16,000 Vote In Tory Open Primary

UPDATE: In a response on Twitter, David Lammy MP has said it's "definite" that Labour should adopt open primaries across the board. View David's full thoughts here.

UPDATE: Andrew Sparrow has some choice quotes on the primary in Totnes from local Conservatives, including:

"The Lib Dems have got the candidate they wanted."

A record 16,000 voters - about 25% of the electorate - have selected Sarah Woolaston as the new Conservative Party parliamentary candidate for Totnes in the country's first open primary experiment.As we've said on these pages before, this is a bold move.

Anthony Painter says on his blog that he is "absolutely staggered and impressed" by the turnout, while Michael Crick of Newsnight said yesterday that any turnout of 15% or more would enable the Tories to claim this was a "successful exercise, even if it has cost them £4 a vote, or more."

I was initially sceptical about primaries in this country, and espcially about how they would be funded. But I've come round to the view that they are something the Labour party should seriously consider adopting - and the relative enthusiasm for the process in Totnes for a first time experiment should mean the party takes another look.

Although we wait to see the impact this may have on the general election result in Totnes, I suspect - with a majority of nearly 2,000 to defend and a relationship built up with constituents through primary campaigning - Sarah Woollaston will be successful.

Hands of Conservative Party On Northern Rock, One In 25 Northern Rock Customers In Mortgage Arrears

• Six-month losses of £724m
• Repossessions fall and signs of easing in early-stage arrears
• £1bn savings withdrawn as customers return to private sector
• Co-operative party urges government to remutualise
• Chancellor wants Rock to turn into an active lender again

Northern Rock

Almost one in 25 Northern Rock customers are three months or more behind with their mortgage repayments, the state-owned lender admitted yesterday as it revealed a jump in bad debts and deepening losses of £724m in the first half.

The Newcastle-based bank, which owes the taxpayer £10.9bn, has a rate of arrears of 3.93% of its mortgage book – or 22,141 customers – compared with an industry average of 2.39%.

It has repossessed nearly four times more homes than the industry average although the 2,522 homes it has in possession is down from the peak of 4,000 and fewer than the 3,620 at the end of last year.

Gary Hoffman, chief executive of Northern Rock, pinned the blame on the Together loan which allowed customers to borrow 125% of the value of their homes.

"Together mortgages are a third of the book, half of the arrears and two thirds to the repossessions," said Hoffman.

As a result 39% of the bank's customers are in negative equity after the 21% drop in house prices from their peak – a fact seized upon by the Conservatives.

Philip Hammond, shadow chief secretary to the Treasury, said: "Gordon Brown and Alistair Darling promised taxpayers our money would be safe and that Northern Rock was a good investment. They were wrong, and ordinary families up and down the country are paying the price in higher taxes to fund their write-offs."

The charge taken to cover bad debts of £602m was up from £192m a year ago, although it was an improvement on the last six months of 2008.

As with HSBC and Barclays on Monday, Northern Rock is finding that the rate of problem loans is slowing. The City is waiting to see what guidance Lloyds Banking Group, owner of Halifax, gives on wednesday, when it is expected to report £10bn or more of bad debts.

But the number of Northern Rock customers in early stage arrears – missing just one or two mortgage payments – is slowing because of low interest rates. "We are seeing some encouraging signs in our early arrears," Hoffman said.

The government, which took control of Northern Rock 18 months ago, is waiting for EU state aid approval to split the bank up. Approval is expected in the autumn when speculation will mount that the Treasury is looking for a buyer for the business.

A new so-called BankCo will carry out £14bn of lending by the end of next year after being injected with more taxpayers' money but stripped of the existing government loans.

A "bad bank" known as AssetCo, will hold the troubled mortgage book as well as the government loans, which could make it easier for the cleaned-up BankCo to find a private sector buyer.

Hoffman insisted both operations could be attractive to buyers and said he did not know which arm he would run once the split took place. He was adamant that despite speculation the government wanted to sell the businesses before the general election, there was "no process underway".

The Treasury also insisted it was not looking for a sale. The Co-operative party, which sponsors Treasury select committee chairman John McFall and is affiliated to Labour, urged the government to remutualise the bank, which converted from a building society 10 years ago.

The Financial Services Authority is allowing Northern Rock to run on a depleted capital ratio while it awaits state aid approval, but even so Hoffman admitted that a target to lend £5bn for mortgages this year could not be met because of its weak capital cushion. He now expects to lend £4bn this year after resuming new lending in the middle of the year when the government reversed previous demands that the bank lose customers to enable it to pay off its taxpayer loan.

Rather than the £724m loss for the six months to June, caused by accounting technicalities, Hoffman highlighted the underlying loss, which narrowed to £270m compared with £443m a year ago.

While the lender suffered a dramatic outflow of funds in September 2007 when its difficulties first emerged and then inflows during last year's banking crisis when it was regarded as a safe haven because of the government guarantee, £1bn was withdrawn in the first six months of the year as the banking system returned to normal.

Israel Annexes Palestinian Village near Jerusalem

The Israeli Authorities annexed the Palestinian village of Beit Iksa by placing it on the map west of the Annexation Wall, and considered it part of Jerusalem. The decision means that the village would be isolated from the West Bank.

The decision comes in contradiction with a decision issued by the Israeli government in 2006 in which it decided not to annex the village.

Implementing the decision means that some 3000 Palestinians would be allowed to enter Israel without any permits, but would also be isolated from the West Bank.

The conflict on the future of the village started after the Israeli government, headed by the former Prime Minister, Ariel Sharon, had decided in 2003 that the village would be on the Israeli side of the Wall.

The government of former Prime Minister, Ehud Olmert, approved in 2006 the new route of the Wall which placed the village on the Palestinian side, only 200 meters away from the Green Line.

The Israeli police and security devices recommended that the Palestinian village should not be on the Israeli side of the Wall as this would allow thousands of Palestinians free access to Israel.

They said that such an issue would facilitate the smuggling of combat equipment, and could lead to ‘criminal offenses’ in addition to smuggling products.

The Wall route was never officially approved by the Israeli cabinet as it still awaiting a response to from the police and the security services. Therefore, the government decided to install a temporary fence that would “stop smuggling and attacks in Jerusalem”.

The fence would likely be electronic, and a road would be paved next to it to allow military patrols to man it. The project will likely cost dozens of millions of Israeli shekels.

The Price of Arab Peace

Once Barack Obama made up his mind to push for a resolution of the conflict between Israelis and Palestinians, it became inevitable there would be an epic test of wills between the US president and Israel’s prime minister, the irredentist Benjamin Netanyahu.

So it has proved, with Mr Netanyahu responding provocatively to US demands for a total freeze on Israel’s colonisation of occupied Palestinian land by expanding the number of settlers – on Sunday, for instance, evicting Palestinian families in Arab east Jerusalem to make way for Jewish families.

But, as everyone watches to see who blinks first, the Obama administration is seeing its strategy attacked from another flank.

Despite intense US diplomacy, Saudi Arabia, Washington’s closest Arab ally, has brushed aside efforts to extract Arab concessions – such as the opening of Israeli trade delegations in Arab countries – in exchange for a settlements freeze. On the face of it, it would seem reasonable for Arabs to gradually “normalise” relations with Israel, to help pave the way towards peace with the Palestinians. But their experience of the peace process has ensured that is not how most Arabs see it.

Prince Saud al-Faisal, the veteran Saudi foreign minister, is echoing widespread sentiments when he called for a “comprehensive approach” to peace that “defines the final outcome at the outset and launches into negotiations over final status issues: borders, Jerusalem, water, refugees and security”.

This is not just because Saudi Arabia is behind a comprehensive Arab-Israeli peace plan, spurned by Israel since it was endorsed by the Arab League in 2002. It is not just because gradualist processes such as Oslo failed because there was no agreement on the final destination, enabling the extremists on each side to exercise a veto. Nor is it just because many Arab leaders cynically use the situation of “no war, no peace” as an alibi to monopolise power and resources.

In 1992-96, at the height of the peace process, Israel reaped a peace dividend without concluding a peace. Diplomatic recognition of Israel doubled, from 85 to 161 countries, exports doubled and foreign investment increased sixfold. Per capita income in the occupied territories fell in the same period by more than a third, while the number of settlers expanded by half. A broad-looking avenue led quickly to a road-block. The Arabs have not forgotten, and Mr Obama will have to get more than a settlement freeze out of Israel to lure them down that road again.