Online gambling companies struggle to clear EU hurdles

LONDON (Reuters) – A partnership stuck on Friday between bwin.party Digital Entertainment and a Belgian casino group has defused one of many disputes pitting online gambling companies against governments across Europe.

The agreement came a month after bwin.party’s co-CEO was questioned by Belgian authorities in an escalating license dispute the company said was costing it 700,000 euros ($ 916,000) in monthly revenue.

By joining forces with Belcasinos, a unit of local casino owner Group Partouche, bwin.party neatly met a requirement to have a presence in Belgium to win a license for online poker, casino and sports betting.

The agreement is a rare bright spot in a tough regulatory environment for online gambling companies across the continent.

Betting online on sports events or playing poker on the Internet are increasingly popular pastimes in Europe, where operators say they are held back by unfair and discriminatory rules in many European Union countries.

“It is not a European Union in any way, it is a patchwork of different countries who happen to be in the EU,” said Professor Leighton Vaughan Williams, director of the betting research unit at Nottingham Business School in central England.

“Different countries have different vested interests and different ideas they are trying to promote. Are they trying to protect consumers or to maximize their tax take?” he said.

The 27 EU member states retain the right to regulate their gambling sectors as they see fit, but rules must comply with EU law, broadly meaning they must be consistent and proportionate.

Some companies are scaling back activities in European markets where, they say, regulatory risks are too high or tax rates are punitive.

Betting exchange operator Betfair for instance said this week it was halting marketing and investment in unregulated markets, including EU members Cyprus, Germany and Greece.

William Hill, Britain‘s largest bookmaker, has joined Betfair in pulling out of Greece and has also stopped offering sports betting to German residents because of a 5 percent turnover tax.

STAKES RISE

The stakes are high. Online gambling is growing at an annual rate of almost 15 percent in the EU and will be worth an estimated 13 billion euros ($ 17 billion) by 2015, according to EU figures.

The European Commission, the EU’s executive, stepped in to the debate in October when it published a medium-term plan to clarify regulations and promote cooperation between member states, ruling out EU-wide legislation for the time being.

“All citizens must be adequately protected, money laundering and fraud must be prevented, sport must be safeguarded against betting-related match-fixing and national rules must comply with EU law,” Internal Market and Services Commissioner Michel Barnier said, setting out his approach.

The online operators accuse the European Commission of failing to follow through properly on complaints lodged about regulation in no fewer than 20 or the 27 EU member states.

Barnier has written to member states accused of breaching EU law in the way they handle gambling, seeking an update on the situation by the end of the year.

However, the industry questions whether the EU will go into battle over gambling when it is facing so many other problems.

“They will chip away at some of the most blatant ones,” said Clive Hawkswood, chief executive of trade body the Remote Gambling Association. “What we really need is for them to take some to the European Court and take enforcement action.”

BRITISH TAXES

Gambling companies themselves have taken advantage of different tax regimes where they work in their favor.

This is illustrated in Britain, historically the biggest betting market in Europe and a place with a well-developed gambling culture where bookmakers have operated in town centers for 50 years.

In recent years, most betting companies have moved their British online betting operations to Britain’s overseas territory of Gibraltar. There they are sheltered from a 15 percent tax on gross profit faced by operators based in Britain.

New legislation will close off that loophole after 2014. The shift to a taxation model based on the location of the consumer was expected to cost gambling companies as much as 270 million pounds ($ 435 million) by 2016-17.

Analyst Nick Batram at brokerage Peel Hunt said smaller players would likely be picked off because of the impact of higher tax and regulatory burdens across Europe.

“It is getting more complicated and more expensive. There is more change afoot but it should ultimately play into the hands of the better-capitalized companies.”

In that vein, William Hill has provisionally agreed a 485 million pound takeover of smaller rival Sportingbet, keen to get its hands on the company’s regulated Australian betting business.

“I think there is a lot more M&A activity to come,” said Batram.

(Additional reporting by Rosalba O’Brien; Editing by David Holmes)

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Sally Struthers enters not guilty plea for DUI

YORK, Maine (AP) — Sally Struthers has entered a not guilty plea on charges she drove drunk in Maine, where she was performing in a musical.

The Portland Press Herald (http://bit.ly/XleJBq) reports the 65-year-old Struthers did not appear in York District Court on Thursday, and entered the plea through her lawyer.

Police arrested Struthers on Sept. 12 on U.S. Route 1 in the resort town Ogunquit (oh-GUHNG’-kwit). She was charged with criminal operating under the influence.

Struthers is best known for her role as Gloria Stivic in the 1970s TV sitcom “All in the Family.” She had been performing at the Ogunquit Playhouse in the musical “9 to 5.”

Struthers is scheduled to appear in court on Feb. 13 for a bench trial.

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Information from: Portland Press Herald, http://www.pressherald.com

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EU agency rejects Sanofi, Isis cholesterol drug

LONDON (Reuters) – European regulators on Friday recommended against approval of Sanofi and Isis Pharmaceutical‘s drug Kynamro for treatment of a rare genetic disorder that causes unusually high cholesterol.

The European Medicines Agency said it was concerned about the medicine’s safety, noting that a high proportion of patients stopped taking it within two years, mainly due to side effects such as flu-like symptoms, injection site reactions and liver toxicity.

The European rebuff contrasts with a green light for the drug, known generically as mipomersen, by a U.S. advisory panel in October.

Sanofi’s Genzyme unit said it was disappointed by the decision and planned to request a re-examination.

(Reporting by Ben Hirschler)

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U.S. to send missiles, troops to Turkey

INCIRLIK AIR BASE, Turkey (Reuters) - U.S. Defense Secretary Leon Panetta signed an order on Friday to send two Patriot missile batteries to Turkey with 400 American personnel to operate them, in a move by NATO members to bolster Turkey's defenses against the threat of Syrian missiles.

The order was signed shortly before Panetta arrived on an unannounced visit to Turkey to meet American troops stationed at the Incirlik Air Base, the last stop on a week-long trip that took him to Afghanistan and Kuwait.

"The purpose of this deployment is to signal very strongly that the United States, working closely with our NATO allies, is going to support the defense of Turkey, especially with potential threats emanating from Syria," spokesman George Little said.

NATO-member Turkey has repeatedly scrambled jets along the countries' joint frontier and responded in kind when shells from the Syrian conflict came down inside its borders, fanning fears that the civil war could spread to destabilize the region.

The widely expected U.S. move follows similar steps by Germany and the Netherlands, which also said they will send two Patriot batteries. The three countries are the only NATO nations with the most modern type of Patriots.

Little declined to say where the U.S. batteries would be located and said the systems would be deployed to Turkey for an unspecified amount of time.

"We expect them to be deployed in the coming weeks," Little said.

NATO approved Turkey's request for air defense batteries on December 4, in a move meant to calm its fears of coming under missile attack, possibly with chemical weapons, from Syria.

The Patriot system is designed to intercept aircraft or missiles. NATO says the measure is purely defensive, but Russia, Syria and Iran have criticized the decision, saying it increases regional instability.

(Reporting by Phil Stewart; Editing by Nick Tattersall; Editing by Janet Lawrence)

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Aides: Chavez in tough fight, may miss swearing-in

CARACAS, Venezuela (AP) — Somber confidants of President Hugo Chavez say he is going through a difficult recovery after cancer surgery in Cuba, and one close ally is warning Venezuelans that their leader may not make it back for his swearing-in next month.

Information Minister Ernesto Villegas said Wednesday night that Chavez was in “stable condition” and was with close relatives in Havana. Reading a statement, he said the government invites people to “accompany President Chavez in this new test with their prayers.”

Villegas expressed hope about the president returning home for his Jan. 10 swearing-in for a new six-year term, but said in a written message on a government website that if Chavez doesn’t make it, “our people should be prepared to understand it.”

Villegas said it would be irresponsible to hide news about the “delicateness of the current moment and the days to come.” He asked Venezuelans to see Chavez’s condition as “when we have a sick father, in a delicate situation after four surgeries in a year and a half.”

Moving to prepare the public for the possibility of more bad news, Vice President Nicolas Maduro looked grim when he acknowledged that Chavez faced a “complex and hard” process after his latest surgery.

At the same time, officials sought to show a united front amid the growing worries about Chavez’s health and Venezuela’s future. Key leaders of Chavez’s party and military officers appeared together on television as Maduro gave updates on Chavez’s condition.

“We’re more united than ever,” said Maduro, who was flanked by National Assembly President Diosdado Cabello and Oil Minister Rafael Ramirez, both key members of Chavez’s inner circle. “We’re united in loyalty to Chavez.”

Analysts say Maduro could eventually face challenges in trying to hold together the president’s diverse “Chavismo” movement, which includes groups from radical leftists to moderates, as well as military factions.

Tapped by the 58-year-old president over the weekend as his chosen political heir, Maduro is considered to be a member of radical left wing of Chavez’s movement that is closely aligned with Cuba’s communist government.

Cabello, a former military officer who also wields power within Chavez’s movement, shared the spotlight with Maduro by speaking at a Mass for Chavez’s health at a military base.

Just returned from being with Chavez for the operation, Cabello called the president “invincible” but said “that man who is in Havana … is fighting a battle for his life.”

After Chavez’s six-hour operation Tuesday, Venezuelan television broadcast religious services where people prayed for Chavez, interspersed with campaign rallies for upcoming gubernatorial elections.

On the streets of Caracas, people on both sides of the country’s deep political divide voiced concerns about Chavez’s condition and what might happen if he died.

At campaign rallies ahead of Sunday’s gubernatorial elections, Chavez’s candidates urged Venezuelans to vote for pro-government candidates while they also called for the president to get well.

“Onward, Commander!” gubernatorial candidate Elias Jaua shouted to a crowd of supporters at a rally Wednesday. Many observers said it was likely Chavez’s candidates could get a boost from their supporters’ outpouring of sympathy for Chavez.

Opposition leader Henrique Capriles, who lost to Chavez in the October presidential election and is running against Jaua, complained Wednesday that Chavez’s allies are taking advantage of the president’s health problems to try to rally support. He took issue with Jaua’s statement to supporters that “we have to vote so that the president recovers.”

Maduro looked sad as he spoke on television, his voice hoarse and cracked at times after meeting in the pre-dawn hours with Cabello and Ramirez. The pair returned to Venezuela about 3 a.m. after accompanying Chavez to Cuba for his surgery.

“It was a complex, difficult, delicate operation,” Maduro said. “The post-operative process is also going to be a complex and hard process.”

Without giving details, Maduro reiterated Chavez’s recent remarks that the surgery presented risks and that people should be prepared for any “difficult scenarios.”

The constitution says presidents should be sworn in before the National Assembly, and if that’s not possible then before the Supreme Court.

Former Supreme Court magistrate Roman Duque Corredor said a president cannot delegate the swearing-in to anyone else and cannot take the oath of office outside Venezuela. A president could still be sworn in even if temporarily incapacitated, but would need to be conscious and in Venezuela, Duque told The Associated Press.

If a president-elect is declared incapacitated by lawmakers and is unable to be sworn in, the National Assembly president would temporarily take charge of the government and a new presidential vote must be held within 30 days, Duque said.

Chavez said Saturday that if an election had to be held, Maduro should be elected president.

The dramatic events of this week, with Chavez suddenly taking a turn for the worse, had some Venezuelans wondering whether they were being told the truth because just a few months ago the president was running for his fourth presidential term and had said he was free of cancer.

Lawyer Maria Alicia Altuve, who was out in bustling crowds in a shopping district of downtown Caracas, said it seemed odd how Maduro wept at a political rally while talking about Chavez.

“He cries on television to set up a drama, so that people go vote for poor Chavez,” Altuve said. “So we don’t know if this illness is for that, or if it’s that this man is truly sick.”

Some Chavez supporters said they found it hard to think about losing the president and worried about the future. His admirers held prayer vigils in Caracas and other cities this week, holding pictures and singing hymns.

Chavez has undergone four cancer-related surgeries since June 2011. He has also undergone months of chemotherapy and radiation treatments. Throughout his treatments, Chavez has kept secret some details of his illness, including the exact location and type of the tumors.

Ecuadorean President Rafael Correa wished his close ally the best, while also acknowledging the possibility that cancer might end his presidency. “Chavez is very important for Latin America, but if he can’t continue at the head of Venezuela, the processes of change have to continue,” Correa said at a news conference in Quito.

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Associated Press writer Christopher Toothaker contributed to this report.

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iPad mini deemed a ‘game changer,’ outgrew Kindle Fire by nearly 50%

Smaller tablets in the 7-inch range have been on the market for more than two years now, but it looks like it took Apple (AAPL) just one month to vault to the top of the category. Mobile advertising firm Millennial Media recently published the findings of a study pitting the iPad mini against Amazon’s (AMZN) popular Kindle Fire, which has been an extremely popular iPad alternative since it first launched last year. According to Millennial, iPad mini usage grew about 50% faster during early November than the Kindle Fire did immediately following its successful launch last year, as measured by ad impressions served by the firm’s network.

Millennial found that impressions served to the iPad mini in early November grew at an average daily rate of 28%. In the weeks following the Kindle Fire’s launch last year, usage of Amazon’s tablet grew roughly 19% each day.

“In the first weeks after the iPad mini went on sale, we saw an average daily growth in impressions of 28 percent. Last holiday season, Amazon launched the Kindle Fire to much anticipation, Millennial Media’s Matt Mills wrote on the company’s blog. “As a comparison, we saw Kindle Fire impressions grow at an average daily rate of 19 percent in the first two weeks after it went on sale last year. So, by our math it looks like Apple could have itself another massive holiday season.”

Mills called the iPad mini a “game changer” and said he expects “a massive amount” of iPad mini tablets to be given as gifts this holiday season.

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Late BBC star Savile suspected of 199 crimes: UK police

LONDON (Reuters) – British television star Jimmy Savile is suspected of carrying out an unprecedented number of sex offences including 31 rapes, police said on Wednesday in their most comprehensive review of the scandal.

Revelations about Savile, who died last year, provoked outrage across Britain where he had been a household name since the 1960s.

News of Savile’s crimes threw his main employer the BBC into turmoil, led to resignation of the BBC’s director general just 54 days into his job and provoked awkward questions for his predecessor Mark Thompson, who recently took over as chief executive of the New York Times.

Detectives launched their inquiry 10 weeks ago following reports in a TV documentary that Savile had abused young girls on BBC premises and at hospitals where he did charity work.

Since then, 450 people had come forward with allegations about Savile, mostly dealing with sexual abuse, said police.

Savile was now a suspect in 199 crimes, the vast majority of them involving children or young people, the force added.

“These levels of reporting of sexual abuse against a single individual are unprecedented in the UK,” the police said in a statement.

Detectives have been examining three categories of alleged offences: those involving only Savile, which make up the majority of cases; those involving Savile and others; and those which had no direct link to Savile.

So far six men have been arrested and another questioned by London police.

Those quizzed include Max Clifford, Britain’s most high-profile celebrity publicist, former BBC radio DJ Dave Lee Travis and former glam-rock singer Gary Glitter.

They have all denied any wrongdoing.

“Our officers will continue to investigate allegations made against those who potentially can be brought to justice,” the police statement said. “More arrests nationally will be forthcoming.”

A one-time professional wrestler with a penchant for garish outfits, Savile became famous as a pioneering DJ in the 1960s before hosting prime-time TV shows until the 1990s.

He ran about 200 marathons for charity, raising tens of millions of pounds for hospitals, leading some to give him keys to rooms where victims now allege they were abused.

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CVS Caremark sees Obamacare as expansion opportunity

(Reuters) – CVS Caremark Corp is looking at changes in U.S. healthcare as an opportunity to serve more customers, whether they are picking up prescriptions, getting them through the mail, or stopping by an in-house MinuteClinic for a checkup.

The company, formed when drugstore chain CVS bought pharmacy benefits manager Caremark in 2007 in a $ 27 billion all-stock deal, is set to give details on its strategy as it meets with analysts and investors in New York on Thursday. It also plans to discuss its 2013 financial forecasts.

The coming year stands to be a busy one for the healthcare sector as the United States prepares for 30 million people to join the ranks of insured patients under the Affordable Care Act, or Obamacare, starting in 2014. At the same time, the large population of aging baby boomers and rising demand for specialty drugs stand to be opportunities for companies such as CVS.

The industry is already seeing rapid growth in the number of people signing up for Medicare Part D prescription plans.

“You’ve got 10,000 baby boomers becoming eligible for Medicare every day now,” CVS Chief Executive Larry Merlo said, referring to the health insurance plan for seniors. “The change is upon us and it will evolve over the next several years.”

Merlo asserts that CVS can play a bigger role in getting patients with chronic conditions to stick to their drug regimens, which can save billions of dollars.

About half of Americans suffer from one or more chronic diseases and of those who are newly diagnosed with a chronic disease, such as diabetes, almost 50 percent failed to stick with their drug regimen in the first year, Merlo said.

“The lack of medication adherence is costing our healthcare system some $ 300 billion a year in unnecessary costs,” he said.

While CVS prepares for next year, its main competitors have come under pressure.

Drugstore leader Walgreen Co is trying to lure patients back to its stores after reaching a new contract with Express Scripts Holding Co , CVS Caremark’s largest competitor in the pharmacy benefits manager business (PBM).

In November, Express Scripts said that its business would come under pressure in the weak economy, leaving analysts to question that company’s strategy in the wake of its acquisition of another PBM, Medco Health Solutions.

Merlo declined to comment on whether CVS’s strategy would include any acquisitions, though “bolt-on” acquisitions to support its retail or PBM units are always being reviewed.

CVS also runs roughly 650 MinuteClinic health care clinics, which have seen more patients come in. The day after Thanksgiving was the clinics’ busiest day to date, with 19,000 visits on November 23. CVS expects more than 3 million visits to MinuteClinic in 2012.

Eight of the more than 7,400 CVS stores remain closed after being significantly damaged by Hurricane Sandy. Six should reopen by the end of 2012 and the rest may reopen by the end of the first quarter of 2013, Merlo said.

CVS already said that costs associated with the massive storm would reduce its fourth-quarter earnings by as much as 1 cent per share.

Its third-quarter profit came in a penny ahead of analysts’ expectations, with growth in both the pharmacy benefits management business and the drugstore chain.

(Reporting by Jessica Wohl in Chicago; Editing by Leslie Gevirtz)

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McAfee returns to U.S., admits to playing the 'crazy card'

John McAfee's month-long international run from police through two Central American nations ended with a flight to Miami, where the businessman who says he abandoned his fortune admitted to playing the "crazy card."

As a gaggle of media waited near several exit doors at the airport Wednesday night, federal authorities whisked the founder of McAfee anti-virus software off the plane and into a van.

"They said, 'Mr. McAfee, please step forward,'" McAfee, 67, later told ABC News exclusively overnight at a Miami Beach hotel. "I was met by a dozen or maybe fewer officers. I said, 'Am I arrested?' They said, 'No, sir, I am here to help you.' That felt the best of all."

He eventually snuck out of the airport in a cab and headed to South Beach. After walking down famed Ocean Drive to the bewilderment of tourists and eating sushi, his first meal in three days, he sat down with ABC News and admitted to playing the "crazy card" and says he is broke.

"I have nothing now," McAfee said. He claims he left everything behind in Belize, including $20 million in investments and about 15 properties. "I've got a pair of clothes and shoes, my friend dropped off some cash."

Just hours earlier, the self-made millionaire was deported by Guatemalan police who forced him aboard his U.S.-bound flight away from the home and the two women he said he loves. After he arrived on South Beach, he said, a mysterious "Canadian friend" ordered another man he'd never met to drop off a wad of fresh $5 bills that McAfee later displayed to ABC News, pulling them from his coat pocket.

He says he left his fortune, including a beachfront compound, behind after his neighbor Greg Faull was found shot to death in Belize on Nov. 10.

Belize officials said he isn't a suspect, but when they asked to question him, McAfee disguised himself and ran.

After three weeks ducking authorities in Belize, by hiding in attics, in the jungle and in dingy hotels, he turned up in Guatemala Dec. 3.

Barely a day later he was detained for entering the country illegally. As Guatemala officials grappled with how to handle his request for asylum and the Belize government's demand for his deportation, McAfee fell ill. The mysterious illness, described by his attorney alternately as a heart ailment or a nervous breakdown, led to a scene with reporters chasing his ambulance down the narrow streets of Guatemala City and right into the emergency room, where McAfee appeared unresponsive.

He now says it was all a ruse:
"It was a deception but who did it hurt? I look pretty healthy, don't I?"

He says he faked the illness in order to buy some time for a judge to hear his case and stay his deportation to Belize, a government he believes wants him dead. When asked whether he believes Belize officials where inept, he didn't mince words.

"I was on the run with a 20-year-old girl for three and a half weeks inside their borders and everyone was looking for me, and they did not catch me," he said. "I escaped, was captured and they tried to send me back. Now I'm sitting in Miami. There had to be some ineptness."

The man who many believe only wants attention answered critics who called his month-long odyssey and blog posts a publicity stunt by simply saying, "What's a better story, millionaire mad man on the run. You [the media] saved my ass. Because you paid attention to the story. As long as you are reporting, it is hard to whack somebody that the world is watching."

He denies any involvement in his neighbor's death but adds that he is not particularly concerned about clearing his name. He is focused on getting his 20-year-old and 17-year-old girlfriends out of Belize and says he has no idea what he'll do next, where he'll live or how he'll support himself.

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North Korea’s new leader burnishes credentials with rocket

SEOUL/TOKYO (Reuters) – North Korea successfully launched a rocket on Wednesday, boosting the credentials of its new leader and stepping up the threat the isolated and impoverished state poses to its opponents.

The rocket, which North Korea says put a weather satellite into orbit, has been labeled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far as the continental United States.

“The satellite has entered the planned orbit,” a North Korean television news-reader clad in traditional Korean garb triumphantly announced, after which the station played patriotic songs with the lyrics “Chosun (Korea) does what it says”.

The rocket was launched just before 10 a.m. Korea time (9 p.m. ET on Tuesday), according to defense officials in South Korea and Japan, and easily surpassed a failed April launch that flew for less than two minutes.

The North American Aerospace Defense Command (NORAD) said that it “deployed an object that appeared to achieve orbit”, the first time an independent body has verified North Korean claims.

North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the United Nations Security Council to stiffen sanctions that it originally imposed in 2006 after the North’s first nuclear test.

The state is banned from developing nuclear and missile-related technology under U.N. resolutions, although Kim Jong-un, the youthful head of state who took power a year ago, is believed to have continued the state’s “military first” programs put into place by his deceased father Kim Jong-il.

North Korea lauded Wednesday’s launch as celebrating the prowess of all three Kims to rule since it was founded in 1948.

“At a time when great yearnings and reverence for Kim Jong-il pervade the whole country, its scientists and technicians brilliantly carried out his behests to launch a scientific and technological satellite in 2012, the year marking the 100th birth anniversary of President Kim Il Sung,” its KCNA news agency said.

Washington condemned Wednesday’s launch as a “provocative action” and breach of U.N. rules, while Japan’s U.N. envoy called for a Security Council meeting. However, diplomats say further tough sanctions are unlikely to be agreed at the body as China, the North’s only major ally, will oppose them.

“The international community must work in a concerted fashion to send North Korea a clear message that its violations of United Nations Security Council resolutions have consequences,” the White House said in a statement.

Japan’s likely next prime minister, Shinzo Abe, who is leading in opinion polls ahead of an election on December 16 and who is known as a North Korea hawk, called on the United Nations to adopt a resolution “strongly criticizing” Pyongyang.

BEIJING BLOCK

China had expressed “deep concern” prior to the launch which was announced a day after a top politburo member, representing new Chinese leader Xi Xinping, met Kim Jong-un in Pyongyang.

On Wednesday its tone was measured, regretting the launch but calling for restraint on possible counter-measures, in line with previous policy when it has effectively vetoed tougher sanctions.

“China believes the Security Council’s response should be cautious and moderate, protect the overall peaceful and stable situation on the Korean peninsula, and avoid an escalation of the situation,” Chinese Foreign Ministry spokesman Hong Lei told journalists.

Bruce Klingner, a Korea expert at the Heritage Foundation, told a conference call: “China has been the stumbling block to firmer U.N. action and we’ll have to see if the new leadership is any different than its predecessors.”

A senior adviser to South Korea’s president said last week it was unlikely there would be action from the U.N. and that Seoul would expect its allies to tighten sanctions unilaterally.

Kim Jong-un, believed to be 29 years old, took power when his father died on December 17 last year and experts believe the launch was intended to commemorate the first anniversary of the death.

The April launch was timed for the centennial of the birth of Kim Il Sung, the grandfather of its current ruler.

Wednesday’s success puts the North ahead of the South which has not managed to get a rocket off the ground.

“This is a considerable boost in establishing the rule of Kim Jong-un,” said Cho Min, an expert at the Korea Institute of National Unification.

There have been few indications the secretive and impoverished state, where the United Nations estimates a third of the population is malnourished, has made any advances in opening up economically over the past year.

North Korea remains reliant on minerals exports to China and remittances from tens of thousands of its people working on labor projects overseas.

The 22 million population often needs handouts from defectors who have escaped to South Korea in order to afford basic medicines.

Given the puny size of its economy – per capita income is less than $ 2,000 a year – one of the few ways the North can attract world attention is by emphasizing its military threat.

Pyongyang wants the United States to resume aid and to recognize it diplomatically, although the April launch scuppered a planned food deal.

It is believed to be some years away from developing a functioning nuclear warhead although it may have enough plutonium for around half a dozen nuclear bombs, according to nuclear experts.

The North has also been enriching uranium, which would give it a second path to nuclear weapons as it sits on vast natural uranium reserves.

“A successful launch puts North Korea closer to the capability to deploy a weaponized missile,” said Denny Roy, a senior fellow at the East-West Center in Hawaii.

“But this would still require fitting a weapon to the missile and ensuring a reasonable degree of accuracy. The North Koreans probably do not yet have a nuclear weapon small enough for a missile to carry.”

Pyongyang says that its development is part of a civil nuclear program, but has also boasted of it being a “nuclear weapons power”.

(Additional reporting by Jumin Park and Yoo Choonsik in SEOUL; David Alexander, Matt Spetalnick and Paul Eckert in WASHINGTON; Linda Sieg in TOKYO; Sui-Lee Wee in BEIJING; Rosmarie Francisco in MANILA; Writing by David Chance; Editing by Raju Gopalakrishnan)

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