Banks foreclosing on churches in record numbers

Forclosure

(Reuters) - Banks are foreclosing on America's churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data.

The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance.

Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group.

In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.

The church foreclosures have hit all denominations across America, black and white, but with small to medium size houses of worship the worst. Most of these institutions have ended up being purchased by other churches.

The highest percentage have occurred in some of the states hardest hit by the home foreclosure crisis: California, Georgia, Florida and Michigan.

"Churches are among the final institutions to get foreclosed upon because banks have not wanted to look like they are being heavy handed with the churches," said Scott Rolfs, managing director of Religious and Education finance at the investment bank Ziegler.

Church defaults differ from residential foreclosures. Most of the loans in question are not 30-year mortgages but rather commercial loans that typically mature after just five years when the full balance becomes due immediately.

Its common practice for banks to refinance such loans when they come due. But banks have become increasingly reluctant to do that because of pressure from regulators to clean up their balance sheets, said Rolfs.

"A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006," Rolfs said. "Banks have had to reappraise the value of these properties, whether it's a church or a commercial office building. Values have gone down, so the loans cannot continue in the same form."

The factors leading to the boom in church foreclosures will sound familiar to many private homeowners evicted from their properties in recent years.

During the property boom, many churches took out additional loans to refurbish or enlarge, often with major lenders or with the Evangelical Christian Credit Union, which was particularly aggressive in lending to religious institutions.

Then after the financial crash, many churchgoers lost their jobs, donations plunged, and often, so did the value of the church building.

CONGREGATIONS IN TROUBLE

Solid Rock Christian Church near Memphis, Tennessee, took out a $2.9 million loan with the Evangelical Christian Credit Union at the beginning of 2008, to construct a new, 2,000 seat, 34,000 square-foot building to house its growing congregation.

In the middle of construction, the economy crashed. The church raided its savings to finish the project, but ended up defaulting on the loan.

The ECCU foreclosed and put the church up for auction.

"We are still fighting this," a church spokesman told Reuters. "We have filed for bankruptcy to stop this foreclosure and to restructure our debt."

At the iconic Charles Street African American Episcopal Church in Boston, Massachusetts, churchgoers and clergy accuse the bank of being unwilling to negotiate.

The church is being threatened with foreclosure and a March 22 auction by its lender OneUnited bank, America's largest black-owned bank.

The bank says the church, which was founded in 1818 and played a major role in the anti-slavery movement, has defaulted on a $1.1 million balloon loan that came due in December 2011.

A balloon loan is a long-term loan, often a mortgage, that has a large, or balloon, payment due upon maturity. They often have very low interest payments and require little capital outlay during the life of the loan due to the large end payment.

The church is also involved in separate litigation with OneUnited involving a 2006 loan of $3.6 million that financed the refurbishment of two buildings into a community center.

"We want to refinance and we want to pay. It's doable, we have the means to do it but we can only do it if they actually sit down and talk to us," said the Rev. Gregory G. Groover Snr, the church's pastor.

Groover said the church did not default by missing monthly payments, but is in trouble because the loan ballooned.

"We don't have a million dollars to pay off the loan. I don't know what church does. The idea of auctioning off a church is senseless," he said.

In a statement provided to Reuters, OneUntied said it was not its practice to discuss the details of "any discreet customer relationship".

"It is not the practice of the Bank to exercise collection remedies including foreclosure in the absence of good cause. We trust the community will not rush to judgment without full knowledge of all the facts," it said.

Axel Adams, an Atlanta, Georgia official with the Rainbow PUSH coalition, the civil rights and economic justice organization led by the Rev. Jesse Jackson, said he had seen a "tremendous increase" in churches facing foreclosure.

"And some pastors have not notified their congregants," Adams said. "They are fearful that if they do, they will lose congregants prematurely."

Flat Rock Church in Lithonia, Georgia, which dates back to 1860, took out an $850,000 balloon loan with Sun Trust Bank in 2005 to fund a new 300-seat church.

In May 2010 the loan became due. The bank foreclosed and the church is due to be auctioned off next month.

"The bank has refused to negotiate and to this day I just don't know why," said Binita Miles, the church pastor.

A spokesman for Sun Trust said: "We view foreclosure as an action of last resort. We have been working for several years to address the issue with the client in hopes of avoiding foreclosure."

There are more than 300,000 churches in the United States.

"The church foreclosure market isn't anything extraordinary," said Rolfs. "It's simply another byproduct of the credit bubble."

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Gingrich victory in South Carolina jolts Republican race

Newt Gingrich

(Reuters) - Republican presidential candidate Newt Gingrich trounced frontrunner Mitt Romney in South Carolina on Saturday in a jarring victory that indicates the party's battle to pick a challenger to President Barack Obama may last months, not weeks.

Gingrich's come-from-behind triumph in the primary in the conservative southern state injects unexpected volatility into a Republican nominating race that until this week appeared to be a coronation for Romney, the former Massachusetts governor and private-equity chief.

Instead, voters in South Carolina rejected Romney's pitch that he is the best bet to fix a broken U.S. economy and defeat Obama, a Democrat, in the November 6 election.

Three different candidates - Gingrich, Romney and former U.S. senator Rick Santorum - now have won the first three contests in the state-by-state battle for the Republican presidential nomination to face Obama.

Gingrich's triumph may lead to a protracted battle of attrition as Republican candidates spend millions of dollars to tear each other down rather than uniting behind a standard-bearer to take back the White House.

With nearly all the votes counted, Gingrich had pulled in 40 percent of the vote, followed by Romney with 28 percent, networks reported. Santorum was in third with 17 percent and U.S. congressman Ron Paul in fourth with 13 percent.

The next contest is the Florida primary on January 31.

Riding a series of feisty debate performances, the former speaker of the House of Representatives captured the lingering unease of conservative voters in South Carolina who view Romney's moderate past and shifting policy stances with suspicion. Gingrich argued that he would be able to better articulate the party's conservative ideals.

South Carolina was a stunning turnaround for Gingrich, whose campaign barely survived after top staff quit last June and stumbled to a disappointing finish just three weeks ago in Iowa, the first Republican nominating contest. He finished fourth in both Iowa and New Hampshire a week later as conservatives split their votes among several candidates.

Gingrich contrasted his sometimes-chaotic management style with Romney's buttoned-down approach, arguing that his campaign was powered by ideas rather than logistics. Romney is one of the wealthiest candidates ever to run for president and his campaign is well financed.

"We don't have the kind of money that at least one of the candidates have. But we do have ideas and we do have people," Gingrich told supporters in a 22-minute tirade against Obama, the news media, judges and other "elites."

Romney acknowledged that there will be a long primary season. He said he would continue to run on his business record and paint Gingrich as a creature of Washington in the weeks ahead.

"I don't shrink from competition, I embrace it," Romney told supporters. "I believe competition makes us all better. I know it's making our campaign stronger."

Obama, who does not face a primary challenger, will have his turn in the spotlight on Tuesday with his State of the Union address. In a message to supporters on Saturday, he said the speech would focus on "building an economy that works for everybody, not just a wealthy few."

ON TO FLORIDA

Heading into Florida, Romney starts off with a wide lead in the polls and a distinct edge in logistics and fund-raising, which will be crucial in a state with 10 separate media markets.

Campaigns must spend at least $1 million each week to reach voters in the sprawling southern state, according to local political officials. Romney's allies have already spent $5 million, mostly on ads attacking Gingrich. No other candidate has a significant presence in the state.

Animosity between Gingrich and Romney has been festering since December, when a group supporting Romney launched a blitz of negative TV ads in Iowa that ruined Gingrich's campaign there. In South Carolina, a state with a reputation for rough and tumble politics, the gloves came off.

Gingrich attacked Romney's business record at private equity firm Bain Capital and his reluctance to release personal tax information, while Romney pointed to Gingrich's past ethics lapses and alluded to his messy personal life.

South Carolina Republican voters said they were focused on fixing the sluggish economy and finding the strongest candidate to defeat Obama. Some 78 percent said they were "very worried" about the economy and 45 percent said that the most important trait in a candidate was the ability to beat Obama, according to exit polls released by CNN.

Those issues are the twin pillars of Romney's candidacy.

But Gingrich's wide-ranging stump speeches and red-meat attacks against Obama convinced many voters that he had the fire in the belly to take on the incumbent.

"A vote for Newt was a vote against Obama," said Charleston photographer Kim Woods, who voted for Gingrich.

Romney saw his aura of inevitability erode in South Carolina after leading opinion polls by 10 percentage points a week ago. He suffered a setback on Thursday when Iowa officials declared in a recount that he had actually come in second place in that state, instead of winning narrowly as initially announced.

Romney took a swipe at Gingrich for criticizing his conduct at Bain Capital, calling it an "assault on free enterprise."

"Those who pick up the weapons of the left today will find them turned against us tomorrow," Romney told supporters.

Voters said they viewed Romney's business background as an asset. But he waffled this week when asked whether he would release his tax records, and acknowledged that he pays a much lower tax rate than many Americans, around 15 percent.

In his speech, Gingrich took aim at Obama, painting him as a weak president, "truly a danger to the country" with his energy policies and "out of touch with reality." He also lashed the news media and condemned what he called "the growing anti-religious bigotry of the elites" in America.

'PUNCH IN THE MOUTH'

"This is the punch in the mouth/wake up call Romney needed if he wanted to be a strong general election candidate," Republican strategist Ford O'Connell said in a Twitter message, referring to the South Carolina results.

Romney has attacked Gingrich's ties to mortgage giant Freddie Mac and criticized his time in the nation's capital. His campaign also highlighted Gingrich's $300,000 fine due to ethics lapses while serving as House speaker 15 years ago.

The thrice-married Gingrich has fended off publicity about his turbulent marital history. On Thursday, he rejected his second wife's accusation that he had asked her for an "open marriage" while he was having an affair with another woman in the 1990s.

South Carolina has been a tough state for Romney's presidential ambitions. In his previous run for the White House in 2008, Romney finished a poor fourth, with just 15 percent of the vote, behind winner and eventual Republican nominee John McCain. McCain endorsed Romney in the current campaign.

The winner of South Carolina's Republican presidential primary has gone on to win the party's nomination in every presidential election since 1980.

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New Miss America of 2012 gets crowned

Miss US 2012 Laura Kaeppeler

Laura Kaeppeler, Miss America 2012

Laura Kaeppeler, Miss America 2012

Laura Kaeppeler, Miss America 2012

Laura Kaeppeler, a 23-year-old beauty queen from Wisconsin, was crowned Miss America 2012 on Saturday after beating 52 other young women from across the United States. Her win marks the first time Miss Wisconsin has taken home the crown since 1972. Kaeppeler won a $50,000 scholarship and a yearlong run with the crown after answering a question about whether Miss America should declare her political affiliation by saying, "Miss America represents everyone ... Miss America represents all." Miss Oklahoma Betty Thompson came in second while Miss New York Kaitlyn Monte placed third.

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Last U.S. troops leave Iraq, ending war

Last U.S. convoy leaves Iraq

(Reuters) - The last convoy of U.S. soldiers pulled out of Iraq on Sunday, ending nearly nine years of war that cost almost 4,500 American and tens of thousands of Iraqi lives and left a country grappling with political uncertainty.

The war launched in March 2003 with missiles striking Baghdad to oust President Saddam Hussein closes with a fragile democracy still facing insurgents, sectarian tensions and the challenge of defining its place in an Arab region in turmoil.

The final column of around 100 mostly U.S. military MRAP armored vehicles carrying 500 U.S. troops trundled across the southern Iraq desert from their last base through the night and daybreak along an empty highway to the Kuwaiti border.

Honking their horns, the last batch of around 25 American military trucks and tractor trailers carrying Bradley fighting vehicles crossed the border early Sunday morning, their crews waving at fellow troops along the route.

"I just can't wait to call my wife and kids and let them know I am safe," Sgt. First Class Rodolfo Ruiz said as the border came into sight. Soon afterwards, he told his men the mission was over, "Hey guys, you made it."

For U.S. President Barack Obama, the military pullout is the fulfillment of an election promise to bring troops home from a conflict inherited from his predecessor, the most unpopular war since Vietnam and one that tainted America's standing worldwide.

For Iraqis, though, the U.S. departure brings a sense of sovereignty tempered by nagging fears their country may slide once again into the kind of sectarian violence that killed many thousands of people at its peak in 2006-2007.

Prime Minister Nuri al-Maliki's Shi'ite-led government still struggles with a delicate power-sharing arrangement between Shi'ite, Kurdish and Sunni parties, leaving Iraq vulnerable to meddling by Sunni Arab nations and Shi'ite Iran.

The intensity of violence and suicide bombings has subsided. But a stubborn Sunni Islamist insurgency and rival Shi'ite militias remain a threat, carrying out almost daily attacks, often on Iraqi government and security officials.

Iraq says its forces can contain the violence but they lack capabilities in areas such as air defense and intelligence gathering. A deal for several thousand U.S. troops to stay on as trainers fell apart over the sensitive issue of legal immunity.

For many Iraqis, security remains a worry - but no more than jobs and getting access to power in a country whose national grid provides only a few hours of electricity a day despite the OPEC country's vast oil potential.

U.S. and foreign companies are already helping Iraq develop the world's fourth-largest oil reserves, but its economy needs investment in all sectors, from hospitals to infrastructure.

"We don't think about America... We think about electricity, jobs, our oil, our daily problems," said Abbas Jaber, a government employee in Baghdad. "They (Americans) left chaos."

GOING HOME

After Obama announced in October that troops would come home by the end of the year as scheduled, the number of U.S. military bases was whittled down quickly as hundreds of troops and trucks carrying equipment headed south to Kuwait.

U.S. forces, which had ended combat missions in 2010, paid $100,000 a month to tribal sheikhs to secure stretches of the highways leading south to reduce the risk of roadside bombings and attacks on the last convoys.

Only around 150 U.S. troops will remain in the country attached to a training and cooperation mission at the huge U.S. embassy on the banks of the Tigris river.

At the height of the war, more than 170,000 U.S. troops were in Iraq at more than 500 bases. By Saturday, there were fewer than 3,000 troops, and one base - Contingency Operating Base Adder, 300 km (185 miles) south of Baghdad.

At COB Adder, as dusk fell before the departure of the last convoy, soldiers slapped barbecue sauce on slabs of ribs brought from Kuwait and laid them on grills beside hotdogs and sausages.

Earlier, 25 soldiers sat on folding chairs in front of two armored vehicles watching a five-minute ceremony as their brigade's flags were packed up for the last time before loading up their possessions and lining up their trucks.

The last troops flicked on the lights studding their MRAP vehicles and stacked flak jackets and helmets in neat piles, ready for the final departure for Kuwait and then home.

"A good chunk of me is happy to leave. I spent 31 months in this country," said Sgt. Steven Schirmer, 25, after three tours of Iraq since 2007. "It almost seems I can have a life now, though I know I am probably going to Afghanistan in 2013. Once these wars end I wonder what I will end up doing."

NEIGHBOURS KEEP WATCH

Iran and Turkey, major investors in Iraq, will be watching with Gulf nations to see how their neighbor handles its sectarian and ethnic tensions, as the crisis in Syria threatens to spill over its borders.

The fall of Saddam allowed the long-suppressed Shi'ite majority to rise to power. The Shi'ite-led government has drawn the country closer to Iran and Syria's Bashar al-Assad, who is struggling to put down a nine-month-old uprising.

Iraq's Sunni minority is chafing under what it sees as the increasingly authoritarian control of Maliki's Shi'ite coalition. Some local leaders are already pushing mainly Sunni provinces to demand more autonomy from Baghdad.

The main Sunni political bloc Iraqiya said on Saturday that it was temporarily suspending its participation in the parliament to protest against what it said was Maliki's unwillingness to deliver on power-sharing.

A dispute between the semi-autonomous Kurdish region and Maliki's central government over oil and territory is also brewing, and is a potential flashpoint after the buffer of the American military presence is gone.

"There is little to suggest that Iraq's government will manage, or be willing, to get itself out of the current stalemate," said Gala Riani, an analyst at IHS Global Insight.

"The perennial divisive issues that have become part of the fabric of Iraqi politics, such as divisions with Kurdistan and Sunni suspicions of the government, are also likely to persist."

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2ft tall Jyoti dreams of Bollywood acting career after being crowned world's shortest woman

Jyoti is measured at 61.95cm on her 18th birthday by Guinness World Record

Jyoti with a family friend two years ago - who, at 13 months, bigger than she is

Celebrating your 18th birthday is a momentous occasion for anyone, but for tiny Jyoti Amge the milestone is even bigger news.

The 2ft teenager is already a mini celebrity in her hometown of Nagpur, India, but is now set for a huge record when she is officially declared the world's smallest woman.

And despite her miniature stature, 61.95cm-tall Jyoti hopes to celebrate being crowned the world's shortest woman by launching a Bollywood movie career.

She took the Guinness World Record from 2ft 3in American Bridgette Jordan, and celebrated her birthday with a teddy bear which loomed over her tiny 24.4in frame.

She measured 7 centimeters (2.76 inches) shorter than the 22-year-old American Bridgette Jordan, who had held the title since September.

A teary-eyed Jyoti, dressed in one of her finest saris, called the honor an 'extra birthday present' and said she felt grateful for being small, as it had brought her recognition.

She also blew out candles on a birthday cake which was comfortably bigger than her.

Even the Guinness World Records book at the ceremony came up to Jyoti's waist.

Jyoti weighs just 12lbs (5.5kg) - only 9lbs more than she did at birth - and has a form of dwarfism call achondroplasia, which stopped her growing after her first birthday.

She has brittle bones and is likely to need care for the rest of her life, but that has not stopped her tall ambitions of cracking the movie industry.

udding actress Jyoti, who is set to appear in two Bollywood films next year, told The Sun: 'I want to make people happy.'

As a teenager at school in Nagpur, Jyoti had her own small desk and chair, but said the other students didn't treat her any differently.

She also has to sleep in a specially-made bed and uses utensils that are smaller than average.

This was not Amge's first Guinness record. Until Friday she was considered the world's shortest teenager, but in turning 18 qualified for the new title.

She has grown less than 1cm (0.4in) in the last two years, Guinness said in a statement, and will grow no more due to a form of dwarfism called achondroplasia.

Her teenage title brought the chance for multiple Guinness-sponsored trips to Japan and Italy for tours and meetings with other record holders, she said.

The title of shortest woman in history continues to be held by Pauline Musters, who lived in the Netherlands from 1876 to 1895 and stood 61 centimeters (24 inches) tall.

Jyoti insists in being treated like a normal young woman, and likes nothing more than doing her make-up, going clothes shopping with friends or enjoying DVDs.

As she celebrated turning 18, Jyoti said: 'It's been my dream to be recognised as the world's smallest woman for many years. I'm now a woman so I hope I don't have to wait much longer!'

She was officially crowned the world's shortest woman at a Guinness World Records ceremony in Nagpur with her mother Ranjana.

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Boy escapes from terrorist group after five months in captivity

Kidnapped Boy

A BOY of 14 kidnapped by a terror group linked with al-Qaeda has escaped by fleeing in bare feet through a jungle for two days.

Kevin Lunsmann was missing for five months while Islamic militants made ransom demands to his family.

But he outwitted four armed guards by telling them he was going to wash in a stream, before running away.

Villagers found him the next evening after he followed a river down a mountain on the southern Philippine island of Basilan.

Kevin was flown to the capital Manila and phoned his Filipino-American mum Gerfa, who was in the U.S. She and Kevin’s Filipino cousin Romnick Jakaria were kidnapped with the teenager during a holiday to the country in July.

His mum Gerfa was released by the ­insurgent group in October.

Romnick then managed to escape from the terrorists last month.

Kevin and Gerfa’s family in Virginia had received demands for money to ensure their safe return.

Ransom kidnappings in the region are blamed mostly on Abu Sayyaf, an al-Qaeda-linked group which is ­considered a terrorist organization by the Americans.

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Iran releases video of downed U.S. spy drone–looking intact

Downed U.S. spy plane

Iran's Press TV on Thursday broadcast an extended video tour of the U.S. spy drone that went down in the country--and it indeed appeared to look mostly intact.

American officials have acknowledged that an unmanned U.S. reconnaissance plane was lost on a mission late last week, but have insisted that there is no evidence the drone was downed by hostile acts by Iran. Rather, they said, the drone likely went down because of a malfunction, and they implied the advanced stealth reconnaissance plane would likely have fallen from such a high altitude--the RQ-170 Sentinel can fly as high as 50,000 feet--that it wouldn't be in good shape.

But Iranian military officials have claimed since Sunday that they brought down an American spy drone that was little damaged. And now they have provided the first visual images of what looks to be a drone that at least outwardly appears to be in decent condition, in what is surely another humiliating poke in the eye for U.S. national security agencies.

The Pentagon declined to comment on the released images Thursday, a Defense Department spokesman told Yahoo News. But military analysts said it appeared to them to be the American drone in question.

"I have been doing this for thirty years, and it sure looks like" a stealthy U.S. drone to me," Loren Thompson, a military analyst with the Lexington Institute and consultant to the RQ-170's manufacturer, Lockheed Martin, told Yahoo News in a telephone interview Thursday. "I think we are going to face the high likelihood that Iran has an intact version of one of our most important intelligence gathering tools."

Still, Thompson went on, the intelligence "windfall" to Iran from obtaining the advanced U.S. stealthy drone may be mitigated.

"I don't think the Iranians get as much out of it as they might hope," he said. "It probably came into their hands as a result of a technical malfunction. What that means is they still don't have a real defense against the U.S. flying other vehicles that have similar capabilities, without much fear of interception."

Analysts also noted that the video of the drone released by Iran did not show the drone's underside. "Pretty intact," the Center for Strategic and International Studies' James Lewis said by email. "Interesting that they covered the underside."

The New York Times reported Thursday that--unsurprisingly--the RQ-170 was lost while making the latest foray over Iran during an extended CIA surveillance effort of Iran's nuclear and ballistic weapons program.

"The overflights by the bat-winged RQ-170 Sentinel, built by Lockheed Martin and first glimpsed on an airfield in Kandahar, Afghanistan, in 2009, are part of an increasingly aggressive intelligence collection program aimed at Iran, current and former officials say," the Times' Scott Shane and David Sanger wrote. "The urgency of the effort has been underscored by a recent public debate in Israel about whether time is running out for a military strike to slow Iran's progress toward a nuclear weapon."

Iran in turn has complained that the drone overflights represent an act of aggression and violation of its sovereignty, and summoned the Swiss envoy--who represents U.S. interests in Iran--on Thursday to lodge a protest.

However, while the images of the U.S. drone surely allowed Iran to score another public relations blow against Washington, Iran may find it tough to generate much in the way of international sympathy for being the target of U.S. surveillance.

Last week, Iranian hardliners ransacked the British embassy in Tehran, prompting the United Kingdom to recall its diplomatic staff from Tehran and order Iran's embassy in London closed. Last month, the UN atomic watchdog agency issued a report raising concerns about research Iran is suspected by some nations to have conducted before 2003 on military aspects of its nuclear program. Iran has insisted its nuclear program is for peaceful energy purposes. In October, the United States accused elements of Iran's Qods force of plotting to assassinate the Saudi envoy to the United States. The United Nations General Assembly voted last month in favor of a resolution condemning the Iranian plot.

Amid its growing international isolation, Iran, unsurprisingly, seemed intent to play up the drone incident for all it could.

"China, Russia want to inspect downed U.S. drone," proclaimed a headline from Iran's Mehr news agency Thursday.

The RQ-170 Sentinel, however, reportedly did not use the latest U.S. surveillance technology on board, in part because as a single-engine aircraft, it was thought more likely to occasionally go down.

"The basic principles of stealthy aircraft are fairly well known," Thompson said. "In terms of [the drone's] on-board electronics and information systems, it is fairly routine in combat to require authentication codes to make them hard to unlock."

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Obama tells Asia U.S. "here to stay" as Pacific power

Barack Obama, U.S. President

(Reuters) - President Barack Obama announced on Thursday that the U.S. military would expand its role in the Asia-Pacific region, despite budget cuts, declaring America was "here to stay" as a Pacific power which would help shape the region's future.

China has voiced misgivings about Obama's announcement of fresh troop deployments to Australia and has longstanding fears that its growing power could be hobbled by U.S. influence. But Beijing has also stressed that conflict is in nobody's interest.

Obama addressed the Chinese unease, pledging to seek greater cooperation with Beijing.

The U.S. military, turning its focus away from Iraq and Afghanistan, would be more broadly distributed in Asia, particularly Southeast Asia, more flexible and help build regional capacity, Obama told the Australian parliament.

"As we end today's wars, I have directed my national security team to make our presence and missions in the Asia Pacific a top priority," Obama said in a major speech on Washington's vision for the Asia-Pacific region.

"As a result, reductions in U.S. defense spending will not -I repeat, will not - come at the expense of the Asia Pacific."

Obama was clear in acknowledging China's discomfort at what it sees as attempts by Washington to encircle it.

"We'll seek more opportunities for cooperation with Beijing, including greater communication between our militaries to promote understanding and avoid miscalculation," he said.

Nervous about China's growing clout, U.S. allies such as Japan and South Korea have sought assurances from the United States that it would be a strong counterweight in the region.

A first step in extending the U.S. military reach into Southeast Asia will see U.S. marines, naval ships and aircraft deployed to northern Australia from 2012.

China has questioned the new U.S. deployment, raising doubts whether strengthening such alliances helped the region pull together at a time of economic gloom.

Obama said the United States would seek to work with China to ensure economic prosperity and security in the region, but would speak candidly about issues such as human rights in China and raise security issue like the South China Sea.

China claims the South China Sea, a vital shipping route rich in oil, minerals and fishery resources. But Vietnam, the Philippines, Taiwan, Malaysia and Brunei hold rivals claims to at least parts of the sea, sparking maritime stand-offs.

U.S. Secretary of State Hillary Clinton pointedly visited the Philippines on Wednesday, saying that no claimant should resort to intimidation to push its cause.

Obama also referred in his address to reforms undertaken by Myanmar's new civilian leaders, including the release of political prisoners. But he said they had to do more on human rights in order to secure better relations with Washington.

Rory Medcalf, security analyst at the Lowy Institute for International Policy in Sydney, said Obama's speech marked a hardening of policy toward China, though he noted that the president was still reaching out to Beijing.

"I think we are seeing a firm stance from Obama. He spent the first year of his presidency trying very hard to engage with China, perhaps even to accommodate China," said Medcalf.

"I think he feels that he was rebuffed and that he was in effect taken advantage by China. So, there is a fundamental reorienting of American policy on display here."

U.S. SEEKS MORE FLEXIBLE FORCES IN ASIA

The winding down of wars in Afghanistan and Iraq has opened the door to greater U.S. attention to simmering tension over the South China Sea, a shipping lane for more than $5 trillion in annual trade that the United States wants to keep open.

Obama and Australian Prime Minister Julia Gillard on Wednesday agreed to have 2,500 U.S. Marines operate out of a de facto base in the northern port of Darwin by 2016.

The United States has military bases and large forces in Japan and South Korea, but its presence in Southeast Asia was dramatically reduced in the early 1990s with the closure of bases at Clark Field and Subic Bay in the Philippines.

Deploying U.S. Marines, ships and aircraft in Darwin, only 820 km (500 miles) from Indonesia, will allow the United States to quickly reach into Southeast Asia and the Indian Ocean to ensure secure major trade sea-lanes.

Obama cited increased U.S. naval ship visits and training in the Philippines and Singapore, working with Indonesia to fight piracy, partnering Thailand for disaster relief, and significantly, acknowledged India's role in region security.

Washington welcomed "India as it 'looks east' and plays a larger role as an Asian power.

"We'll have new opportunities to train with other allies and partners, from the Pacific to the Indian Ocean," he said.

Medcalf said: "It will be a landmark speech of Obama's presidency. It states unequivocally that the U.S. is squarely focusing its strategic attention on Asia. Its defining that Asia as including the Indian Ocean and India."

In a note to his domestic audience, Obama said the increased focus on Asia-Pacific was essential for America's economic future.

"As the world's fastest-growing region-and home to more than half the global economy-the Asia Pacific is critical to achieving my highest priority: creating jobs and opportunity for the American people," he said.

Obama will fly to Bali late on Thursday, where he will seek to underscore a focus on Asia by becoming the first U.S. president to participate in the security East Asia Summit.

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