Asian stocks shrug off ECB, await US job report

HONG KONG -- Asian stocks were mostly indifferent on Friday to the unveiling of a big stimulus package from the European Central Bank as investors awaited the U.S. jobs report for May.

The yen strengthened but reaction from Asian markets to the ECB measures, which included interest rate cuts and a new liquidity program for banks, was more muted than in Europe and on Wall Street, where some indexes reached record highs.

Japan's Nikkei 225 was little changed at 15,077.89 while Hong Kong's Hang Seng slipped 0.2 percent to 23,056.04. In mainland China, the Shanghai Composite Index lost 0.7 percent to 2,026.10. Australia's S&P/ASX 200 rose 0.5 percent to 5,464.20.

Markets in South Korea were closed for a holiday.

"Today, the U.S jobs report will garner most focus while investors continue to digest the ECB decision," strategists at Credit Agricole CIB said in a report.

The U.S. nonfarm payrolls report due later Friday will likely set the tone for markets for the following week as traders assess whether it changes the Federal Reserve's current policy stance of not rushing to raise interest rates.

Analysts forecast that U.S. employers added 220,000 jobs last month after adding 288,000 in April. A fourth straight 200,000-plus monthly job gain would add to evidence that the job market in the world's biggest economy is strengthening.

The monthly U.S. jobs report "at present seems to be one of the few economic releases that is still able to make significant waves in markets," said Michael Every, head of Asia financial markets research at Rabobank.

Markets may cheer even if Friday's number comes in lower than expected, because it would raise the prospect of policymakers delaying their scaling back of monetary stimulus, Every said.

"Equities would no doubt also be happy with the prospect of an even longer period of monetary policy largesse," he said.

On Wall Street, the Dow rose 0.6 percent to close at 16,836.11 and the Standard & Poor's 500 gained 0.7 percent to 1,940.46. Both indexes are at record-high levels. The Nasdaq gained 1.1 percent to 4,296.23.

The euro was edged lower to $1.3657 from $1.3659 in late trading Thursday. The dollar slipped to 102.33 yen from 102.43 in late trading Thursday.

Oil prices edged higher, with benchmark crude for July delivery up 5 cents to $102.53 in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $102.48 on Thursday.

Lebanon's Arabic press digest – June 6, 2014

The following are a selection of stories from Lebanese newspapers that may be of interest to Daily Star readers. The Daily Star cannot vouch for the accuracy of these reports.

An-Nahar

Agreement hit snags over Cabinet, Parliament work regulations

An-Nahar has learned from sources close to the Cabinet and Parliament that there has been no breakthrough in talks on a mechanism of action for both the Cabinet and Parliament

The sources stressed, however, that the problem did not lie with Parliament Speaker Nabih Berri or Prime Minister Tammam Salam as they were working together toward a common goal.

Al-Joumhouria

Berri seems closer to Salam’s theory about Cabinet mechanism of action

Al-Joumhouria has learned that Berri and Salam continued – during their latest meeting – discussion on the obstacles that have so far prevented an agreement on a Cabinet mechanism of action amid ongoing disagreement between the rival political camps on the size and the limits of the power and how to implement it.

However, they have failed to reach a unified solution, and Berri seemed to be closer to Salam’s theory that seeks consensus among ministers in terms of limiting signatures on decrees to the prime minister and the relevant minister.

More to follow ...

ECB's actions are no panacea for Europe's economy

WASHINGTON -- Central banks can't fix everything.

The European Central Bank took bold steps Thursday to protect Europe's fragile economic recovery, cutting interest rates and offering to pump more money into the financial system.

Economists generally praised the moves, which are designed to raise dangerously low inflation in the 18 countries that use the euro and encourage lending. The ECB's steps could also make exporters more competitive by reducing the euro's value and thereby making Europe's goods less expensive abroad.

But they say Europe's economy won't return to health until it receives long-term fixes that the ECB can't provide on its own.

The ECB's "actions will help, but only on the margin," said Mark Zandi, chief economist at Moody's Analytics. "This will be a very long road."

Zandi says banks across the continent must strengthen their own finances, possibly with taxpayer help, before they're healthy and confident enough to ramp up lending.

Countries such as Italy and France need to revamp regulations that discourage businesses from hiring. They must, for instance, make it easier for employers to cut wages, rather than lay people off, during hard times. And Germans, far more prosperous than their neighbors, need to buy more products and services from the rest of Europe.

Compared with other central banks around the world, the ECB has been a laggard.

The U.S. Federal Reserve and other central banks long ago used up their traditional tool for fixing economies — cutting short-term rates to near zero — and then unleashed more untested measures.

The Fed, the Bank of Japan and the Bank of England have aggressively bought government bonds to try to push long-term rates lower and thereby encourage borrowing and spending — an unconventional policy known as "quantitative easing" or QE.

The ECB has balked at going that far. It balked again Thursday. But President Mario Draghi said the ECB would prepare for a program to buy bonds made up of loans to small businesses. The idea would be to accelerate lending to small companies.

For the first time in its history, the ECB will start charging banks for depositing money at the central bank. This step — called a negative deposit rate — is intended to nudge banks to lend rather than hoard cash.

Draghi pledged to do still more, raising hopes among investors that he will pursue a big Fed-style bond-buying program in the future.

"Are we finished?" he said at a news conference. "The answer is no."

The eurozone clearly needs the help. Its economy grew just 0.2 percent the first three months of the year from the October-December quarter. Inflation is running at a perilously low 0.5 percent.

Excessively low inflation is unhealthy. It makes it harder for consumers, companies and countries to repay debt left over from the eurozone's financial crisis. And it raises fears of an outright drop in prices — deflation. Deflation can kill economic activity and business profits by causing people to delay purchases in anticipation of even lower prices.

Draghi succeeded in reassuring investors that the ECB will act aggressively to sustain the eurozone's recovery and raise inflation. Analysts had feared a market sell-off if the ECB had done something half-hearted. Instead, stocks rose Thursday in the United States and Europe.

But many analysts doubt that the benefits will endure.

"It's not going to make the slightest difference" in the long run, said David Kelly, chief market strategist at J.P. Morgan Funds.

European banks aren't lending much not because interest rates are too high. It's mainly because Europe's banks lack confidence. They fear that other banks across Europe are holding too many bad loans and that the European banking system is vulnerable to a repeat of the financial crisis of 2008-2009.

"If you're a bank in Italy, for example, you are probably OK with your own balance sheet," said Markus Schomer, chief economist at PineBridge Investments. "But you have no idea about banks in Spain. You have no idea about banks in Greece. If the Greek banking system blows up again, the entire European banking system will be punished for it."

The banks are undergoing "stress tests" to measure their financial resilience. The results are due this fall. Schomer is optimistic that most banks will perform well.

The tests "will show that essentially the banks are fine," Schomer predicts. "That will be the game-changer that unlocks lending."

In the interim, he says, the ECB's efforts to encourage lending are mere "window dressing."

What's more, the euro hasn't fallen far enough to offer much help to European exporters. After the ECB announcement Thursday, the euro actually rose to $1.37 from $1.36.

Nothing the ECB does, Schomer says, "is going to push the euro down to $1.25 where it needs to be" to help European companies sell more goods and services abroad.

J.P. Morgan's Kelly says central banks can make a big difference in crises by calming financial markets with huge infusions of cash. But they're less effective in helping weak but growing economies return to normal.

That requires not more emergency care from central banks but businesses confident enough to invest and consumers confident enough to shop.

"Sooner or later," Kelly says, "you've got to check out of the hospital."

Brazil strikes a threat to a smooth World Cup

SAO PAULO -- World Cup organizers have fretted for a year over the possibility that a resurgence of mass anti-government protests could mar soccer's premiere event.

Yet in recent weeks Brazil's public sector has become the main worry. A series of strikes by public transport workers, police, teachers and others across the country is proving more disruptive than protests, and some fear they could cause chaos during the tournament that begins in a week.

On Thursday, subway and commuter train operators went on strike in Sao Paulo, just one week before Brazil's biggest city hosts the World Cup's opening match. Authorities are counting on the subway to be main way that soccer fans get to Itaquerao stadium for the game.

Striking teachers in Rio de Janeiro blocked main roads during the evening rush hour, snarling traffic in that city.

If such strikes continue, "there will be chaos during the World Cup," said Carla Dieguez, a sociologist at Sao Paulo University's School of Sociology and Politics.

"What we don't know is how long the strike will last and if workers in others cities where games will be held will also go on strike," she said about the subway and train strike.

A two-day walkout in April by state police officers in the northeastern World Cup host city of Salvador led to a spike in homicides and robberies. One week earlier a police strike in the city of Fortaleza, also a World Cup host, brought widespread looting during two days.

Last month, a 48-hour strike by Sao Paulo and Rio de Janeiro bus drivers left hundreds of thousands of people unable to get to and from work, while civil police in 14 states went on a 24-hour work stoppage demanding higher wages. The police strike affected at least six cities that will host World Cup games: Rio de Janeiro, Sao Paulo, Salvador, Manaus, Recife and Belo Horizonte.

Federal police agents, who oversee immigration at international airports, and state police officers responsible for keeping order on the streets have said they may strike during the World Cup despite an injunction from the Supreme Court ordering them not to halt work during the tournament.

The authorities and courts haven't shown any ability to force public workers in services essential to the World Cup to show up for their jobs.

Late Wednesday a judge had ordered Sao Paulo's train operators to work at full capacity during rush hours and at 70 percent capacity in off hours. Union members voted to go ahead with the strike anyway, disdaining the judge's order that the union be fined $44,000 each day it ignores the ruling.

The union said on its website the strike would continue until officials met its demand for a pay hike of at least 10 percent. The Sao Paulo state government company that runs the subway system has offered an 8.7 percent increase.

The potential trouble from striking public workers has overshadowed earlier worries about disruptions from protests fed by simmering anger over the billions spent by governments to host the World Cup while Brazil's schools, health system and public transit have widespread problems.

Last year, huge protests took over streets in dozens of cities during the Confederations Cup, which is international soccer's warm-up tournament for the World Cup. On just one night, a million people were out in the streets across Brazil to join in demonstrations.

Violent clashes between young protesters and police erupted at many of last year's protests, and threats by some groups to organize demonstrations during the World Cup raised concerns about security during the tournament.

But while there have been almost daily protests in the weeks before the tournament, the marches have been far smaller than a year ago.

The subway strike in Sao Paulo illustrated the potential for disruptions during the World Cup. The more than 3.5 million people who use the city's public transit systems on weekdays faced chaos as only three of the five subway lines operated, and with limited service.

Enraged commuters smashed in doors at some stations when they arrived to find them closed. The station nearest Itaquerao stadium was damaged by irate travelers who kicked down metal barriers at two entryways and some jumped onto the tracks to protest.

Meanwhile, people lined up for long waits at bus stops before squeezing into packed buses for long rides on Sao Paulo's notoriously congested streets.

"It is opportunism. They want a pay raise and are using the World Cup as a tool," said Pedro Araujo, an annoyed truck driver. "Yes, we want to fight for our rights and for what is fair, but not like this, affecting everyone."

Associated Press writers Bradley Brooks in Rio de Janeiro and Adriana Gomez Licon in Sao Paulo contributed to this report.

Hariri: Syria poll "farce," must end Assad spectacle

BEIRUT: Former Prime Minister Saad Hariri Thursday slammed the Syrian election as a “farce,” saying the world must come together to end what he described it as the phenomenon of Bashar Assad.

“This election was a farce. It was dark, fabricated, bloody, abhorrent and all of the things that senior officials have described it as,” Hariri said in a statement.

Assad was declared the winner of Tuesday’s presidential election in a landslide, capturing 88.7 percent of the vote.

The Supreme Constitutional Court said the turnout for the vote, which took place only in regime-held areas of the war-ravaged country, was 73.42 percent.

Hariri, one of Assad’s main critics in Lebanon, said only the Syrian president’s allies rejoiced at the victory.

“A few ... of Bashar's partners in death and destruction welcomed the election and fired celebratory gunfire. Other than that, there was an unprecedented consensus that the world had witnessed the worst practice of democracy in history,” he said.

“The world witnessed a democratic lie never seen [before] even in the mightiest of dictatorships ... What human mind can tolerate such a lie that 74 percent of Syrians took part in the election?”

Russia said Thursday that observers had found the presidential election, in which Assad retained power, fair, free and transparent.

“The Syrian people need a global effort to root out the phenomenon of Bashar from political existence ... [and] an international resolution to end the project of destruction in Syria,” he said.

"The survival of Bashar equals war, terrorism and destruction in Syria ... the time has come to stop this tragic masquerade,” Hariri said, urging the world to put an end to the four-year crisis in Syria.

FitzGerald wants performance-based sin tax plan

CLEVELAND -- Cuyahoga (ky-uh-HOH'-guh) County's top official and candidate for governor Ed Fitzgerald wants to base a portion of sin tax funding for stadiums and arenas on the performance of Cleveland sports teams.

An official in FitzGerald's office says the county executive wants to create a board to determine how to tie team performance to 20 percent of the annual sin tax revenue. That 20 percent collected from cigarettes and alcohol sales is expected to total $2.6 million annually.

The sin tax money helps pay for maintenance at Progressive Field, home of the Indians; Quicken Loans Arena, home of the Cavaliers; and FirstEnergy Stadium, home of the Browns.

Fitzgerald — the Democratic for governor — is expected to announce his plan Thursday. County council will have to approve the proposal.

How states fared on unemployment benefit claims

The number of Americans seeking unemployment benefits rose to 312,000 last week, a modest increase that still puts jobless aid close to its lowest level in seven years. The less volatile four-week moving average of applications declined to 310,250, the best reading since June 2007 and a sign that the job market has stabilized.

Here are the states with the biggest increases and decreases in applications, according to the Labor Department. The data is for the week that ended May 24, one week behind the national figures:

States with the biggest decreases:

Michigan: Down 6,683, due to fewer layoffs in wholesale trade

Kansas: Down 2,093, no reason given

Illinois: Down 1,407, due to fewer layoffs in construction, administrative services and trade industries

Pennsylvania: Down 1,249, due to fewer layoffs in food services, construction and manufacturing

California: Down 1,170, no reason given

States with the biggest increases:

New York: Up 1,347, due to layoffs in food services, construction and education

AUBMC launches new MS awareness campaign

BEIRUT: The AUB Medical Center launched a TV commercial Thursday under the patronage of Health Minister Wael Abu Faour, introducing a second phase in the Multiple Sclerosis Awareness campaign that started last year.

The health minister attended the event at AUB’s Issam Fares auditorium alongside Director of the Abu-Haidar Neuroscience Institute and the Multiple Sclerosis Center Dr. Samia Khoury and Dean of the Faculty of Medicine and Vice President of Medical Affairs Dr. Mohamed Sayegh.

The animated TV commercial shows a young woman experiencing important life landmarks despite her diagnosis of MS at the age of 26, revealing how patients can remain active when offered proper treatment.

“It is a positive spin on MS,” said Khoury, who had grown weary of negative awareness campaigns targeting the illness.

The degenerative disease affecting nerves in the brain and spinal cord can lead to muscular and visual impairment if not treated, said Khoury, adding that 70 percent of MS patients were women.

According to Sayegh, there is no cure for MS, however, early detection accompanied by a proper course of treatment allows patients to “discover life in all its phases.”

The second chapter of the awareness campaign is aimed at increasing awareness of the disease and changing public perception of people with MS, Khoury said.

“AUBMC’s MS campaign complements the ministry’s decision to organize and control the number of patients affected by the disease,” Abu Faour said, adding that five centers set up in the areas of Sidon, Nabatieh, Zahle, Beiteddine and Tripoli would distribute medication to patients who hold the assigned magnetic cards.

In April, the minister announced a 20 percent reduction in the prices of 629 medications, including Avonex, which is used to treat multiple sclerosis, stating that “the ministry would provide medication free of charge for patients who do not benefit from the National Social Security Fund.”

Lebanon must distance itself from regional conflicts

BEIRUT: Labor Minister, Sejaan Azzi, calls on the international community to keep pressuring Lebanon to distance itself from regional conflicts.

“My first call for you dear colleagues is to convince battling groups in the Middle East to keep Lebanon away from their conflicts,” Azzi said, speaking at the Geneva International Labor Conference while addressing participants from over 180 Arab and foreign countries.

“Lebanon’s neutrality is essential to its existence,” he added.

He said that regional conflicts are influencing the country, obstructing its parliamentary and presidential elections, and damaging the constitution.

“ Lebanon is wounded, it is bleeding, its latest wound is the failure of Parliament to elect a new president. Do you know any country in the world without a president? Without a head?” he said.

“These conflicts in the east and the west are pressuring the country, obstructing the election and threatening the unity of Lebanon and its constitution,” he added.

The minister also appealed for the international community to help Lebanon address the crisis of the Syrian refugees’ influx to the country.

He indicated Lebanon is already hosting Palestinians “waiting for Israel to release their right for return to their country” and is now also bearing the consequences of “the Syrian tragedy.”

New 1105 hotline for Children's Cancer Center of Lebanon

BEIRUT: Telecoms Minister Boutros Harb issued a decree allowing the Children’s Cancer Center of Lebanon to use number 1105 on the mobile network for fundraising purposes, the National News Agency reported Thursday.

The number will be used in a CCCL campaign to be launched in July to raise funds to support their patients. The center does not charge children’s parents for the cost of treatment and relies on donations to cover its $15 million budget.

CCCL is affiliated with St. Jude's Children's Research Hospital in Tennessee and works in close coordination with the American University of Beirut Medical Center.

It has treated more than 1,000 children with cancer since 2002, the year of its inauguration, according to CCCL’s website.

UN downbeat over establishing Syrian refugee camps

BEIRUT: United Nations Special Coordinator for Lebanon Derek Plumbly said Thursday he is downbeat about the possibility of establishing refugee camps for Syrians in Lebanon.

“Camps are an issue. The problem obviously with camps inside Syria and in areas between Syria and Lebanon is precisely that of security, protection, the delivery of services and so on,” Plumbly said after meeting with Prime Minister Tammam Salam.

“These are big issues really, so I cannot say that I am optimistic about that particular track,” he added.

Lebanon has been mulling the organization of camps for Syrians along the border with the UN. However, Lebanese officials want the camps established inside safe Syrian territories or on the Syrian side of the border. There are already over 1200 informal settlements for refugees whose number in the country exceeds a million.

Plumbly also reiterated the call on Lebanese officials to elect a new president, after the country plunged into presidential void last month, and said he hoped the Cabinet would be up to challenges facing the country.

“Needless to say, our main message is one you have heard repeatedly over the past two weeks from the Secretary-General, the Security Council, from Secretary Kerry yesterday and from the International Support Group ... the necessity of electing a new President as soon as possible,” he said.

“The additional message is also clear, our support for Prime Minister Salam and his government, and the importance in accordance with the constitution of it being able to address the challenges that Lebanon faces and to work closely with its partners at this time.”

Kabbara concerned over Tripoli security

BEIRUT: Tripoli MP Mohammad Kabbara voiced Thursday concern over the northern city’s security plan after the “violent” celebrations of the supporters of Syrian President Bashar Assad over his election win.

“The gravity of what happened in Jabal Mohsen overnight is not only a celebration by some gunmen over the election win of Assad,” Kabbara said in a statement. “It is more like a political message that involves the Jabal Mohsen residents in declaring what they do not want, to claim that they share the same fate as Assad."

Celebratory gunfire was heard in the neighborhood of Jabal Mohsen Wednesday night after Assad was declared the winner of Tuesday’s presidential election in a landslide, capturing 88.7 percent of the vote.

The Alawite-dominated Jabal Mohsen is one of the major neighborhoods involved in Tripoli’s clashes that ended in April. It was engaged in fierce battles against residents of the Bab al-Tabbaneh neighborhood, dominated by Sunnis who oppose the Assad regime.

The Army earlier this morning detained several suspects over opening fire in the air to celebrate Assad’s election win.

Kabbara also called on the Jabal Mohsen residents to declare frankly “that those who opened fire celebrating Assad’s win do not represent them.”

The Tripoli lawmaker also called on the security forces to tighten its grip against such violations in Jabal Mohsen “as not to bring back tension to the city.”

Costco key sales metric rises in May, tops Street

ISSAQUAH, Wash. -- Costco's sales at stores open at least a year climbed 6 percent in May, topping Wall Street's expectations.

Analysts polled by Thomson Reuters predicted a 4.8 percent rise in the figure.

Sales at stores open at least a year is a key gauge of a retailer's health. It excludes results from stores recently opened or closed.

Costco Wholesale Corp. said Thursday that the figure also increased 6 percent in the U.S. Internationally, the metric climbed 4 percent.

Excluding higher gas prices and the fluctuation of foreign currency exchange rates, sales at stores open at least a year rose 7 percent abroad.

Total revenue for the four weeks ended June 1 rose 8 percent to $8.78 billion.

For the year to date, the wholesale club operator said that sales at stores open at least a year climbed 4 percent. In the U.S., the figure also increased 4 percent. It rose 2 percent overseas.

Stripping out higher gas prices and the fluctuation of foreign currency exchange rates, sales at stores open at least a year rose 6 percent. The metric climbed 4 percent for the U.S. and 7 percent internationally.

Total revenue climbed 6 percent to $81.99 billion.

Costco, based in Issaquah, Washington, runs 657 warehouses, including 464 in the U.S. and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the U.K., 20 in Japan, 11 in Korea, 10 in Taiwan, six in Australia and one in Spain. The company plans to open up to an additional six new warehouses before the end of its fiscal year on Aug. 31.

Last month Costco reported that its third-quarter profit climbed as sales rose and membership fees improved. Its revenue topped analysts' estimates, but earnings fell short of Wall Street's view.

Its shares finished at $116.31 on Wednesday. They are down almost 2.3 percent since the start of the year.

IMF: Containing China's financial risks a priority

BEIJING -- The International Monetary Fund urged China on Thursday to make a priority of containing financial risks that stem for its rising debt.

Beijing should avoid launching more economic stimulus unless growth drops well below this year's official target of 7.5 percent, said the IMF's first deputy managing director, David Lipton, after meeting Chinese officials.

Rising debts owed by local governments and uncertainty about largely unregulated informal lending have fueled concerns China's economic slowdown might cause a rise in defaults and hurt its financial system.

Chinese authorities have begun tightening controls. Lipton said Beijing still has room to prevent an abrupt slowdown in economic growth but risks are rising and regulators need to do more.

"We consider that vulnerabilities have risen to the point where containing them should be a priority," he said at a news conference.

Beijing is trying to steer the world's second-largest economy to growth based on domestic consumption instead of imports and investment following a decade of breakneck expansion.

Economic growth slowed to 7.4 percent in the three months ending in March, down from the previous quarter's 7.7 percent.

Chinese leaders have ruled out further large-scale stimulus but have launched a series of targeted measures in response to weak export growth and a decline in housing prices. A big portion of local government debt stems from borrowing for the multibillion-dollar stimulus that helped China rebound quickly from the 2008 global crisis.

A further growth deceleration to about 7 percent next year "would be consistent with the goal of transitioning to a sustainable growth pattern," Lipton said.

"We welcome the efforts that have been made," said Lipton. "Nonetheless, continuing reliance on credit-fueled growth means that risks are still rising."

Few certainties in calculating Triple Crown value

NEW YORK -- California Chrome's bid for the Triple Crown on Saturday is likely to boost TV ratings and, if he wins, create a star for a sport that could badly use one.

It will be a bonanza for the horse's owners, although their payoff will be limited by Chrome's humble parents and the racing industry's delicate health.

Racing insiders say that if California Chrome becomes the first Triple Crown winner in 36 years, his breeding value is likely to be between $15 million and $20 million. That's a stunning return for owners who paid $8,000 for the horse's mare and another $2,500 to breed her to a stallion with a mediocre racing record.

The horse could bring in millions more in sponsorships and book and movie deals. Shoe company Skechers just announced it will put its brand on California Chrome caps, clothes and horse blankets — financial terms weren't disclosed — and more deals are sure to follow if Chrome wins Saturday.

The payoff, however, might fall short of expectations set by Chrome's team. Before the colt won the Kentucky Derby, his owners said they rejected a $6 million offer for a 51 percent share in the horse. After he won the Preakness, his trainer declared that he was worth $30 million.

Breeders and others in the thoroughbred industry say that's too high given what they consider Chrome's modest pedigree. He is no Kentucky blueblood. His underdog identity — born in California, schooled by a 77-year-old trainer, owned by seemingly regular guys who call their business Dumb Ass Partners — makes him a favorite of racing fans, but fails to excite the professionals whose job is to put a price on horse flesh.

"Breeders are hard-nosed. They wouldn't be swayed unnecessarily by Triple Crown fever," said Cot Campbell, who founded Dogwood Stable in 1969 and helped pioneer partnerships to own Thoroughbreds. He is rooting for Chrome and says a Triple Crown would raise the horse's price, "but if he were regally bred, he would be even more valuable."

That was true for Fusaichi Pegasus, who won the 2000 Kentucky Derby but lost the Preakness and skipped the Belmont. He was reportedly sold to Ireland's Coolmore Stud in a $60 million syndication deal. It helped that his father was Mr. Prospector, one of the top sires of the past 40 years.

Smarty Jones, who won the Derby and Preakness but fell short in the 2004 Belmont, was syndicated in a deal that put his value at $39 million, according to published reports — financial terms weren't disclosed. Big Brown, who lost the 2008 Belmont after winning the first two races, was reported to have sold in a $50 million deal.

The horse industry was healthier when those deals were made. Stud fees have fallen sharply from bubble-like levels before the recession, reflecting in lower prices for stallions. There are fewer potential buyers — maybe a half-dozen farms in Kentucky, plus a few deep-pocket foreign buyers.

Terence Collier, the director of marketing at Thoroughbred auction house Fasig-Tipton, said most people he talks to value Chrome at $15 million to $20 million if he wins Saturday. That's based on a formula that includes an estimate of the horse's stud fee.

Some sires who have produced winners of top races can command fees of $150,000 per mare. As an unproven sire, Chrome would be likely price anywhere between $20,000 and $50,000, breeders said. There are famous sires in Chrome's pedigree if you go back three or four generations, but breeders say it is more significant that his father and mother weren't great runners and haven't yet produced other winners.

"Using horses like Big Brown and Smarty Jones as benchmarks, (Chrome) could easily be worth $20 million if he becomes the next Triple Crown horse — and that's probably on the low side," said Mike McMahon, who runs breeding and racing operations in Kentucky and New York and had one of the most upbeat appraisals of Chrome's value.

McMahon figures that the only way Chrome can overcome doubts about his pedigree is to run a terrific race in the Belmont — good enough to evoke comparisons with Secretariat's 31-length victory in record time in 1973.

Besides breeding value, owners of popular racehorses can earn money from marketing and book and movie deals.

Funny Cide was a bargain horse who won the Kentucky Derby and Preakness in 2003 and developed a fan following partly because of his everyman owners — a bunch of high school pals who rented yellow school buses to drive to the track on race days. His owners landed a $1 million book deal — a movie fell through — and other lesser endorsements.

A movie or television deal for California Chrome is possible but not a sure thing, said veteran producer Dan Paulson, whose credits include the new Hallmark Channel movie "The Color of Rain."

"It's a story about an underdog, that's the most interesting part of it," Paulson said. The return of movies and miniseries to networks that once shunned them helps by expanding the list of potential buyers, he added.

A website operated for Secretariat's owner, Penny Chenery, sells about 150 items ranging from bobbleheads to photographs signed by his jockey. A nail that held the horse's shoes in the Belmont sold for $6,100.

Leonard Lusky, who handles marketing of the horse, thinks that Chrome would have opportunities that didn't exist for Secretariat and could top $1 million in merchandise sales. "With social media, Facebook, Twitter, you can reach beyond the core fan. It will be a frenzy," he said.

Chrome's owners could also try to earn more money at the track. They could enter him in high-stakes races such as the Breeders Cup Classic this fall in his native California, where a win would be worth $2.75 million. It might do the sport good for a champion to keep running.

Racing again poses challenges. Superstars usually don't stick around long enough for most fans to see them because the best are often retired at 3 to earn big stud fees rather than risk catastrophic injury.

"Sometimes when you're offered so much money, it's hard to refuse," Chrome's trainer, Art Sherman, said this week when asked if the horse would race another year.

But it's possible.

"(The owners) just got him insured for a lot of money. You don't pay the insurance premium and sell him right away."

Koenig reported from Dallas. Associated Press Television Writer Lynn Elber contributed to this report from Los Angeles.

Body found in wheel well of Dutch plane

AMSTERDAM -- Dutch border police say they have found a body in the wheel well of a KLM airplane at Amsterdam's Schiphol airport.

Spokesman Richard Haarman said the plane landed Thursday morning, and the incident was under investigation. He declined further immediate comment.

Local broadcaster AT5 reported that the plane had arrived from Norway on a small commercial flight.

In April, a 15-year-old Somali immigrant survived a 5 ½ hour flight from San Jose, California to Hawaii in the wheel well of a Boeing 767.

Hariri congratulates new Armenian premier

BEIRUT: Former Prime Minister Saad Hariri Thursday congratulated Armenia’s new Prime Minister Hovik Abrahamyan.

Hariri stressed his “strong commitment to maintaining the best of ties between the two countries and the two peoples,” the Future Movement head said in a cable.

Army detains several in Tripoli for cheering to Assad

TRIPOLI: Lebanon’s Army detained at least three suspects Thursday morning for cheering and opening fire in the air after the re-election of Syrian President Bashar Assad, security sources told The Daily Star.

Some of the detainees are from the Jajieh and Dabab families. Some are are also wanted suspects by the authorities for previous violations in the northern city, the sources said.

The Army also raided the house of Mahmoud Aboushi in Tripoli's Bab al-Tabbaneh neighborhood for tossing a hand grenade in the Jabal Mohsen area Wednesday night.

Syria-linked intermittent clashes that had plagued the northern city for years came to a halt in April as the security forces enacted a new security plan to end the violence in Tripoli.

Bill would allow Tesla to sell cars in New Jersey

TRENTON, N.J. -- Electric-car company Tesla Motors might stay plugged in in New Jersey.

An Assembly committee on Thursday is scheduled to consider a bill that would allow electric car manufacturers to sell vehicles directly to residents. The companies would be required to operate maintenance facilities in the state.

The bill comes months after the state Motor Vehicle Commission implemented regulations that require new-car dealers to have franchise agreements before they can be licensed.

The rules effectively prohibit Tesla from using its direct-sales model.

The California-based company has been selling cars at two locations in New Jersey for about two years. Its electric cars retail for around $60,000 before incentives.

An industry group that represents new-car dealers claims Tesla's business model stifles competition and limits buyers' access to warranty and safety recalls.

Prosecutor: HK tycoons funneled bribes to official

HONG KONG -- Two Hong Kong billionaire brothers accused of bribing a top official in the Chinese financial center funneled millions to him through middlemen to gain an edge for their property business, a prosecutor said Thursday.

In his opening statement for the high profile corruption case, Prosecutor David Perry said that Thomas and Raymond Kwok routed secret payments to Rafael Hui from 2005 to 2007, during his tenure as Hong Kong's chief secretary.

Perry said payments were disguised by first sending them to two other people also on trial.

The Kwok brothers, their alleged middlemen and Hui all deny a total of eight corruption and misconduct charges involving about 34 million Hong Kong dollars ($4.4 million) in bribes and unsecured loans.

"This case is about the making and receiving of secret and disguised payments involving an abuse of office," Perry said. Hui's loyalty to Hong Kong was "undermined because he was in the pay of property developers," he said.

Hong Kong's biggest graft case in decades has shocked the former British colony, where rule of law and clean governance have traditionally been points of pride. The case has also fed rising resentment of the city's tycoons, many with fortunes from property development, over surging house prices.

The Kwoks are managing directors of Sun Hung Kai Properties, which is one of the world's biggest real estate developers by market value. The brothers are worth a combined $17.5 billion, making them Hong Kong's fourth richest, according to Forbes.

Some HK$19.5 million in payments were made to one of the middlemen, longtime Sun Hung Kai employee Thomas Chan, Perry said. Through his private company, Chan briefly routed the money offshore and then to a second middleman, Francis Kwan, a childhood friend of Hui's, the court heard.

Kwan broke the money down into smaller payments to send to Hui, including HK$150,000 in cash carried by hand through a Hong Kong neighborhood, Perry said.

"Some of the defendants are very good friends and clearly they trusted each other to keep the payments secret," said Perry.

Salam meets with Berri over presidential stalemate

BEIRUT: Prime Minister Tammam Salam held talks Thursday with Speaker Nabih Berri over the presidential stalemate and the work of the Cabinet.

The meeting came days after Berri met separately with presidential hopeful MP Michel Aoun and Interior Minister Nouhad Machnouk, who is also a Future lawmaker.

The talks centered on the presidential vacuum that began after former President Michel Sleiman left Baabda Palace on May 25 without a successor in light of disputes among lawmakers on a consensus candidate.

Although the Cabinet is discussing a mechanism to govern its work in light of the presidential void, Aoun’s bloc along with some Christian MPs and the Future Movement have vowed not to attend legislative sessions in Parliament until a president is elected.

The MPs argue that Parliament should only handle urgent matters until a new president is elected.

STL to appoint defense lawyer for Ibrahim al-Amin in contempt case

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Future bloc condemns Syrian ambassador's remarks

BEIRUT: The Future parliamentary bloc Thursday urged Lebanon’s foreign minister to summon Syrian Ambassador Ali Abdul-Karim Ali over what it said were abusive remarks against Arab states.

The Future bloc “denounced the abusive comments and accusations made by the ambassador of the Syrian regime to Lebanon in a television interview against Arab and sisterly countries; and calls on the foreign minister to summon him,” the coalition said after its weekly meeting.

The bloc, which met under its head Fouad Siniora, also commented on the scene outside the Syrian Embassy in suburban Yarze last week when Syrian expatriates voted “in the so-called Syrian presidential election.”

Future expressed “surprise” that Syrian agents in Lebanon and their allies who remain active inside the country continue “to repeat boring shows through exploiting the influence and the weapons of Hezbollah and its aides to pressure and intimidate Syrian refugees living under difficult conditions.”

There had been unconfirmed reports that voters were intimidated into participating in the May 29-30 voting for expats.

The Future bloc also congratulated Egyptian President-elect Abdel-Fattah al-Sisi on his landslide victory in last week’s presidential election.

"The Arab world desperately needs Egypt to re-establish its role – given its strategic political, Arab and Islamic position – in order to restore the balance that has prevailed in the past several decades due to dangerous developments that the region had witnessed," the statement read by Future MP Ammar Houri said.

The bloc also hailed the new Palestinian unity government and expressed hope that Fatah and Hamas would continue to pursue and achieve unity among the various Palestinian factions.

Regarding the ongoing debate over the powers of the Cabinet, Future said the government “must work to continue to manage the affairs of the country ... and people’s day-to-day affairs ... as stipulated by the Constitution.”

$10M loan to help Marrone Bio Innovations expand

BANGOR, Mich. -- A biotech company is getting a $10 million federal loan to help expand its product line at its plant in southwestern Michigan.

Agriculture Secretary Tom Vilsack announced the funding Wednesday for Davis, California-based Marrone Bio Innovations' facility in Bangor.

The Herald-Palladium of St. Joseph reports (http://bit.ly/TgU1rv ) the company began production late last year, and the loan will allow it to move ahead with its planned $32 million expansion.

The loan is funded through the U.S. Department of Agriculture's Rural Development Business and Industry Guaranteed Loan program. The expansion will bring the introduction of additional bio-based product lines and is projected to add 30 to 50 employees in Bangor.

Marrone Bio Innovations makes pest management and plant health products for the agriculture, turf, ornamental and water treatment markets.

---

Online:

http://bit.ly/1rNP9tu

Geagea congratulates Sisi on presidential victory

BEIRUT: Lebanese Forces leader Samir Geagea Thursday congratulated ex-Army chief Abdel Fattah al-Sisi on his recent victory in the Egyptian presidential election.

"Geagea sent a cable to [Sisi] to congratulate him on being elected ... This step meant Egyptians were committed to the right choice and it is a ray of hope for people who strive for democracy,” the letter said.

“We ask God to bestow wisdom upon [you] to restore Egypt's leading role and help you succeed in your efforts for the good of the Arab world,” he added.

Earlier this week, Sisi won 96.91 percent of the vote with a turnout of 47.5 percent, almost one year after he overthrew Islamist Mohamed Morsi.

Longtime baseball fixture Don Zimmer dies at 83

ST. PETERSBURG, Fla. -- Don Zimmer wasn't a fixture in baseball forever. It just seemed that way.

He played alongside Jackie Robinson on the only Brooklyn Dodgers team to win the World Series. He coached Derek Jeter on the New York Yankees' latest dynasty. And his manager once was the illustrious Casey Stengel.

For 66 years, Zimmer was a most popular presence at ballparks all over, a huge chaw often filling his cheek. Everyone in the game seemed to know him, and love him.

Zimmer was still working for the Tampa Bay Rays as a senior adviser when he died Wednesday at 83 in a hospital in nearby Dunedin. He had been in a rehabilitation center since having seven hours of heart surgery in mid-April.

"Great baseball man. A baseball lifer. Was a mentor to me," teary-eyed Yankees manager Joe Girardi said.

Zimmer started out as a minor league infielder in 1949, hitting powerful shots that earned him the nickname "Popeye." He went on to enjoy one of the longest-lasting careers in baseball history.

Zimmer played on the original New York Mets, saw his Boston Red Sox beaten by Bucky Dent's playoff homer and got tossed to the ground by Pedro Martinez during a brawl.

Oh, the tales he could tell.

"Zim was around when I first came up. He was someone that taught me a lot about the game — he's been around, he's pretty much seen everything," Jeter said after the Yankees lost to Oakland 7-4. "His stories, his experiences."

With the champion Yankees, Zimmer was Joe Torre's right-hand man as the bench coach.

"I hired him as a coach, and he became like a family member to me. He has certainly been a terrific credit to the game," Torre said in a statement.

"The game was his life. And his passing is going to create a void in my life ... We loved him. The game of baseball lost a special person tonight. He was a good man," he said.

A career .235 hitter in the big leagues, numbers could never define all that Zimmer meant to the game. He had tremendous success, too — his teams won six World Series rings and went to the postseason 19 times.

Zimmer's No. 66 Rays jersey had been worn recently by longtime Tampa Bay third base coach Tom Foley in tribute — the team wanted that, and MLB decided a coach should wear it.

Foley was crying in the dugout Wednesday night during a 5-4 loss to Miami. He later remembered the Rays going as a team to see "42," the movie about Robinson.

"He would talk about it. He had a lot of stories, a lot of history coming out of him," Foley said. "He had a lot to give, a lot to offer and he did."

Earlier this season, the Rays hung a banner in the front of the press box at Tropicana Field that simply read "ZIM."

"Today we all lost a national treasure and a wonderful man," Rays principal owner Stuart Sternberg said in a statement.

There was a moment of silence at Dodger Stadium for Zimmer before Los Angeles played the Chicago White Sox.

"On behalf of Major League Baseball and the many clubs that 'Popeye' served in a distinguished baseball life, I extend my deepest condolences to Don's family, friends and his many admirers throughout our game," Commissioner Bud Selig said in a statement.

Zimmer's biggest admirer was his wife "Soot" — they were married at home plate during a minor league game in 1951. Two years later in the minors, Zimmer's path took a frightening turn — he was beaned by a fastball and left in a coma, and doctors had to put metal screws in his head.

Zimmer recovered well enough to wear a lot of uniforms during his 56 years in the majors. He played for the Dodgers, Mets, Cubs, Cincinnati Reds and Washington Senators. He managed San Diego, Boston, Texas and the Cubs.

"I loved Zim. I loved his passion. He was a great, great guy. He was a great baseball guy," Yankees executive Hank Steinbrenner told The Associated Press. "Everybody loved him."

Zimmer hit 91 home runs and had 352 RBIs in 12 seasons. He started Game 7 when Brooklyn beat the Yankees for the 1955 crown and was an All-Star in 1961.

The next year, he played under Stengel on the 1962 expansion Mets, who famously went 40-120.

"Don't blame them all on me," Zimmer once said. "I got traded after the first 30 days."

Zimmer was the 1989 NL Manager of the Year with the Cubs and was at Yankee Stadium for three perfect games, by Don Larsen in the 1956 World Series and by David Cone and David Wells in the late 1990s.

"Zim was a great man, and there are no words to explain what he brought to us and what he meant to me," Rays star Evan Longoria said.

"He taught me a lot of things, and those days of sitting in the dugout with him will be missed," he said.

Said Rays pitcher David Price: "Zim was a very special person to all of us. A very special person in baseball, period."

"He always lit everybody's faces up whenever he'd walk in," he said. "Zim had a passion for baseball that rubs off on everybody."

Zimmer is survived by his wife; son Thomas, a scout with the San Francisco Giants; daughter Donna, and four grandchildren.

State targeting construction firm fraud

NASHVILLE, Tenn. -- State officials say the Department of Labor has been expanding efforts to uncover employer fraud within the construction industry.

The efforts will help identify employers who are paying workers under the table, intentionally misclassifying workers as independent contractors and who are failing to report all wages paid.

The state Department of Labor & Workforce Development said a Nashville drywall firm accused of lying to an insurance company about how many employees were on its payroll was first to pay $300,000 in a settlement.

Officials say the fraud is typically used to avoid paying worker's compensation and unemployment insurance tax premiums. It also gives deceptive employers an unfair competitive advantage over law-abiding firms.

Part of the effort includes the hiring of additional investigators to detect the fraud.

Senate Expected To Approve Sebelius Replacement At HHS

Audio for this story from Morning Edition will be available at approximately 9:00 a.m. ET.

The Senate votes Thursday on the nomination of Sylvia Mathews Burwell to be Health and Human Services Secretary, replacing Kathleen Sebelius. Burwell was running the Office of Management and Budget.

Senators Get Background Briefing On Sgt. Bergdahl's Release

Audio for this story from Morning Edition will be available at approximately 9:00 a.m. ET.

With criticism mounting on Capitol Hill of a prisoner swap that traded 5 jailed Taliban leaders for Army Sgt. Bowe Bergdahl, some military, intelligence and diplomatic officials briefed senators.

Chinese business delegation in Chicago

CHICAGO -- World Business Chicago says a delegation of leaders from 105 Chinese businesses is touring Chicago.

The business leaders and senior official from eight Chinese cities started its tour Wednesday.

World Business Chicago says the tour is a response to Mayor Rahm Emanuel's 2013 visit to Beijing. World Business Chicago tries to help develop the city's economy and raise Chicago's business profile abroad.

The tour is taking the business leaders to economic development forums and showed them local infrastructure.

According to World Business Chicago, trade between Chicago and China was worth more than $30 billion in 2013. The group says that more than 50 Chinese-owned companies operate in the city and the surrounding area.

Families in a frenzy over Disney's 'Frozen'

ST. PETERSBURG, Fla. -- For the Calder family, the "Frozen" frenzy began when the Disney movie came out in late 2013 and they took their 7-year-old daughter Caroline to see it in the theater.

Caroline then saw it again, with a grandparent. Then with the other set of grandparents. Then came the Disney cruise to the Caribbean with the "Frozen" sing-along, the purchase of "Frozen"-themed pajamas — instead of "Frozen" dolls, which were sold out — and waiting in line at a Disney store to obtain a raffle ticket for a chance to purchase a "Frozen" dress.

"We've become the 'Frozen' family," said Caroline's mom Kristin, 41, who says the "Frozen" CD or DVD plays daily in her vehicle or home in Boynton Beach, Florida. "It is part of our everyday life."

Her daughter Caroline describes her love of the movie like this: "I really like Elsa because of her frozen power. And I really like Anna because she's really nice a lot."

Caroline added that the ice blue dress worn by Elsa when she sings the song "Let it Go" is her favorite part of the movie.

Recently, the family had a "Frozen"-themed birthday party for Caroline with life-sized cutouts of the animated film stars, a plush toy depicting the movie's snowman, Olaf, and "Frozen"- themed invitations downloaded from the craft site Etsy. For $350, the Calders even hired performers to portray Anna and Elsa, the sisters from the movie, to sing and play with the kids for an hour. It was the performers' sixth "Frozen"-themed birthday party that day.

For the uninitiated, "Frozen" — which tells the story of how Anna and Elsa overcome Elsa's terrible power to turn everything into ice and snow — has become the fifth-highest grossing film of all time, raking in $1.2 billion in box office earnings worldwide.

The huge demand for anything "Frozen" has created a shortage of merchandise on Disney store shelves all over North America. It's also led to hours-long waits to see the princesses at Disney parks in Florida and California.

It's even become an international phenomenon. The tour company Adventures by Disney added Geirangerfjord, Norway, to a new itinerary this year inspired by the movie. The film's fantasy kingdom of Arendelle was based on the fjord. Calder looked into Disney's Norway cruise for 2015, but shelved the idea over cost — $15,000 for her family plus airfare.

She also figured hiring the princess performers for her daughter's party was cheaper and easier than taking the whole family to Disney World. One day last week, the wait to meet the sisters at the park's Princess Fairytale Hall was listed on a park sign as 300 minutes — five hours — by 9:30 a.m., a half-hour after the park opened, according to Deborah Bowen, a Tampa resident and long-time Disney park-goer.

"I've never seen anything like this, the fury, the popularity that these two princesses have had," Bowen said.

Bowen, a member of Disney Parks Mom Panel, which provides vacation advice, says a saner strategy for seeing the princesses is to use the MyDisney app to book a FastPass appointment, which assures access within a designated time window.

But Jessica Becak, 33, of Long Island, New York, wasn't able to reserve a visit using the FastPass system — other visitors had snagged the appointments before she booked a June trip to Disney with her 3-year-old daughter. So she's downplaying the possibility of seeing Anna and Elsa at the park because she knows it might not be realistic. Waiting in the standby line just isn't an option, she said.

"My daughter's not going to be able to stand in line for two to five hours in the heat," she said. "So right now, we're glossing over it. If we walk by and it doesn't look too traumatic, we might try it."

She's thankful that Anna and Elsa have been added to Disney's Festival of Fantasy Parade, so her daughter will likely be able to at least spot the princesses while in the park.

But Becak was persistent enough to snare a hard-to-find Elsa toddler doll earlier this year — though she had to spend an entire day literally calling every Disney store in the U.S. to get one. Finally, a store in Pittsburgh came through. No luck with any other "Frozen" merchandise, though: "We haven't been able to find anything since," she said.

"Frozen" has boosted Disney's bottom line; in May it posted second-quarter earnings that beat Wall Street forecasts.

Disney CEO Bob Iger said the company's consumer products revenue grew 16 percent to $885 million, lifted by "Frozen," whose merchandise accounted for nine of the top 10 best-selling items in Disney stores. Iger said "Frozen" had become one of Disney's best franchises. The company plans to increase the film's characters in its parks, develop a Broadway show and is working on books and interactive products.

He said he expects the effect of the hit to last for at least the next five years.

Note to parents: If your kids want "Frozen" gifts for Christmas, better start hunting now.

Follow Tamara Lush on Twitter at http://bit.ly/1njA3GQ .

Arab idol unveils single for World Cup

BEIRUT: Palestinian Arab idol winner Mohammed Assaf has made World Cup history by creating the competition’s first ever “fan-written” song, according to the U.N. Palestinian refugee agency.

UNRWA said Assaf would perform the song "Assaf360" live for the first time June 10 in Sao Paulo, Brazil, at the opening ceremony of the 64th FIFA Congress ahead of the World Cup.

Assaf, who is from the Khan Yunis refugee camp in the Gaza Strip, won the second season of Arab Idol in Beirut in 2013. His victory drew huge celebrations across Palestine, and the United Nations Relief and Works Agency appointed him as a goodwill ambassador to raise awareness of refugee issues.

According to a statement released by UNRWA, the song – which reflects the World Cup spirit of hope, youthfulness and unity – was written, composed and recorded in a single day. Fans and supporters around the world sent in their ideas and suggestions on Twitter and Facebook.

The 24-hour studio session on June 3 in Dubai was live-streamed and brought Assaf together with Grammy-winning producer Rodney "Darkchild" Jerkins, Lebanese producers Michael Fadl and Walid Al-Fayed, and noted Arabic lyricist Nizar Francis to create the song, UNRWA said.

"Assaf360" will also be the anthem for the UNRWA Give for Food campaign, the statement added.

From the start of the World Cup until the end of Ramadan, UNRWA will be raising funds for food aid for some 1 million Palestine refugees who are unable to afford their basic minimum food requirements.

All proceeds from the song, which is available to purchase via iTunes or Anghami, will support the UNRWA campaign, helping “red card” hunger for food-insecure Palestine refugees.

Until June 17, supporters of the UNRWA campaign will be entered in a raffle to win World Cup prizes - five footballs and 10 official jerseys - signed by the youth ambassador.

Hezbollah could take future battles into Israel: report

BEIRUT: Hezbollah has changed its strategy and could take any future battle into Israel, an Israeli report said, citing a senior intelligence official.

The report, published Thursday by the Haaretz Israeli daily, cited an article by a lieutenant colonel in intelligence, published in the military magazine Maarachot presenting an unusual scenario on Hezbollah’s war strategy.

The officer, identified only by his first initial N., argued that “Israel should take into account the possibility that Hezbollah changed its strategy to something completely different,” warning that the group could now initiate war against the Jewish state.

“Participating in the war in Syria brings Hezbollah closer to adopting an offensive strategy against Israel as well,” the officer wrote.

“The significance is that Hezbollah is liable to strive for a different kind of confrontation: Instead of reacting to an Israeli initiative and standing in the breach, taking the initiative and making a ground offensive and multi-pronged attack on Israeli territory,” he argued.

The officer said that there were signs Hezbollah was weighing trying to shorten the next campaign through ground operations in Israel.

Referring to comments by Hezbollah leadership about “conquering the Galilee,” the officer said Israel should be alert to such declarations although they might “sound arrogant, perhaps unrealistic ... because they might reflect Hezbollah’s intentions.”

According to the officer, Hezbollah’s 2006 strategy reflected its deep understanding of Israel’s technological, intelligence and air superiority as well as of Israel’s weak spots: high sensitivity to casualties, aversion to a long campaign and the need for clear victory. The party has worked ever since on improving its strong points against Israel, the official argued.

The report said Hezbollah indicated its possible new strategy in 2011 when it published on its website a presentation entitled “The Galilee - the next place of confrontation with the enemy.”

In August 2012, Hezbollah held a military exercise with 10,000 fighters, and Lebanese newspapers reported that the exercise included a scenario of an attack on the Galilee.

He called on the Israeli authorities to be highly alert to this possible scenario.

“If Hezbollah does change its strategy, it will have substantial consequences for Israel,” he said.

“The IDF will have to take into account the possibility that Hezbollah will try to shorten the war by creating facts on the ground like an attack on the Galilee,” the officer added.

“It will have to prepare civilians for such an offensive and prepare for the option of Hezbollah launching a surprise attack in an attempt to end the war before it even begins.”