S A Long

13:56GMT 11Sept2008-European shares remain in red after U.S. opens lower

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European stocks remain in red, after U.S. shares open sharply lower on concerns about the health of the financial sector and Lehman Brothers stocks fell more than 40 percent.

Investors are concerned about the sector after Lehman Brothers' failure to announce definitive deals to raise desperately needed capital. The U.S. investment bank posted a record quarterly loss on Wednesday and announced steps to restructure the company.

The Dow Jones industrial average is down 1.3 percent in early trade, the S&P 500 falls 1.5 percent and the Nasdaq Composite Index slips 1.4 percent.

The FTSEurofirst 300 index of top European shares falls 1.5 percent at 1,130.72 points. Britain's FTSE 100 is down 1.8 percent, Germany's DAX declines 1.5 percent and the France's CAC 40 down 1.9 percent.

Banks remain the biggest weighted loser on the FTSEurofirst 300, with UBS falling 5.2 percent, Credit Agricole slipping 4.5 percent Barclays down 5.6 percent, Royal Bank of Scotland falling 5.4 percent and HBOS down 7.2 percent.

Reuters Messaging: rm://atul.prakash.reuters.com@reuters.net

13:53GMT 11Sept2008-Renovo rises after "buy" note

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Scar treatment specialist Renovo rises 7 percent following a Blue Oar "buy" note.

"At these levels it's a long way below net cash still, it does fluctuate a bit," says Mick Cooper at Blue Oar.

Reuters Messaging rm://ben.deighton@reuters.com

12:03GMT 11Sept2008-FMC rises on JPMorgan upgrade

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Shares in German dialysis company Fresenius Medical Care (FMC) rise 2.7 percent to 38.2 euros, topping the DAX leaderboard and outperforming the DJ Stoxx health care index, after JPMorgan raises its target price for the stock to 47 euros from 42.50 euros.

JPMorgan cites, among other things, the recent strengthening of the U.S. dollar.

"We believe Fresenius Medical should be a core healthcare holding in the current economic climate," JPMorgan says, pointing to FMC's highly defensive earnings.

JPMorgan reiterates its "overweight" recommendation.

Reuters Messaging rm://peter.starck.reuters.com@reuters.net

11:59GMT 11September2008-Gulf Keystone tumbles as FEG-1 is plugged

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Shares in Gulf Keystone Petroleum Ltd. drop 11.3 percent as the company announces it has plugged and abandoned the Feg-1 exploration well on the Hassi Ba Hamou Perimeter. Click on for more on this story.

"It's slightly disappointing but this is part of a six well campaign in Algeria, which exeperienced early success, unfortunately this one hasn't come in," said one analyst.

"Shareholders should now look to the drilling campaign in Kurdistan," the analyst said".

Evolution Securities also remains positive on Gulf Keystone, repeating its "buy" recommendation on Gulf Keystone, saying: "Focus now shifts from Algeria to Kurdistan."

Reuters Messaging rm://david.brett.reuters.com@reuters.net

11:18GMT 11Sept2008-UK Small Caps down 0.8 pct midday

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The FTSE Small Cap index is down 0.8 percent, faring better than both the blue chips and the mid caps falls 4.2 percent.

Reuters Messaging rm://jesus.aguado.reuters.com@reuters.net

10:14GMT 11Sept2008-Seat down on broker sentiment

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Shares in Seat Pagine Gialle fall some 5.3 percent, pushed down by negative broker sentiment on the Italian yellow pages publisher.

Exane BNP Paribas downgrades Seat to "underperform" from "neutral" and cuts its target price to 0.10 euro from 0.13 euro, saying it expects the stock to remain volatile.

"We downgrade Seat ... as our sector view calls to avoid structurally challenges and highly leveraged stocks," Exane says in a note.

A trader says: "There has been negative sentiment from brokers on the stock. Such violent moves make you think about speculative moves by hedges or investors in crisis compelled to liquidate."

At 1013 GMT, the stock is down 5.3 percent to 0.10 euros, while Milan's S&P Mib index is down 0.6 percent.

Reuters Messaging rm://claudia.cristoferi.reuters.com@reuters.net

10:01GMT 11Sept2008-Nordex rises on 500 mln euro order

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Shares in German wind turbine maker Nordex rise as much as 9.9 percent after it says it has won an order worth some 500 million euro from Scan Energy.

"The new contract is important for the midterm order pipeline ... The actual order backlog guarantees the company's capacity utilisation into mid 2010," says DZ Bank analyst Mario Kristl in a research note.

Shares in Nordex, which fell 12 percent over the last 3 days, are trading at 21.83.

For more, double click on

Reuters Messaging rm://david.brett.reuters.com@reuters.net

09:26GMT 11Sept2008-K+S up as JP Morgan starts with overweight

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Shares in K+S AG rise 1.6 percent after JP Morgan initiates the commercial salt and fertiliser company with "overweight" and a price target of 97 euros.

In a note to clients, analyst Neil Tyler says the brokerage expects demand for potash, one of the company's major products, to grow by 3 percent through 2011, while supplies may fall 6 percent.

The brokerage says a dividend of 8 percent of cash flow yield in 2009 and stock buybacks are likely.

Reuters Messaging rm://tyler.sitte.reuters.com@reuters.net

tf.TFN-Europe_newsdesk@thomsonreuters.com cmr

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

MMMM

Yes, in the back. Michel.

QUESTION: Sean, do you have any details about the memorandum that Secretary Rice has signed today with the Jordanian Foreign Minister?

MR. MCCORMACK: Well, it's an important statement about the United States' commitment to a strategic relationship with Jordan. As you know, over the past several years, we have had substantial aid packages for Jordan consisting of FMF as well as other kinds of support. And this memorandum - what it really does is enshrine that relationship and certainly puts on paper the intentions of the United States going forward, beyond this current Administration, to have that kind of strategic relationship with Jordan.

QUESTION: Sean.

MR. MCCORMACK: Yes.

QUESTION: Was there anything new today in terms of U.S.

support for programs in the West Bank and Gaza for Palestinians, the meeting on that subject at the UN?

MR. MCCORMACK: Of the high-level event? I have to admit I was not in that meeting, so I'll see if we can generate an answer for you. But I think that was more of a stock-taking exercise rather than a meeting where they would pledge U.S. --

QUESTION: I heard there's some - I heard there was sort of a rumor through - someone reported there was some money involved, but I guess --

MR. MCCORMACK: Well, we'll check into it for you and see if there's anything - any more detail we can add.

QUESTION: Prime Minister Fayyad has said that the United States has pledged 100 and -- $150 million today.

MR. MCCORMACK: Michel, we'll - I don't typically talk about money, so we'll try to get a breakdown for you, whether or not that's something that has been previously pledged or something that is new.

QUESTION: Can you give us a readout about the meeting with the Lebanese - lunch?

MR. MCCORMACK: Well, the meeting with President Sleiman, they talked primarily about the national reconciliation effort that is underway that's been launched by President Sleiman.

Secretary Rice heard from the president about where that process stands. They also talked a little bit about the situation in the region as well as continuing United States support for Lebanon in a variety of different forms, including the support for the military.

QUESTION: Did they speak about the military reinforcement at the border with Syria, Syrian military reinforcement?

MR. MCCORMACK: They did talk generally about the implementation of 1701 and UNIFIL, and - as well as the role of the Lebanese army on that border.

QUESTION: Because apparently, there are some military forces regrouping on the border.

MR. MCCORMACK: The Lebanese military?

QUESTION: The Syrians.

QUESTION: The Syrian.

MR. MCCORMACK: The Syrian military? Okay, I'll - you're talk --

QUESTION: Can you give us a readout?

MR. MCCORMACK: No, not - not in any detail, no.

Yes. Yes, ma'am.

QUESTION: Can we get a little bit more detail about the Secretary's meeting with the Turkish Foreign Minister?

MR. MCCORMACK: The Turkish Foreign Minister, sure. Let me get to the Turkish Foreign Minister. They - they talked quite a bit about the situation in the Caucasus, both the North and the South Caucasus. They, you know, were able to exchange their assessments of the situation. There was, like, clear agreement that the Russian action in Georgia had a real knock-on effect in Armenia, especially, because of the restricted flow of trade coming in through Poti. The Foreign Minister briefed the Secretary up on the Turkish Government's recent contacts with Armenia and how that could possibly - possibly affect some of the other frozen conflicts in the region. The Secretary expressed our support for Turkey's ongoing efforts in that regard. And that was really the bulk of the conversation. They very - they touched very generally on the bilateral relationship and they both agreed that the bilateral relationship is in a good state.

Yes.

QUESTION: Can I follow up? With respect to that meeting, was - the Turkish side brought up the issue that Turkey is a candidate for the nonpermanent seat on the Security Council.

Was this discussed? And forgive me, but I do not know --

MR. MCCORMACK: Right.

QUESTION: Who is U.S. supporting?

MR. MCCORMACK: Well, in terms of that issue, I don't believe that it came up, although the Foreign Minister and the Secretary did have a little bit of one-on-one time. I don't think that was a topic of conversation. And in terms of, you know, voting for the UN seats, we never talk about whom we support for any given - voting on any given seat.

QUESTION: Except for Japan.

QUESTION: What's she going to speak to --

MR. MCCORMACK: Well, that's right. I mean, that's a long-stated exception.

QUESTION: What's she going to discuss with the Saudis this evening?

MR. MCCORMACK: With the - frankly, I didn't talk to her about that meeting. I would expect that they talk - she would talk to them about all those things that you would expect her to talk about with the Saudi Foreign Minister, talk about the situation in the region, the Israeli-Palestinian peace efforts, talk about Iraq, talk about the security situation in the Gulf.

QUESTION: And energy?

MR. MCCORMACK: I would assume that they probably touch on it, but that's not her main portfolio.

QUESTION: Did the whole idea of this - of the bailout recovery package and what's going on here come up at all with - in any of these meetings?

MR. MCCORMACK: It was - look, the White House and Treasury are the lead on that issue. I can only - I can only pass along to you that it's not something that was brought up by - at least any of the meetings that I - that I was in - any of her interlocutors.

QUESTION: Did Aboul Gheit - did he - hopefully, he was a little more correct in his comments, you know, in terms of being - what he said being true to the Secretary than he was with us. You know, he (inaudible) said not, in fact, the three --

MR. MCCORMACK: What's that? I didn't - he did not - what did he say?

QUESTION: He told us - you were there. He said they were free, safe and sound.

MR. MCCORMACK: Oh, they --

QUESTION: They're not.

MR. MCCORMACK: Well, free --

QUESTION: So he was lying. Anyway, what else - can you tell us more about the meeting with the Egyptians?

MR. MCCORMACK: I'm afraid not. That was a one-on-one meeting, so I was not in it. Welch was it in and he didn't - he - poor David, he got locked out the rest of the - locked out of the building because of lockdown on the building.

QUESTION: Uh-huh.

QUESTION: And what about the Ukraine? What did they speak about?

MR. MCCORMACK: Well, what you might expect. They talked about U.S.-Ukrainian relations. I think there was also a discussion about Ukrainian politics and there was an assessment of who the Foreign Minister - where things stood there. They are - the Secretary, as you heard in public, reaffirmed our position with respect to the Ukraine and NATO.

QUESTION: Could you give us a preview of the Chinese Foreign Minister's meeting coming up as well?

MR. MCCORMACK: Well, it's a dinner and they're going to talk about Six-Party Talks, U.S.-China bilateral relations, but I think most of it will be on the Six-Party Talks.

QUESTION: Are you expecting anything after that?

MR. MCCORMACK: No.

QUESTION: A readout or anything?

MR. MCCORMACK: No.

QUESTION: Is she - I mean, what's her message to the Chinese in terms of the Six-Party Talks? You really need to - you know, you're the ones with the most influence on the North Koreans, you really need to --

MR. MCCORMACK: Well, we - they --

QUESTION: -- nudge them a bit?

MR. MCCORMACK: No, they understand that. They understand where we are in this discussion. You heard this - this process. You heard from Chris. I think that is a shared assessment.

And what I would urge you to think about this week and perhaps into next week is an opportunity for us to touch base with all of our partners in the Six-Party Talks, but especially - all of those except for North Korea - to talk about how to push this process forward, get an assessment of North Korea, where they stand, their decision-making processes, and where they intend to take this negotiation in the short and medium term, and figure out what the best common approach is based on the facts as we know it.

QUESTION: Why not talk to the North Koreans?

MR. MCCORMACK: Well, Chris - well, we are talking to them and we contact them through the New York channel. I'm just saying, at the level of the Secretary as well as Chris Hill, it's a good opportunity for intensive consultations, which we have been doing anyway. But here, we have everybody gathered in one place and you can have more extended conversations, for example, like tonight between the Chinese Foreign Minister and the Secretary.

QUESTION: So what was the - what was - actually, I should have asked him - but, well, in - with the South Koreans, what's their view (inaudible)? What's the --

MR. MCCORMACK: I'll let them describe for themselves how they see the situation.

QUESTION: Well, did you come out - did the Secretary come out of the meeting optimistic, pessimistic, or is she --

MR. MCCORMACK: She's always been - she's always been very realistic about this process. And her view is that - is that this is a process that, if we are to get it to a denuclearized Korean Peninsula, this is the process that will get you there.

But she has also had the view that there's nothing inevitable about this process; that every party's going to have to perform in order for it to move forward. And thus far, we - on the verification protocol, we have not seen the North Koreans perform and improve the verification protocol that everybody can accept.

QUESTION: Right. And at the same time, you haven't seen them produce. They have actually been going the opposite way.

MR. MCCORMACK: Well, they've taken - like, you know, to get back to the three stages that we were talking about, they're in that second stage. They have not yet gone --

QUESTION: Yeah, but they're trying to get --

MR. MCCORMACK: -- operational.

QUESTION: -- back to the first - the first --

MR. MCCORMACK: Well, they haven't gone there yet. We would urge them not to get there. But it is still the - a negotiation and a mechanism that we think can lead to a denuclearized Korean Peninsula. We'll see what North Korea does. And that will, in the short and medium term, really determine whether or not this process goes anywhere from where it is right now.

Okay.

QUESTION: Thank you.

M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com.

Special Briefing

Sean McCormack, Spokesman

New York City

September 22, 2008

On-the-Record Briefing on Various Topics

MR. MCCORMACK: Okay. I can take any other questions that you guys may have on any other topics about the Secretary's day or anything else.

Yes, in the back. Michel.

QUESTION: Sean, do you have any details about the memorandum that Secretary Rice has signed today with the Jordanian Foreign Minister?

MR. MCCORMACK: Well, it's an important statement about the United States' commitment to a strategic relationship with Jordan. As you know, over the past several years, we have had substantial aid packages for Jordan consisting of FMF as well as other kinds of support. And this memorandum - what it really does is enshrine that relationship and certainly puts on paper the intentions of the United States going forward, beyond this current Administration, to have that kind of strategic relationship with Jordan.

QUESTION: Sean.

MR. MCCORMACK: Yes.

QUESTION: Was there anything new today in terms of U.S. support for programs in the West Bank and Gaza for Palestinians, the meeting on that subject at the UN?

MR. MCCORMACK: Of the high-level event" I have to admit I was not in that meeting, so I'll see if we can generate an answer for you. But I think that was more of a stock-taking exercise rather than a meeting where they would pledge U.S. --

QUESTION: I heard there's some - I heard there was sort of a rumor through - someone reported there was some money involved, but I guess --

MR. MCCORMACK: Well, we'll check into it for you and see if there's anything - any more detail we can add.

QUESTION: Prime Minister Fayyad has said that the United States has pledged 100 and -- $150 million today.

MR. MCCORMACK: Michel, we'll - I don't typically talk about money, so we'll try to get a breakdown for you, whether or not that's something that has been previously pledged or something that is new.

QUESTION: Can you give us a readout about the meeting with the Lebanese - lunch?

MR. MCCORMACK: Well, the meeting with President Sleiman, they talked primarily about the national reconciliation effort that is underway that's been launched by President Sleiman. Secretary Rice heard from the president about where that process stands. They also talked a little bit about the situation in the region as well as continuing United States support for Lebanon in a variety of different forms, including the support for the military.

QUESTION: Did they speak about the military reinforcement at the border with Syria, Syrian military reinforcement?

MR. MCCORMACK: They did talk generally about the implementation of 1701 and UNIFIL, and - as well as the role of the Lebanese army on that border.

QUESTION: Because apparently, there are some military forces regrouping on the border.

MR. MCCORMACK: The Lebanese military?

QUESTION: The Syrians.

QUESTION: The Syrian.

MR. MCCORMACK: The Syrian military" Okay, I'll - you're talk --

QUESTION: Can you give us a readout?

MR. MCCORMACK: No, not - not in any detail, no.

Yes. Yes, ma'am.

QUESTION: Can we get a little bit more detail about the Secretary's meeting with the Turkish Foreign Minister?

MR. MCCORMACK: The Turkish Foreign Minister, sure. Let me get to the Turkish Foreign Minister. They - they talked quite a bit about the situation in the Caucasus, both the North and the South Caucasus. They, you know, were able to exchange their assessments of the situation. There was, like, clear agreement that the Russian action in Georgia had a real knock-on effect in Armenia, especially, because of the restricted flow of trade coming in through Poti. The Foreign Minister briefed the Secretary up on the Turkish Government's recent contacts with Armenia and how that could possibly - possibly affect some of the other frozen conflicts in the region. The Secretary expressed our support for Turkey's ongoing efforts in that regard. And that was really the bulk of the conversation. They very - they touched very generally on the bilateral relationship and they both agreed that the bilateral relationship is in a good state.

Yes.

QUESTION: Can I follow up" With respect to that meeting, was - the Turkish side brought up the issue that Turkey is a candidate for the nonpermanent seat on the Security Council. Was this discussed" And forgive me, but I do not know --

MR. MCCORMACK: Right.

QUESTION: Who is U.S. supporting?

MR. MCCORMACK: Well, in terms of that issue, I don't believe that it came up, although the Foreign Minister and the Secretary did have a little bit of one-on-one time. I don't think that was a topic of conversation. And in terms of, you know, voting for the UN seats, we never talk about whom we support for any given - voting on any given seat.

QUESTION: Except for Japan.

QUESTION: What's she going to speak to --

MR. MCCORMACK: Well, that's right. I mean, that's a long-stated exception.

QUESTION: What's she going to discuss with the Saudis this evening?

MR. MCCORMACK: With the - frankly, I didn't talk to her about that meeting. I would expect that they talk - she would talk to them about all those things that you would expect her to talk about with the Saudi Foreign Minister, talk about the situation in the region, the Israeli-Palestinian peace efforts, talk about Iraq, talk about the security situation in the Gulf.

QUESTION: And energy?

MR. MCCORMACK: I would assume that they probably touch on it, but that's not her main portfolio.

QUESTION: Did the whole idea of this - of the bailout recovery package and what's going on here come up at all with - in any of these meetings?

MR. MCCORMACK: It was - look, the White House and Treasury are the lead on that issue. I can only - I can only pass along to you that it's not something that was brought up by - at least any of the meetings that I - that I was in - any of her interlocutors.

QUESTION: Did Aboul Gheit - did he - hopefully, he was a little more correct in his comments, you know, in terms of being - what he said being true to the Secretary than he was with us. You know, he (inaudible) said not, in fact, the three --

MR. MCCORMACK: What's that" I didn't - he did not - what did he say?

QUESTION: He told us - you were there. He said they were free, safe and sound.

MR. MCCORMACK: Oh, they --

QUESTION: They're not.

MR. MCCORMACK: Well, free --

QUESTION: So he was lying. Anyway, what else - can you tell us more about the meeting with the Egyptians?

MR. MCCORMACK: I'm afraid not. That was a one-on-one meeting, so I was not in it. Welch was it in and he didn't - he - poor David, he got locked out the rest of the - locked out of the building because of lockdown on the building.

QUESTION: Uh-huh.

QUESTION: And what about the Ukraine" What did they speak about?

MR. MCCORMACK: Well, what you might expect. They talked about U.S.-Ukrainian relations. I think there was also a discussion about Ukrainian politics and there was an assessment of who the Foreign Minister - where things stood there. They are - the Secretary, as you heard in public, reaffirmed our position with respect to the Ukraine and NATO.

QUESTION: Could you give us a preview of the Chinese Foreign Minister's meeting coming up as well?

MR. MCCORMACK: Well, it's a dinner and they're going to talk about Six-Party Talks, U.S.-China bilateral relations, but I think most of it will be on the Six-Party Talks.

QUESTION: Are you expecting anything after that?

MR. MCCORMACK: No.

QUESTION: A readout or anything?

MR. MCCORMACK: No.

QUESTION: Is she - I mean, what's her message to the Chinese in terms of the Six-Party Talks" You really need to - you know, you're the ones with the most influence on the North Koreans, you really need to --

MR. MCCORMACK: Well, we - they --

QUESTION: -- nudge them a bit?

MR. MCCORMACK: No, they understand that. They understand where we are in this discussion. You heard this - this process. You heard from Chris. I think that is a shared assessment.

And what I would urge you to think about this week and perhaps into next week is an opportunity for us to touch base with all of our partners in the Six-Party Talks, but especially - all of those except for North Korea - to talk about how to push this process forward, get an assessment of North Korea, where they stand, their decision-making processes, and where they intend to take this negotiation in the short and medium term, and figure out what the best common approach is based on the facts as we know it.

QUESTION: Why not talk to the North Koreans?

MR. MCCORMACK: Well, Chris - well, we are talking to them and we contact them through the New York channel. I'm just saying, at the level of the Secretary as well as Chris Hill, it's a good opportunity for intensive consultations, which we have been doing anyway. But here, we have everybody gathered in one place and you can have more extended conversations, for example, like tonight between the Chinese Foreign Minister and the Secretary.

QUESTION: So what was the - what was - actually, I should have asked him - but, well, in - with the South Koreans, what's their view (inaudible)? What's the --

MR. MCCORMACK: I'll let them describe for themselves how they see the situation.

QUESTION: Well, did you come out - did the Secretary come out of the meeting optimistic, pessimistic, or is she --

MR. MCCORMACK: She's always been - she's always been very realistic about this process. And her view is that - is that this is a process that, if we are to get it to a denuclearized Korean Peninsula, this is the process that will get you there. But she has also had the view that there's nothing inevitable about this process; that every party's going to have to perform in order for it to move forward. And thus far, we - on the verification protocol, we have not seen the North Koreans perform and improve the verification protocol that everybody can accept.

QUESTION: Right. And at the same time, you haven't seen them produce. They have actually been going the opposite way.

MR. MCCORMACK: Well, they've taken - like, you know, to get back to the three stages that we were talking about, they're in that second stage. They have not yet gone --

QUESTION: Yeah, but they're trying to get --

MR. MCCORMACK: -- operational.

QUESTION: -- back to the first - the first --

MR. MCCORMACK: Well, they haven't gone there yet. We would urge them not to get there. But it is still the - a negotiation and a mechanism that we think can lead to a denuclearized Korean Peninsula. We'll see what North Korea does. And that will, in the short and medium term, really determine whether or not this process goes anywhere from where it is right now.

Okay.

QUESTION: Thank you.

2008/765

Released on September 22, 2008

Quartet Press Availability

Secretary Condoleezza Rice

United Nations Headquarters

New York City

September 26, 2008

Other Attendees:

United Nations Secretary General Ban Ki-moon,

Russian Foreign Minister Sergey Lavrov,

French Foreign Minister Bernard Kouchner,

High Representative for European Common Foreign and Security Policy Javier Solana,

European Commissioner for External Relations Benita Ferrero-Waldner, and Quartet Representative Tony Blair

MODERATOR: (In progress) - the statement, you can have it later outside of the room. We will start.

We have with us the members of the Quartet. On the far right, the Quartet Representative Mr. Tony Blair; Mr. Javier Solana, High Representative for the Common Foreign and Security Policy of the European Union; Ms. Condoleezza Rice, Secretary of State of the United States; the Secretary General; and Mr. Sergey Lavrov, Foreign Minister of the Russian Federation; and Ms. Benita Ferrero-Waldner, European Commissioner for External Relations.

We'll start with the Secretary General.

SECRETARY GENERAL BAN: Good evening, ladies and gentlemen. We had a very good Quartet meeting this afternoon. We were briefed by Secretary Rice on the status of negotiations between the parties concerned, and by Quartet Representative Tony Blair on the situation on the ground. We had a very fruitful meeting and exchange of views on the way forward, and agreed to continue to support the negotiation process between the parties and to improve humanitarian situation in Gaza.

To save time, I'm not going to read out the statement - all, but I'd like to draw your special attention to the last paragraph, which will be distributed.

"The Quartet" - this says, "The Quartet noted with appreciation the parties' suggestions to brief the Quartet on their ongoing negotiation process with due regard for the confidential and bilateral nature of the discussions. The Quartet expressed its interest in coordinating such a meeting in the region for a date to be determined." This is going to be the first one and the parties suggested that they could brief their negotiation process to the Quartet. We welcome and we are going to determine the date in the region later, sometime this year.

Thank you very much. We are ready for Q&A.

MODERATOR: The first question is FrankUcciardo, CBS.

QUESTION: Yes, I'd like to welcome you all on behalf of the United Nations Correspondents Association and thank you for the opportunity for us to talk with you this evening. My name is Frank Ucciardo from CBS News Up To The Minute. I'd like to direct my first question to Madame Secretary Condoleezza Rice.

Earlier today, the League of Arab States and Saudi Arabia said that they thought the Middle East peace process is failing, and they said primarily because of Israeli settlements in Palestinian territories. I'd like you to respond to that and also, can you identify within the last three months any real concrete progress that you can point to with regards to the process?

SECRETARY RICE: Well, first of all, we have a process, which we did not this time last year. It is the most serious process in which the Palestinians and Israelis have been engaged in seven years. When this Administration came into office, we faced an intifada, we faced terrorist attacks on the territory of Israel. And I think they have come quite a long way from those dark days. Indeed, they've come quite a long way from even this time last year.

I could cite the quite considerable efforts that are being made on the ground by the parties, including by the Palestinians, to reform and improve their security forces, to take up security responsibilities, the work that Quartet Representative Tony Blair is doing on the economic side, the improvements in places like Bethlehem and Jenin and Nablus that are taking place on the ground.

As to the negotiations themselves, I have been very active with the parties, but I respect their need for confidentiality in their negotiations. But the very fact that on the day after she was asked to form a government by the President of Israel, Tzipi Livni and her counterpart, Abu Ala, met, I think shows the seriousness of these parties. And so I am quite certain that this is a process that is ongoing, robust, and that is bringing the parties closer to their goal.

It is a difficult process; there are difficult issues. Had this been easy, it would have been solved 30 years ago. But they are indeed working very hard, and I think it is a process that deserves the support of all of the parties and the encouragement of all of the parties. And I would ask all parties, including those in the region, to be encouraging of the parties.

MODERATOR: Ms. Dana Zimmerman.

QUESTION: (Inaudible) and I'm from Israel. I'm a reporter for Ynet. My question is twofold and it is also to Ms. Rice. A couple of days ago, our President Peres said that he does not think that an agreement should be reached until the end of the year. I would like to hear your opinion on that. And also, do you think that the current government change in Israel can somehow affect the process" Thank you.

SECRETARY RICE: Well, obviously, on the last point, this is a matter for Israelis to resolve. But as I understand the - to the degree that I understand the process, Minister Livni will now try to form a coalition and to bring a government into being. And we are continuing to work and have worked with Prime Minister Olmert. We will work with whatever government emerges, but I think it's no secret that the fact that there is a lot going on in the Israeli political process means that the negotiations, while they are continuing, are obviously having to take account of the circumstances there. Nonetheless, I want to repeat the very fact that she met with her counterpart the very day after she was asked to form the government portends well, and as I understand it, expressed her desire to see the process continue and to progress.

As to the - I'm sorry, you asked also about -

QUESTION: Shimon Peres.

SECRETARY RICE: Oh, Shimon Peres, yes. Look, I have enormous respect for President Peres. He's a long-time friend. I think the best thing that we can do is to continue to work with the parties. They will continue to work themselves. I do believe they can still get an agreement by the end of the year. It was never going to be easy. It's certainly no easier now. But the issues are also pretty clear. And I don't think this is a matter of time; I think it's a matter of working urgently and, at the very least, they certainly have a process that is robust, and I think that they want to continue. But I believe they still have an opportunity to reach agreement.

MODERATOR: We'll take just two more questions. (Inaudible.)

QUESTION: (Inaudible.) Ms. Madame Secretary, do you believe (inaudible) time for Lebanon to initiate direct talk with Israel?

SECRETARY RICE: Well, this is a decision that the Lebanese Government must take as to how it will achieve the goal that we all have for there also to be a resolution of any issues in the Lebanese-Israeli track. You will remember that at Annapolis, we talked about a comprehensive peace, ultimately having to have an Israeli-Palestinian settlement, a Syrian-Israeli settlement, and a Lebanese-Israeli settlement.

There is, of course, work that is yet to be done under Resolution 1701 by the United Nations and by the Secretary General concerning the matter of territory and Shebaa Farms delineation of the border that needs to take place, work that needs to be done by the cartographer. So there is a lot of groundwork that needs to be done. But, you know, it is a remarkable thing that as much as we think about the turmoil in the Middle East sometimes, a lot has happened.

There is a Lebanese Government with a Lebanese President with whom I met yesterday, who is engaged in a national dialogue. There is an Israeli-Syrian, at least indirect, negotiation being brokered by the Turks. And there is a Palestinian-Israeli negotiation that is well underway. And so at some point, I would hope that the Lebanese would take advantage of what I think is an improving atmosphere to find a way to resolve whatever differences they may have as well.

MODERATOR: I'll take the last question - I'll go to Emile Baroudi.

QUESTION: Yes, I'm - Dubai TV. Maybe Mr. Blair can answer this one. Mr. Musa had some harsh words about the Quartet. He was saying it's becoming powerless and irrelevant after the settlements talk at the Security Council.

MR. BLAIR: Yeah, it's - it's perfectly possible to focus on the difficulties and to be negative about this, particularly in relation to issues like settlements. But I think if we were to take a step back and characterize what has happened in the last year, I mean, for seven years, this whole process was spiraling down. In the last year, the challenges are very obvious, but there has been progress.

We have a political negotiation that is underway where the parties are talking and talking about the real issues, and that's the first time this has happened for a long time. Secondly, we have major security sector change on the part of the Palestinians that is being supported by the international community. When you go to Jenin, go to Nablus and talk to the people there, the Palestinian security forces are making a difference. And thirdly, after years of contraction on the West Bank - we leave aside Gaza for obvious reasons at the moment - but on the West Bank, there are things that are happening. Not just small-scale projects and the larger-scale projects being agreed in the industrial parks, but a new platform for housing with support from the international community, the new mobile telephony license agreement that is being done.

So you can, of course, say - and pick out the issue of settlements, and the Quartet today has made a very strong statement on that question. But the fact is that we have the possibility now of substantial change around the politics, on the security, and on getting the right changes on the West Bank to the economy there, which will allow us some hope for the future.

Now there's a massive amount still to do. Nobody's under any illusion about that at all. But there has been some change and some progress, and what is more, we now have an agreed strategy and framework from the international community upon which we can build.

And if you look - just to finish on this point - if you look at what is happening in the Jenin area, in the north of Palestine, the Palestinian security forces are performing. There is the possibility now of some economic and social development there in Jenin. And if we make this work - and we've still got work to do there as well, but if we make it work, then as well as the political process of negotiation, you will have the bottom-up capability being created for a Palestinian state for the future.

So you know, I don't - the last thing anyone should ever be in this situation is foolishly optimistic. We know what all the challenges are. And as I say, it's possible to be totally negative. But that's not my perspective. My perspective is that this was going down and down and down for seven years. It has stopped going down. It is moving back up. It has to move far faster back up. But there is, for the first time, an agreed strategy around politics, the security situation, and how we lift the pressure of occupation that gives us a genuine platform for the future, in my view.

QUESTION: (Off-mike.)

MODERATOR: Well, actually, we have - do you want -

QUESTION: It's about the resolution on Iran, please" Can I -

MODERATOR: Well, we have just - do you want to answer this one?

QUESTION: One question for Secretary Rice and Minister Lavrov?

MODERATOR: Yes, go ahead.

QUESTION: Minister Lavrov, earlier in the week, you spoke about the fact that it wasn't time for another sanctions resolution on Iran. What was it about this particular resolution that you proposed that you thought would benefit the process of getting Iran to suspend its nuclear activities?

Madame Secretary, in your address today the Security Council, you seemed a little bit frustrated with the lack of Security Council, kind of, action - not necessarily on the nuclear front, but about President Ahmadinejad's comments towards Israel and the like. Do you think that the Security Council, on the whole, has been tough enough on Iranian behavior across the board?

Thank you.

FOREIGN MINISTER LAVROV: (Via interpreter) Thank you. I will begin by answering your question. We, it's true, did believe and do continue to believe that it is not timely to, at this time, consider at the ministerial level or at any other level this proposal on new sanctions against Tehran. This position has in no way changed. We are certain that, based on those assessments that are contained in the latest report of the General Director of IAEA, Mr. El-Baradei, that we can and do need to continue efforts to create conditions for the beginning of negotiations based on the proposals that our group, the 3+3, or the 5+1 - you can call it several different ways - has tabled for consideration by the Iranian side.

With respect to the resolution that today was tabled on behalf of the six Security Council, it pursues the primary goal to clearly reaffirm that no one will have any doubt that the six continue to maintain their unity with respect to the very primary goal that unites us. The goal is to help the IAEA to ascertain that there is no military aspect to the nuclear program in Iran. This goal remains valid despite the practical differences in terms of how to move towards that at a time do emerge. The six are committed to that aim, and having reaffirmed the existing resolutions of the Security Council and by calling on Iran to fully implement them, I believe that we all would send an important signal that there should be no attempts to cast doubt on the crucial task related to strengthening the nonproliferation regime.

SECRETARY RICE: As to the statement that I made today, it was simply a statement that I think needs to be made in the Security Council. It is really quite an extraordinary circumstance to see one member of the United Nations call for the destruction of another member of the United Nations and have nothing said about that by the Security Council, which after all is charged with threats to international peace and security. And I think when we have general debates, general discussions in the Security Council that it is important to take note of the really terrible things that have been said by the Iranian president about the state of Israel, including in his most recent speech before the United Nations General Assembly. I think it simply isn't appropriate in civilized company, and I wanted to make that point.

As to the Security Council and its continued efforts, we are working on a dual-track strategy. We did want to show the unity of the six in continuing along that dual-track strategy, but I would just note that we have had three Security Council resolutions and I think it speaks well for the Security Council that it has been able to do that. We have not yet convinced the Iranians that the negotiated track is in their interest, but I hope that there are reasonable people in Iran who might want to take a way out and to stop deepening their isolation.

MODERATOR: Okay, we will have to end it here. Thank you all so very much. Participants have had a very long day.

2008/803

Released on September 26, 2008