Bennett: Obama, wake up to spending

STORY HIGHLIGHTS

• William Bennett: National debt doesn't look like a priority for President Obama


• Bennett: Obama more concerned with his legacy rather than our economic well-being


• He asks why the president is so unwilling to cut the size and scope of government


• Bennett: GOP should make it clear that it will fulfill our debt obligations in a responsible way

Editor's note: William J. Bennett, a CNN contributor, is the author of "The Book of Man: Readings on the Path to Manhood." He was U.S. secretary of education from 1985 to 1988 and director of the Office of National Drug Control Policy under President George H.W. Bush.

(CNN) -- Second terms, untainted by re-election posturing, often reveal a president's true governing philosophy. In the case of President Obama, two recent revelations have confirmed all we may need to know about his agenda for the next four years.

On December 30, the president sat down for an interview with David Gregory on "Meet the Press." Gregory asked the president, "So what is your single priority of the second term? What is the equivalent to health care?"

President Obama replied, "Well, there are a couple of things that we need to get done. I've said that fixing our broken immigration system is a top priority. I will introduce legislation in the first year to get that done." He went on to say, "The second thing that we've got to do is to stabilize the economy and make sure it's growing."

William Bennett

During his first term in office, coming off "the worst recession since the Great Depression," to use the president's own words, it appeared to many that he prioritized Obamacare over the economy. Now it appears that the economy, and all that goes along with it, like the ever-growing national debt, will again play second fiddle, this time to immigration reform.

If priorities are any reflection of politics, it appears the president is more concerned with what he regards as historic, landmark legislation to build his legacy, rather than the economic well-being of the nation. If that seems like a harsh assessment, consider that just this week we learned from Stephen Moore's interview of House Speaker John Boehner in the Wall Street Journal that the president told Boehner during the fiscal cliff negotiations, "We don't have a spending problem."

If $16 trillion of national debt and the huge deficits each year aren't spending problems, then what is? The United States most certainly has a spending problem. For the president to insist otherwise is dumbfounding but at the same time entirely consistent with his policies.

He called for the Simpson-Bowles Commission on deficit reduction, but ignored their recommendations. He campaigned ad nauseam about the need for a balanced approach to deficit reduction, but the latest fiscal cliff deal is almost entirely tax hikes and even includes more stimulus spending. The only spending cuts he agreed to, the sequestration cuts, he had announced during one of the presidential debates "will not happen."

There seems to be a near invincible unwillingness by this president and his advisors to cut the size and scope of government. How then do conservatives negotiate the coming debt ceiling extension, especially when they control neither the White House nor the Senate?

There is no easy answer, but perhaps they should begin by explaining to the American people "the politics of reality," as William Buckley aptly defined conservatism.

The recent elections seem to indicate that a majority of the American people want lower taxes for themselves but approve of the president's increased spending programs. In the end, they cannot have both. A vibrant and prosperous private sector cannot coexist with a one-size-fits-all caretaker state. One relies on low taxes and limited government interference, the other on high taxes and government redistribution of resources.

So Americans must choose between the two and conservatives must make that choice clear: higher taxes, higher spending and more government services, or opportunity and upward mobility with lower taxes and less government interference.

The debt ceiling is just the first of many opportunities to bring this choice to the public. Republicans should make it clear that they will fulfill our debt obligations in a responsible manner, but they will only give the president short-term debt ceiling extensions until we get this problem under control. If Obama doesn't want to cut spending in a meaningful way he's going to have to explain that to the American people every couple of months for the next four years.

The purpose isn't to thrash the president and his party or be ideological shock troops, as Ronald Reagan once warned against, but to hold a national education seminar on fiscal responsibility. Republicans have not won the argument, and will not win it, when these fiscal deals are made behind closed doors before the strike of midnight.

Sunlight is the best disinfectant and so too in politics. Republicans can win the argument by making a clear and cogent public articulation of the president's spending problem and how the American people, especially the lower and middle classes, will be the ones to suffer as a result.

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The opinions expressed in this commentary are solely those of William J. Bennett.

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Locals: Trapped whales freed with sea ice shift

Updated at 11:01 a.m. ET

MONTREAL About a dozen killer whales that were trapped under sea ice appeared to be free after the ice shifted, a leader of a northern Canada village said Thursday.

The animals' predicament in the frigid waters of Hudson Bay made international headlines, and locals had been planning a rescue operation with chainsaws and drills.

5 Photos

Killer whales trapped in Quebec ice

Tommy Palliser said two hunters from Inukjuak village reported that the waters had opened up around the area where the cornered whales had been bobbing frantically for air.

"They confirmed that the whales were no longer there and there was a lot of open water," said Palliser, a business adviser with the regional government.

"It's certainly good news — that's good news for the whales," he said.

The Canadian Department of Fisheries and Oceans said it would send a helicopter to locate them, Isabelle Dubois of the Nunavik Tourism Association told CBS News.

Locals said the whales had been trapped around a single, truck-sized breathing hole for at least two days. A recent sudden drop in temperature may have caught the whales off guard, leaving them trapped under the ice.

Palliser said the winds seemed to shift overnight, pushing the floating ice further away from the shore.

The cornered animals were first seen Tuesday and appeared to have less energy by late Wednesday, Palliser said.

Inukjuak Mayor Peter Inukpuk has said Canada's Department of Fisheries and Oceans informed him that government icebreakers were too far from the area to smash the ice to free the whales.

Palliser said locals had agreed to try to enlarge the existing breathing hole and cut a second opening using chainsaws and drills.

"We certainly had our prayers with them last night during our meeting," he said.

Ice-trapped marine mammals are not unusual in the region.

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Whales Trapped Under Sea Ice Free Themselves

The killer whales trapped under ice in a remote Quebec village reached safety after the floes shifted on Hudson Bay, according to the mayor's office in Inukjuak.

Water opened up around the area where the orcas had been coming up for air and the winds seemed to have shifted overnight, creating a passageway to the open water six miles away.

"This is great news," Johnny Williams, a resident who works for the mayor's office, told ABC News.

Williams said he was unsure how far the whales have moved, but that they were definitely not under the ice hole.

Residents in the remote village of Inukjuak had been watching helplessly as at least 12 whales struggled to breathe out of a hole slightly bigger than a pickup truck in a desperate bid to survive.

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The community had asked the Canadian government for help in freeing the killer whales, believed to be an entire family. The government denied a request to bring icebreakers Wednesday, saying they were too far away to help. Inukjuak, about 900 miles north of Montreal, was ill-equipped to jump into action.

Joe Gaydos, director and chief scientist at the SeaDoc Society in Eastsound, Wash., said that although the whales can go a long time without food, the length of time they can hold their breath, which they must do underwater, was the question.

"The challenge [was] to figure out where the next hole is," he told ABCNews.com before the whales found freedom. "If that lake freezes over, it's an unfortunate situation. It's a very limited chance. It's a matter of luck."

Inukjuak residents posted a video online to show the whales' struggles. In the clip, the whales are seen taking turns breathing. They can't bend their necks so they do a "spy-hopping" maneuver, Gaydos said, in order to look for another hole in the ice.

A hunter first spotted the pod of trapped whales Tuesday. It is believed that the whales swam into the waters north of Quebec during recent warm weather.

ABC News' Bethany Owings contributed to this report

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Karzai's U.S. visit a time for tough talk

The last time Presidents Obama and Karzai met was in May in Kabul, when they signed a pact regarding U.S. troop withdrawal.

STORY HIGHLIGHTS

• Afghan President Karzai meeting with President Obama in Washington this week


• Felbab-Brown: Afghan politics are corrupt; army not ready for 2014 troop pullout


• She says Taliban, insurgents, splintered army, corrupt officials are all jockeying for power


• U.S. needs to commit to helping Afghan security, she says, and insist corruption be wiped out

Editor's note: Vanda Felbab-Brown is a senior fellow in foreign policy at the Brookings Institution. Her latest book is "Aspiration and Ambivalence: Strategies and Realities of Counterinsurgency and State-Building in Afghanistan."

(CNN) -- Afghan President Hamid Karzai is meeting this week with President Obama in Washington amid increasing ambivalence in the United States about what to do about the war in Afghanistan.

Americans are tired of the war. Too much blood and treasure has been spent. The White House is grappling with troop numbers for 2013 and with the nature and scope of any U.S. mission after 2014. With the persisting corruption and poor governance of the Afghan government and Karzai's fear that the United States is preparing to abandon him, the relationship between Kabul and Washington has steadily deteriorated.

As the United States radically reduces its mission in Afghanistan, it will leave behind a stalled and perilous security situation and a likely severe economic downturn. Many Afghans expect a collapse into civil war, and few see their political system as legitimate.

Karzai and Obama face thorny issues such as the stalled negotiations with the Taliban. Recently, Kabul has persuaded Pakistan to release some Taliban prisoners to jump-start the negotiations, relegating the United States to the back seat. Much to the displeasure of the International Security Assistance Force, the Afghan government also plans to release several hundred Taliban-linked prisoners, although any real momentum in the negotiations is yet to take place.

U.S. may remove all triips from Afghanistan after 2014

Vanda Felbab-Brown

Washington needs to be careful that negotiations are structured in a way that enhances Afghanistan's stability and is not merely a fig leaf for U.S. and NATO troop departure. Countering terrorism will be an important U.S. interest after 2014. The Taliban may have soured on al Qaeda, but fully breaking with the terror group is not in the Taliban's best interest. If negotiations give the insurgents de facto control of parts of the country, the Taliban will at best play it both ways: with the jihadists and with the United States.

Negotiations of a status-of-forces agreement after 2014 will also be on the table between Karzai and Obama. Immunity of U.S. soldiers from Afghan prosecution and control over detainees previously have been major sticking points, and any Afghan release of Taliban-linked prisoners will complicate that discussion.

Karzai has seemed determined to secure commitments from Washington to deliver military enablers until Afghan support forces have built up. The Afghan National Security Forces have improved but cannot function without international enablers -- in areas such as air support, medevac, intelligence and logistical assets and maintenance -- for several years to come. But Washington has signaled that it is contemplating very small troop levels after 2014, as low as 3,000. CNN reports that withdrawing all troops might even be considered.

Everyone is hedging their bets in light of the transition uncertainties and the real possibility of a major security meltdown after 2014. Afghan army commanders are leaking intelligence and weapons to insurgents; Afghan families are sending one son to join the army, one to the Taliban and one to the local warlord's militia.

With Afghan president's visit, nations' post-2014 future takes shape

Patronage networks pervade the Afghan forces, and a crucial question is whether they can avoid splintering along ethnic and patronage lines after 2014. If security forces do fall apart, the chances of Taliban control of large portions of the country and a civil war are much greater. Obama can use the summit to announce concrete measures -- such as providing enablers -- to demonstrate U.S. commitment to heading off a security meltdown. The United States and international security forces also need to strongly focus on countering the rifts within the Afghan army.

Assisting the Afghan army after 2014 is important. But even with better security, it is doubtful that Afghanistan can be stable without improvements in its government.

Afghanistan's political system is preoccupied with the 2014 elections. Corruption, serious crime, land theft and other usurpation of resources, nepotism, a lack of rule of law and exclusionary patronage networks afflict governance. Afghans crave accountability and justice and resent the current mafia-like rule. Whether the 2014 elections will usher in better leaders or trigger violent conflict is another huge question mark.

Emphasizing good governance, not sacrificing it to short-term military expediencies by embracing thuggish government officials, is as important as leaving Afghanistan in a measured and unrushed way -- one that doesn't jeopardize the fledgling institutional and security capacity that the country has managed to build up.

U.S. likely to keep thousands of troops in Afghanistan after NATO forces leave

Karzai has been deaf and blind to the reality that reducing corruption, improving governance and allowing for a more pluralistic political system are essential for Afghanistan's stability. His visit provides an opportunity to deliver the message again -- and strongly.

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The opinions in this commentary are solely those of Vanda Felbab-Brown.

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Hong Kong leader survives impeachment bid

HONG KONG: Hong Kong pro-democracy lawmakers failed in an unprecedented bid on Wednesday to impeach the city's embattled Beijing-backed leader, after they accused him of breaking housing laws and urged him to quit.

The city's first impeachment motion, which accused Leung Chun-ying of lying, dereliction of duty and serious breaches of the law in a row stemming from illegal structures at his luxury home, was denied after eight hours of debate.

The 27 pro-democracy lawmakers who signed the joint motion -- which they said was a symbolic move -- voted in favour, while 37 voted against in the 70-seat legislature which is dominated by pro-Beijing members.

Wednesday's vote followed a protest on New Year's Day in which tens of thousands took to the streets to urge Leung to quit and to press for greater democracy, 15 years after the city returned to Chinese rule.

The former British colony maintains a semi-autonomous status, with its own legal and judicial system, but cannot choose its leader through the popular vote.

Leung took office in July after he was picked by a 1,200-strong election committee dominated by pro-Beijing elites, amid rising anger over what many perceive to be China's meddling in local affairs.

China has said the chief executive could be directly elected in 2017 at the earliest, with the legislature following by 2020.

Unauthorised structures are a politically sensitive issue in the space-starved city of seven million and demonstrators have used the scandal to press for universal suffrage in choosing Hong Kong's leader.

Leung secured the chief executive role after criticising his rival Henry Tang over illegal structures at Tang's home.

But he has since acknowledged and apologised for structures at his own home which were built without planning permission.

Maverick lawmaker "Long Hair" Leung Kwok-hung, wearing a T-shirt reading "We topple a tyrant", accused the new leader of lying about his own structures during campaigning when he presented the impeachment motion earlier on Wednesday.

"He has used dishonest ways to win the election," he said.

Chief Secretary Carrie Lam, second in command in Leung's administration, said the motion was unnecessary and urged lawmakers to work together on policy and livelihood issues.

But Democratic Party chairwoman Emily Lau said the motion was a symbolic gesture to show the deepening public mistrust toward Leung, claiming the leader had "cheated his way to power".

"This is the first time we have a motion in the legislature to impeach a cheating chief executive," she said.

If the motion had been passed, the city's highest court would have had to initiate an investigation. At least two-thirds of the legislature would need to endorse a guilty finding before Leung could be removed from office.

Earlier, rival protesters traded barbs outside the legislature and security personnel had to step in at one point when an angry pro-government supporter charged towards the rival group, TV footage showed.

Leung's popularity ratings have fallen since the controversy, with discontent over issues including sky-high property prices and anti-Beijing sentiment remaining high.

- AFP/xq

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Nixon at 100: A model for GOP?

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STORY HIGHLIGHTS

• Timothy Stanley: Wednesday is 100th anniversary of Richard Nixon's birth


• He says GOP could take a page from Nixon on adapting. Nixon was good at getting elected


• He says Nixon was politcially strategic: backed ERA, poverty fighting measures, founded EPA


• Stanley: Without Watergate, he'd likely still be popular

Editor's note: Timothy Stanley is a historian at Oxford University and blogs for Britain's The Daily Telegraph. He is the author of "The Crusader: The Life and Times of Pat Buchanan."

(CNN) -- Wednesday is the 100th anniversary of Richard Nixon's birth. He remains a controversial figure, and not just on the political left. Last year, I was covering the Conservative Political Action Conference in Washington when I came across a stall selling old political pins. Unable to resist, I bought one with a picture of Tricky Dick giving his best crocodile smile beneath the classic slogan "Nixon's The One!"

I slipped it on at a party later that evening and was surprised by the results. None of the young conservative activists had a nice word to say about Nixon and many were quite hostile. To them, he was the archetypal Republican in Name Only -- a liberal in conservative clothing. While most Americans probably remember him only for Watergate or Vietnam -- and many liberals still revile him as a war-bating, divisive anti-communist -- from a conservative perspective his politics were disappointingly moderate.

Timothy Stanley

He's a reminder of an older, more centrist kind of Republican, the kind you don't see very much these days. It feels today like the Republican Party is fighting a series of rear guard actions -- on the fiscal cliff, on guns and on Obama's nominations. That's partly a reflection of political reality; they lost the presidential election and only control the House. But a common theme running through each of these battles is "inflexibility." They seem unwilling to yield either to President Obama's post-election authority or to the popular mood. Of course, principle is an admirable quality. But it won't necessarily win the White House in 2016.

A lesson in the benefits of adapting to circumstances might be taken from the life of Richard Nixon.

In domestic policy, Nixon bowed to the liberal consensus of his era. He supported the Equal Rights Amendment, founded the Environmental Protection Agency and was a proponent of the poverty-fighting measure of guaranteed income. He also established the first federal affirmative action program - the Philadelphia Plan, which required government contractors in Philadelphia to hire minority construction workers.

As was so often the case with Nixon's public compassion, this served a private purpose of outflanking his opponents. His environmentalism was designed to deny the issue to liberals; his support of affirmative action divided them. The Philadelphia Plan was opposed by many Democrats, not just by Southern conservatives but also by labor leaders who saw it as a challenge to seniority programs. It set unions and civil rights activists against each other, while the president grabbed a little credit for being progressive.

Even on foreign policy, the record is a complex mix of hawk and dove. Nixon said he wanted "peace with honor" in Vietnam, which meant concluding the conflict in such a way that didn't undermine American military or political credibility. This translated into a perverse policy of extending the war to end it -- bombing Cambodia to a point of social anarchy that would lead, inexorably, to the genocide of the Khmer Rouge.

Opinion: GOP's obstructionism is suicide strategy

But Nixon won re-election in 1972 partly on a reputation as a peacemaker with whom the Democrats could not compete. His visit to China began the slow process of integrating the Forbidden Kingdom into the rest of the world, and it put pressure on the Soviets to go further on detente. In 1973, the administration helped Israel resist an Arab invasion by (belatedly) supplying arms. When that war was concluded, Nixon was widely regarded as having saved the world from a superpower confrontation in the Middle East and he was greeted by enthusiastic crowds in Egypt. But, by that point, his reputation at home had been so scarred by his involvement in the Watergate break-in that he couldn't capitalize on his image as a global problem solver. Nixon was his own worst enemy.

Beyond his foxing of opponents, Nixon was not without a personal manifesto. He was saving his more conservative policies for after his re-election. Had Watergate not reduced his political capital so early in 1973, there's a chance Nixon would have pushed ahead with his agenda of a New Federalism and undone much of the liberalism of his first term. The New Federalism was similar to what would later become Reaganism: tax cuts, more power to the states, welfare reform.

Nixon, then, was a mix of ideals and prejudices, but all tempered by a respect for the possibilities and limitations of power. Aside from Watergate, that's why he's so unpopular with the contemporary conservative movement. While it's true that the Republican Party continues to nominate moderates (from George H.W. Bush to Mitt Romney), in recent decades they've been expected to pass a test of ideological purity put to them by a restive base that invariably shifts the candidates' platform to the right.

Nixon also did his best to court conservatives, but his instinct was always to anchor himself in the rhetorical center. As president, his ambition to build a permanent New Majority depended upon walking a line between the radicalism of the left and the racialism of the far right. His strategy wasn't built entirely upon pursuing Southern racists, as many liberal critics have suggested. Had it been so, he wouldn't have been re-elected in 1972 by winning every single state but Massachusetts. The fact is that Nixon was often very popular with a lot of regular Americans. In 1968, he even took 36% of the black vote, a much stronger performance than Mitt Romney's paltry 6%.

Today, it's difficult to talk about Nixon as a model for contemporary Republicans because his political reputation is so tarnished. But he does offer an interesting alternative electoral strategy to that pursued by the contemporary right and embodied by the mythically consistent Ronald Reagan (the Gipper was more moderate than his fans admit). And the test of how well Nixon's pragmatism worked is measured in his electoral victories.

Despite his two memorable defeats in 1960 and 1962 ("You won't have Nixon to kick around anymore"), he won election as a House representative, a senator, a vice president and a president. Considering that record, moderate Republicans in pursuit of the White House have every cause to get misty-eyed when they hear the name Richard Nixon.

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The opinions expressed in this commentary are solely those of Timothy Stanley.

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Super Bowls ads selling for more than $4 million

NEW YORK Super Bowl ads have sold for more than $4 million for some 30-second spots for this year's game.

All the commercials for the NFL championship Feb. 3 in New Orleans are sold out, CBS Corp. CEO Leslie Moonves said Tuesday.

Companies paid an average of $3.5 million for a 30-second spot last year, the previous record for a number that keeps going up.

TV's biggest event averaged more than 111 million viewers in 2012. Marketers for everything from cars to yogurt used plenty of stars in last year's crop of ads.

For CBS, the entire company is taking part in promoting the Super Bowl. The network's telecasts will be headquartered in New Orleans' Jackson Square. The sets will be used by 15 different shows from nine CBS divisions, from the main network to cable channels to online to radio.

"We've never done anything like this before," CBS Sports Chairman Sean McManus said.

That list includes the daytime show "The Talk," which will broadcast from the city the week leading up to the game to try to take advantage of the Super Bowl's large female viewership.

The Jackson Square shoots will give CBS plenty of opportunities to highlight New Orleans' recovery from Hurricane Katrina as the city hosts its first Super Bowl since the storm. Its coverage will include a special called "New Orleans: Let The Good Times Roll" hosted by musician Wynton Marsalis airing at noon on Super Bowl Sunday.

The halftime show will be by Beyonce. Moonves joked: "I actually wanted Janet Jackson."

The last time a female pop star performed at the half of a Super Bowl on CBS, Jackson had her breast-baring "wardrobe malfunction" in 2004. Moonves can laugh about it now, after the Supreme Court decided last summer not to consider reinstating the government's $550,000 fine on the network.

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Hospitals Flooded With Flu Patients

U.S. emergency rooms have been overwhelmed with flu patients, turning away some of them and others with non-life-threatening conditions for lack of space.

Forty-one states are battling widespread influenza outbreaks, including Illinois, where six people -- all older than 50 -- have died, according to the state's Department of Public Health.

At least 18 children in the country have died during this flu season, according to the U.S. Centers for Disease Control and Prevention.

The proportion of people seeing their doctor for flu-like symptoms jumped to 5.6 percent from 2.8 percent in the past month, according to the CDC.

Northwestern Memorial Hospital in Chicago reported a 20 percent increase in flu patients every day. Northwestern Memorial was one of eight hospitals on bypass Monday and Tuesday, meaning it asked ambulances to take patients elsewhere if they could do so safely.

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Most of the hospitals have resumed normal operations, but could return to the bypass status if the influx of patients becomes too great.

"Northwestern Memorial Hospital is an extraordinarily busy hospital, and oftentimes during our busier months, in the summer, we will sometimes have to go on bypass," Northwestern Memorial's Dr. David Zich said. "We don't like it, the community doesn't like it, but sometimes it is necessary."

A tent outside Lehigh Valley Hospital in Salisbury Township, Pa., was set up to tend to the overflowing number of flu cases.

A hospital in Ohio is requiring patients with the flu to wear masks to protect those who are not infected.

State health officials in Indiana have reported seven deaths. Five of the deaths occurred in people older than 65 and two younger than 18. The state will release another report later today.

Doctors are especially concerned about the elderly and children, where the flu can be deadly.

"Our office in the last two weeks has exploded with children," Dr. Gayle Smith, a pediatrician in Richmond, Va., said

It is the earliest flu season in a decade and, ABC News Chief Medical Editor Dr. Besser says, it's not too late to protect yourself from the outbreak.

"You have to think about an anti-viral, especially if you're elderly, a young child, a pregnant woman," Besser said.

"They're the people that are going to die from this. Tens of thousands of people die in a bad flu season. We're not taking it serious enough."

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Iran faces oil revenue problem

By John Defterios, CNN

January 8, 2013 -- Updated 1535 GMT (2335 HKT)

With elections in June, it remains unclear how energy policy will evolve after President Mahmoud Ahmadinejad's era

STORY HIGHLIGHTS

• The IEA has suggested Iraq surpassed Iran in output for the first time in over 20 years


• The Iranian people are faced with spiralling inflation and job layoffs within the state sector


• Iranian oil revenues in the country plummeted 40 percent, while gas export revenues fell by 45%

Editor's note: John Defterios is CNN's Emerging Markets Editor and anchor of Global Exchange, CNN's prime time business show focused on the emerging and BRIC markets. You can watch it on CNN International at 1600 GMT, Sunday to Thursday.

Abu Dhabi (CNN) -- All indications are that sanctions against Iran are really starting to bite and this time it is coming from the oil ministry in Tehran, which for months has denied that oil production was suffering due to international pressure.

In an interview with the Iranian Student News Agency (ISNA), Gholam Reza Kateb a member of the national planning and budget committee in Parliament referenced a report from Iran's oil minister Rostam Qasemi. In that report, the minister suggested that oil revenues in the country plummeted 40 percent, while gas and gas products' export revenues fell by 45% compared to the same period last year.

Read more: Official: Iran, nuclear watchdog group deal close

This is a hot button issue in Iran, where the currency due to sanctions has dropped 80 percent from its peak in 2011. The Iranian people are faced with spiralling inflation and job layoffs within the state sector.

I spoke with a source in Iran's representative office to OPEC who declined to comment and referred all matters to the Oil Ministry. A spokesman at the state oil company Iran Petroleum would only say "in this political climate it is difficult to confirm these statements."

Read more: Iran steps up uranium enrichment, U.N. report says

Hours later, a spokesman from the Ministry told another Iranian news agency, Mehr, that the numbers quoted about revenue and production drops are not true, although he offered no specific numbers.

Until this report to the Iranian Parliament, Minister Qasemi has maintained that Iran's production was hovering around four million barrels a day, where it was two years ago.

Read more: Opinion: Time to defuse Iranian nuclear issue

Back at the OPEC Seminar in June 2012, the minister told me that sanctions would not have any influence on plans to expand production and investment, shrugging off questions that suggested otherwise. This despite analysis to the contrary from the Paris based International Energy Agency and Vienna based OPEC of which Iran is a member.

The IEA back in July suggested that Iraq surpassed Iran in production for the first time in over two decades and production in Iran dipped to 2.9 million barrels a day. OPEC in its October 2012 survey said it slipped to 2.72 million at the time Minister Qasemi said output remained at 4 million barrels.

Minister Qasemi was recently quoted at a conference in Tehran that Iran needs to invest $400 billion over the next five years to maintain production targets and to play catch up after years of under investment.

Iran is a land full of potential. According to the annual BP Statistical Review, Iran sits on nearly 10 percent of the world's proven reserves at 137 billion barrels. The South Pars field which it shares with Qatar is one of the largest natural gas fields in the world -- but Iran, due to sanctions, cannot expand development.

This is a highly charged period. With elections in mid-June, it remains unclear how energy policy will evolve after the era of President Mahmoud Ahmadinejad passes. It has been eight years of his tough line against Washington, Brussels and other governments that put forth sanctions against Iran. It is not clear if a new President will usher in a new nuclear development policy to ease the pressure on Iran's energy sector and the country's people.

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India says two soldiers killed in clash with Pakistan troops

SRINAGAR, India: Pakistani troops killed two Indian soldiers on Tuesday near the tense disputed border between the nuclear-armed neighbours in Kashmir and one of the bodies was badly mutilated, the Indian army said.

The firefight broke out at about noon on Tuesday (0630 GMT) after an Indian patrol discovered Pakistani troops about half a kilometre (1,600 feet) inside Indian territory, an army spokesman told AFP.

A ceasefire has been in place along the Line of Control that divides the countries since 2003, but it is periodically violated by both sides and Pakistan said Indian troops killed a Pakistani soldier on Sunday.

Relations had been slowly improving over the last few years following a rupture in their slow-moving peace process after the 2008 attacks on Mumbai, which were blamed by India on Pakistan-based militants.

"There was a firefight with Pakistani troops," army spokesman Rajesh Kalia told AFP from the mountainous Himalayan region.

"We lost two soldiers and one of them has been badly mutilated," he added, declining to give more details on the injuries.

"The intruders were regular (Pakistani) soldiers and they were 400-500 metres (1,300-1,600 feet) inside our territory," he said of the clash in Mendhar sector, 173 kilometres (107 miles) west by road from the city of Jammu.

In Islamabad, a Pakistan military spokesman denied what he called an "Indian allegation of unprovoked firing". He declined to elaborate.

On Sunday, Pakistan said Indian troops had crossed the Line of Control and stormed a military post. It said one Pakistani soldier was killed and another injured.

It lodged a formal protest with India on Monday over what it called an unprovoked attack.

India denied crossing the line, saying it had retaliated with small arms fire after Pakistani mortars hit a village home.

A foreign ministry spokesman said Indian troops had undertaken "controlled retaliation" on Sunday after "unprovoked firing" which damaged a civilian home.

The deaths are set to undermine recent efforts to improve relations, such as opening up trade and offering more lenient visa regimes which have been a feature of talks between senior political leaders from both sides.

Muslim-majority Kashmir is a Himalayan region which India and Pakistan both claim in full but rule in part. It was the cause of two of three wars between the neighbours since independence from Britain in 1947.

- AFP/fa

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