Oil prices rise on strong economic indicators

NEW YORK: Oil prices jumped Thursday on greater economic optimism following strong economic indicators in the US, China and Europe.

A barrel of US benchmark West Texas Intermediate futures for delivery in March settled at US$95.95 a barrel on the New York Mercantile Exchange, up 72 cents.

In London, Brent North Sea crude for March delivery ended at US$113.28 a barrel, up 48 cents from Wednesday.

"The economic news from China looked pretty good and this is adding to ... reports suggesting that the global recession is nearing an end, and that is making people more bullish about oil demand," said Michael Lynch of Strategic Energy and Economic Research.

Oil prices have steadily risen since mid-December, gaining more than 12 per cent since Dec. 10.

Figures from British bank HSBC showed China's manufacturing activity in January hitting a two-year high.

"China has been a main driver of oil demand growth for the last decade and (if there is) strong growth, that is a very bullish indicator for the market," said Lynch.

Also Thursday, US jobless claims came in well below expectations, an unexpectedly strong result for the second week in a row.

In Europe, a purchasing managers index, an indicator of manufacturing and services activity, in January reached its highest level in 10 months.

"It is too soon to call this the turn in the European economy, but some are bound to see it that way," said analyst Chris Low of FTN Financial.

The greater optimism came as weekly data from the US Department of Energy pointed to a larger build of oil stockpiles than expected.

The results showed a gain of 2.8 million barrels, whereas analysts had predicted an increase of 1.7 million barrels.

- AFP/jc

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Moral and secular ethics go beyond religious belief: Dalai Lama

JAIPUR: The Dalai Lama on Thursday called for adopting moral and secular ethics, which go beyond the religious belief. The Tibetan spiritual leader told a gathering on the opening day of the Jaipur Literature Festival that one might be a believer or a non-believer, but secular and moral ethics were very important.

He was in conversation with Pico Iyer in a session titled 'Kinships of Faiths: Finding the Middle Way', based largely on his latest book 'Beyond Religion: Ethics for a Whole World'.

"If you do not have interest (in religion), it's OK. Secular ethics are the most important," he said. "Secularism is the base of India's history, her constitution." Secularism did not mean disrespect to any religion, he said. "Accept all religions. Despite the obvious difference between religions and traditions, all religions preach the basic principles of love, faith, truth and trust."

Earlier in his talk, Dalai Lama drew similarities between science and philosophies of Buddha. "Science and Buddhism share the desire to analyze and investigate the truth. Buddha said 'never take my word, challenge it.' The Nalanda masters, whom I often refer to as skilled professors, are always investigating his teachings and have the liberty not accept a teaching if the literal meaning goes against logic," he said, adding that till date, he considered himself a student.

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Penalty could keep smokers out of health overhaul

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here's how the math would work:

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

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

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

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

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

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

___

Online:

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

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Feinstein Proposes Assault Weapons Ban

Manuel Balce Ceneta/AP Photo

With an AR-15 and nine other guns on her left, Sen. Dianne Feinstein, D-Calif., introduced a bill today that would ban assault weapons and high capacity ammunition clips.

The bill comes nearly 20 years after the first assault weapons ban was signed into law.

“I remain horrified by the massacre committed at Sandy Hook Elementary School in Newtown, Conn., and I’m also incensed that our weak gun laws allow these mass killings to be carried out again and again and again,” said Feinstein, who was joined by senators, representatives, mayors, police officials and victims of gun violence. “Military-style assault weapons have but one purpose, and in my view that’s a military purpose, to hold at the hip, possibly, to spray fire to be able to kill large numbers.”

“Assault weapons were designed for and should be used on our battlefields, not on our streets,” Sen. Charles Schumer, D-N.Y., said. “We know that there is no inalienable right to own and operate 100-round clips on AR-15 assault rifles.”

Feinstein’s proposed plan, which she will formally introduce on the Senate floor this afternoon, will ban the sale, transfer, manufacturing and importation of 158 semi-automatic weapons with at least one military feature. It would also ban fixed magazines that are capable of holding more than 10 rounds.

The newly bill differs from the 1994 assault weapons ban in that it does not have a sunset provision. Feinstein said the bill will protect over 2,200 makes of hunting and sporting rifles and shotguns, and the bill will subject existing or grandfathered weapons to background checks if they are sold or transferred.

“We have tried to learn from the bill. We have tried to recognize legal hunting rights. We have tried to recognize legal defense rights. We have tried to recognize the right of a citizen to legally possess a weapon. No weapon is taken from anyone. The purpose is to dry up the supply of these weapons over time. Therefore, there is no sunset on this bill,” Feinstein said.

Feinstein acknowledged the difficulty lawmakers face in passing this bill through Congress.

“Getting this bill signed into law will be an uphill battle, and I recognize that,  but it’s a battle worth having,” Feinstein said. “We must balance the desire of a few to own military-style assault weapons with the growing threat to lives across America.”

The National Rifle Association said Feinstein’s plan infringes on second amendment rights and neglects to address other issues spurring gun violence.

“Senator Feinstein has been trying to ban guns from law-abiding citizens for decades. It’s disappointing but not surprising that she is once again focused on curtailing the Constitution instead of prosecuting criminals or fixing our broken mental health system. The American people know gun bans do not work and we are confident Congress will reject Senator Feinstein’s wrong-headed approach,” Andrew Arulanandam, spokesman for the NRA, told ABC News.

Feinstein’s office told ABC News that the senator worked with U.S. Capitol Police and Washington Metro Police to ensure the display of weapons at the press conference complied with the rules.

An ABC News-Washington Post poll released last week found that 65 percent of those polled supported banning high capacity ammunition magazines while 58 percent favored banning the sale of so-called assault weapons.

Last week, President Obama introduced his gun policy agenda, which called for the banning of some assault-style weapons and high capacity magazines holding over ten rounds.  The president’s plan included 23 executive actions on gun violence that would not require congressional approval, which included a directive for national agencies to strengthen the criminal background check system.

A new ABC News-Washington Post poll out today showed 53 percent find the president’s gun control plan to be favorable while 41 percent view it unfavorably.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

U.S. URGES NO TEST

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

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

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

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

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

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

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

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

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

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

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

The older Kim died in December 2011.

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

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

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US oil price slumps after pipeline cutback

NEW YORK: US crude oil prices closed sharply lower Wednesday, dragged down by news that a key pipeline had cut capacity due to a bottleneck.

New York's main contract, West Texas Intermediate, for delivery in March, tumbled US$1.45 from Tuesday's close to settle at US$95.23 a barrel.

In London trade, meanwhile, Brent North Sea crude for delivery in March settled at US$112.80 a barrel, an increase of 38 cents.

The New York market, which had been trading slightly lower for most of the session, dived after the operator of the Seaway pipeline told shippers that capacity had been reduced because of an unexpected problem at a delivery point.

"When that headline came out, the WTI immediately came under a significant amount of pressure," said Andy Lipow, an independent oil analyst.

The Seaway carries crude stocked in Cushing, Oklahoma, the main oil terminal in the world's biggest crude consumer, to refineries in the Gulf of Mexico.

Lacking sufficient pipeline capacity to bring oil to refineries, Cushing stockpiles have swollen recently to new record highs, weighing on futures prices.

Traders were keenly awaiting the US Department of Energy's latest weekly report on petroleum stockpiles. The data will be published Thursday, one day later than normal, due to a public holiday on Monday.

"Traders now expect upcoming US government oil inventory data to show crude-oil stocks dropped 2.3 million barrels last week," ETX Capital markets analyst Ishaq Siddiqi said.

Siddiqi said there had been a "bit of profit taking in crude following four sessions of gains, with many (traders) expecting refiners to start seasonal maintenance that will reduce crude oil demand."

- AFP/jc

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Aam aadmi asked to pick up tab for overhaul in emergency response system

NEW DELHI: Justice J S Verma Committee has recommended largescale changes in the government's emergency response system, but has put its financial burden on aam aadmi's pocket.

Calling into question the government's habit of announcing a new helpline every time some untoward incident happens, the Committee has recommended setting up of one central emergency response (ER) number for all exigencies, including crimes, fire or other disasters.

Interestingly, though, the burden of running this centralized system will be on the common man's telephone bill with additional charges being levied on h/his calls to fund this system.

The report says, "It is recommended that we have a one central ER number so that there is no burden on an average person on the street to remember different numbers for different kinds of ER situations. This is necessary in the context of India as a lot of our population is not adequately literate but they are telephony users...

"The need of the hour is to have a system that puts accountability of the emergency response on to the police and other ER services. The system should be auditable and have a public oversight to see its effectiveness and rectify the shortcomings of the system," it adds.

However, to maintain this system, it suggests: "A possible funding of this PERS (Public Emergency Response System) could come from a nominal surcharge on the existing and future telephony users thus not burdening the exchequer."

The committee has recommended setting up of one ER control centre for every geographical cell (such as metropolitan city) to respond to all emergency situations. It has asked for such systems to be put in place that forward the GPS location and address of the caller to the response team so that immediate help can be reached and prank caller be identified.

It has also asked for police patrol vans to be put under the control of these ER centres which themselves will function under the civilian administration. Other recommendations include making public call logs periodically for better accountability.

The panel has recommended presence of a counselor when the victim is interviewed by the police or medically examined to avoid compounding of her trauma.

It has asked the interviewer (read police) to be non-judgmental and not only avoid blaming the victim for the incident but also prevent her from blaming herself. It has also demanded of the counselor to help the family of the victim to understand that the incident is not the fault of the survivor.

It has suggested that all that the victim says should be believed and she along with her family should be educated about medical consequences and psychological fallouts of the incidents. It has recommended long-term therapy for the victim to come out of the trauma.

It has also cautioned police and doctors that absence of signs of struggle on a victim's body is not a sign of consent.

In case of sexual harassment at workplaces, it has recommended appropriate compensation to the victim to be paid by the company as decided by a tribunal.

Full text of Justice (retired) JS Verma Committee report

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Scientists to resume work with lab-bred bird flu

WASHINGTON (AP) — International scientists who last year halted controversial research with the deadly bird flu say they are resuming their work as countries adopt new rules to ensure safety.

The outcry erupted when two labs — in the Netherlands and the U.S. — reported they had created easier-to-spread versions of bird flu. Amid fierce debate about the oversight of such research and whether it might aid terrorists, those scientists voluntarily halted further work last January — and more than three dozen of the world's leading flu researchers signed on as well.

On Wednesday, those scientists announced they were ending their moratorium because their pause in study worked: It gave the U.S. government and other world health authorities time to determine how they would oversee high-stakes research involving dangerous germs.

A number of countries already have issued new rules. The U.S. is finalizing its own research guidelines, a process that Dr. Anthony Fauci of the National Institutes of Health said should be completed within several weeks.

In letters published in the journals Science and Nature this week, scientists wrote that those who meet their country's requirements have a responsibility to resume studying how the deadly bird flu might mutate to become a bigger threat to people — maybe even the next pandemic. So far, the so-called H5N1 virus mostly spreads among poultry and other birds and rarely infects people.

"The risk exists in nature already. Not doing the research is really putting us in danger," said Yoshihiro Kawaoka of the University of Wisconsin-Madison. He and Ron Fouchier of Erasmus University in the Netherlands separately created the new virus strains that could spread through the air.

The controversy flared just over a year ago, when U.S. officials, prompted by the concerns of a biosecurity advisory panel, asked the two labs not to publish the results. They worried that terrorists might use the information to create a bioweapon. More broadly, scientists debated whether creating new strains of disease is a good idea, and if so, how to safeguard against laboratory accidents.

Ultimately, the flu researchers prevailed: The government decided the data didn't pose any immediate terrorism threat after all, and the two labs' work was published last summer.

Fouchier said that within weeks, he will begin new research in the Netherlands, with European funding, to explore exactly which mutations are the biggest threat. He said the work could enable scientists today to be on the lookout as bird flu continually evolves in the wild.

U.S.-funded scientists cannot resume their studies until the government's policy is finalized.

But the NIH had paid for the original research — and it would have been approved under the soon-to-come expanded policy as well, Fauci told The Associated Press. That policy will add an extra layer of review to higher-risk research, to ensure that it is scientifically worth doing and that safety and bioterrorism concerns are fully addressed up-front, he said.

Had that policy been in place over a year ago, it could have averted the bird flu debate, Fauci said: "Our answer simply would have been, yes, we vetted it very carefully and the benefit is worth any risk. Period, case closed."

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Pentagon to Allow Women in Combat

Defense Secretary Leon Panetta will lift a long-standing ban on women serving in combat, according to senior defense officials. The ensuing administrative process could mean women will serve in front line combat roles, but not until 2016.

The move, first reported by the Associated Press, was not expected this week, although there has been a concerted effort by the Obama administration to further open up the Armed Forces to women.

The Joint Chiefs of Staff unanimously recommended in January to Secretary Panetta that the direct combat exclusion rule should be lifted.

"I can confirm media reports that the secretary and the chairman are expected to announce the lifting of the direct combat exclusion rule for women in the military," said a senior Defense Department official. "This policy change will initiate a process whereby the services will develop plans to implement this decision, which was made by the secretary of defense upon the recommendation of the Joint Chiefs of Staff."

Chairman of the Joint Chiefs Gen. Martin Dempsey sent Panetta earlier this month entitled "Women in Service Implementation Plan."
"The time has come to rescind the direct combat exclusion rule for women and to eliminate all unnecessary gender-based barriers to service."

"To implement these initiatives successfully and without sacrificing our warfighting capability or the trust of the American people, we will need time to get it right," he said in the memo, referring to the 2016 horizon.

Women have been officially prohibited from serving in combat since a 1994 rule that barred them from serving in ground combat units. That does not mean they have been immune from danger or from combat.

Adek Berry/AFP/Getty Images

As Martha Raddatz reported in 2009, women have served in support positions on and off the frontlines in Iraq and Afghanistan, where war is waged on street corners and in markets, putting them at equal risk. Hundreds of thousands of women deployed with the military to those two war zones over the past decade. Hundreds have died.

Read that 2009 report HERE.

Panetta's decision will set a January 2016 deadline for the military service branches to argue that there are military roles that should remain closed to women.

In February 2012 the Defense Department opened up 14,500 positions to women that had previously been limited to men and lifted a rule that prohibited women from living with combat units.

Panetta also directed the services to examine ways to open more combat roles to women. However the ban on direct combat positions has remained in place.

Advocates for equality in the services will be pleased. On Capitol Hill today retired Chief Master Sergeant Cindy McNally, a victim of sexual assault in the military, said placing women in combat roles would help equalize the services and actually cut down on sexual assaults, which have emerged as a major problem in the military.

"For larger solutions we need to look at integrating women completely into the armed force," she said. "Remove the combat exclusion policy. Then we will be a fully integrated force. Being able to do the job should be the standard, not whether you are male or female. I believe that as leaders we took our eye off the ball. We enabled a climate where our troops became vulnerable."

But the move is not universally popular among women in uniform who cite real-world concerns about the physical requirements that could be required to be a female front-line service member.

A female Army officer who spoke with ABC News on condition on anonymity pointed out that senior leaders feel compelled to open job positions to show how progressive they are. However this officer noted, "every female troop I know (over the age of 25) says publicly, 'Sure, open them up!' And privately, 'But not for me personally' - I know I don't have the brute strength required and I would be crushed to let down my colleagues - so no way, no thanks."

In September 2011 the Obama administration ended the "don't ask, don't tell" policy that had prohibited gays and lesbians from serving openly in the military after Congress repealed the Don't Ask, Don't Tell Law in December, 2010.

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Cameron promises Britons vote on EU exit

LONDON (Reuters) - Prime Minister David Cameron promised Britons a vote on quitting the European Union, rattling London's biggest allies and some investors by raising the prospect of uncertainty and upheaval.

Cameron announced on Wednesday that the referendum would be held by the end of 2017 - provided he wins a second term - and said that while Britain did not want to retreat from the world, public disillusionment with the bloc was at "an all-time high".

"It is time for the British people to have their say. It is time for us to settle this question about Britain and Europe," Cameron said in a speech, adding that his Conservative party would campaign for the 2015 parliamentary election on a promise to renegotiate the terms of Britain's EU membership.

"When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether. It will be an in-out referendum."

A referendum would mark the second time British voters have had a direct say on the issue. In 1975, they decided by a wide margin to stay in, two years after the country had joined.

Most recent opinion polls have shown a slim majority would vote to leave amid bitter disenchantment, fanned by a hostile press, about the EU's perceived influence on the British way of life. However, a poll this week showed a majority for staying.

Cameron's position is fraught with uncertainty. He must come from behind to win the next election, secure support from the EU's 26 other states for a new British role, and hope those countries can persuade their voters to back the changes.

He also avoided saying exactly what he would do if he failed to win concessions in Europe, as many believe is likely.

Critics, notably among business leaders worried about the effect on investment, say that for years before a vote, Britain may slip into a dangerous and damaging limbo that could leave it adrift or effectively pushed out of the EU.

The United States, a close ally, is also uneasy about the plan, believing it will dilute Britain's international clout. President Barack Obama told Cameron last week that Washington valued "a strong UK in a strong European Union" and the White House said on Wednesday it believed Britain's membership of the EU was mutually beneficial.

Some of Britain's European partners were also anxious and told Cameron on Wednesday his strategy reflected a selfish and ignorant attitude. However, Angela Merkel, the leader of EU paymaster Germany, was quick to say she was ready to discuss Cameron's ideas.

FRENCH "NON"

French Foreign Minister Laurent Fabius was less diplomatic: "If Britain wants to leave Europe, we will roll out the red carpet," he quipped, echoing words Cameron used recently to urge France's rich to escape high taxes and move to Britain.

French President Francois Hollande repeated his refusal of special deals: "What I will say, speaking for France, and as a European, is that it isn't possible to bargain over Europe to hold this referendum," he said. "Europe must be taken as it is.

"One can have it modified in future but one cannot propose reducing or diminishing it as a condition of staying in."

Italian Prime Minister Mario Monti was more positive. He said he agreed with Cameron on the need to make the EU more innovative and welcomed the idea of a British referendum, saying he thought Britons would ultimately vote to stay in the bloc.

Billed by commentators as the most important speech of Cameron's career, his referendum promise ties him firmly to an issue that has bedeviled a generation of Conservative leaders.

In the past, he has been careful to avoid bruising partisan fights over Europe, an issue that undid the last two Conservative prime ministers, John Major and Margaret Thatcher.

His speech appeared to pacify a powerful Euroskeptic wing inside his own party, but deepen rifts with the Liberal Democrats, the junior partners in his coalition. Their leader, Deputy Prime Minister Nick Clegg, said the plan would undermine a fragile economic recovery.

Sterling fell to its lowest in nearly five months against the dollar on Wednesday as Cameron was speaking.

"BREXIT"?

Cameron said he would take back powers from Brussels, saying later in parliament that, when it came to employment, social and environmental legislation, "Europe has gone far too far".

But such a clawback - still the subject of an internal audit to identify which specific powers he should target for repatriation to London - is likely to be easier said than done.

If Cameron wins re-election but then fails to renegotiate Britain's membership of the EU, a 'Brexit' could loom.

Business leaders have warned that years of doubt over Britain's EU membership would damage the $2.5 trillion economy and cool the investment climate.

"Having a referendum creates more uncertainty and we don't need that," Martin Sorrell, chief executive of advertising giant WPP, told the World Economic Forum in Davos. "This is a political decision. This is not an economic decision.

"This isn't good news. You added another reason why people will postpone investment decisions."

Cameron has been pushed into taking such a strong position partly by the rise of the UK Independence Party, which favors complete withdrawal from the EU and has climbed to third in the opinion polls, mainly at the expense of the Conservatives.

"All he's trying to do is to kick the can down the road and to try and get UKIP off his back," said UKIP leader Nigel Farage.

Euroskeptics in Cameron's party, who have threatened to stir up trouble for the premier, were thrilled by the speech.

Conservative lawmaker Peter Bone called it "a terrific victory" that would unify 98 percent of the party. "He's the first prime minister to say he wants to bring back powers from Brussels," Bone told Reuters. "It's pretty powerful stuff".

Whether Cameron holds the referendum remains as uncertain as the Conservatives' chances of winning the election. They trail the opposition Labour party in opinion polls, and the coalition is grappling with a stagnating economy as it pushes through unpopular public spending cuts to reduce a large budget deficit.

Labour leader Ed Miliband said on Wednesday his party did not want an in-or-out referendum.

EU REFORM

Cameron said he would campaign for Britain to stay in the EU "with all my heart and soul", provided he secured the reforms he wants. He made clear the Union must become less bureaucratic and focus more on free trade.

It was riskier to maintain the status quo than to change, he said: "The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy," he said.

Asked whether, if he did not succeed in his renegotiation strategy, would recommend a vote to take Britain out, he said only: "I want to see a strong Britain in a reformed Europe.

"We have a very clear plan. We want to reset the relationship. We will hold that referendum. We will recommend that resettlement to the British people."

Cameron said the euro zone debt crisis was forcing the bloc to change and that Britain would fight to make sure new rules were fair to the 10 countries that do not use the common currency, of which Britain is the largest.

Democratic consent for the EU in Britain was now "wafer thin", he said:

"Some people say that to point this out is irresponsible, creates uncertainty for business and puts a question mark over Britain's place in the European Union. But the question mark is already there: ignoring it won't make it go away."

A YouGov opinion poll on Monday showed that more people wanted to stay in the EU than leave it, the first such result in many months. But it was unclear whether that result was a blip.

Paul Chipperfield, a 53-year-old management consultant, said he liked the strategy: "Cameron's making the right move because I don't think we've had enough debate in this country," he said.

"We should be part of the EU but the EU needs to recognize that not everybody's going to jump on the same bandwagon."

Asked after the speech whether other EU countries would agree to renegotiate Britain's membership, Cameron said he was an optimist and that there was "every chance of success".

"I don't want Britain to leave the EU," he told parliament later. "I want Britain to reform the EU."

In the 1975 referendum, just over 67 percent voted to stay inside with nearly 33 percent against.

(Additional reporting by Paul Taylor in Davos, Alexandra Hudson in Berlin, Brenda Goh in London, Jeff Mason in Washington and James Mackenzie in Rome; Editing by Guy Faulconbridge, David Stamp and Alastair Macdonald)

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