The Independent of London reports the United States is holding hostage some $50 billion of Iraq’s money in the Federal Reserve Bank of New York to pressure the Iraqi government into signing an agreement to prolong the US occupation indefinitely. Patrick Cockburn reports the Federal Reserve continues to hold Iraq’s financial reserves as a legacy of the international sanctions against Saddam Hussein. US negotiators are threatening to remove tens of billions of dollars of Iraq’s money to settle outstanding court judgments dating back to the 1980s unless Iraq accepts the highly controversial military deal. The deal would allow the US to permanently keep more than fifty military bases in Iraq. American forces would also be able to continue to carry out arrests of Iraqi citizens and conduct military campaigns without consultation with the Iraqi government. American soldiers and contractors will enjoy legal immunity.

In other Iraq news, a newly released Senate report has concluded President George Bush and his top policymakers deliberately distorted Saddam Hussein’s links to al-Qaeda and ignored doubts among intelligence agencies about Iraq’s arms programs as they made a case for war. Sen. John Rockefeller, the chair of the Senate Intelligence Committee said the report shows the administration “led the nation to war on false premises.”

In campaign news, Senator Barack Obama and Hillary Clinton met for the first time last night since the end of the primary campaign. Obama’s spokesperson Robert Gibbs confirmed the meeting took place but released no details on what was discussed.

Robert Gibbs: “Senator Obama and Senator Clinton did have occasion to meet this evening. It’s the end of the primary process, and they wanted to talk about bringing these campaigns together in unity and bringing this party together, as we go forward in the fall.”

Hillary Clinton is expected to suspend her campaign on Saturday. Earlier on Thursday, more than 10,000 Obama supporters in Virginia attended his first major rally of the general campaign.

Khalid Sheikh Mohammed and four others prisoners at Guantantamo were arraigned Thursday before a military commission. The arraignment was the first time the alleged 9/11 mastermind had been seen or heard publicly since he was captured in Pakistan in 2003. Mohammed refused legal representation and said he welcomed the death penalty. Defense lawyers said they will challenge any attempt to introduce evidence tainted by torture, but Army Major Jon Jackson said they may not get that chance if the defendants represent themselves.

Army Major Jon Jackson: “What you saw today in that courtroom, commission room, was not justice; it was ridiculous. And the reason I say that is because of what happened with my client, specifically.”

Prosecuting attorney Lawrence Morris praised the commission process.

Lawrence Morris: “As you continue to see, the military commission’s process is an orderly, fair, open legal system, remarkably similar to other trials in United States courts. The prosecution team will continue to work diligently to bring all cases to trial in a fair and expeditious manner consistent with the best practices in both civilian and military courts.”

Prosecutors want to start the trial on September 15, a date defense attorneys say was chosen to influence the November presidential election.

Governments at a UN food crisis summit have agreed on a declaration that the world must take urgent action to prevent soaring food prices pushing millions of people into hunger. But a group of Latin American nations accused the summit of misdiagnosing the problems threatening millions with starvation. Argentina, Venezuela and Cuba said the Rome summit catered to the world’s wealthiest nations by sidestepping key issues like grain-based biofuels advocated by the United States.

Defense Secretary Robert Gates has ousted the top military and civilian leaders at the Air Force after a classified Pentagon investigation found “a chain of failures” in the Air Force’s safeguarding of the US nuclear arsenal. Last year, a B-52 bomber mistakenly armed with six nuclear-tipped cruise missiles flew across the country. The Air Force also mistakenly shipped four Air Force electrical fuses for ballistic missile warheads to Taiwan.

The Senate is considering providing the nuclear industry with over $500 billion in subsidies for new nuclear power development. The subsidies are included in a much-touted bipartisan climate change bill. One aide to Senator Joseph Lieberman described the plan as “the most historic incentive for nuclear in the history of the United States.” John Passacantando of Greenpeace criticized the Senate for including the nuclear subsidies in a climate change bill. He said, “Nuclear power is a dirty and dangerous distraction from real global warming solutions.”

In economic news, a new report has revealed nearly ten percent of American mortgages were past due or in foreclosure at the end of March. During the first quarter of the year, homeowners lost their homes at a record rate. The Mortgage Bankers Association said nearly 450,000 loans fell into foreclosure between January and March. Nearly three million other homeowners are now behind on their monthly payments. Meanwhile, the amount of equity people have in their homes has fallen to the lowest level on record. Overall American households saw their net worth decline by $1.7 trillion in the first quarter of the year.

In international news, grieving and angry parents who lost their children under collapsed schools during the Sichuan earthquake in China urged the government on Thursday to punish corrupt officials and incompetent teachers involved. The Chinese government says the earthquake killed 69,000 people, and another 18,000 are missing and likely dead. The dead include about 9,000 children who were killed in flimsy schools flattened during the quake. The loss of so many children is particularly painful in China, where the government’s family planning policies mean that most people have only one child.

Pi Shiqiu, grandmother of killed student: “Our child was the flower of the country, the future of our country. How could the Xinjian school just bury her like that? She would have been such a great talent for the country, and our whole family depended on her. The whole family! The children were all 'the only child' in the family.”

The family of an Afghan journalist has sued the Bush administration for illegally detaining him in Afghanistan for more than six months without charge. Jawed Ahmad is a cameraman for Canadian CTV. He has been detained at a NATO airbase since October. Since the recent release of Sami al-Hajj and Bilal Hussein, Ahmad is the only known journalist being held by the US military.

The Mexican government has asked the International Court of Justice in the Hague to block the executions of Mexicans on death row in the United States. Mexico has accused US officials of failing to comply with a judgment ordering a review of the trials.

Domestic workers from around the world are gathering in New York for the first-ever National Domestic Workers Congress. The gathering is being organized by Domestic Workers United, a group that organizes New York nannies, housekeepers and elderly caregivers. Domestic Workers United is pushing New York lawmakers to sign a Domestic Workers Bill of Rights. In most states, domestic workers have no right to overtime, sick time, vacation, healthcare and workers’ compensation.

The Washington Examiner reports police in Washington, D.C. plan to begin sealing off entire neighborhoods, setting up checkpoints and kicking out strangers, under a new program to combat violence. Under a directive issued by Police Chief Cathy Lanier, officers will stop cars at the checkpoints, record all license plate numbers and ask drivers why they are visiting the neighborhood. The directive allows officers to turn away anyone who does not have a legitimate reason for entering the neighborhood. Motorists who resist answering questions from police officers will be arrested for failure to obey an officer. D.C. Councilman Harry Thomas said he is worried Washington, D.C. is “moving towards a police state.”

A French stuntman was arrested in New York Thursday after scaling the face of the New York Times building. After climbing fifty-two stories, Alain Robert released a banner that read “Global warming kills more people than 9/11 every week.”

A jury in Iowa has awarded two protesters $750,000 for being inappropriately strip-searched after demonstrating at a President Bush campaign rally in 2004. The women were arrested by the Secret Service and then strip-searched at a county jail.

And in news from here in the Twin Cities, the St. Paul Police Department is coming under criticism for arresting an antiwar organizer outside the Barack Obama campaign rally on Tuesday. Fifty-year-old Mick Kelly was detained as he was handing out leaflets promoting a September 1 march on the Republican National Convention. The American Civil Liberties Union of Minnesota said Kelly’s arrest does not bode well for the way St. Paul authorities will treat protesters during this summer’s convention. St. Paul police say they plan to apologize to Kelly and dismiss the charges.