RBA cuts cash rate to 2.5 percent

The Reserve Bank of Australia has cut the cash rate to a historic low of 2.


5 per cent at its August board meeting, in the first cut during an election campaign since 1990, citing below average growth and moderating commodity prices.

The cut brings the official cash rate to lows not seen since the central bank’s 1959 establishment, just weeks ahead of the September 7 federal election.

RBA Governor Glenn Stevens cited recent muted inflation and retail sales data in unveiling the cut, which follows a grim pre-election budget update from the ruling Labor party last week.

“The economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment,” Stevens said.

The peak in Australia’s decade-long Asia-led mining investment boom and slowdown in key market China saw Labor scale back its growth forecasts for 2013/14 to 2.5 percent and bump up unemployment to 6.25 percent last week, compared with 2.75 percent and 5.75 percent seen in the May budget.

Tuesday’s decision is a mixed bag for Labor. While it underscores fears of an economic slowdown seized on by the conservatives as evidence of mismanagement, it also means an easing in cost-of-living pressures for key mortgage-belt voters.

The Australian dollar edged up slightly on the decision, with some investors expecting a more drastic 50-basis-point cut, to 89.55 US cents from 89.23 cents immediately prior.

The RBA last cut the cash rate by a quarter of a percentage point in May, after making four cuts in 2012.

Full text of the RBA’s rates statement

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.5 per cent, effective 7 August 2013. Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year.

Commodity prices have declined but, overall, remain at high levels by historical standards. Inflation has moderated over recent months in a number of countries.

Globally, financial conditions remain very accommodative, though the recent reassessment by markets of the outlook for US monetary policy has seen a noticeable rise in sovereign bond yields, from exceptionally low levels.

Volatility in financial markets has increased and has affected a number of emerging market economies in particular. In Australia, the economy has been growing a bit below trend over the past year.

This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher.

Recent data confirm that inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the recent depreciation of the exchange rate.

The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values, and further effects can be expected over time.

The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.

The Australian dollar has depreciated by around 15 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.

The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand. At today’s meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate.

The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.

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Suspected Boko Haram attack in Nigeria

Suspected Boko Haram Islamists have stormed a town in northeast Nigeria, opened fire on police and civilians and killed 11 people, residents and a local lawmaker say.


The attack happened late on Thursday in the town of Damboa in Borno state, Boko Haram’s stronghold and where Nigeria has imposed a state of emergency as it pursues an offensive against the insurgent group.

“The attack lasted until about midnight,” said Adamu Isah, a student who lives in Damboa. He said groups of gunmen opened fire on police and civilians and that “11 people died.”

He blamed the attack on “Boko Haram” fighters.

State lawmaker Ayamu Lawan Gwasha, who represents Damboa, confirmed the details, as did a local security official who requested anonymity.

Both Isah and the lawmaker spoke to reporters in Borno’s capital Maiduguri, roughly 85 kilometres from Damboa. Both said they had fled to the capital after the attack.

Details were slow to emerge and the area military spokesman could not be reached for comment because of a phone blackout imposed by the military, an operational measure meant to block the Islamists from coordinating attacks.

The phones have been down in Borno since May, when the state of emergency was declared.

The lawmaker said the town had been on high alert since the weekend, when 47 people were killed in the town of Konduga, also in Borno state, in a brutal attack that targeted Muslim worshippers gathering for morning prayers.

“We raised the alarm” after Konduga, Gwasha told journalists, saying the heightened security presence in Damboa “has helped in reducing the magnitude of the attack.”

The military has sought to portray Boko Haram as being on the defensive, claiming that the sweeping operation launched in May has plunged the extremists into disarray with all their camps destroyed.

But a spate of recent deadly violence has raised doubts about the military’s claims. With the phone network down, information about the operation has been difficult to verify and access to the northeast is restricted.

Boko Haram has said it is fighting to create a strict Islamic state in northern Nigeria, but much of its violence has targeted Muslims.

It has also killed Christians and frequently targeted the security services as well as other symbols of authority.

Some speculate the group has sought out soft targets as it has faced added military pressure. A brutal attack on a school in northeastern Yobe state last month left 41 students dead.

But others counter that Boko Haram is simply demonstrating that it remains unhindered by the military assault, attacking a range of targets in different areas.

The insurgency is estimated to have claimed more than 3,600 lives since 2009, including killings by the security forces.

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What was Australia’s role in the Korean War?

When armed forces from Korea’s north crossed the 38th parallel intent on gaining control of the entire peninsula, many Australians could be forgiven for failing to notice.



First, it happened on a Sunday – June the 25th, 1950.


Second, the north coast of New South Wales was experiencing disastrous flooding, with two people dead in Grafton and 9,000 others made homeless in the wintry conditions.


Stock losses were described at the time as enormous, and Prime Minister Robert Menzies promised he’d match the State pound for pound in flood relief and assistance.


By Monday, the front page of Melbourne’s daily The Argus was reporting the invasion.


But it was fighting for space with a report from a weekend Port Melbourne football game where police had to draw pistols and use batons to control more than 1,000 angry supporters rioting after an attack on an umpire.


War-weary Australians were still on petrol, butter and tea rationing, and the prospect of another conflict should have been daunting.


But that wasn’t quite the response, as Nikki Canning reports.


Two days after the invasion in Korea, Federal Cabinet was earnestly discussing plans to hasten the call-up of young men for compulsory military training.


However, that same day, the United States offered air and sea support to South Korea, and the five-year-old United Nations asked all its members to assist in repelling the North Korean attack.


In all, 21 UN nations responded with troops, ships, aircraft and medical teams.


For the last time in Australian history, volunteers for an overseas military expedition were called for.


Re-opened recruitment offices were initially flooded with volunteers for Korea, says Melbourne University’s Richard Trembath.


“It was an enthusiastic response. I think Korea in some ways, especially in its early year, was a war which the Australian population understood a little more clearly than it understood Vietnam. The world response was a lot more united. The United Nations – which was les than five years old – was the one calling for action. So it had the mark of being something right to do. The Korean War is in fact the only time the United Nations goes to war until the Gulf War of 1991, until the invasion of Kuwait by Saddam Hussein.”


Dr Trembath says many Australians also saw Korea as an opportunity to fight Communism.


“Robert Menzies had come to power in late 1949 with a commitment to formally dissolving the Communist Party [in Australia] and that theme would run right though Australia’s commitment in Korea, that Communism was the great scourge and danger. And I think for Australia it accelerated in 1949 because of the Communist victory in China – I mean, Russia was one thing but China was a lot closer. Menzies spoke several times in the early 1950s that he regarded another world war was only three years away.”


“(Menzies): Can we doubt that under these circumstances the complete socialist state would be set up in Australia? And that, in consequence, we would have the all-powerful state? How would we like to be living in a country where the state was all-powerful?”


Dr Trembath says the other principal motivation was to firm Australia’s alliance with the US.


“The new conservative government was anxious to improve the relationship with the United States – our participation in Korea would eventually be one of the major factors in the formation of the ANZUS Treaty, which happens in 1951.”


Already involved in fighting a Communist insurgency in Malaya, as it was called at the time, Australia was the first country following the US to commit units from all three military services to Korea.


An Australian Navy frigate joined the Korean conflict on the 29th of June, followed a day later by the Royal Australian Air Force’s 77 Squadron.


An infantry battalion from the Australian component of the British Commonwealth Occupation Forces in Japan was called in on July the 26th.


“We were anxious to be seen as very quick to put our cards on the table; we originally only committed air forces and naval forces, but when it was found out in Canberra that Britain was going to commit land forces, we jumped to beat Britain – we actually beat them by about a day or two – to show that we were firm in the alliance with the United States.”


Pilot Sergeant Milton Cottee was among the Australians of 77 Squadron already in Japan when the invasion happened.


He says he had a firm view as to why he should be involved in this war.


“There was an overall feeling I suppose of stopping the Red Peril (Communism) coming down to Australia. That was real in those days. We thought we were doing our bit in that regard. I eventually came to a conclusion that many veterans come to in conflicts, I think, by deciding that what I was doing was preserving the Australian way of life for those I might have to leave behind.”


As might be expected, the Australian contingent had a variety of ethnic backgrounds, which added another dimension to some events, as remembered in his diary by Private Joe Vezgoff.


“We were about a mile forward of the battalion, with the responsibility of racing back when we saw any large troop movement on our front. I, of Russian origin, and George of Chinese, caused some consternation when someone back at battalion headquarters asked who was in the forward outpost. ‘A Chinese and a Russian’, came the reply!”


The Korean War also saw the rise to prominence of Australia’s first Indigenous commissioned officer – Reg Saunders, from Portland, in western Victoria.


Historian Richard Trembath says while he had been commissioned during the Second World War, he was a high-profile figure during the Korean War.


“He came from a military family, in the sense that his father and his uncles and his brothers had fought in both the first and second World Wars. He’s the subject of a biography called ‘The Embarrassing Australian’, by Harry Gordon – later editor of the Brisbane Courier mail and a war correspondent in Korea – which pointed out that though Saunders was a much-feted and much-treated hero during Korea, and the newspapers and newsreels often featured him – he was very photogenic, very media-savvy himself – his private and civilian life saw the usual disasters that could happen to Indigenous Australians in the 50s, ranging from not being served drinks in the pub to not getting employment and things like that. A fascinating character.”


As in other conflicts, the Australians and other UN forces often had a difficult time identifying and isolating the enemy.


On one occasion, South Korean veteran Kim Yu Seon was serving as a military policeman in North Korea’s Hwanghae province.


He says at sunset one day in September, he was with the police commander and saw a number of civilians fleeing south being shelled.


[Kim then translator] “It’s September, the sun is about to set,” [Kim then translator] “they were in a car and they saw an Australian airplane.” [Kim then translator] “Oh, and the Australian plane came and they shelled!” [Kim then translator] “So many people came down to South Korea so,” [Kim then translator] “The Australian plane did not know where they were so they just shelled everywhere.”


Milt Cottee says such incidents were not unusual.


He says UN pilots were often directed to attack groups of people because of fears there were North Korean soldiers among them who would leave the group at night and attack UN ground forces.


“There were many occasions when enemy soldiers would get mixed up with South Korean civilians and the North Korean soldiers would mix in with the South Korean civilians, (using them) as shields. We would be often vectored on to groups of people like that and it was a very difficult decision whether to shoot them up or not. And when you have American forward air controllers saying ‘Hey Aussies, those enemy troops mixed in with those refugees, I suppose you’d call them, they’re going to be out after our guys tonight so please do what you can’.”


For the troops on the ground, the going was intense.


Stanley Connolly served with the 3rd Battalion Royal Australian Regiment at the Battle of Kapyong.


He and other veterans have told their stories as part of a film archive of Australians at War, curated by the Department of Veterans’ Affairs.


“We charged and we began to get shot down. I remember my good friend Gene Tunny on my right falling in the advance and then my big mate Rod Grey on my left, went down shot through the chest and the bullets were cracking, cracking, you can, as they go past you can hear them cracking, you know, because they sort of break the sound barrier. It’s louder than the crack of the weapon firing them. And it seemed to me that there were so many bullets coming that it was like walking or running into a very stiff breeze.”


Maxwell Veale served in HMAS Murchison during the Han River operation.


“But this day we went in and they were waiting for us. And we hadn’t turned, we were going up towards the turn, and the lookout looked over, we were at action stations, and the lookout looked over and he said to the captain, ‘Sir those haystacks are moving.’ And the skipper, looking at them with binoculars, [saw that] they were moving, they had anti-tank guns behind them, they were tanks, moving. And they waited until we stopped when we had to turn and that’s when they hit us.”


However historian Richard Trembath says Australia’s most controversial Korean War figure was the war correspondent Wilfred Burchett.


“He wrote what I think is one of the most enduring pieces of Australian war journalism, at the end of the Second World War: he was one of the first Westerners to look at the consequences of Hiroshima, and that was within a few days of the Japanese surrender – that was an amazing trip, he had a lot of guts [courage].”


Wilfred Burchett chose to report from the North’s side of the front – a decision which immediately cast him in the eyes of his countrymen as a propagandist.


“He spoke to a lot of United Nations prisoners of war in northern camps. Many of them – perhaps most of them – regarded him as a traitor. It served to damn him politically for almost a generation in Australian eyes. I certainly think he had a great amount of courage but I think he had a large anount of naivete. I don’t think he was working directly for Communist powers but I think it was undoubtedly immature to think that speaking on behalf of your enemies to your own people and expecting a good reaction is probably naive. Some of the prisoners, including a key American, regarded Burchett as helping ameliorate their conditions, which were dreadful, in the camps in North Korea.”


However Richard Trembath says there was clearly more to Wilfred Burchett.


“A number of Australian journalists found him an unimpeachable source of facts at the Armistice negotiations at Panmunjom because he had privileged access to a large number of people, and as opposed to roneoed (copied) garbage from the United Nations, Burchett could actually tell them what was happening. He saw himself as even-handed: a number of people saw him as a propagandist.”


From the 29th June 1950 to 27 July 1953, some 17,000 Australian sailors, soldiers and airmen served in the Korean War.


Australian casualties were 339 killed, 1216 wounded and 29 prisoners of war.


43 Australian servicemen are still listed as Missing In Action.


Yet Pilot Sergeant Milt Cottee believes it was worthwhile.


“I think we made a pretty good contribution to the war effort even though our losses were very high. I lost two of my best friends … one was shot down in a Meteor (British jet figher) by a MiG (Russian jet fighter) and my other friend was lost in a midair collision with another aircarft. So one of my best friends is still missing in action in North Korea somewhere.”


After the war ended with the signing of the Armistice on the 27th of July, 1953, Australians remained in Korea and continued with a peacekeeping force until 1957.


And World News Australia Radio will be broadcasting a special program-length feature on Thursday July 25, at 6.10 am and 6.10 pm, to mark the 60th anniversary of the signing of the Armistice that ended hostilities on the Korean peninsula.


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25 police killed as Egypt violence escalates

Militants have killed 25 Egyptian policemen in the deadliest attack of its kind in years.


It comes as the army-installed rulers escalate a campaign to crush ousted president Mohamed Morsi’s Muslim Brotherhood.

The assailants fired rocket-propelled grenades at two buses carrying police in the Sinai Peninsula, sources said on Monday, just hours after 37 Brotherhood prisoners died in police custody.

The incidents came after Egypt’s military chief vowed a “forceful” response to violence roiling the Arab world’s most populous nation.

The Sinai attack raised fears of a return to the wave of deadly Islamist violence that swept the country in the 1990s.

Egypt is struggling to put a lid on a deep political crisis and violence that has killed almost 800 people in several days of clashes between Islamist protesters and security forces across the country.

Western countries have condemned the violence and are threatening to cut off billions of dollars in aid to Egypt in response, but Saudi Arabia said on Monday that Arab nations are ready to step in to fill the financial void.

The developments come as judicial sources say former autocratic president Hosni Mubarak, who was toppled in a popular uprising in 2011, has been granted conditional release in one case against him, but that he will remain in custody in an additional case.

Morsi loyalists vowed new demonstrations on Monday, although a day earlier they had cancelled some marches citing security concerns.

The interior ministry said 25 policeman were killed and two injured in the Sinai attack, which it on “armed terrorist groups”.

A border official said afterwards that the Rafah crossing with the Palestinian Gaza Strip, near where the attack occurred, would be closed.

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PM rejects cooking show claims

Prime Minister Kevin Rudd is rejecting reports he delayed a national security briefing on the crisis in Syria to shoot an episode of ABC TV cooking show Kitchen Cabinet.


Mr Rudd’s campaign headquarters issued a statement late on Saturday denying he put the briefing on hold to take part in the program, ahead of the claim being reported in News Corporation Australia newspapers including Sydney’s Sunday Telegraph.

“We understand that The Sunday Telegraph is intending to report that the Prime Minister delayed a national security briefing on Syria in Canberra today because of a previously arranged media commitment in Brisbane,” it read.

“This is wrong.”

ABC host Annabel Crabb confirmed on Saturday night that Mr Rudd filmed a pre-arranged episode of her show from 12.30pm to 2.30pm that afternoon.

According to the News Corp report, he took “a taxpayer funded VIP jet to fly home to Brisbane” to appear on the program.

Mr Rudd’s statement explained that after he was briefed by his own department on Saturday morning, it was recommended that a second full national security briefing take place involving himself, Foreign Minister Bob Carr and other officials either later on Saturday or Sunday.

“This was to ensure all officials and full briefing papers were ready following discussions with [international] allies during the course of the day.

“Had a full national security briefing on Syria been possible earlier, Mr Rudd would have made arrangements to be in Canberra earlier.”

Opposition Leader Tony Abbott yesterday said Mr Rudd had his full support after the prime minister initially announced he would suspend election campaigning to return to Canberra.

“No, it’s entirely appropriate when a serious international issue is unfolding for the prime minister to seek a briefing,” Mr Abbott told reporters in Adelaide.

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Hoon flags US ’danger zone’ troop support

British Defence Secretary Geoff Hoon said Britain would have failed in its duty as an ally if it refused.

His comments follow Australia’s announcement that it had turned down a United Nations request to send extra troops to Iraq.

With another night of US airstrikes in Fallujah, American forces are planning a major operation to seize the city from insurgents.

They say they need British troops to move north from the relative safety of their base in Basra to free up US forces.

The British government says no decision has been made but British troops in Iraq were already preparing for a move.

In London, the British Defence Secretary denied claims that the American request was political, aimed at boosting George W. Bush’s re-election chances by allowing him to launch a pre-poll offensive.

“I want to make it clear the request is a military request and although, it is linked to elections, it is not linked to the US elections, but with efforts to create the best possible security situation in which to hold the Iraqi elections in January,” Mr Hoon said.

Mr Hoon gave an assurance that British troops would not be sent to Fallujah or Baghdad.

MPs from both sides of the House warned Britain was being sucked further into the mire.

“What the British really want to see is a clearly defined exit strategy from Iraq and not greater commitment and great danger for our troops out there,” said Labour Backbencher Geraldine Smith.

Opposition parties expressed concerns about the rules of engagement if British troops come under American command.

There were also fears that moving troops north could leave British-controlled areas of Iraq under-manned and vulnerable to attacks.

In Baghdad, Iraq’s interim government has announced that a weapons amnesty in the restive suburb of Sadr City has been so successful it will be extended to the rest of the country.

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US soldiers refuse ‘suicide mission’

The army says it is investigating why 19 members of the 343rd Quartermaster Company based at Tallil failed to appear for a fuel delivery mission on Wednesday morning.

The incident came to light through media reports of cell phone calls placed by members of the company to stateside relatives.

Sergeant Patrick McCook told his wife, Patricia, that he and his comrades had refused to go on a refueling convoy because they considered it too dangerous.

“They refused to go because the trucks they were driving were not adequately protected,” Patricia McCook told American television. “They don’t have bulletproof protection on the vehicles, they don’t go fast at all.”

Another US serviceman, Amber McClenny, left a message on her mother’s answering machine that says “We have broken-down trucks, non-armored vehicles. We were carrying contaminated fuel. They are holding us against our will. We are prisoners.”

A Mississippi newspaper quoted relatives of the soldiers as saying they had been arrested by the army for refusing a “suicide” fuel delivery mission, were read their rights and were moved from a military barracks into tents.

However, the army says the soldiers had neither been arrested nor detained.

“Initial indication is that the soldiers scheduled for the convoy mission raised some valid concerns and the command is addressing them,” the army says in a statement issued in Baghdad.

“Unfortunately it appears that a small number of the soldiers involved chose to express their concerns in an inappropriate manner causing a temporary breakdown in discipline confined only to some members of the platoon involved,” it says, insisting it was an isolated incident.

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Investigate Iraq WMD looting: Russia

The call follows reports of the disappearance of high-tech equipment that could be used to make nuclear weapons.

Inspectors from the United Nations Monitoring, Verification and Inspection Commission and the International Atomic Energy Agency must be allowed to go back to Iraq, the Russian foreign ministry said in a statement.

“We believe that these organisations, which possess all the necessary expertise…, must as soon as possible receive unlimited access to Iraq’s nuclear sites to resume their interrupted task,” Russian foreign ministry spokesman, Alexander Yakovenko, said.

“It is essential that Iraq’s transitional government and the United States adopt urgent measures to establish control over sensitive material and equipment, and allow international organizations specially authorized to do that to accomplish their task without any obstacles,” Mr Yakovenko added.

International Atomic Energy Agency director, General Mohamed ElBaradei, has warned the United Nations that equipment and materials that could be used to make nuclear weapons, in some cases entire buildings housing sophisticated technology, are disappearing from Iraq.

In a letter to the Security Council, Mr ElBaradei said he was concerned about the “widespread and apparently systematic dismantlement that has taken place at sites previously relevant to Iraq’s nuclear program” under ousted dictator Saddam Hussein.

Atomic Agency inspectors have made two brief trips to Iraq since the US-led war ended in April 2003 to check inventories at the Tuwaitha nuclear complex south of Baghdad. However these trips were in response to looting and not part of weapons inspections under the agency’s UN mandate.

The international agency is ready to send inspectors back to Iraq, a spokesman said.

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Bigley beheaded by Iraqi militants

The Americans were filmed being beheaded in the week after the three were seized by gunmen from their Baghdad house.

The video shows Mr Bigley pleading for his life as six men stand behind him. One reads a statement, then cuts off Mr Bigley’s head with a knife and brandishes it.

The murder comes despite secret 11th-hour efforts by London to free Mr Bigley from kidnappers whose video messages had played on British emotions on the war in Iraq for three weeks.

The kidnappers, allegedly led by al-Qaeda ally Abu Musab al-Zarqawi, have repeatedly released videos of a distraught Mr Bigley begging British Prime Minister Tony Blair to save him.

British Foreign Secretary Jack Straw said Britain’s last minute attempts to save Mr Bigley was “an attempt to dissuade them from carrying out their threat” but the kidnappers stuck to demands for the release of female prisoners in Iraq.

The messages between London and the kidnappers began after a man approached the British embassy in Baghdad four days ago “presenting himself as a potential intermediary,” Mr Straw said.

Iraqi Prime Minister Iyad Allawi said the jihad group led by al-Zarqawi had planned to kill Mr Bigley from the outset.

“Their intention from the start was to kill him, but they were trying to exploit this matter for a long time for publicity. Their intention was to kill him,” Mr Allawi says.

There was speculation that Mr Bigley may have been killed because of a rescue attempt or sweeps by U.S. forces. But Mr Allawi said that while there had been intense efforts to secure Mr Bigley’s release, there was no attempt to free him by force.

British officials also denied there a botched rescue bid.

Some 30 foreign hostages have been killed in Iraq. Two Westerners are still being held, French journalists Christian Chesnot and Georges Malbrunot. They have been seized by a different militant group, the Islamic Army in Iraq.

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GM axes 12,000 jobs in Europe

One in five GM jobs in Europe faced the chop in a brutal bid to drive the businesses back to profit after six years of losses.

GM Europe chief Fritz Henderson said that while there were no immediate plans to shut down any plants, as unions and politicians had initially feared, factory closures could not be ruled out altogether.

The job cuts, around 90 percent of which would be made next year, were part of GM’s plans to cut costs at its European activities, which have been entrenched in loss since 1999, by 500 million euros by 2006.

In addition to Opel in Germany, GM also owns Vauxhall in Britain and Saab in Sweden.

In Stockholm, Saab said that around 500 jobs were on the line at its 6,300-strong Trollhaetan plant in western Sweden.

No comment was forthcoming from Vauxhall. But the British car maker, which employs around 5,000 at Ellesmere Port, was widely expected to be spared the worst of the cuts.

GM Europe argued the drastic measures were necessary in face of the difficult situation in the European car sector and no indication that things were likely to improve any time soon.

The car maker did not specify exactly how many jobs would be cut at Opel or elsewhere, or where precisely the cuts would be made.

That would be decided in negotiations with unions and labour representatives that were scheduled to start straight away.

But media reports said 4,000 jobs were on the line at Opel’s main manufacturing site in Ruesselsheim, near Frankfurt, and another 4,000 at the factory in Bochum in the heavily industrialised Ruhr region.

Opel’s two other German factories in Kaiserslautern and Eisenach would not be affected.

Such was the crisis at Opel that Economy Minister Wolfgang Clement travelled to Bochum on Thursday to meet with the regional state premier of North Rhine-Westphalia Peer Steinbrueck and his economy minister Harald Schartau as well as employee representatives and unions.

Clement even cancelled a meeting with French Finance Minister Nicolas Sarkozy at the last minute to go to Bochum.

Unions demanded that management issue guarantees not to close any plants and make any forced redundancies.

Furthermore, employees at Opel, Saab and Vauxhall would not allow themselves to be played off against each other, unions said, promising “a day of protest” next week to accompany the start of negotiations with management.

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