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Al-Qaeda for Sale
IRAN The mullahs are feeling the heat, and it isn't just the thousands of American troops on either side of their country — in Iraq and Afghanistan — making them uncomfortable. They are fending off demands from the U.S. and Britain to open their nuclear installations to international inspection. So they have reached for a few extra bargaining chips: the al-Qaeda operatives they have in custody. Arab sources tell TIME that the Iranians are holding at least 40 of them, most from Saudi Arabia, Egypt and Kuwait. They're said to include Sulaiman Abu Ghaith, a Kuwaiti-born al-Qaeda spokesman, and probably Saad bin Laden, son of Osama. In return, the mullahs would like the U.S. and Britain to hush their support for pro-democracy student demonstrations in Iran as well. — By Elaine Shannon and Adam Zagorin

Bomber's Suicide
SAUDI ARABIA Turki Nasser al-Dandani, thought to be the most senior al-Qaeda operative in the kingdom and the suspected mastermind of the May bombings in Riyadh, blew up himself and three followers with a grenade after

MEANWHILE IN GREECE ... Unholy Row The Greek Orthodox Church came out against the Mayor of Athens' plan to regulate the city's sex trade in advance of next year's Olympic Games. The Church's Holy Synod accused city officials of wanting to license extra brothels to cope with an expected increase in demand during the Games. Prostitution is legal in Greece if practiced in a licensed brothel; each brothel can employ up to three people. City officials plan to register 230 establishments for a total of 960 approved sex workers. Not that ambitious, given that at the Sydney Olympics an estimated 10,000 prostitutes serviced some 150,000 clients per day.

being cornered by police in a mosque, authorities said. His death came a week after another suspect, Ali Abd al-Rahman as-Faqasi al-Ghamdi, gave himself up.

Media Blackout
ALGERIA The government banned press coverage of the release of two Islamic leaders and, in an attempt to impose a media blackout, ordered foreign journalists to leave the country. Freed are Abassi Madani, leader of the now banned Islamic Salvation Front (FIS), and his second-in-command, Ali Belhadj, who were given 12-year sentences in 1992.

Mosque Murders
PAKISTAN The army took control of the southwestern city of Quetta after hundreds of Shia Muslims went on the rampage following an attack on a Shia mosque during Friday prayers that killed at least 47 people and wounded 65. No one immediately took responsibility for the attack but police suspected a banned Sunni Muslim group.

Beached Blob
CHILE Scientists were baffled by the remains of a huge, gelatinous sea creature that washed up on the country's southern Pacific coast. The 12.4-m long creature, which resembled a mammoth jellyfish with tougher flesh, was initially thought to be a whale. Experts decided it was a marine invertebrate, perhaps a giant squid, and they appealed for help in identifying the monster.

Yanks Going In?
LIBERIA The West African regional body, ECOWAS, agreed to send 3,000 peacekeeping troops to monitor the fragile week-long cease-fire between the government and rebel groups as U.S. President George W. Bush — on the eve of his first trip to Africa — considered whether to send American forces to join them. Liberian President Charles Taylor offered once more to step down, but only once foreign troops arrived. Liberia was founded by former American slaves. A senior U.S. official told TIME that Bush was weighing intervention primarily because U.S. inaction could make him look bad during his trip to the continent this week.

Still Waiting
U.S. Unemployment in June was reported to have jumped to 6.4%, up from 6.1% in May, bringing to 2 million the total job losses since Bush became President. The news could pose a problem for him in the 2004 election; if things don't improve, he could be the first President since Herbert Hoover in 1932 to record a drop in the number of working Americans during his whole term.