New Europe Print Edition Issue 996

NEWEUROPE19th Year of Publication | Number 996 |2 - 8 September, 2012 | € 3.50 www.neurope.eu

Despite a slowing European economy,which has also hit demand for gas,Gazprom does not intend to reconsiderexport volumes forecast implying thedecrease of Gazprom Group export in 2012,the Russian gas monopoly told NewEurope on 30 August. Gazprom was com-menting on reports that Russia’s EconomyMinistry cut its 2012 gas export forecast to193bn cubic metres from 212bn cubicmetres due to sluggish European demand,which also prompted it to reduce its averageexport price estimate.

Asked if the ministry’s forecast will affectGazprom’s export volumes and price toEurope, the Moscow-based company saidthat, according to Gazprom’s preliminaryestimations, the volume of its export is toremain on a par with the year 2011 and mayreach 222bn cubic metres in Europe, Turkey

and the Commonwealth of IndependentStates (CIS).

Gazprom reminded that the supply is car-ried out according to individual price for-mulas included in each of previously signedlong-term export contracts and consideringvariation in oil and oil products prices. Suchscheme secures the balance of interests ofsellers and buyers, allows sustaining invest-ment cycle in the industry and excludesprice diktat of suppliers, Gazprom said. “Atthe same time we are ready to show flexibil-ity and to consider changes, occurring at themarket, to work out reasonable compromis-es. Gazprom Group has repeatedly achievedagreements about price formulas correctionwith certain partners. Such scheme isimplied in long-term contracts,” Gazprom’sInformation Directorate said.

In May 2012, the new French President,

François Hollande, was elected on the

basis of an anti-austerity albeit pro-

European ideological platform. Hollande

promised to maintain France’s predomi-

nance in European decision-making, and

at the same time to find another way

through the financial crisis, centred on

growth rather than austerity. He went on

to promise new hires in the public sector

(in education and police), a minimum

wage increase, and to bring the retirement

age back down from 62 to 60 years, thus

abolishing the most significant reform

pushed ahead by his predecessor Nicolas

Sarkozy.

But most of all, Hollande guaranteed

the continuation of the so cherished by

the French people generous ‘welfare state’,

and along with it the level of public spend-

ing at around 57% of GDP, when

Germany’s figure is around ten percentage

points lower…

In a nutshell, President Hollande’s elec-

tion was interpreted as a guarantee of

maintaining the ‘socialist’ ideal of life in

France, a view initiated by François

Mitterrand in 1981, and closely followed

by all governments, whether left- or right-

wing, over the last 30 years. Problem is

that the international and European con-

text has changed dramatically since then;

since the introduction of the euro, (a

mostly French invention), France, like its

other Eurozone partners, has lost its mon-

etary autonomy, and cannot devalue its

currency, as Mitterrand did twice in the

early years of his mandate. More impor-

tantly, France has, just like everybody else,

accumulated a public debt through consis-

tent fiscal deficits over the years, that the

present financial crisis has deeply accentu-

ated. Financing these deficits brings

dependence on the markets and the rating

agencies, a reality demonised by Hollande

who went as far as to ‘declare war against

financial markets.’ In fact, this rhetoric just

reveals his weakness against the markets,

and the limited room for manoeuvre in

pursuing his socialist agenda.

The truth is that France is faced with

two hard facts, which point to the oppo-

site direction than the one promised by

Hollande: declining competitiveness and

banking vulnerability.

Declining competitiveness, as measured

by unit labour costs, is the major issue for

France. The hourly labour cost in France

for 2011 was €34.2, against €30.1 in

Germany, and nearly 20% higher than the

Eurozone average of €27.6.

Welfare state or European construction?

Russian gas re-think

· Page 5

Hollande's judgement dayEUThe consequences of Europe’sdebt crisis are all too present, asdistressed economies attemptto stabilize and grow at thesame time, writes Jose ManuelBarroso....

·Page 3

·Page 12

ENVIRONMENTThe EC and Australia haveannounced a link up betweentheir emissions trading sys-tems, in a commitment tocut the amount of carbonpollution... ·Page 4

POLITICSLast month, competinginterests prevented agree-ment on a treaty that wouldhave reduced the appallinghuman cost of the interna-tional arms trade...

·Page 9

KAZAKHSTANMr Stavros Lambrinidiswas appointed as EUSpecial Representative forHuman Rights (EUSR) on25 July 2012...

·Page 30French President Francois Hollande address a press conference next to German Chancellor Angela

Merkel (not in picture) at the chancellery in Berlin, on 23 August, where they discussed debt-

wracked Greece after Athens asked for more time to implement crucial but painful reforms to safe-

guard its eurozone membership. | AFP PHOTO / JOHN MACDOUGALL

As Jose Manuel Barroso is preparinghis “State of the Union” address (12/9)to announce with four years delay theunification of the European BankingSystem and Angela Merkel is prepar-ing her September 14 show to expressher wishful thinking for “moreEurope George Soros will take themboth by surprise with a major speechbeforehand.

Soros to subside Barroso and Merkel

·Page 5

Golden rule

Page 15

FASHION & STYLE

NE 15 YEARS AGO

"What's a Grecian urn?" "About 20% less than last year" |EPA

The Shooting Gallery

In August 1997 Poland was in trouble, after the Central European flood, which took 115 lives in Poland and the CzechRepublic, landing the countries with an €3.8 billion bill for damages. It is estimated that 7,000 people lost all of their pos-sessions. 9,000 private businesseses were affected, 680,000 houses were damaged or destroyed, as well as 843 schools (100destroyed), 4,000 bridges (45 destroyed), 14,400 km of roads, 2,000 km of railways. In total, 665.835 hectares were affect-ed in Poland.The country was also preparing for EU membership, enacting legislation to bring it into line with the EU.This included a banking reform act, data protection laws and an end to the death penalty.

Caught between thebig and the small

A European Single Supervisory Banking Mechanism will be,

according to European Commission President, Jose Manuel

Barroso, “the start of something much bigger”; that is, a more

integrated and secure Europe.

The success of the single currency and European political and

financial integration are inseparable, he says (see over), and as

such the EU is moving up a gear or two to ensure the survival

of the euro, which, says Barroso, says has the “sufficient political

will” of the Union to make it happen. This is a logical position;

any union founded on weak commitment is doomed to col-

lapse, and can only be music to the ears of all Eurosceptics and

arch anti-federalists. However, as Euro-watchers will contend

with a wry smile, nothing ever it seems runs swiftly in Europe

(as Barroso himself acknowledges), and whether or not the

banking union, to be based on the principles of single supervi-

sion, credibility and broad coverage, will be a reality by its pro-

posed 2013 start date does indeed depend on strong will.

Already we have has a summer of meetings; talks between gov-

ernments and paymasters, politicians and bankers. The flurry of

activity promises something; exactly what remains to be seen.

On a smaller scale, uncertainty also surrounds the outcome of

the results of the next EU member state election, to be held in

the Netherlands on 12 September.

Of course, it goes without saying that the outcome of any elec-

tion is uncertain. Right now, indications are that the centre-

right liberal party, VVD, are in the lead, but coming up close

behind are the Socialist party of Emile Roemer, who has been

peddling a strong anti-austerity Eurosceptic populism, a posi-

tion once steadfastly held by Geert Wilders’ Freedom Party,

which now seems to have changed its anti-Islam rhetoric for a

broader anti-immigration one, being particularly aimed at cen-

tral and eastern Europeans.

National elections throw up their obvious share of national

interests, law and order or local taxes for instance, but increas-

ingly Europe is dominating proceedings; mostly these days in a

negative, reactionary way it seems. And, if European solidarity,

the kind that favours deeper integration as outlined by most

European leaders, seems like a reasonable response to tough

times, not everyone remains convinced by top-down values.

Following on from Todd Akin in the US, Kees van der Staaij,

leader of the ultra-conservative, Calvinist, Reformed Political

Party (SGP), has denied that, in all but the smallest cases, rape

leads to pregnancy.

Van der Staaij, who used inaccurate statistics to back-up his

claim, has faced wide condemnation for his comments, which,

based on deep-held religious views, have managed to perpetu-

ate an uneasy debate, both in the wake of the Akin comments

and also the Julian Assange case (see page 11).

Religious views are not, of course, anathema to European val-

ues (however one may define them), but when wedded to an

obviously prejudicial, misogynistic and offensive outlook (the

SGP places massive restrictions on its female members), can

only be considered contradictory to the goals of the European

Union, as are closed borders and intolerance to others.

Increased scepticism may force many to view the European

elites as remote, fanciful ideals, but falling back on easy nation-

alism or parochial attitudes is no real answer, however inviting.

Aromatically gainsaying what the other person says is not to

join the debate at all; and everyone needs to be part of the

debate.

EDITOR

Cillian [email protected]

SENIOR EDITORIAL TEAM

Kostis Geropoulos (Energy & Russian Affairs)

[email protected]

Andy Carling (EU Affairs)

[email protected]

Ivan Delibasic (EU Affairs)

[email protected]

Ariti Alamanou (Legal Affairs)

[email protected]

Louise Kissa (Fashion)

[email protected]

Alexandra Coronakis (Columnist)

[email protected]

DIRECTOR

Alexandros [email protected]

EXECUTIVE LAYOUT PRODUCER

Suman Haque

[email protected]

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NEWEUROPE

© 2012 New Europe all rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic or otherwise, without the permission of New Europe.

ISSN number: 1106-8299

02NEW EUROPE2 - 8 September, 2012

ANALYSIS

BRUSSELS – The consequencesof Europe’s debt crisis are all toopresent throughout much of theEuropean Union, as distressedeconomies attempt to stabilize andgrow at the same time. Notwith-standing the important decisionstaken over the last couple of years,the reality is that we need to domore to tackle the challenges fac-ing the eurozone.

Reform and consolidationmeasures are being implementedacross the EU. Joint financialbackstops have been put in place.And the European Central Bankhas consistently shown that itwill stand by the euro. Yet expertsand partners often underestimateour determination.

All of the steps taken so farhave resulted in more Europeanintegration, not less. It is truethat sometimes decision-makingin our democratic system takestime. But do not misjudge us: thenegotiations are about thearrangements, not about the finaloutcome.

There is sufficient political willin the EU to do whatever is nec-essary to protect the euro, be-cause the future of the singlecurrency will determine that ofEuropean integration.

The additional measures thatEurope needs must be firmlyrooted in a commitment todeeper integration.

High levels of sovereign debt,together with the behavior ofparts of the financial sector, haveamplified the crisis in the euro-zone and raised important issuesof confidence that now require asystemic answer.

That is why we must completethe unfinished business of eco-nomic and monetary union – andwhy the European Commissionhas long argued for the creationof a banking union as an indis-pensable step toward that goal.The Commission’s upcomingproposals are part of a broaderpackage leading to economic, fis-cal, and political union that willredefine the boundaries of Euro-pean integration.

The crisis has starkly revealedthe insufficiencies of existingbanking supervision. We must gobeyond cooperation and establishan EU-wide supervisory author-

ity, particularly in the eurozone.The link between sovereign debtand bank debt has to be brokenonce and for all. We must endthe vicious circle whereby the useof taxpayers’ funds – more than€4.5 trillion ($5.7 trillion) so far– to rescue banks weakens gov-ernments’ budgets, while increas-ingly risk-averse banks stoplending to businesses that needfunds, undermining the economyfurther.

Europe can stop this negativedynamic now with bold action. Asingle rulebook for financialservices is being put in place forthe single market. Building onthis, a single European banking-supervision authority wouldopen the way to direct recapital-ization of banks through the Eu-ropean Stability Mechanism, aswell as to common deposit insur-ance and a single resolutionframework.

On 12 September, the Com-mission will present its proposalsfor a Single Banking SupervisoryMechanism based on three keyprinciples:

Single supervision: Within theeurozone, coordination betweennational supervisory bodies is nolonger enough. Risks thatemerge in one country can affectthe entire currency area. Com-mon banking supervision isneeded for strengthening confi-dence among countries usingcommon financial backstops.

Credibility: The eurozone’s new banking-

supervision mechanism will havethe ECB at its heart. The choiceof tasks to be entrusted to theECB will ensure rigorous, high-quality, and equal prudential su-pervision of eurozone banks,thereby contributing decisivelyto maintaining confidence be-tween the banks – and thus in-creasing financial stabilitythroughout the eurozone. Closecooperation with national super-visors will be built into theframework.

The ECB’s supervisory rolewill be fully separated from itsmonetary-policy responsibilities.In parallel, the European Bank-ing Authority will continue to

perform its existing tasks, namelydeveloping the single rulebookfor the entire single market andensuring convergent supervisorypractice throughout the EU.

Broad coverage: All banks inthe eurozone will be covered bythe new European supervisorysystem. And we will need tobridge the gap between eurozonemembers and EU members thatremain outside the monetaryunion, some of which may wantto participate in the new super-visory mechanisms.

The road that we have decidedto follow will allow for swift ac-tion. The Single Banking Super-visory Mechanism does notrequire a treaty change andshould be in place by January2013.

Common and more integratedsupervision is the first step to-wards a banking union. Next, theCommission will build on ourcurrent proposals for deposit-guarantee schemes and bank res-olution mechanisms to movetoward a single resolution fundand a single resolution authority.

Once these proposals are imple-mented, the banking union willbe complete.

Establishing a banking unionby 2013 will not give Europe amagic wand with which to waveaway the economic crisisovernight; but it is a major andcrucial step to restoring the con-fidence of Europe’s citizens, in-ternational partners, andinvestors. It will ensure financialstability, increase transparency,make the banking sector ac-countable, and protect taxpayers’money.

Moreover, it is the start ofsomething much bigger. Onceagain, I would like to stress thatthe eurozone is drawing lessonsfrom the past and defining a wayforward, not backwards, in termsof integration. That is good newsnot only for the euro, but also forthe global economy.

José Manuel Barroso is Presidentof the European Commission.Copyright: Project Syndicate,2012.www.project-syndicate.org

POLITICS

Europe’s necessary unionBy José Manuel Barroso


ANALYSIS

Municipality workers march in central Athens as part of a 48-hour strike on 29 August, 2012, protesting spending cutbacks and the government's latest austerity measures. According to

European Commission President, Jose Manuel Baroso, "Establishing a banking union by 2013 will not give Europe a magic wand with which to wave away the economic crisis overnight;

but it is a major and crucial step to restoring the confidence of Europe’s citizens".

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The European Commission and Australiahave announced a link up between theiremissions trading systems, in a commit-ment to cut the amount of carbon pollutionand increase liquidity in the market, whichcould lead to gereater things on a globalscale, experts are saying.

Initially the plan is to create a partial linkbetween both parties that will be in opera-tion by July 2015, graduating to a full linkup of a trading emissions system from July2018.

In the meantime the commission will beseeking a mandate to negotiate a treaty onbehalf of the European Union, to be com-pleted by the middle of 2015 to facilitatethe complete link up with Australia in sixyears time.

“We have negotiated with Australia be-cause they have a similar system that is inplace as ourselves, and we hope to incen-tivise a market to produce a lower carbonoutput.” Said Isaac Valero Ladron, thespokesperson for Climate Change Com-missioner Connie Hedegaard.

“Negotiations with Australia have beencontinuing for one and a half years already,and last September Commissioner Hede-gaard visited Australia where official talkson the details of the system took place.”

It is envisioned that in the longer termthere will be further link ups with othercountries in the creation of a global marketto reduce carbon emissions, allowing busi-nesses to tap into an internationally devel-oped system.

“We can only announce an agreementwith Australia at the moment, but there are

possibilities for future link ups.” thespokesperson explained.

“In Switzerland there are developments,South Korea aim to have an emissions trad-ing system working by 2015. In China thereare seven provinces who have promised tocreate an emissions market, and in NorthAmerica there is California and Quebecwho are developing their carbon markets,the potential is there on a world wide scale.”

The partial link up will permit Australianbusinesses to be able to use European al-lowances to meet up to 50 percent of theirliabilities under the Australian scheme,

when the flexible price period begins in2015.

At first a limited agreement was decidedupon to carve out a smoother path to a fulllink up, as this will provide Australia accessto credits from a more established marketthan their own of emissions trading.

In creating the full link up, the Commis-sion and Australia have identified severalareas that need to be focused on.

These include measurement, reportingand verification arrangements, the typesand quantities of third party units that canbe accepted into either system, the role of

land-based domestic offsets from Aus-tralia’s Carbon Farming Initiative in thelinked system and any implications forsupporting the competitiveness of Euro-pean and Australian industries, in partic-ular for sectors exposed to a risk of carbonleakage.

The Australian government is also re-moving the price floor on its carbon mar-ket to simplify the system, when the fulllink is in place a single price will be createdas the market interconnects, leaving in-vestors the security of knowing that there isprice stability on carbon units.

ECONOMY

ETS link-up possible on a ‘world wide scale’

By Peter Taberner

A leading German business questionnairehas revealed that confidence in the econ-omy is the worst it has been in two and ahalf years. The IFO Business Climate Survey, con-ducted by the CESifo Group based inMunich, found that the economic moodhad darkened for August in their month-ly survey, from the responses of 7,000companies in the manufacturing, con-struction, wholesaling and retailing sec-tors. The worst affected sectors were in retail-ing and wholesaling, who receivedindexed negative scores of 4.7 and 2.1respectively, both had positive scores inthe two previous studies taken in Juneand July. For the construction industry a negativescore was reached for the fifth consecu-

tive month, but August’s figure of minus6.9 was only a slight drop from July by0.2, suggesting that there is still someroom for optimism. Although there was better news from thesurvey for manufacturing as there was adecline in negative attitudes, as the fig-ures improved by 0.8 from the precedingstudy in July. Klaus Wohlrabe, an expert in businesscycles and attitudes with the CESifoGroup, said: “We will have to wait a fewmonths yet to see if these attitudes areingrained in the business sectors, this isparticularly true of the retailing sectorwhich can be volatile, five months agothe feedback from retail was very posi-tive.” “There is a lot of psychology involved,and the increase in energy prices and gasprices have taken their toll, this will like-ly reduce investment and orders in these

sectors. The manufacturing sector is morepositive, but many manufacturers espe-cially car manufacturers still want to seewhat the politicians want to do in thecurrent climate with the debts crises stillsuch a pivotal issue.” German businesses will be looking forclarity beginning with the constitutionalcourt’s decision to be delivered nextmonth on the legality of the EuropeanStability Mechanism. Confidence will have been knocked fur-ther by the reduction in growth for thesecond quarter of this year, although offi-cial figures posted 0.3 percent growth,this was down by 0.2 % from the firstthree months of the year. The CESifo Group say they expect thistrend to continue with growth for thenext quarter to be reduced further to 0.1percent as the Eurozone remains in direstraits.

“I think that the corporate sector andGerman SME’s are still worried aboutthe debt crises and believe it will takemore time than thought to resolve.”Matthias Schaefer, head of the depart-ment of economic policy at the think tankKonrad Adenauer-Stiftung. “There are more worried about the com-petitiveness of several EU member states,and are worried about how the UnitedStates and China is doing. There needs tobe clear perspectives on the bankingunion and the role of the ECB, there isanxiety that the banking system is notstable. The corporate sector does not havea reliable partner in the banking sector atthe moment.”A separate IFO survey on the service sec-tor interviewing 2500 companies alsoshowed that confidence was dwindling,but with a positive score of 12.7 it is a farrelatively optimistic sector.

Confidence in German economy sinks


ANALYSIS

Workers hoist glass panels at a commercial building construction site in Sydney's central business district on 29 August , 2012. The European Union and Australia have agreed

to cut global emissions from their respective heavy industries by tarding carbon allowances.

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By Peter Taberner

In May 2012, the new French President, FrançoisHollande, was elected on the basis of an anti-aus-terity albeit pro-European ideological platform.Hollande promised to maintain France’s pre-dominance in European decision-making, and atthe same time to find another way through the fi-nancial crisis, centred on growth rather than aus-terity. He went on to promise new hires in thepublic sector (in education and police), a mini-mum wage increase, and to bring the retirementage back down from 62 to 60 years, thus abolish-ing the most significant reform pushed ahead byhis predecessor Nicolas Sarkozy.

But most of all, Hollande guaranteed the con-tinuation of the so cherished by the French peo-ple generous ‘welfare state’, and along with it thelevel of public spending at around 57% of GDP,when Germany’s figure is around ten percentagepoints lower…

In a nutshell, President Hollande’s election wasinterpreted as a guarantee of maintaining the ‘so-cialist’ ideal of life in France, a view initiated byFrançois Mitterrand in 1981, and closely followedby all governments, whether left- or right-wing,over the last 30 years. Problem is that the interna-tional and European context has changed dra-matically since then; since the introduction of theeuro, (a mostly French invention), France, like itsother Eurozone partners, has lost its monetary au-tonomy, and cannot devalue its currency, as Mit-terrand did twice in the early years of his mandate.More importantly, France has, just like everybodyelse, accumulated a public debt through consis-

tent fiscal deficits over the years, that the present fi-nancial crisis has deeply accentuated. Financingthese deficits brings dependence on the marketsand the rating agencies, a reality demonised byHollande who went as far as to ‘declare war againstfinancial markets.’ In fact, this rhetoric just revealshis weakness against the markets, and the limitedroom for manoeuvre in pursuing his socialistagenda.

The truth is that France is faced with two hardfacts, which point to the opposite direction thanthe one promised by Hollande: declining com-petitiveness and banking vulnerability.

Declining competitiveness, as measured by

unit labour costs, is the major issue for France.The hourly labour cost in France for 2011 was€34.2, against €30.1 in Germany, and nearly20% higher than the Eurozone average of €27.6.This is mainly due to high payroll taxes appliedon employers. In addition to high taxation, thereis a legislation made to protect the employees,which, without attaining the extremes of Italianlabour laws, makes firing people quite compli-cated and costly. As a result, large multinationalfirms are very skeptical about investing and hir-ing staff in France, thus contributing to thecountry’s chronic high unemployment and lowlevel of new investments. The same trend is also

followed by existing companies, which are try-ing to move their factories abroad, the moststriking recent example being the country’s sec-ond biggest car manufacturer Peugeot.

On the other hand, the French banking systemseems to be extremely vulnerable to the sovereigndebt crisis, both because its undercapitalisation andits large exposure to sovereign bonds of countrieslike Greece and Italy. An example of undercapi-talisation is given by IMF’s estimation of the so-called ‘Tier 1 capital’ expressed as a percentage ofassets: 16%for US banks, 10% for German banks,under 9% for French banks. Same thing for theleverage (another measure of risk) which is calcu-lated at an average of 17-to-1 for the US banks,against 27-to-1 for the French banks, even at-taining 49-to-1 for Credit Agricole, one of themajor French banks. This means large amountsof money are necessary to recapitalize the bank-ing system, and as in the economy, “there is nosuch thing as a free lunch,” such amounts will bemissed elsewhere, restraining Mr. Hollande’schoices even further.

To sum up, the judgement day for France isclose, a first test being the new budget to be pre-sented in the next month, where a €33 billion gaphas to be catered for in order to keep the deficit at3% of GDP in 2013. The real dilemma is this:keep the old good socialist model of welfare state,as promised by Hollande? Or, stick to the euroand the European construction, as again prom-ised by Hollande and the entire French elite? Nomagic tricks can make up for a clear-cut politicaldecision here. After all, the future of Europe is atstake.

www.christoskissas.com

POLITICS

Hollande’s Judgement Day05NEW EUROPE

2 - 8 September, 2012ANALYSIS

French President Francois Hollande address a press conference next to German Chancellor Angela

Merkel (not in picture) at the chancellery in Berlin, on 23 August, where they discussed debt-wracked

Greece after Athens asked for more time to implement crucial but painful reforms to safeguard its euro-

zone membership.

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George Soros likely to “steal the show” beforeBarroso and Merkel open their mouths

By Christos Kissas

The late interest of Angela Merkel for “more Eu-rope” unveils the German agony after it realisedthat, in retrospect, things are not developing inthe direction it would like.

Germany now asks for a new Treaty that willfunction as a Constitution with the focus on acommon budget centrally controlled from Brus-sels (write Frankfurt or, better, Berlin). Memberstates will be offered in return Eurobonds andother ephemeral facilities. Yet the “patent” is un-likely to work as it seems to be late overdue bytwo or three years. A midsummer night dream asWilliam would have said but the summer is al-ready gone.

For any major or even minor change in theUnion, the French agreement is necessary. It is a“sine qua non” prerequisite. Europe withoutFrance would only be a complex of barracks andcamps with German commanders. Four and ahalf years ago, October 12, 2008, the then-pow-erful Nickolas Sarkozy gave to Angela Merkelthe great opportunity to reshape Europe, securethe euro and save all economies, now collapsing.Greece, for instance, could have been saved with€20, maximum €30 billion. Now the salvation ofGreece (and soon of several others) may well behistory. Why it was not done four and a half yearsago? Because then (and now), Europe was ruledby accountants.

However, the time slot for such an opportu-nity was then and now it is closed, and will beclosed for a few years. Now France is in the con-stellation of the Left under a Head of State, Fran-coise Holland, who feels his duty is to reflect theaverage French middle- to lower-class and whitecollar workers, who are expecting less workinghours, higher pays and more social benefits. Hol-lande promised that before the election, and theFrench have an outstanding political memory.

We learn that Jose Manuel Barroso, in a good-will public relations exercise aiming mostly tomend fences with the German Chancellor, willannounce during the State of the Union address,the unification of the European banking systemon 12 September.

Angela Merkel is planning to follow thelaunching of her campaign for “more Europe” onFriday, 14 September in grandiose style. Theessence, however, is only a futile exercise aimed atthe German election. Indeed, the German Chan-cellor will not touch the hardcore of the problem,which is the fading-out of political Europe, andwill not address the big political problems of Eu-rope, such as xenophobia or the outwards orien-tation of the Union. The Egyptian presidentMohamed Morsi is now visiting China where-upon arrival, as a symbolic gift, he was handed twohundred million euros. This implies the reorien-tation of Egypt from the West to the Pacific Rimand the European leaders, instead of wonderingwhat that it means, are sitting in Brussels in twoadjacent buildings trying to figure out who is theboss. Boss of what or of whom, however, it is notclear and, after all, is not important.

Political Europe is the issue and unfortunately,at this point, the euro has become the intra-con-necting element of the European Union. This iswrong. Humans, according to Aristotle, are ani-mals by nature political and by social nature. Theyare related and connected among each other byfriendships based on pleasure (ephemeral), or onmutual benefits (short term), or, and this is thereal friendship (teleia filia) which leads to the for-mation of the polis. This is long term as it is basedon common virtues and common values. And itis exactly here our leaders must tell us, what areour values and what are their virtues.

In the meanwhile, I learn that George Soroswill have a major intervention in the Europeandeadlock towards the last part of the first 10 daysof the month. The beauty of it is that given thetiming, both Barroso and Merkel will have to re-write their speeches and this indicates where thereal power of Europe stands. Such an interventionis likely to turn into ruins and ashes both the ex-ercises of the President of the European Com-mission and the German Chancellor, and mightgo further to touch the hardcore of the Europeanproblem. BC

George Soros: preparing to enter the European

debate |EPA/LAURENT GILLIERON


ANALYSIS

While all of Europe is waiting for Germanyto ratify the European Stability Mechanism(ESM), the European Central Bank (ECB)is inventing an ever more questionable sys-tem of creative accounting in order to se-cure the credit line with the Greekgovernment ensuring that Athens contin-ues to fill the pockets of shareholders ofhedge funds and banks ,mainly in Londonas the Financial Times said on 11 Januaryof this year.

But why is it that Germany, that has al-ways been seen to be pushing for greater fi-nancial integration and fiscal austerity,suddenly put on the breaks and halts theenacting of the ESM treaty, which had beentailored by Freshfields Bruckhaus Deringer,a core banking industry major law firm, onemay ask?

The reason for Germany’s reluctance toratify the treaty has to be seen a technicalissue rather than a political one. An over-whelming majority of all parties except forDie Linke have voted in favour of the ESM,as did President Joachim Gauck, who, un-like his predecessor Christian Wulff, has ex-pressed no objection to the ESM, and alsomade headlines saying that he expected thatthe federal constitutional court in Karlsruhewill find no legal reason to halt it further.

Mr Gauck’s statements were interpretedby many commentators as interference withthe supreme court, which made it difficultfor the judges to dismiss motions over theconstitutionality of the ESM outright. Justto make it look as if the court had painstak-ingly scrutinised the document that actuallyis being written, no wonder, in English andcomplies mainly with Anglo-American andnot Roman law, it may have chosen to ex-tend it’s deliberations until 12t Septemberknowing that all EU governments, the Eu-ropean Commission, the ECB and IMF areimpatiently waiting for the verdict.

Dismiss the ESM treaty as anti-constitu-tional would there be plenty.

First of all, the treaty’s articles 32 and 35define that financial instruments based onESM – funds are considered untouchableno matter who might hold them making itimpossible to confiscate these making any‘hair cut’ an illusion.

Furthermore, the members of the gover-nor’s council enjoy a wide-ranging immu-nity and impunity in regards to anytransactions they are executing. On theother hand, the governor’s council can im-pose it’s decisions on any EU member state,institution or citizen making the applica-tion of law a one-way road since no institu-tion, citizen or community may sue thegovernor’s council over a decision.

In Germany, the principle of division ofpower as well as the rule of law are fun-damental and are protected by the consti-tution.

But, Articles 10 and 25 of the ESM treatyexplicitly state that the governor’s councildecides over the volume of the fund as wellas the distribution of burdens. National par-liaments have no control over the amountof money their state receives from the fundor has to contribute to it.

According to Article 9.3 of the ESMtreaty the member states irrevocably andunconditionally have to commit to transferfunds demanded by the governor’s councilwithin 7 days.

In it’s previous ruling of 7 September2011 (BVerfG, 2BvR 987/10), the Germanfederal constitutional court made clear thatthe budgetary plan voted on by the parlia-ment, the Bundestag, according to Article110.2 of the Basic Law is not only an eco-nomic plan binding the executive branchbut also a sovereign act that the lawmakerscan only decide over for a limited time andfor specific purposes.

The ESM treaty’s regulations are dia-metrically opposed to these fundamentalrights of the parliament which as a coreprinciple has the budgetary discretion andby this is responsible for the finances of thestate in front of the citizens.

Any risks that are not in the control of theparliament as well as the government vio-late the sovereignty of the Federal Republicof Germany.

The fiscal pact that accompanies theESM treaty explicitly demands that mem-ber states surrender their budgetary discre-tion, and, therefore, their sovereignty.

What at first glance may look like a use-ful tool to discipline governments of de-faulting states such as Greece, Portugal,

Ireland, Spain, and soon Italy, not only isdreadful for them, but also for the others asthey have waived their rights to expand thefund likewise.

The idea of a pan-European solidarity insharing burdens and debts may sound nicebut in reality it means that the banks haveall governments on the hook by this mech-anism that will eventually spin an ever big-ger wheel of public debts being imposed bybanks trading credit default swaps (CDS)charging exorbitant interest rates for the re-financing of such debts while the richerstates are forced to bridge ever bigger holes.Only beneficiaries are the banks who maythink that they invented a financial perpet-ual motion machine.

Since Greece got ‘rescued’ it’s debts roseby another €25 billion because of thismechanism. To institutionalise this willsooner or later lead to the financial collapseof the European Union. It is just a matterof time.

Germany’s federal constitutional courtalso has to scrutinise whether Article 38of the basic law is being violated, since theESM treaty might pose a threat to under-mine the authority of the Bundestag thatis meant to represent the political will ofthe citizens in parliament. And, the citi-zen’s right to vote is fundamentally vio-lated if the parliament to be electedeffectively has no legal or practical powerof the state’s finances any more which thebasic law is not only containing as a pre-condition but also shall guarantee. Thefiscal necessities arising from the ESMtreaty and Fiscal Pact may make make itimpossible for any government and par-

liament to remain sovereign. In order to protect the basic law, the

founders of West Germany’s post WW IIconstitution also defined the criminal codeaccordingly. Under § 92 StGB (Germancriminal code) it is described as “high trea-son against the federation” to conspire inorder to abolish the democratic, sovereign,foundation of the German state based onthe rule of law.

Article 20 of the Basic Law states that the“Federal Republic of Germany is a social,federal, state based on the rule of law” con-tinuing to say that “legislation is bound bythe constitution, the judicial branch by thelaw and the executive branch by legislation.The German people have the right of re-sistance against whoever intends to abolishthese principles.”

The banks and hedge funds were cleverlymaking the financial crisis they created lookas if it was a state debt crisis but they shouldbe stopped from imposing ever bigger debtsonto our societies forcing richer countriesto pay for the bank’s shareholders profitmaximisation dreams since even Interna-tional Herald Tribune headlined on 12 Jan-uary of this year that the ‘rescue’ funds neverreach Athens but will end up in the pocketsof hedge funds in London and banks inFrankfurt. One would not need to createsuch an enormous legal construction inorder to surrender the taxpayer's hardearned money to our own banks taking ashort detour via Greece, Ireland, Portugal orSpain.

Ralph T. Niemeyer is the Editor-in-Chiefof EUchronicle ([email protected])

ECONOMY

Germany has hung itselfWhy the ESM treaty is held up by the German federal constitutional court

By Ralph T. Niemeyer

The Second Senate of the Federal Constitutional Court of Germany report the judgement over financial assistance for Greece and other suffering EU states, in Karlsruhe, Ger-

many, 7 September 2011.

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ANALYSIS

BERLIN – In the coming months, sev-eral serious regional economic and polit-ical crises could combine into onemega-watershed, fueling an intense globalupheaval. In the course of the summer, theprospect of a perilous fall has become onlymore likely.

The drums of war are being bangedever more loudly in the Middle East. Noone can predict the direction in whichEgypt’s Sunni Islamist president and par-liamentary majority will lead the country.But one thing is clear: the Sunni Islamistsare decisively altering the region’s politics.This regional re-alignment need not benecessarily anti-Western, but it surely willbe if Israel and/or the United States at-tack Iran militarily.

Meanwhile, civil war is raging in Syria,accompanied by a humanitarian catastro-phe. To be sure, President Bashar al-Assad’s regime will not survive, but it isdetermined to fight until the end. Syria’sbalkanization among the country’s diverseethnic and religious groups is a clearlypredictable result. Indeed, a Bosnia-typescenario can no longer be excluded, whilethe prospect of the Syrian government’sloss of control over its chemical weaponsposes an immediate threat of military in-tervention by Turkey, Israel, or the US.

Moreover, the Syrian civil war has be-come a proxy in an openly declared battlefor regional hegemony between Iran onone side and Saudi Arabia, Qatar, Turkey,and the US on the other. Staying on thesidelines of this Arab-Western coalition,Israel is playing its cards close to its chest.

Iran, for its part, has proclaimed Syriaan indispensable ally, and is determinedto prevent regime change there by allavailable means. Does that mean thatHezbollah’s militias in neighboringLebanon will now become directly in-volved in Syria’s civil war? Would such in-tervention revive Lebanon’s own long civilwar of the 1970’s and 1980’s? Is there a

threat of a new Arab-Israeli war hangingover the Middle East? And, as Kurds in-side and outside of Syria grow more as-sertive, Turkey, with its large andlong-restive Kurdish population, is alsogrowing restive.

At the same time, the regional strugglecurrently playing out in Syria is becom-ing increasingly entangled with the othermajor source of war sounds: Iran’s nuclearprogram. Indeed, parallel to the Syriandrama, the rhetoric in the confrontationbetween Israel and Iran over the programhas become dramatically harsher.

Both sides have maneuvered them-selves into a dead-end. If Iran gives in andagrees to a sustainable diplomatic solu-tion, the regime will lose face on a criticaldomestic issue, jeopardizing its legitimacyand survival. From the regime’s point ofview, the legacy of the 1979 Islamic revo-lution is at stake. But the internationalsanctions are hurting, and Iran risks losingSyria. Everything points to the regime’sneed for success – now more than ever –concerning its nuclear program.

Similarly, Israel’s government hasbacked itself into a domestic policy trapof its own. Prime Minister Binyamin Ne-tanyahu and Defense Minister EhudBarak cannot accept a nuclear-armedIran. They do not fear a nuclear attackagainst Israel, but rather a nuclear armsrace in the region and a dramatic shift inpower to Israel’s disadvantage. From theirpoint of view, Israel must either convincethe US to attack Iran and its nuclearplants or take on the maximum risk ofusing its own military forces to do so.

Both sides have substantially reducedtheir options, thereby limiting the possi-bility of a diplomatic compromise. Andthat means that both sides have stoppedthinking through the consequences oftheir actions.

Everywhere there is talk of a “militaryoption,” which means air strikes. But,while advocates speak of a limited “surgi-cal operation,” what they are really talk-

ing about is the start of two wars: an aer-ial war, led by the US and Israel, and anasymmetric war, led by Iran and its allies.

And what if this “military option” fails?What if Iran becomes a nuclear power,the region’s democratic movements areswept away by a wave of anti-Western Is-lamic solidarity, and the Iranian regimeemerges even stronger?

Iran, too, evidently has not thought itsposition through to its logical conclusion.What does it stand to gain from nuclearstatus if it comes at the cost of regionalisolation and harsh United Nations sanc-tions for the foreseeable future? And whatif it triggers a regional nuclear arms race?

A war in the Persian Gulf – still theworld’s gas station – would affect oil ex-ports for some time, and energy priceswould skyrocket, dealing a severe blow toa global economy that is teetering on thebrink of recession.

China, already in economic trouble,would be hit hardest, along with thewhole of East Asia. With the US alsoeconomically weakened and facing apresidential election, America’s leadershipability would be seriously constricted.And could a weakened Europe cope withan oil shock at all? A regional and globalsecurity shock caused by asymmetric war-fare could add still further to the worldeconomy’s troubles, causing exports toslump even more.

Respice finem! (“Consider the end”),the Romans used to say. World leadersneed to take this timeless wisdom toheart. And that applies doubly to Euro-peans. It would be absurd if we had to suf-fer a real catastrophe again in order tounderstand what European integrationhas always been about.

Joschka Fischer, Germany’s foreign min-ister and vice-chancellor from 1998 to2005, was a leader in the German GreenParty for almost 20 years.Copyright: Project Syndicate/Institute forHuman Sciences, 2012.

Members of Jihadist group Hamza Abdualmuttalib train near Aleppo on 19 July. Rebels seized control of all of Syria's border crossings with Iraq the same day,

dealing a new blow to President Bashar al-Assad, as China and Russia dismayed the West by blocking UN action against his regime. But how long will the con-

flict continue to play out in this way?

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POLITICS

An Autumn abyss?

By Joschka Fischer

EU must answerfor complicity intorture and disappearance

The world will shortly be marking the eleventh anniversaryof the ‘9/11’ terrorist attacks in the USA. But as this dateapproaches no EU country has yet fully complied with thelegal obligation to investigate the grave human rights viola-tions committed under the resulting global CIA counter-terrorism operations. These abuses included the illegaltransfer, secret detention, torture and enforced disappear-ance of alleged suspects. However, a new report by the European Parliament,adopted by the Civil Liberties, Justice & Home AffairsCommittee (LIBE) on 10 July, offers some hope of progress.The report applies fresh pressure on EU countries to inves-tigate their own involvement in the CIA’s rendition and se-cret detention programmes. The committee’s chiefrepresentative (rapporteur), Hélène Flautre MEP, haspraised the EP for delivering “a rebuke to those EU mem-ber states complicit in these abuses. MEPs have come underconsiderable pressure from different national and other in-terests, seeking to keep a lid on these allegations." The re-port will be put to the vote in the EP’s plenary session inStrasbourg later this month. The report focuses on three countries which allegedly heldterrorism suspects in secret prisons following 9/11: Lithua-nia, Poland, and Romania. Lithuania has admitted to host-ing two such sites, and there is growing evidence that Polandand Romania also helped the CIA set up secret detentioncentres. All three governments deny that suspects were heldin secret sites on their soil. The committee has called on allimplicated EU countries to hold independent and effectiveinvestigations into their involvement in these programmes.The report follows up a 2007 report by an EP committeewhich listed available evidence of European complicity inthe US-led operations. Resolutions in 2007 and 2009 urgedEU countries to investigate, but these were generally ig-nored. Since 2007, there has been a steady stream of credi-ble new evidence of European complicity, including thediscovery of secret sites in Lithuania (2009), former CIAofficials’ identifying a prison in Bucharest (2011), and newsof charges against Poland’s former head of intelligence forcolluding with the CIA to hold terrorism suspects in Poland(in March this year). An EP delegation visited one CIA site in Lithuania. HélèneFlautre also visited Poland. The final report calls on Lithua-nia to re-open a poorly-managed and abruptly-halted crim-inal investigation into the secret sites and urges Poland,where an investigation is underway, to pursue the investi-gation more transparently. Romania has flatly denied anyinvolvement in the CIA operations. It is frankly absurd, notto say mysterious and frustrating, that EU pressure has yetto succeed there, but LIBE has pressed Bucharest to launcha full and effective investigation into mounting evidence ofits collusion. Data passed to LIBE by the Polish aviation agency and Eu-rocontrol have provided important information about rendi-tion flights in and out of Lithuania, Poland, and Romania,further corroborating claims that the three countries played akey part in the CIA’s programmes. The report also acknowl-edges a connection between the three countries and planeslanding in and overflying Danish and Finnish territory.Amnesty International has reminded EU governments thattorture and disappearance simply cannot be allowed. TheEP’s report drives that point home. It makes a strong con-tribution to the struggle to ensure accountability for Eu-rope’s complicity. We urge MEPs of all parties to standbehind the report in the plenary vote in September, and sendan unambiguous signal to all implicated EU governmentsthat they are not beyond the rule of law.

Nicolas Beger is Director, European Institutions Office,Amnesty International

New Europe content partner

By Nicolas Beger

After two weeks of sporting eupho-ria and some bitter disappointment,millions of viewers worldwide tunedinto the closing ceremony, wavinggoodbye to the athletes that hadcompeted in this year’s Olympics.The games have been a success forLondon, with a combination of fan-tastic venues and thousands of won-derful volunteers that have high-lighted what a great choice the cap-ital city really was. Embrace reallysummed up the pride of the countryas they belted out One Day LikeThis, "Throw those curtains wide.One day like this a year would seeme right".

And then the flame went out, sig-nalling the end to the OlympicGames. However, we are far fromthe end.

After two and a half weeks ofsporting greatness filling ourscreens, we were left with a gap inproceedings before the Paralympicstook the stage on 29 August.

Lord Coe has stated previouslythat "We want to change public atti-

tudes towards disability, celebratethe excellence of Paralympic sportand to enshrine from the very outsetthat the two games are an integratedwhole"

Then I began to think; imagine ifthe Olympics and Paralympics wereheld concurrently, a 4 week feast cel-ebrating everything that is goodabout sport.

The notion of having an end toone games and a beginning toanother somewhat jars with thenotion of an integrated whole.

There is no doubt that attitudetowards the Paralympic games havebegun to change. It is only since1988 that both of the games havebeen held in the same country.Indeed, the Barcelona Paralympicgames are remembered for greatattendances for all the events, butprogress for the Paralympics has hada number of ups and downs.

Events such as the Paralympicsshould play a part in cultural changein attitudes towards disability, butprogress can be slow.

Now Britain has been given themantle for furthering this even, and

now is not the time to drop thebaton.Marketing for both theOlympics and Paralympics have fea-tured South African runner OscarPistorius, and he has been genuinelyembraced in the UK as a true rolemodel. There was much interest inhim running in the Olympic games,and I hope this excitement is carriedinto his Paralympic events.

We have the likes of Jessica Ennisand Mo Farah as the faces of theOlympic Games. What we nowneed is recognition for our own topParalympic athletes in the same waythat the British public haveembraced the blade runner.

The signs for the Paralympics aregood, with venues selling out as theydid in Barcelona 20 years ago.

All eyes are on London. We needto set the example of how to presenta Paralympic games to the worldand be remembered as the nationwho bettered the standard for thisfantastic event.

Nikki Sinclaire is an independentMEP for the West Midlands regionof the UK

By Nikki Sinclaire MEP

SPORT

The Paralympics should play a part inchanging attitudes towards disability


ANALYSIS

Members of the British delegation parade during the opening ceremony of the London 2012 Paralympic Games at the Olympic Stadium in east London on 29 August.

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The Alliance of Civilizations

It is the time of the “Alliance of Civilizations” , aformal Project from the United nations that intendsto put in direct dialogue different civilizations, re-ligons and ideas. The focus on Creativity and Knowl-edge as the drivers of creating added value withinternational dissemination is a unique challengethat may be the answer to a new way of interactionbetween those who have the responsibility of think-ing and those that have the responsibility of makingthings happen. This is the Alliance of Civilizations.The Alliance of civilizations will face new chal-lenges for the future and the World will have to de-cide about the most suitable strategies for a newDevelopment Agenda. In a time of uncertainty anduncontrolled global finantial crisis, the World mustfocus more and more its attention on launching thebasis for an Agenda of New Ideas centered in thedrivers of high growth rate and civil society capacityof creating and developing added value for the inter-national market. This is the really basis for the ac-tion of the Alliance of Civilizations.The Alliance of Civilizations must be an Idea ofChange. In the Alliance of Civilizations there is astrategic challenge focused in the capacity of attract-ing New Investments, New Talents and a New Am-bition for an Agenda for the future. The design ofthe Alliance of Civilizations with a new agenda can-not be made by law but must be built through a“broad and consistent partnership” that is the plat-form for a collaborative network of the different op-erational actors of the continent. In the Alliance ofCivilizations, the key word must be Ambition. TheState, the Municipalities, the Companies, the Uni-versities, in a word, Civil Society must give the ex-ample. They must promote a new adventure in acomplex world and there is a real sense of urgency inour capacity of being able to do it. It´ s time to believe in a new cycle for a changingworld. Reinventing the European Dream and givingthe European Actors (States, Universities, Enter-prises, Civil Society) the opportunity of developingnew challenges focused on innovation and creativityis in a large sense giving a central contribution to thereinvention of the world. The Reinvention of theWorld is the reinvention of its people and institu-tions. More than everything, it is a public demon-stration of a positive answer to the future.This is the idea of the Alliance of Civilizations Thisis a challenge for the future that is the basis for ourpresent. We must be able to win a new ambition forour land. For our people. For our citizenship. Wemust be able to effective construct an Innovation So-ciety mostly based in our individual attitude in acomplex global world. It ´s a challenge we must beable to answer with success.

Francisco Jaime Quesado is the General Manager ofthe Innovation and Knowledge Society in Portugal,a public agency with the mission of coordinating thepolicies for Information Society and mobilizing itthrough dissemination, qualification and research ac-tivities. It operates within the Ministry of Science,Technology and Higher Education

New Europe content partner

By Francisco Jaime Quesado

Happytalk

We’re all in it together, we’re told and I’ve decided totake up the challenge and try to help the EU by becom-ing the Chief Happiness Officer to the EU institutions.This is a voluntary role, but it is only a matter of time be-fore it becomes a central part of the Vision 2020 process.It is a huge burden, but once the funds start rolling in I’llrecruit a ‘Smile Curator’ and an ‘Ecstasy Ambassador’ tohelp fight the good fight.There’s some advice from a CHO on how to fill the role:Ask others "What 3 good things happened to youtoday?"Share your fun sidePlan fun into meetings, chores, learning, and routinehappeningsShare 3 good things about your day with someoneRegularly talk to others about nothing in particular. Thishelps increase a sense of sharing that is necessary forpositive communication and trust.It’s obvious that this old approach won’t work as anyonewho behaved like that would get punched in the face anawful lot.I’m offering a bold plan that will work.First of all, the press bar will remain open throughoutall council summits. A simple step that is bound to makethe media more… appreciative of the long hours of workthat our leaders put in.The Berlaymont atrium and outside area will be trans-formed into a meerkat sanctuary. It’s been proven thatanimals and pets can calm and soothe. Melbourne hos-pital built such a sanctuary in their grounds and is get-ting great results from patients. Adding meerkats to theworking environment is a real winner.Each Commissioner should have their own theme songto play as they march to the podium in briefings andspeeches to parliament. I’m thinking Barroso wouldenjoy Survivor’s ‘Eye of the Tiger’ a little too muchthough. But Connie Hedegaard should get a boost from‘It’s Raining Men’. Commissioner Georgieva would bewell served by Joe Cocker’s ‘With a Little Help from MyFriends’ and Olli Rehn would have a splash of glamourwith Abba’s ‘Money, Money, Money’.Whoever is responsible for making coffee in the Charle-magne building will be hurled from the roof.The Simone Weil Memorial Skateboard Park outsidethe European Parliament is underused. A barrenwindswept plateau, it will need some creative thinking tobring out its happiness potential, I’m thinking crazy golfcourse and bouncy castle.This is just a beginning but it does clearly show what aChief Happiness Officer can achieve. Especially as thejob title was created by companies who wanted to keepthe plebs on board without doing anything that wouldactually make people happier, such as coherent leader-ship.Berlaymont isn’t a happy ship right now as staff try tohang onto as many of their perks as possible and thetranslators are grumbling that nobody understands themand are gearing up for a dispute. More jobs are gettingfarmed out to cheap contractors and it’s only a matter oftime before the switchboard becomes a Bombay basedcall centre.I understand their worries, I feel their pain, but I’m hereto fill them full of joy, which will ultimately benefit allEuropean citizens. Let’s get to work.

[email protected]

By Andy Carling

Last month, competing interests pre-vented agreement on a much-neededtreaty that would have reduced the ap-palling human cost of the poorly regu-lated international arms trade.Meanwhile, nuclear disarmament effortsremain stalled, despite strong and grow-ing global popular sentiment in supportof this cause. The failure of these negoti-ations and this month’s anniversaries ofthe atomic bombings at Hiroshima andNagasaki provide a good opportunity toexplore what has gone wrong, why disar-mament and arms control have proven sodifficult to achieve, and how the worldcommunity can get back on track towardsthese vitally important goals.

Many defence establishments now rec-ognize that security means far more thanprotecting borders. Grave security con-cerns can arise as a result of demographictrends, chronic poverty, economic in-equality, environmental degradation, pan-demic diseases, organized crime,repressive governance and other develop-ments no state can control alone. Armscan’t address such concerns.

Yet there has been a troubling lag be-tween recognizing these new securitychallenges, and launching new policies toaddress them. National budget prioritiesstill tend to reflect the old paradigms.Massive military spending and new in-vestments in modernizing nuclearweapons have left the world over-armed-- and peace under-funded.

Last year, global military spending re-portedly exceeded $1.7 trillion – morethan $4.6 billion a day, which alone is al-most twice the UN’s budget for an entireyear. This largesse includes billions morefor modernizing nuclear arsenals decadesinto the future.

This level of military spending is hardto explain in a post-Cold War world andamidst a global financial crisis. Econo-

mists would call this an “opportunitycost”. I call it human opportunities lost.Nuclear weapons budgets are especiallyripe for deep cuts.

Such weapons are useless againsttoday’s threats to international peace andsecurity. Their very existence is de-stabi-lizing: the more they are touted as indis-pensable, the greater is the incentive fortheir proliferation. Additional risks arisefrom accidents and the health and envi-ronmental effects of maintaining and de-veloping such weapons.

The time has come to re-affirm com-mitments to nuclear disarmament, and toensure that this common end is reflectedin national budgets, plans and institutions.

Four years ago, I outlined a five-pointdisarmament proposal highlighting theneed for a nuclear weapon convention ora framework of instruments to achievethis goal.

Yet the disarmament stalemate contin-ues. The solution clearly lies in greater ef-forts by States to harmonize their actionsto achieve common ends. Here are somespecific actions that all States and civil so-ciety should pursue to break this impasse.

• Support efforts by the Russian Feder-ation and the United States to negotiatedeep, verified cuts in their nuclear arse-nals, both deployed and un-deployed.

• Obtain commitments by others pos-sessing such weapons to join the disar-mament process.

• Establish a moratorium on develop-ing or producing nuclear weapons or newdelivery systems.

• Negotiate a multilateral treaty out-lawing fissile materials that can be used innuclear weapons.

• End nuclear explosions and bring intoforce the Comprehensive Nuclear-Test-Ban Treaty.

• Stop deploying nuclear weapons onforeign soil, and retire such weapons.

• Ensure that nuclear-weapon states re-port to a public UN repository on nuclear

disarmament, including details on arsenalsize, fissile material, delivery systems, andprogress in achieving disarmament goals.

• Establish a Middle East zone free ofnuclear weapons and other weapons ofmass destruction.

• Secure universal membership intreaties outlawing chemical and biologicalweapons.

• Pursue parallel efforts on conventionalarms control, including an arms tradetreaty, strengthened controls over the il-licit trade in small arms and lightweapons, universal membership in theMine Ban, Cluster Munitions, and Inhu-mane Weapons Conventions, and ex-panded participation in the UN Reporton Military Expenditures and the UNRegister of Conventional Arms.

• Undertake diplomatic and militaryinitiatives to maintain international peaceand security in a world without nuclearweapons, including new efforts to resolveregional disputes.

• And perhaps above all, we must ad-dress basic human needs and achieve theMillennium Development Goals.Chronic poverty erodes security. Let usdramatically cut spending on nuclearweapons, and invest instead in social andeconomic development, which serves theinterests of all by expanding markets, re-ducing motivations for armed conflicts,and in giving citizens a stake in theircommon futures. Like nuclear disarma-ment and non-proliferation, such goalsare essential for ensuring human securityand a peaceful world for future genera-tions.

• No development, no peace. No dis-armament, no security. Yet when bothadvance, the world advances, with in-creased security and prosperity for all.These are common ends that deserve thesupport of all nations.

Ban Ki-moon is Secretary-general of theUnited Nations

By Ban Ki-moon


ANALYSIS

CONSTRUCTIVE AMBIGUITY

Anti-nuclear protesters stage a demonstration march near the Hiroshima Peace Memorial Park on 6 August, 2012 as the city marks the 67th anniversary of the

atomic bombing. Tens of thousands of people commemorated the anniversary of the atomic bombing of Hiroshima, as a rising tide of anti-nuclear sentiment

swells in post-Fukushima Japan.

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UNITED NATIONS

The world is over-armed and peace is under-funded

NEW DELHI – Syria’s agony hasgenerated a variety of unproductive re-sponses: verbal condemnation of theexcesses of President Bashar al-Assad’sregime; disagreements about the wis-dom of armed intervention; and all-around confusion about the possibilityof finding a viable long-term solution.Worse, in this sorry state of affairs, theworld may be getting a glimpse of avery ugly future.

First, let us try to disentangle someof the cat’s cradle of ironies and con-tradictions that are bedeviling effortsto end the violence in Syria. WhereasSyria denies political freedom to itscitizens, it tolerates significantly moresocial freedom than many other Arabcountries, particularly Saudi Arabia,which is leading the charge to oustAssad. Governed by minority Alawites(a Shia sect), Syria harbors a kaleido-scope of distinct groups: Arabs, Arme-nians, Christians, Kurds, Druze,Ismailis, and Bedouin.

It is this tolerance of cultural and re-ligious diversity that could be endan-gered if the Sunni-inspired revoltsweeps the country. And that is whySyria simultaneously generates revul-sion at the regime’s atrocities and fearof what might follow if the regime isdefeated.

In an ancient land such as Syria,there can be no examination of theproblems of the present without re-flecting upon the past. History, afterall, is always the mother of the present,and geography the progenitor.

In his history of the Arab world inthe aftermath of World War I, A Peaceto End all Peace, David Fromkin sug-gests that the Middle East today re-flects the failure of the Europeanpowers to consolidate the political sys-tems that they imposed. Britain and itsallies “destroyed the old order,” smash-ing Turkish rule of the Arabic-speak-ing Middle East. But then they“created countries, nominated rulers,delineated frontiers, [and introduced]a state system” that would not work.

But, in the wake of the American-led wars in Iraq and Afghanistan, andthe intervention in Libya, is not thesame experiment being repeated al-most a century later? That is the ques-tion that realistic policymakers shouldbe asking themselves as they ponderwhat to do in Syria.

In August 1919, British ForeignMinister Arthur Balfour summarizedthe essence of the problem that is nowconfronting policymakers. “The un-happy truth,” he wrote, “is that France,England, and America have got them-selves…so inextricably confused that

no…satisfactory answer is now possi-ble.”

Does that not sound familiar? Andis not an updated version of Syrian(and then Iraqi) King Faisal’s exhorta-tion to Arabs – “Choose to be eitherslaves or masters of your own destiny”– echoed in the political pronounce-ments of new leaders in Egypt andelsewhere.

And let us examine the actions ofthe West in 1919 and the years thatfollowed. The French, as Fromkin re-minds us, “shrank Syria, so that theycould control it,” rewarding their“Christian allies by swelling the bor-ders of Mount Lebanon with theBekaa valley, the Mediterranean portsof Tyre, Sidon, Beirut and Tripoli,and…land…north of Palestine. Thou-sands of Muslims [suddenly] belongedto a state dominated by Christians.”

So, as the Oxford historian Mar-garet Macmillan argues in her bookThe Peacemakers, Syria’s leaders, re-membering these events when West-erners probably did not, “took theopportunity” presented by the BlackSeptember crisis of 1970 to sendtroops to their country’s lost lands.

The combination of ethnic and sec-tarian fears and rivalries, historicalmemories, and willful blindnessamong outside powers seems almostpredestined to destabilize the entireMiddle East again. Turkey is resurgentyet troubled; Iraq has been invadedand abandoned; Iran is isolated andthreatened; Israel is anxious and bel-ligerent; and Afghanistan and Pakistanare internally imbalanced and politi-cally fragile.

Indeed, the great arc stretching fromCairo to the Hindu Kush threatens to

become the locus of global disorder.Little wonder that Iranian envoySaeed Jalili, after meeting Assad inDamascus recently, announced that“Iran will absolutely not allow the axisof resistance, of which it considersSyria to be a main pillar, to be brokenin any way.”

For Turkey, Syria’s plight is astrategic nightmare, because anybreakup of Syria implies the possiblerise of a greater Kurdistan, whichwould raise claims to a great swath ofTurkish territory. Is there a solutionto this grim impasse? Certainly, onewill not be found in more UnitedNations resolutions, which is why USPresident Barack Obama is now be-lieved to favor a “managed transition”in Syria that would not fatally erodethe existing instruments of the Syr-ian state.

As Michael Ignatieff has wisely ob-served, Syria’s crisis has revealed thatthis is “the moment in which the Westshould see that the world has trulybroken into two. A loose alliance ofstruggling capitalist democracies” isfaced by Russia and China. Westerncountries’ national interests will nolonger determine the moral and polit-ical impulses of today’s global commu-nity. Indeed, whatever the outcome,Syria’s agony has underscored a furtherirreversible weakening of the West’sdominant global role.

Jaswant Singh, a former Indian fi-nance minister, foreign minister, anddefense minister, is the author of Jin-nah: India – Partition – Independ-ence.Copyright: Project Syndicate, 2012.www.project-syndicate.org

POLITICS

What Syria means10NEW EUROPE

2 - 8 September, 2012ANALYSIS

A Free Syria Army fighter stands next to his children at an unofficial rebel camp set-up in an

olive grove near the Syrian-Turkish border on August 27, 2012. Some 9,000 Syrian refugees have

massed on the country's northwest border with Turkey, waiting for more camps to be set up to ac-

commodate those fleeing the fighting in Syria. Turkey has housed more than 80,000 refugees in

camps along the border but these camps cannot take the new influx from the latest fighting.

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By Jaswant Singh

Nato after Assad(and Khamenei)

Obama’s leading military adviser on 30 August 2012 foreshad-owed a grim situation in the Middle East after the fall of theSyrian government. NATO needs to reflect on what this meansfor European security. Without committing explicitly to the assessment as applicabletoday, the Chairman of the United States, General MartinDempsey, told journalists in London that the worst possibleoutcome in Syria would be an “unstable state with all the risksthat involves”. Yet this situation has already arrived. It will not becorrected within a decade (if the unstable situation in Iraq adecade after the fall of Saddam Hassan is a reliable guide). Dempsey’s bleak picture needs to be read in conjunction withthe speech by NATO Secretary General Anders Fogh Ras-mussen in London on 4 July, in which he talked of a globally en-gaged NATO. At the same time, an unnamed senior official ofNATO was briefing that NATO would be interested in closerrelations with the Gulf Cooperation Council (GCC) – a groupof states currently ranged against both Syrian and its key allyIran. Rasmussen was careful to point out that a NATO moreengaged outside its own territory does not mean an expandedmilitary footprint. Yet with NATO operational in combat inAfghanistan now for a decade, in anti-piracy operations in theIndian Ocean and a new cooperation agreement freshly signedwith Australia, the assurance from the top NATO official is un-convincing.Member states of the GCC have stepped up their arms pur-

chases in the past two years, reflecting their deep concern overthe security situation. In April 2012, the United States and theGCC held their first formal strategic dialogue to develop an of-ficial framework for mutual strategic cooperation. In June,Britain and the GCC held their first joint Ministerial Meetingin London to discuss current strategic concerns. The GCCkicked off a similar process with Australia in 2011 and in June2012 announced agreement with Japan for similar. The GCCset up its similar dialogue with Turkey in 2008. Given the strongcommonality of strategic interests between these countries, allallied in some way to the United States, this is alliance buildingin all but name. The process gives additional meaning to the Obama adminis-tration’s “pivot to Asia”, often interpreted to mean only East Asiaor at most East and South Asia – not all of it.As these “partners” look ahead to the near term strategic envi-ronment in the region, they must also consider a possible lead-ership transition in Iran. Ayatollah Khamenei served asPresident from 1981 to 1989 and then as Supreme Leader forthe 23 years since 1989. He has been at the peak of Iranian gov-ernment for three decades. Regardless of the reliability of long-standing rumours about his health, he is 73 years old andhuman. The next Presidential election, to replace Ahmadinejad,will be held within less than a year (due June 2013). Given thestrategic reach of Iran into Syria, Iraq and Afghanistan, and theserious confrontation now in place between Iran and severalpowerful countries (Israel, the United States, the UK, SaudiArabia and the United Arab Emirates), the leadership transi-tions in Iran will be of profound significance. The newspaper Haaretz last Friday (31 August) carried anopinion piece suggesting Israel should become a member ofNATO. The lack of realism of this proposal demonstrates thealready extreme dimensions of the poor and deteriorating stateof international security in SouthWest Asia – and a signifi-cant narrowing of options. Southwest Asia is NATO’s newfront line. The alliance needs a coherent strategy of commit-ment toward security of the region that goes beyond platitudesabout partnership.

EWI is a New Europe content partner

By Greg Austin

NEW DELHI – German Chancellor AngelaMerkel’s second visit to China in a year comesagainst the backdrop of dire forecasts of a difficultSeptember for the eurozone. Mindful of suchconcerns and persistent pessimism in global fi-nancial markets, Merkel is now taking bold po-litical initiatives at home and overseas. Indeed, herChina trip should be seen as an effort to assertleadership across the eurozone.

At home, Merkel recently sent out a clear mes-sage to her critics that Germany must pay a pricefor eurozone leadership. She cautioned her col-leagues against loose talk about a “Grexit” –Greece’s exit from the eurozone – and assuredvisiting Greek Prime Minister Antonis Samarasthat Germany remained committed to his coun-try’s membership of the eurozone.

While it required courage to take such a toughstance, doing so helped to bolster her position athome and throughout the eurozone. There isnow no doubt that Merkel is willing to commitGermany to the cause of preserving both the Eu-ropean Union and the eurozone, and that she willwork to achieve that goal. If she succeeds, she willemerge as the first great European leader of thetwenty-first century.

This stance suggests that Merkel appreciatesthe essence of the argument that François Heis-bourg, the chairman of the council of the Inter-national Institute for Strategic Studies (IISS),advanced in a recent essay: a federal arrangementdoes not fall apart because of problems at the pe-riphery but because of “failure at the heart of the

system.” Merkel has come to terms with Ger-many’s position – and that it must act to preservethe unity of the whole.

The eurozone (and probably the EU) cannotbe saved in Greece or Finland if it cannot besaved in Germany. Committing Germany to thatobjective is precisely what Merkel has defined asher political goal for the rest of her term in office.

Within hours of declaring her leadership athome, Merkel announced her visit to Beijing.The timing was highly significant: Merkel goesto China, the emerging global power, after de-claring her own commitment to strengtheningthe eurozone, if not the EU as a whole, as a cred-ible pole of an emerging multipolar world.

In recognition of Germany’s growing signifi-cance, Chinese Prime Minister Wen Jiabao wel-comed a delegation of German business leadersto Beijing this May with the words: “StrongerChinese-German cooperation is good for thetwo countries, good for China-EU relations, andgood for world prosperity and stability. Thestrategic dimension of Chinese-German rela-tions, therefore, can only be strengthened, notweakened.”

There are several dimensions to the bilateralrelationship. Germany needs both China’s mar-kets and the funds that its government can deployto purchase German and European bonds. It alsohas more than 7,500 enterprises operating inChina, with gross investment totaling $18.5 bil-lion. Moreover, Germany has sold $15 billionworth of technology to China, and bilateral tradehit a high of $169 billion in 2011, accounting for30% of total China-EU trade. The two countrieshave set a bilateral trade target of $280 billion for2015.

Trade, however, is not the only immediate con-cern. Far more important, especially for Germany,is to get China to invest in and hold its bonds. Inmid-August, at the First IISS Oberoi Lecture inMumbai, Klaus Regling, the CEO of the Euro-pean Financial Stability Facility, underscored theimportance of Chinese demand for EFSF bonds

and China’s role in stabilizing the eurozone.Regling also revealed that there is now in-

creased and frequent coordination between mon-etary authorities in the United States, Germany,and China, drawing attention to the fact that the“old Triad” of the dollar, euro, and yen may nowhave been replaced by a “new Triad” of the dollar,euro, and Chinese renminbi. While Reglingspoke of an emerging “multipolar monetary sys-tem,” his remarks clearly indicated the function-ing of a “tripolar” system.

Lying at two ends of that monetary triangle,the eurozone and China have acquired a geopo-litical stake in helping each other. Hans Kund-nani and Jonas Parello-Plesner of the EuropeanCouncil on Foreign Relations view the China-Germany relationship as one that will shape theoverall China-EU relationship. Like many strate-gic analysts, they worry whether Germany, inpursuit of purely short-term economic interests,might forsake long-term strategic interests andconcerns about human rights, environmentalproblems, press freedoms, and other political andgeopolitical issues.

It is significant, therefore, that German politi-cal parties have emphasized the need for Merkelto raise such matters in her talks with Chineseleaders. However, Merkel’s focus may well remainon trade, investment, and currency flows. Afterall, unless she can turn around the eurozone, herrising profile at home and in Europe could easilywither.

What this means is that to secure Germanleadership of Europe, and her own leadership ofGermany, Merkel has to “walk on two legs,” soto speak. She needs to balance both geo-eco-nomic and geopolitical factors – both interestsand values – in advancing Germany’s relationswith China.

Sanjaya Baru is Director for Geo-economics andStrategy, International Institute for StrategicStudies. Copyright: Project Syndicate, 2012.www.project-syndicate.org

POLITICS

Merkel in China11NEW EUROPE

2 - 8 September, 2012EU WORLD

A magazine cover depicting German Chancel-

lor Angela Merkel with the phrase 'Poker Face'

looms over a news stand in central Beijing,

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“And in the morning, It will be foul weathertoday: for the heaven is red and lowring. Ye knowhow to discern the face of the heaven; but ye can-not discern the signs of the times.” The words ofMatthew seemed apposite as the Republicanparty suspended the start of their conference dueto an act of God, this time expressing Himselfthrough the medium of a tropical storm, Isaac.

We should not be surprised, after all the evan-gelical Tea Party were about to cast their votes fora Mormon.

“Our first priority is ensuring the safety of del-egates, alternates, guests, members of the mediaattending the Republican National Convention,and citizens of the Tampa Bay area,” said the glo-riously named Republican Chairman, ReincePriebus. At least that gave an explanation of whySarah Palin wasn’t invited.

There has been an end of days feel to the Re-publican primaries this time round. There havebeen many in the land of the free that have haddifficulty adjusting to a black president, otherswho were overwhelmed by the power andweight of the Obama campaign.

In desperation, they turned to the desperate

and created the Tea Party movement, or ratherhijacked it. The teapots original purpose was toprotest against the bank bailouts, but this wasturned into fighting Obama’s communist agendaof providing affordable healthcare for all. Whatan evil vision.

The teapots ran wild and out of control. Theend result was that the primaries were avoidedby the smart end of the party as the two bit mes-siahs, the deranged and the publicity whores tookto the platform. Romney came out as the winner,playing the ‘I’m not quite as mad as the others’card.

But the political storm broke before the actualstorm, after one candidate for Senate, Todd Akinsaid that a woman couldn’t get pregnant during“legitimate rape.” This crass remark was followedby equally stupid comments from other male re-publicans, trying to limit what was and was notrape.

Arizona republicans made their contributionby passing a law that dates the beginning of apregnancy from the end of the woman’s lastmenstrual cycle and not the moment of concep-tion.

This is being described as a war againstwomen. It isn’t, it’s something else.

It’s about God. If the fundamentalists couldmanage a virtue like honesty, they would say tothe electorate that their religious beliefs had ledthem to the conclusion that all abortions shouldbe outlawed. However, the subject of rape is onearea where the public are adamant that they wantvictims to be given a choice, on obvious compas-sionate grounds.

Instead of accepting this democratic will, theevangelical zealots try to sneak through their Tal-ibanesque dogmatism with the claim that rapeisn’t real and end up with their grotesque contor-tions. It is to be hoped that this electoral race isall about the Republicans ditching their lunaticfringe and returning to some sort of sanity.

The left are no better. The Assange case, wherethe whistleblower is hoping to avoid extraditionin response to rape allegations has seen many ofhis supporters look at the possibilities of theSwedes being used to allow Assange to be ren-dered to the US. There is a risk of this happen-ing, but it’s hard to see how Sweden is more riskyfor Assange than the UK, who have been mer-rily spiriting people to places unknown for a verylong time.

Some of Assange’s supporters have taken adifferent approach. Britain’s George Galloway,

often called the Honourable Member for Bagh-dad Central, at least before the fall of Saddam,tried to claim that consent wasn’t required “beforeevery insertion” which appalled many, includingthe Respect party leader.

Former diplomat, Craig Murray named oneof the accusers on live TV, claiming it was per-fectly fine because the name had already beenmade public. He suggested googling her, wherewe can find her being called “a slut” and other in-sults. There is of course, a very good reason whyaccusers names are not public; anonymity willhelp them reclaim their normal lives.

But, the advocates of online anonymity aren’tkeen to give that to the women in this case.

It is rather like when Roman Polanski washeld in Switzerland, fighting off extradition forhis rape of a 13 year old girl. There seemed to besome who argued that he was innocent becausehe made films the intelligentsia liked, led byWhoopi Goldberg who said, “I know it wasn'trape-rape.”

Yes it was.For cynical reasons there are too many trying

to lessen this dreadful crime.There was one voice of sanity, President

Obama, who commented on the Akin storm bypointing out the obvious, “"Rape is rape. The ideathat we should be parsing, and qualifying, andslicing what types of rape we're talking about,doesn't make sense to the American people."

OPINION

Why some people don’t think rape is rape

By Sanjaya Baru

By Andy Carling

Despite a slowing European economy, whichhas also hit demand for gas, Gazprom does notintend to reconsider export volumes forecastimplying the decrease of Gazprom Group ex-port in 2012, the Russian gas monopoly toldNew Europe on 30 August. Gazprom wascommenting on reports that Russia’s EconomyMinistry cut its 2012 gas export forecast to193bn cubic metres from 212bn cubic metresdue to sluggish European demand, which alsoprompted it to reduce its average export priceestimate.

Asked if the ministry’s forecast will affectGazprom’s export volumes and price to Europe,the Moscow-based company said that, accor-ding to Gazprom’s preliminary estimations, thevolume of its export is to remain on a par withthe year 2011 and may reach 222bn cubic me-tres in Europe, Turkey and the Commonwe-alth of Independent States (CIS).

Gazprom reminded that the supply is car-ried out according to individual price formulasincluded in each of previously signed long-termexport contracts and considering variation inoil and oil products prices. Such scheme secu-res the balance of interests of sellers and buyers,allows sustaining investment cycle in the indu-stry and excludes price diktat of suppliers, Gaz-prom said. “At the same time we are ready toshow flexibility and to consider changes, oc-curring at the market, to work out reasonablecompromises. Gazprom Group has repeatedlyachieved agreements about price formulas cor-rection with certain partners. Such scheme isimplied in long-term contracts,” Gazprom’s In-formation Directorate said.

Gazprom noted that specific export volumesin short-term period depend not as much oneconomic situation but on weather.

Experts note that the US shale gas boom andample supplies of liquefied natural gas (LNG)are threatening Russia’s high-priced Russianpipeline gas exports.

But Gazprom has been quick to dismiss thelikelihood that Europe could replicate the shalegas boom underway in the US. Gazprom toldNew Europe that shale gas is no threat to itsexport policy.

“We are not against shale gas as such since byitself it increases supply and perspectives gasconsumption in general. Still, one should un-derstand how high the costs of its productionare. The current prices level at American mar-ket does not cover the costs of its manufacture.As for possibilities of supplying gas from theUSA, the current prices level, liquation andtransport costs make exporting American gasto Europe unprofitable. This gas is more likelyto get to premium Asian market,” Gazpromsaid.

Apart from that, due to environmental andeconomic concerns European countries such asBulgaria, France and other states do not rush

to develop its manufacture, Gazprom argued.“In Poland where work in this direction usedto be quite active, the estimations of perspecti-ves of shale gas are becoming more and moremoderate. Some large foreign companies are al-ready leaving the market. So there is no signi-ficant threat to our business connected withshale gas in Europe. Russian gas is to remaincompetitive,” Gazprom said.

Nevertheless, on 29 August, Gazprom an-nounced that it had indefinitely shelved theShtokman project in the Barents Sea it hasbeen pursuing with French and Norwegianpartners because the costs of developing itwould simply be too high.

Asked if falling demand is going to slow thedevelopment of new fields like Shtokman, oiland gas analyst at Alfa Bank Maria Yegi-kyan told New Europe on 30 August that Gaz-prom is launching the Bovanenkovo field,

which is going to contribute to productiongrowth for Gazprom.

“Shtokman is a unique project in Russia, therealisation of which needs substantial capitalexpenditures, making the project commerciallyunfeasible without tax breaks which the Rus-sian government failed to provide to date,” Ye-gikyan said from Moscow.

Risk to demand is another reason for the in-definite postponement. Gazprom earlier deci-ded to switch from pipeline gas to LNGproduction at Shtokman. Growing risks of awave of US LNG exports to Asia, which wastargeted as the key market for Shtokman, couldpotentially challenge the price environmentand demand for Shtokman gas, Yegikyan said.

The Shtokman partners have postponedtheir investment decision several times. Gaz-prom officials had said in July that talks onShtokman would be completed by the autumn.

On 31 August, oil rose towards $114 a bar-rel, heading for a second monthly gain,supported by speculation that US FederalReserve Chairman Ben Bernanke will pro-vide some hints as to whether the Fed willtake additional steps to revive the US eco-nomy, and concern about supplies.Brent crude was up $1.16 to $113.81 a bar-rel by 1337 GMT, after falling to a sessionlow of $112.36 earlier. US crude added$1.73 to $96.35.On 30 August, a United Nations reportsaid Iran had doubled the number of ura-nium enrichment centrifuges it has in anunderground bunker, showing Tehran hasexpanded its nuclear work despite Westernpressure and the threat of an Israeli attack.

Centre for Global Energy Studies (CGES)Senior Petroleum Upstream Analyst Ma-nouchehr Takin told New Europe fromLondon on 31 August that the worriesabout Iran affecting the international crudeprice remain. “With the rhetoric of theIsraeli authorities that they cannot wait,now we’re talking about some months ormaybe the coming weeks that they will at-tack, has a big impact on the price of crudeand that is very sad,” the Iranian analystsaid.Meanwhile, the remnants of HurricaneIsaac, now downgraded to a tropical de-pression, were seen as posing no furtherthreat to most oil and gas installations inthe region. The Gulf of Mexico oil and gas

industry has so far reported no majorstorm-related damage to infrastructure al-though one Louisiana refinery had floo-ding. Energy production was expected toget back to previous levels.Nevertheless, US drivers are being hit witha jump in gasoline prices because Isaac shutdown several refineries along the GulfCoast and others are operating at reducedrates. “There is a lot of crude around,”Takin said. “The price of crude has notbeen so much affected by the price of pe-troleum products within the US has beenaffected because the refineries have closed,”he said. As Isaac fades away and the USsummer driving season ends, gas stationsowners should start dropping prices.

ENERGY|OIL PRICES

Oil prices rise on hopes Fed will take steps to revive US economy

ENERGY|GAS

European economy forces Russian gas exports re-think By Kostis Geropoulos


ENERGY & CLIMATE

The landing station of the Baltic Sea pipeline Nord Stream in Lubmin near Greifswald, Germany, 8 November 2011. Russia is the largest gas supplier to Europe.

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Energy experts said plans by the gas com-pany Gasum to construct a pipeline fromEstonia to Finland will not guarantee thesupply of cheap natural gas, YLENews reported. In April, Gasum unveileda project to import liquefied natural gas(LNG) paid for in part by EU funds. Fi-

nancial support for a liquefied natural gasimport terminal will also be requestedfrom the EU. The project also includes animport terminal to be built on the Finnishcoast.

Energy experts pointed out that theproject, valued at a half a billion euro, does

not guarantee the supply of cheap naturalgas.

Since the 1970s, imports of natural gasfrom Russia have been via a directpipeline. As an alternative, Gasum plans aterminal either at Inkoo or Porvoothrough which LNG could flow.

ENERGY|GAS

Finnish-Estonian pipe no guarantee for low-price gas

Statoil has made an oil discovery in theGeitungen prospect on Utsira High inthe North Sea together with partnersPetoro, Det norske oljeselskap andLundin, Norway Post reported on 27 Au-gust. The Norwegian state-controlled oilgroup said on 27 August that it was nowseeking to produce more oil domesticallyin 2020 than it did currently.

Exploration well 16/2-12 drilled by thedrilling rig Ocean Vanguard has proven a35 metre oil column in a high qualityreservoir dating from the Jurassic period.

Statoil estimates the volumes in Geitun-gen to be between 140 and 270mn barrelsof recoverable oil equivalents. Oil was alsoproven in the basement rocks. This is re-garded as a possible upside in connectionwith the development of the area/discov-ery. "A new oil discovery in the JohanSverdrup area, in the mature part of theNorth Sea reinforces Statoil's faith in theexploration potential of the Norwegiancontinental shelf, and demonstrates thatwe deliver on our strategy of revitalisingthe NCS with high value barrels," Sta-

toil’s Senior Vice President of ExplorationNorway Gro Haatvedt said.

Geitungen was drilled approximatelythree kilometres north of the Johan Sver-drup discovery and was defined as a sepa-rate prospect in the licence PL 265. Welldata indicate that there probably is com-munication between the two discoveries.Statoil is operator for production licencePL265 with an ownership share of 40%interest. The licence partners are Petoro AS(30%), Det norske oljeselskap ASA (20%)and Lundin Norway AS (10%).

ENERGY|EXPLORATION

New oil discovery in the North Sea

The Bulgarian ministry of economy, en-ergy and tourism announced 28 Augustthat the protocol guaranteeing Bulgaria adiscount of 11% from the price ofGazprom gas supplies was jointly signed.The cut in gas prices entered into force on1 April and will continue until the end ofthe year. It relates to all three contracts anddepends on the quantities of gas pur-chased by Bulgargaz which, however, can-not be determined at this point.

During the meeting between the Bul-garian energy minister, Delyan Dobrev,and Gazprom’s Deputy Chairman of themanagement committee, AlexanderMedvedev, also an agreement engaging

Bulgaria to reach a final investment deci-sion for the construction of SouthStream by 15 November.

Furthermore, Medvedev stated thatthere was no doubt that the first gas sup-plies from Russia to Bulgaria via the un-derwater sector of the track and theground segment will start in 2015. Thisinformation was announced at the end ofJune by the Deputy Chairman ofGazprom's Board of Directors, AlexeyMiller.

The parties signed also a third docu-ment committing them both to sign thenew contract for the supply of gas also bymid-November.

Alexander Medvedev expressed confi-dence that the signed documents would

allow the development of other projects inthe field of energy cooperation, like for ex-ample expanding opportunities for under-ground gas storage, as well as creation ofnew generating capacities in the country.

In June, the Council of Ministers inBulgaria decided to permit the stay of thevessels for further research on the con-struction of the South Stream pipeline fora period of one year: between 30 June2012 and 30 June 2013. The additionalresearch is related to the need of obtain-ing further geotechnical, hydro-meteoro-logical, geophysical, geotechnical andenvironmental data, in order to provide adetailed measurement of all factors whichwould affect the security of the pipelineand its construction.

ENERGY|GAS PIPELINE

Bulgaria, Gazprom sign on gas discount and South Stream

By Stanislava Gaydazhieva


ENERGY & CLIMATE

Too little, too late for Ukraine

Feeling the heat from the Russian-backed SouthStream gas pipeline and increasingly alienated from theEU over the Yulia Tymoshenko case, Ukraine's Presi-dent Viktor Yanukovich hinted on 25 August he maysoften his stance against Russia over gas prices andmembership of the Moscow-backed Customs Union.Ukraine, which is heavily dependent on Russian gaswhile about 70% of Russia's gas exports to Europe govia Ukraine, has tried for years to renegotiate a dealstruck in January 2009 after a dispute between Moscowand Kiev left several European countries without gaswhen Russia halted exports via Ukraine.A day after Ukraine’s independence anniversary,Yanukovich met Russian President Vladimir Putin on25 August at the Russian leader's Black Sea residence.In Sochi, Yanukovich told Putin that the Ukrainiangovernment may seek a compromise on its negotiationswith Russia over natural gas supplies. "The issue [of gassupplies from Russia] will never be excluded from ourrelations and will always remain sensitive," he said. "Wewould like to slightly alter our positions in our relationswith Russia."Moscow has showed willingness to lower natural gasprices if Kiev agreed to a merger of Ukrainian state en-ergy firm Naftogaz with Russian gas monopolyGazprom or to sell Ukraine’s transit pipeline to Russia.But with a final investment decision on Putin’s pet proj-ect - South Stream - expected in November and con-struction set to start in December, Ukraine’s willingnessto compromise may be too little too late.There is even less bargaining power by the Ukraini-ans because of South Stream which is almost ap-proved. Moreover, on 29 August, Gazprom said it hascompleted the welding of the last joint on the secondleg of the Nord Stream pipeline intended to deliverRussian natural gas to Europe also bypassing exist-ing transit countries.Analysts point out that there is really no rationale forRussia to both construct South Stream and acquireUkraine’s gas transit pipeline. European demand is notincreasing so rapidly as to provide Russia with the needfor more capacity. Moreover, Gazprom has spare capac-ity and at this point there is no need for extra capacity,especially with South Stream in the pipeline, they add.After failing to get a discount from Moscow in pro-longed negotiations throughout 2011, Ukraine, whichpays more than $400 per 1,000 cubic metres of Russiangas, tried to cut the volume of its gas imports, set atmaximum of around 50bn cubic metres a year.Russia is pushing South Stream in order to get inde-pendence for exports to Europe from Ukraine and Be-larus. Because of South Stream, Ukrainians have to bemore flexible, Centre for Global Energy Studies(CGES) Senior Petroleum Upstream AnalystManouchehr Takin told New Europe from Londonon 31 August. “That is probably a little bit of arm-twisting that they have which will help them getagreement on this side,” Takin said, adding that nowthe issue is less political and more commercial. He saidthat after Nord Stream and South Stream, transitcountries won’t have a monopoly of the transit routefor Russian gas to Europe. “They are important, but ifthey are unreasonable, they might lose the transit feesthat they receive,” Takin said.

[email protected] on tweeter @energyinsider

By Kostis Geropoulos

ENERGY INSIDER

The 69th edition of the Venice Film Festi-val opened with a political movie by the In-dian movie director Mira Nair. TheReluctant Fundamentalist presents the storyof a Pakistani man who moves to the USsearching for the American Dream, butwithout forgetting his routes. During thisjourney, which is a sort of initiation thanksto his mentor (played by a stunning KieferSutherland), we immediately perceive he isa winner. Changez (Riz Ahmed) rapidlyreaches the top in his company and findsalso the love of Erica (Kate Hudson) anupper class New Yorker. The way seems tobe open for this golden boy when some-thing changes his philosophical perceptionof being an American after the 9/11 terror-ist attacks. The story from the beginning isdescribed by a meeting with an Americanjournalist, who has a lot to hide, and who istrying to liberate an American professorkidnapped by an extremists group.

Mira Nair explains, ”I wanted to tell astory of people like me who are living be-tween two worlds, I’m a child of modernIndia but I was raised by essentially a fa-ther who came from Lahore, before it waspartitioned. I was inspired to tell a story ofcontemporary Pakistan which is not whatyou read in the newspapers. The press isdescribing this country as full of corruption

and terrorism forgetting completely thegreat culture it has then the second inspi-ration was the book by Hamid Mohsinwhich can be considered like a dialogue be-

tween east and west. I sought very much inthe dialogue between America and the Is-lamic world in The Reluctant Fundamental-ist to really bring some sense of

bridge-making, some sense of healing, asense of community that goes beyond thestereotypes, goes beyond the myopia, goesbeyond the ignorance”.

She continues with a more political mes-sage about the US. “I hope American audi-ences receive it as it was intended, as a filmmade by people who understand what it isto love America. I hope they see it as a con-versation between two cultures that goesbeyond the prejudices that contaminate us.I really believe, unlike George W Bush, thatit’s not a case of ‘you’re either with us oragainst us’. There is a third way. There iscommon ground”.

The movie has his climax during the 9/11attacks. Nair recalls those terrible moments,which occurred a few days after she won thegolden lion in Venice with Monsoon Wed-ding. “I live in New York. My husband andfamily were in the city. It took me a week toget back there and, when I did, the wholeplace reminded me of images from myhome country. It was quite shocking whenI got back because it felt like images I hadseen in my part of the world, refugee camps,helicopters, a sense of war, a war zone, andit was in our backyard,” she remembers.“And so suddenly, New York became a placewhere people who looked like us were ‘theother.’ And that was painful, and that wasalso part of the inspiration to try to makethis film.”

Finding common groundBy Federico Grandesso


CULTURE

Indian film director Mira Nair poses during the photocall of The Reluctant Fundamentalist at the 69th Venice

film festival on 29 August at Venice Lido. The filmopened The 69th Venice film festival, the cinema mostra,

and is presented out of competition

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At the Venice Film Festival, New Europe spoke to film director Mira Nair, whose new movie, The Reluctant Fundamentalist opened the event on 29 August

INTERVIEW|CECILIA STRADA

Bringing hospitals to inhospitable placesCould you start by telling me about your ac-tivities in the war zones of Afghanistan?We have a long experience in Afghanistan, westarted to work there in 1999 when the situa-tion in the country was very bad because ofcivil war. We opened our first hospital in thenorthern part of the country then a second onein Kabul in 2001 and finally a third in thesouthern provinces in the 2004.We thenopened 30 first aid points in the remote areasof the country, these units refers to our 3 hos-pitals, before for the population was impossi-ble to reach the main hospitals; apart from thatwe also inaugurated a maternity hospital.

How did you manage to interact in a con-structive way with the local political authori-ties?It was not easy, when we first arrived in thenorth of Afghanistan we met authorities whowere basically military forces then in 2001when we opened in Kabul there were the Tal-iban. Even now it is not easy even though wehave a good cooperation with the healthcareministry. Our key to work in these difficultcountries is to show immediately the qualityof our work then we take care of all patients

free of charges and most important we do notsupport any single group in this conflict.Sometimes you can experience a hostile at-mosphere because in the past some humani-tarian organizations were operating hidingsomething else or some NGOs who promisedtoo much and after 4 months they left thecountry. Apart from these problems we couldwork very well and we take care of 3,200,000Afghans on the ground.

How can the EU work with you to act in theseareas. Are there are specific funding programsfrom the European Commission?Yes, for sure, we already applied to the relatedcalls but for the moment we are a little bitblocked because the typology of our long terminterventions does not fit with the require-ments of the calls for proposals which are morefocused on short term interventions. Then wewould like to discuss with the EU authoritiesalso from the strategic point of view. We think that basic healthcare interventionsare important but we are convinced that thisshould be a starting point, we brought, for ex-ample, the cardio-surgery in Africa then weshould take care not only of malaria or AIDS

but also focus on tumours and cardiovasculardiseases. I think that also Africans, for exampleshould have the right to access to excellencemedical treatment like we have in Europe. In Afghanistan the thing that shocked us themost on the ground is too see that 1/3 of thewar victims has less the 14 years and it is notacceptable too see lots of children who stillare suffering because of the various unex-

ploded weapons; this is a lesson for the fu-ture. We should not continue to buy weaponsas we there were no tomorrow. About Eu-rope again, we had recently some meetingwith EU Commissioner Piebalgs, and we dohave some supporters in the European Par-liament like Pino Arlacchi who was workinga lot in Afghanistan and who has observedour structures.

Afghan medical workers, and security personal carry a wounded man to emergency hospital in Lashkar Gah

city, capital of Helmand province on 19 August, 2012.

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Federico Grandesso speaks with Cecilia Strada, President of Italian NGO

Emergency, which brings urgent medical assistance to Afghanistan.


FASHION & STYLE

This fall’s gold mania hasgot us thinking: have de-signers been spellbound

by Renaissance portraiture andits image making charm?

Whether in a few timid outfitsor an entire collection, almostevery brand presented its versionof the black and gold ostenta-tious total look. Coats anddresses are delicately embroi-

dered with pearls and ‘precious’stones; gold coins embellishbelts, while massive jewelry andhairpieces crown the whole. Thisseason also marks the return ofthe arabesque, an oriental deco-rative motif often found in Ren-aissance painting.

Costume references are morethan clear and reminiscent of16th Century royal portraits:

Holbein’s portrait of Henry VIII,Elizabeth I coronation dresses orEleanor of Tolede’s sumptuousattire in Bronzino’s famouspainting.

The designers’ use of gold andblack, royal or sacerdotal colorspar excellence, take us back to atime of affluence and intensemysticism.

A secretive color, black isthought to express power,grandeur, mystery and protec-tion. When matched with gold itbecomes even more dignifiedand intimidating. One may no-tice, however, that the gold hueused seems more tarnished thanexuberant, an aesthetic choicethat possibly conveys the passingof time but also gold’s conflict-ing connotations: triumph, pres-tige and extravagance on the onehand, and the morally con-demned excesses of the rich onthe other.

In fact, this bronze gold is thecolor of sanctity in Byzantineicons and Western altarpieces.Although very luxuriouslyadorned, this winter’s outfits areas covered up as can be and thusexpress pious austerity, alongwith a sense of aristocratic dis-tinction.

Dolce & Gabbana’s whole col-lection was a statement in itself:fashion reflects society’s con-sciousness at a given point intime. For Domenico and Ste-fano, this means taking pride in

one’s history and culture, a returnto clearly defined values and cer-tain propriety of style, but mostimportantly, the recognition offashion as an art.

For the John Galliano brand,Bill Gaytten presented a verytheatrical version of Shakespear-ian pageboy outfits with silk rib-bons and ruffs. A very spiritedhistorical collection indeed!

Alber Elbaz ‘s jewel-like col-lection for Lanvin and OlivierRousteing’s artwork collection

for Balmain, are pure odes tocraftsmanship, as they express adesire to maintain the qualityand creativity of small houses.

Last but not least, ManishArora for Paco Rabanne andMaxime Simoens for Leonardused the royal gold-black themeon short dresses with contempo-rary cuts using metallic appliquéfor an impressive faux-brocadeeffect.

Louise [email protected]

LEONARD© Leonard

Angelo Bronzino

Portrait of Eleanor of Toledo, 1545

DOLCE & GABBANA© Dolce & Gabbana

JOHN GALLIANO© John Galliano

LANVIN© Lanvin

BALMAIN© Balmain

PACO RABANNE© Paco Rabanne

Golden ruleTRENDS: READY-TO-WEAR FALL/WINTER 2012-2013

Would you like to advertise in New Europe’s Brussels Agenda? Ask for more [email protected] or don’t hesitate to call us at +32(0)2 5390039

Welcome to NE’s Brussels Agenda. All you need to know for a complete professional and personal life in Brussels.

An initiative of the Foundation for the Arts, Brussels

LAST MINUTE TICKETS FOR SHOWS & CONCERTS AT -50%

Avec le soutien de LA COMMISSION COMMUNAUTAIRE FRANÇAISE

Tickets for half price for performances and concerts on the same day. Arsène 50 offers you every day a wide range of performances, advises you in your choices and takes care of your reservation.

www.arsene50.be

Ticket sale: - At BIP, 2-4 rue Royale (Place Royale) 1000 BruxellesTuesday to Saturday, from 12.30 pm to 5.30 pm- Online on www.arsene50.beTuesday to Saturday, from 2 pm to 5.30 pm

Salle à l’étage ● Banquets - réunions - Terrase en été

Cosmo Cuisine

Av. de Tervueren,1051040 Etterbeek - Bruxelles

Tel: 02/ 732 43 31Fax: 02/ 733 61 17

After the Summer break,

Brussels is continuing to play its

role as one of the most exciting

music cities in Europe. No mean

feat as the size of the city means

it has to work twice as hard as

bigger municipalities, but the

reward for music lovers is a great

range of venues and more of a

sense of community than else-

where. And fine beer.

The Ancienne Belgique have

too many great musicians com-

ing than we can list, but here are

a few don’t miss concerts, not yet

sold out, but be quick.

Baba Zula, the Turkish sensa-

tion, are playing a free concert on

16 Sept at 3pm. This is also a

‘car-free Sunday so expect a party

feeling inside and outside the

venue. They’re described as “a

turbulent show, with thanks to

the belly-dancers, the action

painting, the insane orchestra

and of course frontman Murat

Ertel (who, especially with his

saz, brings you an Oriental

Zappa without equal).”

Yeasayer, the band instagram

was made for, are making their

third appearance at the AB on

24 Sept. The band, who released

‘Live At The Ancienne

Belgique’. In 2010, will be in

Brussels as their latest album,

Fragrant World, is released.

They describe the new record-

ing, “This is not a dish of pop

rocks like ‘Odd Blood’, instead

‘Fragrant World’ is something

much weirder and darker. It’s

like a demented R&B record or

like an Aaliyah album if you

played it backwards and slowed

it down. Or David Bowie's

'Lodger'. Those two are major

influences."

The Scissor Sisters cut a rug

at the AB on 8 Oct. Having just

finished a new CD, they will be

bringing their vivacious, infec-

tious sounds. You will feel like

dancing.

Botanique is also ready for the

Autumn. One of the most excit-

ing singers around, Gemma Ray

is playing there on 13 Sept. She

recently released a selection of

songs with the eccentric British

duo, Sparks, who were

impressed, saying, “It takes a

certain type of bravery to attack

our songs. Gemma has both

bravery and immense talent. We

are moved by the results.”

Her latest album, Island fire

was released in June to great

reviews, one of which described

Ray as “delightfully eccentric,”

and “Ray has a highly individual

songwriting style and a real flair

for melody. Vocally, she’s the

retro poppet with a dose of folk

and blues sensibility.”

Graham Coxon, the Blur gui-

tarist, is playing at Botanique

on 29 Sept. Coxon left the

Britpop legends in 2002, but

has rebuilt his friendship with

Damon Albarn and Blur occa-

sionally reform to make a song

or two. Coxon’s reputation as an

innovative and inspiring gui-

tarist has grown. Noel

Gallagher has described Coxon

as "the most gifted guitarist of

his generation."

Psych-electronic trio

Lemonade will be at Botanique

on 23 Sept. The band formed in

2005, in San Francisco, after the

three were booked to play a live

show two weeks after forming,

having previously written no

material.

The first set, though mostly

improvised, was well received,

motivating the band to continue

making music. Since then, they

moved to New York and

released their self-titled debut

album in 2008. Their second

album, Diver was out at the end

of May and was reviewed by

Pitchfork, who found it, “delib-

erately austere and chilly, all

frost-covered synths and ice-

picked broken beats. And where

frontman Callan Clendenin

once favored an unintelligible

shout-speak that perfectly per-

sonified the band's hedonistic

verve, on Diver, he sensitively

sings about his feelings and

desires in no uncertain terms.”

Forest National welcome two

big names in September. On

the ninth, George Michael per-

forms as part of his ‘Symphonica

– The Orchestral Tour. The UK

Guardian said, “The

Symphonica tour finds him

hooking up with classical

orchestras from across Europe

to reinterpret a selection of his

own material, unexpected cover

versions and traditional stan-

dards.” After recent troubles

with the law and a serious ill-

ness, Michael is back, more

heartfelt and emotional than

before.

Norah Jones, the American

singer-songwriter, pianist, and

actress, is at Forest National on

12 Sept. The daughter of Indian

sitar player Ravi Shankar, Norah

has won numerous awards and

has sold 50 million albums

worldwide. Her latest album,

Little Broken Hearts has been

called the "most dramatic and

rewarding departure she’s made

in her career."

RESTO BITES

Rouge Tomate, Av Louise, Brussels. (www.rougetomate.be, tel02 647 7044).Situated in an elegant former townhouse, this is fine dining at itsvery best.The food is simple but delicious with the lovingly-prepareddishes carefully prepared by executive chef Alex Joseph, ablyassisted by Belgian Michel Borsy, who has worked in some ofthe city's best-known restaurants.The pastry chef is Ewan McCallum, who hails from Aberdeen,and shows that at least some Scots know rather more aboutcooking than deep frying chocolate bars.Alex, an American, was working at Rouge Tomate in New Yorkwhen he was asked to come over to its Brussels counterpart in2009 to take charge of the kitchen. You can see why the Belgianowner asked him.The menu is relatively short but features exquisite offerings suchas courgette risotto, seabass and turbot. There's a four-course seasonal menu and a "tour de carte" whereAlex and Michel offer a seven-course degustation menu whereyou can discover their best dishes. The wine list is rather impres-sive too.It's also worth bearing in mind that the attractive outside terraceboasts a bar serving cocktails and where (weather permitting!)lighter dishes such as tapas are cooked.The restaurant celebrated its tenth anniversary earlier this yearand has an 80-seat upstairs room for private functions. Highlyrecommended.

TAKE A LOOK

The empty chamber of the EuropeanParliament in Brussels. What many peopleoutside the infamous ‘Brussels bubble’ maynot realize is that the city almost shuts downover the Summer holidays. The MEPs areaway, the Commission and Council are onskeleton staff.There is a discussion on how much longerthis can go on, as the EU builds its powersand has to cope with events like the financialcrisis and the growing problems of somemember states. These problems are norespecters of people’s holidays.There are more people staying in the citythan, say a decade ago, but for many tourists,if they venture away from the pleasures of thecity centre, will find the European quarter vir-tually deserted..

Brussels Agenda 3 – 13 September

WORKsuggest your event for our agenda: [email protected]

PLAYsuggest your event for our agenda: [email protected]

For more on events in Brussels check

www.agenda.be

5 Sept – Happy Birthday Mr Cage

12:30 – 13:20, La Monnaie

Celebrating the life and music of John

Cage, the Wind and Brass Quartet will

mark the composers’ birthday, including

a performance of his legendary piece,

4’33.

9 Sept - George Michael

20:00, Forest National

The troubled singer is back and better

than ever to perform his ‘Symphonica –

The Orchestral Tour, where his old and

new songs have been re-worked for the

finest symphony orchestras in Europe.

11 Sept – Perfume Genius

20:00, Ancienne Belgique

Perfume Genius is the stage name for

Seattle-based solo artist Mike Hadreas

recorded his debut at his mother’s home

two years ago and has become recog-

nized as an edgy and emotional singer

and songwriter.

12 Sept - Norah Jones

20:00, Forest National

Norah has won numerous awards and

has sold 50 million albums worldwide.

Her latest album, Little Broken Hearts

has been called the "most dramatic and

rewarding departure she’s made in her

career."

13 Sept – Gemma Ray

20:00, Botanique

Her latest album, Island fire was

released in June to great reviews, one of

which described Ray as “delightfully

eccentric,” and “Ray has a highly indi-

vidual songwriting style and a real flair

for melody. Vocally, she’s the retro pop-

pet with a dose of folk and blues sensi-

bility.”

3 Sept -To compromise or not to

compromise? Albanian politicians

between outdated dilemmas and

European imperatives

16:00 – 18:00, EPC

Discussion with Majlinda Bregu,

Minister for European Integration,

Albania, Edmond Panariti, Minister

for Foreign Affairs, Albania and

Stefano Sannino, Director General

for Enlargement, European

Commission.

5 Sept -Turkish Insights Policy

Dialogue

11:00 – 12:30, EPC

Cooperation and geopolitics in the

Black Sea: prospects and challenges.

Discussed with Dimitrios

Triantaphyllou, Director, Center for

International and European Studies,

Kadir Has University, Ismail Safi,

Member of the Justice and

Development Party (AKP,

Konstantinos Vardakis, Deputy

Head of Division for the Eastern

Partnership, Regional Cooperation

& OSCE, European External Action

Service, Evgeni Kirilov, Progressive

Alliance of Socialists & Democrats,

European Parliament and Esra

Hatipoglu, Associate Professor,

Department of Public

Administration, Marmara

University.

6 Sept -The EEAS, national foreign

services and the future of European

diplomacy

10:00 – 12:00, EPC

Discussion with David O’ Sullivan,

Chief Operating Officer, European

External Action Service and Poul

Skytte Christoffersen, Ambassador

of Denmark to Belgium.

17NEW EUROPE2 - 8 September, 2012BRUSSELS AGENDA 16NEW EUROPE

2 - 8 September, 2012BRUSSELS AGENDA

Autumn sounds

George Michael Gemma Ray

Amid its current challenges, Europe alsofinds itself in an intense global competi-tive dynamic with growth markets reach-ing new levels of maturity. Fortunatelyfor Europe, many of the capabilities andskills needed to be competitive in an in-novation-based global economy aredeeply ingrained in its DNA.

A two-millennium cultural heritage,sustained investment in skills and world-leading universities provide the platformfor a strong tradition of research-basedinnovation.

Through sustained investment in re-search and development over manydecades, Europe has established itself asthe location of choice for many companiesand academia to work together on chal-lenges that make a real difference to peo-ple’s lives.

However, a rich tradition of scientificresearch is not enough to explain why theseeds of innovation find Europe’s soil sofertile. Success is also dependent on col-laborative spirit. In Europe, not only canthis be witnessed between academic andindustrial organisations, but also acrossnational borders and languages.

IBM itself has long recognised Europe’stremendous strength in collaborative in-novation, establishing research and devel-opment centres in Switzerland and theUK as far back as the 1950’s.

Origins of the Universe A present day example is IBM Zurich’s

and ASTRON's involvement in theSquare Kilometre Array (SKA) , theworld’s largest and most sensitive radiotelescope, which will be used to exploreevolving galaxies, dark matter and eventhe very origins of the universe.

A vast project, the telescope will consistof 3,000 dish antennae, with a combinedtotal surface area of one square kilometre– hence the project’s name. The scale ofthe project becomes even more apparentwhen one considers the enormous volumeof astronomical data that these dishes willcollect: one Exabyte every single day, orroughly equivalent to twice the Internet’sdaily traffic worldwide.

SKA is the outcome of the collaborativeefforts of 20 countries including Italy, theNetherlands and Sweden that will be co-ordinated from SKA’s UK headquarters inManchester, until the telescope is fullyfunctional in 2024.

Over the next five years, scientists andengineers from across Europe will collab-orate at the newly-established ASTRON& IBM Centre for Exascale Technologyin the Netherlands.

The team will investigate technologiesrequired to handle the massive amount ofSKA data. Innovations will include ad-

vanced accelerators and 3D stacked chipsfor more energy-efficient computing, op-tical interconnect technologies andnanophotonics to optimise large datatransfers, as well as high-performancestorage based on next-generation tapesystems and new phase-change memorytechnologies.

On-going InvestmentToday, the EU’s on-going research in-

vestment programme further hallmarksthe benefit of collaborative innovation.For example, a 26-partner internationalconsortium in France is demonstratinghow the impact of CO2 absorption byoceans may affect marine resources andfood security.

In Spain, a research project based onpartnership between local and Germanparticipants saw the construction of thefirst large-scale commercial solar thermalpower plant in Europe, using new meth-ods to concentrate the sun’s rays and pro-duce heat for conversion into electricity.

These projects, by their very scope, du-ration and complexity are intensely inte-grated affairs.

They highlight an ability to bring re-searchers, universities and companies faceto face to address challenges and applyscience to reach smarter solutions. Europemay comprise more than 20 nations andabout 200 spoken languages, but there canbe little doubt about its ability to work to-

gether in order to innovate. The growing importance of commercial

collaboration also came to the fore in therecent IBM Global CEO Study, whichsurveyed 1,709 CEOs worldwide, ofwhich nearly half are Europe-based. Ac-cording to the study, companies classed asoutperformers (i.e. demonstrating highgrowth, high profitability) are 28 percentmore likely to partner than their under-performing rivals. CEOs also stressedtheir intent to partner more extensively inthe near future in order to seek out com-petitive advantage.

Towards 2020Collaboration-based research is firmly

at the heart of the EU's future innovationinvestment agenda. Horizon 2020, theambitious €80 billion programme for re-search and innovation, will continue todrive Europe's competitiveness and stim-ulate growth and jobs in the years ahead.

Clearly demonstrating the value of re-search to Europe, Máire Geoghegan-

Quinn, European Commissioner for Re-search, Innovation and Science, recentlyremarked: “the key to competitiveness forjust about any economy in the world rightnow is knowledge, and that means re-search and innovation…We have seenthat those EU member states that haveinvested in research have largely weath-ered the current crisis better.” (FP7 Finalcalls press conference, Brussels 9 July2012.

Horizon 2020, with its objective of en-gaging science to create competitive in-dustries and a better society, is a seriousstatement of intent. Europe has no desireto relinquish its position as a premier lo-cation for large-scale research projects. Ithas taken much time and investment tosecure the enviable position it now enjoys.Continued significant investment in re-search and development is crucial to steerEurope through the “current crisis”, main-taining a key differentiator and competi-tive advantage on an increasingly globalstage.

TECHNOLOGY

Europe: research, collaborate and win?

By Rich Hume


TECHNOLOGY

European Commissioner for Research, Innovation and Science Máire Geoghegan-Quinn: "We have seen that those EU member states that have invested in research have

largely weathered the current crisis better"

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Rich Hume has been General Manager of IBM Europe since January 2012. Beforethis, he was General Manager of IBM Global Business Partners organization andMid-Market client segment.Since joining IBM in 1984, Rich has held a series of leadership positions includingGeneral Manager of IBM's System x server division, and General Manager of Oper-ations, IBM Global Business Solutions. Prior to these roles, Rich led a variety ofIBM organizations, including its Personal Computing Division in North Americaand ibm.com globally. Rich also has extensive experience in IBM's Finance function.Rich graduated from Pennsylvania State University with an undergraduate degree inaccounting and was previously a CPA.

The death of the first man on the moon, NeilArmstrong, on 25 August without any doubtstirred up memories of many who witnessedthe event through a black-and-white pictureon television. But also many people started tothink whether that trip to the space really con-tributed to society's development.

The Apollo 11 mission didn't left only animage of an astronaut over the moon surfaceand the memorable phrase “That's one smallstep for man; one giant leap for mankind”,today we can find all around us technologiesthat were used during the historical event.

Besides, the idea of going to the moon wasalways a big dream and the U.S. achieved itafter ten years of investigation, with a spaceprogram which at the beginning was not ca-pable to do it. This national proud generated a“we can" attitude among the Americans andthe famous expression “if we went to the moon,why not…?”

There are some conspiracy theories claim-ing that some or all elements of the Apolloprogram and the moon landings were fraudsprepared by NASA and members of other or-ganizations. True or not, what is really demon-strable is that the American agency inventedand developed new space technologies that weuse in our day-by-day.

NASA's Space Shuttle Program has servedspace explorations, enabling many successfulmissions and scientific discoveries and helpingestablish a constant human presence in low-Earth orbit. Today, the program continues toenhance everyday life through spinoff tech-nologies.

In the medical area, the agency developed,among others, an implantable heart pump,based in part on Space Shuttle fuel pump tech-nology. This device saved more than 450 lives;due to its small size, it is perfect for small adultsand children. Also, an autonomous rendezvous

and docking technology to assist satellites re-sulted in an eye-tracking device for LASIK vi-sion correction surgery.

To protect the environment while trans-porting the Space Shuttle, researchers andchemists developed a new type of lubricant,now used for everything from motor-sports tofishing equipment. Besides, to disinfect freshfruits and vegetables, astronauts cleaned themwith a safe and nontoxic biodegradable solu-tion, something that many restaurants and su-permarkets use today.

The International Space Station (ISS) is alsoapplying its science to citizens' life. As theylearn more about living and working success-fully in space, benefits are already being real-ized on Earth, improving, medical treatment,securing the quality of our water supply, andcountering environmental disasters.

Space conditions are sometimes what re-

searchers need to improve on their investiga-tions. The rotating wall bioreactor, mimics mi-crogravity conditions, allowing for healthiercell cultures that closely resemble the way tis-sues form in the body. Now is used on treat-ments for cancer and diabetes.

What do astronauts do when they feel painor they need a doctor consultation? Because amedical emergency room does not exist on theISS, they use a technology that sends diagnos-tic-quality ultrasound images and video tomedical professionals via the Internet in nearreal time. Olympians and professional athleteshave used this to diagnose musculoskeletal;and in remote communities, such as the Arc-tic Circle, is useful to monitor pregnancies anddiagnose injuries.

Numbers can demonstrate NASA's spin-off technology is good for our society. Forinstance, about 12,000 lives were saved only

with two of those devices: a life raft and aventricular assist device for heart trans-plants. Likewise, several airlines saved over$4 billion when they started to applyNASA-proven Winglets technology.

NASA partners have created over 9,200 jobsand have generated $1.2 billion in revenue,thanks at least in part to their collaboration.Withal, not all the benefits are revenues, theorganisation also reduces costs. For example,its water monitoring technology offers a 90%reduction in installation costs.

All NASA's partners agree that spinofftechnologies have produced quantifiable ben-efits on Earth. However, a big part of the soci-ety is not conscious that sometimes in theirdaily life are using the same devices or ideasthan astronauts. Maybe they cannot travel tothe space, but they can feel like Neil Arm-strong just for a while.

SPACE

NASA technology continues to benefit societyBy Nerea Rial


TECHNOLOGY

This undated image obtained from NASA shows Astronaut Neil A Armstrong, Apollo ll mission commander, at the Lunar Module Eagle on the historic first

extravehicular activity (EVA) on the lunar surface. Armstrong died on 25 August, aged 82.

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TELECOMS

Commission calls on Polish telecoms to 'safeguard competition'After a three month investigation, the

European Commission has called on thePolish telecoms regulator (UKE) toamend or withdraw its proposal to givealternative operators only limited accessto Telekomunikacja Polska's (TP) fibrenetworks.

UKE's decision could have a negativeeffect on the European development offibre networks and regulators “must finda balance between giving operators theincentive to invest in very fast internetand safeguarding competition”, said Eu-ropean Commission Vice PresidentNeelie Kroes.

Pricing flexibility is a precondition foran equitable proposal, but UKE pro-posed not to regulate the prices alterna-

tive operators pay for wholesale broad-band access to TP's fibre-to-the-home(FTTH) network, meaning that TPwould determine this access price.

However, to ensure competitionunder the Commission's Recommenda-tion on Next Generation Access Net-works, Polish telecoms should facilitateequivalent “access for all operators toTP's network”, stated Kroes.

Therefore, the Commission called onUKE to offer cost-orientated access toFTTH or to impose rigorous non-dis-criminatory access to the incumbent's net-work. Besides, to work together withalternative infrastructures like cable orLTE (Long Term Evolution) can providesufficient competitive safeguards to allowPolish telecoms not to impose cost-orien-tated access to FTTH networks.

By Nerea Rial

The shares of the South Korean company havesuffered their biggest fall in a single day in al-most four years, after U.S. jury ruled on 25 Au-gust that the tech giant copied Apple's designs.

Samsung, which was ordered to pay $1.05billion in damages to Steve Jobs' company, sawits shares fall a 7% in Seoul trading, the mostsince October 2008.

A California jury found Samsung hadcopied critical features of the iPhone and iPadand could face an outright sales ban on keyproducts, such as their Galaxy S3.

Samsung was disappointed by the verdictand plans to keep up the legal fight to have itsclaims accepted, according to an internal memosent to its employees and released to the media.

Investors were worried that the ruling couldaffect revenues and according to analysts thereare still too many variables in the case. The finalruling has to come at least a month from the

recent verdict. To continue with penalties against the Ko-

rean firm, Apple said it will seek an injunctionto block company's sales of its products in theU.S. at a court hearing on 20 September. De-spite the trial was focussed on older products,on of Samsung's concerns is whether Appletargets its new flagship, the Galaxy S3.

If the American multinational decides to goahead with this block, it would have a majoradvantage in the mobile market, analysts said.

Samsung-Apple case was the most closely-watched of many similar patent disputesaround the world between electronics manu-facturers.

One day before the U.S. verdict, a court inSeoul ruled that both companies infringedpatents when they designed its products. How-ever, the jury decided that Samsung didn't copyiPhone's design.

The American technology giant Apple willhave to wait three months to see if it can baneight Samsung phones in the US after ajudge scheduled a December hearing.When a jury ordered the South Koreancompany to pay Apple more than $1 billionfor infringing its patents, Apple decided tostart an action to ban some of those hand-sets. Despite the judge originally suggestedthat the request would be heard on 20 Sep-tember, today said that a hearing will takeplace on 6 December.U.S. District Judge Lucy Koh said in an orderthat due to the scope of Apple's preliminaryinjunction request, she believed it was "ap-propriate" that various post-trial motions beconsolidated.

Apple wants to ban the Galaxy S 4G, GalaxyS2, Galaxy S2, Galaxy S2, Galaxy S2 Epic 4G,Galaxy S Showcase, Droid Charge and GalaxyPrevail. The list does not include the Galaxy S3,because it was not involved in the case. However, a hearing next month will still con-sider Samsung's motion to dissolve a prelim-inary injunction already allowed against itsGalaxy Tab 10.1, which was taken off U.S.shelves in June.When investors discovered the verdict on 25August, Samsung's shares dropped 7%, theirbiggest fall in a single day four years. Nowthe possible ban is scheduled for December,Samsung may recover itself and plan anstrategy to maintain its products in the U.S.market.

Samsung shares fallafter patent verdict

Apple must wait toban Samsung devices


TECHNOLOGY

Apple's iPhone 4 and a Samsung's Galaxy S3

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The social site faces a potential lawsuit inGermany, after a consumer rights groupthreatened to take it to court over its re-cently launched App Center.According to the Federation of GermanConsumer Organisations (VZBV), Face-book is providing personal data third-partyapp makers without getting users' explicitconsent and it is breaking European dataprotection law. If Facebook does not stopgiving this information before 4 Septem-ber, it could face legal action.VZBV explained that the method of con-sent is very ambiguous. When they want toadd a new app from the App Center, usershave to press buttons like "play game" or"send to phone" without recognizing thatthey've agreed to share personal data.It seems that the user consent is assumedby their action, therefore the group wants aclearest way to accept the conditions and anexplanation on what the company will do

with the data.Germany tends to be very strict on privacyissues. At the beginning of this month,Hamburg reopened the investigation intoFacebook's facial recognition technologyand on 17 August the German data officecalled the company to delete the service.Besides, in March, a Berlin court orderedthe social networking to stop putting users'photos into the ads it runs on its site with-out explicit permission. Facebook has toface this problem with its Sponsored Sto-ries also in U.S., where is still waiting forjudge's verdict.

Megaupload's founder has achieved anotherlegal victory, after a New Zealand court ruled inhis favour, giving him access to $4.83 millionof his frozen funds to pay legal fees and livingcosts, including $1 million in annual rent forhis mansion in Auckland. Kim Dotcom welcomed the news and toldWired that “we now have funds to pay NewZealand lawyers.” The court also allowed himto sell part of his luxury cars confiscated whenlocal authorities raided his home in January atthe request of the U.S. government.However, Dotcom cannot use the money topay legal fees incurred by his Megaupload as-sociates Bram van der Kolk, Finn Batato andMathias Ortmann.The 38-year-old German entrepreneur, whosereal name is Kim Schmitz, was arrested duringthe raid, a warrant that was considered unlaw-ful at the end of June. Most of his assets werefrozen when U.S. authorities claimed he madehis fortune through illegal activity. Dotcom is still waiting for the extradition to

the U.S., where he is accused of leading a groupthat netted $175 million since 2005 by copyingand distributing music, films and other copy-righted content online without authorization.Despite his situation, he announced on hisTwitter account that Megaupload would beback, “bigger and better than ever.” Accordingto his tweets, the new service will be a massiveglobal network that will exclude “all non-UShosters.”“Developers get ready. The Mega API will pro-vide incredible powers. Our API and yourMega tools will change the world,” Dotcomsaid. Besides, Dotcom also announced in Junehis plans to create a new music site, Megabox.The service would allow recording artists to sellmusic directly to fans, but the date of thelaunching was not revealed.

Facebook gets ultimatum from German consumers

Dotcom to accessfrozen funds, announces newMegaupload

MTN Group, Africa's largest telecomcarrier, bypassed U.S. sanctions on the Is-lamic Republic to provide the Iranianregime with American technology, ac-cording to documents seen by Reuters.The South African multinational is facingfights on several fronts due to its contro-versial Iranian venture, Irancell. The com-pany owns 49% of this fast-growingtelecom, which was launched in 2006 andis controlled by the Iranian government.The new evidence revealed that MTNemployees created presentations for meet-ings and wrote reports that openly dis-cussed circumventing U.S. sanctions togive American tech devices for MTNIrancell. The sanctions appeared to stopIran's nuclear program, which Tehran af-firms is peaceful.For instance, a PowerPoint presentation

created in January 2006 for the projectsteering committee includes the title"Measures adopted to comply with/bypassUS embargoes." It discusses company'soptions to outsource Irancell's data centreafter receiving legal advice. Besides, theyalso prepared a “plan B” with the potentialconsequences in case to get caught.Within the equipment sent to Iran therewere products from companies such asSun Microsystems Inc, Oracle Corp, In-ternational Business Machines Corp,EMC Corp, Hewlett Packard Co andCisco Systems Inc. According to the doc-uments, the main objective of the tech-nologies was to provide services likewire-tapping, voice mail and text messag-ing; and the companies were not awareabout the actions.MTN won millions of dollars with theseunlawful actions, and now is in talks withthe U.S. Treasury to obtain permission to

repatriate its profits, which are stuck onthe Iranian financial system. "U.S. sanc-tions should not have unintended conse-quences for non-U.S. Companies”, saidMTN's chief executive.In addition, the South African police is in-vestigating how the telecom, which deniedany wrongdoing, obtained the Iranian's li-cense, following corruption allegationsmade by a Turkish rival in a U.S. federallawsuit.Reactions after the document's revelationstarted to appear. United Against NuclearIran (UANI) Ambassador Mark D. Wal-lace said in an statement that “MTN is adirect threat to U.S. national security in-terests and the human rights of the Iran-ian people.”He also urged the Obama administrationto sanction the South African company,due to its partnership with the Iranianregime. “The U.S. should be sanctioning

MTN, not helping it”, he stated, “We callfor a global boycott of MTN’s productsand services.”According to Wallace, “MTN was a char-ter member of UANI's Iran Business Reg-istry, launched in 2009, and a continuingfocus of UANI’s Tech & Telecom Cam-paign”, and now “has a floor in its Tehranheadquarters.”This is not the first telecom that helpedIran avoid increasingly tougher sanctionsfrom the U.S. In mid-July, the FBI startedan investigation on ZTE's illegally actionsin the Islamic country. The Chinese tele-coms giant sent hardware and softwarepurchased from U.S. tech firms to Iran’sgovernment-controlled telecom company.In this case was also Reuters the one thatpublished a report revealing that ZTEsold Iran a monitoring system capable ofcontrol land line, mobile and internetcommunications for $130 million.

African telecom sends US technology to Iran

Metal theft has become a serious problem- like vandalism and sabotage - harminglocal services and causing major disruptionto peoples’ lives across the EU. In additionto the upsetting desecration of religiousbuildings and memorials, and loss of pub-lic art, disruption to public transport andelectrical power and problems caused tointernet and phone connections are seriousconsequences of metal theft. Metal stolenfrom farm irrigation systems in remote dryregions even threatens food production,and although still rare, there have evenbeen cases of hospital closures due topower disruption. Overall damage far ex-ceeds the scrap value of the metal stolen,with significant losses reaching many mil-lions of Euros across Europe.

The total volume of metal stolen fromtelephone service providers, railways, watersuppliers and public buildings is still quitesmall - 1% - compared to all the metal thatis being recycled legally, so unless any theftis detected quickly and the stolen metalfound immediately, it can be difficult toidentify.

Nevertheless the consequential loss ofservices far outweighs the value of the metalstolen. European Member States sufferingfrom this increasing scourge have had to bemore active in responding as metal thievesneed to be caught and sufficiently punishedin order to deter further theft. Whilst somepolice forces may not yet differentiate metaltheft from other acquisitive crime, somehave been successful by treating theft ofmetal separately.

The European Commission’s Directorate

General Home Affairs is currently fundinga European Project to address metal theft:the Pol-PRIMETT project (Police-PrivatePartnership to Tackle Metal Theft) exam-ines metal theft in the context of transna-tional and organised crime, and provides aforum to examine the drivers of theft. Itidentifies, develops and shares both legaland voluntary approaches and technicalmeans to prevent or reduce metal theft, andinitiates good relationships between na-tional police and private industries.

Recycling industries are also victims ofmetal theft and fully support best practicesto eradicate it. In the EU, scrap collectors,

traders, foundries and metal works arehighly regulated and the consequences ofregistered or permitted facilities receivingstolen metals can be very serious. These fa-cilities should therefore have procedures inplace to avoid buying stolen metal.

“In 2011, in the UK alone, theft andfraud in the scrap metal industry causedclose to €1 billion in damages,” says RobertVoss, Managing Director of UK-basedVoss International Ltd and President ofEurometrec. “But this is an increasingproblem throughout Europe and it willonly get bigger and more organised if thereis no action. Hence why the industry is

working together with other organisationsto try and combat it.”

In contrast, informal operators are activein the EU with or without scrap yards. Ille-gal facilities in the EU are taking in scrapmetals including stolen content, as manyauthorities lack the capacity to enforce ex-isting laws, or simply have other priorities.Consequently it is the owners of infrastruc-ture who still need to find ways to improvethe physical protection of the metal on rail-ways, electricity supply and telephone sys-tems. Fortunately, new effective means to doso are currently being developed.

Similar to what sometimes occurs whena house installs a burglar alarm, encouragingthe burglar to find easier pickings at aneighbouring property, metal theft deterredin one Member State may be displaced toneighbouring countries. Therefore, atransnational approach urging best practicein a coordinated way is essential for the EU-27. The first Pol-PRIMETT project’sdeadline is looming, yet more action is stillneeded and it is increasingly clear that a fol-low-on project is vital to maintain momen-tum and promote actions to tackle metaltheft. This will better ensure a legacy of allthe work done to date and consequently it ishoped that the European Commission’sPrevention of and Fight Against Crime willsupport a new Pol-PRIMETT project thatincreases Member State participation, en-hancing cooperation to tackle metal theft.

Ross Bartley is Environmental & TechnicalOfficer for the European Ferrous Recovery& Recycling Federation (EFR) and the Eu-ropean Metal Trade & Recycling Federa-tion (EUROMETREC)

By Ross Bartley

By Nerea Rial

INDUSTRY

Lives interrupted by metal theft in the European Union


TECHNOLOGY

A workman looks at the hand print revealed by an Ultra-violet scanner after it was coated with Smart-

Water forensic coding spray at St Andrew's Church in Telford. The security solution, which has been

pioneered by English company SmartWater Technology Ltd, based in Telford, is being used by all

churches insured by the Ecclesiastical Insurance Group following a rise in the number of churches

being hit by metal thieves.

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SLOVAKIA|EDUCATION

Slovakia teachers' unions planning strikeWorkers in the education sector are slated to hold a one-daystrike that is expected to keep teachers and other staff awayfrom schools on 13 September, Slovak spectator reported.Speaking at a press conference, the head of the sector's tradeunions, Pavel Ondek, announced that the strike is expected torun between 6 am and 6 pm. "Both teachers and non-teach-ing staff shouldn't carry out their work for their employers. Asfor pupils, parents will be notified as to whether or not theirparticular school will join the strike," said Ondek. The tradeunion's top representatives convened at a meeting last Mon-day to discuss the budget proposal for the education sector in2013. The Slovak Finance Ministry has earmarked €2.45 bil-lion for the sector, which is an increase of €16.6 million, butOndek said this is mainly due to extra money from EU funds."In comparison with this year's budget, the expenditure of thestate budget (in the education sector) for 2013 has dropped by€7.85 million. This may translate into a cut in salaries for all cat-egories of employees in the education sector," said Ondek. Thetrade unions are demanding that salaries of teaching person-nel amount to 1.2-2 times the current average salary. Theplanned strike is intended to make the government come togrips with the dismal financial situation in education and theinsufficient funding of research. Based on recent figures, teach-ers in Slovakia earn an average of €770 per month.

FINLAND|TRANSPORT

VR on time, losing moneyFinland's dominant train company, VR, said on 28 Augustthat 85.6% of its long-distance trains reached their destina-tions on time, while the punctuality rate for commuter trainsrose to 93.2%. A year earlier, the corresponding figures were70.7 and 89%, YLE News reported. The company considersany long-haul train that arrives within five minutes of itsscheduled arrival to be “on time”, while it uses a three-minutemargin for local trains. “The net result reflects the invest-ments we have made in improving punctuality,” said CEOMikael Aro in a statement, adding that “the new ticket sys-tem for passenger services and the changes in the productionstructure for logistics place the Group in a stronger positionto respond to competition.” Between January and June, theVR Group lost €14.6 million, whereas during the same pe-riod of 2011 it was just 3.5 million in the red. The wintermonths of January through March were heavily loss-making,as the group actually made a profit between April and June.However this second-quarter profit was just over €4million,down from nearly €7 million in the spring of 2011. The firmblames its losses on growing personnel and rolling stock costs.

SWEDEN|BUSINESS

Sweden's fashion exports prosperSwedish fashion exports are booming according to industryexperts, who said that the upward trend is strong despite un-stable European economies and the lingering financial crisis,The Local reported. “Sweden has never exported as muchfashion as during the first half of 2012,” said Ola Toftegaardof the Swedish Textile and Clothing Industries Associationin a statement. Up until 31 May this year Swedish fashion ex-port had reached 5.1 billion Swedish crowns ($772.7 mil-lion) compared to 4.66 billion for the same period last year.At Swedish fashion brand Tiger of Sweden, exports havegrown by 26% in the last year. The largest increase is fromnorthern European countries and export manager PerHakans expects the upward trend to continue. “The increaseis part of a general positive trend for Tiger of Sweden. For2011/2012 we had the good fortune to note an all-time highwith an increase in turnover by 12% to 765 million kronor,”Hakans said in a statement.


EUROPEAN UNION

Sony said previous Thursday it wouldchop 15% of the workforce at itsstruggling mobile phone unit andmove its headquarters to Tokyo fromSweden as the Japanese consumerelectronics giant slashes costs, TheLocal reported.

The move to cut 1,000 jobs at SonyMobile Communications came aboutsix months after Sony bought Swedishtelecom company Ericsson's share intheir former joint venture, called SonyEricsson, set up in 2001.

The joint venture struggled to launchpopular smartphones amid stiff compe-tition from rivals including Apple andSouth Korea's Samsung Electronics.

On 23 August, Sony said the job cuts

in Sweden, expected to be completed by2014, were part of a bid to "increase op-erational efficiency, reduce costs anddrive profitable growth".

"We are accelerating the integrationand convergence with the wider Sonygroup to continue enhancing our offer-ings," Sony Mobile chief KunimasaSuzuki said in a statement. "A more fo-cused and efficient operational structurewill help to reduce Sony Mobile'scosts... and bring the business back to aplace of strength."

Sony, which makes PlayStation gameconsoles and Bravia televisions, has al-ready said it would cut about 10,000jobs worldwide and spend nearly $ 1.0billion on an overhaul that its chief

Kazuo Hirai described as "urgent".The Japanese firm lost a whopping $

5.81 billion in the year to March, itsfourth consecutive annual loss. It alsoreported a widening loss in its latestquarter and cut a profit forecast for theyear as the struggling firm overhauls itsbusiness.

The losses have been particularlyacute in Sony's television business.Japanese electronics firms have beenhurt by a strong yen, shrinking profitmargins and stiff competition from for-eign rivals.

Piracy has threatened its music andfilm assets while Sony was also hurt bylast year's quake-tsunami disaster inJapan.

Sony cuts Sweden workforce by 15%SWEDEN|JOBS

Workers fear for jobs as shipbuilder goes bankruptGERMANY|JOBS

German shipbuilder P+S applied forbankruptcy after negotiations with itsclients and suppliers failed. The moveleaves around 2,000 fearing for their jobs,The Local reported.

Hundreds of workers still turned up forthe early shift in Stralsund last Wednes-day. The shipyard employs nearly 2,000people, making it one of the largest em-ployers in the north eastern state of

Mecklenburg-Western Pomerania.P+S has been in difficulty since 2009

and hasn’t delivered a ship since April.The state of Mecklenburg-WesternPomerania and the federal governmenthave repeatedly supported the shipyardfinancially.

In the more than two decades sinceGerman reunification, the state and fed-eral government have poured billions into

P+S's two locations Stralsund and Wol-gast, the Handelsblatt newspaper re-ported last Wednesday.

They offered P+S another € 152 mil-lion over the summer, but it soon becameclear even this would not be enough tosave the firm.

The European Commission wouldnot allow more state money than this tobe offered.

Vestas in talks with MitsubishiDENMARK|BUSINESS

Shares in Vestas Wind Systems ASsurged 19% on 29 August, after theworld’s largest wind-turbine maker con-firmed it’s in talks with Mitsubishi HeavyIndustries Ltd over a strategic pact, it wasreported.

The Denmark-based group didn't dis-close details Tuesday but said an an-nouncement will be made if the two

companies reach agreement.The turbine maker confirmed last

Monday night that it’s in an ongoing di-alogue with the Japanese industrial giant.However, Vestas Senior Vice PresidentLars Villadsen last Tuesday declined tocomment further on the talks.

A spokesperson from Mitsubishi was-n't immediately available for comment.

Vestas said previous week it will slash1,400 jobs to reduce costs amid stiff com-petition and a market slowdown. Thosecome in addition to 2,335 worldwide lay-offs announced worldwide in January. Itcurrently has 20,400 employees.

Vestas reported a second-quarter netloss of €8 million, down from a profit of€55 million in the same period last year.

Sony are looking at job cuts.

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HUNGARY|BUSINESS

Haribo to double capacity in HungaryHaribo is expanding its 5,000 sq m plant in Nemesvamos,Hungary, to 10,000 sq m. The company has been approvedfor HUF 800 million in non-refundable subsidies from thegovernment, Portfolio Hungary reported. Construction ofthe new unit began in June and is scheduled for completionin 2012. The company did not release specific hiring plansat the unit which currently employs 200 staff. Haribolaunched production in Hungary in 2002 with only oneproduction line, two packaging machines and 48 employ-ees. Output grew from 1550 tonnes in the first year to10,000 tonnes by 2006. 30% of the plant's products are soldin Hungary, coupled with steady expansion of importswhich increased from HUF 4.7 billion in 2010 to 5.4 bil-lion in 2011, partly due to the weakening of the local cur-rency. Key export markets include Russia, Poland, theCzech Republic and Slovakia in the CEE region, alongwith the Netherlands, Belgium and Germany.

AUSTRIA|BANKING

Raiffeisen Bank H1 profit risesRaiffeisen Bank International AG reported that consoli-date profit after tax and non-controlling interest for the firstsix-month of 2012 was €701 million, up 13.9% from €615million in the first six-month of 2011, RTT News reported.Profit before tax for the period rose 5.6% to €927 mil-lion from €879 million last year. Profit after tax was€734 million up 8.3% from €677 million in the sameperiod a year earlier. Earnings per share for the periodincreased to €3.09 from €2.65 in the same period lastyear. Net interest income for the first six-month of2012 declined 4% to €1.716 billion from the year agoperiod. Net interest income declined primarily atGroup head office due to lower interest income causedby the placement of execs liquidity with central banksand sales of securities. Net fee and commission incomedecreased by 25% to €721 million compared to thesame period last year. Raiffeisen Bank International ex-pects a slight increase in the volume of non-perform-ing loans in the second half of 2012 and the netprovisioning ratio to remain stable or increase slightly.Bank leveis in Austria and CEE will presumably resultin a negative earnings effect of some €190 million in2012. The bank plans to raise around €5.8 billion inlong term wholesale funding (maturity of more thanone year) for RBI Group in 2012.

SLOVENIA|BUSINESS

Intereuropa posts €3 millionnet profit in H1The group around logistics company Intereuropa gen-erated € 3 million in net profit in the first half of 2012on an operating profit of €9.2 million, which is up 63%year-on-year, the company said on 24 August, InvestSlovenia reported. The increase is attributed most tothe increase of sales at the parent company. However,sales revenues on the group level fell by 12% year-on-year to €96.9 million in the first half of 2012, which isin line with the group's plans of streamlining, closure ofGerman and French subsidiaries and scaling back ofoperations in Ukraine. The logistics group, which re-turned to operating profit in 2011 after struggling inthe red since 2008, continues its financial restructuringand divestment. After Intereuropa managed to brokerwith its creditor banks in February an extension of itsdebts to the end of September, the company is negoti-ating a conversion of part of the claims into ownershipstock, since the biggest owners had refused the possi-bility of providing a capital injection.

Le Shuttle, the car carrying trains run byEurotunnel through the Channel Tun-nel, achieved a new record for traffic overrecent weeks. In the seven days up to 12August, 74,292 vehicles (cars, motorcy-cles, caravans and camper vans) and 776coaches travelled (in both directions) be-tween Folkestone, Kent, and Coquelles,Pas-de-Calais. Their journeys took just30 minutes. This is the heaviest trafficever seen in one week, since the end ofDuty Free sales in 1999.

To manage these historic traffic levels,

838 Shuttle departures were needed, at arate of 5 per hour, the equivalent to onedeparture every twelve minutes betweenthe hours of 07:00 and 22:00. At thesame time, a new daily record was alsoachieved, with 15,152 vehicles travellingacross the Channel on Saturday 11 Au-gust in both directions.

This follows the increase in traffic seenas a result of the Olympic Games, whenLe Shuttle continental bookings in-creased by 16% for the period from 23July to 12 August. On top of this there

were also 40 additional Eurostar depar-tures during the Games. The ParalympicGames which start on 29 August shouldsee this trend continue.

Jacques Gounon, Chairman and ChiefExecutive Officer of Groupe EurotunnelSA stated: “In a highly competitive mar-ket this new record demonstrates the ef-ficiency and flexibility inherent to the LeShuttle service, the professionalism of ourstaff and the attraction for the travellingpublic of a transport system that is bothfast and environmentally friendly”.

New Traffic Record Eurotunnel Le Shuttle

FRANCE|TRANSPORT

More cars than ever are travelling under the channel on trains.

Aer Lingus urges shareholders to reject Ryanair offerIRELAND|AVIATION

Aer Lingus has again said the Ryanairoffer for the airline undervalues the com-pany and that it has recommended rejec-tion of the offer, RTE Ireland reported.

In a statement, the airline said that itsboard unanimously recommends thatshareholders take no action in relation tothe offer. It also urged shareholders notto sign any document sent by Ryanair orits advisers.

Ryanair has asked European competi-tion regulators to approve the €694 mil-lion takeover bid for Aer Lingus.

This statement from Aer Lingus saidthat the company ''is a strong and prof-itable airline with a proven businessmodel; a strong balance sheet; and an in-

ternationally recognised and valuedbrand''. ''The Board's unanimous view isthat Ryanair's offer to acquire control ofAer Lingus for € 1.30 per share funda-mentally undervalues Aer Lingus andrepresents a significant discount to theintrinsic value of the business,'' the airlinesaid. Both airlines said they did not ex-pect EU antitrust regulators to approvethe takeover bid.

Instead they expect it to move to alonger Phase II process that can last upto 105 working days, which would pusha resolution into next year.

While Ryanair promised to offer theEU "radical remedies" to address compe-tition concerns, Aer Lingus said the bid

was doomed to fail.The European Commission, which

acts as EU competition watchdog, isamong the biggest impediments to a dealwhich was announced in June and isRyanair's third attempt to take over theformer state carrier.

Ryanair CEO Michael O'Leary toldjournalists in Madrid 23 August he ex-pected the commission to move to PhaseII but said he would offer unspecifiedremedies to allay competition concerns.

Ryanair has already held talks withBritish Airways and Virgin Atlanticabout possibly opening routes to competewith a combined Irish airline, accordingto a source with knowledge of the talks.

Greenhouse gas emissions fall 6.5% in 2011NETHERLANDS|EMISSIONS

Greenhouse gas emissions in theNetherlands were more than 6.5%lower in 2011 than in 2010. This wascaused by a decrease in energy con-sumption of nearly 7%. Emissions ofgreenhouse gases were 8% below thelevel of 1990, the base year for the

Kyoto Protocol, Statistics Netherlandsreported.

The emission of greenhouse gases in2011 amounted to 196 billion CO2-equivalents, 14 billion CO2-equiva-lents (more than 6.5%) less than in2010. The decrease is almost entirely

caused by the decrease in the emissionof carbon dioxide. As a result of themild winter, but also of the economicrecession at the end of 2011, much lessnatural gas was consumed. Emissionsof other greenhouse gases remained atthe same levels.

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GREECE|ENERGY

Hellenic Petroleum earnings upOn 29 August, Greece's biggest refiner Hellenic Petroleumreported a much smaller than expected profit drop for thesecond quarter. Net profit, adjusted for the value of the com-pany's oil inventory, stood at €86mn, down 7.5% from theprevious year, the company said. “We are pleased to an-nounce both a set of positive operating results this quarter,despite the adversities faced in our markets; as well as thecompletion of the commissioning of the upgraded Elefsinarefinery, which is starting up and will begin to generate sig-nificant results and cash flows for our Group,” Hellenic Pe-troleum Chief Executive John Costopoulos said.Meanwhile, Hellenic Petroleum participated in the biddinground for the exploration licences of Patraikos and Ioan-nina blocks in Western Greece, leading a consortium withMelrose Resources and Edison with each partner holdinga 33.3% share in the JV.

GREECE|BANKING

Piraeus Bank eyes Geniki Greece's Piraeus Bank is close to a deal to buy Societe Gen-erale's Greek subsidiary Geniki Bank, Greek media reportedon 29 August. Piraeus Bank is the country's fourth-largestlender by assets. If completed, the sale of Geniki would markthe second attempt by a French bank to exit Greece's trou-bled market and comes just as France's Credit Agricoleweighs three bids for its own Greek subsidiary, EmporikiBank of Greece. On 28 August, Credit Agricole said it couldseal a deal to sell Emporiki within weeks.

ROMANIA|ENERGY

Martifer opens solar parkPortuguese firm Martifer Solar finalized a 1.5 MW solarpark in Vrancea County in Romania. The project, completedat end July, was connected to the power grid in August. Thevalue of the investment in the park was not yet disclosed,Romania Insider reported on 29 August. Earlier in May thisyear, Martifer announced the opening of its Romanian of-fice after signing an agreement for a large-scale photovoltaicinstallation in Romania. “We’re one of the first players en-tering the Romanian photovoltaic market with this busi-ness, after having developed this business in the Balkanregion,” said Pedro Pereira, Regional Manager with Mar-tifer Solar. Martifer has been active in Romania since 2004.

ROMANIA|MEDIA

Public television cuts staffThe Romanian public television SRTv is expected to let go ofapproximately 980 employees following an announced re-structuring process aimed at cutting the station’s costs, Busi-ness Review reported on 29 August. The staff-reductionmeasure was adopted by SRTv’s board of administration aspart of its economic recovery program. TVR’s staff will be cutdown to a total of 2,340 once the recovery program is imple-mented. According to a statement by SRTv, the economic re-covery programme is meant to harmonize the station’seditorial offer and used resources with its monthly income.

ROMANIA|RETAIL

Carrefour opens Focsani storeAfter recent rumours about a possible pull out of Carrefourfrom several markets including Romania, the retailer hasannounced it would open a supermarket in Focsani lastThursday, Business Review reported on 29 August. This isthe 58th supermarket the company would open locally. Inaddition to this, Carrefour Romania runs 25 hypermarketsand eight franchise proximity stores.


EUROPEAN UNION

On 29 August, the Bulgarian Ministry ofEconomy announced that the govern-ment has signed a contract with theFrench company Total, allowing it to ex-plore oil and gas reserves in the area ofBlock 1-21 Khan Asparuh for the periodof five years.

The energy minister said that the ini-tial data indicated a considerable potentialfor production of both gas and oil in thisarea, so he expected that significant quan-tities will be produced. He added: “Todaywe start to forge the Bulgarian energy in-dependence”.

Bulgarian Prime Minister BoykoBorissov said, “By signing this contract,we make a huge step on the way to a truediversification of energy sources in Bul-garia”. According to him, the contract

represented an expression of the govern-ment's commitment to the next genera-tions as they would be are able to enjoycheaper energy resources.

Total will invest more than 1 billioneuro in research, including 3D seismicline over five thousand square kilome-tres, 2D seismic line over 10,000 kilo-metres and drilling of 5,000 and 6,000feet deep.

Bulgaria chose the French oil companyafter it has won the tender over theBritish Melrose Resources and theAmerican Exxon Mobil. The winnercompany planned to work together withthe Austrian OMV and the SpanishRepsol.

It seems that Bulgaria is committed toensuring its energy independence as thisis the second major energy deal which thecountry concludes within two days after it

signed on Tuesday the protocol guaran-teeing it a discount of 11% from the priceof Gazprom gas supplies. During thesame meeting, also an agreement engag-ing Bulgaria to reach a final investmentdecision for the construction of SouthStream by 15 November was signed.

Days before the deal with Total tookplace, the government decided to permitthe exploration of oil and natural gas alsoin the area Block 1-19 St. Athana-sius which is located south from the blockwhere Melrose Resources currently ex-tracts gas whose amounts satisfy between10 and 15% of gas consumption in thecountry. It expects that the maximumutilisation of the country’s resourceswould not only increase Bulgaria’s energyindependence, but would also lead to adecrease in the current excessive oil andgas prices.

Bulgaria signs contract over oil and gas exploration

BULGARIA|ENERGY

July youth unemployment reaches a record 35.3%ITALY|LABOUR

Youth unemployment in July showed anincrease of 1.3% and of 7.4% over July2011, figured revealed by ISTAT, the Ital-ian Statistics Institute, showed, high-lighting that the annual growth rate isthree times higher than the general rate.

The rate of unemployment in the 15-24 age group rose to 35.3% up from33.9% in June. In the 15-24 age group,

job-seekers are 618,000, accounting for10.2% of the population belonging to thisage group.

During the second quarter of 2012, therate of unemployment in the 15-24 agegroup rose to 33.9% up from 27.4%recorded in the second quarter of 2011.It is the highest rate since 1993, the yearin which the historical series began. Spain

and Italy have recently passed wide-rang-ing labour market reforms to regain wan-ing investor confidence in theireconomies.

However, Italy has so far avoidedthe kind of social unrest that has af-fected countries such as Greece andSpain since the onset of the economiccrisis in Europe.

Government to approve bad bank for toxic assetsSPAIN|BANKING

On 31 August, Spain's government ismeeting to approve a new financial sectorreform that will create a bad bank to con-tain toxic property investments and willgive the central bank more powers to shutdown troubled lenders.

The creation of the bad bank is amongconditions set by Spain’s 16 eurozone

partners in exchange for a €100bn loanfor Spanish lenders hit by the country’sreal estate crash. Spain’s banks have an es-timated €176bn in bad real estate loansand investments. Spain’s Prime MinisterMariano Rajoy's cabinet will decree theframework for the bad bank as well asother new rules giving the government

more power to take over ailing lenders.The decree creating the bad bank will

go into effect immediately, but still needsto be approved in Spain's Parliament.Meanwhile, Spain's regional lenders aremost heavily exposed to the bad propertyassets and some have already needed bail-ing out by the state.

Total’s oil company headquarters in Paris. On 29 August, the Bulgarian Ministry of Economy announced that the government has signed a contract with

the French oil company.

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FYROM|LOAN

EBRD supports rail linkThe European Bank for Reconstruction and Development(EBRD) recently offered €46.4mn to the government ofFYROM to upgrade a 30 kilometre rail link between Ku-manovo and Beljakovce in spring 2013, reads a press re-lease. The EBRD has granted the loan to the FYROMstate company responsible for railways, Public Enterprisefor Railway Infrastructure. The project is backed by a sub-stantial grant funding worth €4mn provided by the EU’sWestern Balkans Investment Framework for project de-sign, tender preparation and implementation assistance.

FYROM|POLITICS

Government faces crisis FYROM Prime Minister Nikola Gruevski has confirmed thatthere is a crisis in the country's governing coalition consistingof his rightist party VMRO-DPMNE and the ethnic Al-banian Democratic Union for Integration, MRTOnline re-ported. Gruevski, which has often made nationalisticstatements, claimed that the crisis is the result of a change in the"behaviour" of DUI leader Ali Ahmeti and members of DUIleadership, which is "no longer honest, as it was in the past”.The premier said the government also faced a crisis when thecountry's Defence Minister Fatmir Besimi, an ethnic Alban-ian from the coalition's junior partner, paid tribute to ethnicAlbanian rebels killed in the 2001 conflict.

FYROM|TRANSPORT

US, Skopje ink Open Skies pactUS Deputy Assistant Secretary Philip Reeker and FY-ROMn Minister of Transportation Mile Janakieski recentlyinked an Open Skies air services agreement. The pact willformalise the liberalisation of bilateral aviation relation be-tween the parties, MRTOnline reported. In addition it alsocreates opportunities for strengthening the economic part-nership between the United States and FYROM throughcloser links in transport and trade.

ALBANIA|ECONOMY

Weak euro helps economyEconomy expert Adrian Civici recently announced thatseasonal effect entailed the strengthening of Albanian do-mestic currency, Leke, and depreciation of the euro cur-rency, AENews reported. “Tourism and the arrival ofimmigrants are the main reasons for the strengthening ofLeke in exchange with the European currency,” he said. Headded that the reasons for depreciation of the euro. Ac-cording to him, kind of revaluation of the Leke in relationto the euro, or the euro weakening in this period, reflect aninternational trend but they are more connected to seasonaltrend observed in Albania, at least during the last 10-15years stemming from the tourist season and the fact that95% of the tourists who visit come to Albania, come fromthe eurozone, the EU or from countries that use euro.

ALBANIA|DIPLOMACY

Foreign Minister visits AustraliaAlbania’s Foreign Minister Edmond Panariti was recently wel-comed by Australia Foreign Minister Bob Carr. This was thefirst visit of Panariti to the region as Foreign Minister and thefirst to Australia by a member of the Albanian Government,AENews reported. The visit followed after Parliamentary Sec-retary Richard Marles MP's visit to Albania in April. Duringthe talks, Carr said the rising high-level engagement betweenAustralia and Albania reflects the growing bilateral relationshipand co-operation in NATO and the Organisation for Co-op-eration and Security in Europe.

On 30 August, Turkey's President Ab-dullah Gul, hospitalised late on 23August with an ear infection, tweetedthat he was recovering. "Glory toAllah, my health is better," Gul, 61,said on the social networking site. "Icontinue to work, reading reports andbooks," he said.

Gul, who has suffered ear problemsrepeatedly in the past, had been due on30 August to receive a delegation to

observe the anniversary of Turkey's in-dependence. Gul was obliged to cutshort a trip to Kyrgyzstan last weekbecause of his ill health. He has alsocancelled trips planned abroad, no-tably to Sweden and the UnitedStates, because flying can cause prob-lems for weak eardrums.

Earlier, the Presidency dismissedclaims that appeared in a Turkishnewspaper on 29 August that Gul was

hospitalized due to having been poi-soned. “The claims concerning themedical condition of the president aretotally groundless,” a statement re-leased by the Presidency read. Turkey,which has a 900-kilometre borderwith Syria, is facing a diplomatic andhumanitarian struggle. So far, Ankarais extending support not only to theSyrian political opposition, but also toits military wing.

Gul’s health improvingTURKEY|POLITICS

Turkey's President Abdullah Gul reads on his hospital bed at Hacettepe University hospital in Ankara, 29 August 2012.

17% of Turks believe Turkey will become an EU memberTURKEY|EU AFFAIRS

According to a recent poll, the number ofTurks who believe the country will ac-quire European Union membership hasdropped in comparison to last year.

The percentage of people of who be-lieve that Turkey can become and EUmember, has witnessed a decline from34.8 % to 17 % in just a year, according toa poll conducted by the German-TurkishFoundation for Education and ScientificResearch (TAVAK), Zaman reported.The poll was conducted among 1,110persons between June 20 and 30 in Is-tanbul, Ankara, Izmir, Antalya, Kayseri,Gaziantep, Artvin and Trabzon. Merely17% of Turks said ‘yes’ on being askedwhether Turkey would become an EU

member or not while 78% gave a negativeanswer. Again, on being questionedwhether Turkey might finally become amember after a decade’s time, 15% gave anod while 76% were against it. Negativedevelopments in the 27-nation bloc, par-ticularly the economic crisis were consid-ered a factors responsible for the decline,said the project advisor Faruk Sen.

“Turkey’s growth numbers in recentyears reduced the belief of the Turkishpeople in full membership,” said Sen,who is also the head of TAVAK. Headded that the trend is most unlikely toreverse mainly due to the opposition ofFrance and Germany to Turkish mem-bership. Respondents claimed that

France is the leading country which hasplaced obstacles in Turkey’s path to EUintegration.

Other countries expected to blockAnkara’s path to EU are Germany,Greece and “Greek Cyprus”, as the Re-public of Cyprus is called. Sen suggestedthat Turkey should adopt a more aggres-sive policy to alter this trend for instancethe government should explain moreabout the benefits of membership, likefreedom of movement or the benefitsstemming from having access to EUfunds. Meantime, 28% feels that Turkeyshould cooperate with Brazil, Russia,India and China (BRIC) as any hope offull EU accession has weakened.

Turkish solar regulations to cost industry €50mnTURKEY|ENERGY

Turkish Ministry of Energy and Natu-ral Resources recently announced that“solar intensity” measurement must besubmitted by each investor applying fora license to implement a solar powersystem, Zaman reported. This newsirked the investors as the move will costthe fledgling industry more than€50mn in total to have the solar inten-sity of subject areas measured for thegovernment.

The problem is that only foreignfirms have the expertise to performmeasurements on solar intensity, andthat each measurement costs around€10,000. Investors are disheartened asthe ministry has allowed only two of thehundreds of applicant firms a produc-tion licence. Turkey will generate energyfrom solar power and licences are sup-posed to be delivered by June 2013.

The Ministry of Energy and Natural

Resources acknowledged that it hasdone a mistake and need to change theregulation. In July, the Energy MarketRegulatory Agency (EPDK) issued astatement which says, “Requiring indi-vidual measurements from all firms ap-plying to get a license would be to makeunproductive use of the country's re-sources, and also possibly creating a sit-uation which could be technicallyunexplainable”.

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CROATIA|ECONOMY

Majority believe crisis will continueAccording to a recent survey conducted by the Centre forResearch GfK, the majority of the Croatian citizens whichmeans 84% have expressed concern over the current eco-nomic crisis, Javno reported. They believe that the crisis inthe country will continue for another three years or maybelonger. The same survey also showed that 80% of citizensalso believe that level of unemployment figures will also in-crease. Around 475 are worried about going jobless whiletwo-thirds of citizens of Croatia predict economic instabil-ity. The survey states that only 185 were unaffected by thecrisis and just 14% expect Croatia to emerge from the eco-nomic crisis in the upcoming years. As of now, merely 20%are pleased with their current financial situation. Croatsfrom Zagrbe seems the most optimistic lot while Croatsfrom the Slavonia, Lika, Banovina and Kordun regions areconsidered as the pessimists.

FYROM|AVIATION

US, FYROM sign Open Skies pactUS Deputy Assistant Secretary Philip Reeker andFYROM Minister of Transportation Mile Janakieski re-cently inked an Open Skies air services agreement. The pactwill formalise the liberalisation of bilateral aviation relationbetween the parties, MRTOnline reported. In addition italso creates opportunities for strengthening the economicpartnership between the United States and FYROMthrough closer links in transport and trade. This agreementwill also deepen and underpin trade and tourism links withFYROM, offering benefit to US and FYROM businessesand travelers by expanding opportunities for air services andencouraging vigorous price competition by airlines, whilepreserving commitments to aviation safety and security.Open Skies agreements allows unrestricted air service bythe airlines of both countries between and beyond theother’s territory, eliminating restrictions on how often thecarriers fly, the kind of aircraft they use and the prices theycharge. Initialed in July 2011, by US and FYROM, theOpen Skies Agreement will be effective 30 days after thedate of the final notification, via an exchange of diplomaticnotes between the two sides.

SERBIA|DEVELOPMENT

EBRD President visits BelgradeThe President of the European Bnk for Reconstruction andDevelopment (EBRD), Suma Chakrabarti, will be on athree-day visit to Serbia starting today. This is Chakrabarti'sfirst trip to the country since he took office in July this year.The EBRD President will hold meetings with senior Serbianofficials, including President Tomislav Nikolic, Prime Min-ister Ivica Dacic, Finance and Economy Minister MladjanDinkic, and with representatives from the business and civilsociety. In addition, Chakrabarti' schedule for the visit in-cludes meetings with representatives of Serbian companies inwhich the Bank has previously invested, for example Beo-hemija, Victoria Group and Forma Ideale. Speaking in ad-vance of his visit, the EBRD President said, “the EBRD willcontinue to invest strongly in Serbia and across the region.We aim to stimulate economic growth and will remain asource of funding when alternative financing remains scarce.Creating jobs to secure longer term prosperity for the peopleof Serbia is a key priority”. The number of companies rely-ing on EBRD funding continuously grows, to include alsoErste Bank Serbia which recently successfully received a loanfrom the Bank, amounting to €10 million. Since the begin-ning of its operations in Serbia, the EBRD has committedover €3 billion in various sectors of the country’s economy,with a total value of some €6 billion.


ENLARGEMENT

A senior European Commission officialrecently stated that Serbia is least likelyto get a start date for EU membershiptalks this October, Beta news agency re-ported. The EU envoy said that theEuropean Commission's latest opinionof Serbia’s progress will not be positivecompared to 2011 as progress washardly seen in Belgrade-Pristina talks,and EU reforms also got delayed as Ser-bia was in election mode.

As a result, the upcoming progress re-port might be affected, added the EUofficial. However the new governmentassured that besides negotiations withpristine, internal reforms will continue.If Serbia meets all the EU criteria, thenSerbia might get a date for membership

talks by July 2013.Speaking at the UN, Serbia’s Prime

Minister, Ivica Dacic said that Serbiawill implement all agreements reachedin EU-led talks with Kosovo and willcontinue on its path towards EU mem-bership. The new head of the govern-ment’s EU integration office, MilanPajevic believes that the country canmeet EU criteria and start date for EUnegotiations by next summer is ex-pected. Meantime, Serbia’s progresspath to EU integration was slammed bya member of the Serbian parliament’sCouncil for EU Integration, LazloVarga.

He noted that the EU path of Serbiahas grown sluggish in negotiations with

Kosovo, the former Serbian provincewhich declared independence in 2008and Serbia is yet to recognise it. He ex-pressed doubt whether talks withKosovo will complete in few months sothe July 2013 date for a start to EU talksseems shaky. Varga said he did not be-lieve that Serbia will start negotiationsbefore December 2013.

After release of a positive opinion, or"avis", in October 2011, the EuropeanCouncil postponed a decision on Ser-bia's candidacy for March 2012 due tolack of progress in normalisation of tieswith Kosovo. Although Serbia hasachieved an official EU candidate sta-tus in March of this year but yet to geta start date for negotiations.

Serbia may start EU talks in July 2013SERBIA|EU

EBRD to offer loan for yacht repairMONTENEGRO|DEVELOPMENT

European bank for Recosntruction andDevelopment recently announced a loanto finance part of the construction anddevelopment costs of a yacht repair facil-ity, on a site located within the existingAdriatic Shipyard in Bijela, Montenegro.

The fund would be allotted to a jointventure company which would owned byAdriatic Shipyard, Adriatic MarinasD.O.O. and an international yacht repairspecialist. The highly experienced yachtrepair specialist will act as the operatorand a shareholder.

The loan will ensure environmentalimprovement to the shipyard which re-quires new investment for its environ-

mental remediation work, involving awaste-disposal programme and site im-provements to mitigate environmentaland health risks and impact assessmentin line with international standards.

The project is also an importantpart of the service sector that isneeded to support the developmentpotential of the tourism strategy forMontenegro. The project will help tomake the region a home port enticingboats, yachts and crews to stay on, cre-ating job opportunities to local peopleall year round instead only in summerperiods. As a result, the project willyield social and economic benefits in

terms of creating long term employ-ment, regeneration and help supportsustainable tourism and developmentsin the country.

Moreover, the project will also spreadawareness of safety and environmental is-sues and promote best practice in the de-velopment of an Environmental andSafety Action Plan (‘ESAP’) relating tosite assessment, a clean-up programmeand selection of appropriate waste dis-posal options, and introduction of an ap-propriate technology and wastemanagement system.

The cost of the project is estimated at€16 million.

New property tax in 2013CROATIA|TAX

Croatia's Minister of Finance SlavkoLinic recently announced the countryhas introduced a new property taxwhich will come into effect from Jan-uary 1, 2013, Javno reported.

The new tax will be divided intothree phases and will replace localrates, said Linic. In addition, the newtax will also bring Croatia into linewith the majority of European coun-

tries. The ministers aid that a year isrequired to determine the values ofconstruction and agricultural landwhich in turn will lead to introductionof the new tax.

EU commissioner for Enlargement, Stefan Füle (R) and Serbian Deputy Prime Minister in charge of European Integration, Ms Suzana Grubjesic (L)

give a press conference on August 30, 2012 at the EU Headquarters in Brussels.|

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NORWAY|AQUACULTURE

Norway and Malaysia signaquaculture agreementMalaysia signed an agreement and institutional cooper-ation contract with Norway on Regulatory Frameworkfor Aquaculture in Malaysia, to contribute to sustainabledevelopment of aquaculture in Malaysia, it was reported.Norway, which has a leading position globally in theaquaculture industry, will not only help Malaysia developa regulatory framework for aquaculture farming, but willalso provide experts and training for Department of Fish-eries (DOF) staff in the field. The total funding for theproject is on a cost-sharing basis, Norway will provide3.253 million Ringitt in funding while Malaysia will con-tribute 3.275 million, starting 2012-2015. Agricultureand Agro-Based Industry Minister Datuk Seri NohOmar said besides strengthening relations between thetwo countries, the agreement was a step forward to en-hance the development of the local aquaculture industry.Thus, he said, it would also help reduce the problem offish supply shortage. Noh said seven experts from Nor-way would come in October to train DOF staff here,while 20 DOF officers would be sent to Norway forshort-term and long-term courses. He said the DOFwould also set up a new division for aquaculture, realisingthat it was becoming a more important sector not only inthe country but also worldwide. Currently, Malaysia'saquaculture production is 287,000 tonnes valued at 2.5billion Ringitt, while under the National Key EconomicArea (NKEA), the production is projected to increase to790,000 tonnes by 2020 and exports of aquaculture prod-ucts to be worth 3.2 billion Ringit.

ICELAND|AVIATION

Icelandair announces directflights from AlaskaIcelandair, an airline based in Iceland's capital city ofReykjavik, announced that it will introduce nonstopservice from Anchorage to Iceland beginning in thesummer of 2013, it was reported. A press release fromthe company said that Anchorage is one of three newcities being introduced to the airline's service area, join-ing Zurich, Switzerland and St Petersburg, Russia. Theintroduction of Icelandair to the potential air carriers inand out of Alaska opens up new opportunities for in-ternational travel for Alaskans. "From its hub in Reyk-javik, Icelandair offers non-stop connections to morethan 20 destinations in Scandinavia, the United King-dom and Continental Europe," the company said inthe release, which means Alaskans can use the nonstopservice as a launching point to other destinations. De-tails and conditions of the travel were minimal, but thecompany said that the service will begin on 15 May,2013 and continue through mid-September of 2013,with two flights a week. Icelandair is a partner airlinewith Alaska Airlines, long the dominant air carrier inAlaska. Though based in Seattle now, Alaska operatesmany of the flights that carry Alaskans and visitors toand from the Lower 48. But they appear to be wel-coming Icelandair to the market, perhaps hoping thatEuropean travellers will use the new flight as a jump-ing-off point to other US destinations. "Icelandair'swell-timed arrival and departure connects well withAlaska Airlines and will help share and serve all ofAlaska," Scott Habberstad, Alaska Airlines’ director ofsales and community marketing for Alaska, said in therelease. Alaska has few options for nonstop interna-tional travel. Condor has offered over-the-pole travelfrom Anchorage and Fairbanks to Frankfurt, Germanyfor the past several summers, with few other destina-tions offered. Korean Airlines and Japan Airlinesbrought tourists from Asia this past summer, butAlaska travellers were prohibited from using thoseflights to go the other direction.

Switzerland has agreed details of itsplanned purchase of 22 fighter jets fromSweden, despite a critical parliamentaryreport on the deal, the defence ministriesof the two countries said, The Local re-ported.

A Swiss government statement said anagreement in principle had been con-cluded between its weapons procurementagency Armasuisse and Sweden's FXMagency on the acquisition of the SaabGripen warplanes.

Final details of specifications, deliverydates, prices, equipment and infrastruc-ture had been settled pending a finalgreen light from Bern, it said.

The deal forms part of a larger order

for Gripens to be shared with Sweden,which Stockholm said would help tokeep costs down.

The Swiss parliamentary security com-mission said that the "choice of jet madeby the Federal Council carries the mostrisks: technically, commercially, financiallyand in respect of the delivery date", Swissnews agency ATS reported.

The members of the commissionnonetheless voted 16 to 9 against de-manding that ministers put a halt to thedeal.

Defence Minister Ueli Maurer saidthat the Gripen "was the cheapest" op-tion compared with the French DassaultRafale and the EADS Eurofighter and

its purchase price, 3.126 billion francs($3.25 billion) , was guaranteed not tochange.

Opponents of the Gripen purchase,which still has to be approved by the fed-eral parliament, have said that they wouldseek to hold a national referendum on thedeal.

The Gripens, to replace the Swiss airforce's ageing US-built F-5 Tigers, are ofa more advanced model still under devel-opment and will not be available before2018, according to Bern.

For its part the Swedish governmentplans to buy 40-60 new Gripens over thenext decade at a cost of two billionSwedish crowns (€242 million).

Swiss go ahead with jet fighter dealSWITZERLAND|DEFENCE

A Swedish Gripen aircraft fighter flies during the first day of the airshow of Sion, Switzerland, 16 September 2011.

Central bank abandons interest rate increasesICELAND|BANKING

The Icelandic Central Bank hashalted a planned series of interest raterises as they expect the nation’s cur-rency, the krona to rise.

Sediabanki is keeping the rate at5.75% after the rate was increased fivetimes in the previous 12 months.

“The inflation outlook for the nexttwo years has improved since the

Monetary Policy Committee’s lastmeeting, although inflation is not ex-pected to reach the bank’s inflationtarget until the end of the period,” saidthe bank.

Asdis Kristjansdottir, from ArionBanki HF, told Bloomberg, “The bankseems to anticipate that the krona willappreciate further through 2014,

meaning that it will adversely impactIceland’s balance of trade. At the mo-ment the country needs to generatemore foreign exchange to meet its for-eign exchange obligations. I’m there-fore surprised that the bank doesn’tuse the opportunity to purchase for-eign exchange in the markets whilethe krona is so strong.”

Aker Solutions to equip six drill ships in BrazilNORWAY|MARITIME

Aker Solutions has won a contractto supply drilling equipment packagesfor a series of six deepwater drill-shipsbeing built by Jurong Shipyard for theBrazilian market, Norway Post re-ported.

The contract includes completetopside and subsea equipment(drilling riser and BOP) packages forsix drill-ships, and an option for one

further unit. The value of the contractis undisclosed.

The equipment will be deliveredfrom Aker Solutions in Norway andGermany, as well as from the com-pany's new site in Brazil. Aker Solu-tions is building a new $100 millionservice and manufacturing facility inMacae, Brazil's offshore capital, inorder to meet the company's growth

in the country.The drilling units will be delivered

between 2015 and 2019. The firstAker Solutions equipment will be de-livered in the second half of 2013. Thecontract includes project management,engineering, topside equipment, sub-sea package including Aker Solutions'Clip riser, and commissioning of therigs at Jurong's yard in Brazil.

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Real growth to slowly increase, says S&PStandard & Poor rating agency recently said in a statementthat it expects real growth in Azerbaijan to increase slowlyagain, reaching 3.0% this year and 5.0% in 2013, reads apress release. The agency expects the growth to be main-tained by higher oil production and prices leading tostronger inflows from exports, an increase in householddisposable incomes, and better credit conditions, whichsupports domestic demand. The agency prognosis showsthat the growth of GDP per capita will be 3.2% in 2012-2014, which would correspond to median ration of 3% ofthe countries of BBB rating category, but will be lower, es-pecially in Russia and Kazakhstan which depend on theproduction of raw materials and where population growthrates are lower. "We expect GDP per capita to increase to$7,063 in 2012, significantly lower than in Kazakhstan andRussia, as well as the 'BBB' median ($11,697), but com-paring well with Morocco, Colombia, and Peru," theagency said.

AZERBAIJAN|EU AFFAIRS

EU offers financial aid for reformsThe European Commission recently announced freshfund for Azerbaijan to help reform the institutions whichare responsible for bilateral ties with the EU especially injustice and migration sectors, news agencies reported. Ac-cording to a press release issued by the Commission, as perEU-Azerbaijan Action Plan the fund will help to releasethe implementation of the aforesaid actions and alsostreamline the visa application process, which will help toincrease mobility for citizens of Azerbaijan. Support forregional development will also continue in order to helpreduce regional, social and economic differences and fos-ter growth through job creation. Support will be in theform of policy advice, assistance, studies or training, whichwill be provided in areas related to socio-economic devel-opment of the regions. Under the Annual Action Pro-gramme 2012 for Azerbaijan, European Neighbourhoodand Partnership Instrument (ENPI) provided €19.5mn ofbilateral allocation to the country. The fund would beutilised in the implementation of the European Neigh-bourhood Policy Action Plan priorities and institutionalreforms.

GEORGIA|POLITICS

NBE postpones fine enforcementagainst Georgian Dream PartiesThe Georgian Justice Ministry recently announcedthat National Bureau of Enforcement (NBE) has“postponed” collection of GEL 2.85 million fine, whichwas imposed on six political parties united in BidzinaIvanishvili-led Georgian Dream opposition coalition,Civil Georgia reported. The Justice Ministry informedthat so far merely a fine of GEL 122,000, has been col-lected by the NBE, without freezing any account. Afternegotiations with the State Audit Office of Georgia,who is the creditor in the case and following the sug-gestions made by the Inter-Agency Task Force for theFree and Fair Elections, the NBE has decided to post-pone the enforcement of the Tbilisi Court Decision. It was reported that the fine enforcement was postponedafter two co-rapporteurs from Parliamentary Assembly ofthe Council of Europe (PACE) on honouring Georgia’sobligations, has expressed concern over seizure of bankaccounts of the Georgian Dream. The PACE envoys alsosaid that disproportionate fines imposed by the StateAudit Office undermine normal political activity by anopposition party.


EASTERN PARTNERSHIP

OSCE’s Office for Democratic Institu-tions and Human Rights (ODIHR) re-cently announced the launch of electionobservation mission for Georgia’s parlia-mentary polls scheduled to take place on1 October , The Messenger reported.

The mission headed by NikolaiVulchanov of Bulgaria, comprises of 15experts who will stay in Georgia until themiddle of October. The experts would bejoined by 28 long-term observers. It wasnoted that Vulchanov has 15 years of ex-pertise in election observation and wholed OSCE/ODIHR observation mis-sions for Georgia’s 1999 parliamentaryand 2000 presidential elections.

Vulchanov said that the mission is nothere in Georgia to determine whether theelection is legitimate or not but insteadestablish based on body of facts, collectedby observers, whether the election com-plied with the legislation and the inter-national commitments of Georgia.

ODIHR has requested from theOSCE participating countries to send350 short-term observers to monitorelection day proceedings and the votecounting process. Vulchanov stressedthat if the participating states meet therequest on election day then around 400observers are expected from ODIHRalone.

On the day of election, ODIHR mis-sion will join efforts with delegationsfrom parliamentary assemblies of OSCE,NATO, Council of Europe and Euro-pean Parliament. The ODIHR missionwill comprise of two interim reports onpre-election situation. The first oneplanned to be released in late part of firsthalf of September and the second one aweek prior 1 October elections. After theelections the mission will release prelim-inary findings and final report will beavailable about two months after the finalelection results are summarised.

Currently an OSCE ParliamentaryAssembly delegation headed by theOSCE President Riccardo Migliori paida visit to Tbilisi. During the visit theOSCE delegation met with Georgianparliament members, representatives ofopposition coalition Georgian Dreamand NGO leaders. Georgian Dreamspokesperson Maia Panjikidze said thatthe delegation was briefed with detailedinformation and documents were pro-vided which fully reflect what the gov-ernment has implemented against theGeorgian Dream coalition since last Oc-tober to present.

Transparency International ExecutiveDirector Eka Gigauri emphasized themisuse of administrative resources. “We

discussed the activity of the State AuditAgency, and the imposed fines andseizures. I have the impression that theywere surprised.” said Chairperson of theYoung Georgian Lawyers AssociationTamar Chugoshvili.

During the visit, the OSCE PresidentRiccardo Migliori also met with theGeorgian parliament members to get in-formation about the pre-election situa-tion in the country. Vice speaker ofParliament, MP Gigi Tsereteli said it wasa preparatory meeting before the arrivalof the larger OSCE election monitoringteam. According to lawmakers, OSCEmostly expressed concern over the imple-mentation of the new electoral legislationadopted by Parliament recently.

OSCE begin election monitoring missionGEORGIA|ELECTION

Georgian billionaire and politician Bidzina Ivanishvili’s opposition civil movement 'Georgian

Dream' are hoping for a clean election.

Syrian Armenians boost housing demand in YerevanARMENIA|REAL ESTATE

Amid growing tension in Syria, the realestate market in Armenia is witnessingsome growth in recent months, ArmeniaLiberty.org learnt from Armenian serv-ice. Local realtors claimed that a numberof ethnic Armenians are arriving fromSyria and some intend to stay on a per-manent basis in Armenia while othersseem undecided and choose to renthomes for now. This is the reason thereare 10 times as many rents as home-buy-ing deals in the market, said GarikDanielian, who runs a private real estateagency in Yerevan.

Danielian said, “Many came andrented apartments for a month, and theynow extend their rents for another monthafter hearing news of the worsening sit-uation in Syria. People are scared.” Hestressed that the slump in the prices ofhousing market which was seen in 2008,has now come to a halt.

Danielian said, “There are people whobuy homes, there is some movement inthe market, even a slight increase in pricesfor newly built homes.” Other realtorsstated that ethnic Armenians from Syriaoften prefer renting or buying housing inor close to downtown Yerevan and innewly constructed residential buildings.

According to Artin Arakelian, directorof a real estate agency in Yerevan, thosewho have come to Armenia so far aremainly well-to-do Syrian Armenians. Henoted such Armenians are exploringbusiness opportunities in the countrywhich entails increasing demand for of-fice space. The Syrian Armenians are see-ing their business in Armenia andplanning to rent some commercial prop-erty to see if they are as successful here inArmenia doing the same business as theyhave done in Syria, added Arakelian. Hehowever noted that Syrian Armenians

are not hasty in their decision to becomehomeowners in Armenia as they are stillunsure whether they would find a job inArmenia and are even clueless about theupcoming developments in Syria.

Syrian Armenians are also facing prob-lems in selling their property in Syria andbringing their capital to Armenia. Over20-25 Syrian-Armenian businessmenhave turned to the Chamber of Com-merce and Industry of Armenia for con-sultations, head of the Chamber ArayikVardanyan said. Earlier the Chamber saidSyrian-Armenians wishing to set upbusiness in Armenia, will get free consul-tations. Vardanyan said that the chamberis having talks with entrepreneurs inter-ested in running business in Armenia.The consultations cover legislation andbusiness, including customs and tax, laborand civil codes, as well as information onmarkets.

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29NEW EUROPE2 - 8 September, 2012EASTERN PARTNERSHIP

BELARUS|DIPLOMACY

Minsk, Baku sign documents On 28 August, the talks between Azerbaijan’s PresidentsIlham Aliyev and his Belarusian counterpart AlexanderLukashenko in presence of delegations were followed by aceremony of signing the Azerbaijan-Belarus documents.The two countries signed an agreement between the Azer-baijan and Belarus on expansion of leasing activities, estab-lishment of favourable legal and economic framework. Theyalso inked documents on co-operation in combating illegalproduction of and trafficking in firearms, ammunition, ex-plosives and explosive devices. “We would like to jointlyenter markets of other countries, including neighbouringones, via Azerbaijan in Caucasus where respect for thecountry is high,” Lukashenko said.

MOLDOVA|TRADE

Moldova to ratify agreementOn 30 August, Moldova’s government approved a draft lawon the ratification of the free trade agreement within theCommonwealth of Independent States (CIS). It is to beratified by the parliament. This document, signed in St Pe-tersburg on 18 October 2011, sees the exclusion of the taxeson import and export of many products to the CIS coun-tries. Economics Minister, Deputy Premier Valeriu Lazarsaid the agreement is important for Moldova as it will en-sure a stable framework with the CIS states, which are maintrade partners for Moldova. "It will exclude the opportunityto appear some possible bans on behalf of the CIS part-ners", Lazar said.

MOLDOVA|FROZEN CONFLICTS

Transnistria's prospects discussedRegional Development and Construction Minister Mar-cel Raducan and the head of the OSCE Mission toMoldova, Ambassador Jennifer Brush, on 28 August dis-cussed prospects of developing the left side of the Dni-ester River and co-operation with the OSCE to create aregional development agency in the Transnistrian region,Moldpress reported. According to the ministry's press re-lations service, Brush pointed out the need to establishcommon points in promoting regional development onthe left side of the Dniester.

UKRAINE|ECONOMY

State budget seen in SeptemberOn 29 August, Ukrainian Economic Development andTrade Minister Petro Poroshenko said the Cabinet of Min-isters of Ukraine will most likely approve the draft statebudget for 2013 at a meeting on 12 September. "We al-ready have the tradition that draft state budgets are dis-cussed at the last government meeting before September15 [the last deadline for submitting the draft state budgetto parliament]. I do not think that there will be an excep-tion this year," he said. Poroshenko said that while draftingthe budget for 2013, there could be some adjustments inthe forecast for growth in gross domestic product (GDP).

BELARUS|AGRICULTURE

Russia-Belarus to export sugarBelarusian and Russian sugar manufacturers plan to setup a joint venture to export sugar to third countries,Belarusian state food industry concern Belgospishche-prom Chairman Ivan Danchenko said on 29 August.Belarus and Russia fully supply themselves with sugar.Excess sugar supply is estimated at 300,000 tonnes.The excessive sugar puts pressure on the market anddrives prices down, Danchenko said.

Brussels has condemned a decision byUkraine’s high court to throw out formerpremier and opposition leader Yulia Ty-moshenko’s appeal against a seven-yearconviction for abuse of office. The courtsaid it found no grounds to overturn theconviction, which the European Union,the United States and allies of Ty-moshenko believe is a politically moti-vated. “We have noted with regret theoutcome,” said Michael Mann, aspokesman for EU Foreign Affairs ChiefCatherine Ashton. “We stress the impor-tance for the Ukrainian authorities to takeconcrete steps to address the systemicproblems of the judiciary,” he added.

“These should also redress the effects ofselective justice, including in the cases ofMs Tymoshenko, Mr [former InteriorMinister Yuriy] Lutsenko and others, andprevent such failures from occurringagain,” Mann stressed. “We are deeplydisappointed with the consequences ofthe current situation, as two importantleaders of the opposition are preventedfrom standing for parliamentary elec-tions.” He added that the EU wouldmonitor the situation with the casesagainst Tymoshenko, Lutsenko, and oth-ers. Ukraine's relations with the Westhave been severely strained over Ty-moshenko’s conviction. Ukraine’s Vice

Prime Minister Sergei Tigipko said thatwhile he understood the cased posedgreat obstacle to Ukraine’s bid to integratewith the EU there should be no doubtover Tymoshenko’s guilt.

Tymoshenko's defence lawyer said theruling by a three-judge panel had beensteered by Ukraine’s President ViktorYanukovich for political reasons. "Thesefindings have no relation to justice," Ser-hiy Vlasenko told journalists after judgeOlexander Yelfimov ruled that lowercourts had delivered "correct decisions onthe crimes of Tymoshenko." "This is adecision of Yanukovich to keep Ty-moshenko in prison," Vlasenko said.

EU slams Tymoshenko appeal rejectionUKRAINE|HUMAN RIGHTS

Judges Stanislav Mischenko, second left, and Roman Sakhno, second right, listen as Alexander Elfimov, left, reads the decision in the appeal of jailed ex-

premier Yulia Tymoshenko at the court house in Kiev, 29 August 2012.

Gazprom to boost gas transit through BelarusBELARUS|ENERGY

During the meeting dedicated to the de-velopment of Belarus gas pipeline systemon August 23, Russian gas monopolyGazprom Chairman Alexei Miller saidthat the company plans to increase thevolume of gas transit through Belarus,and that the parties will discuss it later.“We will consider the possibilities of thetransit increase,” he said at Beltransgaz.

Miller said the transit increase will becoordinated with such like plans of theRussian party. Also under discussionthere are plans for restoration of the gas

pipeline system in Belarus and construc-tion of new pipelines, announced thehead of Gazprom, BelTA reported.

Gazprom intends to develop a plan ofaction. “Today our task is to analyse therelative issues and to give instructions,”Miller said, adding that Belarusian andRussian parties are trying to stay in tunewhile performing joint businessprocesses, developing new standards, pro-cedures, and regulations. “In my opinion,the process is going well and at full blast,although it is clear that it will take some

time to work out unified standards,”Miller said.

Gazprom took control of Beltransgazas part of a revised energy deal with Be-larus last year for $2.5bn. The companysaid it was paying "particular attention"to the gas transmission system and an ac-tion plan on development was expectedwithin the next two months.

A reliable gas transmission system inBelarus is a focal point of the integrationof Beltransgaz into Gazprom, the Russ-ian company said.

Lukashenko urges to accelerate harvesting campaignBELARUS|AGRICULTURE

Belarus President AlexanderLukashenko said the pace of harvestingand processing of agricultural cropsshould be accelerated. At a meeting withPrime Minister of Belarus MikhailMyasnikovich on 30 August,Lukashenko said the progress of the har-vesting campaign is a pressing matter.The head of state said that cereals hadbeen collected virtually everywhere butVitebsk Oblast.

However, Lukashenko said a lot hasyet to be done to gather in other crops, inparticular, flax, sugar beet, and corn.

Lukashenko urged to accelerate the har-vesting pace as long as the weather is dry.“The price for sugar has increased on theglobal market. From this point of viewour peasants can earn more. Therefore,we should put more efforts into sugarbeet processing,” Lukashenko said.

He also gave instructions to resolve is-sues with signing contracts for the deliv-ery of potato. “We need clarity regardinghow much we will sell, to whom, and atwhat price,” he said.

Lukashenko was also informed aboutpreparations for the national harvesting

festival Dazhynki. This year’s event willtake place in the town of Gorki. Most ofthe facilities have been commissioned al-ready, in particular, an ice palace, a sta-dium, a surgery wing, a dentist clinic.Repairs of the M4 motorway Minsk-Mogilev and a bridge of the BerezinaRiver, an amphitheater are nearly over.

A matter concerning the reconstruc-tion of dairy farms was also raised.Myasnikovich remarked that the equip-ment to refit all the farms that are beingreconstructed will be delivered by 1 De-cember at the latest.

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TAJIKISTAN|DIPLOMACY

Rahmon pays Turkmen visitTajik President Emomali Rahmon recently paid workingvisit to Ashgabat at the invitation of his Turkmen counter-part Gurbanguly Berdimuhamedov, Asia-Plus quoted theTajik government as saying. He had bilateral talks withTurkmen President and some other high-ranking Turkmenstate officials. The sides discussed state and prospects of fur-ther expansion of bilateral cooperation between Tajikistanand Turkmenistan. They reaffirmed their commitment topeace and stability in neighbouring Afghanistan. They alsodiscussed trade and economic partnership, prioritising theenergy sector, transport and power engineering.

TURKMENISTAN|AIRLINES INDUSTRY

Turkmenistan to buy Boeing 737According to a relevant decree signed by Turkmen HeadGurbanguly Berdimuhamedov, Turkmenistan plans to ac-quire Boeing 737-800 aircraft, Turkmenistan.ru learnt froman official Turkmen source. To this effect, TurkmenistanAirlines plans to sign a contract with US Boeing. The dealwill be concluded under the National Programme for theDevelopment of Civil Aviation of Turkmenistan for 2012-2030, which aims to increase the number of internationalflights and further improve the quality of services and in-crease passenger safety.

TURKMENISTAN|DELIMITATION

Ashgabat wants Caspian dialogueTurkmenistan stands for a constructive dialogue in the areaof the Caspian basin, Turkmen President GurbangulyBerdimuhamedov said at a meeting of the Cabinet of Min-isters, the Turkmen government said. “While steadily real-ising a course of foreign policy based on the principles ofequal and mutually beneficial partnership, the balance ofnational and common interests, neutral Turkmenistanstrives to intensify a constructive dialogue to promote peaceand harmony and to expand the effective cooperation inthe Caspian Sea bilaterally and multilaterally,” the presidentsaid. President Berdimuhamedov stressed that the CaspianSea is a unique natural reservoir and assured that his coun-try will continue taking consistent steps to maintain, in-crease and rationally use its rich resources.

UZBEKISTAN|ENERGY

Electricity metering modernisedUzbekenergo State Joint Stock Company chairman BatyrTeshabaev said that in early 2013 the company will start tomodernise the metering system of electricity in the domes-tic sector of Uzbekistan, Uzbekreport.com reported. Theannouncement was made at an international seminar, "Theprogramme to implement automated system of account-ing and control over electricity consumption in Uzbekistanand international experience" held in Tashkent. The eventwas organised with the support of the World Bank.

UZBEKISTAN|BANKING

Banks stable but vulnerableAccording to a special report recently released by interna-tional rating agency Fitch Ratings, the banking sector inUzbekistan has stable performance in a largely state-dom-inated local economy but weak corporate governance andrisk management, fast recent asset growth, significant di-rected lending and acquisitions of problem assets makes thesector vulnerable to impending economic shocks. Theagency went on to say that banks' foreign currency obliga-tions in particular those stemming from trade finance arevulnerable due to existing foreign exchange constraints.


EURASIA

Mr Stavros Lambrinidis was appointed asEU Special Representative for HumanRights (EUSR) on 25 July 2012. He tookoffice on 1 September. Will he turn a blindeye on the Zhanaozen tragedy like theOSCE did recently?

In Aktau, the trial of Vladimir Kozlov,Serik Saparghali and Akganat Aminov for"attempt a coup-d’état, incitement of so-cial hatred, creating an organized criminalgroup" is one more chapter in tragic saga ofZhanaozen.

The political activists who tried to re-solve the dispute between the oil workersand the company within the framework ofcurrent legislation are chosen to serve as asymbolical sacrifice, in order to make itclear to every citizen that standing up foryour rights is not allowed.

The very first day of the trial of Kozlov-Sapargali-Aminov showed the court’scharacter - Kozlov was not given enoughtime to review the court case of 62 vol-umes. Neither was he given the provisionsof three days to review the indictment.Moreover, all 10 petitions were declined.Even a petition to postpone Kozlov’s trialin connection with the death of hismother's lawyer was bluntly rejected.

Human rights activists, observers,lawyers, politicians compare this processwith Stalin’s notorious Vyshinsky Court,says the exiled Kazakhs’ on-line media ‘Re-spublika’. ‘All incompetence of investiga-tors and prosecutors at the trial in the "caseof 37 oil-workers" is overwhelming’ sayspolitician Bulat Abilov. The evidence baseis completely false’. He is convinced thatthe court is engaged into creation of animage ‘Kozlov-Saparghali- Aminov toblame for Zhanaozen’s tragedy’, so theprosecutors are constructing the case tojustify the inevitable punishment. His viewis confirmed by the fact of government’sreluctance of an open process.

None of the witnesses directly or indi-rectly were able to provide a tangible evi-

dence to prove the involvement of threedefendants in Zhanaozen’s tragedy.

Respectful of the constitution of Kaza-khstan, but contradicting the interests ofauthorities, the three defendants have notbeen given a chance, on the contrary theyhave been already stigmatized for ‘calls toundermine the constitutional order, the es-tablishment of organized crime groups’.The prosecutor’s line is clear;they’ll bejudged for extremism and terrorism,crimes they didn’t commit.

The member’s of the Alga party, dis-solved by Nazarbayev, issued a statement:

‘For several days in Aktau is the so-called "judicial" process of the leader ofPeople's Party Alga, Vladimir Kozlov, andcivil activists Serik Saparghali andAkzhanatom Aminov. The process, whichno doubt goes down in history as anotherattempt to completely eradicate by theNazarbayev regime in Kazakhstan of free-thinking, independent political views, thepresence of principled citizenship. It is ameaningless attempt that leads to a deep-ening of the gap between Acorda and so-ciety, the state and the people, trying toinciting social discord and enmity. Thepurpose of the councils is happening - notonly isolated from the society of politicalopponents of the regime, but also tostrengthen the climate of fear that rein-force the myth of absolute omnipotenceauthoritarianism prevailing in Kazakhstan’.

‘Politically motivated judicial executionstoday; no doubt neither Kazakhstan northe international community is closelytracking the process. The absurdity of thecharges of inciting social hatred, participa-tion in criminal groups and calls for theoverthrow of the constitutional order cancompete only with custom textbook andpolitical processes of the late 30s of the lastcentury’.

‘Even in the period of investigation withrespect to rights investigators Kozlov madea lot of errors. The absence of a public de-

fender, the denial of visits, harsh conditions.... Violated the terms and procedure of fa-miliarization with the materials of the caseand the indictment. Now, in the course ofthe trial, there is again a cynically mockingattitude to the rights of the accused. All ap-plications for protection have been rejected,the process continues in the absence of alawyer, Vladimir Kozlov, access to theprocess of the media is limited, there is notransparency. Prosecution witnesses areconfused in their own testimony and evi-dence, direct or indirect, as well as evidencepointing to the involvement of Kozlov tothe tragic events in Zhanaozen, no. Yesthem and can’t be, as they exist in nature’.

‘However, the pace at which the finalpart of the investigation progressed andheld court itself, leave no doubt that thepunishment will be soon. Already, there isa perception that Akorda will be made tothe Constitution Day gift in the form ofmaking the hardest sentence to one of theleaders of the democratic opposition -Vladimir Kozlov’.

‘Labeled an extremist gang member, in-stigator and provocateur, the regime willgive a blank check for the further develop-ment of political terror in the country.Threatened are the continued existence ofNP Alga, independent media, referred toin the indictment, as well as freedom of themost active and loyal supporters and asso-ciates Kozlov’. ‘Without faith and hope inthe objectivity and impartiality of the court,appeal to all observers of the process,lawyers, experts, human rights activists,diplomats, journalists, friends, colleaguesand associates, Vladimir Kozlov, and SerikSapargali Akzhanata Aminov not to re-duce their attention to the process, to fixall the violations , perjury, falsification offacts, falsification of data and other tools ofthe "evidence of guilt." In front of the courtof history, the court descendants. Thesecourts must pay his due all current punitiveregime’.

Kazakhstan: Zhanaozen Part II – CrucifictionKAZAKHSTAN|HUMAN RIGHTS

On trial in dubious circumstances: Vladimir Kozlov, Serik Sapargali and Akzhanata Aminov

31NEW EUROPE2 - 8 September, 2012RUSSIA

RUSSIA|VISAS

US-Russia visa easing A US-Russian agreement on simplifying the countries’visa programme will go into effect on 9 September. Theagreement allows Russians and Americans to get three-year multi-entry visas under which they can stay for upto six consecutive months. It also eliminates Russia’srequirement that visitors get a letter of invitation, al-though tourists will still need to show advance accom-modation bookings. In late July, RussianPresident Vladimir Putin has signed the ratification ofthe agreement.

RUSSIA|HUMAN RIGHTS

Activist sentenced to 8 yearsOn 28 August, a Russian court sentenced opposition ac-tivist Taisiya Osipova to eight years in prison on drugcharges, doubling the time sought by prosecutors in a casegovernment critics call trumped-up retaliation. Osipova, 28,and her supporters insist police planted 4 grams of heroin inher apartment as retaliation for her antigovernment ac-tivism. Osipova and her husband, Sergei Fomchenkov, weresenior members of the Other Russia opposition party inSmolensk, about 230 miles southwest of Moscow. Her hus-band said was revenge for the couple's criticism of the au-thorities. In 2008 Osipova left politics to raise her daughter.Fomchenkov is still an active party member. Police arrestedOsipova in October 2010.

RUSSIA|AUTO INDUSTRY

GM to increase output in RussiaGeneral Motors will pump about $1bn in the developmentof its production in Russia before the end of 2018, JamesBovenzi, head of GM’s Russian operations, said on 29 Au-gust. GM, which produces cars in Kaliningrad, St Peters-burg and Togliatti, will invest the money to increase outputcapacity and in sourcing local components. The number ofcars sold in Russia rose 40% last year to 2.5mn, reversinglosses suffered after the credit crunch, with foreign brandsproduced in Russia jumping 70% to top 1mn.

RUSSIA|ENERGY

Second Nord Stream completedRussian construction teams have completed the laying ofthe second pipe of the Nord Stream natural gas pipeline.The first pipe was completed in April. Once fully opera-tional, the pipeline will annually supply Europe with 55bncubic metres of Russian gas. Nord stream, which runs underBaltic Sea and connects Vyborg near St Petersburg withGreifswald in northern Germany, will significantly reducethe need for politically precarious overland gas transit, ex-perts say.

RUSSIA|DEFENCE

Kuril troops’ reinforcementRussia’s Chief of the General Staff General NikolayMakarov said the country is reinforcing its troops de-ployed in the Kuril Islands – the Russian territory in theFar East that is claimed by Japan. The reinforcement goesin accordance with the schedule earlier approved by theRussian President, Makarov said. Two modern garrisonsare being built on the islands, the general added. “Thedeliveries of weaponry and military hardware are pro-ceeding on plan, and we will fulfil the President's in-structions within a couple of years," Interfax quotedMakarov as saying. "We are building a military forcethere which, in our estimate, will match our securityneeds in that region,” the commander said.

Russian investigators are questioninga man suspected in an alleged plot toassassinate Russian President VladimirPutin, news agencies reported. IlyaPyanzin was extradited on 25 Augustto Russia from Ukraine.

On 28 August, Kommersant dailyreported that Pyanzin told investiga-tors he was only a witness to the as-sassination plot and that the lateRuslan Madayev was behind it.

On 22 August, the Odessa OblastCourt of Appeals upheld the Ukrain-ian Prosecutor General's Office's de-cision to extradite Pyanzin. Thefollowing day, according to Kommer-sant, the prosecutors prepared Pyanzinfor extradition. On 25 August, the of-fice handed the individual over to theRussian special services. On the sameday, Pyanzin was delivered to Moscowand placed in the Lefortovsky isola-tion ward.

Pyanzin and fellow suspect AdamOsmayev allegedly planned to assassi-nate Putin by blowing up his motor-cade after the Russian presidentialelections last March. The alleged plothas been dismissed by Putin’s critics asKremlin’s bid to win popularity for theRussian leader.

Pyanzin and Osmayev were arrestedin Ukraine. The court dismissed Os-mayev's extradition appeal and upheldthe Prosecutor General's Office's de-cision to transfer him to Russia. How-ever, Osmayev had submitted an

application to the European Court ofHuman Rights (ECHR), which inturn advised Ukraine to suspend theextradition proceedings. Osmayev'sextradition has been suspended untilthe Strasbourg court passes a judg-ment on the lawfulness of his extradi-tion. Meanwhile, Georgia may soontake a decision on granting refugeestatus to Osmayev, his lawyer ValeryKochetov was quoted as saying on 27August.

Kommersant reported that, accord-ing to sources close to the investiga-tion, during the interrogation on 27August, Pyanzin told the investigator

he was involved in the criminal activ-ity against his will.

He also said that it was notChechen born Osmayev, arrested inUkraine, and who confessed to organ-ising the attempted assassination, whowas behind the plans, but his compa-triot, the late Ruslan Madayev, whowas killed as a result of an explosion inhis flat in the Ukrainian city ofOdessa. Besides plotting to kill Putinand Chechen leader Ramzan Kadyrov,Pyanzin is also charged with illegalpossession of weapons and makingand keeping explosive devices. Pyanzindenies all these charges.

The plot thickens in planned Putin assassination attempt

RUSSIA|DIPLOMACY

A man is questioned for allegedly planning to assassinate Vladimir Putin after the Russian presi-

dential elections last March.

Ministry raises GDP, inflation forecastsRUSSIA|ECONOMY

Russia’s Deputy Economy Minister AndreiKlepach said the country’s economy will ex-pand 3.5% this year, exceeding a prior fore-cast of 3.4%, while consumer prices willadvance 7%.

The ministry also raised a forecast for the2012 inflation from 5-6% to 7%. The fore-cast for inflation in 2013 has been raisedfrom 4.5-5.5% to 5-6%. The forecast for aprice increase in 2014 and 2015 has re-mained the same, at 4-5%. The forecast for

inflation has been raised mainly because ofhigher expectations of a growth in foodprices caused by a relatively low crop yield in2012 in comparison with 2011, Klepachsaid.

The forecast for the annual inflationgrowth rate in 2012 has been raised from4.8% to 5.2%; in 2013, from 6.2% to 7.1%,and in 2014, from 5.2% to 5.4. The forecastfor 2015 has remained unchanged, at 4.9%.It was reported that inflation in 2011 stood

at 6.1%, and its annual average was 8.4%.Earlier, Klepach also said a weaker ruble wasbeing driven by capital outflows, despitehigher oil prices. Russia’s Economy Minis-ter Andrei Belousov said last month that theforecast for growth this year may be up-graded to as high as 4% after retail sales andinvestment surged in the first half. Growthwill slow to 2.7% from a year earlier in thethird quarter before rising to 2.9% in thefinal three months, Klepach said.

Gazprom postpones Shtokman developmentRUSSIA|ENERGY

Russian gas monopoly Gazprom has in-definitely postponed development of theShtokman natural gas field it has beenpursuing with French and Norwegianpartners, news agencies reported.

Reuters quoted Vsevolod Cherepanov,head of Gazprom's production depart-ment, as saying its partners in the project,France's Total and Norway's Statoil,agreed with the assessment that the proj-ect can not go ahead due to costs over-

run. "All parties have come to the con-clusion that the financing is too high tobe able to do it for the time being,"Cherepanov told a conference.

In mid-July, shortly after the expirationof a framework agreement with Total andStatoil, Gazprom's Chief ExecutiveAlexei Miller said the company wouldmake a final choice of foreign partners inearly autumn.

Plans to develop Shtokman, 550

kilometres offshore in the icy watersof the Russian sector of the BarentsSea, have been complicated by a shalegas revolution in the United States,which had been seen as a primary ex-port market for Shtokman. Unwill-ingness by the Russian government tocut taxation has also weighed on plansto launch the project. A slowing Eu-ropean economy has also hit demandfor Russian gas.

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Greece is living its last days in theEurozone. The managers of Eu-rope, including Angela Merkel,look at Athens perplexed andcompassionate, yet with relief asthey have secured their banks bypassing the Greek papers to theCentral European Bank (ECB),thinking now what to do withItaly and Spain. They are com-pletely missing the point, andhave not realized the potentialthreat the socio-political volcanoGreece precludes. Maybe becausethe current leaders of Europe arenot leaders but only managers themajority of which are not evengood managers. As to the recentinterest of Germany to keepGreece in the Eurozone, evenmaking a concession of its origi-nal demands is due to the factthat if Greece returns to the localcurrency, in two weeks time theeuro will strengthen by an esti-mated 20%, and German exportswill accordingly drop. However,this will be only temporary be-cause the Euro was designed tofail at any case.

“We can see Gods, we can seeDemons, but we cannot see ournose, dear Athenians,” said Peri-cles, and history repeats itself inthe window of our time frame.Indeed the real problem, whatwill make the euro and the Euro-zone history is not Italy or Spain.It is France (which is explainedby my friend Christos Kissas onpage 5 of this newspaper).

The problem we will analysetoday is Greece, it is political andit concerns the entire EuropeanUnion despite the clearance ofthe Greek papers in the Germanand French banking portfolios.Greece is not an island, is a fullMember of the European Unionbut the later, has never become areal Union but it turned to be a“complex system.”

Indeed, the EU is not a Unionas the United States is, as it doesnot have a common fiscal policyor a common budget, nor it has acommon foreign and defencepolicy. However, it has all the el-ements of a complex system. It iscomposed of 27 interdependent,interconnected diverse entities.The EU, as a complex system,given the magnitude of its com-ponents (Member States), it isrobust. That means it is unpre-dictable and it can produce largeevents such as crashes and wars.

At the same time, as a robust sys-tem, the EU can afford largetraumas and still adapts andholds together. Which meansthat if Greece is withdrawn fromthe euro and the EU, the systemwill maintain functionality andwould not be irrevocably trauma-tized because of that.

Yet, complex systems are subjectto bottom-up emerging phenom-ena capable of making the systemcollapse. In our case, if we have aserious, uncontrolled generalizedsocial unrest in Greece it may gen-erate a spillover effect, which willlikely contaminate the most so-

cially incoherent, economicallyweak countries countries. Theywill be the countries, which fol-lowed policies similar to theGreek, putting extreme pressure tolow income classes with austeritymeasures such as reducing pen-sions, salaries as well as health andsocial security benefits.

From that point of view, thesocio-political, and not the eco-nomic, Greece constitutes a majorthreat to the social structure ofthe European Union, and themanagers of the later are seem-ingly not conscious of the threats,

being convinced that acting asgood accountants will resolve po-litical problems that took have acentury to formulate.

What is Wrong with Greece?To see what is wrong with

Greece one has to look with theeyes of an historian as to how thepolitical power was formulated inGreece after World War II.

At the Yalta (Crimea) Confer-ence (February 4-11, 1945) theheads of the winning powers ofWWII, Roosevelt, Churchill and

Stalin decided how to split influ-ence in Europe, and among oth-ers, decided for Greece to fallunder the western influence by90%, and the Soviets (communistrule) 10%. Despite this clear andexplicit decision, the Greek com-munists decided to oppose theYalta agreement and pulled thecountry in a 4-year civil warwhich destroyed whatever wasleft from the war and pushedGreece back to the thirties whileEurope was healing its woundsand progressing.

The post-war political and

economic elite, which emergedafter the civil war, while had ascommon denominator the valuesof the West, free economy anddemocratic rule, was artificiallydivided into a centre-left and acentre-right group. These groupsin form of political parties underdifferent names are rulingGreece, exchanging power be-tween each other, until our days.The only dividing element in thepolitics of the two politicalgroupings is rhetoric while theuniting element are the commu-nists, which the two political sys-tems maintain alive so as to

function as a threat.Indeed, all over Western Eu-

rope communism had a marginalrole after the war and disappearedcompletely after the collapse ofthe Soviet Union in the lateeighties except for Greece whereit still flourishes despite Greece,after the civil war experience,being the number one country inEurope where communismshould have totally disappeared.

From the practical point ofview, the way the fruits of powerare divided in Greece (positionsin the public sector, etc.) is sim-

ple, 70% for the ruling party and30% for the opposition. As to for-eign or national investments andthe alike, which require a clearand transparent environment no-body cares. What counts is power,not investments.

Under the communist threat,the two ruling parties, securedtheir rule in the past half a cen-tury by hiring through the yearsin the public sector over one mil-lion excess public servants, whowith the tolerance of the rulingelite were let to develop a sys-temic corruption, horizontal andvertical, which makes the greatpart of civil servants co-conspira-tors in crime thus force to politi-cally support their benefactorsand protectors.

Task Force and Troika,naïve or incompetent?To cut the long story short, the

problem of Greece is one andonly, and if the Greek govern-ment were forced to dismiss onemillion excessive civil servants,the country would immediatelybecome surplus, the publicdeficit would be cured and theforeign debt would be served.These are elementary schoolmathematics and it is worthwondering why, things that eventhe tourists realize when visitGreece, the famous troika (rep-resentatives of EU, ECB andIMF) and the most regardedTask Force of the EuropeanCommission did no perceive. Areall these experts so incompetentand naïve or the Greek politi-cians are co capable to cheat onthe best brains of Europe easilyand permanently?

Instead, the brains from Eu-rope, have agreed for the Greekauthorities to impose more andmore taxes (despite it was offi-cially stated that only 20% ofwhat the Greek taxpayers pay-ments goes to the budget whilethe rest is divided among civilservants and politicians). In thisway, the Greek economy was putinto a spiral of permanent reces-sion, which will lead Greece outof Europe in the next couple ofmonths and will bring the Leftistopposition Syriza, the re-brandedSocialist party of Papandreous inpower, perpetuating the Greeksystem.

BC

KASSANDRAOur European leaders pressed for "urgent"action on the Eurozone... after six weeksholiday!

Page 32 | New Europe

2 - 8 September, 2012

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