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LONDON (AP) -- Iran and other Middle East countries have been hit with a cunning computer virus that can eavesdrop on computer users and their co-workers and filch information from nearby cellphones, cybersecurity experts said Tuesday. And suspicion immediately fell on Israel as the culprit.

The Russian Internet security firm Kaspersky Lab ZAO said the "Flame" virus is unprecedented in size and complexity, with researcher Roel Schouwenberg marveling at its versatility.

"It can be used to spy on everything that a user is doing," he said.

Computers in Iran appear to have been particularly affected, and Kaspersky's conclusion that the virus was crafted at the behest of a national government fueled speculation it could be part of an Israeli-backed campaign of electronic sabotage against the Jewish state's archenemy.

The virus can activate a computer's audio systems to listen in on Skype calls or office chatter. It can also take screenshots, log keystrokes and - in one of its more novel functions- steal data from Bluetooth-enabled cellphones.

Schouwenberg said there is evidence to suggest that the people behind Flame also helped craft Stuxnet, a virus that is believed to have attacked nuclear centrifuges in Iran in 2010. Many suspect Stuxnet was the work of Israeli intelligence.

Tehran has not said whether it lost any data to Flame, but a unit of the Iranian communications and information technology ministry said it has produced an anti-virus capable of identifying and removing Flame from its computers.

Israel's vice premier did little to deflect suspicion about the country's possible involvement in the cyberattack.

"Whoever sees the Iranian threat as a significant threat is likely to take various steps, including these, to hobble it," Moshe Yaalon told Army Radio when asked about Flame. "Israel is blessed with high technology, and we boast tools that open all sorts of opportunities for us."

Researchers not involved in Flame's discovery were more skeptical of its sophistication than Kaspersky, with Richard Bejtlich of Virginia-based Mandiant saying the virus appeared similar to spyware used by the German government to monitor criminal suspects.

"There have been tools like this employed by high-end teams for many years," he said.

Colorado-based Webroot said the virus wasn't as complex or as stealthy as Stuxnet and was "a relatively easy threat to identify."

Flame is unusually large. Malicious programs collected by the British security firm Sophos averaged about 340 kilobytes in 2010, the same year that Kaspersky believes Flame first started spreading. Flame is 20 megabytes - nearly 60 times that figure.

Alan Woodward, a professor of computing at the University of Surrey in England, said functions can be added or subtracted to the virus depending on what kind of espionage is desired, not unlike the way apps can be downloaded to a smartphone.

He was particularly struck by Flame's ability to turn an infected computer into a kind of "industrial vacuum cleaner," copying data from vulnerable cellphones or other Bluetooth wireless devices left near it.

"I don't believe I've seen it before," he said.

Udi Mokady, chief executive of Cyber-Ark, an Israeli developer of information security, said he believes four countries, in no particular order, have the know-how to develop so sophisticated a weapon: Israel, the U.S., China and Russia.

"It was 20 times more sophisticated than Stuxnet," with thousands of lines of code that took a large team, ample funding and months, if not years, to develop, he said. "It's a live program that communicates back to its master. It asks, `Where should I go? What should I do now?' It's really almost like a science fiction movie."

It's not clear exactly what the virus was targeting. Kaspersky said it detected the program in hundreds of computers, mainly in Iran but also in Israel, the Palestinian territories, Sudan, Syria, Lebanon, Saudi Arabia and Egypt.

The company would not give details on the victims except to say that they "range from individuals to certain state-related organizations or educational institutions."

Schouwenberg said stolen data was being sent to some 80 different servers, something that would give the virus' controllers time to adjust their tactics if they were discovered.

As for Flame's purpose, "maybe it's just espionage," he said. "Maybe it's also sabotage."

(Reuters) - The Pentagon unveiled a 2013 budget plan that would cut $487 billion in spending over the next decade by eliminating nearly 100,000 ground troops, mothballing ships and trimming air squadrons in a bid to create a smaller, agile force with a new strategic focus.

The funding request, which includes painful cuts that will be felt across the country, comes at a historic turning point for the military as it winds down 10 years of war in Afghanistan and Iraq and shifts its strategic focus to the Asia-Pacific region and the Middle East.

The budget plan, sharply criticized by some lawmakers, sets the stage for a new struggle between President Barack Obama's administration and Congress over how much the Pentagon should spend on national security as the country tries to curb its trillion-dollar budget deficits.

"Make no mistake, the savings that we are proposing will impact all 50 states and many districts, congressional districts across America," Defense Secretary Leon Panetta told a news conference at the Pentagon on Thursday.

"This will be a test of whether reducing the deficit is about talk or action."

Panetta, previewing a budget to be made public February 13, said he would ask for a $525 billion base budget for the 2013 fiscal year, the first time since before the September 11, 2001, attacks that the Pentagon has asked for less than the previous year. That compares with $531 billion approved this year.

Panetta said he would seek $88.4 billion to support overseas combat operations, primarily in Afghanistan, down from $115 billion in 2012 largely due to the end of the war in Iraq and the withdrawal of U.S. forces there at the end of last year.

Congress ultimately controls the Pentagon's purse strings and regularly intervenes to change the size and detail of military spending as it sees fit. The Defense Department's budget accounts for about 20 percent of total federal spending.

Republican lawmakers who oversee military affairs on Capitol Hill sharply criticized the plan.

Senator John McCain said it "ignored the lessons of history" by imposing massive cuts on the military, and Representative Buck McKeon said it reflected "Obama's vision of an America that is weakened, not strengthened, by our men and women in uniform."

The 2013 budget is Panetta's first as defense secretary and is the first to take into account the Budget Control Act passed by Congress in August that requires the Pentagon to cut $487 billion in projected spending over the next decade.

The budget plan does not take into account an additional $600 billion in defense cuts that could be required after Congress failed to pass a compromise agreement to cut government spending by $1.2 trillion. The Pentagon could face cuts of another $50 billion a year, starting in 2013, unless Congress changes the law.

Panetta said he hoped once lawmakers understood the sacrifice involved in reducing the defense budget by almost a half a trillion dollars, they would make sure to avoid another $500 billion in additional cuts that would "inflict severe damage to our national defense for generations."

The budget begins to flesh out a new military strategy announced by the Pentagon earlier this month that calls for a shift in focus from the ground wars of the past decade towards efforts to preserve stability in the Asia-Pacific region and the Middle East.

"To ensure an agile and ready force, we made a conscious choice not to maintain more force structure than we could afford to properly train and equip," Panetta said.

The budget plan would provide new challenges for the Pentagon's top suppliers, such as Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon. The Arca index of defense stocks closed Thursday down 0.7 percent.

The plan retains but slows the purchase of weapons like Lockheed's F-35 Joint Strike Fighter, the Pentagon's largest procurement program, as well as submarines, amphibious assault ships and other vessels. It would retain a fleet of 11 aircraft carriers.

The Pentagon would boost its emphasis on special operations forces like those who carried out the raid in Pakistan that killed al Qaeda leader Osama bin Laden last year and rescued two aid workers this week from kidnappers in Somalia.

It would also increase its emphasis on cyber operations, expand its work on drone aircraft, go ahead with a long-range bomber and proceed with other weapons that would allow it to project power from a greater distance.

Those capabilities are needed as countries like Iran and China develop arms that could threaten U.S. aircraft carriers in international waters near their shores.

General Martin Dempsey, the top U.S. military officer as chairman of the Joint Chiefs of Staff, warned against "parsing through each cut, each change, to look for a winner or loser," saying the plan should be judged for how it adapts the military to a changing security environment.

While the cuts announced on Thursday would affect all major defense contractors, consultant Loren Thompson said shipbuilders would be hit particularly hard because of the plan to cut 16 vessels from the total planned for the next five years.

The plans could affect work flow at Huntington Ingalls' shipyards in Pascagoula, Mississippi, and Newport News, Virginia.

The size of the active-duty Army would be trimmed to 490,000 over five years from its wartime peak of 570,000 in 2010 and the size of the Marine Corps would fall to 182,000 from its high of about 202,000.

Military pay increases would begin to slow after two more years of growth, and fees would be increased on healthcare benefits for military retirees, those who served more than 20 years, both above and below the age of 65.

In addition, the Pentagon would:

- Delay development of a new ballistic missile submarine by two years.

- Eliminate six of the Air Force's tactical-air fighter squadrons and retire or divest 130 aircraft used for moving troops and equipment.

- Retire seven Navy cruisers and two smaller amphibious ships early, postpone the purchase of a big-deck amphibious ship by one year and postpone the planned purchase of a number of other vessels for several years.

- Eliminate two Army heavy brigades stationed in Europe and compensate by rotating U.S. based units into the region for training and exercises.

- Study the possibility of further reducing the size of U.S. nuclear arsenal.

- Begin a new round of talks on closing bases made unnecessary by the smaller force.

(Reuters) - Major powers signaled on Friday their willingness to reopen talks about curbing Iran's suspected pursuit of nuclear weapons but said Tehran must show it is serious about any negotiations.

The focus on diplomacy follows weeks of rising tensions between the West, which is seeking to cut Iran's oil sales, and Tehran, which has threatened to close the Strait of Hormuz through which almost one-fifth of oil traded worldwide flows.

Alarmed Arab neighbors made a plea to avoid escalating the dispute over Iran's nuclear program while an ally of Iran's supreme leader called for Israel to be "punished" for allegedly killing an Iranian nuclear scientist.

The West suspects Iran is using its civilian nuclear program as a cover to develop atomic weapons and has pursued a two-track approach of sanctions and diplomacy to try to rein it in. Iran says its nuclear program is solely to produce electricity.

While major powers stressed their openness to renewed talks,

diplomats said they remain divided on their approach, notably on whether to let Iran keep enriching uranium at some level.

The group, known as the P5+1 and as the EU3+3, includes Britain, China, France, Germany, Russia and the United States.

EU foreign policy chief Catherine Ashton, who represents the group, issued a statement making clear that a diplomatic path remains open to Iran despite tougher sanctions and fresh speculation of a military strike on its nuclear facilities.

"The EU3+3 has always been clear about the validity of the dual track approach," Ashton's spokesperson said in a statement that included her October 21 letter to the Iranians laying out the possibility of talks. "We are waiting for the Iranian reaction."

The release of the statement and letter appeared to reflect frustration at Iran's statements hinting at a willingness to resume talks but Tehran's failure to formally respond to the letter and commit to discussing the nuclear program in earnest.

CONCILIATORY TONE FROM CLINTON

U.S. Secretary of State Hillary Clinton struck a decidedly conciliatory tone at a news conference with German Foreign Minister Guido Westerwelle in Washington.

"We do not seek conflict. We strongly believe the people of Iran deserve a better future," she said. "They can have that future, the country can be reintegrated into the global community ... when their government definitively turns away from pursuing nuclear weapons.

"We have to see a seriousness and sincerity of purpose coming from them."

Westerwelle said, "One thing is clear: the door for serious dialogue remains open but the option of nuclear weapons in Iran is not acceptable."

Diplomats said major powers are divided over what incentives to offer Iran if talks were to resume.

A central issue is whether the group might ask Iran to cease enriching uranium to the higher level of 20 percent but allow it, at least for a time, to continue enriching at lower levels -

a stance partly at odds with the group's past positions.

Uranium enrichment is a process that at low levels can yield fuel for nuclear power plants or, if carried out to much higher levels of purity, can generate fissile material for bombs.

To let Iran enrich at lower levels would be something of a concession by the P5+1, although it has previously offered a temporary "freeze-for-freeze" in which Iran would not expand its nuclear program and the powers would not pursue more sanctions.


IRANIAN CALLS FOR PUNISHING ISRAEL

After Supreme Leader Ayatollah Ali Khamenei paid his respects to the families of two scientists assassinated on what Tehran believes were Israel's orders, one of them just last week, a close ally demanded retribution.

"Terrorism has a long history in some countries like the Zionist regime," Ali Larijani, speaker of Iran's parliament and a former nuclear negotiator, said Israel, which views an atomic bomb in Iran's hands as a threat to its survival.

"The Zionist regime should be punished in a way that it can not play such games with our country again."

Such threats have been made before in Tehran and it is unclear how or when they might be carried out. Israel, widely assumed to have the only nuclear arsenal in the Middle East, is on guard against attacks on its borders and within, notably by Lebanon's Hezbollah movement, which is supported by Iran.

Obama's top military official, chairman of the Joint Chiefs of Staff General Martin Dempsey, briefly visited Israel and was quoted by its Defense Ministry as telling officials there that Washington was keen to coordinate on strategy.

"We have many interests in common in the region in this very dynamic time and the more we can continue to engage each other, the better off we'll all be," Dempsey was quoted as saying in a statement issued by the Israeli Defense Ministry.

The comments may reflect U.S. concerns about the possibility that Israel, which has previously bombed nuclear facilities in Iraq and in Syria, might launch an attack on Iran.

French President Nicolas Sarkozy said on Friday that time was running out to avoid a military intervention and appealed to China and Russia, veto-wielding U.N. powers who have been reluctant to tighten sanctions, to support new sanctions.

"Time is running out. France will do everything to avoid a military intervention," Sarkozy told ambassadors gathered in Paris. "A military intervention will not solve the problem, but it will unleash war and chaos in the Middle East."

"We need stronger, more decisive sanctions that stop the purchase of Iranian oil and freezes the assets of the central bank, and those who don't want that will be responsible for the risks of a military conflict," Sarkozy warned.

"We really need you," he said in an appeal to Moscow and Beijing.

With tensions, including mutual threats of disrupting the oil trade, creating worries across the region, the foreign minister of the United Arab Emirates, the wealthy, U.S.-allied state sitting across the Gulf from Iran, offered a warm welcome to a call for calm on Thursday by his Iranian counterpart.

"It's important to get far away from any escalation and we stress the stability of the region," Sheikh Abdullah bin Zayed al-Nahayan was quoted as saying by state news agency WAM.

RAMALLAH/GAZA: Israel released 550 Palestinian prisoners Sunday in the second stage of a deal with Hamas that brought home soldier Gilad Shalit after five years of captivity in the Gaza Strip.

While many of the 450 prisoners freed on October 18 in the first phase of the Egyptian-brokered prisoner swap were serving life sentences for deadly attacks, none in the second group was convicted of killings.

Nearly all of the prisoners passed through a crossing into the West Bank and were greeted by thousands of Palestinians who danced and cheered in the city of Ramallah.

Though Hamas, which rules the Gaza Strip, had reached the deal with Israel, most of the crowd waved flags from the rival Fatah faction of Palestinian President Mahmoud Abbas, the dominant party in the West Bank.

In Gaza, two buses with 41 prisoners, escorted by the International Committee of the Red Cross, passed through the Rafah crossing and were met by hundreds of relatives waving flags representing the different Palestinian factions.

"My feelings of joy are mixed with sorrow because we left behind beloved brothers, we hope all of them will be freed," said Samer Aweidat, who was released after serving four years of a six-year sentence for weapons possession and being a member of a miltant group.

Israel's Supreme Court opened the way for Sunday's release to go ahead by turning down a petition Friday from Israelis opposed to freeing the prisoners, whose terms ranged from a few months to 18 years.

They were convicted of crimes that included attempted murder, planting bombs and membership of militant groups. Shalit was abducted in June 2006 by militants who tunnelled into Israel from the Gaza Strip and surprised his tank crew, killing two of his comrades. He was held incommunicado in the Hamas-ruled territory and a huge majority of Israelis backed the deal that brought him home two months ago.

Hani Habib, a political analyst in Gaza, said that Israel, given the opportunity to pick which prisoners would be freed in the second stage, chose inmates from Fatah rather than Hamas.

"Israel was interested in turning the victory that has been achieved into a Palestinian discomfort and a Palestinian division with its discrimination," he said.

Hamas said it would petition Egypt to pressure Israel into freeing all the Palestinian women in its jails, something it had wanted to happen in Sunday's release.

CAIRO -- At the foot of Mohamed Mahmoud Street, just a few feet from the resounding crowds in Tahrir Square, a group of people gathered around a man holding four canisters above his head.

"Tear gas! Rubber bullets! Nerve gas!" he cried out, displaying the spent metal canisters.

"Where are they from, America?" people asked, already knowing the answer.

"Yes, America," the man replied furiously. The crowd murmured with unsurprised disdain. Like many gas canisters in Tahrir, one of his was marked with blue letters that read "Made in USA" and bore the name of the company that produced it: Combined Tactical Systems, in Jamestown, PA.

For days, similar scenes have played out across Tahrir. Tear gas has become a persistent companion in the square, a troublesome cousin who crashes on the couch and fails to leave. Wafting in from the clashes up the street -- except in a few rare instances where it has been fired directly onto the square -- the gas lingers in the air, causing, from afar, noses to run and a sour taste in the mouth.

But the added indignation of an American connection -- on the street, protesters insist it is more like collusion -- is a potent blow.

"You know where this is from," another man, standing next to a field clinic across the street, said with a glare Wednesday, as he held up a thick metal canister shaped like a short bottle of spray paint.

"This is from America. America sent it to bomb Egypt."

Nearby, an 18-year-old in a red soccer jersey sat slumped on the sidewalk in the clinic, pawing at his eyes and moaning. He had been pulled from the fray a few minutes earlier, where the gas was much more intense. The burning sensation had briefly rendered him unable to speak. Now and then, a nurse came by and poured a homemade solution -- a mixture of antacid, topical anesthetic, and saline -- from a reused bottle of Dasani water over his face.

"It feels like my eyes are burning," the boy, who said he was from Giza, cried out after he had finally composed himself. "I can't open my eyes, I can't breathe. The gas they're using, it's different from before. I don't know where they got it from, but it's really different -- and it takes a lot longer to heal."

All day Wednesday, as the fighting around the square reached its 100th hour, people with severe cases of gas exposure -- not to mention rubber-bullet wounds -- came streaming into field clinics and dozens of first aid stations scattered near the combat zone.

At the corner of Tahrir Street and Yousef el Guindi Street, not far from the front lines, a young man wearing a white lab coat spattered with blood struggled to find a moment of peace to explain what he'd seen these past few days.

"I'm so tired," he said, with a weary smile. Suddenly, a motorbike careened up to the curb, ferrying a boy in a black sweatsuit. The fighters around Tahrir have established a makeshift ambulance system for the combat zone, with pairs of men on motorbikes who race in and out of the fight, and deliver the injured -- upright, and sandwiched between them -- to the nearest doctor.

The boy tumbled onto the rug that demarcated the first aid station.

"Hold on," the doctor said as he raced over to his new patient, grabbing him by the shoulders. "Stay awake! Stay with me," he yelled. The patient only had a rubber bullet wound on his leg, but he was young, perhaps just 15 years old, and he wailed in pain. The doctor and his two nurses sprayed him with an antibiotic foam, and sent him down toward the larger field clinics in the square.

"That was one of the easiest cases I've had yet," the doctor said when he came back. He introduced himself as Ali Sharif, and said that he was actually just a third-year medical student. He is 19 years old.

Another motorbike pulled up, this one ferrying a balding, middle-aged man in a tracksuit who had clearly succumbed to tear gas inhalation. The man was red in the face and his body sat rigidly between two people riding the motorcycle-ambulance; when it stopped, he nearly keeled over. Sharif huddled over him, urging him to cough, while the man spit up phlegm onto the sidewalk. Sharif signaled for another motorcycle, waiting nearby, to shepherd the man to a better-equipped clinic.

"That man has a heart condition, so I told him I couldn't treat him here," Sharif said when he stood back up. "Ninety percent of the cases we see of people injured are from tear gas, just normal cases. But since last night, a lot of what they've used is some other kind of gas, it's much stronger. When we start first aid the patients seem normal, but then after a while they start screaming and they lose control over their bodies, and start shaking."

Sharif is one of many around Tahrir who insist that the security forces have recently begun using a more potent form of the gas -- CR, rather than the typical CS -- or perhaps even nerve agents. (He says he has a canister of "nerve gas" that was made in China at his home.)

Unlike CS, which is commonly used by police and military forces around the world, CR has been connected with fatalities in the past, and evidence exists it may be a carcinogen. The United States military has ceased using CR out of health concerns.

So far, however, conclusive evidence about the use of other gases has proven nearly impossible to find.

"So far we have only seen [canisters] with CS on them," said Karim Medhat Ennarah, a political and security reform researcher for the Egyptian Initiative for Personal Rights, which has spent the past two days seeking evidence of other forms of gas being used.

The Guardian recently reported that many sources have complained that protesters are suffering from effects more commonly associated with powerful gases like CR, but the paper was unable to confirm the existence of canisters with those letters on them. In several hours looking around Tahrir, The Huffington Post only came across canisters marked CS, as well as a few that were unmarked. Heba Morayef, a researcher with Human Rights Watch who has also been investigating the reports, said that the unmarked canisters are likely Egyptian-made.

Instead, it seemed more likely to observers and human rights investigators that most of the severe cases of tear gas exposure come from the tendency of riot police to fire four or five rounds of gas at a time, and from the fact that most of the skirmishes are taking place in narrow, confined alleyways.

"What we can say beyond doubt is that it's definitely excessive use of tear gas and that's probably behind a lot of the problems it's causing," Ennarah said. "It can be used for crowd dispersal, but they seem to be using it as a kind of punishment."

The U.S. State Department denied on Tuesday that the gas was purchased with American "security assistance funds," but did acknowledge that direct sales between the government and American companies have been authorized in the past.

The use of American-made tear gas has only compounded the sense among many of Tahrir's most ardent protesters that the U.S. plays a malicious role in Egyptian politics, seeking to reinforce the status quo -- in this case, the military, which they have good relations with -- rather that supporting the aspirations of demonstrators.

Over the past several days, Tahrir and its surrounding areas have become an increasingly unwelcome place to foreigners, with many foreign reporters describing xenophobic exchanges, and being subjected to random credential checks. Direct attacks on foreign journalists by the crowd have remained at a minimum.

From the start, the U.S. State Department has delivered tempered remarks on the contest between demonstrators and riot police, initially calling for restraint from "all involved," and urging "everybody" to focus on the nation's first democratic parliamentary elections, which are still scheduled to begin on Monday.

The U.S. government faces a particularly difficult challenge in Egypt because it has long backed the forces of stability -- first Hosni Mubarak, now the military regime -- as a bulwark against the rise of militant Islam. Now, the parliamentary elections which begin on Monday are expected to deliver a majority to the conservative Muslim Brotherhood, something the U.S. does not appear to mind so long as a friendly military government is there as a steward.

On Tuesday, State Department spokesman Victoria Nuland directed her message more sharply to the Egyptian government, saying, "We condemn the excessive force used by the police."

But she also backed the speech of Field Marshal Mohammed Hussein Tantawi, the current leader of the military regime ruling the nation, who addressed the nation Tuesday night and pledged to complete the transfer of power to civilian hands by mid 2012. (When the speech concluded, security forces once again barraged Tahrir with tear gas.)

For those like Ali Sharif, standing at his corner medical station, the struggle is far from over.

"I've been here nonstop since Saturday, except for only four hours of sleep," he said. "Sometimes I wish they would all just go home, so that I could too."

Sharif laughed. In fact, he doesn't want the struggle to end -- "I'm doing this for Egypt," he said -- but he does sometimes find himself yelling at the young fighters who keep making their way back to his station to find another use for their time.

"I tell them I'm getting tired of seeing them," Sharif said. "But they never listen to me. They all go back."

Victory, Libya

Prince Nayef, Saudi Arabia