Chancellor Angela Merkel of Germany and her centre-left coalition partner have cut a deal which strengthens the chances of Jean-Claude Juncker becoming the next chief of the EU executive, presaging a defeat for David Cameron who has vowed to fight Juncker's appointment to the bitter end.

Sigmar Gabriel, the German vice-chancellor and leader of the Social Democrats (SPD), joined Merkel in backing Juncker for the job of European commission president while dropping demands that Martin Schulz, the outgoing German president of the European parliament, be made the German commissioner in Juncker's team.

The deal in Berlin came as the EU's centre-left government leaders prepared to meet in Paris on Saturday to coordinate positions ahead of what promises to be a turbulent EU summit next week focused on Juncker, the former Luxembourg prime minister.

Following last month's European elections, leaders are to meet for a summit on Thursday and Friday to debate who should be the next commission chief.

Cameron has waged a loud and aggressive campaign in what looks like a doomed attempt to sway minds against Juncker. Officials in Brussels say the Cameron campaign has been driven by Conservative party politics, with fateful implications for Britain's future in Europe.

The deal in Berlin suggests that domestic party politics in Germany have played an even bigger role in resolving the controversy over Juncker and the EU's future leadership team.

Schulz led the European social democrats in the recent election as contender for the commission job while Juncker, with Merkel's backing, led the campaign for the Christian democrats who won, making the Luxembourger the frontrunner. Cameron had no say in either candidacy since the Conservatives are aligned with neither grouping after the prime minister parted company with Europe's Christian democrats in 2009.

"The SPD will accept a commissioner from [Merkel's] CDU," Gabriel told Der Spiegel, "provided Schulz is elected president of the European parliament".

That represented a climbdown. The SPD had previously threatened to block Juncker in the necessary vote in the European parliament unless Schulz was named by Merkel as the new German commissioner.

Schulz told the Guardian last week that Juncker had offered him the post of vice-president of the commission and also warned that it would be "easier" for the SPD to support Juncker in a vote if he was assured of the job.

It is not clear how the Berlin deal will go down in the rest of Europe and whether Merkel, the most powerful leader in the EU, will get her way. But it suggests she will push to have Juncker nominated next week. If she does, Cameron will insist on a vote at the summit, will vote against, will force other leaders to show their true colours on Juncker, and will probably lose in the qualified majority vote.  Until now, these decisions have always only been taken by consensus by national EU leaders....Well...Merkel is by far not as powerful as many people are led to believe. Juncker wasn't her favorite candidate in the first place but letting him down and thus defying the Spitzenkandidat process she had agreed to earlier would have undermined her credibility and ended her career. That's why the social democrats pushed so hard.
Then there's the concessions she did have to make: Schulz becoming president of the European Parliament even though his group is not the largest. Helle Thorning-Schmidt, a Denish social democrat, becoming president of the Council of Ministers. And most importanly: Loosening the ties on austerity within the eurozone, thus making Juncker acceptable to Renzi.
So Merkel didn't come out as a winner, but Cameron wasn't even allowed to take part in the game.

Devaluation cannot be considered a free lunch, an increase in jobs an output with no inflation. The history of the UK economy shows that a 10% fall in the value of sterling eventually results in a 10% rise in prices. However several factors affect this.
A fall in the exchange rate can affect prices in two ways. First, there is the direct impact of dearer imports. If workers demand and get higher wages to compensate for the higher prices the inflationary effect is magnified. As was the case in the 1970s as oil prices rose and subsequent wage demands were met. The benefits may well be short-lived before inflation erodes them.
Secondly, an export boom uses up capacity in the same way as a consumer boom. If the economy is close to full capacity inflationary pressures mount.

The exact impact of devaluation on an economy will therefore depend upon the significance of trade to overall GDP, the responsiveness of wages and at what stage of the economic cycle (whether there is spare capacity) the economy is.Devaluation will work in increasing output and jobs without being offset by inflation only if workers accept real pay cuts and there is spare capacity. And the elasticity of demand for both exports and imports.

The USA tends to have a relaxed attitude towards a falling dollar since imports are only 11% of GDP as opposed to 30% in Western Europe. Furthermore, American labour is far more flexible than European labour and are more likely to accept pay cuts.

An economy heavily dependant on imports will wipe out any price advantages due to devaluation due to import price rise. For example, the UK that has such a dependency not least due to foreign owned manufacturers that import many components along with domestic ones that do the same, JCB in 1979 used 96% by value UK components but by 2010 only 36%i .

BAGHDAD, June 16 (Xinhua) -- As tensions rose due to the advance of Sunni insurgents, the United Nations said it had evacuated nearly 60 staff members from Baghdad to neighboring Jordan, according to a report from the Los Angeles Times.

"Underscoring the menace posed by the fighters of the Islamic State in Iraq and Syria (ISIS), the United Nations said it had moved nearly 60 staffers from Baghdad to neighboring Jordan with the intention of relocating them to northern Iraq," the report said.

Meanwhile, the United States had said Sunday that some staff members of the U.S. Embassy in Baghdad would be temporarily moved to the U.S. consulates general in other Iraqi cities of Basra and Erbil, or to Jordan's capital city of Amman. The U.S. Embassy in Baghdad is the largest embassy in the world and employs around 5, 000 people.

The standoff between Ukraine and Russia over gas prices hit a new low Monday, exacerbating fears that a halt in natural gas shipments to Kyiv could ultimately threaten Europe's own energy supplies.

Hours after Moscow halted deliveries to Ukraine on Monday, the head of Russia's Gazprom said Kyiv could illegally divert gas destined for the EU should the country run into shortages.

Half of the gas the EU imports from Russia is transported through pipelines in the Ukraine. Kyiv has promised to not renege on its gas transport commitments and has said it has enough gas in underground storage to meet its own needs until December.

Speaking after the latest round of negotiations ended without a deal, Guenther Oettinger, the European energy commissioner, said the EU would be wise to top off its gas storage. "If the store is not filled then perhaps we all will have a problem in winter," Oettinger said. The German politician's remarks underscored a wider unease in the EU about potential energy shortages, especially in Germany, which relies on Russia for the lion's share of its natural gas imports. In total, Germany burned through 1.179 million terajoules worth of natural gas in the first three months of 2014 - 31.6 percent of which came from Russia. Germany imported around four-fifths of the natural gas it consumed, and of those imports, 38 percent came from Russia. As far as exporters of natural gas to Germany went, Norway was in a distant second with 291,000 terajoules from January to March this year, or 26 percent of the natural gas Germany imported. In third place the Netherlands with 20 percent.

Compared to a year ago, Germany consumed 17.7 percent less natural gas, but at the same time the amount of gas it imported from Russia rose by 11.7 percent. For its part, the German government has said it sees no risk of energy shortages. "We perceive no threat to the security of our supply in Germany," a spokesman from the economics ministry said Monday. While roughly half of the gas EU countries, including Germany, order from Russia is pumped through pipelines in Ukraine, the other half is transported via Belarus or through the North Stream pipeline in the Baltic Sea.

Were bottlenecks in supply to occur in Ukraine, the German ministry spokesman said, they could be overcome by rerouting gas through the North Stream pipeline, as it is only at two-thirds capacity currently.(DW)

Message from Tony Blair to the Iraqis--Baghdad Drop Zone, Leaflet no 16  : Hello to our Iraqi friends or "Salom-a-lekom" as you put it. Oh no that's the other lot isn't it? Mind you ones as awkward as the other when you think about it. No, no, only joking - British sense of humor, it's the envy of the free crusading world. And its just one of the many gifts we're dying (no pun intended) to give you. All of us over here remember very clearly how our sense of humor got us through the blitz. Our relatives may have been atomized by high explosives from above, but did we grumble? Not a bit of it - we sang songs, robbed sleeping strangers in the underground and jolly well got on with it. And you can do the same.
Yes indeed, even though you’re killing yourself and your fellow non-combatants in difficult to confirm numbers, it's for your own good. It will be character forming In the long run. We've never really been as happy as we were when Mr. Hitler was maiming our mothers and pulverizing our infants with searing shrapnel. And now, even the smallest sporting occasion is an excuse for us to roll out the flags and banners, the old songs and the wartime slogans. Soon you'll doing the same, believe me.
We know you currently tend to use your football pitches for mass executions but eventually we know you will see the error of your ways. I mean, don't get me wrong, the president of the United States is rarely happier than when he's offing a bad egg or two but, please, do it the Christian way - by lethal injection. We'll sell you all the necessary equipment at very reasonable rates. Which brings me to our central aim, selling you necessary equipment. For goodness sake, you can't even shelter in an underground because we haven't built you one. How are we supposed to destroy your infrastructure when you've shown no interest in acquiring more than a few yards of road and half an airport? No taking out exorbitant loans, no exchanging backhanders with lobbyists and no handing over your independence to multinationals and the IMF. I mean, what's wrong with you people - don't you want to be civilised? Once we've started dropping the first few thousand 15,000lb bombs, believe me, your country's going to be a lot less mountainous and awkward than it was. Ideal for a major development of motorway and rail networks. We can help you with that. The people of Britain would he delighted to send you over executives, specialists, in fact, the whole darn staff of a wonderful organisation called Railtrack which will provide you with literally stunning railway lines and signaling in no time. And we guarantee its services will kill far fewer civilians than we ever will Look, I know the last time we asked you to stand shoulder to shoulder with us we just sent over a few SAS men to research their novels and then rather dropped you in it with the Russians and raging poverty and extremism and so forth, but things will be different this time. We will not walk away, No we're going to stay-even though a great deal of your countryside is going to be a tad radioactive with all the depleted uranium we'll have blasted into it Nevertheless we will happily build you for example pricey hospitals to accept the deformed children of the wealthy new class of capitalist robber barons we'll create. Everyone else's children can choose to sell a kidney in exchange for treatment or simply enjoy the benefits of random genetic mutation. That's the free market for you. Meanwhile you'll be offered a rich variety of satisfying new jobs - The kind of employment you goat herders and opium farmers have only Dreamed of. You'll be able to stitch trainers, jeans or even cheap Gucci replicas. Or we'll help you get those clever foreign fingers of yours busy assembling parts for mobile phones, personal organisers, and other humanitarian devices. Some of you may even earn the princely sum of £1 a month. I know it's difficult to believe but this is the life that’s what’s around the corner which ISIS are bringing you. And remember no glumness and resentment and no thinking you'll slip off and become an economic refugee just because your village is covered in body parts and broken flour bags and your belongings have gone up in smoke. That's no reason to leave. Between you and me turning up in Dover as a refugee just because we made you one wouldn’t be wise. We do have Muslims here, almost all of them Good Muslims, some of them are showing extremism in schools but we have that under control but we don't particularly want any more. All that inter racial understanding and international social responsibility, it's not really British

So Ally-Akbar, as Cherie and I often say and Al-Humpty-leel-lah

Best wishes

Tony Bair US Ambassador to the world

As many as 500,000 Iraqis escaped Mosul as the city fell and the Iraqi army melted away.

But now, tens of thousands have decided to return.

In the Sunni dominated city, the removal of the Iraqi army by ISIS has been interpreted as a local victory; as a means of empowering Mosul residents against Iraqi Prime Minister Nouri al-Maliki and the Shia dominated national government who they feel has kept their people “oppressed”.

“For seven years we lived in a prison. The people who have come now [ISIS], are better than the Maliki army,” Maher, 36, told the Telegraph. He wouldn’t reveal his name for fear putting his family in danger. “All of Mosul feels this way.”

An English teacher, with a soft manner and kind eyes, Maher bore no similarity to the masked men in the ISIS adverts proffering holy slaughter.

But the sympathy he felt for his new occupiers sharply illustrates the threat that is now being posed to Baghdad, and the challenges that Mr Maliki will face to regain control of northern Iraq.

As jihadist insurgents have swept victoriously south, conquering village after village and pushing the front line to only 60 miles from the capital, they have met little resistance from Sunni residents.

On Friday William Hague, the foreign secretary, implied the British government may send special forces such as the SAS to advise Iraqi army units in how to fight the “terrorists”.

But the crises in northern Iraq is now less one of a single jihadist group to be rooted out and destroyed, than of a sectarian pushback by the Sunni population against the Iraqi government.

With the rest of his family crammed into his battered silver Sedan car, ready to drive to Mosul, Maher, the teacher, described the city, which he had been to the day before.

“The situation is quiet and normal now in Mosul. Schools and hospitals have opened,” he said. “There is no pressure from ISIS. Yesterday there was a parade by them in the streets to show off the weapons that they took from the Iraqi army. People came out to watch; they feel safe.”

Video footage from inside the city shows masked gunmen acting as traffic police, calmly waving cars through at a crossroads. Other images show the jihadists studiously repairing broken electricity lines.

One female resident, who asked not to be named, spoke to the Telegraph from her home inside the city.

“The armed men organise even the municipal services. Rubbish is being cleaned off the streets. Electricity is very fine: we now have it more than nine hours per day, which is even better than during Saddam [Hussein]’s rule,” she said.

“Now, in these days of being in the grip of the armed men, we only feel the wonderful peace, which we have missed for more than a decade now, since 2003.”

All the residents in Mosul who the Telegraph spoke with automatically referred to the Iraqi army as the “Maliki militia”.

After the 2003 invasion Maliki appointed mostly Shia commanders from southern Iraq to lead the troops in Mosul. Feeling no allegiance to the city, the soldiers’ behaviour toward the locals ranged from demeaning to violent, residents said.

Troops were known for running sweeping arrests of any Sunni men who happened, even by accident, to be in the vicinity of an incident. The city was fragmented by army checkpoints that were difficult for locals to cross. And then there were the smaller humiliations of troops swaggering with entitlement taking petrol and goods without paying.

Twenty-two year old Refat said he spent six months in prison after a suicide bomb exploded close to the sweet shop where he worked: “The soldiers rounded all the workers in the area up and put us in jail. They told us we are all terrorists,” he said. “Under Maliki it was a religious right to kill or mistreat Sunnis.”

“We will live under al-Qaeda if they give people their rights. We have no problem with living under Shariah law, even if woman have to cover their face,” he added.

But some residents of Mosul have already felt the brutal, crazed, streak in the jihadists who for now, are playing nice.

Ahmed, 24, is an Iraqi police men from Mosul who fled the city after witnessing ISIS beheading four soldiers at a checkpoint.

“I was hiding in my home. I could see the ISIS checkpoint outside. They took the ID cards of the men and checked their names against a database.”

“Then they pulled them out of the car. They put them in a line, and, grabbing their faces swiped their swords. They beheaded all four people.”

In the first few days after taking control, the jihadist went on a rampage of revenge. In storming the military headquarters they gained access to the database of military personnel, Ahmed said. Since then, they have been seeking out members of the special forces who had in the past put members of ISIS in jail, and exacted their vendetta.

In addition they have begun to impose their ideology on the people of Mosul.

At public gatherings, and using the tannoys of the minarets of mosques, the jihadists espoused the “ten commandments” of their rule.

“People, you tried secular rulings and they gave you pain. Now is time for the Islamic state,” they shouted at one night rally, the lights of the mobile phones of residents shining in the dark as they recorded the new rules.

The new dictates are typical of the ISIS movement, reflecting almost exactly the regulations it imposed in Raqqa, the northern Syrian city under it’s control: Smoking, drinking alcohol, tattoos, and grave sites are banned. Women should be covered in public, but preferably should remain at home.

Breaking these rules is punishable by public flogging. Thieving can result in limbs being chopped. Committing adultery merits being stoned to death.

It is unclear how long the honeymoon between the jihadists and the people of Mosul can last.

The occupation of the city may repeat patterns already established in Syria, where initially the population welcomed the jihadists as a force for moral good after years of suffering under a brutal and corrupt leadership. But then, the strict regulations imposed by ISIS debilitate the freedoms they used to have. They grate and inspire rejection.

“We know that radicalism won’t survive in our society and we will take care of that,” said the woman speaking from Mosul.

Reuters - The new head of the biggest group of conservatives in the European Parliament dismissed on Saturday demands by British Prime Minister David Cameron to put the brakes on European integration.

Manfred Weber, the new chairman of the European People's Party (EPP), also told a German paper that the group still backed its candidate Jean-Claude Juncker to be the next Commission president despite opposition from Britain.

"The EU is based on an ever closer union of European peoples. That is set out in the treaties. It is not negotiable for us," Weber told the Frankfurter Allgemeine Sonntagszeitung.

"We cannot sell the soul of Europe," he added, also rejecting any demands to let national parliaments win rights to stop European laws.  "If we grant every national parliament a veto right, Europe would come to a standstill," he said.

Cameron, under pressure from anti-EU hardliners in his own Conservative party and in the UK Independence Party (UKIP), has agreed to hold a referendum in 2017 on whether his country stays in the EU. His party is not in the EPP.

Before the referendum he is trying to renegotiate the terms of Britain's membership. He has said that he wants to prevent mass migration and EU interference in police and judicial matters and that he wants national parliaments to be able to work together to block unwanted European European legislation.

Weber said the EPP still fully supported former Luxembourg Prime Minister Juncker's bid to become the next European Commission president. "We must keep the commitments that we made to our voters: he will be the next president of the Commission," said Weber.

Britain has opposed Juncker's bid, which is supported by several EU members including Germany. Cameron fears Juncker is too aligned to old-school federalists to bring in change.

Citing no sources, Der Spiegel magazine reported that conservative Chancellor Angela Merkel did not want Social Democrat (SPD) Martin Schulz to become Germany's Commissioner in Brussels despite pressure from SPD leader Sigmar Gabriel.

Merkel leads a 'grand coalition' with Gabriel's SPD.