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The 27 members of the EU should also pool intelligence on terrorism, develop joint video-surveillance and unmanned drone aircraft, start networks of anti-terrorism centres, and boost the role and powers of an intelligence-coordinating body in Brussels, said senior officials.

The 53-page report drafted by the Future Group of interior and justice ministers from six EU member states – Germany, France, Sweden, Portugal, Slovenia, and the Czech Republic -argues Europe will need to integrate much of its policing, intelligence-gathering, and policy-making if it is to tackle terrorism, organised crime, and legal and illegal immigration.

The report, seen by the Guardian, was submitted to EU governments last month following 18 months of work. The group, which also includes senior officials from the European Commission, was established by Germany last year and charged with drafting a blueprint for security and justice policy over the next five years.

Baroness Scotland, the UK attorney general, had observer status with the group to assess the implications for Britain, whose legal system, unlike continental Europe, is based on the common law.

The group’s controversial proposals are certain to trigger major disputes, not least its calls for Europe to create an expeditionary corps of armed gendarmerie for paramilitary intervention overseas.

The report said the EU would fail to beat terrorism unless it developed a full partnership with Washington, a process currently pushing ahead in fits and starts.

“The EU should make up its mind with regard to the political objective of achieving a Euro-Atlantic area of cooperation with the United States in the field of freedom, security and justice,” it said.

Such a pact, which should be finalised by 2014 at the latest, would entail the transfer of vast volumes of information on European citizens and travellers to the US authorities. Negotiations have long been under way to agree such a pact, but have been bedevilled by divergences in privacy law and data protection regimes.

The US is already demanding that EU countries sign up for a battery of security measures on transatlantic flights and the supply of personal information on passengers if they are to enjoy visa-free travel to the US. Under one such accord struck in March between Washington and Berlin, the Germans are to make DNA and biometric information on travellers available.

The European Commission and the US homeland security department are also trying to iron out discrepancies in privacy laws to allow the wholesale exchange of data. The aim is to reach a binding international agreement this year or next.

Last month the American Civil Liberties Union wrote to MEPs pressing Brussels to reject US pressure because the US is “a country that, in privacy terms, is all but lawless … US privacy laws are weak. They offer little protection to citizens and virtually none to non-citizens.”

While urging a comprehensive transatlantic electronic pact, the Future Group focuses mainly on boosting police cooperation and integration between EU states, policies which would reinforce the powers of European agencies and institutions bearing acronyms such as Europol, Eurojust, Frontex, and Sitcen and perhaps see new agencies established to deal with security and intelligence operations.

Several member states, not least Britain, will have deep qualms about the proposals, with the British likely to balk at automatic pooling of national intelligence.

Anti-terrorist campaigns can only be effective if “maximum information flow between [EU] member states is guaranteed,” the report said. “Relevant security-related information should be available to all security authorities in the member states.” It said “networks of anti-terrorist centres” was a possible solution.

While cooperation between national police forces in the EU was advancing, the report conceded that the sharing of espionage and intelligence material was a “considerable challenge” as it clashed with the “principle of confidentiality” that is the basis for successful exchanges.

“It’s very hard to predict right now when and if we’ll need more capital,” Chief Executive Officer Robert Willumstad said today in a conference call with analysts. “Future losses can change that assumption and we’re obviously dependent on the condition of the U.S. housing market.”

Willumstad faces increasing pressure to turn around AIG after the insurer posted more than $18 billion in losses over the past three quarters. The second quarter’s $5.36 billion loss, reported yesterday, was worse than analysts predicted and renewed concern that AIG may need to raise cash by selling shares. Willumstad called current capital “satisfactory.”

AIG slid as much as 18 percent in New York Stock Exchange composite trading, its biggest one-day drop in 39 years, according to Los Angeles-based Global Financial Data, which keeps records on historical share prices. The stock declined $4.75 to $24.34 at 1:56 p.m., leaving the shares down almost 60 percent this year. AIG’s quarterly loss was driven by $5.56 billion in pretax writedowns tied to credit-default swaps.

Initial jobless claims increased by 7,000 to 455,000 in the week ended Aug. 2, the most since March 2002, from 448,000 the prior week. The number of continuing claims increased to a four- year high.

Companies are reducing staff as demand slows and raw- material costs surge. Rising unemployment adds to concerns that consumer spending will falter in coming months after the effects of the government’s tax rebate checks wane.

The revision means that speculators controlled 48 percent of the open interest in NYMEX crude oil futures and options as of July 15, compared with just over 38 percent under the previous classification.

“That’s huge when you look at the numbers,” said Phil Flynn of Alaron Trading in Chicago.

“It changes the whole way you look at the recent moves in this market.”

The U.S. Commodities Futures Trading Commission announced on July 18 that it was reclassifying some trading positions that it had reported as commercial hedging positions as noncommercial speculative positions.

The data revision converted approximately 327,000 long and 330,000 short NYMEX crude oil futures and options positions into mostly spreading positions held by speculators.

The big shift is all the more surprising, oil traders and analysts said, since the CFTC apparently reclassified only one unidentified oil trader at the same time as the data revision.

“There may have been multiple ‘positions’ which were reclassified … but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else,” noted John Kemp of RBS Sempra Commodities.

She also said the agency would not confirm whether a single trader or multiple traders had been reclassified.

“This reclassification issue highlights the fact that improvements are still needed in the area of data collection and that the agency does not yet have the comprehensive data we need to make any declarative statements about the overall role of speculators in commodity markets,” said Democratic CFTC Commissioner Bart Chilton.

SEMGROUP LINK?

The reclassification comes amid the collapse of energy trader SemGroup LP, which filed for bankruptcy on July 22 after suffering $3.2 billion in losses on oil futures and derivatives.

SemGroup has blamed its collapse on unauthorized speculative oil trading by its co-founder and former chief executive, according to a court filing by a SemGroup lender.

The SemGroup collapse coincided with a sharp fall in oil futures from their peak above $147 a barrel in mid-July. However, a person familiar with SemGroup’s trading position said Monday the trader’s position was not concentrated in any one month and was more focused on intermonth spread positions.

“This was no Amaranth or Motherrock,” said the person familiar with SemGroup’s futures trading book, referring to two energy hedge funds whose multibillion dollar failures roiled futures markets.

SemGroup began the process of transferring its NYMEX trading book to Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) on July 11 after drawing down a $54 million line of credit to place a deposit with the British bank, according to bankruptcy court testimony.

SemGroup completed the transfer of its trading book to Barclays on July 16.

The transfer of SemGroup’s NYMEX trading position was instigated by the exchange itself, according to a source familiar with the NYMEX’s activities.

SemGroup’s financial difficulties were first disclosed by its publicly traded subsidiary SemGroup Energy Partners LP (SGLP.O: Quote, Profile, Research, Stock Buzz) on July 17, three days after its parent hired The Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) to advise it on restructuring and two days after a conference call with its lenders where it told them it had run out of cash.

The new rules, issued late Wednesday with immediate effect, call for penalties of up to 30 percent of the capital involved in any unauthorized inward or outward foreign currency transfers. They give authorities stronger control over such transactions and expand reporting requirements for financial institutions.

“As China’s economy becomes more internationalized and the movement of international capital flows accelerates, there is a need to improve the system and oversight of multinational capital movements,” the State Administration of Foreign Exchange, or SAFE, said in a statement posted on its Web site.

Those are foods recommended by Price, a Cleveland dentist who traveled the world studying primitive diets. His 1939 book, “Nutrition and Physical Degeneration,” concluded that a diet high in the vitamins found in animal fats and untouched by “modern” innovations such as refined flour, sugar and chemically preserved foods was the key to preventing chronic disease and tooth decay.

Such ideas have been considered heretical by modern American public health policy that promotes a low-fat, low-sodium diet. But increasing interest in sustainable, local foods, combined with industrial health scares such as the recent salmonella outbreak, has put the spotlight on the foundation’s unorthodox ideas about healthful eating. Its membership is nearly 10,500 strong, and growing at a 10 percent clip each year. There are more than 350 U.S. chapters, plus international groups from Australia to Norway.

For years, these ideas were “as fringe as you could get, as politically incorrect as you could get,” says Fallon, 60. “All of a sudden, people are listening.”

That new audience is surprisingly broad. Some adherents are interested exclusively in nutrition. But more and more, the concept of returning to traditional foodways is pulling people in. New members include the expected “back to the land” types, for whom the foundation’s message provides yet another reason to support small organic farms, and those who oppose the government’s attempt to limit the availability of foods such as raw milk.

Tests showed that personal information could be cloned and manipulated within an hour before being inserted into new chips, the Times reported.

The paper said it had exposed “security flaws” in the passport system by asking a researcher to clone the chips on two British passports and implant digital images of Osama bin Laden and a suicide bomber. The altered chips were then passed as genuine by reader software used by the UN agency that sets the standards for such e-passports.

The tests showed that bogus biometrics could be inserted in fake or blank passports, the Times alleged, saying the flaws also undermined assertions that 3,000 blank passports stolen last week could not be forged.

The identity and passport service at the Home Office remained confident, however, that the British biometric passport was “one of the most secure passports available”, saying no one had been able to demonstrate they could modify or change information contained in a chip, and that if they did, it would be obvious to the reader.