, and that the opposition is making the situation worse by perpetuating unrest.

(Additional reporting by Ashraf Fahim, Tom Perry, Marwa Awad and Shaimaa Fayed in Cairo and Yousri Mohamed in Ismailia; Writing by Tom Perry; Editing by Angus MacSwan)

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Keppel Corp's net profit falls 22% on-year in Q4

SINGAPORE: Falling margins from building oil rigs has hit the bottomline of Keppel Corp.

Net profit for the world's leading rig builder fell 22 per cent on-year to S$305 million in the fourth quarter last year.

Still, full year profit for the conglomerate came in 15 per cent to S$2.24 billion.

Despite lower net profit in the three months ended Dec 31, Keppel Corp still declared a final dividend of 27 cents per share.

As part of its 45th anniversary, Keppel Corp is handing out more goodies to its shareholders.

The company has proposed to distribute one Keppel REIT unit for every five Keppel Corp shares.

That is about 27.4 cents per share based on Keppel REIT's closing price of S$1.37 on Thursday.

Together with the interim dividend of 18 cents, total distribution for 2012 will be 72.4 cents per share.

Keppel Corp said the lower net profit was partly due to lower contributions from its offshore and marine unit.

Offshore and Marine's contribution was 12 per cent lower from a higher base in 2011 when margins were at record highs. It contributes to half of Keppel Corp's net profits.

"Keen rivalry from Chinese and Korean yards have suppressed prices and squeezed margins on newbuilds," said Choo Chiau Beng, chief executive officer at Keppel Corp. "In 2013, we will be completing a record of 22 newbuild units."

Analysts remained upbeat of Keppel's prospects going forward.

They say their financial results still outperformed market expectations.

Keppel Corp expects crude oil prices to stay above US$100 per barrel, supporting the need for more global exploration and production.

But global challenges like the slower US economy and the eurozone crisis from last year will continue to pose uncertainties for Keppel Corp's business.

Keppel Corp's property arm, led by the listed Keppel Land, boosted the group's earnings.

Net profit for the property division was 2.5 times higher than in 2011, offsetting the lower earnings from business in the offshore and marine, and infrastructure.

But Keppel Corp does not expect its property arm to perform better this year.

This is because recognition from sales of completed units at its development Reflections at Keppel Bay is expected to be lower this financial year.

- CNA/xq

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UR Ananthamurthy in Man Booker Prize shortlist

JAIPUR: Kannada author UR Ananthamurthy has been shortlisted among 10 other authors for the International Man Booker Prize for Fiction.

Ananthamurthy, 80, is the only Indian among to have made it to the final list of the prestigious prize announced at the DSC Jaipur Literature Festival here on Thursday.

Considered to be one of the most important voice of "new movement" in Kannada language, Ananthamurthy has written five novels, eight short story collections and three poetry collections that have been translated into other languages in India as well as in Europe.

The author studied English literature at the Univesity of Mysore and earned his doctorate from University of Birmingham.

Best known for his 1966 novel Samskara, the author was also shortlisted for DSC Prize for South Asian literature in 2012 for his novel Bharatipura (published in English in 2010).

Other finalists of 2013 include Aharon Appelfeld (Israel), Lydia Davis (USA), Intizar Husain (Pakistan), Yan Lianke (China), Marie Ndiaye (France), Josip Novakovich (Canada), Marilynne Robinson (USA), Vladimir Sorokin (Russia) and Peter Stamm (Switzerland).

Peter Stamm is the first Swiss author who has made it to the final list.

Previous winners of the 60,000 pound award include Canada's Alice Munro, Nigeria's Chinua Achebe and Philip Roth of the United States.

The award, an offshoot of Britain's better-known Man Booker novel-of-the-year prize, is awarded for a lifetime's work. It is open to authors of all nationalities whose work is available in English.

The winner would be announced on May 22 in London, the chair of judges Christopher Ricks announced here.

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Burger King drops supplier linked to horsemeat

LONDON (AP) — British and Irish burger fans could face a Whopper shortage. Burger King says it has stopped buying beef from an Irish meat processor whose patties were found to contain traces of horsemeat.

The fast food chain said in a statement Thursday that it had dropped Silvercrest Foods as a supplier for its U.K. and Ireland restaurants as a "voluntary and precautionary measure."

Last week Silvercrest, which is owned by ABP Food Group, shut down its production line and recalled 10 million burgers from supermarket shelves in Britain and Ireland after horse DNA was found in some beef products.

Burger King said the decision to drop the supplier "may mean that some of our products are temporarily unavailable." It stressed that "this is not a food safety issue."

The presence of horsemeat in beef is a sensitive issue in Britain and Ireland, which do not have a tradition of eating horses. The British tabloid The Sun reported the Burger King story under the headline "Shergar King," a reference to a famous racehorse.

Products from another Irish firm and one in Britain also were contaminated by horsemeat. Most had only small traces, but one burger of a brand sold by the British supermarket chain Tesco contained 29 percent horsemeat.

Irish food officials say an ingredient imported from an unspecified European country and used as filler in cheap burgers is the likely source of the horsemeat contamination.

Burger King says its patties are made from 100 percent beef.

Officials say the horsemeat poses no risk to human health, but the episode has raised food security worries.

More concern arose Thursday when lawmaker Mary Creagh, environment spokeswoman for Britain's opposition Labour Party, said that several horses slaughtered in the country last year had tested positive for phenylbutazone, an anti-inflammatory drug given to horses that can cause cancer in humans.

"It is possible that those animals entered the human food chain," she said.

The Food Standards Agency confirmed that meat from five horses had tested positive for the drug, but said none had been approved for sale in Britain. It said the relevant food safety authorities were informed in cases where the meat was exported to other countries.

The agency said no horsemeat in the current scandal contained phenylbutazone.

Very little horsemeat is sold in Britain but the country sends thousands of horses a year abroad to be killed for meat.

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Exterminator Charged in Pa. Doctor's Murder

An exterminator named Joseph Smith was arrested and charged today in the strangling and burning death of Philadelphia pediatrician Melissa Ketunuti.

Smith, 36, had been sent to Ketunuti's home on a service call where the two got into "some kind of argument" in Ketunuti's basement on Monday, Capt. James Clark of the Philadelphia police department said this morning.

"At her home they got into an argument. It went terribly wrong. He struck her, and knocked her to the ground," Clark said. "Immediately he jumped on top of her, started strangling her. She passed out, and then he set her body on fire."

Clark said Smith burned the woman's body "to hide evidence like DNA." He said "at some point, he bound her up." The doctor was found with her hands and feet tied behind her back.

The captain said that before today's arrest Smith's record consisted of only "minor traffic offenses."

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Police received a call from Ketunuti's dog-walker about the house fire around 12:30 p.m. Monday, and once inside found Ketunuti with her hands and feet bound. They believe Smith hit her and strangled her with a rope, causing her to pass out, and then bound her body and set fire to it in order to destroy evidence, including DNA evidence.

Ketunuti, 35, was fully clothed and police do not believe she was sexually assaulted.

She was a doctor at Children's Hospital of Philadelphia and had lived alone in the Graduate Hospital neighborhood of the city for about three years.

Clark said that homicide detectives scoured the neighborhood for surveillance videos from nearby stores and businesses, and through the video identified the suspect.

Smith was spotted on video getting out of the vehicle and following Ketunuti to her home. The man left her home after an hour and was seen on video circling her home.

Detectives drove to Clark's home in Levittown, Pa., outside of Philadelphia where he lives with a girlfriend and her child, on Wednesday night and brought him back to the Philadelphia police station.

A silver Ford truck was towed from Smith's home, which was the same truck spotted on surveillance video Monday in Ketunuti's neighborhood, sources told ABC News affiliate WPVI.

There, he gave statements that led police to charge him with the murders, Clark said.

Smith will face charges of murder, arson, and abuse of a corpse.

Ketunuti's hospital issued a statement Tuesday that she was "a warm, caring, earnest, bright young woman with her whole future ahead of her," adding that she will be deeply missed.

"[She was] super pleasant, really nice," one neighbor said. "Just super friendly."

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North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "sworn enemy".

The announcement by the country's top military body came a day after the U.N. Security Council agreed to a U.S.-backed resolution to censure and sanction North Korea for a rocket launch in December that breached U.N. rules.

North Korea is not believed to have the technology to deliver a nuclear warhead capable of hitting the continental United States, although its December launch showed it had the capacity to deliver a rocket that could travel 10,000 km (6,200 miles), potentially putting San Francisco in range, according to an intelligence assessment by South Korea.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un, who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

China, the one major diplomatic ally of the isolated and impoverished North, agreed to the U.S.-backed resolution and it also supported resolutions in 2006 and 2009 after Pyongyang's two earlier nuclear tests.

Thursday's statement by North Korea represents a huge challenge to Beijing as it undergoes a leadership transition, with Xi Jinping due to take office in March.

China's Foreign Ministry called for calm and restraint and a return to six-party talks, but effectively singled out North Korea, urging the "relevant party" not to take any steps that would raise tensions.

"We hope the relevant party can remain calm and act and speak in a cautious and prudent way and not take any steps which may further worsen the situation," ministry spokesman Hong Lei told reporters at a regular press briefing.

North Korea has rejected proposals to restart the talks aimed at reining in its nuclear capacity. The United States, China, Russia, Japan and the two Koreas are the six parties involved.

"After all these years and numerous rounds of six-party talks we can see that China's influence over North Korea is actually very limited. All China can do is try to persuade them not to carry out their threats," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts said the North could test as early as February as South Korea prepares to install a new, untested president or that it could choose to stage a nuclear explosion to coincide with former ruler Kim Jong-il's Feb 16 birthday.

"North Korea will have felt betrayed by China for agreeing to the latest U.N. resolution and they might be targeting (China) as well (with this statement)," said Lee Seung-yeol, senior research fellow at Ewha Institute of Unification Studies in Seoul.

U.S. URGES NO TEST

Washington urged North Korea not to proceed with a third test just as the North's statement was published on Thursday.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul.

"We hope they don't do it. We call on them not to do it," Davies said after a meeting with South Korean officials. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

A South Korean military official said the concern now is that Pyongyang could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

North Korea's 2006 nuclear test using plutonium produced a puny yield equivalent to one kiloton of TNT - compared with 13-18 kilotons for the Hiroshima bomb - and U.S. intelligence estimates put the 2009 test's yield at roughly two kilotons

North Korea is estimated to have enough fissile material for about a dozen plutonium warheads, although estimates vary, and intelligence reports suggest that it has been enriching uranium to supplement that stock and give it a second path to the bomb.

According to estimates from the Institute for Science and International Security from late 2012, North Korea could have enough weapons grade uranium for 21-32 nuclear weapons by 2016 if it used one centrifuge at its Yongbyon nuclear plant to enrich uranium to weapons grade.

North Korea has not yet mastered the technology needed to make a nuclear warhead small enough for an intercontinental missile, most observers say, and needs to develop the capacity to shield any warhead from re-entry into the earth's atmosphere.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions that it sees as hostile.

The bellicose statement on Thursday appeared to dent any remaining hopes that Kim Jong-un, believed to be 30 years old, would pursue a different path from his father, Kim Jong-il, who oversaw the country's military and nuclear programs.

The older Kim died in December 2011.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Additional reporting by Christine Kim in SEOUL, Ben Blanchard and Sui-Lee Wee in Beijing; Writing by David Chance; Editing by Raju Gopalakrishnan and Ron Popeski)

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