Wall St. rises as Comey testimony springs no surprise

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 2, 2017. REUTERS/Brendan McDermid

By Tanya Agrawal

(Reuters) – U.S. stocks were higher in early afternoon trading on Thursday after former FBI Director James Comey’s testimony was seen by investors as having no smoking gun that could affect Donald Trump’s presidency.

Comey, who was investigating alleged Russian meddling in the 2016 U.S. presidential election, said he had no doubt that Russia interfered with the election, but was confident that no votes had been altered.

Comey said he was disturbed by Trump’s bid to get him to drop a probe into former national security adviser, Michael Flynn, but would not say whether he thought the president sought to obstruct justice.

Investors were concerned that any major revelation by Comey could dampen already flagging momentum for Trump’s agenda of lower taxes and lax regulations.

Bets that Trump can implement his agenda are partly behind a rally that has taken stock indexes to record highs.

“I think the market is taking less of an alarmist review of this situation because there is no smoking gun here. So it’s not particularly impactful for thinking about … Trump’s economic agenda to go through,” said Thomas Simons, money market economist at Jefferies & Co in New York.

Earlier on Thursday, the European Central Bank signaled no further interest rate cuts as euro zone prospects improved, but said subdued inflation meant it would continue to pump more stimulus into the region’s economy.

Investors are also awaiting the results of the UK general election. Opinion polls show Theresa May’s Conservative Party leading between 5 and 12 percentage points over the main opposition Labour Party, suggesting she would increase her majority.

“The market cares because if Theresa May loses the majority that would be disruptive of the Brexit process,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“Getting back into something that seemed to be a fair and orderly process into something that’s going to be more disruptive would not be a market positive.”

At 12:36 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 68.55 points, or 0.32 percent, at 21,242.24 and the S&P 500 <.SPX> was up 4.06 points, or 0.16 percent, at 2,437.2.

The Nasdaq Composite <.IXIC> was up 14.46 points, or 0.23 percent, at 6,311.84.

Six of the 11 major S&P sectors were lower, with the defensive utilities index’s <.SPLRCU> 1.04 percent loss topping the decliners.

Financials <SPSY> rose 1.59 percent leading the gainers.

Shares of Alibaba Group Holding <BABA.N> were up 11.3 percent at $139.78 after the company said it expected revenue growth of 45-49 percent in the 2018 fiscal year.

Yahoo <YHOO.O>, which owns a 15.5 percent stake in Alibaba, rose 8.3 percent.

Nordstrom <JWN.N> jumped 10.6 percent to $44.78 after the department store operator said that some members of the controlling Nordstrom family have formed a group to consider taking the company private.

Advancing issues outnumbered decliners on the NYSE by 1,624 to 1,188. On the Nasdaq, 1,832 issues rose and 926 fell.

(Reporting by Tanya Agrawal in Bengaluru; Additional reporting by Sinead Carew and Dion Rabouin; Editing by Anil D’Silva and Savio D’Souza)

Comey’s caution to meet Trump’s tweets in Russia hearing

FILE PHOTO: U.S. President Donald Trump (L) speaks in Ypilanti Township, Michigan March 15, 2017 and FBI Director James Comey testifies before a Senate Judiciary Committee hearing in Washington, D.C., May 3, 2017 in a combination of file photos. REUTERS/Jonathan Ernst/Kevin Lamarque/File Photo

By Warren Strobel and Patricia Zengerle

WASHINGTON (Reuters) – Former FBI Director James Comey will tell Congress on Thursday that President Donald Trump pressed him repeatedly to halt a probe into his ex-national security adviser’s ties with Russia and to declare publicly that Trump himself was not under investigation.

Comey’s testimony in the most widely anticipated congressional hearing in years will put at center stage a high-stakes clash between two men with vastly different personas.

The outcome could have significant repercussions for Trump’s 139-day-old presidency as special counsel Robert Mueller and multiple congressional committees investigate whether Trump’s campaign team colluded with Russia during the 2016 presidential election. The White House and Russia deny any collusion occurred.

In written testimony released by the Senate Intelligence Committee on Wednesday, Comey quoted Trump as telling him the Russia investigation was a “cloud” impairing his ability to operate as president.

Comey said in his statement that in a one-on-one meeting in the Oval Office on Feb.14, Trump asked him to drop an investigation of former national security adviser Michael Flynn that is part of a wider probe into Russia’s alleged meddling in the 2016 presidential election.

“I hope you can see your way clear to letting this go, to letting Flynn go,” Comey quoted Trump as saying.

Comey also said Trump told him during a one-on-one dinner on Jan. 27 that he needed “loyalty.”

Trump fired the FBI chief on May 9, setting off a political firestorm, and he has since called Comey a “showboat” and a “grandstander.”

Democrats, along with some Republicans, on the committee will use the hearing on Thursday to press for further details of any attempts by Trump to blunt the Russia investigation.

“I’m very concerned about the implication that Comey keeping his job was dependent on his loyalty or, in Comey’s words, developing a ‘patronage relationship.’ That is another way the President sought to impede the investigation,” Democratic Senator Ron Wyden said in a comment emailed to Reuters.

Senator Susan Collins, a Republican member of the panel, said earlier this week: “I want to know more also about the president’s interactions with Mr. Comey with regard to the investigation into Michael Flynn. … It makes a big difference what the exact words were, the tone of the president, the context of the conversation.”

But Republican Senator Richard Burr, the panel’s chairman, sought to downplay Comey’s “loyalty” remark, saying: “I don’t think it’s wrong to ask for loyalty from anybody in an administration.”

Trump’s attorney, Marc Kasowitz, released a statement on Wednesday saying the president felt “totally vindicated” by Comey’s acknowledgement that he had told Trump on three occasions that he was not personally under investigation.

Despite landing himself in other political controversies, including his handling of the FBI investigation of 2016 Democratic presidential nominee Hillary Clinton’s private email server, Comey is widely seen as cautious and fact-oriented.

“One thing you don’t ever hear about him is (that) people don’t think he tells the truth. He brings a lot of credibility,” said Benjamin Wittes, a Comey confidant and senior fellow at the Brookings Institution.

Less than five months into office, Trump has proven himself to be impulsive and visceral, turning to Twitter to lambaste perceived adversaries in 140 characters or less.

AWKWARD RELATIONSHIP

As Comey’s written testimony underscored, he and the U.S. president had an awkward, topsy-turvy relationship.

Then-candidate Trump excoriated Comey last summer for deciding not to prosecute Clinton over her handling of government emails, then praised him when he reopened the issue in October just days before the election.

Trump initially kept Comey on as FBI director, and publicly embraced him at a January White House event. Two days after firing him, Trump said it was because of “this Russia thing.”

Trump is widely expected to use his Twitter account, which lists 31.8 million followers, to counterpunch at Comey on Thursday – perhaps even in real time.

The Republican president’s unconstrained use of Twitter has confounded allies and skeptics alike.

“Every time you tweet, it makes it harder on all of us who are trying to help you. I don’t think you did anything wrong. Don’t get in the way of an investigation that could actually clear you,” Republican Senator Lindsey Graham told Fox News on Wednesday.

Despite the high drama, Comey is not expected to drop any major new bombshells, or directly accuse Trump of trying to obstruct justice by asking him to halt the FBI probe of Flynn.

He is also unlikely to reveal new details of the ongoing Russia investigation. U.S. law enforcement officials said Comey had discussed his testimony with Mueller’s investigative team to ensure it did not interfere with the special counsel’s probe.

“The one thing you know he’s not going to do, you know he’s not going to reach a conclusion (on the legality of Trump’s actions) and he’s not going to talk about the underlying investigation,” said Stephen Ryan, a former federal prosecutor and congressional investigator now at the McDermott, Will & Emery law firm.

Still, Ryan said the testimony, and senators’ questions, would be historic. The closest comparison, he said, was the appearance 44 years ago of President Richard Nixon’s White House counsel John Dean, who, after being fired by Nixon, gave damning testimony in 1973 to the Senate Watergate Committee.

(Additional reporting by John Walcott; Editing by Yara Bayoumy and Peter Cooney)

Gulf states squeeze Qatar as U.S., Kuwait probe for solution to row

Buildings are seen on a coast line in Doha, Qatar June 5, 2017. REUTERS/Stringer

By Tom Finn

DOHA (Reuters) – Gulf states cranked up the pressure on Qatar on Thursday as U.S. President Donald Trump and Kuwait’s emir worked to end an Arab row that Qataris say has led to a blockade of their country, an investment powerhouse and supplier of gas to world markets.

With Trump offering to help resolve the crisis, possibly with a meeting at the White House, the United Arab Emirates cut postal links to Qatar, and close Saudi ally Bahrain reiterated a demand that Doha distance itself from regional foe Iran.

Bahrain, Saudi Arabia, Egypt, the UAE and several other countries severed diplomatic and transport ties with Doha on Monday, accusing it of supporting Islamist militants and their arch-foe Iran – charges Qatar says are baseless.

Normally guarded about politics, Qataris expressed outrage.

“It is a blockade! Like that of Berlin. A declaration of war. A political, economic and social aggression,” a Qatari diplomat said. “We need the world to condemn the aggressors.”

With food and other supplies disrupted and worries mounting about deepening economic turbulence, banks and firms in Gulf Arab states were seeking to keep business links to Qatar open and avoid a costly firesale of assets.

Turkey has brought forward a troop deployment to Qatar and pledged to provide food and water supplies to its Arab ally, which hosts a Turkish military base. Turkish President Tayyip Erdogan has said isolating Qatar would not resolve any problems.

The UAE’s national postal service, Emirates Post Group, suspended all postal services to Qatar, state news agency WAM said, the latest in a series of measures degrading commercial and communications links with Doha.

The Abu Dhabi Petroleum Ports Authority also reimposed a ban on oil tankers linked to Qatar calling at ports in the UAE, reversing an earlier decision to ease restrictions, and potentially creating a logjam of crude cargoes.

Trump initially took sides with the Saudi-led group before apparently being nudged into a more even-handed approach when U.S. defense officials renewed praise of Doha, mindful of the major U.S. military base hosted by Qatar that serves, in part, as a launchpad for strikes on Islamic State jihadists.

In his second intervention in the dispute in as many days, Trump urged action against terrorism in a call with Qatari Emir Sheikh Tamim bin Hamad al-Thani, a White House statement said, suggesting a meeting at the White House “if necessary”.

It said that Trump, in a later call with Abu Dhabi’s crown prince, Sheikh Mohammed bin Zayed al-Nahayan, called for unity among Gulf Arabs “but never at the expense of eliminating funding for radical extremism or defeating terrorism”.

Officials from Qatar and its Gulf Arab neighbors embarked on a quickening round of shuttle diplomacy, with the Qatari foreign minister due in Moscow and Brussels and Bahrain’s king visiting his ally Egypt for talks on the crisis.

SAUDIS SAY OUTSIDE MEDIATION UNWANTED

Qatar called for “dialogue and diplomacy”.

The Qatari ambassador to Washington, Meshal Hamad al-Thani, wrote on Twitter that a key pillar of Doha’s foreign policy was mediation. “Open channels of communication means venues for conflict resolution,” he said.

But Saudi Foreign Minister Adel al-Jubeir said Gulf states could resolve the dispute among themselves without outside help.

“We have not asked for mediation, we believe this issue can be dealt with among the states of the Gulf Cooperation Council (GCC),” he told a news conference with his German counterpart during a visit to Berlin broadcast on Saudi state television.

The foreign minister of Oman met fellow GCC member Kuwait’s emir for talks. The Kuwaiti leader went to the UAE and Qatar on Wednesday for talks on the crisis and is now back in Kuwait.

In the meantime, Qatar’s neighbors kept up a drumbeat of criticism and warnings.

In an interview with BBC radio, UAE Ambassador to Russia Omar Saif Ghobash said Qatar had to choose between supporting extremism or supporting its neighbors.

“We have all kinds of recordings taking place where they (Qatar) are coordinating with al Qaeda in Syria,” he said.

“Qatar needs to decide: Do you want to be in the pocket of Turkey, Iran and Islamic extremists? They need to make a decision; they can’t have it both ways.

The Saudi newspaper al Watan published what it called a list of eight “extremist organizations” seen as working to destabilize the region from Qatar, including Qatar’s al Jazeera news channel, that were targeted by Gulf Arab states.

Qatar has backed Islamist movements but vehemently denies supporting terrorism. It provides a haven to anti-Western groups such as the Afghan Taliban, Palestinian Hamas and Algeria’s Islamic Salvation Front. Qatar says it does not accept its neighbors’ view that any group with an Islamist background is terrorist. Qatar’s emir has said such a view is a big mistake.

In an interview published by Saudi-owned Asharq al Awsat newspaper, Bahraini Sheikh Khalid bin Ahmed al-Khalifa said conditions posed by the four countries for a resolution of the crisis were “crystal clear”.

“NUMBER ONE ENEMY IRAN”

“Qatar has to redress its path and has to go back to all previous commitments, it has to stop media campaigns and has to distance itself from our number one enemy Iran.”

Jubeir declined to confirm a list of 10 demands published by Al Jazeera, which included shutting down the widely watched, Doha-based satellite network. But he added that Qatar knew what it needed to do to restore normal relations.

Turkey’s Erdogan called Kuwait’s ruler, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, late on Wednesday and discussed developments in the Gulf and ways to cement cooperation between Muslim countries, the Kuwaiti state news agency KUNA said. Turkey, like Kuwait, has offered to mediate.

In a sign of the economic damage from the dispute, Standard & Poor’s downgraded Qatar’s debt on Wednesday as the country’s riyal currency fell to an 11-year low amid signs that portfolio investment funds were flowing out because of the rift.

UAE Minister of State for Foreign Affairs Anwar Gargash told Reuters more economic curbs would be imposed on Qatar if necessary and said Doha needed to make ironclad commitments to change what critics call a policy on funding Islamist militants.

He later told France 24 television that any further steps could take the form of “a sort of embargo on Qatar”.

In a measure that cemented earlier UAE restrictions on air transport, the country’s General Civil Aviation Authority said it had closed the air space for all air traffic to and from Doha until further notice.

Regional tensions have been aggravated by the worst dispute among Gulf Arabs for two decades and were ratcheted up further on Wednesday after militants attacked targets in Tehran, killing at least 12 people.

Shi’ite Muslim Iran blamed Sunni Muslim arch-rival Saudi Arabia for the attack, which was claimed by the Sunni Islamic State. Riyadh denied any involvement.

(Additional reporting by Reem Shamseddine, Aziz El Yaakoubi, Sylvia Westall, Sami Aboudi and Andrew Torchia, Writing by William Maclean, Editing by Mark Heinrich)

Trump pushes infrastructure plan as Russia probe heats up

U.S. President Donald Trump announces his $1 trillion infrastructure plan to the crowd during a rally alongside the Ohio River at the Rivertown Marina in Cincinnati, Ohio, U.S. June 7, 2017. REUTERS/John Sommers II

By Jeff Mason

CINCINNATI, Ohio (Reuters) – President Donald Trump on Wednesday trumpeted plans for $1 trillion in U.S. infrastructure spending as he struggles to gain momentum for his economic agenda amid growing attention on the probe into alleged ties between his campaign and Russia.

“America wants to build,” Trump said. “There is no limit to what we can achieve. All it takes is a bold and daring vision and the will to make it happen.”

Speaking in Cincinnati, Ohio, Trump reviewed a proposal announced earlier this year to leverage $200 billion in his budget proposal into a $1 trillion of projects to privatize the air traffic control system, strengthen rural infrastructure and repair bridges, roads and waterways.

Trump said he would not allow the United States to become a “museum of former glory.” He spoke about backing large transformative projects but did not give specifics.

“We will construct incredible new monuments to American grit that inspire wonder for generations and generations,” he said.

Trump pointed to a government program that allows the private sector to tap into low-cost government loans called the Transportation Infrastructure Finance and Innovation Act as a way to leverage federal funds with state, local, and private sector funding.

Transportation Secretary Elaine Chao said at a Senate hearing on Wednesday that administration plans to unveil a detailed legislative proposal by the end of September.

Democrats want $1 trillion in new federal spending and proposed a plan that includes $200 billion in roads and bridges,$20 billion in expanding broadband Internet access, $110 billion for water systems and $75 billion for schools.

Senate Democratic Leader Charles Schumer said the Trump budget unveiled in May cuts $206 billion in infrastructure spending across several departments, including $96 billion in planned highway trust fund spending.

The Ohio visit was the second leg of a week-long White House focus on infrastructure. On Monday the president proposed spinning off air traffic control from the Federal Aviation Administration.

The proposal to privatize air traffic control has run into skepticism and opposition from Democratic senators and some Republicans.

The infrastructure push comes as the White House seeks to refocus attention on core promises to boost jobs and the economy that Trump made last year during his presidential campaign.

Those pledges have been eclipsed by the furor over Russia’s alleged meddling in the election. That drama will come to a head on Thursday when former Federal Bureau of Investigation Director James Comey, who was leading the Russia probe until Trump fired him last month, testifies before a Senate panel.

(Reporting by Jeff Mason in Cincinnati, Ohio Writing by David Shepardson in Washington; Editing by Chris Sanders and Cynthia Osterman)

Trump to ask former Justice Dept official Wray to lead FBI

FILE PHOTO: Assistant U.S. Attorney General Christopher Wray pauses during a press conference at the Justice Department in Washington, U.S. November 4, 2003. REUTERS/Molly Riley/File Photo

By Julia Edwards Ainsley

WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday he plans to nominate Christopher Wray, a former U.S. assistant attorney general under President George W. Bush now in private practice, to lead the Federal Bureau of Investigation.

“I will be nominating Christopher A. Wray, a man of impeccable credentials, to be the new Director of the FBI. Details to follow,” Trump said in a statement on Twitter.

The U.S. Senate must approve Trump’s choice to replace former FBI Director James Comey, whom the president fired last month amid the agency’s ongoing probe into alleged Russian meddling into the U.S. election.

Trump’s announcement comes the day before Comey is scheduled to testify before the Senate Intelligence Committee on Moscow’s alleged interference and any potential ties to Trump’s campaign or associates.

The president met last week with candidates for the FBI director post, including Wray, according to White House spokesman Sean Spicer.

Wray currently works for King & Spalding’s Washington and Atlanta offices where he handles various white-collar criminal and regulatory enforcement cases, according to the firm.

He served as assistant attorney general in the Justice Department’s criminal division from 2003 to 2005, working on corporate fraud scandals and cases involving U.S. financial markets, according to his biography on the law firm’s website.

Many lawmakers have said Trump should pick a career law enforcement professional.

One former FBI official questioned whether Wray had the management experience to run an agency with more than 35,000 people, given the small size of the division he ran at the Justice Department.

(Additional reporting by Susan Heavey and Doina Chiacu; Editing by Alden Bentley and Jeffrey Benkoe)

UAE turns screw on Qatar, threatens sympathizers with jail

A shop with a picture of Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani is seen in Doha, Qatar, June 6, 2017. REUTERS/Naseem Zeitoon

By Sylvia Westall and Tom Finn

DUBAI/DOHA (Reuters) – The United Arab Emirates tightened the squeeze on fellow Gulf state Qatar on Wednesday threatening anyone publishing expressions of sympathy toward it with up to 15 years in prison, and barring entry to Qataris.

UAE Minister of State for Foreign Affairs Anwar Gargash also told Reuters there would be more curbs if necessary and said Qatar needed to make iron-clad commitments to change what critics say is a policy on funding militants.

Qatar vehemently denies any such backing.

Efforts to defuse the regional crisis — triggered on Monday when the UAE, Saudi Arabia, Egypt and others severed diplomatic ties with Qatar over alleged support for Islamist groups and Iran — showed no immediate signs of success.

U.S. President Donald Trump took sides in the rift on Tuesday, praising the actions against Qatar, but later spoke by phone with Saudi King Salman and stressed the need for Gulf unity.

His defense secretary, James Mattis, also spoke to his Qatari counterpart to express commitment to the Gulf region’s security. Qatar hosts 8,000 U.S. military personnel at al Udeid, the largest U.S. air base in the Middle East and a launchpad for U.S.-led strikes on the Islamic State militant group.

Kuwait’s emir has also been seeking to mediate, meeting Saudi’s king on Tuesday.

Qatar’s sudden isolation has led to the country holding talks with Turkey, Iran and others to secure food and water supplies, according to a Qatari official.

UAE-based newspaper Gulf News and pan-Arab channel Al-Arabiya reported the crackdown on expressions of sympathy with Qatar.

“Strict and firm action will be taken against anyone who shows sympathy or any form of bias towards Qatar, or against anyone who objects to the position of the United Arab Emirates, whether it be through the means of social media, or any type of written, visual or verbal form,” Gulf News quoted UAE Attorney-General Hamad Saif al-Shamsi as saying.

On top of a possible jail term, offenders could also be hit with a fine of at least 500,000 dirhams, the newspaper said, citing a statement to Arabic-language media.

Since the diplomatic row erupted, slogans against and in support of Qatar have dominated Twitter in Arabic, a platform used widely in the Arab world, particularly in Saudi Arabia.

Newspapers and television channels in the region have also been engaged in a war of words over Qatar.

Allegations of Islamist sympathies and support have for years strained Doha’s relations with its Gulf Arab neighbors, who consider movements such as the Muslim Brotherhood a security threat.

The UAE’s state-owned Etihad Airways, meanwhile, said all travelers holding Qatari passports were currently prohibited from traveling to or transiting through the emirates on government instructions.

Foreigners residing in Qatar and in possession of a Qatari residence visa would also not be eligible for visa on arrival in the UAE, Etihad spokesman said in an email.

“This ruling applies to all airlines flying into the UAE,” the spokesman said in the statement.

Those breaking ties with Qatar are the UAE, Saudi Arabia, Egypt, Bahrain, the Maldives, Mauritania and Libya’s eastern-based government. Jordan has downgraded its diplomatic representation and revoked the license of Doha-based TV channel Al Jazeera.

SQUEEZE

Qataris were loading up on supplies in supermarkets, fearing shortages.

One official in Doha, speaking on condition of anonymity, said there were enough grain supplies to last four weeks and that the government also had large strategic food reserves. But talks were underway to ensure supplies.

“We are in talks with Turkey and Iran and other countries,” the official said on condition of anonymity.

He said supplies would be brought in through Qatar Airways cargo flights.

Closing all transport links with Qatar, the three Gulf states who have moved against Doha gave Qatari visitors and residents two weeks to leave. Saudi Arabia, Bahrain and Egypt banned Qatari planes from landing and forbade them from crossing their air space.

“This is a very diverse relationship that Qatar has with the UAE and with Saudi and Bahrain – families, business, travel, interests … It will be quite complex to disentangle, but we are intent on saying we cannot go back to the status quo ante,” Gargash, the UAE minister, told Reuters in an interview.

He said more steps against Qatar, including further curbs on business, remain on the table.

“We hope that cooler heads will prevail, that wiser heads will prevail and we will not get to that,” he said.

MARKETS

Qatar’s stock index was down 1.15 percent after plummeting 8.7 percent over the last two days.

“Tensions are still high and mediation efforts by fellow Gulf Cooperation Council state Kuwait have yet to lead to a concrete solution, so investors will likely remain on edge,” said one Dubai-based trader.

Oil prices dipped on renewed concerns about the efficacy of OPEC-led production cuts due to the tensions, and also over growing U.S. output.

Qatar has said it will not retaliate against the curbs.

“We are willing to sit and talk,” Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani told CNN late on Tuesday. He said his country was “protecting the world from potential terrorists”.

A Qatari official, however, said the rift was pushing Doha in the direction of leaving the six-state Gulf Cooperation Council, founded in 1981, “with deep regret”.

Bans on Doha’s fleet using regional ports and anchorages are threatening to halt some of its exports and disrupt those of liquefied natural gas.

Traders on global markets worried that Riyadh’s allies would refuse to accept LNG shipments from the Gulf state, the world’s largest liquefied natural gas exporter, and that Egypt might even bar tankers carrying Qatari cargoes from using the Suez Canal as they head to Europe and beyond.

(Reporting by Sylvia Westall, Hadeel Al Sayegh, Celine Aswad, William MacLean; Writing by Jeremy Gaunt; Editing by Raissa Kasolowsky)

U.S. lawmakers to press intel chiefs on Russia ahead of Comey hearing

FILE PHOTO - FBI Director James Comey waits to testify to the Senate Select Committee on Intelligence hearing on "Russia's intelligence activities" on Capitol Hill in Washington, U.S. January 10, 2017. REUTERS/Joshua Roberts/File Photo

By Patricia Zengerle and Dustin Volz

WASHINGTON (Reuters) – Top U.S. intelligence officials will face questions on the Federal Bureau of Investigation’s probe into Russian involvement in the 2016 U.S. election and fallout from the firing of former FBI director James Comey when they appear at a Senate hearing on Wednesday.

The U.S. Senate Intelligence Committee’s open hearing will feature officials closely tied to President Donald Trump’s abrupt firing last month of Comey, which sparked accusations that the Republican president had dismissed him to hinder the FBI probe and stifle questions about possible collusion between Trump’s campaign and Russia.

Deputy Attorney General Rod Rosenstein, the second-ranking official at the Department of Justice who signed a letter recommending Comey’s dismissal, will testify, a day ahead of Comey’s own hotly anticipated testimony in the investigation of Russian involvement in the 2016 U.S. election.

Rosenstein’s public testimony will be the first since he appointed – in the face of rising pressure from Congress – former FBI Director Robert Mueller as special counsel investigating possible links between Russia and the election.

Acting FBI Director Andrew McCabe, who took over after Comey was fired, will also be at the hearing.

The probe has hung over Trump’s presidency since he took office in January and threatens to overwhelm his policy priorities.

The Kremlin denies U.S. intelligence agencies’ conclusion that Moscow tried to tilt the election campaign in Trump’s favor, including by hacking into the emails of senior Democrats. Trump has denied any collusion.

“I know that there are going to be members who want to hear from Deputy Attorney General Rosenstein about his involvement in the (Comey) firing,” Senator Mark Warner, the top Democrat on the Intelligence Committee, told Reuters.

National Security Agency Director Admiral Mike Rogers and Director of National Intelligence Dan Coats will also be present at the hearing originally set to discuss a foreign surveillance law.

“My hope will be that Admiral Rogers and Director Coats won’t try to hide behind executive privilege … about the press reports about the president asking them to downplay the Russia investigation,” Warner said.

The Washington Post reported on May 22 that Trump had asked the officials to help push back against the FBI investigation into possible coordination between his campaign and Moscow, citing current and former officials.

The two refused to comply with the request, which they regarded as inappropriate, the Post report said.

The Washington Post separately reported on Tuesday that Coats told associates in March that Trump asked him if he could intervene with then FBI Director Comey to get the FBI to back off its focus on Michael Flynn, the former national security adviser, in its Russia probe, according to officials.

The intelligence officials are also expected to defend Section 702 of the Foreign Intelligence Surveillance Act, or FISA — the stated topic of the hearing — which will expire on Dec. 31 unless Congress votes to reauthorize it.

Section 702 allows the NSA to collect digital communications of foreigners believed to be living overseas whose communications pass through U.S. telephone or Internet providers. Information about Americans is also sometimes incidentally gathered, such as when someone is communicating to a foreign target which privacy advocates have long argued evades Constitutional protections against warrantless searches.

U.S. surveillance practices have come under increased scrutiny amid unsubstantiated assertions by Trump and other Republicans that the White House under former President Barack Obama, a Democrat, improperly spied on Trump or his associates.

There is no evidence that political motives drove Obama administration officials to request the names of Trump associates in any intercepts. The requests underwent every required evaluation, and they produced nothing out of the ordinary, according to four current and former officials who have reviewed the materials.

(Additional reporting by John Walcott; Editing by Yara Bayoumy and Lisa Shumaker)

Delaware House votes to guarantee abortion rights, in stance against Trump

FILE PHOTO -- A woman holds a sign in the rain as abortion rights protestors arrive to prepare for a counter protest against March for Life anti-abortion demonstrators on the 39th anniversary of the Roe vs Wade decision, in front of the U.S. Supreme Court building in Washington, January 23, 2012. REUTERS/Jonathan Ernst/File PhotoFILE PHOTO -- A woman holds a sign in the rain as abortion rights protestors arrive to prepare for a counter protest against March for Life anti-abortion demonstrators on the 39th anniversary of the Roe vs Wade decision, in front of the U.S. Supreme Court building in Washington, January 23, 2012. REUTERS/Jonathan Ernst/File Photo

By Barbara Goldberg

(Reuters) – The Delaware legislature on Tuesday approved a bill that would guarantee abortion access, taking the stance after President Donald Trump pledged to upend the U.S. Supreme Court ruling that allows the procedure nationally.

Delaware’s legislation aims to codify at the state level the provisions of Roe v. Wade, the 1973 landmark Supreme Court decision that protects a woman’s right to abortion.

Trump, a Republican whose election was backed by anti-abortion groups, has promised to appoint justices to the nation’s top court who would overturn Roe v. Wade and let states decide whether to legalize abortion.

The Delaware state House, after more than five hours of debate and discussion, voted 22 to 16 on Tuesday to approve the measure, according to the website for the state legislature. The measure had already passed in the state Senate.

Both chambers of the Delaware legislature are controlled by Democrats, and Governor John Carney Jr. also is a Democrat.

Passage of the bill through the House positions Delaware to potentially become the first state to guarantee access to abortion since Trump was elected president.

Carney, who has been following debate on the bill, has not yet said if he will sign it into law, his spokeswoman Jessica Borcky said.

“But the governor supports the rights and protections afforded women under Roe v. Wade,” Borcky said.

Abortion opponents lobbied against the legislation, concerned it could turn Delaware into “a late-term abortion haven,” said Delaware Right to Life spokeswoman Moira Sheridan. Her group plans to take its fight to the governor’s office.

“We will exert the same pressure upon Governor Carney, a Catholic, to uphold the sanctity of life for those innocent unborn children whose lives depend upon his vetoing this radical bill,” Sheridan said.

A bill to support abortion rights was approved by the Illinois legislature in May but the state’s Republican governor, Bruce Rauner, has vowed to veto it. In January, New York’s Assembly adopted legislation similar to Delaware’s, but it has stalled in the Senate.

(Reporting by Barbara Goldberg in New York and Alex Dobuzinskis in Los Angeles; Editing by Jeffrey Benkoe and Tom Brown)

Trump and Brexit give momentum to EU defense push

European Commissioner Elzbieta Bienkowska arrives to a meeting of European Union defence ministers at the EU Council in Brussels, Belgium May 18, 2017. REUTERS/Eric Vidal

By Gabriela Baczynska and Robin Emmott

BRUSSELS (Reuters) – The European Union’s executive is ready to increase support for the bloc’s first ever defense research program, offering more funds to develop new military hardware in its earliest stages after years of government cuts, a top EU official said.

Following a 90-million-euro pilot investment from the EU’s common budget in 2017-2019, the European Commission is proposing 500 million euros ($563 million) for the 2019-2020 period that could rise to 1.5 billion euros a year from 2021, Industry Commissioner Elzbieta Bienkowska told Reuters.

“European citizens see security as the number one thing that Europe should provide to them, so it’s time to propose this,” Bienkowska said in an interview.

With Britain, one of EU’s leading military powers, leaving the bloc, ideas for common EU defense are gathering pace in the wake of Islamic attacks in Western Europe. Europeans are also worried about U.S. commitment to NATO under President Donald Trump.

Under the proposal unveiled on Wednesday, at least three firms and two member states would have to submit a joint project to be eligible for financing from the EU budget.

If agreed by governments and the European Parliament, the EU budget would put up 20 percent of the costs of developing prototypes, Bienkowska said.

“The prototype phase is the riskiest one and it is very important to have incentives from the European budget to prepare common projects,” she added.

A European drone is often cited as an example of how EU funding can help get projects underway. Bienkowska said she also hoped to see cyber projects from smaller firms and innovative startups.

She said she wants negotiations and legislative work between the Commission, member states and the European Parliament to finalize by the end of 2018.

BREXIT FACTOR

The EU’s political capital Brussels hopes it can turn the tables on Brexit – an unprecedented setback in 60 years of European integration – by moving ahead with closer defense and security cooperation, which London had long blocked.

The EU, where most governments are also NATO allies, have also come under increased pressure from Trump, who last month scolded the Europeans for failing to spend enough on their own defense.

Though Bienkowska said work on promoting more security and defense cooperation in the EU has started two years ago, she admitted Europe’s unease about Trump gives it additional momentum: “All developments in the United States will make our cooperation (in Europe) stronger.”

“We will work more closely in the European Union, what we want to achieve is to have a stronger European defense and a stronger NATO.”

Russia’s 2014 annexation of Crimea from Ukraine and its subsequent backing for militias fighting Kiev troops in the industrial east of the former Soviet republic also add to the bloc’s security concerns.

The EU estimates it loses up to a 100 billion euros a year on duplication, leaving it with far fewer capabilities than the United States. Years of defense cuts have worsened the issue as national governments jealously protect their own firms.

Europe has 37 types of armored personal carriers and 12 types of tanker aircraft compared to nine and four respectively in the United States, according to EU analysis.

“Up until now, member states were doing things completely separately, without any cooperation. I want to appeal to the member states to think about common projects, because the money will be there,” Bienkowska said.

For the future, Bienkowska is mulling a common European defense bond for joint purchases from 2021, though she said no decisions had yet been taken.

Italy is a proponent of issuing joint EU debt, as well as exempting various types of spending from budget deficit limits. Germany, on the other hand, which is the bloc’s largest economy and key power, is opposed to both these approaches. ($1 = 0.8887 euros)

(Editing by Pritha Sarkar)