By Hamid Shalizi and Lesley Wroughton

KABUL/WASHINGTON (Reuters) – Revived Afghan peace talks hit their first roadblock on Wednesday, a day after they were announced, as Afghan President Hamid Karzai said his government would not join U.S. talks with the Taliban and would halt negotiations with Washington on a post-2014 troop pact.

The United States and the Taliban had announced on Tuesday that officials from both sides will meet in Doha, the capital of Qatar, in coming days, in a step forward for a stuttering peace process after 12 years of bloody and costly war between U.S.-led forces and the insurgents.

But the precise timing of the negotiations was uncertain on Wednesday as U.S. officials worked furiously to keep the nascent peace talks on track.

Officials of Karzai’s government, angered by the opening of a Taliban political office in Doha on Tuesday, said the United States had violated assurances it would not give official status to the insurgents.

“As long as the peace process is not Afghan-led, the High Peace Council will not participate in the talks in Qatar,” Karzai said in a statement, referring to a body he set up in 2010 to seek a negotiated peace with the Taliban.

Karzai’s objections appeared to focus on the way the Taliban unveiled the office in Doha, which suggested the Islamic movement would use it as an official embassy or even a base for a government-in-exile.

When Taliban envoys appeared at the building on Tuesday, it was decorated with a banner referring to the Islamic Emirate of Afghanistan, the name the Taliban used during its 1996-2001 rule of the country.

Karzai said the office’s opening showed the United States had failed to honor promises made to the Afghan state about its role.

“The U.S. officials told us the office will be used to move peace talks forward, but not to give them an identity,” an Afghan official said. “The Taliban’s flag and the banner of the Islamic Emirate was something we did not expect.”

U.S. and Afghan officials said U.S. Secretary of State John Kerry spoke with Karzai on Tuesday night and again on Wednesday morning in an effort to defuse the controversy.

Kerry told the Afghan leader that “the government of Qatar has taken steps today to ensure that the political office is in compliance with the conditions established by the government of Qatar for its operations,” State Department spokeswoman Jen Psaki said.

Qatar “has had the sign with the incorrect name in front of the door taken down,” Psaki said.

U.S. Defense Secretary Chuck Hagel, answering questions after an address on Wednesday at the University of Nebraska, said the involvement of Karzai’s government would be essential for future talks.

Without specifying a time frame, Hagel added: “Any kind of a next set of meetings that would involve the United States – certainly we’re a long way from any negotiations – would require the Taliban to agree to certain things. That can’t be done, won’t be done, without President Karzai and the people of Afghanistan.”

Meanwhile, U.S.-Taliban talks that U.S. officials had suggested would take place in Doha on Thursday appeared to be delayed by at least a few days.

A senior U.S. official, speaking on condition of anonymity, said the initial meeting was likely to be held in the “next few days,” but would not be more specific.

The dispute over the Taliban office after months of behind-the-scenes diplomacy to restart the peace talks underscored what U.S. officials say is a void of trust between Karzai and the Taliban, who have been waging an insurgency to overthrow his government and oust foreign troops.

Fighting continued in the war-ravaged nation. Four U.S. soldiers were killed in a rocket attack on the heavily fortified Bagram base near Kabul late on Tuesday, international military officials said.

TROOP TALKS SUSPENDED

Karzai’s office also said it was suspending the talks on a post-2014 security pact with the United States.

Negotiations on the Bilateral Security Agreement began this year and, if completed, will set out how many U.S. bases and soldiers will remain in Afghanistan once NATO ends combat operations by December 2014.

“In view of the contradiction between acts and the statements made by the United States of America in regard to the peace process, the Afghan government suspended the negotiations,” Karzai’s office said in a statement.

“The suspension of the talks will continue until there is clarity from the United States,” the Afghan official added.

The announcement of the diplomatic moves on Tuesday had raised hopes that Karzai’s government and the Taliban might enter their first-ever direct negotiations on Afghanistan’s future, with Washington acting as a broker and Pakistan as a major outside player.

On Tuesday, Karzai had said his government would also send a team to Qatar but added the talks should quickly be moved to Afghanistan.

The Taliban has until now refused talks with Kabul, calling Karzai and his government puppets of the West. But a senior Afghan official said earlier the Taliban were now willing to consider talks with the government.

It remained to be seen how long Karzai’s boycott of the peace process – of which he is said to be deeply skeptical – will last. He has at times staked out stark positions publicly, only to reverse himself later.

A Taliban spokesman in Qatar on Wednesday confirmed the insurgency movement would attend a meeting with U.S. officials, but gave no time for the talks. The spokesman, Mohammed Naeem, told Reuters that no Afghan government officials would be at that meeting.

Underlining the importance of the process to the United States, the State Department said Kerry would travel to Doha for meetings with senior Qatari officials on Friday and Saturday. But U.S. officials said he would not meet with Taliban representatives.

SIGN OF OPTIMISM

The Taliban has said it wants a political solution that would bring about a just government and end foreign occupation of Afghanistan.

The first signs of optimism in peace efforts for many months come as the U.S.-led war effort reaches a critical juncture. The NATO command in Kabul on Tuesday handed over lead security responsibility to Afghan government forces across the country.

U.S. officials said that in the talks in Doha, the United States would stick to its insistence that the Taliban break ties with al Qaeda, end violence, and accept the Afghan constitution, including protection for women and minorities.

Asked if the Taliban would renounce al Qaeda, which Washington considers a terrorist organization, Naeem, the Taliban spokesman, said there was no clear definition of terrorism.

“Once we define what terrorism is, for the Islamic emirate of Afghanistan (the Taliban), (we) will be able to say what is acceptable and what is not acceptable,” he said.

The Taliban is expected to demand the return of former senior commanders now detained at the U.S. military prison at Guantanamo Bay, Cuba, a move opposed by many in the U.S. Congress, as well as the departure of all foreign troops.

The United States wants the return of the only known U.S. prisoner of war from the conflict, Sergeant Bowe Bergdahl, who is believed to be held by the Taliban.

(Additional reporting by Miriam Arghandiwal, Jeff Mason and Roberta Rampton in Berlin, Amena Bakr in Dubai and Phil Stewart in Washington; Writing by Dylan Welch and Warren Strobel; Editing by Robert Birsel and Peter Cooney)

By Jared Ferrie

YANGON (Reuters) – Her adoring compatriots believe democracy champion Aung San Suu Kyi is destined to become Myanmar‘s next president. But don’t bet on it.

A year ago, the Nobel Peace Prize winner was feted at home and abroad and flush from her National League for Democracy (NLD) party’s landslide wins in April 2012 by-elections, which swept her into parliament.

Even a military-drafted constitution designed to exclude her from the highest office seemed a surmountable hurdle.

Now the journey from political prisoner to president appears much less certain, even as her ambition is clearer than ever.

“I want to be president and I’m quite frank about it,” she told journalists at the World Economic Forum in the capital Naypyitaw on June 6.

But to emerge as president after a 2015 general election, Suu Kyi, 68, must overcome challenges that would daunt a less formidable political survivor.

She must convince a military-dominated parliament to amend the constitution.

Even if she can do that, and the constitution can be amended in time, she could then face a voter backlash over her position on a violent and widening rift between her nation’s Buddhists and minority Muslims.

Her rare public expressions of support for Muslims, who have borne the brunt of waves of sectarian violence, put her in a politically fraught position in the Buddhist-majority country.

Some people wonder if the violence is being exploited by conservative opponents to chip away at her support.

To win power, she would also have to fend off two former generals who covet the top spot. The first is Shwe Mann, the influential speaker of Myanmar’s lower house.

The other is the popular incumbent Thein Sein, whose quasi-civilian government took power in March 2011 after nearly half a century of military rule and launched a series of political and economic reforms. Thein Sein might seek a second term despite health concerns.

NO EASY TASK

Suu Kyi’s most immediate problem is the constitution.

It bars anyone married to a foreigner or who has children who are foreign citizens. Suu Kyi and her husband, the late British academic Michael Aris, had two children who are British.

“By all accounts it was drawn up with her in mind,” Andrew McLeod, a professor at Sydney Law School and deputy director of the Myanmar Constitutional Reform Project, said of the constitution, drawn up under the former military junta.

Any constitutional amendment would require 75 percent support in parliament – no easy task when the constitution also reserves a quarter of seats for the military.

Most of the rest of the members of parliament are members of the Union Solidarity and Development Party (USDP), created by the old junta and largely made up of retired military officers.

If passed by parliament, an amendment must win more than half the vote in a referendum. Some analysts say there just isn’t enough time to do all that before the 2015 election.

But even if she can pull off the amendments, the reality of partisan politics could threaten Suu Kyi’s presidential hopes.

Suu Kyi, the daughter of the hero of the campaign for independence from Britain, faces pressure internationally to defend the persecuted, including Muslims. But when she does, her once-unassailable popularity is threatened.

At least 237 people have been killed in violence between Myanmar’s Buddhists and Muslims over the past year and about 150,000 people have been left homeless. Most of the victims have been stateless Rohingya Muslims in the western state of Rakhine.

Groups such as the New York-based Human Rights Watch have condemned Suu Kyi for not using her moral authority to speak in defense of the Rohingya for fear of upsetting the Buddhist majority ahead of the election.

A 1982 law bars most Rohingya from citizenship and the government – and many ordinary Buddhists – consider them illegal immigrants from Bangladesh even though many can trace ancestry in Rakhine state for generations.

ALIENATING VOTERS?

When asked about her failure to strongly condemn violence against the Rohingya, Suu Kyi said at the World Economic Forum she didn’t want to “aggravate the situation” by taking sides. But she has criticized a policy in Rakhine State limiting Rohingya women to two children.

Suu Kyi has also said the government should re-examine the 1982 citizenship law. But that prompted the Daily Eleven newspaper to warn that any attempt by her to change the law would alienate voters and cost her party the next election.

For Suu Kyi the presidency would crown a remarkable life.

The military put her under house arrest in 1989 following the suppression of pro-democracy protests. The NLD swept a 1990 election by a landslide but the junta ignored the result and kept Suu Kyi under house arrest for 15 of the next 20 years.

She was released in November 2010 a week after a general election, widely regarded as rigged, swept the USDP to power. The NLD boycotted the election as undemocratic.

The European Union and United States have lifted or suspended most sanctions against Myanmar, although Washington warned they could be reimposed if it backtracked on reform.

Denying Suu Kyi a crack at the presidency could suggest to the world that Myanmar is doing just that, said McLeod. This could prompt Western companies to halt investment in one of Asia’s last frontier economies.

But Bertil Lintner, a veteran journalist and author of several books on Myanmar, said that was not likely.

“I think the foreign business community would prefer to have the USDP and the military in power,” he said. “For them, it means stability and continuity.”

(Additional reporting by Soe Zeya Tun; Editing by Andrew R.C. Marshall)

By Roberta Rampton and Stephen Brown

BERLIN (Reuters) – U.S. President Barack Obama used a speech in Berlin on Wednesday to call on Russia to revive the push for a world without nuclear arms by agreeing to target further reductions of up to one third of deployed nuclear weapons.

Speaking in Berlin where John F. Kennedy and Ronald Reagan gave rousing Cold War speeches, Obama urged Russia to help build on the “New START” treaty that requires both countries to cut stockpiles of deployed nuclear weapons to 1,550 each by 2018.

“After a comprehensive review I have determined that we can ensure the security of America and our allies, and maintain a strong and credible strategic deterrent, while reducing our deployed strategic nuclear weapons by up to one third,” he said.

“I intend to seek negotiated cuts with Russia to move beyond Cold War nuclear postures,” Obama said at the Brandenburg Gate, which once stood alongside the Berlin Wall that divided the communist east and the capitalist west.

Obama’s vision of a “world without nuclear weapons” set out in a speech in Prague in 2009, three months into his presidency, earned him the Nobel Peace Prize. But his mixed results so far have fuelled criticism that the prize may have been premature.

Experts said reducing the nuclear arsenal makes strategic and economic sense. But Mark Fitzpatrick at the International Institute for Strategic Studies said Obama faces major obstacles “including a recalcitrant Russia and a reluctant Senate”.

President Vladimir Putin, speaking in St. Petersburg minutes before Obama’s speech, made no direct comment but voiced concern about U.S. missile defenses and high-precision weapons.

Moscow sees nuclear deterrents as the safeguard of national security. It is worried about the West’s superior conventional weapons and NATO plans for a missile defense system in Europe.

“High-precision conventional weapons systems are being actively developed … States possessing such weapons strongly increase their offensive potential,” said Putin.

The chief of the Russian military’s general staff appears reluctant to negotiate a new nuclear deal and Russian foreign policy expert Fyodor Lukyanov described Obama’s desire to “go to zero globally” as totally unacceptable in Russia.

REPUBLICANS OPPOSED

Obama will also target reductions in U.S. and Russian tactical nuclear weapons in Europe and host a summit in 2016 on securing nuclear materials and preventing nuclear terrorism. He hosted such a meeting in 2010, a second was held in Seoul in 2012 and Obama will attend a third in The Hague next year.

He met the Russian president this week at the G8 summit in Northern Ireland, where they signed a new agreement on securing nuclear material left over from the Cold War, replacing the 1992 Nunn-Lugar agreement that expired on Monday.

That was “the kind of constructive, cooperative relationship that moves us out of a Cold War mindset”, Obama said afterwards.

Early initiatives of Obama’s presidency led to the New START treaty plus measures to bolster the Non-Proliferation Treaty and a new effort to secure nuclear materials worldwide, but that push has flagged in the face of political realities.

But Obama said the United States and Russia were on track to cut deployed nuclear warheads “to their lowest levels since the 1950s” and said a framework was being forged to counter what he called Iran and North Korea’s “nuclear weaponisation”.

Iran denies it is seeking nuclear weapons.

He also wants to see negotiations on a treaty to end the production of fissile materials for weapons.

Experts and advocacy groups described Obama’s initiative as “long overdue” and the reduction targets as modest.

“The one-third cuts outlined by the President are but 200-300 warheads fewer than the United States was prepared to agree to during the New START negotiations four years ago,” said Daryl Kimball of the Arms Control Association in Washington.

“The U.S. could have gone much lower and maintained deterrence,” said Jon Wolfsthal, a former special advisor to the vice president on nuclear security and non proliferation. He saw little chance of success in the face of political opposition.

“Our experience has been that nuclear arsenals – other than ours – are on the rise,” said Jim Inhofe, the top Republican on the Senate’s Armed Services Committee, pointing to Iran and North Korea.

“A country whose conventional military strength has been weakened due to budget cuts ought not to consider further nuclear force reductions while turmoil in the world is growing.”

(Additional reporting by Jeff Mason, Alexei Anishchuk, Fredrik Dahl and Timothy Heritage; Writing by Stephen Brown; Editing by Elizabeth Piper and Ralph Boulton)

By Jeff Mason and Roberta Rampton

BERLIN (Reuters) – U.S. President Barack Obama said on Wednesday Afghans must talk to each other to resolve the conflict in their country even though huge mistrust exists between the government and its Taliban foes.

Obama was speaking in Berlin a day after the United States said it would begin talks with the Taliban on Thursday to try to seek a negotiated peace to 12 years of war – a move that has deeply upset President Hamid Karzai‘s U.S.-backed government.

“We do think that ultimately we’re going to need to see Afghans talking to Afghans about how they can move forward and end the cycle of violence there so they can start actually building their country,” Obama said at a joint news conference in Berlin with German Chancellor Angela Merkel.

As a sign of displeasure with the move, Karzai has suspended talks with the United States on a troop agreement. But Obama said he welcomed Karzai’s announcement that Afghan forces would soon take responsibility for security from the U.S.-led NATO peacekeeping force.

Obama arrived in Germany from a two-day summit with Group of Eight leaders in Northern Ireland and later on Wednesday will unveil plans for a sharp reduction in nuclear warheads in a speech at the Brandenburg Gate.

At the news conference, he also addressed the issue of a U.S. spying program dubbed Prism, saying he was confident his government had struck a balance intelligence gathering and civil liberties.

The Prism program applied to specific leads on terrorism and weapons proliferation, he said.

“I came into office committed to protecting the American people but also committed to our values and our ideals and one of our highest ideals is civil liberties and privacy.”

Revelation of the program has upset Germans wary of government surveillance after the trauma of the Nazi Gestapo and East German Stasi secret police. Chancellor Merkel told Obama that government monitoring of Internet communications needed to remain within proper limits.

“I made clear that although we do see the need for gathering information, the topic of proportionality is always an important one and the free democratic order is based on people feeling safe,” Merkel said at the news conference.

On Syria, Obama said reports that the United States was ready to go to war in the country were exaggerated. He reiterated his view that President Bashar al-Assad’s government had used chemical weapons and could not regain legitimacy.

“Some of the stories that have been out there publicly have gotten a little overcranked in terms of the idea that somehow the United States is preparing to go all in and participate in another war. What we want to do is end a war,” said Obama, whose government is considering arming rebels fighting against Assad.

For her part, Merkel said Germany would not deliver weapons to the rebels, even though a European Union arms embargo on Syria has lapsed.

Obama, on his first visit to the German capital as president, will make his Brandenburg Gate speech 50 years after John F. Kennedy declared “Ich bin ein Berliner” in a defiant Cold War address.

A senior U.S. administration official said Obama would signal his desire to cut deployed atomic weapons by up to one third below the level achieved in the last “New START” treaty with Russia.

“The U.S. intent is to seek negotiated cuts with Russia so that we can continue to move beyond Cold War nuclear postures,” the official said.

The Democrat leader has forged a pragmatic – if not warm – relationship with conservative Chancellor Merkel, one of his closest European allies. Obama’s trip gives her a boost just months before a German election.

(Editing by Angus MacSwan and Ralph Boulton)

By Jeff Mason and Roberta Rampton

BERLIN (Reuters) – President Barack Obama will say on Wednesday he will pursue a new reduction in deployed nuclear weapons by up to a third below the level achieved in the “New START” treaty with Russia, a senior administration official said.

“The President will also articulate the goal of reducing U.S. and Russian tactical nuclear weapons in Europe, pledging to work with NATO allies to develop proposals that can be explored with Russia to achieve this goal,” the official said.

The “New START” treaty was signed in 2010.

Obama is due to speak in Berlin at 12:30 p.m. (6.30 a.m. EDT), a city where John F. Kennedy and Ronald Reagan gave defiant Cold War speeches.

It comes after Obama met Russian President Vladimir Putin at the G8 summit, where the two signed a new agreement on nuclear nonproliferation to replace the 1992 Nunn-Lugar agreement, which expired on Monday.

“The U.S. intent is to seek negotiated cuts with Russia so that we can continue to move beyond Cold War nuclear postures,” the official said.

Obama will also say he will host a nuclear security summit in 2016 to work on securing nuclear materials and preventing nuclear terrorism, and that he will participate in the 2014 summit in The Hague.

(Reporting by Jeff Mason and Roberta Rampton; Editing by Elizabeth Piper)

By Todd Benson

SAO PAULO (Reuters) – President Dilma Rousseff on Tuesday sought to defuse a massive protest movement sweeping Brazil, acknowledging the need for better public services and more responsive governance as demonstrations continued in some cities around the country.

Speaking the morning after more than 200,000 Brazilians marched in over a half-dozen cities, Rousseff said her government remains committed to social change and is listening attentively to the many grievances expressed at the demonstrations.

“Brazil woke up stronger today,” Rousseff said in a televised speech in Brasilia. “The size of yesterday’s demonstrations shows the energy of our democracy, the strength of the voice of the streets and the civility of our population.”

Monday’s demonstrations were the latest in a flurry of protests over the past two weeks that have fed on widespread frustration with poor public services, police violence and government corruption.

The protests, organized mostly by university students through snowballing social media campaigns, marked the first time that Brazilians have taken to the streets on such a large scale since economic volatility and a corruption scandal led to the toppling of a president in the early 1990s.

The demonstrations started as small protests in a few cities against an increase in bus and subway fares but quickly ballooned into a national movement after police fired rubber bullets at protesters in Sao Paulo last week in clashes that injured more than 100 people.

Eager to ease tensions and prevent future protests, officials in at least five cities, including important state capitals such as Porto Alegre and Recife, announced plans on Tuesday to lower bus fares.

But demonstrations continued in a few cities, including Rio de Janeiro and Sao Paulo, where thousands gathered in front of the city’s landmark cathedral and marched on its main avenue in what protesters hoped would be a final push persuading local officials to cancel the bus fare increase.

Tuesday night’s mostly peaceful demonstrations were marred by a small group of rioters who smashed the windows of Sao Paulo’s city hall and then set fire to a police security post and a TV broadcaster’s transmission van.

The Justice Ministry said in a statement it would send federal troops to the cities hosting the two-week FIFA Confederations’ Cup soccer tournament, which kicked off in Brazil on Saturday, to reinforce security.

Sao Paulo Mayor Fernando Haddad, a prominent figure in Rousseff’s left-leaning Workers’ Party, said in a meeting with leaders of the protest movement on Tuesday that he is considering a cut in bus fares but needs to find ways to compensate for the loss in revenue.

Even if Haddad does cede, it remains unclear if that would be enough to halt the protests, given that protesters have embraced so many other causes.

ROUSSEFF TURNS TO LULA

Rousseff traveled to Sao Paulo on Tuesday to meet with Haddad and former President Luiz Inacio Lula da Silva, her predecessor and political mentor. A former metalworker and union boss who led massive protests in the late 1970s, Lula remains an important power broker in Brazilian politics.

The unrest comes at a delicate time for Rousseff, whose administration is struggling to rein in high inflation and get the economy back on track after two years of sluggish growth. Polls show Rousseff remains widely popular, but her approval ratings have begun to slip in recent weeks for the first time since taking office in early 2011.

A leftist guerrilla in her youth who was jailed for conspiring against Brazil’s military dictatorship, Rousseff said the sight of so many young Brazilians marching for their rights moved her.

She also said her government sympathizes with the many grievances expressed at the demonstrations, from calls for more spending on education and healthcare to better and more affordable public transportation.

“My government hears the voices clamoring for change, my government is committed to social transformation,” Rousseff said. “Those who took to the streets yesterday sent a clear message to all of society, above all to political leaders at all levels of government.”

(Additional reporting by Pedro Fonseca and Jeferson Ribeiro; Editing by Mohammad Zargham)

By Paulo Prada

RIO DE JANEIRO (Reuters) – When more than 200,000 protesters took to the streets across Brazil on Monday night, they demanded a dizzying array of improvements – from halting the fast rise of prices to cleaning up government corruption.

If one message stood out, it was that Brazilians are no longer willing to accept the rosy outlook that politicians in Latin America’s biggest country have been painting for years.

Until recently, Brazil was one of the world’s most envied economies. An export boom, growing domestic demand and ambitious social welfare programs for much of the past decade led to average annual economic growth exceeding 4 percent and lifted more than 30 million Brazilians from poverty.

But vast economic differences still divide Brazil.

A sluggish economy, rising inflation and the poor quality of public services are prompting optimism to wane. Brazil may have made big strides, but daily life for most people remains a gritty, frustrating ordeal compared to what they imagine when considering the country’s elusive potential.

“The fantasy that the country is paradise, a marvel, is over,” wrote Eliane Cantanhede, a columnist for the Folha de S. Paulo newspaper, on Tuesday.

The implications of the message are far from clear.

No one political party is the target of the protests, which were initially sparked by an increase in bus fares but became a groundswell of other complaints. No single politician is the object of the wrath aimed at local, state and federal figures alike.

Still, it is remarkable that the protests broke out at all.

Unemployment remains near record lows. Brazil has not seen public turmoil on this scale since far worse economic problems and a corruption scandal combined to topple a president in the early 1990s. The generation driving the protests, mostly young first-time activists rallying through social media, has long been derided for its political apathy.

GETTING AHEAD OF THE MESSAGE

With more protests planned, officials are trying to get ahead of the message, which demonstrators know is resonating all the more as the country puts on a series of high-profile events in the coming years.

In addition to an ongoing international soccer tournament and a forthcoming visit by Pope Francis, Brazil will host the 2014 World Cup and the 2016 Summer Olympics.

Though the country normally shines during big celebrations, particularly when it comes to soccer, the more than $ 3 billion cost of World Cup stadiums has given demonstrators a price tag to latch onto as they criticize a lack of investment in roads, health clinics and security, a growing concern because of a surge in violent crimes in many cities.

President Dilma Rousseff, who just last week denounced growing criticism of Brazil’s economic outlook as “terrorism,” on Tuesday praised the protesters for being mostly nonviolent and vowed to heed their concerns.

“My government hears the voices clamoring for change,” she said in a speech in Brasilia, where demonstrators danced on the roof of the national Congress building on Monday.

The success of the past decade, she added, “created citizens who want more and deserve more,” conceding the need for better hospitals, schools, transportation and the many other demands made by the demonstrators.

Delivering more will be hard, though, at a time of economic uncertainty and in a noisy, unwieldy democracy where Rousseff’s own congressional allies often torpedo her simplest initiatives.

Her rivals are already jockeying to leverage the dissatisfaction. Speaking to reporters on Tuesday, Aecio Neves, a senator and the expected candidate for the opposition Social Democratic party in next year’s presidential race, said the protests “make clear that the flush Brazil celebrated in the official propaganda … does not exist.”

Now in her third year in office, and planning an expected bid for re-election, Rousseff still enjoys strong support, especially among lower-income voters. Most working-class Brazilians still credit the ruling Workers’ Party and Rousseff’s predecessor, Luiz Inacio Lula da Silva, for hard-won gains.

For that reason, however, Rousseff also has much to lose.

The leftist party for years has successfully contrasted the boom of the Lula administration with the economic volatility before he took office. Lula himself has accused the opposition of having a “short memory” and pointed out that they, who now criticize annual inflation of 6.5 percent, were in power when prices were rising at exponentially higher rates.

ECONOMIC PESSIMISM

But the pitch is a hard sell at a time with the economy is flagging. After growth of 7.5 percent as recently as in 2010, Brazil last year grew by less than 1 percent and appears on track for another disappointing year in 2013.

“Until recently, the promise of continuity was a good thing,” said Rafael Cortez, a political analyst at Tendencias, a consultancy in Sao Paulo. “Now there will be more of a need to present real and new solutions for a whole new set of problems.”

The changing mood mirrors a sentiment already displayed by foreign investors, whose enthusiasm for Brazil’s prospects fueled a tide of investment during the boom.

They have increasingly lost patience with policies that they believe seek to micromanage the economy instead of tackling longstanding problems, including high taxes, bad infrastructure, red tape and regulatory uncertainty.

Ratings agency Standard & Poor’s has said it could downgrade Brazilian debt. The real, Brazil’s currency, lags behind those of other emerging markets and has weakened by more than 10 percent from a March peak against the dollar.

“There are a whole series of structural issues that are going to limit Brazil’s ability to go back to any sort of boom anytime soon,” said Neil Shearing, chief emerging markets economist at Capital Economics in London.

(Additional reporting by Maria Carolina Marcello; Editing by Todd Benson and Mohammad Zargham)

By Jonathon Burch and Daren Butler

ANKARA/ISTANBUL (Reuters) – Turkey‘s deputy prime minister said on Monday the armed forces could be called up if needed to help quell popular protests that have swept Turkish cities in the last two weeks, the first time the possibility of a military role has been raised.

Bulent Arinc made the remarks in Ankara, where 1,000 striking trade union workers faced off briefly against police backed by several water cannon, before police retreated and the crowd left.

In Istanbul, the cradle of protests that have presented Prime Minister Tayyip Erdogan with the greatest public challenge to his 10-year leadership, several hundred union members also marched in sympathy with anti-government demonstrations.

They were prevented from entering Taksim Square, the focal point of the unrest, but after workers had moved off, between 200 and 300 mainly young protesters, some of them throwing stones from slingshots, fought with police.

The violence was minor compared with the weekend, which saw some of the fiercest clashes so far when police fired teargas and water cannon to clear thousands of people from the square.

“Our police, our security forces are doing their jobs. If it’s not enough, then the gendarmes will do their jobs. If that’s not enough … we could even use elements of the Turkish Armed Forces,” Arinc told Turkey’s state-run TRT television.

Any use of the army would be a dramatic step in Turkey, where Erdogan has pushed through democratic reforms including taming a military that toppled four governments in four decades.

There were also clashes on Monday in the city of Eskisehir, around 200 km (120 miles) southeast of Istanbul, where police used teargas and water cannon to disperse crowds and cleared away hundreds of tents, the Dogan news agency reported.

Monday’s union marches were peaceful and small, and, while it was unclear how many of the 850,000 public workers answered union calls to strike, there were no signs of major disruption.

What began late in May as a protest by environmentalists upset at government plans to build on a public park adjoining Taksim has grown into a movement against Erdogan, who opponents say is overbearing and meddles in their personal lives.

OPPOSITION SUPPORT RISES

The unrest has yet to seriously threaten Erdogan’s position.

A new poll showed that 35.3 percent of people would vote for his AK Party were an election to be held straight away, compared with 36.3 percent in April.

In the first survey published since protests started, opposition groups also gained in popularity, most notably the CHP whose support jumped to 22.7 percent in June from 15.3 percent two months ago.

European Union enlargement commissioner Stefan Fuele expressed concern about developments in Turkey, whose negotiations to join the bloc have stalled, partly over worries about its record on human rights and freedom of speech.

Germany has long harbored doubts about admitting Turkey to the EU. Chancellor Angela Merkel said she was “appalled, like many others” at Turkey’s tough response to the protests.

“I would like to see those who … have a different opinion and a different idea of society having some space in a Turkey that moves into the 21st century,” she told the German broadcaster RTL.

“What’s happening in Turkey at the moment is not in line with our idea of the freedom to demonstrate or freedom of speech.”

Erdogan sought to seize back the initiative over the weekend by holding huge rallies in Istanbul and Ankara. Hundreds of thousands turned up to see a leader who has won three successive elections, and whom they considered unfairly under siege.

The blunt-talking 59-year-old said the rallies were to kick off campaigning for local elections next year and not related to the unrest, but they were widely seen as a show of strength.

A defiant Erdogan told a sea of flag-waving supporters in Istanbul on Sunday that the disturbances had been manipulated by “terrorists” and dismissed suggestions that he was behaving like a dictator, a constant refrain from protesters on the streets.

Just a few kilometers away, police fought running battles with protesters in clashes that lasted well into the evening.

The stark contrast between events in different parts of Istanbul highlighted how the protests have polarized Turkey, its conservative religious heartland largely backing Erdogan while Western-facing liberals swell the ranks of the protesters.

(Additional reporting by Seda Sezer, Can Sezer, Asli Kandemir in Istanbul, Jonathon Burch and Humeyra Pamuk in Ankara; Writing by Mike Collett-White; Editing by Michael Roddy)

By Kate Holton and Maria Golovnina

ENNISKILLEN, Northern Ireland (Reuters) – Russian President Vladimir Putin faced growing isolation on the second day of a G8 summit on Tuesday as world leaders lined up to pressure him into toning down his support for Syrian President Bashar al-Assad.

Syria was set to dominate the last day of the meeting in a secluded, heavily guarded golf resort in Northern Ireland, with Putin standing firm on his position that forcing out Assad would be disastrous for Syria and the region.

Following a frosty encounter between the Kremlin chief and U.S. President Barack Obama on Monday, G8 leaders sought to use the last day of talks to find common ground on a transition of power in Syria despite Russia‘s stance.

If there is no consensus, it is possible a final G8 statement might be released without Russia’s input and in the name of the G7 rather than the G8, officials indicated.

Such a scenario would further damage Russia’s position on the world stage. But is something Kremlin-controlled media would probably seize upon to portray Putin as standing up to a bullying and imperialistic West, a familiar charge that still plays well for him at home.

Putin, who appeared tense on the first day, has faced a barrage of criticism from Western leaders for supporting Assad, who is trying to crush a two-year-old uprising in which at least 93,000 people have been killed.

“It’s a clarifying moment to see what kind of commitments the Russians are willing to make in a leading world forum,” a British official said before the leaders met for dinner.

Russia and the United States have agreed to bring together warring sides for a peace conference but their goals are different. Obama wants Assad out while Putin believes it is too dangerous to remove him at a time when there is no clear transition plan.

It is unclear what Obama could offer Putin as an incentive to change his mind on Syria as there is little he seems to be looking for at the summit.

But it appeared some form of consensus was still possible. An official close to one delegation said the talks over dinner on Monday had gone better than expected and that a joint communique with Russia on Syria now seemed more likely.

A person with direct knowledge of the talks said on condition of anonymity that Putin was constructive and willing to reach consensus during late Monday talks and no hard words were exchanged between him and Obama.

However, Russian Foreign Minister Sergei Lavrov said on Tuesday the Syrian opposition must not set preconditions for attending the peace conference proposed by Moscow and Washington, suggesting sticking points remained.

Renewed diplomatic tension over Syria stems from last week’s decision by the United States to step up military aid to the rebels, including automatic weapons, light mortars and rocket-propelled grenades.

For Russia, Syria is not just a strategic issue. It is one of its last bastions of support in the Middle East and has cultural ties that go back decades. The Russian navy also has a vital base at the Mediterranean port city of Tartus.

TAX AND TERROR

British Prime Minister David Cameron, who is chairing the summit, will also move the conversation on to taxation and how global powers can help close international loopholes.

Cameron has been stung by revelations that the likes of Google and Starbucks have sharply cut their corporate tax bills in Britain using legal loopholes.

Last week he sought to turn up the pressure on other rich economies by pressing Britain’s overseas tax havens into a transparency deal and announcing new disclosure rules for British firms.

Worries about global economic weakness and Japan’s sweeping stimulus policies also dominated the meeting. Japanese officials welcomed the G8′s stance on Prime Minister Shinzo Abe’s plan as a vote of confidence in the government’s strategy to revive a lackluster economy.

(Additional reporting by Andrew Osborn, William Schomberg, Guy Faulconbridge, Roberta Rampton, Alexei Anishchuk and Jeff Mason in Enniskillen; Writing by Kate Holton and Maria Golovnina; Editing by Andrew Osborn and)

WASHINGTON (Reuters) – The Pentagon said on Monday it will spend $ 572 million to buy 30 Russian-built military helicopters that will be used by Afghan security forces.

The Mi-17 helicopters will be used by Afghanistan’s National Security Forces Special Mission Wing, which supports counter-terrorism, counter-narcotics and special operations missions.

The contract with Rosoboronexport, the Russian arms company, covers spare parts, test equipment and engineering support. The Pentagon said the work would be performed in Russia. It is expected to be completed by the end of 2014.

A year ago, the Defense Department purchased a dozen of the Mi-17 aircraft from Rosoboronexport for $ 217.7 million, as part of a larger contract originating in 2011.

(Reporting by Charles Abbott; Editing by Toni Reinhold)