The children accompanied the soldiers carrying in the national flag at the most solemn moment of the ceremony. They were dressed in costumes associated with the country's ethnic minorities, including those from troubled areas such as Tibet and the muslim province of Xinjiang. Such displays of "national unity" are a compulsory part of any major state occasion.

But the children were all from the Han Chinese majority, which makes up more than 90 per cent of the population and is culturally and politically dominant, according to an official with the cultural troupe from which they were selected. "I assume they think the kids were very natural looking and nice," Yuan Zhifeng, deputy director of the Galaxy Children's Art Troupe said. The official guide to the opening ceremony said that the children did not just represent but "came from" China's ethnic groups. "Fifty-six children from 56 Chinese ethnic groups cluster around the Chinese national flag, representing the 56 ethnic groups," it said.

It is a sign of how sensitive ethnic relations in China are. At national Communist Party and state congresses, while the Han Chinese delegates all wear suits, carefully chosen members of ethnic minorities are told to wear traditional costume.

Maj Gen Barney White-Spunner said the Iraqi-led crackdown on Shia militia groups in Basra had improved security and they would not regain control. He said there was obvious "scope" for the government to review troop numbers. The PM has said the UK's mission will change in 2009, but the MoD said it was too early to be specific on reductions.

Maj Gen White-Spunner has just completed a six-month tour of duty as the British commander in the country. He described Basra as a happier and more secure city, with property prices doubling, thanks to the interest of foreign investors.

He said Christians and Sunni Muslims were also returning to the city and that he was confident the militias would not regain control. "Basrawis realised what a nightmare, literally, that was. They're not going to put themselves back through that period of violent extremism," he told the BBC. "They have got better things to do now with their lives and I do not see Basra coming back under militia control. Those days are passed," he added.

They'll get over it. A-B's shareholders sure did, considering the $52 billion price tag, which at $70 a share was a 27% premium for a stock that had gone flat. The ruling Busch family ultimately faced up to THE FACT THAT THE US IS FOR SALE, AND FOREIGNERS ARE BUYING. It's everything from the St-Tropez crowd buying up condos in Palm Beach, Florida, to Asian and Middle Eastern governments sinking billions into US banks to Europeans taking over US pharmaceutical and infrastructure companies.

Even tourists are busy using their euros and pounds to snap up iPhones, jeans, shoes and everything else they can stuff into the empty suitcases they carry along for just that purpose, damn them. The weak dollar and our weakening economy are underwriting the great American yard sale. Investors from Dubai are behind the June purchase of the General Motors Building in New York City for $2.8 billion. The Abu Dhabi Investment Council's sovereign wealth fund bought a 90% stake in the landmark Chrysler Building.

General Electric's plastics division is gone, and its famed appliance unit could soon be in the hands of China's Haier or South Korea's LG. Chrysler is hoping to hook up with India's Tata Motors or Italy's Fiat. Switzerland's Roche Holding is offering about $44 billion to acquire the 44% of the biotechnology outfit Genentech that it doesn't own.

THE SURGE OF FOREIGN BUYING SPANS THE ECONOMY. Since 2003, foreign-led mergers and acquisitions have increased more than sixfold. Last year there were over 2,000 foreign-led acquisitions of US companies in deals worth some $405.4 billion, twice the value of deals in 2006 and up from $60.8 billion in 2003, according to Thomson Reuters, the financial-information company. Unlike the 1980s panic about the Japanese buying up American landmarks like Rockefeller Center, the response of the financial establishment has been to welcome the latest rush of foreign investment. "The US needs these flows, particularly now," says Bank of America chief market strategist Joseph Quinlan. "It helps create income and jobs for Americans."

Indeed, European infrastructure firms calculate that the US needs a massive infusion of capital to modernize its roads, bridges and power lines, highlighted by a recent spate of blackouts and the tragic collapse of a Minneapolis highway bridge last year. Steve Lucas, CEO of British power utility National Grid, says estimates are that the US will spend $2 trillion in the next two decades upgrading electricity and gas infrastructure. "That's bigger than China," he notes.

In 2004, the United Nations Environment Program (UNEP) took stock of the phenomenon - which is CAUSED IN LARGE PART BY AGRICULTURAL RUNOFF - and pronounced it one of THE BIGGEST ENVIRONMENTAL PROBLEMS OF THE 21ST CENTURY. Two years later it noted that the number of identified dead zones, some of which cover thousands of square miles, had climbed from 150 to 200.

The best way to prevent this from happening would be to reduce the amount of nitrogen introduced into the ocean. The technology already exists to do that. If, for example, farmers in the upper part of the U.S. were given a financial incentive to plant crops like winter wheat, rather than leaving their fields fallow after the fall harvest, says marine ecologist Robert Howarth of Cornell University, much of the nitrogenous fertilizer that would normally get washed into waterways by spring thaws could instead be absorbed into winter grain crops. Measures of this sort, if uniformly implemented, could all but eliminate the Gulf of Mexico's famously ballooning dead zone.

"The oceans are vast and they cover most of the Earth's surface," notes Howarth. "But what people mostly care about in the oceans is largely in these coastal areas. That's where the most productive fisheries are, and where people recreate. And that's where people are overfishing, and where dead zones are developing."

The ruling affected approximately 200,000 children and raised protests from grass-roots activists all the way to the office of Governor Arnold Schwarzenegger. On Aug. 8, however, the same judges made an equally surprising reversal of this decision. Judge H. Walter Croskey, presiding over the Second District Court of Appeal in Los Angeles, wrote that as long as parents declare their home to be a private school, they may continue to homeschool their children, even if the parents do not have credentials.

Schwarzenegger, who has been clear that he would fight for homeschooling, was pleased with the new ruling. "This is a victory for California's students, parents and education community," he said in a statement. "I hope the ruling settles this matter for parents and homeschooled children once and for all in California, but assures them that we, as elected officials, will continue to defend parents' rights."

HIS DEPARTURE FROM OFFICE WOULD BE LIKELY TO UNLEASH NEW INSTABILITY IN THE COUNTRY as the two main parties in the civilian government jockeyed for the division of power. The details of how Mr. Musharraf would exit, and whether he would be able to stay in Pakistan - apparently his strong preference - or would seek residency abroad were now under discussion, the politicians said.

While Mr. Bush has kept up his relationship with Mr. Musharraf - including regular telephone conversations - the administration has also been trying to build its relations with the new Pakistani government, as it demands greater action against militants based in Pakistan.

As president and army chief, Mr. Musharraf worked hand in hand with the United States against terrorism until last November, when he handed the army post to Gen. Ashfaq Parvaz Kayani, who promised to keep the army out of politics. Since assuming the army leadership, General Kayani has remained true to his promise. The neutrality of the military has actually tipped the scales against Mr. Musharraf, said Arif Nizami, editor of the daily newspaper The Nation.

Meanwhile, the EU yesterday agreed to send non-military "monitors" - but only on the condition that the move is first approved by the UN. The FT notes that "The fudge was necessary not only to maintain the support of the Russians but also to bridge the widening gap separating EU partners."

The FT reports that Ukraine yesterday announced restrictions on use of the Crimean port of Sevastopol by Russia's Black Sea Fleet. The surprise decree by Ukraine's pro-western President requires Russian naval vessels to request permission 10 days in advance before returning to the strategically important port, which Russia leases from Ukraine.

A separate article in the paper reports that talks on building part of a US missile defence shield on Polish soil restarted on Wednesday, with Polish officials keen to push ahead with the plan in light of Russia's Georgian intervention. Donald Tusk, the Polish Prime Minister, said this week: "The Georgian issue shows that in the generally understood area of the former Soviet bloc, real security guarantees are important."

The National Development and Reform Commission's draft rebuilding plan was published this week. State media says it calls FOR REBUILDING 3,400 PRIMARY SCHOOLS in hard-hit Sichuan province and the neighboring provinces of Gansu and Shaanxi.

The quake was China's worst natural disaster in a generation, and the state-run Xinhua News Agency reported Wednesday that the death toll was 69,225 as of Monday. At least 4,000 Children were left orphaned by the earthquake.

The United States meanwhile began sending in humanitarian aid, the first tangible results of an American response that Georgia's leader suggests has been confused and naïve. The first shipment arrived on a huge military C-17, a veiled reminder of the close U.S.-Georgia military cooperation that has angered Russia. Ministry spokesman Shota Utiashvili said that Russian troops, have also left Poti, a Black Sea port city with an oil terminal that is key to Georgia's fragile economic health.

The Russian troops on Wednesday entered Gori, about 15 miles south of South Ossetia, the separatist Georgian region where Russian and Georgian forces fought a brutal five-day battle. The entry into Gori came hours after both sides signed a cease-fire agreement that called for their forces to be pulled back to the positions they held before the fighting started a week ago.

The truce allows Russian forces to take unspecified "security measures," raising the possibility they could try to stay in Georgia proper under the justification of protecting their troops in South Ossetia. The first of two planned U.S. aid flights arrived in Tbilisi late Wednesday, carrying cots, blankets and medicine for refugees displaced by the fighting.

The pound dropped sharply on Wednesday after the Bank of England issued its gloomiest assessment yet of the health of the UK economy. Recent official figures have already shown the UK is struggling with high inflation and faltering growth. FEARS ABOUT EUROPEAN GROWTH HAVE ALSO HELPED THE DOLLAR BOUNCE BACK FROM RECORD LOWS.

The US economy is still reeling from the credit crisis but analysts say the deteriorating outlook elsewhere in the world has given the dollar a boost. Falling commodity prices have also supported the US currency. Investors had bought gold and oil to protect against dollar weakness and are now unwinding their positions.

The euro was trading at $1.4883 on Thursday, slightly above the 6-month low of $1.4815 struck earlier this week. Earlier this year, the euro was trading at $1.60. The euro has been further undermined by the military conflict in Georgia.

The US Census Bureau's latest figures - based on birth, death and immigration rates - suggest that minorities will soon make up 55% of the population. Hispanics who now make up about 15% will, it says, account for 30% by 2050. It is projected that black people will make up 15%, a small increase, while Asians will grow from 4% to 9%. White non-Hispanics currently make up about two-thirds of the population, but only 55% of those are aged under five.

It has long been said that the US is a nation of immigrants but in the past the influx has mainly come from white Europeans, the BBC's Jonathan Beale reports from Washington. By the middle of this century, that group will be in the minority for the first time, he notes. It is likely that the demographic changes will be experienced right across the country - and no longer confined to urban areas as in the past.

Overall, the US population is expected to rise from 305 million people to 439 million by the year 2050. The white population will also be ageing. The number of people over 85 years old will triple in the next 40 years. THE CENSUS BUREAU POINTS OUT THAT ITS PROJECTIONS ARE SUBJECT TO BIG REVISIONS, depending on immigration policy, cultural changes and natural or manmade disasters.

The bank, which was also facing an order to buy back from clients stressed assets worth some 18.6 billion dollars, said it would split its business into three autonomous units in a move to restructure its operations. It said any "positive sentiment seen at the end of the first quarter that the credit crisis may be easing was short-lived." Trading conditions "deteriorated significantly" in the second half of May, leading the bank to book a net loss reaching 358 million Swiss francs (221 million euros, 329 million dollars) for the second quarter.

"In the second half of this year, UBS does not expect to see any improvement in the adverse economic and financial market trends that affected this quarter's results," it said. It would therefore continue to cut jobs, costs and risks, added the bank, which counts among Switzerland's key employers. Net new money outflows also reached 43.9 billion francs during the period as clients took their assets elsewhere.

Just a year ago, UBS was practically a byword for safe, reliable and trustworthy investments. But the past 12 turbulent months have seen its shares lose 66 percent of their value, and its market capitalisation halve to 45.3 billion dollars from nearly 90 billion. The bank now ranks 25th in the world in terms of market capitalisation, with the dubious distinction of being in the top three -- behind US peers Citigroup and Merrill Lynch -- in terms of share devaluation.

Channel 2's expert on the Muslim world, Ehud Ya'ari, told viewers of the central evening newscast that Russia and neighbouring countries were vying for control of a strategic oil pipeline from the Caspian Sea to the Mediterranean. This relatively new pipeline passes through Azerbaijan and Georgia to Turkey and is the only pipeline between Asia and Europe that does not pass through Russia or Iran. Israel is expecting to receive oil and gas through the pipeline. By using the ethnic Russian population in South Ossetia to destabilize Georgia, Russia was making a play for the pipeline, he said.

The Georgian move against South Ossetia was motivated by political considerations having to do with Israel and Iran, according to Nfc. Georgian President Mikheil Saakashvili decided to assert control over the breakaway region in order to force Israel to reconsider its decision to cut back its support for Georgia's military. Russian and Georgian media reported several days ago that Israel decided to stop its support for Georgia after Moscow made it clear to Jerusalem and Washington that Russia would respond to continued aid for Georgia by selling advanced anti-aircraft systems to Syria and Iran.

Hundreds of Israeli defence experts are reportedly in Georgia and Israel's military industries have been upgrading Georgia's air force, training its infantry and selling the country unmanned aerial vehicles and advanced artillery systems. Former minister Ronny Milo was reportedly among the leading Israeli middlemen in the arms deals with Georgia and Brig.-Gen. Gal Hirsch has been training army units through a company he owns.

However, the Home Office also admitted last night that because the measure is the result of EU directive 2006/24/EC, the data will be made available to public investigators across Europe. The consultation paper published yesterday estimates that it will cost the internet industry over £50m to store the mountain of data. Although some telecommunications companies already store similar data voluntarily the EU directive makes storage of significant amounts of data mandatory across all EU states.

The Liberal Democrats' home affairs spokesman, Chris Huhne, said, "We will be told it is for use in combating terrorism and organised crime but if Ripa powers are anything to go by, it will soon be used to spy on ordinary people's kids, pets and bins". The Shadow Home secretary, Dominic Grieve, added: "Yet again the government have proved themselves unable to resist the temptation to TAKE A POWER QUITE PROPERLY DESIGNED TO COMBAT TERRORISM TO SNOOP ON THE LIVES OF ORDINARY PEOPLE IN EVERYDAY CIRCUMSTANCES".

In a letter to the Guardian Claude Moraes, a Labour MEP, criticises the lack of parliamentary scrutiny and transparency in these proposals. He concludes by saying that "radical, secretive decisions which are not scrutinised by parliaments or do not take people with them will ultimately fail".

QUITE SUDDENLY, THE NEW EASTERN MEMBERS OF THE UNION WILL BE CLAMOURING FOR SECURITY. AND IT WILL SOON BECOME APPARENT THAT THE UNITED STATES IS ENTIRELY UNWILLING TO REASSUME ITS COLD WAR ROLE AS GUARANTOR OF EUROPE'S MILITARY INTEGRITY.

The Poles and the Czechs will no longer be sceptics about the merits of the Lisbon Treaty. They will become passionate advocates for its rapid ratification... Georgia has decisively placed the security question on the agenda - raising the stakes, and putting a great deal of responsibility on Ireland to reach an accommodation with the rest of Europe that will allow the Union to move forward without another period of anxious renegotiation."