BY LAURIE BURKITT

BEIJING—Nestlé SA’s $1.7 billion bid for Chinese candy maker Hsu Fu Chi International Ltd. marks an effort by the Swiss foods giant to gain on rivals in a fast-growing market by tapping directly into local tastes.

The Swiss food company is aiming to buy 60% of Hsu Fu Chi, the companies said in a joint statement Monday, in a deal that values the entire Singapore-listed company at 3.5 billion Singapore dollars ($2.87 billion). If completed, the acquisition would be one of the largest foreign takeovers of a Chinese company, and would give Nestlé control of the second biggest confectionery company …

By ADAM ENTOUS

BAGHDAD—Visiting U.S. Defense Secretary Leon Panetta delivered a blunt message to the Iraqi government, which has frustrated the Pentagon by deliberating for months about whether to ask the U.S. to keep some of its troops in the country beyond Dec. 31: “Dammit, make a decision.”

Mr. Panetta, speaking Monday to American troops in Baghdad, also stepped up public pressure on Iraq to do more to stem attacks on U.S. troops by Iran-backed Iraqi militias, saying the U.S. would “push the Iraqis to take on the responsibility” but would also “do what we have to do unilaterally” to protect American lives.

“We’re going to take this on, straight on,” he said, without offering any specifics.

View Full Image

Associated Press

U.S. Secretary of Defense Leon Panetta delivers remarks to the troops during his visit to Camp Victory in Baghdad, Iraq.

Mr. Panetta’s first war-zone tour as Pentagon chief has been punctuated by frequent moments of remarkable candor, as well as by some statements that the defense secretary himself or his spokesman sought to clarify or retract soon after Mr. Panetta said them. During the meeting with American troops, Mr. Panetta appeared to reprise a contentious argument used by senior members of the Bush administration to justify the 2003 invasion of Iraq.

“The reason you guys are here is because on 9-11 the United States got attacked and 3,000… innocent human beings got killed because of al Qaeda, and we’ve been fighting, you know, as a result of that,” Mr. Panetta said in response to a question from one soldier.

Assertions about Iraq’s ties to al Qaeda in the run-up to the 2003 invasion have been widely dismissed, and Mr. Panetta and his spokesman said after his remarks to the troops that the secretary wasn’t trying to advance that rationale.

“I wasn’t saying, you know, the invasion, or going into the issues or justification of that,” Mr. Panetta told reporters later. “It was more the fact that we really had to deal with al Qaeda here, and they developed a presence here and that tied into it.”

Douglas Wilson, assistant secretary of defense for public affairs, called Mr. Panetta “a plain-spoken secretary,” and said Mr. Panetta’s main point was that U.S. “troops are here today” because al Qaeda still has a presence in the country and the U.S. was determined to crush the group.

“I don’t think he’s going down that rabbit hole,” Mr. Wilson said. “I don’t think that he is getting into the arguments of 2002 and 2003. He’s dealing with the security situation that our country faces today… and he’s dealing with it in a very plain-spoken way.”

The confusion over what Mr. Panetta meant followed similar incidents in Afghanistan, which he visited over the weekend. There, Mr. Panetta made statements, which aides subsequently sought to clarify or retract, about how many troops would remain in Afghanistan through the end of 2014. Mr. Panetta said 70,000 would remain but Mr. Wilson said he misspoke.

He also said the “primary effort” of the military mission in Libya is to “bring down the regime” of Col. Moammar Gadhafi. The United Nations resolution authorizing the use of force in Libya specifies that the intention is to protect civilians from Col. Gadhafi’s forces, not to topple the longtime dictator.

Mr. Panetta’s blunt talk about Iraq’s delay in asking some U.S. troops to stay in the country after Dec. 31 reflects Pentagon concerns that Baghdad will wait until the last minute to decide. Time is of the essence for the Pentagon because it needs time to redirect forces and equipment if they will be staying in Iraq.

In keeping with a U.S.-Iraqi agreement, the Pentagon plans to withdraw the 46,000 U.S. troops it currently has in Iraq by the end of December unless the Iraqi government formally asks for some to remain longer to assist with security and training. U.S. officials say preliminary talks have centered on keeping about 10,000 American troops in Iraq beyond this year.

Mr. Panetta commended the Iraqis and the government of Prime Minister Nouri al-Maliki for the hard work of fostering democratic institutions since the fall of longtime dictator Saddam Hussein.

At the same time, Mr. Panetta said the sometimes slow-moving decision-making process in Iraq can be “frustrating” for the U.S., which has also been waiting for the appointment of a new Iraqi defense minister.

“I’d like things to move a lot faster here, frankly, in terms of the decision-making process. I’d like them to make the decision, you know: Do they want us to stay? Don’t they want us to stay? Do they want to have, you know, a minister of defense or don’t they want to get a minister of defense?” Mr. Panetta said. “But dammit, make a decision.”

Gen. Lloyd Austin, the commander of U.S. forces in Iraq, stopped short of demanding a decision on whether troops will stay in the country. But he said in a question-and-answer session with reporters after Mr. Panetta made his remarks that time was of the essence. He said it will be increasingly difficult and costly the longer Baghdad waits to decide. Cost, he said, was an important favor because of U.S. budget woes.

“It’s evident to everyone that when you get into the October-November timeframe, you’re really taking things apart that are very difficult to put back together,” he said.

Write to Adam Entous at adam.entous@wsj.com

By ADAM ENTOUS

BAGHDAD—Visiting U.S. Defense Secretary Leon Panetta delivered a blunt message to the Iraqi government, which has frustrated the Pentagon by deliberating for months about whether to ask the U.S. to keep some of its troops in the country beyond Dec. 31: “Dammit, make a decision.”

Mr. Panetta, speaking Monday to American troops in Baghdad, also stepped up public pressure on Iraq to do more to stem attacks on U.S. troops by Iran-backed Iraqi militias, saying the U.S. would “push the Iraqis to take on the responsibility” but would also “do what we have to do unilaterally” to protect American lives.

“We’re going to take this on, straight on,” he said, without offering any specifics.

View Full Image

Associated Press

U.S. Secretary of Defense Leon Panetta delivers remarks to the troops during his visit to Camp Victory in Baghdad, Iraq.

Mr. Panetta’s first war-zone tour as Pentagon chief has been punctuated by frequent moments of remarkable candor, as well as by some statements that the defense secretary himself or his spokesman sought to clarify or retract soon after Mr. Panetta said them. During the meeting with American troops, Mr. Panetta appeared to reprise a contentious argument used by senior members of the Bush administration to justify the 2003 invasion of Iraq.

“The reason you guys are here is because on 9-11 the United States got attacked and 3,000… innocent human beings got killed because of al Qaeda, and we’ve been fighting, you know, as a result of that,” Mr. Panetta said in response to a question from one soldier.

Assertions about Iraq’s ties to al Qaeda in the run-up to the 2003 invasion have been widely dismissed, and Mr. Panetta and his spokesman said after his remarks to the troops that the secretary wasn’t trying to advance that rationale.

“I wasn’t saying, you know, the invasion, or going into the issues or justification of that,” Mr. Panetta told reporters later. “It was more the fact that we really had to deal with al Qaeda here, and they developed a presence here and that tied into it.”

Douglas Wilson, assistant secretary of defense for public affairs, called Mr. Panetta “a plain-spoken secretary,” and said Mr. Panetta’s main point was that U.S. “troops are here today” because al Qaeda still has a presence in the country and the U.S. was determined to crush the group.

“I don’t think he’s going down that rabbit hole,” Mr. Wilson said. “I don’t think that he is getting into the arguments of 2002 and 2003. He’s dealing with the security situation that our country faces today… and he’s dealing with it in a very plain-spoken way.”

The confusion over what Mr. Panetta meant followed similar incidents in Afghanistan, which he visited over the weekend. There, Mr. Panetta made statements, which aides subsequently sought to clarify or retract, about how many troops would remain in Afghanistan through the end of 2014. Mr. Panetta said 70,000 would remain but Mr. Wilson said he misspoke.

He also said the “primary effort” of the military mission in Libya is to “bring down the regime” of Col. Moammar Gadhafi. The United Nations resolution authorizing the use of force in Libya specifies that the intention is to protect civilians from Col. Gadhafi’s forces, not to topple the longtime dictator.

Mr. Panetta’s blunt talk about Iraq’s delay in asking some U.S. troops to stay in the country after Dec. 31 reflects Pentagon concerns that Baghdad will wait until the last minute to decide. Time is of the essence for the Pentagon because it needs time to redirect forces and equipment if they will be staying in Iraq.

In keeping with a U.S.-Iraqi agreement, the Pentagon plans to withdraw the 46,000 U.S. troops it currently has in Iraq by the end of December unless the Iraqi government formally asks for some to remain longer to assist with security and training. U.S. officials say preliminary talks have centered on keeping about 10,000 American troops in Iraq beyond this year.

Mr. Panetta commended the Iraqis and the government of Prime Minister Nouri al-Maliki for the hard work of fostering democratic institutions since the fall of longtime dictator Saddam Hussein.

At the same time, Mr. Panetta said the sometimes slow-moving decision-making process in Iraq can be “frustrating” for the U.S., which has also been waiting for the appointment of a new Iraqi defense minister.

“I’d like things to move a lot faster here, frankly, in terms of the decision-making process. I’d like them to make the decision, you know: Do they want us to stay? Don’t they want us to stay? Do they want to have, you know, a minister of defense or don’t they want to get a minister of defense?” Mr. Panetta said. “But dammit, make a decision.”

Gen. Lloyd Austin, the commander of U.S. forces in Iraq, stopped short of demanding a decision on whether troops will stay in the country. But he said in a question-and-answer session with reporters after Mr. Panetta made his remarks that time was of the essence. He said it will be increasingly difficult and costly the longer Baghdad waits to decide. Cost, he said, was an important favor because of U.S. budget woes.

“It’s evident to everyone that when you get into the October-November timeframe, you’re really taking things apart that are very difficult to put back together,” he said.

Write to Adam Entous at adam.entous@wsj.com

By ADAM ENTOUS

BAGHDAD—Visiting Defense Secretary Leon Panetta, speaking to American troops on Monday, bluntly voiced frustration with the Iraqi government’s delay in deciding whether to ask the U.S. to keep some of its forces in the country beyond Dec. 31, saying, “Dammit, make a decision.”

He also stepped up public pressure on Iraq to do more to stem attacks by Iranian-backed militia on U.S. troops, saying the U.S. would “push the Iraqis to take on the responsibility” but would also “do what we have to do unilaterally” to protect American lives. “We’re going to take this on, straight on,” he said, without offering any specifics.

View Full Image

Associated Press

U.S. Secretary of Defense Leon Panetta delivers remarks to the troops during his visit to Camp Victory in Baghdad, Iraq.

Mr. Panetta’s first war-zone tour as Pentagon chief has been punctuated by frequent moments of remarkable candor, as well as by some statements that the defense secretary himself or his spokesman sought to clarify or retract soon after Mr. Panetta said them. During a meeting with American troops in Baghdad Monday, Mr. Panetta appeared to reprise a contentious argument used by senior members of the Bush administration to justify the 2003 invasion of Iraq.

“The reason you guys are here is because on 9-11 the United States got attacked and 3,000 … innocent human beings got killed because of al Qaeda, and we’ve been fighting, you know, as a result of that,” Mr. Panetta said in response to a question from one soldier.

Assertions about Iraq’s ties to al Qaeda in the run-up to the 2003 invasion have been widely dismissed, and Mr. Panetta and his spokesman said after his remarks to the troops that the secretary was not trying to advance that rationale.

“I wasn’t saying, you know, the invasion, or going into the issues or justification of that,” Mr. Panetta told reporters later. “It was more the fact that we really had to deal with al Qaeda here, and they developed a presence here and that tied into it.”

Douglas Wilson, assistant secretary of defense for public affairs and a Pentagon spokesman, called Mr. Panetta “a plain-spoken secretary,” and said Mr. Panetta’s main point was that U.S. “troops are here today” because al Qaeda still has a presence in the country and the U.S. was determined to crush the group.

“I don’t think he’s going down that rabbit hole,” Mr. Wilson said. “I don’t think that he is getting into the arguments of 2002 and 2003. He’s dealing with the security situation that our country faces today … and he’s dealing with it in a very plain-spoken way.”

The confusion over what Mr. Panetta meant followed similar incidents in Afghanistan, which he visited over the weekend. There, Mr. Panetta made statements, which aides subsequently sought to clarify or retract, about how many troops would remain in Afghanistan through the end of 2014 (Mr. Panetta said 70,000 would remain but Mr. Wilson said he misspoke) and about the goal of the military mission in Libya (Mr. Panetta said “the primary effort there is to bring down the regime of Gadhafi.”)

Mr. Panetta’s blunt talk about Iraq’s delay in asking some U.S. troops to stay in the country after Dec. 31 reflects Pentagon concerns that Baghdad will wait until the last minute to decide. Time is of the essence for the Pentagon because it needs time to redirect forces and equipment if they will be staying in Iraq.

In keeping with a U.S.-Iraqi agreement, the Pentagon plans to withdraw the 46,000 U.S. troops it currently has in Iraq by the end of December unless the Iraqi government formally asks for some to remain longer to assist with security and training. U.S. officials say preliminary talks have centered on keeping about 10,000 American troops in Iraq beyond this year.

Mr. Panetta commended the Iraqis and the government of Prime Minister Nouri al-Maliki for the hard work of fostering democratic institutions since the fall of longtime dictator Saddam Hussein.

At the same time, Mr. Panetta said the sometimes slow-moving decision-making process in Iraq can be “frustrating” for the U.S., which has also been waiting for the appointment of a new Iraqi defense minister.

“I’d like things to move a lot faster here, frankly, in terms of the decision-making process. I’d like them to make the decision, you know, do they want us to stay? Don’t they want us to stay? Do they want to have—you know—a minister of defense or don’t they want to get a minister of defense,” Mr. Panetta said. “But dammit, make a decision.”

Lt. Gen. Lloyd Austin, the commander of U.S. forces in Iraq, stopped short of demanding a decision on whether troops will stay in the country. But Lt. Gen. Austin, in a question-and-answer session with reporters after Mr. Panetta made his remarks, said time was important. He said it will be increasingly difficult and costly the longer Baghdad waits to decide. Cost, he said, was an important factor because of U.S. budget woes.

“It’s evident to everyone that when you get into the October-November timeframe, you’re really taking things apart that are very difficult to put back together,” he said.

Write to Adam Entous at adam.entous@wsj.com

By CAROL E. LEE, JOHN D. MCKINNON and NAFTALI BENDAVID

President Barack Obama and Republican leaders in Congress clashed Sunday over the scope of an effort to cut the federal deficit, one that could be shorn of its most ambitious elements, including revamping the tax code and significantly reducing growth in benefit programs.

Mr. Obama urged the top eight congressional leaders from both parties during a meeting that lasted about 75 minutes at the White House to strive for the largest possible package, some $4 trillion over 10 years. Republicans, however, made a pitch for a scaled-down plan of roughly $2 trillion over 10 years that doesn’t include about $1 trillion in tax increases the White House is seeking.

View Full Image

Associated Press

President Barack Obama and House Speaker John Boehner, left, meet with congressional leadership in the cabinet room of the White House on Sunday.

Republicans have tied a vote on raising the government’s $14.29 trillion borrowing limit to a deficit-reduction deal, and the tone of the Sunday meeting was tense and confrontational at times.

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Republican and Democratic leaders have said they won’t let the U.S. default, but the Treasury Department says the government could begin defaulting on its financial obligations, including debt payments, after Aug. 2 if the debt ceiling isn’t increased.

Officials from both parties said the leaders didn’t make any major progress toward reaching a deal that could win support from conservatives opposed to tax increases and liberals opposed to Medicare cuts.

Mr. Obama plans to host the same leaders again Monday and hold a news conference. The president asked Republicans to lay out at the Monday meeting the type of deficit reduction deal they would like to see, a Democratic official familiar with the discussion said.

An effort last week to negotiate an ambitious deficit-reduction deal reached an impasse Saturday because of forces still likely to bedevil negotiations over a smaller deal: tax increases and cuts to entitlement programs.

Mr. Obama and House Speaker John Boehner (R., Ohio) privately discussed and then announced their support last week for a framework for reaching a deal to reduce future deficits by $4 trillion over the next 10 years.

But Mr. Boehner backed away Saturday night as progress on a range of issues slowed. Emerging details of what it would take to reach the $4 trillion figure also made rank-and-file members of both parties balk.

He said negotiators should focus instead on a deal roughly half its size. Negotiators on each side also suggested the other side was being over-cautious.

In the meeting Sunday, Mr. Obama tried to break the logjam over taxes by saying he is willing to reform the tax code in a way so Republican members of Congress wouldn’t have to vote for a tax increase, a Democrat familiar with the discussion said.

Republicans restated their position that a $4 trillion plan, which would presumably include tax increases, couldn’t pass the House, and they emphasized the lack of time to pull the deal together and push it through, according to people briefed on the session.

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When Mr. Boehner made the point about timing, these people said, Mr. Obama responded that until then, the speaker had cited no concerns about the time.

Mr. Boehner told the group that he believes a package based on the work of the negotiating group led by Vice President Joe Biden is the most viable option at this point, according to a Boehner aide.

U.S. Treasury Secretary Timothy Geithner said the Obama Administration is still looking for a major deal on debt and the debt ceiling. Video courtesy Reuters.

Such a deal would still be a heavy legislative lift. The Biden negotiations fell apart last month when Democrats and Republicans reached an impasse over taxes, suggesting a smaller deal may not be any easier to achieve than the large deal.

Rep. Chris Van Hollen (D., Md.), a participant in the Biden talks, said the group had only identified roughly $1 trillion in cuts, and said on CNN’s “State of the Union” program that those were contingent on Republicans agreeing to some new taxes.

Mr. Boehner also restated his position that a deal requires spending cuts that are greater than the amount of the debt-ceiling increase and that no tax increases can be included. “The president agreed with the speaker that their previous talks did not produce any agreement,” the aide said.

Democratic officials briefed on Sunday’s meeting said Mr. Obama didn’t back down from his commitment to a big deal. “They definitely did not agree to scale back the size,” one official said.

But Republicans expressed dismay that Democrats weren’t pushing harder for a deal including major savings in Medicare and Social Security.

“It’s disappointing that the president is unable to bring his own party around to the entitlement reform that he put on the table,” said Don Stewart, spokesman for Senate Republican Leader Mitch McConnell, of Kentucky.

Senate Majority Leader Harry Reid lashed out at Republicans, saying this is just the latest in a series of bipartisan budget efforts they have derailed. “Every time we try to do something big about the deficit, you guys walk away,” he said, according to a Reid aide.

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Associated Press

U.S. Treasury Secretary Timothy Geithner talks about the debt crisis on CBS’s “Face the Nation” in Washington Sunday.

Democratic officials noted that in the meeting, Mr. Boehner kept a lower profile and that his No. 2 in the House, Rep. Eric Cantor of Virginia, did most of the talking for the Republicans.

Mr. Boehner came under fierce pressure from Republicans Friday, including from Mr. Cantor, who rejected one cornerstone of the big deal: $1 trillion in tax increases along with corporate and individual tax reform.

At the same time, the White House was slow to move on significant changes to spending programs such as Medicare and Medicaid, a senior GOP aide said. “Rather than going to big issues, we spent a lot of time nickel and diming,” the aide said.

A Friday jobs report showing the unemployment rate rose to 9.2% in June hardened the Republican argument against tax hikes.

“I’m for the biggest deal possible, too,” Mr. McConnell said in an interview on Fox News Sunday. “But we’re not going to raise taxes in the middle of this horrible economic situation.”

People briefed on the Sunday meeting said Mr. Obama told congressional leaders they should meet every day until they reach a deal.

Treasury Secretary Timothy Geithner said Sunday the parties should agree on the outlines of a deal this week to meet the Aug. 2 deadline.

Mr. Geithner also said the financial markets could soon begin to react with concern, which could drive up interest rates and make borrowing more expensive.

The president told the lawmakers Sunday night he would reject a series of short-term debt ceiling increases because they would create too much uncertainty.

Messrs. Obama and Boehner began to seriously negotiate a $4 trillion deficit-reduction deal the week of June 27, when the speaker indicated he was open to raising revenues through the tax code, a senior administration official said.

To generate the revenue Mr. Obama needed to make a $4 trillion deal palatable for Democrats, Mr. Boehner agreed to explore letting the Bush-era tax cuts for the wealthiest Americans expire as scheduled in January 2013, while extending the cuts for Americans making under $250,000 a year.

In exchange, Mr. Obama would agree to significant savings in Medicare, Medicaid and Social Security and comprehensive tax reform to simplify the tax code and lower rates by early 2012.

—Janet Hook

and Damian Paletta contributed to this article.

Write to John D. McKinnon at john.mckinnon@wsj.com and Naftali Bendavid at naftali.bendavid@wsj.com

By JEREMY PAGE

BEIJING—Adm. Mike Mullen, Chairman of the U.S. Joint Chiefs of Staff, kicked off a visit to China with a vow to maintain the U.S. military presence in Asia and a warning that recent incidents in the disputed waters of the South China Sea could escalate into conflict.

At the start of a four-day visit, Adm. Mullen on Sunday acknowledged China as a fellow Pacific power, but urged its military to ease regional concerns about its rapid modernization by playing a more cooperative, responsible and transparent role in the world.

Adm. Mullen arrived Saturday on a reciprocal visit at the invitation of Gen. Chen Bingde, his Chinese counterpart, who visited the U.S. in May as part of bilateral efforts to rebuild military exchanges that resumed in January after a 12-month suspension by Beijing.

But even as both sides express their commitment to enhance military ties, tensions are mounting again over one of the most divisive issues between them—the South China Sea, where China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei all have territorial claims.

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Agence France-Presse/Getty Images

Admiral Mike Mullen, right, seen here alongside Defense Secretary Robert Gates during a committee hearing on Capitol Hill in March, is visiting Beijing in a bid to cool military tensions between the U.S. and China.

Adm. Mullen expressed concern about recent incidents in those waters that have provoked angry exchanges between China and two other claimants—Vietnam and the Philippines—as well as protests in Hanoi, the Vietnamese capital, over the past few weeks.

“We have an enduring presence here, we have an enduring responsibility,” Adm. Mullen told foreign reporters at a briefing. “We seek to strongly support the peaceful resolution of these differences. The worry, among others that I have, is that the ongoing incidents could spark a miscalculation, and an outbreak that no one anticipated and we should seek to avoid that under all circumstances.”

Several Southeast Asian nations—most notably Vietnam—have been strengthening military ties with the U.S. since Chinese military and civilian figures began using more strident rhetoric about their territorial claims early last year.

China has accused the U.S. of interfering in its territorial affairs since Hillary Clinton, the Secretary of State, declared in Hanoi last July that the U.S. had an interest in protecting freedom of navigation in the South China Sea. Beijing, which advocates resolving the territorial issues bilaterally without any U.S. involvement, has also repeatedly demanded that the U.S. cease aerial reconnaissance and joint exercises around what it sees as its territorial waters.

Adm. Mullen made it clear that the U.S. would maintain its military presence and activities in the region, which included low-level joint naval exercises with Japan and Australia in the South China Sea on Saturday.

“The U.S. is not going away,” he said. “Our enduring presence in this region has been important to our allies for decades and it will continue to be so.”

China’s Foreign Ministry did not respond to a request for comment about Saturday’s exercises, or Adm. Mullen’s comments Sunday. But the state-run China Daily, an English-language newspaper, said in an editorial Friday that Southeast Asian nations should not tolerate attempts by outside forces to interfere in bilateral disputes.

“Asia’s history proves outside forces have never worked whole-heartedly for Asian peace and development,” it said.

Speaking later Sunday to students at Renmin University in Beijing, Adm. Mullen urged China’s military to be more open about its modernization program. “With greater military power must come greater responsibility, greater cooperation, and just as important, greater transparency,” he said. “Without these things, the expansion of military power in your region, rather than making it more secure and stable, could have the opposite affect.”

The U.S. and many Asian countries have been alarmed by China’s rapid development of advanced weaponry—notably a stealth fighter, a prototype of which it test-flew in January, and an aircraft carrier expected to begin sea trials in August.

“There are some very specific capabilities that are being developed here that are very focused on the United States’ capability,” Adm. Mullen told the earlier briefing.

However, he said it was not clear whether China would be able to make use of the carrier’s full potential, given the huge cost and technical challenges.

“There is great symbolism associated with that and I understand that…. Sometimes matching the actual capability of it versus the symbolism of it, there can be a gap there so I, like you, wait to see what is forthcoming,” he said.

He also expressed hope that China and the U.S. could find more ways to cooperate on antipiracy patrols, humanitarian operations, and North Korea, and to communicate directly with each other to help resolve crises.

“China and the United States are both Pacific powers and will be for a long, long time. And we need to, from my perspective, approach this relationship as two leaders with all of the responsibilities that that implies,” he said. “And frankly I think we need to work a lot harder on strategic trust and transparency. And it’s my hope that these reciprocal visits will get us started in this direction and that they can be sustained even through difficult issues.”

Write to Jeremy Page at jeremy.page@wsj.com

BY CHARLES DUXBURY

As Sweden’s finance minister, Anders Borg has received much of the kudos for his country’s relatively easy passage through the financial storms following the 2008 crisis. But now as things seem to be looking up, Mr. Borg—with a reputation for fiscal prudence—isn’t going to loosen the purse strings. Rather, he is preparing for the next crisis.

“I have a very strong ambition to keep Sweden on the safe side,” Mr. Borg says. “I have never in my life seen anyone taking damage from having too large safety margins.”

Mr. Borg says his cautious approach stems from hard lessons learned during …

BY VLADIMIR GUEVARRA

LONDON—The optimism among finance chiefs of many of the U.K.’s biggest companies in the recent quarter has fallen at its fastest rate since the collapse of Lehman Brothers Holdings Inc. in late 2008, and a third of those surveyed expect the country to slip into a double-dip recession, accounting firm Deloitte Touche LLP said Monday.

In its latest quarterly survey of chief financial officers, Deloitte said these key executives have become more focused on cost control and managing cash flow, and some see an end to rising profit margins.

The results of the survey come after …

BY JOHN LYONS

SÃO PAULO—Backers of a controversial plan to merge Carrefour SA’s Brazilian operations with the country’s biggest retailer by revenue, Pão de Açúcar, are scrambling to bring A-list investment funds into the deal to improve its chances of succeeding, a person familiar with the matter said.

Bringing new investors into the mix would help get over two major obstacles to the plan to create one of Brazil’s biggest companies. The person didn’t name the funds that will be approached about joining the deal.

First, a …

BY DAVID FICKLING

SYDNEY—Macarthur Coal Ltd. said Monday it received a takeover offer from Peabody Energy Corp. and ArcelorMittal that values the Australian coal miner at 4.68 billion Australian dollars (US$5.03 billion).

Macarthur, the world’s largest producer of the pulverized coal used in some blast furnaces, said the companies had offered A$15.50 a share for the business through a jointly owned bid company, representing a premium of 40% to Macarthur’s Monday closing price of A$11.08 a share. Still, the per-share amount is less than the company’s final dividend this year.

“The board makes no recommendation in relation to the indicative proposal but will …

BY CAROLYN CUI

Oil is back on the upswing, flying in the face of international efforts to keep prices low.

After an initial drop, crude-oil futures are back above the levels seen before the International Energy Agency in late June announced a plan to release 60 million barrels of oil from emergency stockpiles, ending Friday at $96.20 a barrel on the New York Mercantile Exchange. The U.S. will release 30.6 million barrels toward that total.

That futures contract is up more than 6% from the lows hit after the announcement. U.S. gasoline futures prices are up 11%, suggesting more pain at the pump …

By SIOBHAN HUGHES

WASHINGTON—The U.S. labor market could stay sluggish for a while, with small-business executives reluctant to hire amid the murky economic outlook.

A survey of small business owners shows a lack of confidence in the U.S. economy. More than two-thirds indicated they do not plan to add payrolls in 2011 or 2012. WSJ’s Siobhan Hughes reports. Photo: Justin Sullivan/Getty Images

Almost two-thirds—64%—of small-business executives surveyed said they weren’t expecting to add to their payrolls in the next year and another 12% planned to cut jobs, according to a U.S. Chamber of Commerce report to be released Monday. Just 19% said they would expand their work forces.

This comes after a Labor Department report Friday showed employers added few jobs in June, and unemployment rose to 9.2%. The bleak figures joined other data showing the recovery losing momentum in recent months, which has caused many analysts and policy makers to lower their forecasts for economic growth in the second half of the year.

The Small Business Administration says small businesses, defined as companies with fewer than 500 workers, employ about half of the workers in the private sector. In the Chamber’s survey of 1,409 executives, conducted by Harris Interactive, small businesses were defined as firms with revenue of $25 million or less.

More than half of the small-business executives in the June 27-30 survey cited economic uncertainty as the main reason for holding back on hiring. About a third blamed lack of sales, while just 7% pointed to problems getting credit.

“I think it’s safer to stay on hold and not hire workers,” said Harold Jackson, chief executive of Buffalo Supply, a Lafayette, Colo., distributor of high-tech medical equipment used in operating rooms.

Mr. Jackson said he has halved his staff to 15 workers since 2009 and was unlikely to start hiring soon even if his business picked up. “I can handle a reasonably large increase in business without having to increase the staff.”

Many of the executives surveyed were gloomy about the economy’s prospects. About 41% see the business climate getting worse over the next two years, compared with 29% who expect the climate to improve.

The modest hiring plans of small businesses don’t make up for the job losses in the past year, when some 29% let go workers, far outpacing the numbers that now plan to hire.

The June survey was conducted while the White House and congressional leaders were working to reach a deficit-reduction agreement that would ease the way for Congress to raise the federal borrowing limit by Aug. 2, in time to prevent a government default on its obligations. Treasury officials have predicted a default could trigger another financial crisis, sending interest rates soaring and causing a recession.

Of the small-business executives who responded, 70% predicted a negative impact for their business in the case of a government default.

“Small-business owners are pretty savvy; they do understand the ramifications for credit,” said William Miller, a senior vice president at the Chamber, who owns restaurants in Washington, D.C.

The executives had more confidence in their own futures than in the future of the country. While just 29% said that America’s best days were ahead, 39% said their own business’s best days were ahead. Some 84% said the U.S. economy was headed in the wrong direction, but 61% thought their own business was headed the right way.

“I’m optimistic about the future, but you still have to find your way through all these issues,” Mr. Jackson said.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

BY GAVIN LOWER

MELBOURNE—Australian pay-TV companies Austar United Communications Ltd. and Foxtel said Monday they had reached agreement for Foxtel to take over Austar in a deal that values Austar at 2.5 billion Australian dollars (US$2.69 billion).

Austar said in a statement the proposed deal, which had the backing of U.S. cable company Liberty Global Inc., Austar’s majority shareholder, would result in its shareholders receiving A$1.52 per share. The takeover will be conducted through a series of transactions and a scheme of arrangement.

Foxtel made its bid …

BY JARED A. FAVOLE

President Barack Obama is expanding his administration’s campaign against what he has referred to as “dumb” regulations by pressuring independent agencies to comb their books for outdated rules.

Mr. Obama in January ordered federal agencies—such as the Environmental Protection Agency and the Food and Drug Administration—to search their books and strike any overly burdensome regulations. Independent agencies—including the Securities and Exchange Commission and National Labor Relations Board—were exempt from the rule, raising …

BY LAURIE BURKITT IN BEIJING AND SAM HOLMES IN SINGAPORE

Nestlé SA is seeking to buy a 60% stake in Chinese candy maker Hsu Fu Chi International Ltd. for about $1.7 billion, the companies said Monday, in what could be one of the largest foreign takeovers of a Chinese company.

The Swiss foods giant is offering to pay 4.35 Singapore dollars a share, or about $3.56, and is proposing to acquire a 43.5% stake of Singapore-listed Hsu Fu Chi, the companies said in a joint statement Monday. If that succeeds, Nestlé would then seek to buy another 16.5% stake from members of the Hsu family, which founded Hsu Fu Chi. …

BY SERENA NG

American International Group Inc. is planning to replace one or more Wall Street banks in a group of four managing its next sale of shares from the U.S. government, reflecting dissatisfaction about the first sale in May.

AIG hasn’t decided which investment banks that led its first offering to drop, but will definitely make changes to the line-up of lead underwriters before the next share sale later this year, Chief Executive Robert Benmosche said in a recent interview. He said he had expected the banks to do a better job drumming up investor demand for the insurer’s shares in the …

BY MIA LAMAR

Hertz Global Holdings Inc. said it would extend to August its exchange offer to acquire fellow car-rental company Dollar Thrifty Automotive Group Inc. amid weak investor interest.

As of late Friday, a …

BY DANIEL MICHAELS, SUSAN CAREY AND PETER SANDERS

A potential American Airlines order for more than 250 jetliners holds even higher stakes for the carrier, Airbus and Boeing Co. than the deal’s giant size suggests.

Airbus wants to break Boeing’s monopoly at American and has assembled a team of lenders and leasing firms to help the European company dangle almost $6 billion in preferential financing, people familiar with the proposal said. Airbus’s offer has a catalog value of almost $23 billion, but that is being heavily discounted, the people said. The unit of European Aeronautics Defence Space Co., is offering American 130 of the current-generation A320s and …

BY DENNIS K. BERMAN, GINA CHON AND SCOTT KILMAN

Chemicals conglomerate Sinochem Corp. is in advanced discussions with Monsanto Co. to deepen their ties significantly, people familiar with the discussions said, an important sign of China’s growing appetite for U.S. crops and biotechnology.

The two companies have been in talks for months, the people said. It was unclear what form an agreement might take, though arrangements could include a large joint venture, the sale of a minority stake or Sinochem assuming a larger role marketing Monsanto products in China.

Discussions have been difficult, the people said, because of economic and political sensitivities of moving the companies closer together. “You …

BY KATE O’KEEFFE

HONG KONG—Credit-ratings firm Moody’s Investors Service warned of “red flags” at 61 rated Chinese companies as it sought to provide transparency on its approach to ratings amid rising investor concern about corporate governance at such entities.

The flags are meant to “highlight issues meriting scrutiny to identify possible governance or accounting risks for non-financial corporate issuers in emerging markets” and relate to issues such as weak corporate governance, riskier or more opaque business models, fast-growing-business strategies, poorer quality of earnings or cash flow, and concerns over auditors and quality of financial statements, the report, issued Monday, said.

“To address investors’ …

BY GORAN MIJUK

ZURICH—Making use of the strong Swiss franc as a takeover tool, chemicals maker Lonza Group AG said Monday it will buy U.S. biocides firm Arch Chemicals Inc. for $1.2 billion in cash to broaden the Switzerland-based firm’s product portfolio, extend its emerging-markets footprint and improve its natural currency hedge.

Lonza said the transaction, which also assumes around $170 million in Arch Chemicals’ debt and will be financed through the issuance of euro, Swiss franc and convertible bonds to limit dilution, was partly driven by the Swiss currency’s current strength and Lonza’s efforts to better protect itself against currency swings.

“The …

BY JONATHAN D. ROCKOFF AND RON WINSLOW

The pharmaceutical industry, after years of research flops that led some to write its obituary, shows signs it is coming back to life.

Credit a revamped research approach by the industry, which, after years of focusing on me-too drugs for ills that were already well treated, is pouring firepower into diseases that aren’t.

Companies have won marketing approval so far this year for 20 innovative medicines that work differently or better than existing drugs, or tackle ailments lacking good treatments, according to the Food and Drug Administration. “New molecular entities,” the FDA calls them. There were just 21 such approvals …

BY LYNN COWAN AND MIA LAMAR

Doughnut chain Dunkin’ Brands Group Inc. came one step closer to throwing open its doors to a public offering Monday, setting the price terms for its deal.

The company wants to sell 22.25 million shares at a price between $16 and $18, for a raise of about $401.4 million. It plans to trade on the Nasdaq under the symbol DNKN.

Though most IPOs immediately launch a marketing road show and begin trading …

By SOPHIA HOLLANDER

On Sept. 12, 2011, when the public is allowed to step onto the World Trade Center site for the first time in 10 years, the approach will be more pedestrian than poignant.

Visitors will pass through police screening gates and walk past barriers designed to prevent bombs from tearing through the site again. But this sobering reintroduction to the World Trade Center site is perhaps a fitting transition from the past decade—when the public’s last direct experience of the site was a morning of terror—to a new era.

Philip Montgomery for The Wall Street Journal

Water pours through the north memorial pool at Ground Zero.

As visitors emerge from the screening, they will encounter a sweep of trees that one day will rise to form a canopy filtering light and sound. As they approach the footprints of the towers destroyed during the Sept. 11, 2001, terrorist attacks, rushing water will mute the sounds of the surrounding city. They will find voids where the buildings once stood, an emptiness now filled with waterfalls.

The Wall Street Journal recently toured the site with architect Michael Arad and the president and CEO of the National Sept. 11 Memorial Museum, Joe Daniels.

Even though the opening is only two months away, the site remains primarily a construction zone. More than 500 neon-clad workers are racing to make the 10th-anniversary deadline; on Monday, the public can begin reserving time slots for visits.

The challenges to arriving at this moment have been legion: logistical, emotional, political. At several points, as costs swelled past $1 billion and donations withered, there were questions about whether the memorial would be built at all.

But as the 10th anniversary approached, people realized “it is not up to anybody on this project whether the world is going to check in on us,” Mr. Daniels said. “That got everybody motivated.”

Costs were shaved, down to $700 million for capital construction. Donors were re-invigorated as Mayor Michael Bloomberg personally took charge of the fund-raising effort.

Questions linger over what happens after the opening: Annual operating costs could be as high as $60 million and as of yet there is no identified funding source. Officials are considering charging for access to the museum, which will open a year later, and are pursuing federal contributions.

Ten years after the attack on the World Trade Center, the memorial to the victims is finally set to open. WSJ’s Sophia Hollander took a look around as organizers raced to finish.

“What we’re not going to do under any circumstances is let this place fall into disrepair,” Mr. Daniels said.

But those are problems for another day. On Sept. 12, the public will encounter a moving public space, threaded with hidden stories.

As visitors stare at the names of the 2,983 people who died in the attacks in 2001 and 1993, they can wonder about the invisible connections between them. Although the names appear to be scattered randomly around the rims of the pools, they have been grouped to reflect relationships among friends, families and colleagues, as requested by families.

Mr. Arad hopes to provide some kind of guide for visitors to hear their stories. “It’s hard to confront statistically close to 3,000 dead, but when you hear the story of one family, one friend, that’s something that we can all relate to,” he said.

There is meaning to be found in subtle details—such as the way the waterfalls begin as individual strands of water before merging into a single sheet midway through the descent.

“That’s quite poetic and appropriate in this context,” Mr. Arad said.

The pools, trees and pathways are reflected in unexpected corners and surfaces around the site—including the glass-clad towers rising at the edges.

Unlike monuments in battlefields or along the National Mall, this eight-acre site is embedded within one of the country’s densest commercial districts.

“This is an urban ruin, the walls of which will be defined by the buildings that surround it,” Mr. Arad said.

It is one of the many tensions animating the memorial: how to provide a quiet space for reflection apart from the city even while restoring life to a site that has been quarantined from the public for nearly a decade.

People may come alone to mourn—but some will also come to feel less alone, an experience that motivated Mr. Arad.

After the attacks, he remembers volunteering to donate blood and finding a line snaking around the block; he saw a policeman struggling to erect a barricade along First Avenue and hurried to help. “You just wanted to be—to find something to do that could make things better,” he said.

He began sketching a memorial: two large holes “torn” in the surface of the Hudson River, with water rushing continuously into the voids.

“How would you deal with an errant kayaker?” he asked rhetorically, with a slight smile. “That had not been resolved.”

The image of water rushing into voids stayed with him.

When the Lower Manhattan Development Corp. announced a design competition for the official memorial in 2003, Mr. Arad was among more than 5,200 peoples who submitted proposals.

His design quickly emerged as a favorite, recalled Paula Berry, the lone 9/11 family member on the 13-person jury. The panel winnowed the choices down to two favorites, each representing a strikingly different vision.

One drew viewers to look upward into the sky, evoking light and hope, she said. Mr. Arad’s design pulled eyes down into the pits left by the towers.

It “was the glass half empty,” she said. “Michael’s was very, very clearly not pulling any punches. It was meant to actually mark the tragedy and the magnitude of that event.”

On a recent afternoon, Mr. Arad sat at his desk and brought up the initial rough sketches on his computer. He grinned.

“It’s kind of funny to see these sketches,” he said, “and think that little squiggle is now an acre of empty space in Lower Manhattan.”

He said he always intended the site to include spaces for elements of mourning and of moving ahead. But, he said, “I struggled to find the right balance.”

Mr. Arad worked with Peter Walker, a landscape designer, who added in more than 400 trees to the original barren design. Over the years, in sometimes contentious collaborations with other stakeholders, they crafted, refined and reformed the plans.

As the site comes together, everyone is watching anxiously to see if reality matches their polished renderings.

“You just don’t know until you see it,” said Mr. Daniels. He worried over the fountains.

“I thought, ‘There’s fountains all over the place,’” he said. “I’m always wondering, ‘Will the scale of these fountains express the power that the architect was hoping?’”

He is starting to get his answer.

The massive pools, each stretching about a full acre, dominate the site. As you step closer and peer into the void, cascading water mutes even the hammering, blaring and booms of the construction site.

“People are going to remember that sound,” Ms. Berry said.

The names, etched into dark bronze, glint gold in the sun; at night, an internal light will make them blaze. On certain days, rainbows have arched out of the voids, sparked by the interplay of water and sunlight; at other times, the pools have reflected their own image in the pit’s granite walls, creating a series of shadow memorials.

“These are happy discoveries you can’t take credit for as a designer,” Mr. Arad said.

Where the twin towers once rose into the sky is a deep gash in the landscape, now preserved.

“The design, unlike most places in New York, is about emptiness and nothingness,” Mr. Arad said. But “it’s an emptiness that’s full of meaning, the same way that a moment of silence is filled with intention.”

Despite years of tweaks, concessions and compromising among the sometimes-warring constituents, Mr. Arad said the final design reflects the original vision—something he finds a welcome relief.

“It could so easily have turned out differently,” he said. “When you’re dealing with emptiness and nothing and silence and simplicity, it takes very little to overwhelm that—yet we still have that deafening silence.”

By MICHAEL ROTHFELD, ASHBY JONES and DIONNE SEARCEY

Legal experts say prosecutors have mounted cases with witnesses who suffer credibility issues similar to the accuser of former International Monetary Fund chief Dominique Strauss-Kahn.

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Associated Press

Dominique Strauss-Kahn, left, being escorted in New York last week.

The 32-year-old Guinean immigrant maintains she was sexually attacked but has admitted lying to authorities about other matters, according to prosecutors. Attorneys for Mr. Strauss-Kahn say charges should be dropped.

In mob and insider-trading cases, for example, people who have pleaded guilty to serious felonies or have told lies, have often testified successfully for prosecutors. The 1992 testimony of Sammy Gravano, a one-time mafia underboss, helped convict John Gotti, the head of the Gambino crime family, even though Mr. Gravano wasn’t considered entirely trustworthy.

Jurors can accept that someone can lie about one thing and tell the truth about another, legal experts say. The main challenge in this case would be to distinguish between the maid’s overall credibility and the veracity of her statements about the incident.

“Credibility issues often exist. That doesn’t mean the prosecutor automatically drops the case,” said Gerald Shargel, a top criminal defense lawyer in New York. “Weighing the strengths of a case is not singularly focused on credibility problems. The case is like mosaic. You have to look at everything.”

Compared to most sexual-assault cases, some legal experts say that there is already enough evidence based on what has been disclosed publicly to take the case to trial and let a jury decide whether the incident at New York’s Sofitel hotel suite 2806 on May 14 was forced—as she alleges—or consensual—as he claims.

There is physical evidence to support her account, prosecutors say. She “from day one has described the sexual assault many times,” and done so consistently, her lawyer, Kenneth Thompson, has said. Mr. Strauss-Khan, 62 years old, has pleaded not guilty.

“We have more here than we have in most sex crimes,” said Assistant District Attorney Joan Iluzzi-Orbon, one of the prosecutors in the case, in a recent interview with The Wall Street Journal. “The period of time that this happened is completely consistent with what she told us happened.”

Benjamin Brafman, a lawyer for Mr. Strauss-Kahn, has called the revelations about his accuser the “first step to what we believe will be full exoneration.”

Some advocates for women and crime victims say prosecutors should pursue the case if there is any reason to believe the maid’s story about the incident, pointing out that prosecutors routinely use witnesses with questionable backgrounds.

“People lie on asylum applications—they sometimes have a lot of pressing financial incentive to do so,” according to Deborah Denno, a law professor at Fordham University and a criminal-law expert. It has “nothing to do” with the May incident and “and some of the other lies were about incidents that happened long, long ago.”

Other lawyers say the fact that she initially said she was hiding in a hallway when she had actually resumed cleaning rooms could see by a jury as an effort by her to seem scared and traumatized when she wasn’t.

But key hurdles exist in this case, legal experts said. She told a gripping account of a past gang rape to seasoned prosecutors who believed her, then backtracked and admitted it was a lie, according to law-enforcement officials. It could be difficult to convince jurors that she was telling the truth about the sexual incident in this case, people close to the investigation said.

The ongoing investigation into the sexual-assault accusations against Mr. Strauss-Kahn could unearth evidence in the coming days that definitively convinces prosecutors whether a crime was committed or not.

After raising concerns about the credibility of the maid who made the allegations against Mr. Strauss-Kahn, investigators are continuing to dig further into her background and personal relationships, according to people familiar with the situation.

Relations appear to have broken down between prosecutors and Mr. Thompson, the maid’s attorney. He has called for District Attorney Cyrus Vance Jr., to be replaced with a special prosecutor on the case.

Mr. Thompson didn’t comment Sunday. A spokeswoman for prosecutors declined to comment as did Mr. Brafman.

Some advocates for women and crime victims say prosecutors should pursue the case if there is any reason to believe the maid’s story about the incident, pointing out that prosecutors routinely use witnesses with questionable backgrounds.

In any trial, Mr. Strauss-Kahn’s defense lawyers would be able to cross-examine the maid about a string of false statements she made. They would likely try to bring up the tearful—and phony—account of being gang raped in Guinea that was told to prosecutors, to show that she is able to convincingly tell false stories.

They would likely discuss a phone call she had with an Arizona inmate, in which law-enforcement officials have said she told him she expected to profit from the incident because Mr. Strauss-Kahn was wealthy. They would likely bring up a series of transactions in which they have said tens of thousands of dollars were deposited into her bank account by different men.

“I’d pay to see a lawyer of Ben Brafman’s caliber cross-examine her,” said Paul Shechtman, a criminal-defense lawyer in New York and former federal and state prosecutor. “It wouldn’t be pretty.”

Proceeding on a high-profile case on shaky testimony could also set back the cause of sex-crimes prosecutions, some legal experts say. In 2006, a woman accused members of the Duke University lacrosse team of raping her. The case crumbled after it appeared the accuser had lied, and the charges were dropped. The lead prosecutor in the case was eventually disbarred for his actions in the case.

Write to Michael Rothfeld at michael.rothfeld@wsj.com, Ashby Jones at ashby.jones@wsj.com and Dionne Searcey at dionne.searcey@wsj.com

By PETER LOFTUS

Joan Langbord, who still works in the Philadelphia jewelry shop started by her late father, a Depression-era coin dealer, found her gold treasure in a family safe-deposit box in 2003—ten Double Eagle gold coins dated 1933,

The Double Eagles—with a face value of $20—were minted but never released, prompting a similar coin owned by someone else to fetch $7.6 million at a Sotheby’s auction the year before Ms. Langbord’s discovery.

Associated Press

1933 Double Eagle $20 gold coin

When the family handed over the ten Double Eagles to the U.S. government for authentication, they hoped their find would be worth millions of dollars.

Mint officials confirmed the coins were legitimate—and among the rarest, according to collectors—then confiscated what they said was U.S. property. Now the Langbord’s are fighting back in federal court.

The government claims Ms. Langbord’s father, Israel Switt, who died in 1990, must have obtained the coins illegally.

The 1933 Double Eagles were never released by the government and were ordered melted back into bars amid President Franklin D. Roosevelt’s efforts to combat gold hoarding during the Great Depression.

“This is a crime the government has been waiting to put to rest for 70 years,” Assistant U.S. Attorney Jacqueline Romero told jurors in opening statements at a trial last week.

Ms. Langbord and her sons Roy and David, grandsons of the coin dealer, say federal attorneys have no proof they coins were obtained illegally.

“Mint records don’t show how the coins left,” their lawyer, Barry Berke, told jurors. “It is the government’s burden to prove they were stolen.”

The U.S. Mint’s Philadelphia factory made nearly 450,000 of the coins dated 1933. In coin vernacular, which dubs a $10 coin an “Eagle,” they were known as Double Eagles. Etched onto opposing sides of the coins are a soaring eagle and liberty figure resembling a Greek goddess. It was designed by sculptor August Saint-Gaudensin the early 1900s at the behest of President Theodore Roosevelt, who wanted to beautify American coins.

But the 1933 coins were never circulated because a newly inaugurated President Franklin Delano Roosevelt issued an order prohibiting the release of gold from the Mint. It was part of an effort to rescue the banking system, which was endangered by people withdrawing gold at an alarming rate.

The Langbord’s case is being closely watched by collectors because it involves some of the most prized coinage in the world.

“These coins were legendary,” said Robert W. Hoge, curator of North American coins and currency with the American Numismatic Society. Their scarcity, design and historical provenance all have contributed to their value, he said.

Underscoring that value, the Mint displayed the 10 coins at a coin-collector conference in Denver in 2006, after they were submitted by the Langbords. They’ve since been stored at the U.S. Bullion Depository in Fort Knox, Ky.

The bulk of 1933 Double Eagles were eventually melted into gold bars by 1937. None of the coins was legally issued to the public, according to the government; two were sent to the Smithsonian in Washington for its coin collection and 20 were sent for testing and destroyed.

Nevertheless, other coins have surfaced. In 1944, the U.S. Treasury Department issued an export license for a 1933 Double Eagle purchased by King Farouk of Egypt for his collection, according to court records. In the 1990s, a British collector tried to sell what he claimed to be the King Farouk Double Eagle in New York.

The U.S., which maintains that the original export license to King Farouk was a mistake, tried to block the British dealer’s sale. After six years of litigation, the U.S. and the dealer agreed to auction off the King Farouk coin and split the proceeds. That single coin sold to an unidentified buyer for $7.6 million at a Sotheby’s auction in 2002, a record for a public coin auction.

In the 1940s, the U.S. Secret Service, whose duties include protecting the nation’s money supply as well as government leaders, investigated appearances of other 1933 Double Eagles after one was listed for public auction. The agency traced at least nine such coins back to Mr. Switt, who eventually admitted he had sold them around 1937, according to court documents.

A faded copy of Mr. Switt’s 1944 sworn statement to the Secret Service is among the documents being presented at the current trial. “… I do not remember when, where or from whom I purchased them, as they were received by me in collections with other coins at different times,” Mr. Switt wrote. He did write, however, that he didn’t get them directly from the U.S. Mint or its employees.

The Secret Service wanted to prosecute Mr. Switt for theft of U.S. property, according to the government, but the statute of limitations had expired. The government eventually recovered at least nine of the coins believed to have been sold by Mr. Switt and destroyed them.

The government believes Mr. Switt obtained the coins from a former Mint cashier who had exclusive access to the 1933 batch.

Members of the Langbord family declined to comment outside the courtroom.

Mr. Berke said it was illegal for the government to take the coins without going through legal forfeiture proceedings. He also said the government wouldn’t even have known about the 10 coins if the Langbord family hadn’t voluntarily notified the Mint.

If the coins ever become available for sale, they would probably sell for at least $1 million apiece, numismatic experts said.

On Friday, jurors heard from a witness called by the government, David Tripp, the former head of Sotheby’s coin department who wrote a book about the 1933 Double Eagles published in 2004. Mr. Tripp walked jurors through copies of Mint records from the 1930s which he says show that none of the 1933 batch made it out to the public as legal tender.

The trial is expected to last two to three weeks.

Write to Peter Loftus at peter.loftus@dowjones.com

By JEFFREY BALL

Gary Vann pines for the days when he could put the pedal to the metal in his 18-wheeler and hurtle down empty stretches of highway at 100 miles per hour. “You talk about fun, man,” the 34-year-old Tennessean said.

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Jeffrey Ball/The Wall Street Journal

Doug Andersen shows the ‘black box’ that transmits his truck’s location and speed to the dispatch center.

That was in the late 1990s, when Mr. Vann was a rookie truck driver and oil was cheap. Now, with diesel at close to $4 a gallon, trucking companies are moving to cap soaring fuel bills by tapping the brakes on their drivers.

Several big companies have tweaked the computerized governors on their trucks’ engines in recent months, dialing down the top speed. Mr. Vann’s employer, Titan Transfer LLC, cut it to 65 mph from 70 mph. Titan also drops extra cash on drivers who know how to get the best fuel economy out of their rigs, and puts extra pressure on the leadfoot.

Terry Kelley, another Titan driver, is about to pop a gasket. He is averaging about five miles per gallon in his truck, far below the seven mpg Titan has told its drivers it wants them to eke from their machines. “They called and chewed me out about it today,” he said one recent morning.

Under the sterner governor, Mr. Kelley said, he covers less blacktop, crimping his take-home pay, since truckers are paid by the mile.

“It’s like trying to eat a french fry with a hand over your mouth,” he said. “It’s not going to work.”

To truckers across the U.S., the new controls—the industry’s latest attempt to wring better economy from its fleets—spell the end of a romantic age, powered by cheap diesel, when drivers could do pretty much as they pleased on the open road. Gone are the days of open-throttled hauling made famous by “Smokey and the Bandit,” the 1977 movie starring a suave Burt Reynolds, in which a tractor-trailer shreds the speed limit on a cross-country beer run.

At highway speeds, every decline of five mph improves an 18-wheeler’s fuel economy by about half a mile per gallon. Titan spends roughly $24 million a year on diesel and expects “huge” savings from the five-mph cut in its trucks’ top speed, said Tommy Hodges, the company’s chairman, who declined to give specific numbers.

Mr. Hodges said Titan was trying to teach its drivers to cruise, as much as possible, at a steady speed instead of constantly speeding up and then slowing down, which slurps fuel. The ideal, he said, is to drive “like there’s an egg under the accelerator.”

It’s a good thing John Gilbert didn’t have an egg under his accelerator in the 1970s. Back then, he often high-tailed it from Los Angeles to Baltimore at an average speed of 80 mph. Mr. Gilbert, now 69, would cross the country in three days, not the five his company gave him for the trip. That gave him two days to relax at home in Baltimore, with his bosses none the wiser.

The low-tech tools of the trade were catnip to rogue truckers. The CB radio helped drivers skirt speed traps. Faced with federal rules limiting the number of hours they could drive in a day, truckers kept written logs—sometimes several versions of them—to hide illegally long days from authorities’ prying eyes.

“I used to have three log books,” recalled trucker Terry Johnston, 52. “You could run anywhere you wanted to.”

Today, a driver’s every move is electronically recorded and relayed back to the dispatch center, where supervisors pick the data apart. Key to the system is a gadget some drivers liken to Big Brother: a black box in the cab that’s wired to a satellite dish near the roof and beams all the juicy details back to the company in real time: the truck’s location, its speed—even what gear it’s in, as trucker Doug Andersen learned the hard way last month.

Mr. Andersen, whose truck is governed at a maximum of 65 mph, was cruising downhill on Interstate 15, heading from California to Utah, when he slipped his rig into what truckers call “Georgia overdrive,” a guerrilla move to override an engine’s governor. He shifted the moving truck into neutral, letting gravity speed it up. When the speedometer neared 80 mph, the legal speed limit on that stretch of road, a red light flashed on the gray, tablet-size computer wired into the truck’s dashboard.

Snagged by his superiors, who call the move dangerous because it makes an 18-wheeler hard to control, Mr. Andersen pulled his truck over and called the dispatcher for his tongue-lashing.

“They said, ‘That’s a no-no. You can get fired for that,’ ” recalled Mr. Andersen, a lanky 54-year-old from Utah whose khaki baseball cap sports the American flag.

Sometimes the very computers that the trucking companies use to enforce more efficient driving can contribute to burning more diesel. On a recent steamy day at a truck stop in Dallas, driver Randy Murray spent about two hours sitting in his parked rig, the engine idling to keep the air conditioner running. He was waiting for orders to pick up 44,000 pounds of Coca-Cola to haul to Florida.

The alternative to running the engine, he said, was to “sit here in a 100-degree truck and sweat to death.” He could have shut off the engine and waited in the air-conditioned truck stop, but he said he wouldn’t have been able to see when the computer in the cab told him to get moving.

Safety advocates say slowing down 18-wheelers saves lives as well as fuel. Some drivers agree it reduces crashes. “Some of the stuff I did when I was younger scares me,” said Mr. Gilbert, the trucker who used to speed from coast to coast in three days. Now he’s content to cruise at 65 mph.

Other truckers argue that slower trucks cause more wrecks, because cars whose drivers are furious about the lumbering 18-wheelers whip around them.

Since the trucking company he works for recently trimmed its rigs’ top speed to 64 mph from 68 mph, driver Nolan Newcomb has noticed more car drivers greeting him with a universal hand signal he calls “No. 1.” To illustrate, the 52-year-old, whose girth and white beard make him look a little like Santa Claus, stuck out his middle finger.

Write to Jeffrey Ball at jeffrey.ball@wsj.com

By ARIAN CAMPO-FLORES

Zuma Press

A marker shows the farthest point the shoreline receded to in a 2001 drought.

PALM BEACH, Fla.—A record dry season left West Palm Beach, Fla., with just 22 days worth of fresh water last month, prompting new rules restricting residents to once-a-week watering schedules for lawns and plants.

But with a 2.6-acre estate in neighboring Palm Beach that features a 37,000-square-foot home, a pool and lush tropical landscaping, Terry Allen Kramer is accustomed to using more than 120 times the amount of water consumed by the average customer in the region.

And she isn’t alone.

Some of her neighbors in this tony island enclave—whose water is supplied by West Palm Beach—use more than one million gallons of water a month to keep their properties green.

Top 5 Water Users in Palm Beach

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That disparity has drawn calls for a water-pricing arrangement that includes surcharges, at least while drought conditions last, and has spawned tension between the tract-home crowd and the more affluent.

“People living on a 19-acre estate can afford to pay a lot more for their water,” said Drew Martin, who has a seat on the Palm Beach Soil and Water Conservation District. “If they were paying significantly higher expenses, it would encourage them to be more efficient.”

“The excess water usage is not for the grass,” said Ms. Kramer, a theater producer and heiress of Charles Allen, who co-founded investment bank Allen Co. “I do have guests. I do have 19 bathrooms.”

Though her property consumed more than 13 million gallons of water from June 2010 to May 2011—the most of any Palm Beach resident, according to an analysis of residential water bills by the Palm Beach Post—she said she didn’t plan to reduce her usage. The town should invest in a desalination plant, she said, which would ensure that “there’s enough water for everyone.”

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Zuma Press

West Palm Beach code enforcement officer Carlos Maldonado last month.

After enduring the most parched October-to-June dry season on record, parts of eastern Palm Beach County are suffering “exceptional” drought conditions, the highest classification, according to the National Drought Mitigation Center. As a result, officials in West Palm Beach tapped an emergency wellfield, bought water from the county and obtained permission to draw off a reservoir owned by the South Florida Water Management District.

They also limited landscape irrigation, which accounts for roughly half of total water consumption, to one day a week for all utility customers, including those in Palm Beach.

Yet there is no cap on the volume of water a resident can consume and no surcharge for excessive usage.

Given the need to conserve, some residents ask why the owners of large estates are allowed to continue soaking up as much water as they want. “It’s appalling,” said Cecily Hangen, who has kept her water use in check by cutting back on laundry and planting native species in her garden. “They should be fined.”

Code enforcers in Palm Beach have been cracking down on violators of the watering restrictions. Since April 1, the town has issued 283 written warnings and 116 citations, according to code-enforcement manager Raychel Houston. Among those warned were Ms. Kramer; John L. Thornton, a former president of Goldman Sachs; and Stephen Schwarzman, co-founder of the Blackstone Group. Mr. Thornton also received a $125 citation.

Mr. Thornton didn’t return calls seeking comment. A spokesman for Mr. Schwarzman said the house had been fully compliant with watering restrictions since the warning and that his contractor expects a “major reduction” in usage through checking for leaks, among other things.

Some residents argue that officials should crack down more vigorously. “If you’ve got a water bill that high, the county needs to cut your water off,” said Louise Fargason, adding that she no longer hoses down her yard.

West Palm Beach leaders have shied away from criticizing Palm Beach estate owners and say there are no plans to change the pricing scheme. “We don’t want to isolate anybody,” said Pat Painter, watershed manager for West Palm Beach. “Collectively, we’re all culpable.”

The Palm Beach Civic Association has been encouraging homeowners to invest in more efficient irrigation systems, said Garrison Lickle, a director of the group and a board member of the Everglades Foundation, which advocates on water management issues.

In the past few weeks, bouts of rainfall have provided some relief to the area. But climatologists say the region needs to be drenched by several tropical storms to close the water deficit.

“People are already asking, ‘Can I start watering more?’ ” said Mr. Painter. “We’re trying to say, ‘If it rains this week, that’s your one day a week. Take it as a gift.’ “

By CAROL E. LEE, JOHN D. MCKINNON and NAFTALI BENDAVID

The White House and Republican leaders in Congress embarked on a new effort Sunday to cut the federal deficit, one that now appears to have been shorn of its most ambitious elements, including revamping the tax code and significantly reducing growth in benefit programs.

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President Barack Obama and House Speaker John Boehner, left, meet with congressional leadership in the cabinet room of the White House on Sunday.

President Barack Obama and the top eight congressional leaders from both parties met at the White House for 75 minutes Sunday night in attempt to piece together a scaled-down package. It wasn’t clear if the leaders made progress on reaching a deal that could win support from conservatives opposed to tax increases and liberals opposed to Medicare cuts.

Aides to two leaders in the meeting said the group tentatively plans to meet again Monday.

Republicans have tied a vote on raising the government’s borrowing limit to a deficit-reduction deal. The Treasury Department says the U.S. will default on its financial obligations by Aug. 2, including debt payments, if the debt ceiling isn’t increased.

An effort last week to negotiate an ambitious deficit-reduction deal fell apart Saturday because of forces still likely to bedevil negotiations over a smaller deal: tax increases and cuts to entitlement programs.

Mr. Obama and House Speaker John Boehner (R., Ohio) privately discussed and then announced their support last week for a framework for reaching a deal to reduce future deficits by $4 trillion over the next 10 years.

But Mr. Boehner backed away Saturday night as progress on a range of issues slowed. Emerging details of what it would take to reach the $4 trillion figure also made rank-and-file members of both parties balk. He said negotiators should focus instead on a deal roughly half its size. Negotiators on each side also suggested the other side was being over-cautious.

Hitting the Ceiling

See what the federal debt limit has been at year-end since 1940.

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Mr. Boehner came under fierce pressure from Republicans, including his No. 2 in the House, Rep. Eric Cantor of Virginia, who rejected one cornerstone of the big deal: $1 trillion in tax increases along with corporate and individual tax reform. At the same time, Democrats—including the White House—were too wary of changes to Medicare, Medicaid and Social Security, Republicans complained.

A Friday jobs report showing the unemployment rate rose to 9.2% in June hardened the Republican argument against tax hikes. “I’m for the biggest deal possible, too,” Senate Minority Leader Mitch McConnell (R., Ky.) said in an interview on Fox News Sunday. “But we’re not going to raise taxes in the middle of this horrible economic situation.”

When asked at the start of the meeting Sunday night whether a deal to cut the deficit and raise the debt ceiling could be done in 10 days, President Obama said, “We need to.”

The president entered the meeting prepared to make the case that a $4 trillion deal is still possible. White House chief of staff Bill Daley said on Sunday that Mr. Obama “is not giving up.” “This president is committed to bringing economic soundness to this country, and that takes a big deal,” Mr. Daley said in an interview on the ABC News program “This Week.”

Mr. Boehner’s statement Saturday night said leaders should strive for a deficit-reduction plan closer to $2 trillion over 10 years, as lawmakers and the White House had for weeks pursued in talks led by Vice President Joe Biden.

U.S. Treasury Secretary Timothy Geithner said the Obama Administration is still looking for a major deal on debt and the debt ceiling. Video courtesy Reuters.

Such a deal would still be a heavy legislative lift. The Biden negotiations fell apart last month when Democrats and Republicans reached an impasse over taxes, suggesting a smaller deal may not be any easier to achieve than the large deal.

Rep. Chris Van Hollen (D., Md.), a participant in the Biden talks, said the group had only identified roughly $1 trillion in cuts, and said those were contingent on Republicans agreeing to some new taxes. “Our Republican colleagues are dreaming,” if they think Democrats will agree to $2 trillion or more in cuts without any accompanying revenue increases, he said on CNN’s “State of the Union” program.

Lawmakers have just three weeks to reach a deficit-reduction deal in time for Congress to pass legislation to raise the $14.29 trillion debt ceiling. One idea that’s gotten attention lately involves re-calibrating how inflation is measured for a variety of federal programs, from the tax code to benefit programs such Social Security. It has been discussed in deficit talks, but it’s unclear yet whether it could become part of a scaled-down deal.

Treasury Secretary Timothy Geithner said Sunday the parties should agree on the outlines of a deal this week to meet the Aug. 2 deadline.

Mr. Geithner also said the financial markets could soon begin to react with concern, which could drive up interest rates and make borrowing more expensive.

Messrs. Obama and Boehner began to seriously negotiate a $4 trillion deficit-reduction deal the week of June 27, when the speaker indicated he was open to raising revenues through the tax code, a senior administration official said.

To generate the revenue Mr. Obama needed to make a $4 trillion deal palatable for Democrats, Mr. Boehner agreed to explore letting the Bush-era tax cuts for the wealthiest Americans expire as scheduled in January 2013, while extending the cuts for Americans making under $250,000 a year.

In exchange, Mr. Obama would agree to significant savings in Medicare, Medicaid and Social Security and comprehensive tax reform to simplify the tax code and lower rates by early 2012.

That time line was designed to allow Mr. Boehner to argue that the tax increase for upper-income people would never actually take effect.

The big deal appears to have collapsed over a disagreement on how to structure tax reform.

Mr. Boehner offered an approach, but the White House objected, saying it would unduly benefit higher earners.

A senior administration official said the administration, in a counteroffer late last week, insisted on maintaining a tax code in which tax rates rise with household income and upper-income earners pay a disproportionately large share of total taxes.

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Associated Press

U.S. Treasury Secretary Timothy Geithner talks about the debt crisis on CBS’s “Face the Nation” in Washington Sunday.

The White House said it would be fine with lowering rates for everyone, but would not accept letting top earners pay a smaller share of total taxes, a senior administration official said.

By late Saturday afternoon the White House was still waiting for a response from Mr. Boehner’s office on the tax proposals, the senior administration official said.

Instead Mr. Boehner reached out Saturday night to Mr. Obama to tell him he was backing away from the big deal.

One senior Republican aide said Mr. Boehner’s decision was driven in part by the intensifying public and private discussion of the deal on Friday, after which he concluded he couldn’t sell the tax proposal to his GOP caucus.

Given the difficulty lawmakers had reaching a deal of that scale, some people familiar with the talks believe it may not be possible to reach any long-term agreement before the markets become jittery and that a short-term deal may be necessary. Mr. Obama has threatened to veto a short-term deal.

—Janet Hook

and Damian Paletta contributed to this article.

Write to Damian Paletta at damian.paletta@wsj.com and Ian Talley at ian.talley@dowjones.com

By JAY SOLOMON And ADAM ENTOUS

WASHINGTON—The Obama administration confirmed it has suspended hundreds of millions of dollars in military aid to Pakistan, senior U.S. officials said, due to slackening support by the country for Washington’s fight against al Qaeda and the Taliban.

This “pause” in aid disbursement was specifically tied to Islamabad’s decision to expel U.S. military trainers from Pakistan following the May killing of al Qaeda leader Osama bin Laden by a U.S. special-operations unit.

The White House didn’t notify Pakistan’s military commanders ahead of time about the operation conducted deep inside the South Asian country. The incident has fueled heightened anti-American sentiment among Islamabad’s top brass and led to diminished cooperation, according to senior U.S. officials.

“Right now, they have taken some steps that have given us reason to pause on some of the aid which we were giving to their military, and we’re trying to work through that, and it’s a complicated relationship in a very difficult, complicated part of the world,” White House Chief of Staff William Daley said Sunday on ABC News’s “This Week.”

The New York Times reported in Sunday’s editions that about $800 million in military aid and equipment to Pakistan could be affected in the suspension. Mr. Daley confirmed this figure.

“The Pakistani relationship is difficult, but it must be made to work over time,” Mr. Daley said. “But until we get through these difficulties, we will hold back some of the money that the American taxpayers have committed to giving.”

U.S. military officials said some aid items placed on hold are directly related to the work of American trainers who Pakistan expelled in May. This includes: intelligence, reconnaissance and surveillance equipment, small arms and military hardware used to dispose of explosive ordinance.

The Pentagon also is withholding equipment directly tied to military programs overseen by U.S. officials who have been denied visas to enter Pakistan since bin Laden’s death. This includes: night-vision devices; helicopter spare parts; UHF and VHF radios, and equipment used to detect and dispose of roadside bombs and other improvised explosive devices, or IEDs.

Write to Jay Solomon at jay.solomon@wsj.com and Adam Entous at adam.entous@wsj.com

By JEREMY PAGE

BEIJING—Adm. Mike Mullen, Chairman of the U.S. Joint Chiefs of Staff, kicked off a visit to China with a vow to maintain the U.S. military presence in Asia and a warning that recent incidents in the disputed waters of the South China Sea could escalate into conflict.

At the start of a four-day visit, Adm. Mullen on Sunday acknowledged China as a fellow Pacific power, but urged its military to ease regional concerns about its rapid modernization by playing a more cooperative, responsible and transparent role in the world.

Adm. Mullen arrived Saturday on a reciprocal visit at the invitation of Gen. Chen Bingde, his Chinese counterpart, who visited the U.S. in May as part of bilateral efforts to rebuild military exchanges that resumed in January after a 12-month suspension by Beijing.

But even as both sides express their commitment to enhance military ties, tensions are mounting again over one of the most divisive issues between them—the South China Sea, where China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei all have territorial claims.

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Admiral Mike Mullen, right, seen here alongside Defense Secretary Robert Gates during a committee hearing on Capitol Hill in March, is visiting Beijing in a bid to cool military tensions between the U.S. and China.

Adm. Mullen expressed concern about recent incidents in those waters that have provoked angry exchanges between China and two other claimants—Vietnam and the Philippines—as well as protests in Hanoi, the Vietnamese capital, over the past few weeks.

“We have an enduring presence here, we have an enduring responsibility,” Adm. Mullen told foreign reporters at a briefing. “We seek to strongly support the peaceful resolution of these differences. The worry, among others that I have, is that the ongoing incidents could spark a miscalculation, and an outbreak that no one anticipated and we should seek to avoid that under all circumstances.”

Several Southeast Asian nations—most notably Vietnam—have been strengthening military ties with the U.S. since Chinese military and civilian figures began using more strident rhetoric about their territorial claims early last year.

China has accused the U.S. of interfering in its territorial affairs since Hillary Clinton, the Secretary of State, declared in Hanoi last July that the U.S. had an interest in protecting freedom of navigation in the South China Sea. Beijing, which advocates resolving the territorial issues bilaterally without any U.S. involvement, has also repeatedly demanded that the U.S. cease aerial reconnaissance and joint exercises around what it sees as its territorial waters.

Adm. Mullen made it clear that the U.S. would maintain its military presence and activities in the region, which included low-level joint naval exercises with Japan and Australia in the South China Sea on Saturday.

“The U.S. is not going away,” he said. “Our enduring presence in this region has been important to our allies for decades and it will continue to be so.”

China’s Foreign Ministry did not respond to a request for comment about Saturday’s exercises, or Adm. Mullen’s comments Sunday. But the state-run China Daily, an English-language newspaper, said in an editorial Friday that Southeast Asian nations should not tolerate attempts by outside forces to interfere in bilateral disputes.

“Asia’s history proves outside forces have never worked whole-heartedly for Asian peace and development,” it said.

Speaking later Sunday to students at Renmin University in Beijing, Adm. Mullen urged China’s military to be more open about its modernization program. “With greater military power must come greater responsibility, greater cooperation, and just as important, greater transparency,” he said. “Without these things, the expansion of military power in your region, rather than making it more secure and stable, could have the opposite affect.”

The U.S. and many Asian countries have been alarmed by China’s rapid development of advanced weaponry—notably a stealth fighter, a prototype of which it test-flew in January, and an aircraft carrier expected to begin sea trials in August.

“There are some very specific capabilities that are being developed here that are very focused on the United States’ capability,” Adm. Mullen told the earlier briefing.

However, he said it was not clear whether China would be able to make use of the carrier’s full potential, given the huge cost and technical challenges.

“There is great symbolism associated with that and I understand that…. Sometimes matching the actual capability of it versus the symbolism of it, there can be a gap there so I, like you, wait to see what is forthcoming,” he said.

He also expressed hope that China and the U.S. could find more ways to cooperate on antipiracy patrols, humanitarian operations, and North Korea, and to communicate directly with each other to help resolve crises.

“China and the United States are both Pacific powers and will be for a long, long time. And we need to, from my perspective, approach this relationship as two leaders with all of the responsibilities that that implies,” he said. “And frankly I think we need to work a lot harder on strategic trust and transparency. And it’s my hope that these reciprocal visits will get us started in this direction and that they can be sustained even through difficult issues.”

Write to Jeremy Page at jeremy.page@wsj.com

BY ADAM ENTOUS

BAGHDAD—Leon Panetta made his first visit to Baghdad as U.S. defense secretary to deliver a tough message to the Iraqi government that its security forces need to do more to stem increasingly deadly attacks by Iranian-backed militias on American troops.

Pentagon impatience with the government of Prime Minister Nouri al-Maliki has been building for months as the U.S. military presses for a long-awaited decision from Baghdad about whether it will request that some U.S. troops remain in Iraq beyond the end of this year.

The surge in deadly attacks has ratcheted up the pressure on both sides. Mr. Panetta made …

BY PATRICK O’CONNOR

WHITE EARTH, Minn.—Republican presidential hopeful Michele Bachmann touts one job as her primary professional experience before entering politics. On the campaign trail, she describes it as being a “federal tax litigation attorney.” Others might call it tax collector.

Ms. Bachmann spent four years with the Internal Revenue Service district counsel office in St. Paul, Minn., from 1988 to 1992, and “worked on hundreds of civil and criminal cases,” according to her congressional website.

This part of her resume cuts two ways for Ms. Bachman, who ranks near the top of the GOP field in polls of New Hampshire and Iowa, …

BY VU TRONG KHANH

HANOI—Vietnam Oil and Gas Group and its partners are considering buying ConocoPhillips’s stakes in three oil and gas projects off the coast of Vietnam, according to the country’s state-run oil company, also known as PetroVietnam.

ConocoPhillips, the third-largest U.S. oil company by market value after Exxon Mobil Corp. and Chevron Corp., has stakes in oil fields located 180 kilometers southeast of Ho Chi Minh City.

“The reason why the firm [ConocoPhillips] is selling the stakes might be it is restructuring itself,” PetroVietnam Director General …

BY YASMINE CHINWALA

This year’s FN100, Financial News’s annual list of the 100 most influential people in European financial markets, for the first time has a regulator in the top slot: Mario Draghi. Not only is he going to be president of the European Central Bank starting in October, he will also become chairman of the European Systemic Risk Board, the umbrella body for the new structure of European regulation. Mr. Draghi is also chairman of the Financial Stability Board until his term ends next April.

Over the past three months, Financial News, a sister paper of The Wall Street Journal Europe, canvassed …

BY LYNN COWAN

Though many industries are hoping for better times for U.S. initial public offerings, young health-care companies, in particular, have a lot at stake.

The IPO market has been rocky since early May, and pharmaceutical, biopharmaceutical and medical-device firms have been completely absent from the roster since late April. The last deal seen, Sagent Pharmacueticals Inc., rose 24% on its first day of trading.

The Dow Jones Industrial Average slipped into six consecutive weeks of declines soon after, and IPO pricings became …

BY CHARLES DUXBURY

As Sweden’s finance minister, Anders Borg has received much of the kudos for his country’s relatively easy passage through the financial storms following the 2008 crisis. But now as things seem to be looking up, Mr. Borg—with a reputation for fiscal prudence—isn’t going to loosen the purse strings. Rather, he is preparing for the next crisis.

“I have a very strong ambition to keep Sweden on the safe side,” Mr. Borg says. “I have never in my life seen anyone taking damage from having too large safety margins.”

Mr. Borg says his cautious approach stems from hard lessons learned during …

BY ENDA CURRAN

CANBERRA—Australia plans to close some of the country’s biggest polluters and has pledged billions of dollars for renewable-energy projects as the government seeks to roll out one of the world’s largest national carbon-pricing plans.

Australia is one of the world’s largest polluters per capita due to its heavy use of coal-fired power, which accounts for some 75% of electricity output. The plan to price carbon comes less than two years after a global push to tackle climate change stalled in Copenhagen.

Only the European Union’s emissions-trading scheme will be of comparable size, and industry has criticized Canberra for pursuing the …

BY VLADIMIR GUEVARRA

LONDON—The optimism among finance chiefs of many of the U.K.’s biggest companies in the recent quarter has fallen at its fastest rate since the collapse of Lehman Brothers Holdings Inc. in late 2008, and a third of those surveyed expect the country to slip into a double-dip recession, accounting firm Deloitte Touche LLP said Monday.

In its latest quarterly survey of chief financial officers, Deloitte said these key executives have become more focused on cost control and managing cash flow, and some see an end to rising profit margins.

The results of the survey come after …

BY GABRIELE PARUSSINI AND WILLIAM HOROBIN

AIX-EN-PROVENCE, France—The global economy is still fragile and more work needs to be done in terms of strengthening economic governance in the European Union and coordinating policies among its 17 members to avoid future crises, European Central Bank President Jean-Claude Trichet said Sunday.

“The major revelation of the last four years was the fragility of the global economy,” Mr. Trichet told the Rencontres Economiques d’Aix-en-Provence conference. “Strengthening resilience is absolutely essential given the fragility exhibited by the global economy.”

Mr. Trichet’s remarks come as the European economic bloc faces increasing challenges, with some observers warning that it ultimately runs the …