Obama steps up pressure on Iran over 'plot'

Barack Obama, the US president, has said there is no doubt members of the Iranian government knew of an alleged plot to kill the Saudi ambassador to Washington and that they must be held accountable for the "reckless behaviour".Obama said on Thursday that one of the suspects was an individual of Iranian-American descent and had "direct links, was paid by, and was directed by individuals in the Iranian government"."Our first step is to make sure that we prosecute those individuals who have been named in the indictment," he said.

But the US Treasury said more action, if it had international support, could further isolate the institution.

The state department has said that the US has had "direct contact" with the Iranian government about the allegations.

"We have had direct contact with Iran on this issue," Victoria Nuland, the state department spokeswoman, told a news briefing on Thursday, declining to give further details.

"We are not prepared at the moment to go any further on the question of who spoke to whom, and where, but just to confirm that we have had direct contact with Iran."

'Spreading Iranophobia'

Ayatollah Ali Khamenei, Iran's supreme leader, said on Thursday that the West was trying but failing to instill "Iranophobia", in remarks that appeared to be prompted by, but did not directly address, the US allegations.

Saudi Arabia said it was weighing its response to the alleged plot that has increased tensions between OPEC's two top oil producers.

"We hold them [Iran] accountable for any action they take against us," Prince Saud al-Faisal, the Saudi foreign minister, said in Vienna.

"Any action they take against us will have a measured response from Saudi Arabia."

The White House maintains Iranian plotters hired a would-be assassin in Mexico.

Two men, including one who the US says was a member of Iran's Quds Force special foreign actions unit, were charged in a New York federal court on Wednesday with conspiring to kill the Saudi ambassador to the US, Abel al-Jubeir, at a Washington restaurant.

american economic recovery 'close to faltering'

The chairman of the US Federal Reserve has urged congress against implementing spending cuts that could cause more financial turmoil, saying the country's economic recovery is "close to faltering".Ben Bernanke made the appeal in testimony to US legislators in Washington on Tuesday, painting a bleak picture of the economic outlook for the US and the world.Speaking to members of a joint economic committee, Bernanke said recent indicators point to "the likelihood of more sluggish job growth in the period ahead".He called for a credible plan to cut long-term deficits, but said legislators should "avoid fiscal actions that could impede the ongoing economic recovery".

"There is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy," he said.

Poor job growth

Bernanke added that the economy was growing more slowly than the Federal Reserve, the US central bank, had expected, with poor job growth marking the biggest factor depressing consumer confidence.

"We need to make sure that the recovery continues and doesn't drop back and that the unemployment rate continues to fall downward."

But he made clear that the Federal Reserve stood ready to ease monetary conditions further following the launch of a new stimulus measure in September.

Trimming the deficit

A committee of US legislators is currently considering measures to trim the US federal deficit. But Republicans and Democrats appear far from an agreement, particularly on the need for higher taxes ahead of the upcoming 2012 presidential election.

Bernanke's testimony was the firmest indication yet that the Federal Reserve may take further steps to prevent a weakening US economy from stumbling back into recession. Financial analysts increasingly have warned that economic contraction is a considerable risk.

His comments also came amid heightened concern that Europe's debt crisis could spill over to the continent's banks and beyond.

"It is difficult to judge how much these financial strains have affected US economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth," Bernanke said.