"Kosovo declared independence on February 17 and the Republic of China (Taiwan) has formally recognized Kosovo with immediate effect," Taiwan's Foreign Ministry said in a statement, using the island's official name.
But the Foreign Ministry stopped short of saying whether it had forged formal diplomatic ties with Kosovo.

On Tuesday, Chinese Foreign Ministry spokesman Liu Jianchao said it was pointless to even talk of Taiwanese recognition of Kosovo, because there is only one China, to which Taiwan belongs. Taiwan's number of diplomatic allies has been dwindling over the past few years as China tries to isolate the island diplomatically. China sees Taiwan as a renegade province that needs to be reunified eventually, by force if necessary. The island has been ruled separately since the defeated Nationalists led by Chiang Kai-shek fled there after losing a civil war in 1949.

Ahead of weekend talks in Canberra with U.S. Defense Secretary Robert Gates on the planned withdrawal of 550 soldiers, Air Chief Marshal Angus Houston said Iraqi forces had not needed Australian backup for two years now. "The situation on the ground in Al Muthanna and Dhi Qar (provinces), the Iraqis are taking care of business," Houston told a hearing before Australia's upper house Senate.

"The conditions on the ground have been established whereby we can leave them to it and, because we have influenced their training, we are very confident in their ability to handle the circumstances in those two provinces. The job is done." Britain is also withdrawing some forces, but like Australia denies the draw-down represents a distancing from Washington over support for the war.

Yasser Abed Rabbo, a member of the Palestinian negotiating team with the Israelis, told Reuters that if they could not reach a deal with the Jewish state, the Palestinians could consider declaring independence like Kosovo did on Sunday.

"If things are not going in the direction of actually halting settlement activities, if things are not going in the direction of continuous and serious negotiations, then we should take the step and announce our independence unilaterally," he said.

The real centre piece of the improved Negev-based IAF complex is its new landing strip, a whopping 2.5-mile (over four kilometres) paved highway on which the largest transport aircraft can land. It will be the largest landing strip in the entire Middle East.

The article also pointed out that such a mammoth operation requires development of improved infrastructures in the area: "This will include constructing transportation systems, education facilities, places of employment and housing. As part of the improvement of the infrastructure in the region, a train station will be built at the gates of the base - vital roads will be built ahead of schedule by the IAF, and a gas-powered electricity station will be built to produce energy for the region." The amount of asphalt used to pave the new landing strip was about the same amount used to pave a 56-mile-long two-lane highway.

The base is expected to stretch across an area equivalent to the total size of Tel Aviv-Jaffa, and will include a new air traffic control tower, underground hangars and housing for at least 2,000 soldiers. Some 900 workers were hired to build the new base, with more than half of them local Negev residents. The project, which also involved relocation of IDF training units, Intelligence Corps and Teleprocessing Units, is expected to cost a total of approximately $658 million.

Iran's Fars News Agency reported that Jafari's prediction appears in a letter he wrote to Hassan Nasrallah, the leader of the Lebanese terrorist group Hizbullah. Jafari was offering condolences to Nasrallah in the wake of last week's death of Hizbullah mastermind and arch-terrorist Imad Mughinyeh.

"In the near future, we will witness the destruction of the cancerous existence of Israel by the powerful and competent hands of the Hizbullah combatants," Jafari's note said. "Undoubtedly the martyrdom of this sincere fighter [Mughniyeh] will strengthen the determination of all revolutionary and combatant Muslims, particularly his comrades, in confrontation with the Zionist regime."

Mughniyeh was killed in a car bombing in Damascus, Syria last week. Israel has been credited with the elimination of the wanted terrorist, who was responsible for several major international terrorist attacks on Israeli, American and Jewish targets. No confirmation has been forthcoming from Jerusalem. US President George Bush commented only that "the world is a better place" without Mughniyeh in it.

A pamphlet distributed in synagogues around the country this past Sabbath is devoted to one topic: Getting Shas to quit the government. IT WARNS THAT OLMERT IS USING THE CONTINUED PRESENCE OF SHAS IN THE GOVERNMENT to formulate an agreement endangering Jerusalem, other areas of the land of Israel - and hundreds of thousands of Jews. (IF THE SHAS LEAVE, THE COALITION GOVERNMENT WILL FALL)

No address, organization or publisher is printed on the pamphlet calling upon Shas to leave. However, it does feature a full-page article by Yossi Elituv, long-time Shas affairs commentator and writer for the weekly Mishpacha magazine.

The top article is headlined, "Israel has Secretly Agreed to Divide Jerusalem," and cites a PA source bragging that major progress has been made in "the secret talks, especially regarding Jerusalem." The source said, "Today we can say that Israel is agreeable to withdraw from nearly all the Arab neighborhoods and villages in Jerusalem. Israel is willing to re-divide Jerusalem, and this is a positive development."

Elituv, in an open letter to the leaders of Shas, praises their governmental work on behalf of their constituents over the past two years - but then goes for the jugular: "This period has now ended. Your mandate is over. Shas must leave the government, simply because the Prime Minister has decided to take advantage of the time that is left until the coming elections to formulate an unreal and dangerous diplomatic agreement that has major and far-reaching concessions."

"Jerusalem is being torn to pieces, and all in the merit of the votes of the Shas Knesset Members. There must be some red lines that will get you out - and those red lines have already been crossed. Your four Cabinet ministers are a source of pride; Yeshai, Attias, Nahari and Cohen can tell us what they have done, collectively and individually, for the People of Israel. We believe you that you have accomplished much. But now, please make a courageous decision and change the tune."

Finally, former IDF Chief of Staff Lt.-Gen. (ret.) Moshe Yaalon is quoted as saying, "You have to be blind to think that if we give the [Arab] neighborhoods to the Arabs, that this will bring quiet to Israel. Giving up these neighborhoods means that the Knesset, nurseries, the university and the Western Wall will all come into Kassam rocket range."

The schoolgirl was found about five miles from the small southern Welsh town and she is thought to have been close to at least one other victim of the apparent suicide epidemic. This weekend friends of Kelly Stephenson, 20, paid tribute to the keen footballer who took her own life hours after hearing that her cousin Nathaniel Pritchard, 15, had hanged himself. The two lived a few doors from each other in Bridgend.

Police have played down links between the young people who have recently died in the area, and politicians have dismissed rumours of an internet suicide cult in the county. The suicides, by 17 young people aged between 15 and 27 since January 2007, has prompted national media interest but also great anguish in South Wales. At least eight of the previous victims are thought to have known each other.

In recent weeks one part of the debt market after another has buckled. High-risk loans used to finance corporate buyouts have plummeted in value. Securities backed by commercial real estate mortgages and student loans have fallen sharply. Even auction-rate securities, arcane investments usually considered as safe as cash, have stumbled. The breadth and scale of the declines mean more pain for major banks, which have already written off more than $120 billion of losses stemming from bad mortgage-related investments.

THE DEEPENING LOSSES MIGHT MAKE BANKS EVEN MORE RELUCTANT TO MAKE THE LOANS NEEDED TO PROD THE SLOWING AMERICAN ECONOMY. They also could force some banks to raise more capital to bolster their weakened finances.

Such dire predictions underscore how the turmoil in the credit markets is hurting Wall Street even as the Federal Reserve reduces interest rates. Already, once-proud institutions like Merrill Lynch, Citigroup and UBS have gone hat in hand to Middle Eastern and Asian investors to raise capital. "You don't have a recovery until you have the financial system stabilized," Ms. Whitney said. "AS THE BANKS ARE TRYING TO RECOVER THEY WILL NOT LEND. THEY ARE ALL ABOUT SELF-PRESERVATION AT THIS TIME."

And last week, some hedge funds began to wade into the troubled loan market. But prices do not yet reflect any widespread rallies, and Wall Street still has to absorb losses reflected in these markets. "The fourth quarter was terrible, but you had strong investment banking revenues," Mr. Hintz said. "Now you've had a bad December, a worse January and an even worse February."

Nawaz Sharif, the prime minister Musharraf overthrew in a coup and only allowed back from exile three months ago, urged Musharraf to accept he was no longer wanted. "He would say when people would want, I will go. Today the people have said what they want," Sharif said after his party ran a close second in Monday's polls.

A wave of sympathy helped the Pakistan People's Party of assassinated former Prime Minister Benazir Bhutto emerge as the largest party in the 342 seat National Assembly. But it does not have a majority and will need to seek coalition partners.

While Pakistanis hoped for a new era, many remained unconvinced by the reappearance of politicians associated with corrupt, inefficient governments from the 1990s. As of 6 p.m., unofficial results for 252 seats showed Bhutto's Pakistan People's Party (PPP) had won 86 and Sharif's Pakistan Muslim League (Nawaz) had 65. The pro-Musharraf PML trailed with 37. Small parties and independents shared the others.

In fact, companies such as H.J. Heinz and Hormel Foods Corp proved again with earnings forecasts and announcements on Friday that this was still the case early this year, fueling a rally in food stocks. But that relief could prove short-lived, as 2008 could be the year consumers say "enough!" and start shunning branded products for less expensive private-label alternatives, industry experts warn.

"The next round of increases will actually start to impact consumer behavior in a profound way," Ken Harris, a principal at consulting firm Cannondale Associates, said. That could hit profits at the companies that already have exhausted most measures to cut costs and become more efficient over the past several years in the wake of soaring prices for wheat, cocoa, milk and energy, just to name a few.

"When you say input costs are going up 6 percent and you are only getting 4 percent net pricing, where do you make up the rest?" asked Gregg Warren, an analyst at Morningstar. Food price increases are adding to the pile on consumers who are also facing higher costs for gas, rising mortgage payments and falling home values.

While major European states are to recognise Kosovo as independent, DEEP SPLITS WITHIN THE EU have forced foreign ministers to adopt a common text in reaction to Kosovo's proclamation of independence, but leaving it to up to member states whether to recognise the newly proclaimed state.

EU MINISTERS FAIL TO APPROVE 5 GM CROPS, COMMISSION LIKELY TO DO SO
EU agriculture ministers failed to give the green light to imports of five new strains of genetically modified maize and potato. SPLITS AMONGST THE FARM MINISTERS mean that it is now the responsibility of the European Commission to take a decision on the biotech products.

EU REMAINS SPLIT ON KOSOVO
The question of whether the 27-nation European Union will be able to come up with a unified reaction to the self-proclaimed independence of Kosovo currently rests with Spain, as the country is refusing to sign up to a common position drafted by the Slovenian EU presidency.

KOSOVO INDEPENDENCE EMBOLDENS SOUTH CAUCASUS BREAKAWAY REPUBLICS
Georgia's breakaway republics of Abkhazia and South Ossetia are to ask Russia and the United Nations to recognise their independence in the wake of Sunday's unilateral declaration of independence by Kosovo. But the EU's external relations commissioner immediately ruled out any linkage.

What is likely to happen? The US and the European members of the UN Security Council will back Kosovo's independence. But Russia and China will not. Russia will block Kosovo's membership of the United Nations. Serbia will use all diplomatic means at its disposal to block Kosovo's recognition - and will probably block Kosovo's access to the Organisation for Security and Co-operation in Europe and the Council of Europe.

The real questions are less glamorous and more profound. Unemployment in Kosovo is over 40 per cent, corruption and organised crime is bad, and wealth per person is just 5 per cent of the EU average. The troubles are far from over yet. Is independence for Kosovo a good thing?

Yes...

* 90 per cent of its people are non-Serbs and should be allowed to determine their own fate

* Serbia effectively lost Kosovo through its own actions in the atrocities and ethnic cleansing of the 1990s

* Kosovan independence is the logical working out of the collapse of Communist Yugoslavia after the Berlin Wall came down

No...

* Kosovo has formed the heart of the state of Serbia since medieval times

* All the people of Serbia should have been allowed to vote on the issue of Kosovan independence

* It sets a dangerous precedent for other parts of the world where rebels want to break away

The use of the Fed's Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February.

US officials say the trend shows that financial authorities have become far more adept at channelling liquidity into the banking system to alleviate financial stress, after failing to calm money markets last year. However, the move has sparked unease among some analysts about the stress developing in opaque corners of the US banking system and the banks' growing reliance on indirect forms of government support.

"The TAF allows the banks to borrow money against all sort of dodgy collateral," says Christopher Wood, analyst at CLSA. "The banks are increasingly giving the Fed the garbage collateral nobody else wants to take, this suggests a perilous condition for America's banking system."

Serbia's southern province of Kosovo declared independence on Sunday after almost nine years under U.N. administration. Foreign ministers and diplomats in Brussels said they expected Belgium, Luxembourg, Slovenia, Sweden, Ireland, Denmark, Finland, Bulgaria, Poland, Estonia, Latvia, Lithuania, Austria and Hungary to recognise Kosovo soon.

UPDATE - telegraph.co.uk - At a meeting of EU foreign ministers in Brussels, Miguel Angel Moratinos, Spain's foreign minister, said Kosovo's independence "does not respect international law" and could inflame ethnic disputes across the Balkans. Spain emerged as one of Kosovo's strongest critics, clearly fearing that its own separatist movements in the Basque country and Catalonia could be emboldened by the new country's independence. The president of Romania, which along with Spain, Cyprus, Greece and Slovakia, made up the group of EU dissenters, also criticised the move as "illegal".

Serbia announced a series of retaliatory moves. While it has ruled out military reprisals, it could cut trade and energy links to Kosovo.

"I neither will aspire to nor will I accept, the position of president of the Council of state and commander in chief," he wrote in the letter. Mr Castro handed over power temporarily to his brother, Raul, in July 2006 when he underwent intestinal surgery. The 81-year-old has ruled Cuba since leading a communist revolution in 1959.

In December, Mr Castro indicated that he could possibly step down in favour of a younger generation. The National Assembly is scheduled to meet on 24 February to elect his successor.