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|Vatican under fire from Israel over deal with Palestine
Agreement is the first between both parties since Palestine was recognized by the Vatican two years ago.
The Vatican has come under fire from Israel after signing a historic first accord with Palestine that called for "courageous decisions" to end the Israeli-Palestinian conflict.
The historic accord signed on Friday covers the activities of the Church in the parts of the Holy Land under Palestinian control, is the first agreement since the Vatican recognised Palestine as a state in February 2013 and drew immediate response from Israel.
"This hasty step damages the prospects for advancing a peace agreement, and harms the international effort to convince the Palestinian Authority to return to direct negotiations with Israel," Israeli foreign ministry spokesman Emmanuel Nahshon said.
The product of 15 years of discussions, the agreement between Palestine and the Vatican was finalised in principle last month despite Israel's opposition to both the symbolism of Palestine signing international accords and the specific content of the agreement.
Palestinian Foreign Minister Riad Al-Malki said at Friday's signing ceremony that it would "not have been possible without the blessing of his Holiness Pope Francis for our efforts to reach it".
The minister said the "historic" accord enshrined Palestine's special status as the birthplace of Christianity and the cradle of the monotheistic religions (Christianity, Islam, Judaism).
Paul Gallagher, the British archbishop who is the Vatican's de facto foreign minister, signed the accord on behalf of the Holy See in the presence of guests including Vera Baboun, the mayor of Bethlehem, the Palestinian town considered to be the birthplace of Jesus.
Ending the conflict
Gallagher said the accord's provisions to ensure the rights of Christians should serve as a model for other Arab and Muslim states in their relations with Christian minorities facing increasing persecution in the Middle East.
He said it was "indicative of the progress made by the Palestinian Authority in recent years, and above all of the level of international support (for recognition)".
"In this context, it is my hope that the present agreement may in some way be a stimulus to bringing a definitive end to the long-standing Israeli-Palestinian conflict, which continues to cause suffering for both Parties.
"I also hope that the much desired two-State solution may become a reality as soon as possible. The peace process can move forward only if it is directly negotiated between the parties, with the support of the international community," Gallagher said.
"This certainly requires courageous decisions, but it will also offer a major contribution to peace and stability in the region."
The Palestinian Authority considers the Vatican one of 136 states to have recognised Palestine's sovereign status.
The Vatican has had diplomatic relations with Israel since 1993 but has yet to conclude an accord on the Church's rights in the Jewish state which has been under discussion since 1999, with issues related to the status of Jerusalem proving hard to overcome.
Nahshon said the Vatican-Palestinian accord contained "one sided texts" which "ignore the historic rights of the Jewish people in the Land of Israel and to the places holy to Judaism in Jerusalem".
He added: "Israel will study the agreement in detail, and its implications for future cooperation between Israel and the Vatican."
Italy raises terror alert after attacks
Italy raised its terror alert level on Friday night after deadly attacks in France, Tunisia and Kuwait.
"No country is without risk, we have raised the level of alert to re-sensitise those units charged with protecting sensitive places," Interior Minister Angelino Alfano said.
"Today has seen three attacks with dozens of dead carried out in three different places around the world, linked by one thing: violence and terror,” he said.
Italy had raised its alert level to the third-highest in January, after the jihadist attacks in Paris.
Alfano did not specify to what grade he had increased the level on Friday, after a massacre at a beach resort across the Mediterranean in Tunisia and a grisly Islamist attack in southeast France.
At least 37 people were killed and 36 wounded when a gunman opened fire on holidaymakers on a beach in the Tunisian resort town of Sousse.
Meanwhile in France, a businessman was found decapitated with Arabic inscriptions on his body at a gas factory near Lyon, while further afield in Kuwait, a suicide bombing at a mosque claimed by Islamic State jihadists killed 25.
Alfano shot down claims that would-be jihadists may be entering Italy via migrant boats crossing the Mediterranean from Libya, hidden among the over 60,000 people who have washed up on the country's shores so far this year.
"We will win the terror challenge only if we do not allow ourselves to be conditioned by fear," he said, adding that "there is no proof that there has been a rise in crime as a consequence of the rise in immigration".
Earlier Friday, a Pakistani accused of organising a 2009 bomb attack on a Peshawar market that killed more than 130 people was detained in Italy.
Italian anti-terrorism detectives believe the man to be part of a jihadist network based in Italy, which was plotting terror attacks on Rome and possibly the Vatican to be carried by suicide bombers from Pakistan.
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Greece's future in balance as creditors reject aid extension
by Derek Gatopoulos and Demetris Nellas
BRUSSELS (AP) — Greece's place in the euro currency bloc looked increasingly shaky on Saturday after eurozone nations rejected a month-long extension to its bailout program and the prime minister called for a risky popular vote on the country's financial future.
Worried Greeks queued outside banks for cash amid the uncertainty, while eurozone finance ministers deciding to hold a meeting without Greece to assess how to keep the euro currency union stable in the face of heightened risks that Greece could drop out.
Prime Minister Alexis Tsipras shocked Greece's creditors late Friday when he called for a referendum in a week on whether to accept the reforms that the rescue lenders want in return for more financial aid. The country's bailout program ends Tuesday and without an extension or more loans from creditors, Greece is likely to be in arrears on a debt payment due the same day. Its banks face the risk of collapse.
The Greek government's call for the people to vote against a proposed bailout deal from international creditors on July 5 angered many of its eurozone partners.
"We must conclude that, however regretful, that the program will expire on Tuesday night. That is the latest date that we could have reached an agreement," said Jeroen Dijsselbloem, the top eurozone official.
"The Greek authorities have asked for a month extension. But in that month there can be no disbursements," he said. "How does the Greek government think that it will survive and deal with its problems in that period? I do not know," Dijsselbloem said.
France's finance minister, Michel Sapin, stressed that a deal was still possible and that he was ready to act as a go-between among Greece and the creditors after relations neared a breaking point.
Now much will depend on whether the European Central Bank will accept to continue to prop up Greek banks even after the country's bailout program expires. It would be under huge pressure to stop using eurozone taxpayer money to keep alive the banks if there is no prospect for a deal.
In that case, the banks would likely collapse and the Greek government would have to support them itself. Penniless, the government would have to revert to printing a new currency, effectively drawing the country out of the euro union.
The governing council of the ECB will meet "in due course" to assess the situation.
Greek Finance Minister Yanis Varoufakis insisted that Athens and lenders still had time to improve the deal — and avoid a negative outcome to the referendum. "There is no reason why we can't have a deal by Tuesday. If the deal is acceptable we will recommend a positive vote," he said.
"It's a sad day for Europe but we will overcome it," Varourfakis said upon leaving while his counterparts continued talks.
The sides are haggling over the reforms the country needs to make in exchange for more financial aid but have managed to only increase uncertainty over the country's future.
Greece has a debt due on Tuesday and its bailout program expires the same day, after which it is unclear whether its banks would be able to avoid collapse, an event that could be the precursor to Greece leaving the euro.
The Greek Parliament is debating and will vote at midnight Saturday on the government's request for a referendum.
Across Athens, people started flocking to cash machines shortly after Tsipras announced the referendum around 1 a.m. local time. The queues grew the next day, though the number of people and the availability of cash varied widely. The Bank of Greece assured in a statement that the flow of cash will continue.
The referendum will ask Greeks to vote on a proposal of reforms that the country's creditors made on Thursday. The Greek government rejected it as imposing cuts that are too harsh on the general population.
The Greek government said it would recommend Greeks vote "no" in the referendum, but Varoufakis noted "the high possibility that the Greek people will vote against the advice of the Greek government."
What would happen in that case — whether Greece would have to leave the euro or try to renegotiate more time with creditors — is unclear.
An exit from the euro would put Greece through a new era of economic pain. With the new currency less valuable than the euro, the government would have to write off a chunk of its foreign loans — mainly owed to eurozone countries — and many companies and households would go bankrupt. Experts predict a long and deep recession in a country that has already been through five years economic depression.
The uncertainties of all this would roil European and global markets, though experts are divided on the extent. Some say Europe is better equipped to handle a Greek euro exit, but others say it is unclear what might happen. The euro dropped in value slightly on international markets after the referendum was called.
As the country came to grips with what lay ahead, former prime minister Costas Karamanlis broke a longstanding silence and criticized the government.
"The nation's most vital interests demand that the country remains at the heart of Europe. The EU's actual shortcomings do not, in any way, negate this..." Karamanlis said. "Foolish choices that undermine this principle push the country to adventures, with unpredictable and possibly irreversible consequences."
In the streets of Athens, views were mixed on the merits of holding a referendum.
"The people are not in a position to decide. Those who are in position to decide are the ones that know a bit more and they must explain and simplify the issues for the people," said Grigoris Kanellopoulos, 41, a street seller of bagels.
Athina Kontosozou, 56, has already made up her made about how she will vote.
"No (to the creditors' proposals), no to any more measures. We don't know what will happen (after the referendum). Let's hope that things will be better. And they will get better. We believe it".
Nellas reported from Athens. Thanassis Stavrakis and Paris Ayiomamitis in Athens, Greece, and Raf Casert and Lorne Cook in Brussels contributed to this report.
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