WASHINGTON (Reuters) -- Convicted murderer Ingmar Guandique was sentenced on Friday to 60 years in prison for the death of former federal intern Chandra Levy, a court official said, capping off a controversial, decade-long case.

In November, Guandique, a 29-year-old Salvadoran immigrant, was convicted on two counts connected to Levy's death.

Levy disappeared on May 1, 2001, launching a wide search that turned up few details about her whereabouts but did bring allegations the 24-year-old Levy had an affair with then-Congressman Gary Condit of California.

The married Condit acknowledged having a "close relationship" with Levy but maintained he had nothing to do with her disappearance or death.

Despite never being named a suspect, media coverage of the investigation contributed to his reelection loss in 2002.

Levy's largely decomposed remains were found in Washington's Rock Creek Park a year after she disappeared but the investigation went cold.

Not until 2009 did police charge Guandique, who was already imprisoned for attacking other women in the same area Levy went missing.

Police came under criticism for a number of missteps early in the investigation, including initially focusing on Condit rather than Guandique.

(Reporting by Wendell Marsh; Editing by Jerry Nortonx)

PHOENIX (Reuters) – A federal judge has ordered a temporary stay on the release of federal "mug shots" of accused Tucson shooter Jared Lee Loughner, after his attorneys argued releasing them would be tantamount to trying him in the media.

In a ruling announced on Friday District Judge Larry Burns stayed the release of U.S. Marshals Service booking photographs of Loughner, 22, pending a court hearing on February 18.

Loughner is charged with the attempted assassination of U.S. Representative Gabrielle Giffords and attempting to murder two of her aides in a January 8 shooting rampage outside a Tucson supermarket that killed six people and injured 13.

The order follows an emergency motion lodged by Loughner's attorneys on Thursday, arguing that mug shots are "powerfully associated with criminality."

"Release of the photograph conflicts with the parties' interests in avoiding the case being tried in the media rather than in court," defense attorney Reuben Camper Cahn argued.

He added that mug shots are "inherently private," and "reveal what individuals look like at their most humiliated moment," and argued that their release served no relevant freedom of information interest.

The photograph of Loughner so far released to the media was taken by the Pima County Sheriff's Department after his arrest.

The U.S. Marshals Service mug shots that his attorneys sought to block were taken after he was subsequently booked into federal custody.

Further federal charges are expected to be brought against Loughner, after which he could face prosecution for an array of state crimes.

(Reporting by Tim Gaynor; Editing by Jerry Norton)

MADISON, Wisconsin (Reuters) – Wisconsin's new Republican governor on Friday proposed sharply curtailing the bargaining rights of public employee unions and other cost-saving measures to rein in the state's budget deficit.

Governor Scott Walker said he will ask the Republican-controlled legislature to pass his "budget repair bill" next week. He said it aims to bring stability to government finances and stave off employee layoffs.

"The last thing we need is any more people on unemployment," Walker said at a news conference.

The proposal drew criticism from Democrats in the state, which has a $137 million budget deficit in the fiscal year ending June 30 and larger deficits to come.

"If Republicans get their way, workers will no longer be able to negotiate over the hours they work, the safety conditions they labor under or the health insurance and retirement benefits they and their families depend on," Senate Democratic Leader Mark Miller said in a statement.

The proposal includes limiting state employee wage increases to the rate of inflation unless approved in a voter referendum. Public employees -- other than police, fire, and inspectors -- would lose many bargaining rights and could opt out of paying union dues after current contracts expire, with dues no longer collected automatically.

State workers will have to increase contributions to their pensions to 5.8 percent of salary, and double contributions to health insurance premiums to 12.6 percent of salary. Wisconsin's unfunded pension liability is $252.6 million, according to Moody's Investors Service.

The plan calls for raising appropriations for prisons and the Medicaid program, which is underfunded by $153 million, while making changes to the health insurance program for the poor. It also calls for selling the state's heating plants.

Walker's plan also would allow the state to push principal payments due March 15 on its general obligation bonds into future years to gain $165 million through a debt refinancing. That money would help cover a court-ordered payment to the Injured Patients and Families Compensation Fund and payments under the state's tax reciprocity program with Minnesota.

SHARE THE PAIN

State employee unions made $100 million in concessions in December to ease the budgetary strain, said Bryan Kennedy, president of the state chapter of the American Federation of Teachers. But Walker's response has been "to eviscerate our most basic rights" and "end labor peace in Wisconsin."

Leading Republican lawmakers say workers have to share the pain of shoring up the state's unsustainable financial problems -- a projected $2.9 billion biennial budget deficit for fiscal 2012 and 2013. This year's budget totals $12.7 billion.

"Anything short of making the tough decisions that are necessary to balance our budget and rein in spending is going to leave our state bankrupt, and the livelihood and well-being of Wisconsin will depend on the swift and decisive action we'll be taking over the next week," state House Majority Leader Scott Suder said.

A growing number of deficit-ridden states have tried to curb expenses by going after public employee union contracts and pensions. Wall Street rating agencies and investors in the $2.8 trillion municipal bond market are increasingly focusing on the cost of employee benefits like pensions as they weigh the credit-worthiness of state and local government debt.

Walker's plan to eliminate all bargaining rights of public sector workers except for a limited discussion of wages is draconian, according to one legal expert.

"Not only is this inconsistent with international human rights law, which recognizes a right to collectively bargain with one's employer, but it also flies in the face of decades of cooperation between the labor movement and the government in Wisconsin," Marquette University law professor Paul Secunda said.

(Additional reporting by Karen Pierog and John Rondy, Writing by Andrew Stern, Editing by Dan Grebler)

PHOENIX (Reuters) – Arizona on Thursday filed a lawsuit against the federal government, alleging that Washington has failed to secure the state's porous border with Mexico.

Gov. Jan Brewer and state Attorney General Tom Horne, both Republicans, told a news conference that they filed a counter suit against the government in federal court in Phoenix.

The suit is in response to a government lawsuit last year blocking key parts of the state's tough law cracking down on illegal immigrants.

"Because the federal government has failed to protect the citizens ... of Arizona, I am left with no other choice," Brewer told reporters at a news conference in central Phoenix, as several boisterous protesters attempted to shout her down.

"We did not want this fight. We did not start this fight. But, now that we are in it, Arizona will not rest until our border is secured and federal immigration laws are enforced," she added.

The desert state straddles a furiously trafficked corridor for human and drug smugglers from Mexico, and is the principal gateway for illegal immigrants entering the United States.

In Washington, a spokesman for the U.S. Department of Homeland Security dismissed the suit as a "meritless court claim" that "does nothing to secure the border."

"Smart strategies, dedicated law enforcement personnel, and strategic partnerships with state, local, and tribal governments and agencies do," spokesman Matt Chandler said.

'RAMPANT ILLEGAL IMMIGRATION'

The suit detailed five separate counts, including allegations that the government had failed to achieve "operational control" over the border, enforce immigration laws, and protect Arizona from "harms associated with rampant illegal immigration."

Brewer locked horns with the federal government last April, when she signed the state's controversial measure cracking down on illegal immigrants into law.

It provoked protests in Arizona and around the country, although opinion polls showed that a majority of Americans supported the law,

At the heart of the state law is the requirement that police determine the immigration status of a person they have detained and suspect of being in the country illegally.

But before it could take effect last July, U.S. District Court Judge Susan Bolton blocked key parts of the state law, arguing immigration matters are the federal government's responsibility.

In November, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit heard arguments in the case. It has yet to issue a ruling.

Brewer said the state would most likely have to pursue its claims all the way to the U.S. Supreme Court.

She added that legal costs were covered by donations from thousands of Americans, and that no state taxpayer funds had been spent in defending the law.

(Writing by Tim Gaynor; additional reporting by Jeremy Pelofsky in Washington; editing by Greg McCune)

LOS ANGELES (Reuters) – Fast-growing burrito chain Chipotle Mexican Grill Inc said on Thursday it was too early to tell if it would change its hiring practices after a federal immigration crackdown forced it to fire hundreds of employees in Minnesota.

But as the company faces a widening probe into restaurants in Virginia and Washington D.C., executives said they are trying to head off the kind of disruption that occurred in Minnesota, where new hiring and training added 20 percent to 30 percent in restaurant crew hours.

"This has not been an easy process for anyone involved," co-Chief Executive Monty Moran told analysts on a fourth-quarter earnings call. "But we're navigating our way through it, and we're learning as much as we can so that we can avoid this sort of disruption in the future."

Analysts' scrutiny of the immigration probe was one of the few critical notes in an otherwise stellar day for Denver-based Chipotle, which reported strong quarterly results that sent shares up 7 percent.

The company -- whose motto is "Food with Integrity" -- is one of the most high profile employers to come under the scrutiny of Immigration and Customs Enforcement (ICE) since the agency shifted its focus two years ago to probing employers' hiring rather than snaring workers in surprise workplace raids.

The investigation into Chipotle is also serving as a wake-up call to the restaurant industry, which relies on immigrant labor for around one-quarter of its work force.

Moran assured analysts that his company has a strict policy against hiring employees who are not authorized to work in the United States. He said it has professionals review documents to detect forgeries and train managers to examine them at the store level.

Moran said he wants to "use the Minnesota situation to get better" as the company plans to add 135 to 145 new stores to its 1,100 restaurants across the United States.

"This is a new situation for us -- to find out that there were a significant number of undocumented workers in Minnesota," said Moran. "And we're working with ICE and with a number of experts and professionals to make sure the disruption that occurred there is not something that takes place in the future for Chipotle."

NEW YORK, Feb 10 (Reuters Legal) – Retail stores may not ask a customer to provide a zip code in the course of a credit card transaction, the California Supreme Court ruled on Thursday.

The decision, which has implications for all retailers doing business in California, arose in a class action suit against Williams-Sonoma. Plaintiff Jessica Pineda alleged that the housewares company used customer zip codes to obtain the home addresses of "hundreds of thousands, if not millions" of customers and then used the data for marketing or sold the information to other businesses.

Pineda said the practice breached her right to privacy under the California Constitution and violated the Song-Beverly Credit Card Act of 1971, which prohibits retailers from recording a customer's "personal identification information" in a credit card transaction. Each violation carries a civil penalty of up to $1,000.

In its 15-page, unanimous decision, the California Supreme Court ruled that the act was designed to promote consumer protection and that personal identification information includes a cardholder's zip code. Any other result, the court wrote, would be an "end run" around the statute's clear purpose. The ruling reversed two lower courts and rejected an argument by Williams-Sonoma that the statute was unconstitutionally vague. The ruling also allowed the decision to be applied retroactively to past customer transactions.

"People don't understand they're giving information on their addresses," said Gene Stonebarger, a lawyer for Pineda who presented oral arguments before the Supreme Court in January. "They believe they need to provide the zip code to process the transaction, similar to what they do at a gas station." Gas stations, however, do not store zip codes after a transaction has been approved.

SIMILAR LAWSUITS

Williams-Sonoma had argued that the law was never intended as sweeping privacy legislation to prevent a retailer from using legal means to send catalogues to its customers. Even without zip codes, a business could still use other ways to track down customer addresses, such as a phone book or electronic database, the company said.

Craig Cardon, who represented Williams-Sonoma, declined to comment on the court's decision.

Retailers doing business in California, including Polo Ralph Lauren and Pottery Barn, a unit of Williams-Sonoma, have faced a number of similar lawsuits. Most recently, in a 2008 case against Party City, the California 4th District Court of Appeals ruled that zip codes were too general to fall under the law's ban.

Donna Wilson, an attorney who has defended multiple retailers in these cases, said the Williams-Sonoma decision was "about as broad a decision as could have been issued" and raises the question of how retailers can maintain contact with their customers without risking a violation of the law. Applying it retroactively, she said, exposes retailers to liability even though they relied on lower court opinions that blessed the practice of zip-code gathering.

David Faustman, who represented Party City in the previous case, said this kind of litigation has caused retailers to reconsider doing business in California.

It was not immediately clear whether the ruling would have an impact beyond California. The Song-Beverly act was modeled after a similar statute in New York, and other states including Delaware, Kansas, Maryland, Massachusetts, Nevada and Rhode Island have similar laws. None of those states prohibit the collection of zip codes, Williams-Sonoma argued in its brief.

(Reporting by Terry Baynes of Reuters Legal; Editing by Amy Singer)

HOUSTON (Reuters) – Representative Gabrielle Giffords has begun to regain her speech a month after being shot in the head in an assassination attempt, and has even requested toast for breakfast, her spokesman said on Wednesday.

"She is speaking more and more with each passing day, most recently asking for toast," said spokesman C.J. Karamargin. "The congresswoman is working very hard and clearly it's paying off."

Giffords' accomplishment is the latest milestone in a recovery her doctors have called miraculous.

The Arizona lawmaker was shot in the head outside a grocery store in Tucson, Arizona, on January 8. Six people, including a federal judge, were killed and 12 others were wounded in the attack. Jared Loughner has been accused in the shootings.

Giffords, 40, has been recovering at TIRR Memorial Hermann hospital in Houston, where "she is undergoing a rigorous therapy program," Karamargin said.

"They are working with her on all kinds of language and speech exercises," Karamargin said.

Giffords -- known to friends and relatives as "Gabby" -- is eating three meals a day, her husband said.

"Gabby's appetite is back and -- even though it's hospital food -- she's enjoying three meals a day," NASA astronaut Mark Kelly said in a Facebook posting on Tuesday.

Kelly, a three-time space shuttle veteran, will command the shuttle Endeavour when it launches in April, NASA said last week.

"The doctors say she is recovering at lightning speed considering her injury, but they aren't kidding when they say this is a marathon process," Kelly said.

Doctors say Giffords' full recovery could take months.

(Additional reporting by Jessica Johns Pool; Editing by Xavier Briand and Todd Eastham)

WASHINGTON (Reuters) – Republicans have no clue who they will nominate to face President Barack Obama in 2012, but conservative aspirants to the nation's highest office are hoping to put their names in play this week.

Several Republicans pondering a run in 2012 are to speak this week to a large gathering of conservatives in Washington, a chance to test their messages and generate some buzz.

A year ahead of the first state voting contests to decide who will face Obama in November 2012, no prominent Republican has formally announced a candidacy and no potential candidate has emerged as a favorite.

But plenty of politicians who can envision themselves in the Oval Office are running underground campaigns, visiting early voting states, talking to fund-raisers, organizing staffs. The first announcements are expected by March.

The Conservative Political Action Conference is to hear from a number of potential candidates on Thursday, Friday and Saturday as conservatives who have been celebrating the 100th anniversary of the birth of conservative giant Ronald Reagan search for someone who can wave his banner.

"It's one of the first times that they get to showcase their actual credentials among key constituencies and generate publicity for themselves early on in the cycle," said Republican strategist Ron Bonjean.

Among the speakers are two former governors, Mitt Romney of Massachusetts and Tim Pawlenty of Minnesota; former House of Representatives Speaker Newt Gingrich and sitting governors Haley Barbour of Mississippi and Mitch Daniels of Indiana.

Gingrich and two other possibles, Representative Michelle Bachmann and former Senator Rick Santorum speak on Thursday.

Romney, Pawlenty, South Dakota Senator John Thune, Texas Governor Rick Perry and Daniels speak on Friday and Barbour speaks on Saturday. Attendees will decide their favorites in a Saturday straw poll.

Absent from the proceedings are two Republicans who poll well among conservatives, former Alaska Governor Sarah Palin and former Arkansas Governor Mike Huckabee, who are weighing whether to jump into the race.

NO HEIR APPARENT

Republicans have no obvious heir apparent in 2012 as they usually do, leaving party loyalists to ponder a crowded field that includes Romney, who fought hard but lost to eventual Republican nominee John McCain in 2008.

"It's totally wide open," said Republican pollster Whit Ayres, though he said he now sees Romney as the front runner.

The party is on a high after wrestling control of the House from the Democrats in November's midterm elections and squaring up to Obama on spending cuts.

A key objective for the potential candidates is to do no harm. "What you want more than anything else, you want to come out of there without anything negative generated from it," said Republican strategist Matt Mackowiak.

And by delaying their formal announcements, the candidates save money and avoid peaking too soon.

"They can reach more people for free three times a day on Twitter than they can by buying a 30-second ad on television every night," said Republican strategist Rich Galen.

Part of the calculation a politician considers in whether to launch a run is to what extent their opponent can be beaten. All agree Obama will be hard to beat, but that it can be done -- depending on how the U.S. economy performs.

Obama appears to be enjoying an improved standing with Americans by taking some centrist moves after his Democrats were routed in congressional elections last November. A Reuters/Ipsos poll on Wednesday put his job approval rating at 51 percent after spending most of 2010 in the 40s.

A crowded Republican field may play to Obama's advantage.

"We're a closely divided country and we'll have another close election in 2012, but right now it's to the president's advantage to have such a large Republican field that will be battling among themselves," said Peverill Squire, political science professor at the University of Missouri.

(Editing by Todd Eastham)

WASHINGTON (Reuters) – U.S. intelligence chiefs head to Congress on Thursday to answer questions about the soaring costs of spycraft and shifting threats to the United States nearly a decade after the September 11 attacks in 2001.

President Barack Obama's Democrats lost control of the House of Representatives in November's congressional elections, largely due to voter anger over a slow economic recovery and a swelling government deficit.

The new Republican chairman of the House intelligence committee -- mirroring his party's very public focus on cutting spending -- is promising to take a close look at costs at the CIA, the National Counterterrorism Center and other agencies.

"We know that we can't sustain growth rates in the intelligence community the way we have in the past decade," Representative Mike Rogers told Reuters.

Last year, the U.S. government disclosed it spent just over $80 billion on intelligence in fiscal year 2010, double the amount in 2001. Obama took office in January 2009 after the eight-year presidency of George W. Bush, a Republican.

"Ten years after 9/11 we've had huge increases in intelligence spending and we're going to review ... where we were, where we are and where we need to go," Rogers said.

Director of National Intelligence James Clapper and seven other senior officials will testify at the annual hearing that is expected to touch on sensitive issues ranging from North Korea's nuclear programs to China's cyber capabilities in open and closed-door sessions.

A Senate committee will hold a similar hearing next week.

Much of the focus will remain on the evolving war against Islamist militants, Rogers said.

Al Qaeda's affiliates in troubled states like Yemen, Somalia and elsewhere are emerging as direct dangers for the United States, while the group's core leadership in Pakistan's border regions with Afghanistan are under unprecedented pressure from U.S. strikes by unmanned drone aircraft.

YEMEN VS PAKISTAN

In a preview of what may be heard on Thursday, Michael Leiter, head of the National Counterterrorism Center, told the Homeland Security Committee on Wednesday he saw al Qaeda's Yemen-based branch as a major threat to the United States.

The group, al Qaeda in the Arabian Peninsula, or AQAP, has claimed responsibility for a failed Christmas Day attack in 2009 aboard a U.S. airliner and a more recent attempt to blow up two U.S.-bound cargo planes with toner cartridges packed with explosives.

Still, U.S. officials are split over whether al Qaeda in Yemen or Pakistan is the biggest danger.

"Which one is more dangerous or immediate, you get a debate about," a senior U.S. defense official told Reuters, speaking on condition of anonymity.

"AQAP makes more news through failed plots. The other failed plots don't necessarily do that. But that doesn't mean they don't exist."

The official did not say which threats went unreported.

On Egypt, Rogers defended U.S. intelligence ahead of the protests that threaten to topple President Hosni Mubarak. Critics have said Obama and Secretary of State Hillary Clinton were slow to grasp the scale of the upheaval.

"I think what you'll find is that this was not an intelligence failure," Rogers said, adding there had been plenty of warning of "chafing under Mubarak."

"Once it did occur, was there information sufficient to make real-time policy decisions? Well, as somebody who was getting briefed on a regular basis as this was unfolding, I can say absolutely yes."

The White House has shared that assessment. Spokesman Robert Gibbs said last week that Obama received "relevant, timely and accurate" intelligence on the crisis.

(Editing by John O'Callaghan and Cynthia Osterman)

PHILADELPHIA (Reuters) – Vice President Joe Biden on Tuesday announced an ambitious $53 billion U.S. program to build new high-speed rail networks and make existing ones faster over the next six years.

But the plan drew immediate fire from majority Republicans in the House of Representatives, who said building high-speed rail requires private investment rather than a government plan.

Biden, who estimated he has ridden Amtrak trains between Washington and his home in Wilmington, Delaware, some 7,900 times, made a strong pitch for rail transportation to enable the United States to compete and lead internationally.

"This is about seizing the future," he said, making the announcement at Philadelphia's busy 30th Street station with U.S. Transportation Secretary Ray LaHood.

The United States should follow the example of Japan and China and build high-speed rail, Biden said. "If we do not, you tell me how America is going to be able to lead the world in the 21st century," he said.

President Barack Obama's budget for fiscal year 2012, to be unveiled next week, includes $8 billion for the plan. The rest of the money would be allocated over the six-year time period.

Obama has said he wants to target investments in areas such as infrastructure while reducing spending to tackle the budget deficit.

Under the initiative, the Department of Transportation would choose corridors for new projects and increase U.S. use of the passenger rails.

Republicans in the House criticized the program and suggested it could face problems getting legislative approval.

In a joint statement, Transportation Committee Chairman John Mica and Railroads Subcommittee Chairman Bill Shuster expressed "extreme reservations" regarding the plan.

"This is like giving Bernie Madoff another chance at handling your investment portfolio," Mica said in the statement on the Transportation Committee's website, referring to the financier serving a 150-year prison sentence for running an estimated $65 billion Ponzi scheme.

Shuster said an unsound rail project "just prolongs the inevitable by subsidizing a failed Amtrak monopoly that has never made a profit or even broken even.

"Government won't develop American high-speed rail. Private investment and a competitive market will."

Biden's announcement follows Monday's news that Amtrak, the United States' largest passenger rail service, plans a $13.5 billion commuter rail project connecting New York City and New Jersey, reviving an idea rejected late last year by New Jersey's Republican governor, Chris Christie, as too expensive.

The project became a lightning rod in the run-up to the November 2010 election, pitting those calling for more federal infrastructure spending against those who said such projects were too costly.

Advocates say U.S. investment in high-speed rail lags many other countries and point to China, which plans to invest $451 billion to $602 billion in its high-speed rail network between 2011 and 2015, according to the China Securities Journal.

(Additional reporting by Jeff Mason and Wendell Marsh in Washington; editing by Mohammad Zargham)

ST. LOUIS (Reuters) – Missouri executed by lethal injection on Wednesday a man convicted for the 1991 murder, rape and kidnapping of an 11-year-old St. Louis girl.

The execution of Martin Link, the first in Missouri in nearly two years, was carried out at 12:15 a.m. (0615 GMT) Wednesday at the state prison in Bonne Terre after last-minute appeals failed, Department of Corrections spokesman Chris Cline said.

Governor Jay Nixon on Tuesday denied a clemency petition, and appeals before Missouri and U.S. courts also failed.

Nixon said nothing had changed since Link, 47, was convicted of killing Elissa Self-Braun, who disappeared walking to her school bus stop. Her body was found four days later floating in the St. Francis River, about 135 miles from her home.

Link was executed with an injection of sodium thiopental, a drug formerly made by Hospira, Inc., the only U.S. company that manufactured the drug. The company said recently that it will no longer make the drug because it does not want it to be used in executions.

Missouri's last execution was in 2009, and another man, Richard Clay, had been scheduled to die earlier this year. His sentence was commuted to life in prison at the last minute by Nixon.

The execution of Link was the fifth this year in the United States. There were 46 executions in the United States during 2010, down 12 percent from 2009. Since 1989, Missouri has executed 67 men.

(Reporting by Bruce Olson; Editing by Mary Wisniewski, Jerry Norton and Greg McCune)

WASHINGTON (Reuters) – The military on Tuesday issued its first new statement of strategy in seven years, moving beyond a focus on the war in Afghanistan to address the rise of China and other strategic challenges.

The 2011 national military strategy by the Joint Chiefs of Staff reaffirmed U.S. commitment to fighting violent extremism with allies in Afghanistan and Pakistan but said the military must broaden its horizons to address developing threats elsewhere.

"While we continue to refine how we counter violent extremism and deter aggression, this strategy also rightly emphasizes that our military power is most effective when employed in concert with other elements of power," Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, wrote in his "Chairman's Corner" blog.

The strategy is a broad statement on how the military intends to use its forces and prioritize aid and training to help achieve U.S. security goals.

Military officials say a "whole-of-nation" approach involving not only security forces but diplomacy and nongovernmental organizations will be necessary to address many future security challenges.

"This whole-of-nation approach to foreign policy, with civilian leadership appropriately at the helm, will be essential as we address the complex security challenges before us," Mullen said.

While the last national military strategy, produced in 2004, called for the military to protect the United States, prevent surprise attacks and prevail against adversaries, the current document goes beyond that.

In addition to countering violent extremism and deterring aggression, the 2011 strategy seeks to strengthen global security through regional and international partnerships and aims to reshape the military force to meet future challenges.

"We focus more toward the future and strengthening global and regional stability and shaping the future force," a senior military officer said on condition of anonymity.

The national military strategy addresses in broad general terms how the military forces will be used. By law it must be reviewed every two years, but it is not necessarily revised unless changes are needed.

The senior military officer said the security environment facing the United States had changed substantially in seven years since the 2004 strategy was issued.

The United States faces a broad range of challenges in the Asia-Pacific region, from the rise of India and China, to North Korea's nuclear program, the shifting global economic balance and a fierce competition for natural resources, he said.

The strategy calls for improving global security by forging deeper military-to-military relationships and cooperation with China and other Asia-Pacific countries.

The senior officer said the U.S. military had to "achieve our mission" in Iraq and Afghanistan, but also must look beyond those conflicts and "start recognizing that the strategic environment that's elsewhere needs to be dealt with."

(Editing by Cynthia Osterman)

LOS ANGELES/DALLAS (Reuters) – Chipotle Mexican Grill has a lot going for it -- an upscale burrito concept, a hip and eco-friendly image, expansion plans galore and a 500 percent-plus stock price gain in just over two years.

And then it has something not going its way -- a federal crackdown on its immigrant labor force that has so far forced Chipotle to fire hundreds of allegedly illegal workers in the state of Minnesota, perhaps more than half its staff there.

The probe is widening. Co-Chief Executive Monty Moran told Reuters on Friday that U.S. Immigration and Customs Enforcement (ICE) has also issued "notices of inspection" for restaurants in Washington D.C. and Virginia.

Investors in the Wall Street darling are taking note and one firm, Calvert Investments, plans to talk to Chipotle about the large number of undocumented workers uncovered.

Dependence on illegal labor is the elephant in the room for the U.S. restaurant business. And experts say the Chipotle ICE investigations are a wake-up call for an industry that is one of America's biggest employers and generates over $300 billion in annual sales, according to research firm IBISWorld Inc.

Chipotle -- a Denver-based company whose motto is "Food With Integrity" -- is one of the most well-known names caught in the immigration enforcement shift that began two years ago.

At that time, Barack Obama, a proponent of immigration reform to help manage the 11 million undocumented immigrants in the United States, became president. Also at that time, immigrant hiring by restaurants began to rebound.

Obama has had to walk a fine line on the issue. He must uphold the law and appease Americans resentful of illegal immigrants working as the unemployment rate stubbornly sits at 9 percent. But he needs to do it in a way palatable to Hispanic voters who will be key to his re-election in 2012.

Gone are the days of big raids that snared large numbers of workers, mostly from Mexico and Central America. Under Obama, immigration enforcement agents are cracking down on employers with so-called "I-9 audits" -- I-9 being the employment eligibility verification form.

ICE says that means companies' hiring practices could be subjected to the same degree of scrutiny as their bookkeeping is by the Internal Revenue Service.

"When you get a big name like Chipotle, it stands out and sends a message," said Jacqueline Longnecker, president of Reno-based Employment Verification Resources Inc.

"The onus is on employers now ... It sends the message that nobody is going to be excused from this," she said, adding that many companies -- both large and small -- do not recognize the potential liabilities they now face.

Chipotle believes it has not been singled out.

"ICE has vowed to increase pressure on employers to avoid employing undocumented workers ... We are one of a large and growing number of companies to go through this process," Moran told Reuters by e-mail.

But to date, the majority of audits that have come to light in the restaurant business have been limited to small operators or franchisees of big chains, like Subway.

EMPLOYEE CHURN

The U.S. fast-food industry historically has offered relatively low pay and paltry benefits to legal workers and, as a result, has struggled with high employee turnover.

Longnecker and other experts said restaurant owners are attracted to illegal laborers because they work hard, are loyal and will go the extra mile to hold down a job.

It is hard to know the extent of hiring of illegal immigrants in restaurants. But immigrants -- both legal and illegal -- account for about a quarter of workers in the restaurant and food services industry and their numbers are up in recent years.

Their share fell from 24.5 percent in March 2006 to 21.4 percent in March 2008 -- before and during the recession -- but then recovered to 23.6 percent in March 2009 and March 2010, according to an analysis of the government's Current Population Survey (CPS) data conducted for Reuters by the Migration Policy Institute, a nonpartisan think tank.

The overall number of immigrants employed in the sector climbed from just over 1.7 million in 2008 to 1.8 million in 2010, according to this data, even as native employment fell from 6.4 million to 5.9 million.

The Pew Hispanic Center -- whose demographic and labor market work is highly regarded -- estimated in a 2009 report that 12 percent of the workforce in food preparation and serving in 2008 was undocumented.

Chipotle, which has more than 1,000 restaurants mostly in the United States and plans to open as many as 145 more in 2011, pays its workers more than the average burger flipper but its building binge has stoked its appetite for new hires.

Alejandro, one of the Chipotle workers fired in Minnesota who asked that his last name not be published for fear of reprisals, worked there for five years and earned $9.42 per hour, taking home $1,200 a month. That allowed him to send up to $800 per month to his daughters to keep studying in Mexico.

"I thought it was a good company," said Alejandro, who lost his job in December along with 10 of his 20 co-workers. "I was even going to get training to be promoted to kitchen manager."

PROBLEMS WITH PAPERS

Alejandro, 37, and co-worker Tanya, a 35-year-old mother of four, admit they are in the United States illegally and had to use false documents to get their jobs at Chipotle.

"I believe that when you go to apply there, they know beforehand that you don't have papers," Tanya said by phone. "And after the six years I worked there, or the 10 years of some of my colleagues, they get rid of us without warning."

The false documents, which include things such as driver's licenses, Social Security cards and residence permits, are easy to come by "on the street," said Tanya. "Many people offer them. It is part of coming here and trying to make a better life for your children."

But Moran says that Chipotle has "always taken this issue very seriously, and over the last five years we have done a great deal to improve our systems, and our document review capabilities and procedures."

"Certainly this incident has been eye-opening for us and caused us to redouble our efforts to make sure we are doing all we can short of running afoul of the mandate of the Department of Justice," said Moran, adding that Chipotle performs two document reviews for each employee hired, one by the hiring manager and another by its human resources department.

The company, which has gained a cult-like following by serving natural and organic food where possible, stands out as one of the industry's top performers when it comes to sales at established restaurants and stock gains. Its stock price is flirting with $250 compared to under $40 in November 2008.

It also differs from other public traded chains in another very important way. Unlike McDonald's Corp and most other restaurant companies, it does not rely on franchisees to own and operate restaurants, which means it might be easier to hold its head office more accountable for infractions.

INVESTOR URGES 'BETTER SYSTEMS'

Investors, however, may not see much risk to Chipotle or other fast food companies from their immigration quandaries. Chipotle stock still ended 3 percent higher on Friday after the news of the widening immigration probe.

After all, the companies can simply go out and hire others or pay fines to ICE that probably won't dent their bottom lines. Total ICE fines last year were a paltry $7 million.

But Maryland-based Calvert Investments said it was surprised by the extent of Chipotle's undocumented workers because the company scores high on the issues Calvert monitors -- good social, environmental and corporate governance.

"We would urge them to put better systems in place so that the likelihood of this occurring again is slim," said Ellen Kennedy, senior sustainability research analyst at Calvert, which oversees $14.5 billion in assets.

Chipotle, which reports fourth-quarter earnings on Thursday, recognizes it is big deal for its operations.

"This incident has caused a lot of disruption -- both to us and in the lives of so many of our people," said Moran, whose company reported 22,250 employees at the end of 2009. "In addition, it's been a heartbreaking situation for us to lose so many excellent employees."

Indeed, it is not just a few workers who need to be hired and trained to keep the places running. Chipotle will not disclose the total number fired, but it could be as many as 700 of its estimated 1,200 Minnesota workers.

Those are the figures circulating among the Minneapolis legal community, according to Javier Morillo, the president of labor union SEIU Local 26, which does not represent the fast food sector but is helping the workers because of its interest in immigration reform.

The need for reform is where labor and business agree.

"We need those businesses that are being audited to speak up and say to the government this is insanity and it is not solving a thing," said Morillo.

Chipotle's Moran does speak up, saying in his email: "The system clearly isn't working very well as it is, and reform is absolutely necessary."

As for Tanya and Alejandro, they are fairly confident they will get new jobs in restaurants or factories in Minneapolis, but they probably won't get the good salary or long run they had at Chipotle.

(Additional reporting by Herb Lash in New York; Editing by Cynthia Osterman.)

DETROIT (Reuters) – Ford Motor Co is recalling more than 1,600 just-built Explorers for a safety problem with the second row of seats.

Ford said in a filing with federal safety regulators that the seats may not provide the required strength in the event of a crash.

The recall affects 2011 model-year Ford Explorers made between July and December last year.

The redesigned Explorer, which is built in Chicago and was launched in late 2010, is an important new vehicle for Ford.

The automaker sold more than 7,300 of the new Explorers in January -- a 70 percent increase in sales compared with the SUV's older version a year earlier.

Ford said its seat supplier for the Explorer, Lear Corp, had shipped some second-row seats with manual reclining mechanisms that did not meet federal safety standards.

The automaker said it had identified the problem at its assembly plant in December and instructed dealers to stop selling affected vehicles until they could be repaired.

Ford said it would repair recalled vehicles under warranty for consumers who have already purchased them. Recall notices will be sent starting on February 14, Ford said.

The recall adds to the growing cost of quality and safety campaigns at the No. 2 U.S. automaker. Ford said last week that it would recall nearly 363,000 of its top-selling F-150 pickup trucks because of a defect with interior door handles.

The automaker has recalled more than 900,000 vehicles in the first weeks of 2011, more than the roughly 600,000 vehicles recalled in all of 2010.

(Editing by Maureen Bavdek)

WASHINGTON (Reuters) – The families of two Americans held by Iran on suspicion of espionage expressed hope on Monday the pair's Sunday court appearance in Tehran moves them closer to freedom, while the United States renewed its call on Iran to release them.

Shane Bauer and Josh Fattal, held since July 2009, pleaded not guilty in court on Sunday on the first day of their closed-door trial in the Iranian capital, according to state-run English language Press TV. No date has been set for the trial to resume, it added.

"We are pleased that Shane and Josh have had the opportunity to explain their innocence to the court and hope that the Iranian authorities will now move to resolve their case so that they finally can come home after 18 months of detention, isolation and uncertainty," the families of Bauer and Fattal said in a statement.

Bauer and Fattal were arrested on July 31, 2009, near Iran's border with Iraq, along with a third American, Sarah Shourd, who was released on $500,000 bail in September and returned home.

The three Americans, in their late 20s and early 30s, say they were hiking in the mountains of northern Iraq and, if they crossed the unmarked border into Iran, it was by mistake. Under Iranian law, espionage can carry the death penalty.

"Now that the court has heard their testimony first hand, we hope and pray that truth and justice will at long last prevail. In the meantime, we continue to worry terribly about their well-being after such a lengthy detention," the families said.

State Department spokesman P.J. Crowley told reporters the United States is "aware that the trial is proceeding" and "I believe that there has been a continuance."

"And we continue to call on the government of Iran to release the two hikers," Crowley said. "They've been in custody for far too long."

The case has further complicated relations between Iran and the United States that already are strained over Iran's nuclear program. The two countries have no diplomatic relations.

(Writing by Will Dunham; Editing by Todd Eastham)

LOS ANGELES (Reuters) – Ronald Reagan was honored on Sunday in a centennial celebration of his birth that saw his former chief of staff praise the 1980s president for his pragmatism.

Nancy Reagan, the former first lady, also honored the former president by laying a wreath at her husband's grave at the Ronald Reagan Presidential Library in Simi Valley, 45 miles from Los Angeles.

James Baker, who served the former president as his White House chief of staff from 1981 to 1985, said Reagan, a Republican, could work with Democrats and other political foes.

"While he held convictions as firmly as anyone I have ever known, he was also a pragmatist, who saw the world as it is," Baker said.

"Ronald Reagan was a master at reaching across the aisle for solutions to our nation's problems."

Baker said the United States must learn from Regan's example of pragmatism and work to solve problems, rather than "cynically rely on them for partisan advantage."

The remarks by Baker, who also served as U.S. secretary of state from 1989 through 1992 under former President George H.W. Bush, come at a time when political commentators have warned of heightened partisanship in Washington, D.C.

The 89-year-old Nancy Reagan, wearing red, received thunderous applause when she took the stage to speak about her late husband.

"I know that Ronnie would be thrilled and is thrilled, to have all of you share in this 100th birthday," she told the crowd. "It doesn't seem possible, but that's what it is."

The event, on a day marked by bright sunshine, featured performances by singers Amy Grant and Lee Greenwood and 1960s supergroup the Beach Boys, as well as a speech by actor Gary Sinise of the TV show "CSI: NY."

Sinise said that like Reagan, a former Hollywood star, he himself is an actor born in Illinois.

"But when I consider how he went from where I am to the pinnacle of the free world, I am in awe," Sinise said.

A 21-gun salute, military band, color guard and flyover were also part of the ceremonies for Reagan, a supporter of strong U.S. armed forces.

Reagan, a former governor of California, was elected U.S. president in 1980, defeating Democratic incumbent Jimmy Carter. He won re-election to a second term in 1984 when he carried 49 of the 50 states.

He was diagnosed in 1994 with the brain-wasting disease Alzheimer's, and died in 2004 at age 93.

(Editing by Jerry Norton)

DALLAS (Reuters) – The Green Bay Packers reclaimed the greatest prize in North American sport when they beat the Pittsburgh Steelers 31-25 on Sunday to win the 45th Super Bowl.

Inspired by their dynamic young quarterback Aaron Rodgers, the Packers gave a masterclass demonstration, opening up a 21-3 lead in the second quarter and then showing amazing courage to survive a ferocious late comeback from the Steelers.

It was game that lived up to all the hype as two of the most successful franchises in the NFL slugged it out in front of a crowd of more than 100,000 at Cowboys Stadium.

They scored seven touchdowns between them but it was game characterized by hard-hitting defense as both teams lost key players, including Packers receiver Donald Driver and his team mate cornerback Charles Woodson, to injuries.

"We just kept battling. We had some adversity, we lost some guys to injuries and we had some rough plays out there," Packers head coach Mike McCarthy said.

"We knew it was going to be a heavyweight slug match. We knew it was going to come down to the wire."

Rodgers, who emerged from the shadows of his predecessor Brett Favre, was named MVP after completing 24 of 39 passes for 304 yards and throwing three touchdown passes but there were plenty of other worthy contenders for the award.

Greg Jennings scored two touchdowns, Jordy Nelson scored one (among his nine receptions) and Nick Collins intercepted a wayward pass from Ben Roethlisberger and raced 37 yards for a TD in the first quarter that gave the Packers a 14-0 lead.

"Wow, wow, wow," shrieked Jennings. "It's a great day to be great, baby."

The Steelers, who were chasing a record seventh Super Bowl win, were brave in defeat.

They never led but pulled to within 28-25 midway through the fourth quarter when a costly turnover, their third of the night, handed the momentum back to Green Bay.

"We're not into moral victories," Pittsburgh head coach Mike Tomlin growled.

"We came here to win the football game and of course we didn't do that."

For the Packers, it was their fourth Super Bowl win. Only the Steelers (six), Dallas Cowboys and San Francisco 49ers (five each) have won more.

With a population of 102,000 Green Bay is the smallest city in the U.S. with an NFL team but few franchises have a more sentimental attachment to the Super Bowl than the residents of Wisconsin.

LEGENDARY COACH

The Packers won the first two Super Bowls, in 1967 and 1968, and the Vince Lombardi Trophy, which is presented to the winning team, is named after their legendary coach.

"The Vince Lombardi Trophy is finally going back home," McCarthy said.

Although the Packers were the slight favorites to win Sunday's game, they overcame some incredible obstacles just to get to the big one as the casualties starting mounting up during the season.

They needed to win their last two regular season games to secure a wildcard berth into the postseason and then win three playoff games on the road to win the NFC championship.

Green Bay threatened to turn the game into a rout when Rodgers picked out Jennings in the end zone with a superb 21-yard pass to give the Packers a 21-3 second-quarter lead.

The Steelers began to claw their way back with Roethlisberger hitting Hines Ward on an eight-yard TD pass before Rashard Mendenhall scored on an eight-yard run.

A second Jennings touchdown gave the Packers some breathing room at 28-17 but the Steelers set up a grandstand finish when Mike Wallace collected a 25-yard touchdown pass from Roethlisberger and Antwaan Randle El completed a two-point conversion.

However, a 23-yard field goal from Mason Crosby with just over two minutes left gave the Packers the six-point lead they maintained until the end as the Steelers failed to mount one last challenge.

"What a great football game with two classic teams," NFL Commissioner Roger Goodell said.

"The smallest city in the league has won the biggest game."

While the game did live up to all expectations, there was some embarrassment for the NFL when more than 400 fans were unable to get in to the $1.2 billion stadium because they ran out of temporary seats.

The NFL paid them each three times the face value of their tickets and ordered an investigation into the mix-up.

Grammy winner Christina Aguilera also fumbled a line of the national anthem during the pre-game presentation but the Black Eyed Peas performed a dazzling half-time show watched by an estimated television audience of more than 100 million.

(Editing by Steve Ginsburg)

CLEVELAND (Reuters) – A student at Ohio's Youngstown State University was killed and 11 other people, including six YSU students, were wounded in a shooting at an off-campus fraternity house, officials said on Sunday.

The dead student was identified as Jamail E. Johnson, 25. Police have two people in custody in the shooting. The suspects had been thrown out of a party at the house, police said.

A 17-year-old girl was in critical condition.

The shooting occurred just after midnight. YSU spokesman Ron Cole said the private residence housed some members of the Omega Psi Phi fraternity, a YSU sanctioned African-American fraternal organization.

YSU Police Chief John Gocala said there was no threat to the campus, according to the YSU statement.

"I want to express my deepest sympathies to the family of the student who died in this tragic act of violence, and to ask everyone to keep him and the other students in their thoughts and prayers," YSU President Cynthia E. Anderson said.

"It is a sad day for the YSU family."

Omega Psi Phi was the first African-American fraternal organization to be founded at a historically black college -- Howard University in 1911.

Youngstown Police Chief Jimmy Hughes said the fraternity house had a good reputation in the neighborhood and was not known to be rowdy.

(Reporting by Kim Palmer; Writing by Mary Wisniewski; Editing by Jerry Norton)

WASHINGTON (Reuters) – More than 15 percent of Iraq and Afghanistan war veterans were unemployed in January, far higher than the national jobless rate and the highest since the government began collecting data on veterans in 2005, the Bureau of Labor Statistics said on Friday.

That rate could go even higher if the U.S. military begins winding down operations in Afghanistan and a flood of veterans return home looking for work, a veterans' advocate said.

"These numbers need to be a wake up call for all Americans because there is really no excuse for this," said Todd Bowers, deputy executive director for Iraq and Afghanistan Veterans of America.

The government said 15.2 percent of veterans were out of work in January, up from 12.6 percent the same month a year ago. This compares with a overall U.S. unemployment rate of 9.0 percent seasonally adjusted and 9.8 percent without adjustment. The government data for veterans is only presented without adjusting for seasonal differences.

Bowers, a Staff Sergeant in the Marine Corps Reserves, said the increase is because multiple deployments have become standard operating procedure for a stretched military.

"You've got folks who are active duty, national guard, and the reserves who have done three, four, five, six deployments and that makes it extremely difficult to come home... and jump back into the workforce for a brief period of time and head out again," he said.

The 31-year-old Bowers was deployed four times and had to step back from active reserve so he could get his career back on track.

"I had just been jumping back and forth from Iraq to Afghanistan and then coming back and trying to get my feet into the workplace."

Senator Patty Murray of Washington state, chair of the Veterans Affairs committee, introduced legislation in April of last year to give veterans extra assistance after veteran unemployment reached double digits.

The proposed legislation would create and expand federal programs to equip and retool veterans for working in the civilian world and expand job assistance for soldiers going through the transition.

Economic Policy Institute Economist Heidi Sheirholz said that most military veterans are young men with less education, and jobs for that group have been especially hard hit during the recession.

She said the rate may also be higher because of a decline in construction jobs during the winter. And she said the rate may also reflect a sharp rise of 10 percent in the number of veterans over the past year.

Some fear that with the military operations in Iraq and Afghanistan slimming down, and reductions in the defense budget, a growing number of veterans will hit the job market.

"That's going to be a tremendous amount of people jumping back into the workforce sort of unwillingly," Bowers said.

(Editing by Greg McCune)

BOSTON (Reuters) – Unrelenting winter storms have left a chilled New England in a white maze, with growing mounds of snow and ice creating formidable public safety concerns.

The barrage of winter weather has stoked concern about the potential for water pollution from snow disposal in rivers, roof collapses and traffic and pedestrians navigating narrow clearances.

"Given the increased snowfall and snow amounts throughout the city, visibility has clearly been affected," said Boston Police Department spokesman James Kenneally.

Snow accumulation totals this season so far have reached almost 71 inches in Boston, a city used to plowing and playing in a more manageable 23 inches of snow each year.

Other Northeastern cities, too, have been hammered by this season's snowfall, with Hartford recording more than 80 inches of snow and New York City almost 58 inches, according to Weather Channel tallies.

One result is that cities and towns trying to make streets and walkways passable are running out of space to pile snow, prompting some to consider disposing of snow in waterways.

Massachusetts regulates disposing of snow in rivers, lakes or canals because snow mixed with auto fluids, asphalt, salt and other debris can pollute water or pose navigation hazards.

The state does make an allowance if a community has exhausted other options and public safety is an overriding concern, Joe Ferson, spokesman for the state's Department of Environmental Protection, said.

The policy has been in place since late 1997, but Ferson said he believes this is the first year it's been needed. The department has so far fielded four inquiries about the last-resort disposal.

Massachusetts Port Authority, which operates Logan International Airport, and two communities near Boston have consulted with the agency, but only the Coast Guard, operating near the North End neighborhood in Boston, has disposed of any snow in water in accordance with the guidelines, Ferson said.

The city of Boston, however, doesn't intend to dump snow in waterways despite forecasts calling for more precipitation.

"Not something we're interested in and it's not necessary," said Joanne Massaro, commissioner of Public Works for Boston.

Connecticut, too, has revised snow disposal guidelines, saying in some cases dumping snow in salt water may be viable.

"When it comes to disposing of all this snow, we must strike the right balance between environmental protection and public safety," the state's Department of Environmental Protection commissioner Amey Marrella said on Friday.

Both states require advance notice and prohibit disposal of snow in critical environmental areas.

Mountains of snow on city streets aren't the only hazard.

Public officials are increasingly concerned about a rash of roof collapses in the region as flat roofs are crippled under the weight of snow and ice.

Massachusetts Emergency Management Agency reports more than 92 roof collapses, with the majority occurring in the last few days primarily in eastern and southeastern parts of the state.

"The snow acts like a sponge," said spokesman Peter Judge, noting rain and wintry mix have been as detrimental as snow.

Most structures in trouble are commercial properties with large, flatter roofs including warehouses, gas station canopies and even barns, Judge said.

No serious injuries have been reported, but local media in New England report barn collapses injuring or killing animals.

Buildings in the Boston area are typically designed for a snow load of around 30 lbs per square foot, or about two feet of snow, said Elizabeth Lewis, a structural engineer at Weymouth, Mass-based Gale Associates, Inc.

She said some older buildings let heat escape, which helps melt roof snow, while more insulated, energy-efficient newer buildings do not have the same winter luck.

Winter worries aren't likely to subside any time soon.

Forecasts are calling for a wintry mix of snow, sleet and freezing rain in southern New England on Saturday evening and snow likely again on Monday night.

(Reporting by Lauren Keiper. Editing by Peter Bohan)

SAN FRANCISCO (Reuters) – Chrysler Group LLC's chief executive apologized on Saturday for describing the high-interest bailout loans extended by the U.S. and Canadian governments in 2009 as "shyster loans."

"Yesterday, in responding to a question about Chrysler's government loans, I used a term in reference to the interest rate being charged on our government loans that has raised concern," CEO Sergio Marchionne said in a statement. "I regret the remark which I consider inappropriate."

Shyster is a derogatory term used to describe an unprincipled lawyer or politician. He used the term at least three times in his remarks during an industry conference on Friday.

In 2010, Chrysler paid $1.23 billion, or about $3.4 million a day, in interest payments on its debt. It is seeking to refinance those loans before a planned initial public offering in the second half of 2011.

In his statement, Marchionne said the company was grateful for the financial assistance from the U.S. and Canadian governments at a time when the company had no other options. The loans were part of a bailout to keep the automaker from collapse.

Chrysler emerged from bankruptcy in June 2009 and is now under the management control of Italy's Fiat SpA, which has a 25 percent stake in the U.S. automaker. Marchionne is also CEO of Fiat.

"As the only parties willing to underwrite the risk associated with Chrysler's recovery plan, the two governments levied interest rates that, although appropriate at the time, are above current market conditions," Marchionne said.

"Because of these changed market conditions as well as the improvements in our performance and outlook made possible through the support of the U.S. and Canadian governments, Chrysler intends to repay these loans in full at the earliest opportunity," he added.

(Reporting by Deepa Seetharaman; Editing by Peter Cooney)