Saturday, 7 January 2012

Breaking News

Breaking News

Penn State Hires Bill O'Brien as Football Coach

Posted: 07 Jan 2012 09:25 AM PST

STATE COLLEGE, Pa. –  Penn State has hired New England Patriots offensive coordinator Bill O'Brien as its head coach, the first change in leadership for the storied football program in nearly a half-century.

The announcement caps a turbulent two-month period that began with the firing of Hall of Famer Joe Paterno on Nov. 9 in the aftermath of child sex abuse charges against retired assistant coach Jerry Sandusky.

Not only is O'Brien replacing Division I's winningest coach, but he must also guide a program shrouded in uncertainty. Besides the criminal investigation into Sandusky, the NCAA has launched its own inquiry.

The 42-year-old O'Brien will be formally announced at a news conference on Saturday in the Nittany Lion Inn ballroom on campus.

But some fickle, fed-up Penn State fans did not wait for the official introduction to take to Twitter to start debating O'Brien's resume and qualifications. While instrumental in running the Patriots' high-powered offense, O'Brien has never been a head coach.

Now he's taking over for Paterno, who had been on the job 46 seasons. In between, the 85-year-old Paterno won 409 games and was elected to the Hall of Fame.

"I am thrilled to be the head coach of the Penn State football program," O'Brien said in a statement. "As head coach of this special football program, it is my responsibility to ensure that this program represents the highest level of character, respect and integrity in everything we do."

He said that encompassed coaches, players and anyone else involved in the 125-year-old football program.

"There is tremendous pride in Penn State football and (we) will never, ever take that for granted," O'Brien said.

The new head coach also faced skepticism from some alumni and prominent former players. Some supported interim coach Tom Bradley to be elevated permanently; others criticized the search process for not taking into account enough the opinions of those affiliated with the program who backed Bradley, a 33-year veteran of the staff.

Others still, including former quarterback Kerry Collins, asked for lettermen to give O'Brien a chance.

"Whether you agree or disagree with his hiring, we should support him," Collins said in a statement Friday night, according to the Reading Eagle. "Instead of chastising him for not being a Penn Stater, let's show him what it means to be a Penn Stater. ... Let's support him in any way we can."

O'Brien has no apparent previous ties to Penn State and a proud program tarnished by a scandal that also led to the departure of President Graham Spanier.

O'Brien and Paterno do share at least one connection though -- both coaches attended Brown University.

"I understand Bill O'Brien has been named head coach and I want to congratulate him on his appointment," Paterno said in a statement to The Associated Press provided by his family. "I don't know Bill, but I respect his coaching record, and I am particularly pleased we share a connection to my alma mater, Brown."

"Despite recent commentary to the contrary, Penn State football has always been about more than winning," Paterno added, citing what he said was the program's commitment to education and community service.

"I am hopeful this tradition will continue."

This was O'Brien's first year coordinating the Patriots' legendary offense, but he has also coached star quarterback Tom Brady since 2009 and spent 2008 coaching receivers.

O'Brien recently was in the spotlight when he and Brady got into a heated argument, shown on national television, after Brady threw an interception in the end zone in the fourth quarter of the Patriots' 34-27 win over the Washington Redskins on Dec. 11.

New England closed the regular season on an eight-game winning streak, and scored 513 points, the most in the AFC. Brady threw for 5,235 yards and 39 touchdowns, with just 12 interceptions.

Iran Hails U.S. Rescue of Sailors as 'Humanitarian and Positive' Act

Posted: 07 Jan 2012 09:21 AM PST

TEHRAN –  Iran's foreign ministry on Saturday labeled the U.S. Navy's rescue of 13 Iranians from pirates who had hijacked a fishing vessel a "humanitarian and positive" act.

"We consider the actions of the U.S. forces in saving the lives of Iranian seamen to be a humanitarian and positive act and we welcome such behavior. We think all nations should display such behavior," Iran's foreign ministry spokesman Ramin Mehmanparast told broadcaster al Alam.

U.S. forces rescued the Iranian sailors Thursday after a Navy helicopter spotted a suspicious skiff alongside an Iranian-flagged boat and picked up a distress signal from its captain.

Ironically, the forces that came to assist the sailors were assigned to the USS John C. Stennis strike group -- the same aircraft carrier that was subject to an Iranian threat just days earlier amid heightened tensions between Washington and Tehran over the Islamic Republic's pledge to close the Strait of Hormuz.

A counter-piracy team from the Navy destroyer USS Kidd boarded and detained 15 pirates who had been holding the boat's crew hostage for more than a month, using their ship, the Al Molai, as a launch pad to mount raids on other vessels.

The captured pirates were put on board the Stennis while authorities considered prosecuting them.

The rescue came just days after Iran's army chief warned the Stennis against returning to the Strait of Hormuz, a key shipping route for up to 20 percent of the world's oil.

The aircraft carrier, one of the largest in the U.S. fleet, had vacated the area while Iran's navy conducted war games in the Persian Gulf for ten days.

U.S. officials have dismissed the threat of closing the waterway as an increasingly isolated Iran lashing out at the international community.

GOP Candidates Look to Rein In Romney at N.H. Debates

Posted: 07 Jan 2012 09:17 AM PST

With Mitt Romney pulling away in the polls, his opponents are looking to knock him off his game during a pair of debates which could represent their best shot at changing up the race before the New Hampshire primary.

A win by Romney in the Granite State would appear a foregone conclusion, considering he's enjoyed a double-digit lead in the state in virtually every poll since polling began. But while some analysts are calling the primary a battle among his opponents for second place, the field of competitors is keen to at least deprive Romney of a crushing victory Tuesday which could help bolster an image of inevitability going into South Carolina and other contests.

Newt Gingrich on Friday night held an event where he urged primary voters not to "mass up" on election day, a dig at Romney's days as Massachusetts governor.

"We're drawing a sharp contrast. I am a Reagan conservative. He is a Massachusetts moderate," Gingrich told Fox News on Saturday. "There are really big gaps between where the two of us stand."

Previewing the strategy ahead, Gingrich accused Romney of backing tax hikes as well as allowing the funding of abortions in his state health care plan. Gingrich's campaign is planning to release an ad focused on Romney's abortion record, though the former House speaker said Saturday he will avoid "negative" ads.

The candidates will have a chance to articulate their concerns with Romney at a debate Saturday night, followed by another Sunday morning. There are fewer than 12 hours between the ABC News/WMUR debate Saturday and the NBC News/Facebook debate on Sunday's "Meet the Press."

Gingrich said he plans to draw contrasts with his opponents, but said of the debates, "I'm not going to be nasty or mean-spirited."

Ahead of the grueling rhetorical task ahead, Gingrich was holding a town hall in New Hampshire Saturday, as were Romney and former Utah Gov. Jon Huntsman, who is banking on New Hampshire to keep his struggling campaign afloat. Rick Santorum, the former Pennsylvania senator who finished a few votes behind Romney in the Iowa caucuses, had a string of events scheduled for Saturday as he pursues the same kind of retail politics in New Hampshire that helped propel him from the back of the pack to the front in Iowa.

Both Santorum and Romney have enjoyed a surge in the polls coming out of the caucuses. But Romney appears to be pulling away for the moment. In New Hampshire, a new Rasmussen Reports poll showed him leading by 24 points. The candidate who was seemingly unable to break the 25-point threshold in Iowa was clocking in at 42 percent in New Hampshire, followed by Ron Paul with 18 percent and Santorum with 13 percent.

With Gingrich's numbers going down, Romney has also returned to the lead in national polls, and in South Carolina polls. Several surveys released Friday showed Romney seizing the lead from Gingrich in the Palmetto State, with Santorum and Gingrich jockeying for second position.

South Carolina historically has been the most critical early GOP primary contest, and Romney's opponents are determined to keep him from going three-for-three. They routinely raise questions about whether he has the conservative core that primary voters are looking for.

"The only way Republicans lose is if we screw this up and nominate another moderate who has taken multiple positions on every major issue of our time," Santorum wrote supporters in a fundraising appeal.

Santorum is set to leave Sunday for South Carolina for a half-day of campaigning. Romney has events planned in New Hampshire through primary day on Tuesday.

Gingrich has been talking of merely holding Romney's winning total under 50 percent in New Hampshire while Paul, who arrived in the state on Friday, has focused his criticism on Santorum.

"He brags about being for a balanced budget amendment but never did anything about it," Paul said of Santorum's time in the Senate. "He voted four or five times to raise the debt ceiling. He voted to double the size of the Department of Education."

Rihanna Named Biggest-Selling Digital Artist of All Time: Most Overrated 'Digital' Artist?

Posted: 07 Jan 2012 09:12 AM PST

It's official: Rihanna is the queen of the digital universe. Critics say she's all about s-e-x, but the Barbadian beauty is the biggest-selling digital artist of all time, according to a new report from Nielsen SoundScan.

In other words, working that sexy body has rung up a whopping 47.5 million digital downloads from July 4, 2004, to Jan. 1, 2012, the report says. And she's still only 23.

SODAHEAD SLIDESHOW: See the most overrated "digital" artists.

The Black Eyed Peas take second place on the list with 42.4 million digital sales, despite their disappointing performance at last year's Super Bowl halftime show. The Real Slim Shady stands up in third place, with Eminem fans downloading 42.2 million "units" of his songs.

And say what you want about Lady Gaga, but the Queen Monster is holding steady in fourth place with 42 million units sold. Taylor Swift takes the No. 5 spot with 41.8 million, and soon-to-be divorced Katy Perry is in sixth place with 37.6 million.

Cruise rings in New Year at top of box office

Posted: 07 Jan 2012 09:07 AM PST

( ANGELES: Tom Cruise's "Mission: Impossible - Ghost Protocol" topped the North American box office for a second straight weekend, ringing in the New Year with $30 million in ticket sales, industry estimates showed Sunday.

The action film, the fourth in the series, thus far has taken in $133 million, according to Exhibitor Relations.

In second place was "Sherlock Holmes: A Game of Shadows," a sequel to the 2009 film about the detective created by Sir Arthur Conan Doyle. It took in $22.1 million in the third week since its release.

In third place with $18.3 million was "Alvin and the Chipmunks: Chipwrecked," the third animated film about the adorable singing critters.

Fourth place went to Steven Spielberg's "War Horse," about the bond between a boy and his horse during World War I, which was expected to reap in $16.9 million.

"The Girl with the Dragon Tattoo" -- the Hollywood adaptation of the wildly popular Stieg Larsson novel, starring Daniel Craig and Rooney Mara -- took in $16.3 million for fifth place.

Family film "We Bought A Zoo" starring Matt Damon finished in sixth place, taking in $14.3 million.

Another Spielberg film, "The Adventures of Tintin," about an intrepid Belgian boy reporter, was seventh with $12 million.

Star-studded holiday romance "New Year's Eve" earned $6.7 million for eighth place, while thriller "The Darkest Hour" took ninth place with $4.3 million.

Woodford to sue Olympus, drops leadership bid

Posted: 07 Jan 2012 09:01 AM PST

( - The ousted British CEO of disgraced Olympus Corp, who blew the whistle on a $1.7 billion accounting fraud, dropped his bid to return to lead the medical device maker, blaming cozy ties between its management and big Japanese shareholders and saying the saga had taken its toll on his family.

Michael Woodford's campaign against its management rocked the once-proud maker of endoscopes and cameras, but failed to win over Japanese institutional shareholders including Olympus' main lenders, who support a board that has been castigated for insufficient oversight.

"Despite one of the biggest scandals in history, the Japanese institutional shareholders have not spoken one single word of criticism, in complete and utter contrast with the overseas shareholders who were demanding accountability," Woodford told a news conference in Tokyo on Friday.

The decision by Woodford, who was fired in October after just two weeks as chief executive, leaves foreign shareholders who want a new slate of directors, including U.S. fund manager Southeastern Asset Management, without a champion to lead any proxy battle when the company convenes an extraordinary shareholders meeting as early as March.

"We applaud and respect (Woodford's) actions and regret that he has decided to withdraw. Olympus ... continues to suffer under shoddy corporate governance and an utterly discredited board. We maintain that the board should be replaced and a new board should oversee the company's revival," Josh Shores, Southeastern's senior analyst and principal said in a statement.

Another major U.S.-based investor, Harris Associates in Chicago, echoed Southeastern's sentiment.

"It is unfortunate that Mr. Woodford has ended his quest to put together a sound, quality board of directors for Olympus, but the reform process has to continue," said David Herro, chief investment officer for international equities at Harris.

"We still agree with what the independent third-party committee implied - that the entire existing board of directors needs to be replaced, given their involvement in the tobashi scandal," Herro said in a statement.

"All stakeholders need to be working toward the objective of renewal for Olympus, and a new, high-quality board of directors is the first step to be taken."

In a tobashi scheme an investment firm hides a client's losses by shifting them between the portfolios of other genuine or fake clients.

Woodford said he would sue Olympus for unfair dismissal and had instructed his lawyers to begin legal action in Britain. Olympus said in October it fired Woodford because he failed to understand the company's management style and Japanese culture.

"There are no grounds whatsoever for dismissal," he said.

Woodford, looking calmer than at his last news conference in Japan, where he lashed out at Olympus executives and big Japanese shareholders, called his sacking and later developments an "Alice in Wonderland" situation.

"I get fired ... for doing the right thing, and they (current management) are still there," he said.

Woodford, who fled to England after his sacking citing unspecified safety concerns, said the trauma suffered by his wife after he went public with his campaign played a major part in his decision to drop his bid to return to Olympus.

"It's been a frightening period for my wife. I cannot put her through any more anguish," he said in a statement explaining why he was abandoning his battle to be reinstated.

Olympus is being investigated by Japanese police, prosecutors and regulators and U.S. and British authorities over the scandal, in which the firm used dodgy M&A deals to hide investment losses stretching back over two decades. Woodford said he would meet next week with the UK Serious Fraud Office.


The scandal revived concerns about lax corporate governance in Japan and sparked speculation that organized crime syndicates were involved in the Olympus cover-up.

An external panel appointed by the company to investigate the scandal in December issued a scathing rebuke of core management, but found no evidence that gangsters were involved.

The company's main lender and major shareholder Sumitomo Mitsui Financial Group (SMFG) is backing existing management led by CEO Shuichi Takayama, which is seeking a capital tie-up with a rival firm to bolster Olympus' finances.

Olympus' net assets are dangerously thin after it corrected its accounts to include the effects of the 13-year accounting fraud.

Shareholder equity was just 42.9 billion yen ($556 million) at end-September, or 4.5 percent of total assets - less than a quarter of what is seen as a healthy cut-off. A 20 percent proportion of equity would imply that it needs to raise about 150 billion yen in fresh equity.

Japanese media have reported that Sony Corp, Fujifilm Holdings and Panasonic Corp are among those that may ride to the rescue of Olympus.

Japan's big banks such as SMFG and Mitsubishi UFJ Financial Group are often cornerstone investors in Japanese blue chips, with major equity and debt holdings. That puts them in a powerful position to influence board decisions.

In a sign that lenders are in the driving seat at Olympus, the company appointed industrialist Shiro Hiruta, with connections to Olympus' biggest lender SMFG, as the head of an outside panel to advise the firm on a management shake-up.

SMFG, which declined a request from Woodford for a meeting, holds a 3.4 percent equity stake in Olympus as well as 227.5 billion yen ($2.95 billion) in outstanding loans and bonds, according to company data and sources.

Woodford told reporters he thought he could have won a proxy fight, but, in a reference to the lack of support from Olympus' main bank, added: "If I won, what was I coming back to?"


He took aim at Japan's system of cross-shareholdings, in which investors hold shares to cement business ties, as the key reason for poor corporate governance and under-performance, and urged Japanese politicians to legislate against it.

"Cross-shareholding served this nation well post the Second World War. It made this nation into an economic super-power. The situation is not that any more. This nation is going backwards," Woodford told the news conference.

"Cross-shareholding keeps everything comfortable, cozy, nice - no confrontation, no challenge, no takeover."

Nippon Life Insurance Co, one of the firm's biggest shareholders, said it had no comment.

Woodford, who had described his experience after blowing the whistle at Olympus as resembling a John Grisham thriller novel, said he was discussing a book deal of his own.

"I am very motivated to keep preaching the word about how it happened and why it happened," he said, adding his decision to give up on a proxy fight was "a huge weight off my shoulders".

Olympus shares closed 2.1 percent higher at 1,053 yen.

The shares have lost about 60 percent of their value since the onset of the scandal, although they have stabilized as the market gained confidence that the company could avoid a humiliating delisting of its shares that would effectively cut it off from the equity market.

"There are obviously many investors that think that even without Woodford, the company has such a strong market share (in endoscopes) that it has value as a possible for TOB (potential acquisition target)," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

SEC to demand admission of wrongdoing in some cases

Posted: 07 Jan 2012 08:51 AM PST

( - Securities regulators will no longer let companies settle civil cases without admitting or denying the charges if they have already admitted wrongdoing in parallel criminal cases.

The policy change, announced by Securities and Exchange Commission Enforcement Director Robert Khuzami on Friday, applies only to instances where a defendant has already admitted to violating criminal laws.

It comes just over a month after a federal judge in New York rejected a proposed $285 million settlement between the SEC and Citigroup, in part because the bank had not admitted to wrongdoing. However, in that case, no parallel criminal charges have been filed.

It seemed "unnecessary" for the SEC to include its traditional "neither admit nor deny" approach if a defendant had already been criminally convicted of the same conduct, Khuzami said.

For years companies have admitted to a narrow set of facts in resolving a criminal case with the Justice Department, while neither admitting nor denying more colorful language in an SEC complaint.

In one of the most egregious examples, Bernard Madoff pleaded guilty for his role in a multi-billion dollar Ponzi scheme in 2009, but neither admitted nor denied the allegations in a settlement with the SEC.

"It was ludicrous to say the defendant does not admit charges that he's already pled criminally guilty to," said John Coffee, a professor at Columbia Law School.

More recently, insurance brokerage firm Aon admitted to accounting errors to resolve criminal bribery charges with the Justice Department last month, but neither admitted nor denied related allegations from the SEC.

The practical impact of the change could be limited.

Since defendants will not be required to admit to allegations beyond those in a criminal case, it could do little to help private litigants sue on similar grounds, a concern companies have long raised.

"It is a very small, marginal change," but it "does make them look more flexible," Coffee said.


In rejecting the Citigroup accord, U.S. District Judge Jed Rakoff said the SEC's failure to require Citigroup to admit or deny its charges left him with no way to know whether the settlement was fair. Rakoff also called the $285 million payout "pocket change" for the third-largest U.S. bank.

The Citigroup settlement was intended to resolve charges that the firm sold risky mortgage-linked securities in 2007 without telling investors that it was betting against the debt.

The SEC policy change comes after a review by senior enforcement staff that began last spring, Khuzami said, and is "unrelated" to the Citigroup ruling.

Still, James Cox, a professor at Duke Law School, said the policy change appeared to be an attempt to calm criticism over the force of its settlements.

"My take on things is it is all about managing the press," said James Cox, a professor at Duke Law School. The agency "looked pretty silly before Judge Rakoff the other day," he said.

The policy change could have some drawbacks, according to Rob Blume, a partner at Gibson Dunn, who said it may drag out negotiations as it forces the parties to try to overlay criminal admissions to a broader civil complaint.

The two agencies have different mandates in approaching cases, so perfectly aligning the two could be difficult, Blume said.


The SEC has fought back against criticism of its settlements on multiple fronts.

The same day Rakoff denied the settlement, SEC Chairwoman Mary Schapiro asked Congress to allow the SEC to impose larger monetary penalties.

The SEC has also appealed Rakoff's rejection of the settlement, saying in December it believes Rakoff erred "by announcing a new and unprecedented standard that inadvertently harms investors by depriving them of substantial, certain and immediate benefits."

The SEC got into hot water with Rakoff again last week, when he chastised the agency for keeping him out of the loop on its efforts to salvage the case. [ID:nL1E7NT8D9]

When Rakoff issued a ruling opposing any delay in the case last Tuesday, the 2nd Circuit Court of Appeals had granted a temporary stay 78 seconds earlier.

A motions panel on January 17 will consider the SEC's bid for a longer delay as it appeals Rakoff's ruling.

Streep on 'blue carpet' for UK premiere of Thatcher film

Posted: 07 Jan 2012 08:46 AM PST

( Meryl Streep took to a specially-laid blue carpet for the European premiere of "The Iron Lady", the biopic of former British prime minister Margaret Thatcher which could win her an Oscar.

Streep braved the drizzle to walk up the carpet - matching Thatcher's trademark blue outfits and her Conservative party's traditional colour - at the BFI Southbank in central London on Wednesday.

Her performance as the grocer's daughter who changed the face of Britain has earned her a Golden Globe nomination, putting her in line to win the third Oscar of her career next month.

While Streep's acting has won acclaim, Thursday's early reviews were mixed.

Times reviewer Kate Muir gave the film three stars out of five, calling it a "performance of great depth that is condemned to stay in the shallow end".

The film has already opened in Australia and the United States, but its premiere at a venue along the Thames from the Houses of Parliament, which Thatcher dominated from 1979 to 1990, has special resonance.

Few of Thatcher's cabinet colleagues or rivals have seen the film, which only opens in Britain on Friday, yet many who have say Streep has captured the essence of the woman whose legacy is still the subject of intense debate.

Film critics have pointed to Streep's bouffant hair and clothes in the role as near-perfect, and the distinctive voice which Thatcher worked so hard to perfect booms throughout the film.

Streep confessed she knew little about Thatcher's policies before accepting the role but defended the decision to make a film about a woman who remains a divisive figure in Britain.

Analysis: Amid jobs gains, worries persist over Europe

Posted: 07 Jan 2012 08:41 AM PST

('s stronger-than-expected December U.S. jobs growth figures drew a sharp contrast with European numbers, but staffing executives who track labor demand on both sides of the Atlantic caution Europe's impact on jobs in the United States may yet prove deeper than it has so far.

Executives in the temporary staffing and employment services field say anxiety about a likely recession in Europe keeps cropping up in conversations with clients and, in some cases, is putting hiring plans on hold.

Faced with falling sales and profits in Europe, multinational clients may look for offsetting savings in other markets, including the United States.

Randstad Holding NV (RAND.AS), the world's second-largest temporary staffing provider by revenue, offers one anecdote to illustrate how Europe weighs on U.S. jobs.

Randstad's recruitment outsourcing business, SourceRight Solutions, which handles large-scale hiring of as many as 500 people at a time, has a banking client that tentatively plans aggressive expansion in 2012. But the client's plans are being held hostage by Europe.

"There's still caution around Europe and how they could impact the U.S.," said Joanie Ruge, Randstad senior vice president and chief employment analyst. "That is (clients') biggest concern right now, though they seem optimistic about all the economic indicators in the U.S. moving in the right direction."

Uncertainty persists even as the U.S. economy improves by many measures. U.S. manufacturing grew at its fastest pace in six months in December - in sharp contrast to the euro zone. Pending home sales are the highest since April 2010 and U.S. consumer confidence is at an eight-month high.

Friday's employment report improved that picture. The U.S. economy added 200,000 non-farm jobs last month, 50,000 more than expected, and the jobless rate slipped to 8.5 percent, the lowest since February 2009.

Musharraf advocates Pak-Israel ties

Posted: 07 Jan 2012 08:35 AM PST

( Former president Gen (Retd) Pervez Musharraf has said that Pakistan should give a serious thought to building terms with Israel.
"There is nothing to lose by trying to get on Israel's good side," Musharraf, a former army chief, told the liberal Israeli newspaper Haaretz in an interview carried on its website.

"Pakistan also needs to keep readjusting its diplomatic stand toward Israel based on the mere fact that it exists and is not going away."
That kind of talk could comfort Israel, which is increasingly nervous because Islamist groups opposed to the Jewish state have been making political gains in Arab states following revolts that brought down autocrats in the region.

Israeli officials were not immediately available for comment on Musharraf's remarks.

Musharraf, who resigned in 2008 in disgrace, has said he plans to return to Pakistan this month, despite possible arrest, in order to participate in a parliamentary election due by 2013.

On Sunday, he is scheduled to address a rally via video in the country's biggest city and commercial hub, Karachi, sources in his recently formed All Pakistan Muslim League said.

Speaking in favour of relations with Israel could make Musharraf more unpopular, especially among militants who made several attempts on his life with bombings because of his support for the U.S. "war on terror" following the 9/11 attacks.

Iran's Ahmadinejad to seek Latin American support

Posted: 07 Jan 2012 08:28 AM PST

( - Iranian President Mahmoud Ahmadinejad will seek support from Latin America's leftist leaders on a tour starting on Sunday after tough new Western sanctions targeted Iran's oil industry.
With one eye on his standing at home ahead of March's parliamentary election, Ahmadinejad will meet other anti-American presidents on a trip Washington said showed Iran was "desperate for friends."

His first stop is OPEC-ally Venezuela, where Ahmadinejad has been assured a warm welcome by President Hugo Chavez. He will also visit Cuba and Ecuador and attend the inauguration of re-elected Nicaraguan President Daniel Ortega.

"We are making absolutely clear to countries around the world that now is not the time to be deepening ties, not security ties, not economic ties, with Iran," U.S. State Department spokeswoman Victoria Nuland said on Friday.

"As the regime feels increasing pressure, it is desperate for friends and flailing around in interesting places to find new friends," Nuland said.

President Barack Obama signed new measures into law on New Year's Eve that will make it harder for most countries to buy Iranian oil. The European Union is expected to announce some form of ban on Iranian oil by the end of the month.

The sanctions are aimed at forcing Iran to halt its nuclear work, which the United States and its allies say is aimed at producing bombs. Iran says it is for power generation only.

The sanctions are already hurting Iranians. Faced with rising prices and a falling rial currency, they have been queuing at banks to convert savings into dollars.

"The representative of the dignified people of Iran will be welcome," Chavez said last week as Iranian naval exercises helped push up global oil prices.

But it remains to be seen how far Chavez would go in backing Iran's threat to close the Strait of Hormuz, the world's most important oil shipping lane, or how much he could undermine the sanctions by providing fuel or cash to the Islamic Republic.

Other regional leaders due to receive Ahmadinejad, such as Ortega and Ecuador's Rafael Correa, have a similar ideological stance to Chavez but fewer resources available to help Iran.

Ahmadinejad, who is subordinate to Supreme Leader Ayatollah Ali Khamenei on foreign policy, has said little about the spike in tensions with the West, leaving it to military commanders to make the most bellicose statements.

Under increasing fire from rival hardliners aiming to stop his supporters making gains in the March election, Ahmadinejad will hope the foreign tour will show voters he still has international clout and is not, as his critics say, a lame duck.

With less than 18 months left of his presidency, he will be keen to preserve his legacy as a leader who stood up to Washington in a changing Middle East.


The friendly relations between Ahmadinejad and Chavez are a growing source of concern for Obama. In a newspaper interview last month, he said: "Sooner or later, Venezuela's people will have to decide what possible advantage there is in having relations with a country that violates fundamental human rights and is isolated from most of the world."

Chavez replied that Obama should mind his own business. In the past, Chavez has threatened to stop oil exports to the United States, but has never followed through.

He and Ahmadinejad can be expected to announce new deals during the trip. Iran has built homes, dairies and vehicle factories in the South American country. But analysts say their private talks are likely to be more significant.

The Washington D.C.-based Center for Strategic and International Studies (CSIS) think-tank said this week Iran had funded joint ventures across the region that could help it sidestep trade restrictions with the West, and Venezuela led the rest of Latin America in such arrangements.

"In almost all cases, joint ventures and investments seem directed at either political objectives or possible clandestine technology transfer, not profits," the CSIS said in a report.

It said Iran wanted to challenge the United States in its own backyard and the easiest way was to "exploit" the loose alliance of leftist leaders headed by Chavez.

But Chavez's close ties with Iran are likely to be jumped on by opponents who hope to unseat him at an election in October.

"I think it's absolutely harmful, a visit that gives no help at all to international politics, that keeps away investors and will contribute to bringing chaos to the country," opposition lawmaker Edgar Zambrano told Reuters TV.