HIGHLIGHTS: 'Stop being economically Defensive & Be Politically Courageous', Annan Tells World Leaders|| Negotiations over Reaching an Action Plan to Turn 11992 Rio Promises into Reality Painstaking||However, Compromises Reached in Three Areas Climate Change, Trade and Sanitation|| STORY: U.N. Secretary-General Kofi Annan welcomed more than 100 heads of state to the World Summit with a plea for all nations to work together to uplift the poor and to rescue the world's struggling environment.

"Let us not be deceived when we look at a clear blue sky into thinking that all is well. All is not well," Annan said.

Conjuring up the "cries for help of those 13 million souls" in southern Africa facing starvation, Annan told the leaders that failure to take decisive action at the summit would have too high a cost.

"Let us stop being economically defensive and start being politically courageous," he said.

The 10-day conference, which started a week ago, aims to shape an agreement to turn promises made at the 1992 Earth Summit in Rio into reality.

"Poverty and environmental degradation, if unchecked, spell catastrophe for our world. That is clear," British Prime Minister Tony Blair said.

However, negotiations over reaching an action plan have been painstaking.

Bleary-eyed negotiators worked into the early hours of the morning Monday trying to hammer out the last details of an agreement and were upbeat after compromises were reached in three key areas: climate change, trade and sanitation.

"The process is not just about approving text. It's about working with developing countries that look to us for concrete action," said Undersecretary of State Paula Dobriansky, head of the U.S. delegation. "Failure is not an option."

Diplomats said one contentious issue was resolved late Saturday, when negotiators settled on wording to address the Kyoto Protocol on climate change, which the United States has refused to sign.

The agreed text says nations that have ratified Kyoto "strongly urge" states that have not done so to ratify it in "a timely manner."

Negotiators also reached compromises on trade that largely stick to language agreed at a World Trade Organization meeting in Doha, Qatar. They include a repeat of commitments to hold negotiations with a view to phasing out agriculture and other trade-distorting subsidies.

The last outstanding trade issue was resolved late Sunday when negotiators agreed to delete language giving the WTO precedence over multilateral environment agreements, diplomats said.

"There's a sense of euphoria among the delegates that they've been able to settle this very difficult issue," said Lucian Hudson, a spokesman for the British delegation. "We're nearly there."

Early Monday, negotiators added a commitment to halve the 2 billion people living without sanitation by 2015, diplomats said.

The United States had resisted including new targets and timetables in the action plan, arguing the way to get results is through concrete projects - not paper agreements.

Negotiators also agreed to include wording emphasizing the need for good governance to achieve sustainable development, but did not make it a condition for receiving aid as advocated by the United States, diplomats said.

Though everyone from King Mswati III of Swaziland to German Chancellor Gerhard Schroeder was here Monday, many were disappointed that President Bush had opted not to come. Secretary of State Colin Powell was expected to arrive Wednesday.
Several speakers slyly criticized the United States with general appeals for all countries to ratify Kyoto.

"We know that if climate change is not stopped, all parts of the world will suffer. Some will even be destroyed," Blair said.
South African President Thabo Mbeki told the leaders not to be afraid of an unknown, but probably better, future.

"Surely there's no one among us who thinks that billions in the world should continue to be condemned to poverty, to underdevelopment and the denial of human dignity," Mbeki said

PHOTO CAPTION

Scientist Phillip Tobias, left, from the University of Witwatersrand, gives a presentation to UN Secretary-General Kofi Annan, 2nd from right, and South African President Thano Mbeki, right, at Sterkfontein Caves near Johannesburg, Sunday Sept. 1, 2002. Others watching are from left, Wendy Schilowa, South African Deputy President Jacob Zuma, conservationist Jane Goodall and Nane Annan. (AP Photo/Dario Lopez-Mills)