>> hello and welcome to "the journal." >> welcome. >> our top stories this hour. settlement building resumes in the west bank after israel lifted the freeze on construction. the german government defends its plans for a small hike in welfare, against sharp criticism. >> the gold rush continues. the price of gold hit a new record high. captioned by the national captioning institute --www.ncicap.org-- >> the palestinian leader says that he will consult with arab

leaders before deciding how to respond to israel's decision not to extend its moratorium on settlement construction in the west bank. abbas had threatened to break off talks if the moratorium expired. the u.s. has praised his restraint. the u.s. -- u.n. secretary general said monday he was disappointed at the israeli decision. >> construction is back in operation at the settlement in the west bank. so far the building activity has remained limited but the settlers are defiant and determined to press ahead. >> we must build and worry less about what people in the world think about it. that is how we have always succeeded. >> in the west bank settlement, bulldozers have begun preparing the ground for more new homes. palestinians regard settlement construction as a major obstacle to peace. that also accused mr. netanyahu of duplicity in the way he has

addressed the issue. >> the prime minister was able to enforce a moratorium. a partial moratorium. we would want it to be fall. he can and should in for such a moratorium during the direct talks. -- he can and should enforce such a moratorium during the direct talks. >> on monday, french president nicolas sarkozy called on israel to halt construction. sarkozy has invited abbas netanyahu, and the egyptian president to paris for peach -- for peace talks in november. >> let us go to our correspondent in jerusalem. what is the situation on the ground now? how much construction activity is going on? >> we have seen construction of only a few settlements today. these are many projects which

had been permitted before the moratorium was put in place. it is not yet the large scale that was expected. i think part of that is due to a jewish holiday here. sellers have expressed concern and want to see a further development on the political level. -- settlers have expressed concern. this building process is a strong political signal. people are very skeptical about the talks. this did not go down very well. "palestinian leader said he will so -- will consult with arab leaders before deciding how to respond. what is the outcome likely to be? will peace talks continue? >> that is difficult to say. the have to prevent a total collapse but the positions are the same. the fact that the palestinians did not walk out of the talks immediately leaves time for more diplomacy but we have to weigh

the plo and arab league decision in the next few days. u.n. envoy george mitchell will be back in the region. pressure will be high on the israeli government. netting and -- netanyahu has to work with his own coalition government, but time is running out. the settlement issue is one of many will have to deal with if they go on. >> thank you very much. the human rights council in geneva is debating a report into an attack by israeli commandos on a gaza-bound a flotilla last may. the raid may have broken international law. israel has rejected the findings as biased. there is another flotilla made up of jewish activists who said

it want to express their support nearly 10 days after afghanistan's parliamentary election the country's electoral commission has ordered a partial recount. the commission said it had evidence of election fraud in seven of the 34 provinces. there were more than 3000 complaints of irregularities. a recount could further delay the results of the election, which had been expected at the end of october. here in germany opposition parties say they will fight the government's new population of welfare benefits. it would raise support for the long-term unemployed by five heroes of month, which the opposition says is to stingy. it cut support for a call and tobacco. it does include the cost of internet access. it will affect 1.7 adults -- 1.7 million adults. >> the labor minister dashed the

hopes of the long-term unemployed. she said her reforms had a different purpose than putting money in their pocket. >> to sum things up, our goal was transparency, and we have achieved that goal. "rules of the game will largely stay the same for welfare recipients. that is the government's aim. it wants the unemployed to find jobs instead of relying on state funds or handouts, so it raised benefits by just five euros, to 364 euros per month starting in january. >> everyone who would like to cryptically take part in this discussion should go through the 230 line items in this calculation and clearly say where they think the labor minister went wrong, where they would add more money and the expected result. >> children will receive exactly the same financial support. the opposition and welfare organizations are incensed,

calling the decision a scandal. >> it disadvantages the poor. nothing is being done to lift people out of poverty. there will be further marginalize. >> the government says it has not ignored the interests of children. it says that are getting additional support to a school lunch program. their parents just will not receive more money. >> the communist party in north korea is gathering ahead of a conference expected to set the stage for a power transfer. the 60-year-old leader, kim jong il, is planning to hand over power to his son. the north korean media announced the suns promotion to the rank of general on monday. he is thought to be around 26 years of age. kim jong il pit sister has also been promoted to the rank of general and could play a leading role in the transition. homburg airport has become the first site in germany to use

full body scanners at the airports. for now, their use is optional. the scanners will not reveal the nude body. the scanners shall be used for a trial period of six months. will move on to steve who has some business news starting with gold. >> a new record high, yes. the analysts say we still have a lot of room to the upside. the price for gold has hit another all-time high this monday pushing through the $1,300 an ounce level. and that as investors eager to hedge their risk continue to pour their money into classic safe havens such as precious metals. businesses offering to buy gold have mushroomed, and people

wanting to buy gold will soon be able to go to their nearest and machine. >> if you can afford to buy gold, it is available almost everywhere, even at a vending machine in this luxury hotel in spain. similar machines are set to go into service in germany this week. more and more people are buying gold these days, and that is driving the price up and up. an ounce of gold now costs about $150 more than it did at the start of the year. and it is not just fears of inflation that have got people buying gold. it is traditionally considered a safe haven investment in times of uncertainty, much more so than stocks and real estate. on to the markets. european shares were not able to build on last week's rally. investors took to the sidelines.

here is a summary of the monday trading session in frankfurt. >> last week's rally did not continue in the german stock market. we have to wait and see what happens this week from u.s. trade. on the agenda are very important economic data. gold analysts see gold as a reserve currency. siemens announced higher operating profits and revenue but could not meet industry expectations. >> will stay in frankfurt for a closer look at monday's closing numbers. the dax slipped by 0.3%. the era stocks 50 dropped by 0.6%. -- euro stoxx 50 dropped by 0.6%.

the dow finished at 10,812 points. the era trading at this hour and at $1.3464. the european commission is proposing legislation to strengthen european union budget rolls -- budget rules including strong sanctions for countries the break them. the rules which will be formally unveiled on wednesday will include semi-automatic sanctions that will be imposed early enough to prevent eurozone economies from straying off course. >> the euro is still a work in progress in some respects. a task force is working on a new foundation for the common currency. the aim is to ensure more transparency about the finances of eu member states. there is a mechanism to impose strict penalties on countries which breach budget deficit rules. >> the sanctions need to be

semi-automatic. secondly they need to occur early enough in the process that that are essentially preventative. >> the eu monetary affairs commission only once sanctions which can be implemented immediately but the german finance minister places more emphasis on the severity of any sanctions for excess deficits, such as the threat of losing e.u. voting rights. >> how far we can go depends on the current eu treaty. i think some suggestions would not be possible under the current treaty but luxembourg the support germany's suggestion of stronger sanctions. >> other countries including spain and france are skeptical. the question even semi-automatic sanctions. hermann von runway -- rompuy has

to hammer out a compromise. >> dmitry medvedev visited china and the two countries signed a number of wide-ranging agreements including energy cooperation deals. that will feed china's massive growing energy needs. russia will provide anything from coal to renewable energy. medvedev and his chinese counterpart also celebrated the completion of a new pipeline which will carry oil directly from russia into china. >> the first oil pipeline from russia into china is now complete. workers have made the final weld's between the two stretches of pipeline at the border. it is important for russia especially, which is trying to reduce its dependence on european energy customers. >> this project? the partnership between our nations and our corporation much stronger. it is looking into the future. it is mutually beneficial.

i am sure it will be of great use to both our countries. >> russia can now ship up to 100 million barrels a year from siberia to china. gas from would like to sell natural gas to -- gazprom would like to sell natural gas to china as well after the trouble it has had with transit companies in europe. >> it makes sense for gazprom from a political standpoint. it could show europe that it could sell its gas products elsewhere. >> but a gas deal could still be a way off. china is reluctant to match the price for gas paid by the europeans. >> there has been a healthy outlook for germany's biggest economy going into 2011. i think it is time to hand it back to you melinda. >> thank you very much. iranian officials say that a

computer virus has infected pcs at iran's first nuclear power station but has not damaged the plant's operating system. the bush from -- bushra power plant is scheduled to go on line in november. the trojan uses flaws in microsoft windows to target systems made by the germany company -- the german company siemens. this may have been a state- backed attack on iran's nuclear program. ruskoff will not resign despite pressure from the kremlin. kremlin officials and state media have pitted the -- have repeatedly accused him of corruption in recent weeks. he has angered the kremlin by criticizing medvedev.

he has been mayor of moscow since 1992. in brazil, the presidential candidates have held a sharp debate ahead of sunday's election trading barbs over corruption and mismanagement. in this televised debate, the head of the governing party attacked his rival in the social democrats. he was the energy -- she was the energy minister under de sliva and remains -- under de silva and remains the favorite. louis van gaal will stay with the club for another season. he guided them to the champion league finals this year. the dutch coach signed for one extra year. he said his ambition is to train a national team in the future. we will be going back to brazil

for our in-depth report, so stay with us for that.

>> welcome back. brazilians go to the polls in less than a week to direct a successor to lula, the charismatic president whose social welfare program has made him immensely popular among the poor. his former energy minister and chief of staff is front runner in the polls. that lead has been shrinking in the face of corruption allegations and opposition criticism of the government's pro-iranian foreign policy. she is never the less likely to win a comfortable majority. lula will be a hard act to follow. his support payments are considered the leading world redistribution program in the world. the helped to close the wide gap

between brazil pip rich elite and the poor. -- between brazil's rich elite and the poor. >> crowds applauded enthusiastically when brazil's president enters the room. his presence can fill a stadium. he hugs people and kisses babies. he likes to be seen as a man of the people and rebels in their attention. he spends most of his time in the capital brasilia, but his affects can best be seen elsewhere in the country. here in the dirt-poor regions of eastern brazil, man well and his siblings make a meal out of fish river water. their mother cooked dried beans to go with them. a poor family's dinner in brazil. >> i used to have to go begging

to feed my 12 children. now we get a little money from the state so i do not have to beg anymore. i can even do some shopping. >> the da silva's house has dirt floors. two rooms has a family of 15. they do not have running water. carla and marcus walk several kilometers a day over hot roads to fetch them. today, not a drop comes from the tap. that is everyday life in the poor, and dry state in northeast brazil. here in the villa san pedro 90% of the residents live hand to

work. there is no work. farmers seized land illegally to plant a few vegetables. until eight years ago there was no state support and the family went hungry. >> after our president was elected, he did a lot for us poor people. without him, things would be much worse. we believe in him. >> lala himself -- lula himself was born not far away in this house, now almost a national shrine. he knows what hunger is. >> we would reelect him in a minute if we could. he created jobs and change the entire country. >> the near reverence with which the poor and working-class voted him into office for a second term have their roots in the 1970's. as a union leader, he was a thorn in the side of the

dictatorship. he was imprisoned and tortured for calling for general strikes. in the decade since then, he has been cheered feverishly by crowds of supporters. now, just months before he leaves office, the 64-year-old shows the same charisma he had as a union boss. his election win was historic. for the first time, the president was elected to did not come from the rich, white upper- class. the elite were the -- the elite were afraid the country would turn to communism. they were wrong. stockholders had their biggest gains in brazil's history. it stabilized the currency estimated exports, an increased growth. lula inaugurated hydroelectric power and construction of the largest to works in latin america. -- largest steelworks in latin

america. he is his country's foremost ambassador. he made the world pay attention to brazil, including awkward moments like his support for the iranian president. even a large-scale corruption scandal in his party seemed to bounce off him. remains a man of the people, complete with down to earth humor. when he got tired of being photographed for hours on end he turned the camera on the press and snapped them for a while. he remains unpredictable. his forced manner of speaking is the bane of the upper class but that is what people love about him. >>lula has thrown his support behind the woman shown in the orange dress as his successor in the party. she also fought against brazil's dictatorship. she is considered one of the architects of the war on poverty. it is expected she would

continue the reforms. [applause] and many think it is possible that lula could take back his old job after his former cabinet had has had four years at the reins. this is one of thousands of illegal clearcutting operations in the amazon. even though the felling of trees has declined in the past year one thing lula could be criticized from is narrow energy policies at the cost of national resources. the former labor leaders made no priority to save one of the last great rain forests on earth. slash and burn has remained a widespread practice. but his supporters do not care.

what they care about is the money in their pockets. she makes her way to the state welfare of this, where she picks up her support money, also called a family allowance. she is one of 50 million brazilians to receive the aid. she gets 134 reales -- about 58 euros. that may not sound like a lot, but for this family is saves them from going hungry. the mother of 12 heads straight for the market, just like everyone else. that in turn has helped boost demand for produced nationwide. brazil's growth is not just due to the export of raw materials but the new purchasing power of its own consumers. >> i buy meat, which we could not afford before.

butter, beans rice, butter coffee, and sandals for the children. >> lala's conservative critics argue this is money down the drain because it is not sustainable, but that is not entirely the case. lula has made it receiving welfare contingent on children attending school and visiting the health care clinic regularly. as a result the country's development index has risen dramatically. the quality of life for families has improved, and life expectancy has nearly doubled since lula took office. south america's largest country is a towering giant. its economic growth is the envy of europe. it's true success can be seen in the lives of ordinary people every day -- a triumph over poverty and hungry. -- and hunger. >> that has been our in-depth report on the changes lula

brought to brazil. thanks for joining us.