Off the Wires

President-elect Donald Trump announced Exxon Mobil Corp Chief Executive Officer Rex Tillerson as his choice for U.S. secretary of state on Tuesday, despite concerns from lawmakers in both political parties over the oilman's ties to Russia.

Tillerson's experience in diplomacy stems from making deals with foreign countries for Exxon, the world's largest energy company, and Trump praised him as a successful international dealmaker who leads a global operation.

"He will be a forceful and clear-eyed advocate for America's vital national interests and help reverse years of misguided foreign policies and actions that have weakened America's security and standing in the world," Trump said in a statement.

Tillerson has been chief executive of Exxon Mobil since 2006 and, like Trump, has never held public office. Tillerson said in a statement that he shared the president-elect's "vision for restoring the credibility of the United States' foreign relations and advancing our country's national security."

Some lawmakers raised concerns about Tillerson's relationship with Moscow. His appointment requires Senate confirmation.

Senator John McCain, a leading Republican foreign policy voice and his party's 2008 nominee for president, told Reuters: "I have concerns. It's very well known that he has a very close relationship with (Russian President) Vladimir Putin."

Trump was poised to add another figure with close ties to the oil industry to his Cabinet.

A source close to the transition said Trump had chosen former Texas Governor Rick Perry, whose state is a leading oil producer, as his nominee for energy secretary, with an announcement expected soon. Perry met Trump on Monday at Trump Tower in New York.

Trump picked Tillerson, 64, after the Texan was backed by several Republican establishment figures, including former Secretary of State James Baker, former Secretary of State Condoleezza Rice and former Defense Secretary Robert Gates, a senior transition official said.

Rice and Gates, who have worked for Exxon as consultants, both issued statements of support on Tuesday.

Their backing is seen as crucial to helping Tillerson get past a possibly contentious Senate confirmation battle likely to focus on his relationship with Putin.

Senate Foreign Relations Committee Chairman Bob Corker said he would hold a confirmation hearing in early January. He called Tillerson "a very impressive individual" with "an extraordinary working knowledge of the world."

Exxon Mobil's board will meet soon regarding its transition, CNBC reported citing a company statement.

RUSSIAN TIES

In 2013, Putin bestowed on Tillerson a Russian state honor, the Order of Friendship, citing his work "strengthening cooperation in the energy sector."

There also has been controversy over alleged Russian interference in the Nov. 8 presidential election, with the CIA concluding Moscow had intervened to help Trump defeat Democrat Hillary Clinton.

Tillerson's "cozy ties to Vladimir Putin and Russia would represent an untenable conflict at the State Department," Representative Eliot Engel, the ranking Democrat on the House of Representatives Committee on Foreign Affairs, said in a statement.

Republican Senator Marco Rubio said in a statement he also had serious concerns.

"The next secretary of state must be someone who views the world with moral clarity, is free of potential conflicts of interest, has a clear sense of America's interests, and will be a forceful advocate for America's foreign policy goals to the president, within the administration, and on the world stage," Rubio said.

Trump is confident that Tillerson can get past questions about his ties to Russia, the transition official said.

"His relationships with leaders all over the world are second to none," Trump's statement said.

There also are concerns among lawmakers about former U.N. Ambassador John Bolton, who has been mentioned as a possible No. 2 State Department official and who has voiced hawkish views on Iraq and Iran, as well as on China and Taiwan.

Republicans and Democrats said they would ask Tillerson, who has met Putin several times, about his contacts with Russia. He won fresh support from Moscow on Tuesday, with a Kremlin foreign policy aide saying Tillerson has good relations not only with Putin but with many other Russian officials as well.

The U.S. business community welcomed Trump's choice of Tillerson, with GE Chairman and CEO Jeffrey Immelt calling him "a great negotiator."

"We are pleased that Rex will bring a business perspective to the State Department," the National Association of Manufacturers added.

Human rights, environmental and other advocacy groups decried the choice, questioning Exxon deals with various governments and environmental impact under Tillerson.

"This sets a very alarming path for the new administration," Global Witness said in a statement.

BUSINESS INTERESTS

While busily filling out his Cabinet, Trump is seeking to answer questions about how he will separate himself from his far-flung business empire before taking office on Jan. 20.

He had planned a news conference on Thursday to lay out the details but delayed it until Tuesday due to what aides said was the crush of picking people to serve in his administration.

In a series of late-night tweets on Monday, Trump said he would be leaving his business before his Jan. 20 inauguration so he can focus full-time on the presidency and that he would leave his two sons, Donald Trump Jr and Eric Trump, to manage it.

He did not mention his daughter Ivanka, who has been a central player in his business affairs, as well as his campaign, and who is said to be considering a move to Washington to help her father.

"No new deals will be done during my term(s) in office," Trump said, adding that he would hold a news conference "in the near future."

Director of U.S. National Intelligence James Clapper said on Thursday that he submitted his letter of resignation but would stay until the end of the Obama administration.

"I submitted my letter of resignation last night, which felt pretty good. I've got 64 days left," Clapper said during a U.S. congressional intelligence committee hearing.

Clapper, 75, has served as the U.S. top spy since 2010 and has said for months he intended to step down when President Barack Obama leaves office in January.
Clapper's service in government spans six decades, beginning in the 1960s as a U.S. Air Force officer.

Clapper "always exhibited sober judgment and put the fate of the nation first," said Representative Adam Schiff, the top Democrat on the House Intelligence Committee.

Jihadist fighters unleashed a deluge of bombs and gunfire Friday on Iraqi forces punching into the streets of Mosul for the first time, forcing some units into a partial pullback.

Some armoured vehicles from the elite Counter-Terrorism Service (CTS) returned from the streets of Al-Karamah a few hours after moving in and encountering fierce resistance from the Islamic State group, an AFP correspondent reported.

"We weren't expecting such resistance. They had blocked all the roads," said one officer, as top brass considered whether or not to attempt a fresh foray.

"There are large numbers of jihadists... It was preferable to pull back and devise a new plan," the CTS officer said, speaking on condition of anonymity.

Some CTS forces remained inside the city, however, and there were at least five regiments involved in the operation launched Friday, making it hard to gauge the extent of the pullback.

After daybreak, bulldozers and tanks backed by air strikes pushed into the streets of Mosul from the east for the first time since Iraqi forces launched a broad offensive to retake the city on October 17.

The CTS's "Mosul Regiment", the last to leave the city when the jihadists overran it in June 2014, immediately faced "tough resistance", commander Muntadhar Salem told AFP.

The gunfire was almost uninterrupted for hours and reports from the front crackling into CTS radios said IS had set up barriers and laid bombs all along the streets.

Air strikes by the US-led coalition had intensified over the past two days, despite the smoke from burning tyres set alight by IS in a bid to provide cover.

They ebbed when the ground push got under way, however.

- Back from the dead -

The resistance came despite widespread reports in recent weeks that top IS commanders had left the eastern side of the city and crossed the Tigris river to regroup on its west bank.

An estimated 3,000 to 5,000 IS fighters are scattered across the sprawling city, Iraq's second largest, where a million-plus civilians are believed to be trapped.

There has been an exodus of civilians from outlying villages this week, but few managed to find a safe way out of Mosul itself.

Umm Ali could not hold back tears when she spoke of her constant fear the jihadists would take her young sons.

"They kept coming to our home. Sometimes they'd knock on the door at 10:00 pm," she said. "They took our car, saying: 'This is the land of the caliphate, it belongs to us'."

Civilians seeking refuge in Kurdish-controlled areas east of the city recounted tales of IS brutality.

"We're coming from the world of the dead back to the world of the living," said Raed Ali, 40, who fled the nearby village of Bazwaya.

In a rare audio message released on Thursday, IS leader Abu Bakr al-Baghdadi urged his fighters to defend the city where he proclaimed the "caliphate" in June 2014.

The public announcement he made from the pulpit of Mosul's Great Mosque of al-Nuri heralded the most ambitious and brutal experiment in modern jihad, a period marked by mass murder, attempted genocide and slavery.

But the "caliphate" has been shrinking steadily since mid-2015, and the loss of Mosul would leave Raqa, in Syria, as the group's only major urban stronghold.

- Caliphate 'on defensive' -

IS has been increasingly pragmatic in its tactics this year, falling back in the face of superior force even in emblematic bastions such as Fallujah in Iraq and Dabiq in Syria.

However Baghdadi, in his first message of 2016, called on IS fighters still in Mosul to make a stand.

"Holding your ground with honour is a thousand times easier than retreating in shame," he said.

Aymenn al-Tamimi, a jihadism expert at the Middle East Forum, said the tone of the half-hour speech was "very much of a caliphate on the defensive".

Iraqi forces and their Iranian and US-led coalition allies see the battle for Mosul as capping a two-year recovery from the rout that saw IS sweep through the Sunni Arab heartland north and west of Baghdad.

As they regained ground and the caliphate declined, defections from IS increased, providing intelligence that enabled coalition aircraft to take out key field commanders.

The jihadist group has carried out a series of diversionary attacks elsewhere in Iraq since the Mosul battle began.

On Friday, jihadists infiltrated Sharqat, an area south of Mosul that was recaptured over a month ago, sparking clashes that killed seven Iraqi security personnel, police said.

With colder weather setting in, concern has grown for Mosul's civilian population.

Aid groups say up to a million people could seek to flee as soon as they can, but shelter is available for only a fraction of that number.

The United Nations says it has received credible reports of IS forcing tens of thousands of civilians into Mosul from outlying areas for use as "human shields".

Although the sale of marijuana is a federal crime, the number of U.S. banks working with pot businesses, now sanctioned in many states, is growing, up 45 percent in the last year alone.

Still, marijuana merchants say there are not nearly enough banks willing to take their cash. So many dispensaries resort to stashing cash in storage units, back offices and armored vans.

Proponents believe the Nov. 8 election could tip the balance in favor of liberalizing federal marijuana laws, a move seen as key to getting risk-averse banks off the sidelines.

Measures on ballots in California, Florida and seven other states would bring to 34 the number of states sanctioning pot for medical or recreational use, or both. That could push annual sales, by one estimate, to $23 billion.

The prospect for a market of such scale is adding urgency to calls for a national approach to marijuana that expands banking options. Law enforcement and Federal Reserve officials have expressed concern about the fraud and crime associated with un-bankable cash.

Nearly 600 dispensary robberies have been reported in Denver since recreational pot was legalized in Colorado three years ago.

"There's not a single human being who thinks there is any benefit at all in forcing marijuana business to be conducted on an all-cash basis," said Rep. Earl Blumenauer, a Democrat from Oregon who has called for the decriminalization of marijuana since coming to Congress in 1996.

MONEY LAUNDERING

The U.S. Justice Department said in 2014 it would not prosecute banks for serving state-sanctioned marijuana businesses. At the same time, the Treasury Department requires banks to report suspected drug crimes.

At last count, 301 banks were serving marijuana businesses, according to the Treasury Department. Many more have avoided the sector out of fear that making the wrong call could put them at risk, said Robert Rowe, a vice president at the American Bankers Association.

The National Cannabis Association is pressing Congress for a law that would hold banks harmless for handling pot cash, said Michael Correia, a lobbyist for the trade group. If California legalizes recreational use next week, the nation's biggest Congressional delegation will have a big stake in the issue.

In lieu of federal action, some states have tried their own fixes. Colorado created a credit union system for state-sanctioned marijuana businesses. But it fell apart when the Kansas City Federal Reserve denied a Colorado pot credit union access to the national payments system, which distributes currency and clears checks and electronic payments.

California has no such plans, said Tom Dresslar, spokesman for the state’s Department of Business Oversight.

“This was a problem created by federal law,” Dresslar said, “and it needs a federal solution.”

In northern California, where growers serve state-sanctioned medical dispensaries as well as the black market, the Community Credit Union of Southern Humboldt stopped opening pot business accounts because of the red tape and uncertainty, said senior vice president Janet Sanchez.

“We’re not being asked to go over to the gun dealer and ask them if they’re making appropriate background checks,” she said.

Dispensary operators unable to find willing banks tell tales of subterfuge, recordkeeping nightmares and armies of security guards. Many open bank accounts and submit credit card charges in ways that obscure their true enterprise, such as “spa services.”

Susana de la Rionda has run a Los Angeles medical marijuana dispensary for 12 years and has had to find a new bank about once a year and submit to tax audits twice as often.

“I feel like a gangster,” she said.

Denver Relief dispensary founder Ean Seeb said operators always are trying workarounds to get cash into banks, including washing bills in fabric softener to hide the odor of pot. For a time, he said, one automated teller machine near a Denver mall drew lines every night of marijuana merchants, each depositing the maximum $500 in cash.

WEEDING OUT RISK

Partner Colorado Credit Union began working with state-sanctioned dispensaries two years ago and has developed elaborate protocols to minimize risk, including an initial vetting that can take three weeks. It uses armored trucks to take cash deposits directly from dispensaries to the Denver branch of the Federal Reserve Bank.

When the credit union spots a red flag, Chief Executive Sundie Seefried dispatches employees to pay the dispensary a visit, and she has closed two accounts for compliance problems. Seefried encourages operators to visit by keeping fine cigars in her office, and she stays in touch with regulators.

“Our program is designed with eyes on the business, eyes on the owner, eyes on the money,” she said.

With 95 dispensary members, Seefried said the credit union is at capacity, and she hopes more bankers will get involved. She fields calls for advice, speaks to industry groups and, earlier this year, shared what she’s learned in a book.

Despite the safeguards, Seefried said she takes nothing for granted. Every few months, she said she drills her staff to make sure they know what to do in the event of her arrest.

“What calls are you going to make?” she said she asks them.

“If you don’t have a little fear going into this because of the illegality at the federal level, you’re probably not the person to do this job,” she said.