South Korean President Lee Myung-bak says that his nation will sever nearly all trade ties with North Korea to punish the North for what he called the deliberate sinking of a South Korean warship two months ago. South Korea also plans to block North Korean merchant ships from using South Korean sea lanes. US diplomats said the situation on the Korean peninsula is one of the gravest threats to Northeast Asian security “in decades.” President Barack Obama has directed the US military to coordinate with South Korea to “ensure readiness” and deter future aggression from North Korea. South Korean Defense Minister Kim Tae-young outlined plans for future US-South Korean military exercises.

Kim Tae-young: “We are planning on holding a South Korea-US combined anti-submarine training exercise in the West Sea in the near future. It will serve as an opportunity to focus on the enhancement of our defensive tactics against underwater attacks by North Korea and our surface firing capabilities.”

Federal prosecutors have decided not to bring charges against any executives from AIG for their roles leading up to the company’s collapse in 2008. The Justice Department had been considering charging Joseph Cassano and other top AIG officers. Cassano was the chief executive of AIG’s Financial Products unit, which made huge bets on risky mortgage securities.

In other financial news, a total of 775 banks, or one-tenth of all US banks, are now on the Federal Deposit Insurance Corp.’s list of “problem” institutions. The number of banks in trouble has jumped by 500 since 2008. Regulators have closed seventy-three banks so far this year.

A federal appeals court has ruled that prisoners held in an American-run jail in Afghanistan cannot challenge their confinement in federal court. The ruling impacts hundreds of prisoners held at Bagram Air Base, including men who were captured in other countries and then transported to Afghanistan. Tina Foster, an attorney for the detainees, criticized the decision. She said, “This is an extremely disturbing precedent that allows the US government to kidnap someone from any part of the world and never have to justify it, ever.”

The British oil company BP has rejected demands from the Obama administration to use less-toxic chemical dispersants to break up the massive spill in the Gulf of Mexico. Over the past month, BP has used about 715,000 gallons of the chemical Corexit, made by the Illinois-based company Nalco. The chemical is banned in Britain, and scientists have questioned its safety as well as effectiveness compared to other dispersants. Last week the Environmental Protection Agency ordered BP to switch chemical, but BP is now fighting that order. The dispute between the EPA and BP highlights the power the oil company has been granted in controlling the cleanup of the spill. Coast Guard Commandant Adm. Thad Allen was questioned on CNN about BP.

Candy Crowley: “And they say, why is BP in control now? They don’t trust BP, so why is BP in control of this?”

Thad Allen: “I don’t think it’s an issue of control. What makes this an unprecedented, anomalous event is access to the discharge site is controlled by the technology that was used for the drilling, which is owned by the private sector. They have the eyes and ears that are down there. They are necessarily the modality by which this is going to get solved. Our responsibility is to conduct proper oversight to make sure they do that.”

On Sunday, Interior Secretary Ken Salazar visited the Houston command center where scientists for BP and the government have been working to plug the blown-out well.

Ken Salazar: “I am angry and I am frustrated that BP has been unable to stop this well from leaking and to stop this pollution from spreading. We are thirty-three days into this effort, and deadline after deadline has been missed.”

President Obama has created a bipartisan commission to investigate the oil spill disaster. Heading the probe will be Democrat Bob Graham, a former US senator, and Florida governor and Republican William Reilly, a former Environmental Protection Agency administrator.

President Obama: “If the laws on our books are inadequate to prevent such an oil spill, or if we didn’t enforce those laws, I want to know it. I want to know what worked and what didn’t work in our response to the disaster and where oversight of the oil and gas industry broke down. We know, for example, that a cozy relationship between oil and gas companies and the agencies that regulate them has long been a source of concern.”

The New York Times reports that in the days since President Obama announced a moratorium on permits for drilling new offshore oil wells, at least seven new permits for various types of drilling and five environmental waivers have been granted.

While the Obama administration’s handling of the oil spill faces increasing scrutiny, Kentucky’s Republican Senate nominee Rand Paul weighed in on the oil spill on Friday. During an appearance on ABC’s Good Morning America, Rand Paul accused President Obama of being un-American for criticizing BP’s actions in the Gulf.

Rand Paul: “What I don’t like from the President’s administration is this sort of, you know, I’ll put my boot heel on the throat of BP. I think that sounds really un-American in his criticism of business. I’ve heard nothing from BP about not paying for the spill. And I think it’s part of this sort of blame-game society in the sense that it’s always got to be someone’s fault. And instead of the fact that maybe sometimes accidents happen, I mean, we had a mining accident that was very tragic, and I’ve met a lot of these miners and their families. They’re very brave people to do a dangerous job. But then we come in, and it’s always someone’s fault. Maybe sometimes accidents happen.”

Rand Paul’s comment came just days after he criticized the Civil Rights Act of 1964 for banning segregation in private businesses. Shortly after the Good Morning America interview, Rand Paul canceled his scheduled appearance on NBC’s Meet the Press. Politico reports Karl Rove, the former top adviser to George W. Bush, called Paul’s campaign manager and said the candidate was hurting himself with all the media exposure. According to Meet the Press, only two other people have canceled appearances on the program: Louis Farrakhan and Saudi Prince Bandar bin Sultan.

In Kentucky, Republican leaders gathered on Saturday for the first time since Tuesday’s primary. Senate Minority Leader Mitch McConnell of Kentucky urged all Republicans to back Rand Paul in the general election.

Sen. Mitch McConnell: “The only way you make public policy in this country is to win general elections. And that’s why we’re here today, to send a clear and unmistakable message to every Republican in Kentucky that we’re going to elect Dr. Rand Paul to the United States Senate.”

The United Nations peacekeeping mission in Haiti has launched an investigation into reports that Haitian police shot dead at least twelve unarmed prisoners soon after the January earthquake. The killings took place in an overcrowded jail in Les Cayes, Haiti’s third biggest city.

In Detroit, nearly 1,000 mourners gathered Saturday for the funeral of seven-year-old Aiyana Jones, who was shot dead by police in her own home. The Rev. Al Sharpton traveled to Detroit to deliver the eulogy.

The two men accused of shooting dead a pair of police officers in Arkansas last week have been tied to the far-right-wing Patriot movement. Police say Jerry Ralph Kane and his sixteen-year-old son Joseph shot dead the officers on Thursday. The two Kanes were later killed in a firefight with other law enforcement officials. Authorities say the elder Kane had been involved since at least 2002 in the Patriot or sovereign citizen movement that believe the government has no legitimate authority. The car Jerry Kane was driving was registered to property that is owned by an aging white supremacist.

The Republican-dominated Texas State Board of Education has approved new controversial curriculum standards for US history. Before the final vote, the board’s five Democrats criticized the Republican majority for injecting their political and religious views into the standards and giving short shrift to important Latino, African American and Asian figures in history.

The mothers of the three American hikers jailed in Tehran returned to the United States Saturday after seeing their imprisoned children for the first time in nine months. Shane Bauer, Sarah Shourd and Josh Fattal were detained in July after straying across Iran’s border during a hiking trip in northern Iraq. Their mothers arrived in Tehran last week after the Iranian government OKed their visas. Cindy Hickey, the mother of Shane Bauer, said they were hoping to return home with their children.

Cindy Hickey: “We will forever savor the precious moments we were able to spend with our children after such a long and anxious months, many months, of separation. But we are also very disappointed that when we went to the airport to return from Iran, Shane, Sarah and Josh had to go back to Evin Prison. The pain we felt at having to leave Tehran without our children is almost more than we can bear. Our greatest hope was to bring our children home with us where they belong.”

Nora Shourd, the mother of Sarah, repeated her call for the Iranian government to release the three hikers.

Nora Shourd: “Shane, Sarah and Josh have done nothing to deserve their continued detention, and the lack of movement in their case troubles us greatly. Our children, our families are suffering. The consequences of tensions and political considerations is beyond any of our control. We hope that this will soon change, now that the Iranian authorities know us for who we are — loving mothers who know the pain and share the heartache of any mother anywhere who is separated from her child in a prison in a foreign land.”

The Guardian newspaper has published secret South African documents revealing that Israel offered to sell nuclear warheads to the South Africa apartheid regime. In 1975, South Africa’s defense minister, P.W. Botha, asked Israel’s then-Defense Minister Shimon Peres for nuclear warheads. Peres, who is now Israel’s president, responded by offering warheads “in three sizes.” The South African documents show that the apartheid-era military wanted the nuclear missiles as a deterrent and for potential strikes against neighboring African states. South Africa did not go ahead with the nuclear deal in part because of the cost. The documents were first uncovered by Sasha Polakow-Suransky, author of the new book The Unspoken Alliance: Israel’s Secret Relationship with Apartheid South Africa. The documents provide new evidence that Israel has nuclear weapons despite its policy of “ambiguity” in neither confirming nor denying their existence.

Israeli nuclear whistleblower Mordechai Vanunu has been sent back to jail for violating the terms of his parole. Vanunu was released from prison in 2004 after serving an eighteen-year sentence for revealing details of Israel’s nuclear weapons program.