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Gazprom focuses on South Stream’s onshore section |Page 13
NEWEUROPE19th Year of Publication | Number 969 | January 15- 21, 2012 | € 3.50 www.neurope.eu
IN THIS ISSUE EU PolicyIs the European Parliament a corporate dating agency?|Page 4EP presidential candidates in final push|Page 6Time for EU to wake up over welfare states and pensions|Page 10
EU-WorldBuilding confidence andreducing tensions|Page 14
Energy & ClimateFrance plans major wind energy projects|Page 12Turkey: Permission for South Stream not against Nabucco|Page 13
Country newsBorder Arbitration Agreement between Slovenia and Croatia|Page 19Rolls-Royce posts record car sales |Page 20UAE, Greece talk investment|Page 24Gazprom against reducing Ukraine's gas purchases|Page 28Putin turns to voters’ ideas toformulate programme|Page 31
Editorial & OpinionCheap euro is a good investment |Page 2Suffocating in Iran|Page 6EFSF pays for being fooled|Page 8Inside the Parliamentarium|Page 9
On 13 January, the prospect of reduced ener-gy demand offset supply reduction worriescaused by Nigeria and Iran, steadying oilprices. New York's main contract, WestTexas Intermediate for delivery in Februarywas at $99.27 a barrel. Brent North Sea forFebruary was at $110.82.
Nigeria, like Iran, is becoming a concern thatcould affect supply. “The concern in Nigeria isgrowing very significantly. At the moment, ismostly to do with the north, but it could very eas-ily impact on the south without very mucheffort,” Justin Urquhart Stewart, the director ofSeven Investment Management Limited in
London, told New Europe on 13 January. Anationwide strike over the removal of fuel subsi-dies has locked down key oil producer Nigeria.“We have ignored Nigeria for an awful long timein terms of the dysfunctions that they have hadand the growing unease with the communities,”he said.
On 12 January, oil prices dropped a littleon rumours that the European Union willdelay an embargo of Iranian oil for sixmonths to allow member countries to findalternative supplies.
Urquhart Stewart said it marginally easedthe pressure on oil prices. “Iran could easily
switch back the other way in a moment. Idon’t think we can trust or be confidentabout the situation there at all,” he said.
A significant jump in oil prices wouldpush the eurozone deeper into recession.
“If we were to see a significant increasefrom here then obviously that will haveimpact but at these levels I think a lot of thecurrent prices are really factored in,”Urquhart Stewart said. “The real issue wegot at the moment is going to be where thedemand comes from and that’s whereEurope can actually focus on getting growthpolicies through.”
Turmoil in crude producers Iran and Nigeria fuel supply worries
·Pages 12, 13
Oil threatens EU growth
People gather during a protest against the scrapping of oil subsidy at Gani Fawehinmi Park, Ojota in Lagos, 12 January. Nigeria is Africa's biggest oil producer andkey member of the Organization of Petroleum Exporting Countries (OPEC). |AFP PHOTO/PIUS UTOMI EKPEI
ECONOMYEuropean Parliament Vice President GianniPittella writes that the financial crisis that isdevastating Europe urgently calls for achange of direction and the implementationof courageous decisions ·Page 5
EU POLICYAna Palacio, former senior vice presi-dent and general counsel of the WorldBank writes that officials bounce ran-domly from one vital European summitto the next
·Page 3
EUROZONEIf any troubled southern European economyfails to roll over its debt in the comingmonths, the resulting contagion will spreadquickly from the eurozone throughout theglobal financial system ·Page 7
GREEK FIRESPendeli Mayor Stergiou-Kapsali tells NEhe will pursue in courts seeking damagesagainst the Turkish government for themajor destruction caused by the Pentelifire of 1995 ·Page 11
FASHION & STYLE
Keeping our feet on the groundPage 15
ANALYSIS Page 2 | New Europe NEW EUROPEJanuary 15- 21, 2012
NE 15 YEARS AGOHerman couldn't quite place it, but when he looked in the mirror that morning he got the strange feeling something was defi-nitely wrong. |EPA/OLIVIER HOSLET
The Shooting Gallery
Fifteen years ago Bulgaria was coming out of its communist past along with the other central European countries. The com-mon denominator in all those places was that the breakdown of the old communist regimes led to lawlessness. Bulgaria paid adearer price than most, and it took years to resolve those problems. Still the fight is not over. Prime Minister Boyko Borisov wona large majority in the 2009 election on a ticket to fight corruption and Mafia gags. Brussels and member states enthusiasticallyreceived him, as they had previously associated him with transparency and anti-corruption. Today’s PM, as Security Secretaryduring the years before Bulgaria accession to the European Union, did an excellent job in combating organized crime, and indoing so he opened his country’s way to full EU membership.
Cheap euro is a goodinvestment
At the dawn of 2012, and according to the current wis-dom during the deepening sovereign debt crisis in theEurozone with the contagion effect having badly shakenItaly both financially and politically, one could legiti-mately expect that the overall image of the single moneyzone is now worse than it was six months ago.But no, in fact – reality stands as a witness to the contrary,and there is no better proof than what happened at thebeginning of this week in the German capital market,with investors appearing ready to pay instead of beingpaid, in placing their wealth into Berlin debt paper. Ontop of this last week it was reported that the Germaneconomy grew by 3%, a very good record all things con-cidered.In detail a German six month government bill auctionwas met last week with offers 1.8 times higher than itsamount and the average interest rate agreed was negative,at -0.0122% in comparison with 0.0005% at the begin-ning of last December.It was the first time that investors appeared ready tospend some of their capital in order to safeguard the valueof the rest. Another conclusion that one may draw from this is thatfund managers are on a state of high alert as far as thesecurity of their wealth is concerned and are not payingmuch attention to returns at present. It is equally true,however, that Italy is still borrowing money at very highrates, with the Italian treasury obliged to pay interestrates as high as 7% for its new debt issues.It seems that the capital markets now believe somehowthere is a financial firewall built into the Eurozone to sep-arate ‘sinners’ such as Greece and Italy from the zone’ssurplus members, namely Germany and Holland. Also onthe positive side for the Eurozone, sources in Athens saythat the Greek government, aided by the EU and theIMF, is negotiating with the country’s private bond hold-ers and the party is very close to a deal, over the well-known Private Sector Involvement (PSI) to make thecountry’s debt manageable.Sources say that the ‘haircut’ may be as high as 60% andthe interest rate on the new bonds to replace the old aslow as 4%. The reason for this good news is that manyGreek bonds have been bought by banks in the secondarymarket over the past six months at prices at least 50%below their nominal value. In this way, the initial holdersof a large part of the Greek debt have already incorporat-ed losses to the tune of 50% on their Greek portfolio intotheir balance sheets.It is only logical, then, to expect the secondary buyers toaccept a deeper haircut than the 50% initially agreed atthe 28 October Brussels EU leaders’ council. An agree-ment on the PSI in Athens may, however, mark the begin-ning of the end of the Eurozone’s sovereign debt troubles,and then developments may give credence to those whosay that the euro is now very cheap compared with thedollar so is not a bad investment at all.
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ISSN number: 1106-8299
By Dionyssis Kefalakos
ANALYSISNew Europe |Page 3NEW EUROPEJanuary 15- 21, 2012
MADRID – While the world anxiously awaitsthe climax of the eurozone drama, its leaders’behavior resembles the political equivalent ofwhat physicists call “Brownian motion,” withofficials bouncing randomly from one crucialbilateral consultation and vital European sum-mit to the next. The impact of make-or-breakdeclarations that are supposed to solve themonetary union’s problems dissipates almost assoon as they are issued.
Meanwhile, a plethora of diagnoses and pre-scriptions are competing for attention – and intheir gloominess. But their overwhelming focuson the economics of the euro crisis is itself part ofthe problem because the crisis is, above all, a re-flection of deep-seated weaknesses in Europeaninstitutions and the fabric of European society.Otherwise, what began as a marginal debt crisis,aggravated by political indecisiveness in Greeceand in the European Union as a whole, would nothave grown into an existential watershed momentfor the European project.
Europe is plagued by three distinct problems.First, it remains incapable of adjusting to therealities of a world whose center of gravity hasirrevocably shifted eastward to the Pacific,pulling with it the attention of the UnitedStates. Second, more than ever, Europeans arelooking inward, as a sense of entitlement meetspervasive skepticism – a combination that per-meates to the highest echelons of the Unionand EU national governments.
Meanwhile, at a time when the EU’s basic law,the Treaty of Lisbon, needs to be reformed, theentire Union is paralyzed by the navel-gazing at-titude of a Germany beset by 90-year-old mem-ories of the doomed Weimar Republic. Thereinlies the problem: the decision-making process thathas underwritten much of the EU’s construction,while highly effective during the Cold War, whenthe Union’s institutional and legal foundationswere laid, has remained largely intact, leaving Eu-rope unable to address its current challenges.
Founded on the stability of the Cold War era’sbipolar international order, the EU had the luxuryof time as it deliberated on each successive build-ing block of its growing edifice. No sooner woulda new block be set in place than agents of furtherintegration would infiltrate the existing structureand establish the bridgeheads from which the EUwould evolve further.
Indeed, some of the Union’s major undertak-ings – European Monetary Union being a fittingexample – were contemplated for years before see-ing the light of day. The EMU, implemented in1999 with the launch of the euro, bore the DNAof the Delors Committee, which laid out the fun-damentals of the common currency in 1988. Crit-ics have been quick to dismiss the incompletenature of the euro’s original structure, which re-mains unchanged to this day. But these critics for-get that the greatest miscalculation was theassumption of stability while on the verge of a sys-temic transformation impregnated with volatility.
Europe’s current crisis is rooted in loss. Unteth-ered from the mooring of Cold War-era bipolar-ity, Europe was swept off its feet and cast adrift inthe currents of a globalized world, unable to findeither its place or direction. Most critically, Eu-rope’s old instincts and modus operandi persistedlong after the new contours of global affairs hadtaken shape.
They still do. That is why, in facing its gravesttest so far, Europe seems oblivious: its leaders proj-ect confusion and indecision; its citizens exude amixture of complacency, indifference, and self-doubt; and its institutions are locked in turf battlesand remain hindered by laborious procedures andprotocol. It is also part of the reason why marketsare besieging the eurozone so incessantly. Whatinvestors sense is not weak economic fundamen-tals, but Europe’s weak political fundamentals –the absence of a governance structure with realpower and the will to use that power to resolveproblems. If Europe is to adjust to the require-ments of the new “Pacific world,” it does not needfine-tuning; it needs a new design.
The EU is a political structure based on the ruleof law. As such, it cannot afford to disregard thevital tasks of updating its procedural components.On a deeper level, Europeans need to replace theirmelodramatic, and entirely groundless, self-doubtwith the pride and determination befitting theirexample of democracy and prosperity. And, mostimmediately, Germany must stop singing solo andstart playing its part in the European choir.
Ana Palacio is a former Spanish foreign ministerand former Senior Vice President and GeneralCounsel of the World Bank.Copyright: Project Syndicate, 2012.
The leaders of the three main EU institutions, European Commission President Jose Manuel Barroso (C), EU Council President Herman Van Rompuy (R) and Eu-ropean Parliament President Jerzy Buzek (L) are seen during a news conference at the European Council headquarters in Brussels, Belgium, 30 November 2011. Theinstitutions today remain "locked in turf battles and remain hindered by laborious procedures and protocol". |EPA/OLIVIER HOSLET
By Ana Palacio
www.greenpowerconferences.com+44 (0)20 7099 0600
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ECONOMY
The perils of Europe’s navel gazing
Page 4| New Europe NEW EUROPE
ANALYSISJanuary 15- 21, 2012
Banks finally triumphed in the US and they are aboutto do the same in Eurozone. Lets follow the story asunfolds in this side of the Atlantic Ocean. The Inter-national Monetary Fund (IMF) has seemingly adoptedthe position of the banks in assessing the financialneeds of Greece over the coming years, which are nowestimated as being higher than the level of €130 billionin EU aid agreed on 28 October by the EuropeanCouncil.This new estimate is based on the outcome of negoti-ations with Greece’s private lenders, who have accepteda 50% ‘haircut’ off the nominal value of the bonds theyhold (Private Sector Involvement, PSI), in order thatthe overall sovereign debt of the country can be re-duced to 120% of GNP by the year 2020.This is imperative, if the IMF is to continue sup-porting the debt-stricken country. It should be notedthat the IMF cannot lend money to a country that isnot on a ‘sane path’, and the 120% benchmark is con-sidered by the IMF as being the highest ratio of debtto gross national income (GNI), that can be termed asmanageable.On 12 January, however, two months after the 28 Oc-tober decision, the IMF believes that new elementsin the Greek economy indicate that a 50% haircut ofprivately held debt is not enough to bring down theoverall sovereign debt of the country to manageablelevels.So, it is either PSI that must be increased, (and sincethis seems to present insurmountable problems if thetransaction is to be voluntary) or the EU aid packagemust be increased above the agreed level of €130bn. Ofcourse the banks prefer the option of an increased EUaid package to Greece to the tune of at least €140bn,which threatens a dogfight over the carcass of theGreek economy, with the banks pressing for at leastanother €10bn of Eurozone public money to covertheir own blunders.They amply financed the Greek economy after 2001with no restrictions whatsoever and at interest ratessimilar to those in Germany. At that time, of course,the Greek bonds did not carry any risk at all and thefeast lasted until early 2009, with commissions andomissions running high.In any case, in early 2010 it became clear that Greececould not honour its obligations, soon to be followedby Ireland and Portugal. Unlike the other two, how-ever, Athens is to receive a second package of EU-ECB-IMF funds to cater for the needs of the countryuntil the year 2015, and the battle is in full progress asto who is going to pay for the extra costs.It seems that, once again, the banks are winning andthe EU will be obliged to increase its participation insaving Greece. Not to forget that the European Cen-tral Bank (ECB) recently bestowed half a trillion euroto 500 Eurozone banks, in order to replenish their cof-fers with almost zero-cost liquidity. Now, again, thebanks will receive billions more to cover their own pre-vious negligence.Athens has very little to say in this game, and negoti-ations are taking place between the banks and Berlin.Seemingly, Christine Lagarde, the head of the IMF, isnow on the side of the banks and advocates an increaseof Berlin's participation in bailing out Greece, whichwas the purpose of the meeting that Lagarde had withthe German Chancellor Angela Merkel earlier thisweek. According to German media, the EU will becalled on to increase its participation in the packagefor Athens by €15 billion.
By Dionyssis Kefalakos
Who pays theextras tobailout Greece
Elections often have little to do with democracy. Stepping intoa polling booth once every four or five years is a pretty mean-ingless exercise if the people we chose to “represent” us eitherbelong to a financial and corporate elites or are subservient tothem. The European Parliament is an elected institution but isit a democratic one?
Democracy, according to the Oxford English Dictionary, is“a system of government by the whole population or all the el-igible members of a state”. A code of conduct for MEPs ap-proved by a majority of them last month seems to chime withthat concept. It said that MEPs shall “act solely in the public in-terest”.
But there are strong reasons to predict that the code will behabitually violated. Many MEPs have joined secretive clubs,known within the Brussels beltway as “intergroups”, that serveprivate, rather than public interests.
Karl-Heinz Florenz exemplifies why these clubs are perni-cious. In 2010, this German Christian Democrat set up the Eu-ropean Raw Materials Group, with the objective of making thesupply of natural resources a top priority for the EU’s political ac-tivities. The invitation for the group’s inaugural meeting indi-cated that it was an initiative of the Small and MediumEntrepreneurs Union, a business association led by Paul Rübig,the group’s co-founder. Rübig combines his job as an MEP withbeing a managing director of an eponymous metal company.
Florenz has been tasked with drafting the Parliament’s offi-cial position paper on a planned EU law for dealing with oldcomputers, mobile phones and electrical equipment. His paper,scheduled for debate in Strasbourg this week, recommends thata proposal made on this topic by the European Commissionshould be amended to emphasise that “retrieval of critical rawmaterials” is a guiding principle when managing electronic waste.Florenz has argued that the Commission’s blueprint paid insuf-ficient attention to raw materials.
Florenz’s key suggestions (which include a target for recycling85% of electronic waste by 2016) may well be sensible. But hiseagerness to stress the raw materials component of this dossiermust raise questions, considering his links to companies thathave a vested interest in pushing the EU to pursue a more ag-gressive agenda on ensuring access to the often rare resourcesrequired by modern technology. Recycling plays little morethan a cameo role in that agenda, which is mainly focused on en-suring that corporations won’t be held back from exploiting theresources of foreign (and frequently impoverished) countries bynamby-pamby ideas like ecological protection or national sov-ereignty.
The new code of conduct for MEPs also commits them toabide by the principles of “selflessness, integrity, openness, dili-gence, honesty [and] accountability”.
When I asked Florenz if corporate interests had any inputinto this work, he replied that he had personally drafted thepaper, along with an assistant. “There is no conflict of interests,firstly because the European Raw Materials Group has not yetstarted its content-based work and secondly because the Euro-pean Raw Materials Group is simply a group of like-mindedmembers of all political groups in the European Parliament whoexchange views on a subject,” he added.
Can we really believe that his intention was merely to start atalking shop for policy wonks?
It is worth recalling that the MEPs’ code of conduct is the di-rect result of a sting operation undertaken by reporters workingfor The Sunday Times. Unlike the despicable phone-tappingundertaken by other newspapers owned by Rupert Murdoch,this operation was perfectly defensible as it exposed how cor-
ruptible some politicians are. When the paper’s reporters posedas lobbyists and offered 60 MEPs large sums of money in returnfor tabling amendments to legislative proposals, they found that14 MEPs were willing to accept such bribes.
Florenz was not among the 14 but it has been documentedthat he has tabled amendments written by private sector inter-ests in the past. An investigation by the organization CorporateEurope Observatory revealed that when the Parliament’s envi-ronment committee was conducting a debate on the EU’s emis-sions trading scheme (ETS) in 2008, Florenz copied and pastedamendments drawn up by the steel industry group Eurofer andsigned them as if they were his own work.
Anecdotal evidence indicates that such behaviour is commonin the Parliament, yet there is no appetite to stamp it out. Evenif no cash is offered in return for tabling amendments, the prac-tice is unethical.
Florenz is undeniably influential. He was chairman of the en-vironment committee from 2004 and 2007 and then served asthe Parliament’s point man on climate change between 2007and 2009.
In a 2004 interview with The New York Times, he wasquoted as whinging about the inordinate number of lobbyistswho badger MEPs. His staff, however, appear to be on suchgood terms with those pests that they sometimes end up beinghired as lobbyists. Axel Eggert, a director of public affairs withthe aforementioned Eurofer, is a former assistant to Florenz.Another one of Florenz’s previous advisers, Christian Hierholzer,went on to work as a healthcare specialist with Weber Shand-wick before heading the Brussels office of hanover, a public re-lations firm so cool that it spells its name in lower case.
The career path followed by these men illustrates the un-healthily close relationship between MEPs’ offices and big busi-ness. How can we have democracy if the EU’s only directlyelected institution serves as a corporate dating agency?
Ernst Strasser, one of a number of MEPs caught out by the Sunday Timesas part of its 'cash for amendments' investigation. He resigned following theaccusations. |EPA/BARBARA GINDL
POLITICS
Is the European Parliament acorporate dating agency?
By David Cronin
ANALYSISNew Europe |Page 5NEW EUROPEJanuary 15- 21, 2012
The financial crisis that is devastat-ing Europe urgently calls for achange of direction and the imple-mentation of courageous decisions.From the financial crisis Europeansare learning that when the single cur-rency is under the pressure of specu-lation, the sole solution is acoordinated action promoted by theUnion as a whole.
Europe has to convince financialmarkets that the Euro stands on firmpolicy foundations and that its mem-bers will do whatever it is necessaryto end speculation.
In order to avoid the collapse of thesingle currency, action must be takenprioritizing three sectors: nationalbudgetary and financial policies, cri-sis management at the Euro level andgrowth policies.
The European Parliament hasclearly stressed that without an effi-cient growth policy, a solution cannotbe found. Structural reforms are re-quired in order to re-launch the Eu-ropean economy that has being
overtaken by others more innovativeones around the world – such asChina, India and Brazil. Investmentsin different sectors such as R&D, ed-ucation and labour mobility are es-sential to guarantee a constantgrowth. Current European resourcesare limited and this is the reason whythe EU must look towards the Eu-robond and Financial transaction tax
as new tools able to finance a strongEuropean investment plan.
I believe that we must emergestronger and more united from thecurrent crisis.
If Europeans want to save the Eu-rozone, they must be aware that themonetary Union can no longer sur-vive if this latter is not supported bycommon rules regarding fiscal policy.
The lack of political will and policycoordination are the main obstaclesto achieve this goal. It is a shame thatafter nearly two decades that theEuro was introduced, Europe is stilldealing with reticence by memberstates and increasing nationalist eco-nomic approaches which are coun-terproductive for Europe.
Primarily there is a need to rein-force EU’s control mechanisms overnational budgetary and financialpolicies. The European SystemicRisk Board and European BankingAuthority should have the power tointervene directly to stop excessiveleverage in the banking and financialsystem. In addition, the EuropeanCentral Bank should be allowed tofully use its powers to act as lender oflast resort in order to support solventsovereign debtors with opened mar-ket operations. Finally, economicgrowth is essential to the sustainabil-ity of debt in the medium term.Under current trends growth is toolow to remove competitive imbal-ances and to restore full employment.
In a world where is becoming
more difficult for young generationsto trust in their future, it is not sur-prising to see the wave of protestsbroken out all over the world. Thecivil majority that participated in lastperiod demonstrations has the rightto be indignant. European citizensare worried about the increasing riseof unemployment rates and with theabsence of a clear European strategyto face the crisis; they are losing faithvis-à-vis European institutions. Cit-izens, markets and institutions re-quire stability. And citizens won'taccept to change the rules of thegame unless they can debate thosechanges. Therefore, a closer eco-nomic and political integration is achallenge that can no longer wait.EU’s guiding principles must con-tinue to be those enshrined in theTreaties: the promotion of solidarityamong member states, the creation ofa highly competitive social marketeconomy and the seeking of Euro-pean citizens’ social progress.
Gianni Pittella is Vice President ofthe European Parliament
A man walks past a graffiti in central Athens, December 2011. Reports statethat thousands of Greek small and medium size enterprises have closed overlast two years due to the economic crisis. |EPA/ORESTIS PANAGIOTOU
By Gianni Pittella
FINANCIAL CRISIS
Countering the crisis united
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Page 6 | New Europe NEW EUROPE
ANALYSISJanuary 15- 21, 2012
The Governing Council of the Euro-pean Central Bank (ECB) kept thebasic interest rate of the bank unchangedat 1%, as economic analysts expected itwill do.
It should be recalled that the ECB re-duced its basic rate last month from1.25% to 1%, phasing the two rate in-creases made earlier in 2011.
The ECB also offered unlimited liq-uidity to banks, relaxing the rules on col-laterals and increasing maturities tothree years.
Eurozone financial pressures werelowered across the board on 12 January,with Spanish and Italian debt paperbeing placed in capital markets at
markedly reduced rates. Madrid raised€9.986 billion, double the auctionedamount, after strong demand was ex-pressed by investors.
According to the Bank of Spain, thecountry's treasury issued bonds of three-, four- and five-year maturities withyields from 3.384% to 3.912% instead of4.871 to 4.848% during the previousauction. On another occasion Italy solda wealth of €12bn in 12-month andflexible government bills, at an averageyield of 2.733% on the 12-month titles,instead of 5.952% one month ago.
These better-than-expected results inboth debt-paper auctions by the Euro-zone's peripheral countries triggered anincrease in stock prices all over Europeand supported the parity of the euro
with other major currencies. Along thesame lines the creditworthiness of cen-tral Eurozone countries like France andGermany also marked good gains.Berlin actually arrived at a position toborrow at negative interest rates, mean-ing that investors appeared ready toloose some of their capital in order to ac-quire the valued 'bunds', the Germangovernment bonds which are considerednow as the safest placement all over thethe global financial markets. In the sameline of action rating agencies acknowl-edged that France is to keep its triple Arating for its debt paper. All that togetherwith the possibility of a swift arrange-ment of the Greek debt over the comingweeks may give back to Eurozone itsinitial glory.
ECONOMY
Lower cost for Eurozone's debt
With the European Parliament set toelect a successor to outgoing presi-dent,Jerzy Buzek on 17 January, the can-didates are gearing up for the last daysof the race, as they attempt to persuadetheir fellow MEPs to elect them to theparliament’s top spot.
It had been assumed that, followingthe usual deal made between the twolargest group’s in the parliament, thatMartin Schulz, of the Socialists and De-mocrats (S&D), would follow Buzek,however two candidates have emergedto challenge that consensus; Nirj Devaof the centre-right Conservatives andReformist group, and Diana Wallis, whosits with the liberals, but who is contest-ing the election as an independent.
Wallis announced her candidature inlate November, and since then has beenbusily building up media profile. Deva, aBritish conservative, remains very much
the outsider, and, unlike his compatriot,has trouble attracting support from bothright and left. As well as support fromher own ALDE group, Wallis also hassupport from the left-wing GUE/NGLgroup, as well as from some independ-ents. The Greens are reportedly split onthe matter, with the candidate admittingto journalists on 11 January that supportwithin the group “was not as strong” asshe would like, although she believes in-dividual support is there. There have alsobeen talks with various members of theEPP and S&D groups. In attemptingto upset the EPP-S&D deal on alter-nating presidents, Wallis is keen to pres-ent her candidature as “breaking out ofthe stranglehold” of current practice. Ifelected, she says, she will strive to ensurebetter interaction and communicationbetween the European Parliament andthose in national member states. Shealso wants to engage more with civicplatforms around Europe, ideas, she says,
that “have resonance” with citizens. There is another “unspoken point”,
she says, that is driving her campaign;namely gender equality. “If you look atthe history of our parliament,” she says,there have been 13 presidents. It is quitestriking that of those 13 presidents, onlytwo have been women.” Her candidacy,she says, is hopefully a way of “redressingthe balance that needs to be made.”
Her candidacy, she says, is the one thatcurrently “attracts attention and sup-port,” however, and despite the results ofa recent online poll which gave herfavourable support compared to theother two candidates (something she isdownplaying), the numbers appear to beheavily stacked against her.
Assuming that all, or a large majority,of EPP (271) and S&D (190) membershonour the existing agreement, thenmajority support amongst the 754MEPs looks likely to be elusive for any-one other than Schulz.
Diana Wallis MEP, one of three candidates who is running for presidency of the European Parliament.
By Cillian Donnelly
By Dionyssis Kefalakos
EUROPEAN PARLIAMENT
EP presidential candidates in final pushSuffocating
in IranI left Iran early last time. Not because I wanted to, but because Icouldn’t breathe. It was mid-December 1999, and the air was heavywith a thick black smog. My father and I, visiting from Ohio,weren’t used to it. On the streets, those with surgical masks worethem to block the pollution while the rest just used their head-scarves, hands or shirts. Everyone’s greatest hope was rain...But it didn’t rain, and wimps that we were, my father and I leftTehran early, with my grandmother in tow. It would be the lasttime she saw her homeland, before coming to America and ulti-mately succumbing to Alzheimer’s eight years later, thousands ofmiles from home. So too, that was the last time I stepped foot in myancestral homeland, not knowing that my increasingly public cri-tique of the Iranian government would soon make me persona nongrata for all intents and purposes...To say the issue of Iran’s air quality strikes close to home would bea lie. It strikes in my home, like a lightning rod tearing through aramshackle roof. And since I last left, it’s only gotten worse.In its first global survey of outdoor air pollution, the World HealthOrganization recently reported that several Iranian cities containthe worst levels of air pollution in the world. The south-westerncity of Ahvaz features the highest level of airborne particles smallerthan 10 micrometers. On a human level, this translates into an in-creased risk of asthma, lung cancer, heart disease, birth defects andpremature death. Many other Iranian cities grace the bottom ofthe list as well, including Qom, Mashhad, Tabriz, Isfahan, Shirazand Tehran.What makes matters worse is that it’s already hard enough tobreathe in Iran these days. The regime’s brutal crackdowns on po-litical opposition—particularly since the 2009 presidential electionand resulting protests—have also done a bang-up job of suffocat-ing the Iranian people. Widespread intimidation, torture, andcountless unlawful arrests, detentions and executions have left manyIranians gasping for air. Suicide, drug abuse, unemployment andgeneral discontent are all growing problems that the regime hasfailed to remedy.While the WHO may be able to measure fine particulate matterto tell us how polluted the atmosphere has become, no one canmeasure the stench of tyranny and injustice that weighs just asheavily in the air. No one can calculate the oppression and indig-nities that Iranians have suffered at the hands of the so-called Is-lamic Republic. No one can quantify the grief and longing so manyof us in exile feel for our friends, families and memories left behind.And not even the most brilliant scientists can calculate the aguishof emotional (and sometimes literal) captivity choking Iranians athome.With all this sorrow and political suppression, not to mention Iran’sdismal economy, it’s often hard to remember the role of environ-mental devastation and the toll it takes on everyday Iranians. Still,it cannot be ignored. Iran would be wise to take a lesson from aseemingly unlikely source today, one lost too soon, but whose voicecan and should echo throughout the world: Wangari Maathai.While Iran certainly has its own environmental activists, we needmore Wangari Maathais to win this fight. Still, despite a lack ofleadership, increasing environmental awareness and environmen-tal protests in Iran today highlight the potential for change.But the people can’t do it alone, and they shouldn’t have to. Theregime also must make efforts to combat air pollution—becausethis is one noxious reality that affects everyone, regardless of polit-ical position or economic circumstance. And it’s a rare issue thatIran can get behind with the full support of its populace. If theregime has the sense to do so, it may very well win back an ounceof public confidence as Iranians begin to breathe easier.
Melody Moezzi is writer, activist, attorney and award-winningauthor.
By Melody Moezzi
NEW YORK – Europe’s sovereign-debtcrisis has rumbled on for so long thatsome people are beginning to take it forgranted that eurozone leaders can con-tinue to stumble from one non-solutionto the next without risk of cataclysm. Butif any troubled southern European econ-omy fails to roll over its debt in the com-ing months, the resulting contagion willspread quickly from the eurozonethroughout the global financial system,with consequences far more grave thanwhat followed Lehman Brothers’ collapsein September 2008.
Despite the new agreement reached atthe European Union’s summit in De-cember, strengthening financial markets’confidence in the eurozone remains anelusive goal. In the aftermath of the sum-mit, the euro’s exchange rate sank to itslowest level of the year (around $1.30),while yields on Italian five-year bonds hita new high (almost 6.5%). In France, So-cialist presidential candidate FrançoisHollande flatly declared that the latestagreement “is not the right answer,” be-cause “without economic growth we willachieve none of the targets on deficit re-duction.” Hollande was right. Since thecrisis erupted in Greece almost two yearsago, EU leaders have failed to propose asolution that balances austerity with eco-nomic growth. Whenever the marketssignal skepticism about the euro’s viabil-ity, European leaders rush to restore con-fidence through austerity measures, whileignoring the underlying need to reestab-lish the conditions for growth. The urgentcrowds out the merely important. But,without growth, the EU’s long-termprospects are grim.
Since the crisis began, the need for eco-nomic growth in Europe’s debt-distressedcountries has been portrayed as theirproblem. For creditors, especially Germanlenders, the main priority has been to im-
pose austerity and discipline on the euro-zone’s profligate south. Because Germanbanks hold much of the debt owed by pe-ripheral banks and governments, officialshave focused on this financial link be-tween Germany’s economy and those oftroubled eurozone members. But Ger-man Chancellor Angela Merkel’s under-standable desire to discipline thespendthrifts entails sawing away at thelast remaining branch on which Ger-many’s bankers and taxpayers are perched.
Merkel’s strategy ignores a second linkbetween Germany and the eurozone’shighly indebted countries. A large shareof German exports (as well as those ofother healthy eurozone economies) go toeurozone markets – including those in thetroubled south.
Until the crisis hit, Germany benefitedimmensely from the stable environmentcreated by the eurozone. Peripheral euro-zone countries ran large current-accountdeficits, which subsidized Germangrowth. If these markets now contract –and austerity has thus far led to severe re-cessions in Greece and Ireland, with Por-tugal expected to follow next year – so willthe German economy. The highly in-debted southern countries are far frombeing the sole stakeholders in their owneconomic growth.
Any viable strategy to resolve the crisismust address both links between core andperipheral economies. This means find-ing the right policy mix between auster-ity and growth. Only a solution thatbalances the two will guarantee the long-term growth of both peripheral and coreeurozone economies, reassuring debtmarkets of their solvency and stemmingthe contagion that threatens to sweep thecontinent. The agreement reached at therecent EU summit to institutionalize aus-terity needs to be supplemented by agrowth policy.
This requires a two-pronged approach.First, highly indebted countries should beallowed to swap existing debt for newbonds issued at a heavy discount. The dis-
count is essential for reducing sovereigndebt in the periphery to manageable lev-els and lowering immediate debt pay-ments, thereby freeing resources for theinvestment and consumption that makegrowth possible.
But if creditors must share in thedownside of the current crisis, they shouldalso share in the future economic growthof peripheral eurozone economies. Thisrequires a second step: linking the newbonds to warrants tied to debtor countries’GDP growth. Converting existing sover-eign debt into new bonds attached toGDP warrants would work like adebt/equity swap in a corporate bank-ruptcy. It would guarantee that creditorsshare in the upside of the reforms that theeurozone must implement to guaranteeits own viability.
There is a precedent for this. Follow-ing its debt default in 2002, Argentinasuccessfully implemented a similar pro-gram. In exchange for a reduction of itsexisting debt, the Argentinean govern-ment issued new bonds linked to GDPwarrants and committed 5% of future an-nual GDP growth above 3.3% to a poolshared among creditors.
These Argentinean GDP warrantssoon became tradable separately from thebonds to which they were initially linked,allowing their holders to cash in. Oncegrowth resumed in Argentina, its GDPwarrants became some of the best invest-ments in the developing world, generat-ing a total return of more than 500% overthe last five years. Without economicgrowth, there will be no lasting solutionto the eurozone crisis. For the troubledeconomies to revive, the recent agree-ments on austerity must be supplementedby significant debt haircuts. Such haircuts,however, are hard to sell to the Germanelectorate. GDP warrants would be agood way to close the deal.
Jim Leitner is President of Falcon Man-agement. Nuno Monteiro and Ian Shapiroare professors of political science at Yale.
ANALYSISNew Europe | Page 7
NEW EUROPEJanuary 15- 21, 2012
EUROPEAN ECONOMY
Restoring Europeangrowth
Ian Shapiro
Mario Draghi, President of the European Central Bank (ECB), addresses the media during the press conference following a meeting of the ECB GoverningCouncil in Frankfurt/Main, western Germany, on January 12, 2012. Some of the debt-wracked eurozone countries are making "very substantial, very signifi-cant" progress on getting their finances in order, Draghi said. |AFP PHOTO / DANIEL ROLAND
By Jim Leitner, Nuno Monteiro,and Ian Shapiro
Keeping it together
It was George Clemenceau who is credited with the ob-servation that a patriot loves his country, while a na-tionalist hates everyone else’s; one of the many suchthoughts offered on this most thorny of subjects. Whatthe former French prime minister was signalling in thelatter half of this famous quote, was nationalism as thepolitical adjunct of patriotism, cast here as a kind ofBlimpish sentimentality, an essentially benign affliction. Things have undoubtedly changed much, at least froma certain linguistic perception, and to be a nationalist isthese days to run counter to radicals or separatists; thinkof the Northern Irish nationalists who stood as acounter to republican extremism, for example. TheScottish Nationalist Party (SNP), fall somewhat intothis category, and defy Clemenceau’s vision of misan-thropists and belligerents. Except, maybe, if you happento be English. The issue of Scottish independence, a referendum onwhich SNP leader and first minister of Scotland, AlexSalmond, promised as part of his party’s victorious elec-tion campaign in 2011, has been exciting the headlinewriters in the UK this week. Prime minister DavidCameron has pre-empted Salmond’s plans for a refer-endum during the second half of his term, by offeringthe chance of a vote within 18 months. Independencefor Scotland can only be achieved with the consent ofthe whole of the United Kingdom, and a Scots-onlyvote would not be legally binding, something Salmondhas himself acknowledged. The first minister, however,insists that a yes vote north of the border would putpolitical pressure on the government in London to con-sent to Scottish demands. But that would probably not mean full independence.Salmond, in addition to asking a straightforward yes/noto independence would also like another question onthe ballot relating to a greater transfer of powers, theoddly-named ‘devo max’ (maximum devolution), whichon current numbers would certainly benefit the SNP;oddly, not all of its supporters actually favour full inde-pendence, but would be satisfied with more devolvedpowers that stop short of breaking-up the union.Cameron has rejected this idea, wanting instead just thestraight independence question, but the government hasindicated it is willing to concede the date. Salmond’splan, to have a referendum in 2014, was deliberatelychosen. It was designed to cash-in on the nationalisticfervour that will undoubtedly be infesting the countryas it celebrates the 700th anniversary of the battle ofBannockburn, the decisive battle of the first war ofScottish independence, which took place in June 1314.This has led to some counter suggestions in the mediathat Cameron’s 2013 date was for its part an attempt tocapitalise on the swell of national pride that will followin the wake of the Queen’s diamond jubilee. Old school,blustering patriotism hasn’t entirely diminished, itseems.Many questions still remain about the full implicationsof Scottish independence, about the EU and the euro,for example, and although the 2014 date looks nowlikely to be the date of the referendum, without thatmuch-valued additional question on additional powersand with the main parties in confederacy against him,Salmond may find himself outmanoeuvred on this oc-casion; the tearful patriots and the bellicose nationalistsoutdone by political calculation.
EVERYTHING BUT ARMS
By Cillian Donnelly
Page 8 | New Europe NEW EUROPE
ANALYSISJanuary 15- 21, 2012
Rio + 20In the beautiful city of Rio de Janeiro it will takeplace in June 2012 the Global Meeting for the Sus-tainability , a formal Project from the United Nationsthat intends to develop a strategic agenda towardsthe sustainability in the world. The focus on sus-tainability as the driver 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 will be the challenge of Rio +20.The Sustainability Agenda will face new challengesfor the future and the World will have to decideabout the most suitable strategies for a new Devel-opment Action. In a time of uncertainty and uncon-trolled global finantial crisis, the World must focusmore and more its attention on launching the basisfor an Agenda of New Ideas centered in the driversof high growth rate and civil society capacity of cre-ating and developing added value for the interna-tional market. This is the really basis for the action ofto be discussed in Rio.The Sustainability Agenda must be an Idea ofChange. In the Sustainability Agenda 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 Sustainability Agenda with new actors cannotbe made by law but must be built through a “broadand consistent partnership” that is the platform fora collaborative network of the different operationalactors of the continent. In the Sustainability Agenda,the key word must be Ambition. The State, the Mu-nicipalities, the Companies, the Universities, in aword, Civil Society must give the example. Theymust promote a new adventure in a complex worldand there is a real sense of urgency in our capacity ofbeing able to do it. It´ s time to believe in a new cycle for a changingworld. Reinventing the European Dream and givingthe Global Actors 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 will be the idea of the ideia in Rio + 20. 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
Double Dipping is considered unethicalaccording to international business guide-lines but EU institutions ignore suchstandards as they allow Deutsche BankAG, Credit Suisse S.A. and SociétéGénérale S.A. not only to ‘advise’ theEFSF in placing freshly emitted paperswhich already amounts to letting mon-keys mind a banana plant but even paythe aforementioned institutions huge fees.
Deutsche Bank AG, which togetherwith Goldman Sachs, is to a large degreeindirectly responsible for the Greek dis-aster as the institutions were issuing andtrading Credit Default Swaps, and thisblew up the Greek state debt so that itgrew by 20 billion after the rescuing hadcommenced, had also advised the EFSFin previous emissions for five and tenyears. Now, the EFSF issued 3 year – pa-pers for €3 billion, proceeds of whichshall benefit Portugal and Ireland.
It is especially delicate to haveDeutsche Bank AG pocket huge consul-tancy fees as all the smart investmentbankers from Frankfurt are doing is pro-tecting their own exposure. That’s whyAllianz AG and Deutsche Bank AG hadconstrued the guarantee mechanism in away that it covers up to €2 trillion, theexact figure one finds on the balance sheetof Deutsche. EU institutions either don’tget it or are partners in crime to pay forbeing fooled.
That’s why activists from ‘OccupyFrankfurt’ and ‘Occupy Deutsche Bank’together with many other Occupy-move-ments in the US and around the globeheld simultaneous demonstrations on15th January.
While in Greece, German flags areburning as many citizens there believethat it was solely the German banks andgovernment’s fault that the countrydrowned in debts. Closer scrutiny revealsthat, in fact also German banks (exceptfor Deutsche Bank AG, of course) gotfooled by so called “investment banks”mainly situated in New York.
It will probably never be possible tofully establish how much of the trash pa-pers on the balance sheet of public banksin Germany, such as IKB and the Lan-desbanken, a bill the taxpayer has to foot,has passed through the hands of an in-vestment banker of Deutsche Bank AG.But, it is evident that it had been hugeamounts.
“Along with Goldman, Deutsche Bankwas the leading market maker in abstrusemortgage derivatives” , writes the formerinvestment banker Michael Lewis in hisbook “The Big Short”,
“Abstruse mortgage derivatives“ hadbeen those papers based on American
mortgage CDOs and ABS that plum-meted since the beginning of the crisis on11th August 2007.
Back to Wall Street, where everythingbegun: the head of Deutsche Bank AG’sAsset Backed Securities (ABS) division,a very young man by the name of GregLippmann generated a profit of €1 billionfor Deutsche Bank AG in 2007, the yearthe crisis began.
Greg Lippmann had, as the Germanfinancial paper Handelsblatt asserted, asearly as in 2005 been handed an analysisthat predicted the collapse of the US’smortgage bonds market, but that had notbeen reason enough for Deutsche BankAG to at least reduce the acceleration oftheir engagement in that market segment.Even worse, Mr. Lippmann had thechutzpah to at the same time orchestratethe billion-fold bets anticipating the up-coming crash that later made him be-come a star at Wall Street.
That makes it clear that “DeutscheBank AG didn’t even bother bundlingdubious American mortgage papers andselling these to their clients as long astheir own portfolio remained clean”, theconservative German Handelsblatt wroteassuming that “exorbitant commissionshad been paid”.
Interestingly, Michael Lewis describesin his book how a meeting arranged forby Mr Lippmann with Hedge Fundmanagers proceeded, during which heconvinced the latter to bet against theDeutsche Bank AG – supported Mort-gage Backed Securities (MBS).
Deutsche Bank AG obviously wantedto become a mediator between the ‘Long’and ‘Short’ side of this transaction so inother words Deutsche Bank AG wantedto earn a commission on selling on trashpapers.
As it was clear that these papers hadbeen construed in a way that a default wasimminent one of the hedge fund man-agers asked Mr Lippmann in disbeliefwho was “the idiot on the other side?“
The answer of Greg Lippmann hadbeen remarkably simple: “Düsseldorf.Stupid Germans. They take rating agen-cies seriously. They believe in the rules.”
One of the participating investorsnoted later: “However corrupt you thinkthis industry is, it’s worse.“
But, who where those stupid Germansfrom Düsseldorf? IKB and WestLB havetheir seats there. A lot is speaking forthem being the major buyers for the toxicassets Deutsche Bank AG created by bet-ting on the default of papers that at thesame time was praising in front of IKBand WestLB.
One should always become suspiciouswhen a German Landesbank is trying tojump onto a bandwagon.
Several transactions between IKB andDeutsche Bank AG are evident and it canonly be seen as cynical that DeutscheBank AG bet against the same paper ithad just sold onto IKB and the Landes-banken. Later, it transpired that DeutscheBank AG was behind the EU Commis-sion’s drive to privatise the German Lan-desbanken so a conspiracy theory is athand in such a case.
The fact that Deutsche Bank AG wasbehind several transactions with IKB isevident as Deutsche also acted as trusteein some of the transactions utilising theinfamous Rhineland-Funding-Conduitsto which it extended the credit-lineswithout which IKB never had been putinto a position to by the toxic assets. Atthat time Deutsche Bank - CEO JosefAckermann recently admitted that “it istrue that we at some occasions had a dif-ferent understanding of the market thanIKB”.
The last act in the IKB tragedy went asfollows: Deutsche Bank AG – CEOJosef Ackermann, whose office was raideda few days ago by German criminal po-lice, cut the credit-line for IKB and rangthe president of the German federalagency for financial supervision (BaFin),Jochen Sanio. He told him that the smallbank soon would be bankrupt and alsohad bundles of dubious commercial paperin their books.
After putting down the receiver MrAckermann reportedly quickly orches-trated the short-selling of a bundle ofIKB stocks so Deutsche Bank AG stillmade a bit of money on the final declineof IKB. In total, the German taxpayerhad to pay €10 billion.
The highly reputable German Profes-sor Walter Perron, an expert in criminallaw and economics, asserted the behav-iour of Deutsche Bank AG – employeesand management in regards to the IKBcase as outright fraud.
Also a former federal judge, Axel Boet-ticher, demanded in 2008 that federalprosecutors should investigate the case.Same should also apply to the Landes-banken who also got mislead by DeutscheBank AG and their Wall Street – part-ners in crime, some of them reputable “in-vestment” banks.
EU internal market CommissionerJoaquin Almunia is said to block theplanned merger of NYSE Euronext andDeutsche Börse AG in February overfears that a derivative trading monopolywould be created. Well, the sick model it-self is not being debated only its structure,so Deutsche Bank AG can continue con-ning public banks and state governments.
Ralph T. Niemeyer is the Editor-in-Chiefof EUchronicle ([email protected])
ECONOMY
EFSF pays for being fooledAlmunia likely to block merger of NYSE Euronext
and Deutsche Börse AG
By Ralph T. Niemeyer
By Francisco Jaime Quesado
I braved the barren, windsweptplateau of the Simone Veil MemorialSkateboard Park outside the Euro-pean Parliament to visit the new €23million visitor centre. There has beena fair amount of either outraged crit-icism or breathless adoration, butwhat is it really like?
I was standing outside the frontdoor, when a couple came to me andasked if this was the visitor centre.Not a very silly question as the cen-tre has the incomprehensible andpretentious title of ‘parliamentarium’that does conjure up the image ofMEPs in fish tanks, but why notsimply call it the European Parlia-ment Visitor Centre’?
It is also hard to find, despite thebrash and glaring revolving digitaldisplay outside because there is nosignposting of any note and thedoors, instead of being welcominghave, perhaps appropriately, a bareand austere look. Not even an ‘En-trance’ or similar. People expect thiswhen they go to a public attractionand the lack of even a poster con-fuses.
Inside the main door, it is littlebetter. A bare lobby with nothing,nothing at all to even say you’re inthe right place, and the actual en-trance doors are tinted so you can’teven tell what’s inside. These are el-ementary and basic blunders that canbe corrected at little or no cost.
Once inside, the staff are helpfuland attentive but there’s anotherproblem. Signs. They’re in multi-coloured lettering with differing lan-guages overlaying each other. Funkybut unreadable; a drawback for asign. The overall look of the exhibi-tion is that if a swinger’s mid 70sapartment.
The first section takes you through
the pre-EU history but not chrono-logically. The story is of uninter-rupted warfare.
Then the EU begins to form andthe nations rejoice. The most im-pressive part of the expo is the 12minute film, in 360 panorama show-ing the workings of the parliament.It’s so good it actually makes the par-liament look exciting.
After that, visitors go and roll bar-rels with TV screens over a floor mapof Europe which lines up little videosof various aspects of EU life and pol-icy. More relaxing is the next room,laid out with a mixture of comfychairs and handy screens that showvarious Europeans doing variousthings.
This turned out to be more inter-esting than it first appeared. Finally,you walk out, past a screen asking foryour ideas for a better future. Pleasenot that your suggestions are pro-jected onto the walls.
As we head through the timeline,there is a final sight, of 2050 on a
wall in huge letters. I went up to it,but it is only a wall, hopefully not ametaphor for our safe Europeanhome.
There was a special expo on theway out, that described the buildingof the parliamentarium. I called anassistant over. There were facts andfigures on just about everything, in-cluding the number of tenders and soon, but not the cost of the project.Finally, I had a look through the vis-itor’s book. One comment simplysaid, “Thanks, Now give me a Euro-pean passport. Thanks sluts!”
It is very much an ‘officially ap-proved’ introduction and this is itsbiggest failing, it’s too narrow in itsperspective. It could also be morechallenging and offer different per-spectives. A braver exhibition couldput challenging questions to the vis-itors, why is voting turnout often dis-mal? How should MEPs berewarded? How should lobbying – asubject avoided by the expo – bedealt with?
ANALYSISNew Europe | Page 9NEW EUROPEJanuary 15- 21, 2012
A visitor settles down to learn how wonderful the parliament is.|NEW EUROPE
COMMUNICATION
Inside the ParliamentariumPretty good but should be better The cold
north wind
It is clear that hostilities between England and Scotlandhave already broken out, with the tussle over a vote on Scot-tish independence. David Cameron doesn’t want to be re-membered as the Conservative and Unionist prime ministerwho lost part of the union.Behind the scenes an Axis of Empire has assembled to as-sault Alex Salmond’s plans. This multi-party campaign isdesperate to keep the union through fair means or foul, buthow far can they actually go? Let’s say that the Scots decideto go it alone, what then?It seems as though perfidious Albion will claim that it is upto the UK to grant independence, rather than it being askedfor. At this point the Scots will have little alternative otherthan initiating independence by military means. At firstglance this may seem suicidal, but the Tartan Army havesignificant advantages.First of all, there is the question of alliances. The north ofEngland could be persuaded to play along, in return for re-gional autonomy in the new United Kingdom of Scotland,being as distrustful of London centred governance as theCaledonians. Likewise, the South West could easily come toa mutually beneficial arrangement. Wales will stand aside.But the deal that will guarantee victory is less predictable. Itis quite possible to see how the Queen could be brought on-side. After a long reign and a lifetime of dutiful public serv-ice it would be possible to let her take retirement inBalmoral, the spiritual home of the Windsors. Even theBritish public would accept that she’s done her share anddeserves a break. If it means that there’s a gap of a few years(or more) before Charles and Camilla move into BuckHouse, the public can accept that.When we look at this, England suddenly seems to be a lotsmaller. And that’s where the problems really start. TheScottish strategy will begin with a terrifying strike at theheart of London, something far beyond ‘shock and awe’.There will be some machinations, but the Go! Signal will bea friendly game of football between England and Scot-land… at Wembley. This will allow them to fill the capitalwith crack undercover troops.There’s also the question of the amount of serious kit thatis stored north of the border. Let’s just put this simply. Imag-ine the potential of nuclear arms in the hands of Glaswe-gians. Just bounce that around your think tank for amoment.Against this, what will the chinless wonders find? TheBritish army? Perhaps not; their toughest regiments arefrom the North and Scotland. These are the really terrify-ing battalions. It’ll be like trying to have a fist fight with BenNevis. They aren’t going to come to the aid of, what, TheBullingdon Club? Former Eton public schoolboys? Not achance.Faced with this, where could Cameron turn to for sup-port? The Dutch are useless in a fight, the Belgians won’tnotice or care, Germany’s a huge no-no, so that leaves…France. Now, it could be possible that Sarkozy might goalong with this. In exchange for French becoming the na-tional language of Blighty. Oh, and to adopt the euro asthe national currency.Wouldn’t it just be a lot less bother if the English just let theScots to make up their own minds and have the good man-ners to accept whatever decision they make? If the Englishreally wanted to keep Scotland as a vital part of the union,they wouldn’t have treated them like dirt for the last severalcenturies. [email protected]
CONSTRUCTIVE AMBIGUITY
By Andy Carling
By Andy Carling
There has been a change of candidates in the Greek del-egation to the European Parliament, due to the applica-tion of rotation with regard to ithe candidacies for theBureau of the European Parliament as Vice-President.MEP George Papastamkos takes the place of MEP RodiKratsa, who has completed two terms as first and secondVice-President and will not be a candidate this time.Nonetheless, her legacy is significant due to her impor-tant responsibilities and the multi-faceted activity shehas developed at european and international level.
As EP Vice-President responsible for the conciliationprocedure, Rodi Kratsa has successfully led high-levelnegotiations, as a result of long and arduous consulta-
tions during difficult times on a number of timely andchallenging issues, like the "Life+" programme for the
environmental protection, the new Regulation on EUcivil aviation security, the "Erika III" package for mar-itime, passenger and crew safety and the rights of bus andcoach passengers. During her term as Vice-President re-sponsible for the EP information and communicationpolicy, the EP policy developed even beyond the confinesof the European Parliament, while, in charge of the euro-mediterranean and euro-arab relations, Mrs. Kratsa re-vitalised and gave visibility to the cooperation of theEuropean Union with the Mediterranean and Gulf part-ner-countries.
EUROPEAN PARLIAMENT
Rotation of vice presidents in Parliament
Page 10 | New Europe NEW EUROPE
ANALYSISJanuary 15- 21, 2012
Traditionally there are four models of welfarestate that range from the more generous Nordicand Continental models that includesGermany, then the more minimalist visionshared by the Anglo Saxon version, preferredby the UK and Ireland, and the southernEuropean states.
Denmark can be considered to be the beaconto the Nordic model of state provision, whereyou can receive up to five years of support as aregular student. These kind of benefits arereflected in the level of social protectionspending that in 2009 reached 34.4 % of GDPaccording to Eurostat - the highest in all of theEU.
Levels of growth to fund their services arealso higher than most, with Eurostat figuresagain proving favourable with a 1% growth ratefor the second quarter of last year, outflankedonly by the Baltic states and Ireland.
Their model of flexible labour marketscombined with a redistributive strongprotection and retraining strategy works, butperhaps is easier to administer in a smallcountry with a largely homogenous populationof 5.5 million where local information is moreaccessible.
Ilaria Maselli, a researcher with the Centrefor European Policy Studies said: “Whatwelfare states have to do is match expenditurewith what means it has to pay and despite thediffering models of welfare state its really amatter of national preference.
“In Denmark the system is a sustainable oneas the people are paying a lot of taxes and theyare happy to pay them as they see the effect intheir everyday lives. With the exception of theNordic model the problem for welfare states isthat they are not changing as much as theworld is, although it’s hard to change things likea pension scheme when it’s in place," sheadded.
Next in the rankings of European welfaregenerosity is the Continental model, adheredto by France and Germany, both countries haveincreased their social spending in 2009 by 2%and 3.4% respectively since the crash a yearearlier Eurostat revealed.
Titans of the EU they may be, but economicgrowth strategies and a lot modifications arerequired if their giving culture is to remain intact, and this is reflected in the programmes ofcuts and tax rises that have followed.
In Germany, where Angela Merkel facesfederal elections next year amid a falteringgrowth rate of 0.5% in the third quarter oflast year, drastic cuts were spelt out totalling€80 billion over a four year period that wasannounced in 2010. The axe fell on 15,000public sector jobs, with fresh taxes to beimposed on the air travel and nuclear power.The pension age will also rise from 65 to 67with the change to be phased in fully by2029, in a move that was decided before the
crash in 2006.Despite these measures, Matthias Schaefer,
head of economic policy at the KonradAdenauer Stiftung foundation, said: “I wouldsay that in the current situation the welfarestate as part of a framework in the liberaleconomy is still a fruitful relationship, and theContinental model of provision is anautomatic stabilising balance to theeconomy.”
He added: “A difference between Germanyand the UK is that we look towards efficiencywith our welfare state rather than to implementmore of a cutting culture. As an example someof those efficiencies regards pensions where€80bn is paid out of the public budget into thepension system from the state. So demographicchange is a big challenge with regard to thepublic debt. As people will be working longerwe have to update skills for older people in thelabour market and integrate them, that’s goodfor the people, the employment and the publicbudget.”
“It’s all part of our social market economywhere growth is achieved through thecompetitiveness of our economy, and becausewe have distinct cultural differences withcountries such as the UK we bring in tradeunions and employers in a partnership.”
The continental model may have found asuccess in Germany, but in France where thegrowth forecast for this year has been reducedto 1%, the situation is nowhere near as healthy.Eurostat figures taken from 2010 reveal that10% of the French national debt is swallowedup by its social security system, far more thanany other comparable economy in the EU, withonly Lithuania performing worse.
Of course, it's important to make thedistinction between the more centralisedsystem in France in comparison to thesubsidiary principle of Germany that operates
organically from local authority in their Landerstates.
A round of spending cuts in France wereannounced last year amounting to €18.6million for this year and 2013 that includedlevies on large companies, increasing lower endproduct sales taxes and the curbing of welfarestate payments. The minimum pension age willalso be increased to 62 from 60 that sparkedhuge protests when 2.5 million took to thestreets.
Although Ilaria Maselli does not believe thatthis means the end of the French system as weknow it: “The French people are having to payhigh tax, and like all countries is finding abalance between its tax revenue andexpenditure. I don’t think that high taxesnecessarily hurt growth rates, it costs threetimes as much in labour costs to produce a carin Germany compared to Italy but they still sellmore cars.”
What is exposed is the political culturaldisparity between the Anglo-Saxon mentalityand mainland Europe. From a centralEuropean point of view more of a ‘socialcontract’ exists between the government andits citizens facilitating a partnership in thename of social cohesion. A concept which is farmore alien in the UK and Ireland, whogenerally favour a smaller state spending less onsocial protection, despite the UK having such amonolith public health system.
Southern Europe was a late developer inwelfare state provision, and not until theseventies and eighties was there something likea comparative system with the rest of Europe.Greece has been the worst pupil in the classsince the financial crises, which has led to fivetax and spending plans being releasedthroughout the last 18 months, culminating ina five year plan approved last October with theintention to cut €14bn.
The cuts will fall on the public sector wagebill with cuts of up to 20%, health andeducation spending is to be reduced, with€850m chopped from public investment.
Pension reform is in line with most othercountries by raising the statutory retirementage, in the case of women to 65 matching theirmale colleagues. EL Stat research disclosed thespiralling pension costs in Greece withcontributions totalling €37.8m in 2007 from€23.6m in 2002 with employers’ contributionsgrowing the most as a percentage of subsidies.It comes as no surprise that attacking payrollcosts was part of Greece’s reforms attemptingto balance an unsustainable system.
“Greece is a more distinct situationcompared to the other PIIGS countries,”explained Matthias Schaefer. “They need to putin place new tax levies and spending cuts toarrive at a growth path, and regain marketcredibility with the markets, to be attractive toinvestors and by that reduce the public debtsburden.
“Compared with other Southern Europeancountries there is perhaps less political stabilitythan in Spain and Italy that have more supportof the population in making cuts, and havebetter economic fundamentals. Portugal andcertainly Ireland are also in far better shape.”
It is really the area of pensions that tells usthat the party is over for the traditionalEuropean welfare model as populations creakwith old age with fewer young guns to pay forannuities. OECD research tells us that theFrench pension system for example is 8% moreexpensive as a proportion of GDP than theOECD average, with a working age populationthat is projected to decrease up to 2050.
No doubt this is why pensions have been themost attacked area of social spending so far,with necessary reforms of extending workingages and higher public sector contributionsbeing made. Health policies are likely to berevised with more focus on education to reducethe cost of palliative care for the elderly, andhome treatments for ailments such as asthmaand diabetes that has been espoused byGermany and the UK.
Unemployment benefits may be another areaof reform with a more US style time lock onpayments, and a harsher view of thoseunemployed may be taken in addition to lessgenerous benefits.
Nation states will make their own choices onhow to evolve welfare aligned to their politicalcultures, but with an economic piece of the piethreatened by China and all of the BRICcountries alongside huge debts to pay, even inAthens it’s time to smell the coffee.
Peter Taberner has previously written forFinancial News, Investment and PensionsEurope, Utility Week, EGOV Monitor,European Pensions, Suite101.com, PPPBulletin, Global Pensions Weekly, TobaccoJournal International, IPS and Seeurope.net.
Pensioners shout slogans as they demonstrate outside the Finance Ministry in Athens, Greece on 25October 2010. |EPA/ORESTIS PANAGIOTOU
EUROPEAN WELFARE
Time for EU to wake up over welfare states and pensions
By Peter Taberner
New Europe interviewed the Mayor of theMunicipality of Pendeli, Greece DimitriosStergiou-Kapsali to discuss his recent asser-tions that he will pursue in national and in-ternational courts seeking damages againstthe Turkish government for the major de-struction caused by the Penteli fire of 1995.
New Europe: Is it true that you will proceedwith filing a claim against the Turkish gov-ernment for damages that was caused by themajor forest fire in the Municipality of Pen-teli in 1995?Stergiou-Kapsali: Yes, this information iscompletely true. It was also documented andreported from the decision taken by theTown Council of Pendeli on 3 January 2012that the Municipality of Pendeli will file aclaim in the Greek and international courtsin accordance with the existing procedurebased on international jurisprudence inorder to seek damages of €50 million for theimplementation of Municipality’s project ofplanting trees in the 25,000 acres that weredestroyed in the major fire in 1995. The for-mer Turkish Prime Minister and Minister ofForeign Affairs Mesut Yilmaz stated thatthe fire was caused by Turkish sabateouragents in Greece. It should be noted thatthere is no possibility for natural reforesta-tion to occur.This movement is not one that is aspiring tostop only at Pendeli, but we hope that it willbecome a pan-municipal one because dur-ing that period of the tragic forest fires, theacres in Pendeli were not the only ones thatwere burnt, but also islands close to the coastof Turkey, as well as in Peloponniso and inAttica. These operations will start gradually,and when the case is brought before theGreek courts and is tried, then we will go tothe Hague tribunal for our final vindication.
You understand that only States can bringcases and be parties in contentious casebrought before the International Court ofJustice in the Hague according to Court’sstatutes. How will you overcome this issueof standing and do you already have the sup-port of the Greek state?As I understand it, not only can States beparties in a case but also local authorites andindividuals to file a case, if not at the Inter-national Cour of Justice in The Hague thenwith the European Court of Human Rightsin Strasbourg. Therefore, after we are fin-ished with the Greek courts, then we willseek to proceed with our claim on the inter-national forum.If the Greek state decides during the courseof these proceedings that they will or willnot support us, it will not change our deci-sion to claim for damages, not for the pur-pose of rebuilding the areas that weredestroyed, but to achieve the environmental
resurrection of the municipality, as I men-tioned before, by planting 3,750,000 trees inthe 25,000 acres of destroyed land, in accor-dance with the relavant environmental sur-vey conducted.
What will be the legal basis for the lawsuitand what will be your arguments/evidenceto support your claims?We will focus on the recorded statementsmade by such a significant person, as is[Mesut] Yilmaz, the former prime ministerand minister of foreign affairs. He stated,and I do not know the reasons for why hemade the statements that Turkey, togetherwith sabateour agents, purposely set fires inPendeli during the period of 1995-97 plusthe testimonials of people who witnessedcertain events and occurrences that will goto prove that the fires were not accidentalbut that it was arson, and that this arson wasnot caused by domestic terrorism but on thecontrary, from external terrorism.
...apart from this, do you have any other ev-idence to support your claim?I think this is a matter for the trial lawyerswho have undertaken this case, and hope-fully, after the pre-trial proceedings at firstinstance, we will be able to say more.I would like to add at this point, that if wewill succeed with our claim for damages,then we are planning to include Turkish vol-unteers in the reforestation given that thearea that was damaged in Pendeli, will notbe only for the benefit of the Greek citizen,but also for the Turkish citizen, as the envi-ronment does not have boundaries.
The major forest fire occurred in 1995.
What prompted you to take action now, in2012?I am referring to the major forest fire in1995 in Penteli, as this was the one that
[Mesut] Yilmaz referred to in his state-ments. We also had major forest fires in1998, 2007, and 2009. I want to believe thatTurkish sabateour agents did not act in thesame way as in 1995 to cause the latter onesalso.Nevertheless, the reason we are taking ac-tion now is because the statements by theformer Turkish prime minister were madejust 10 days ago.
The jurisdiction of the ICJ is not compul-sory. Only 66 States, which are also UnitedNation members, recognise the jurisdictionof the Court as compulsory. Although bothGreece and Turkey are entitled to appearbefore the Court, only Greece is included inthe group of 66 States. If Turkey does notrecognise the ICJ’s jurisdiction as compul-sory, do you find this a problem to bring thecase to the Court and to bind Turkey in anegative decision against them?I would like to believe that the filing of thesuit in Greece will give us the guidanceneeded to be able to file the case in TheHague or in Strasbourg. However, the stepsneeded to take to proceed to the interna-tional forum will be formulated and assesed,legally and practically, once we have finishedwith our domestic proceedings, which as youare aware, will be time consuming. We willface that issue when we reach that stage.
ANALYSIS
New Europe | Page 11NEW EUROPEJanuary 15- 21, 2012
Mayor of the Municipality of Pendeli, Greece Dimitrios Stergiou-Kapsali
By New Europe team
INTERVIEW | DIMITRIOS STERGIOU-KAPSALI
'Turkey waged a different kind of war against Greece'
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On 12 January, oil prices dropped a little on rumours that theEuropean Union will delay an embargo of Iranian oil for sixmonths to allow member countries to find alternative supplies.The US wants an embargo on Iranian oil to step up pressure onIran's nuclear programme. EU diplomats had said a consensuswas emerging to grant a grace period before banning new dealswith Iran -- six months for crude oil purchases and three monthsfor petrochemicals.
Late on 12 January, ICE Brent crude for February deliverysettled down 98 cents at $111.26 a barrel, well off an earlier peakof $115.12, the highest level since 9 November. US Februarycrude oil fell $1.77 to settle at $99.10 a barrel, off session highsof $102.98. Oil had traded higher for most of 12 January afterNigeria threatened shut output on 8 January as Africa's biggestoil producer and key member of the Organization of PetroleumExporting Countries (OPEC) entered its fourth day of nation-wide protests over the loss of fuel subsidies.
Nigeria is forced to import nearly all of its gasoline because the
country’s refineries are dysfunctional. Fuel doubled in price inthe past week, to about $3.50 per gallon from about $1.70 pergallon, after the government announced it was ending fuel sub-sidies that amounted to about a quarter of the national budget.In Abuja, protesters led by labour leaders marched on 9 January,protesting against the government, according to news reports.
Regarding Iran, US Treasury Secretary Timothy F. Geithner'sefforts to tighten economic sanctions on Tehran over its nuclearprogramme won backing from Japan a day after China rejectedlimiting oil imports from the country. "We want to take con-crete steps to reduce our share in an orderly way as soon as pos-sible," Japan's Finance Minister Jun Azumi said at a pressconference in Tokyo on 11 January after discussions with his UScounterpart. "The world cannot tolerate nuclear development."
Meanwhile, Kuwait's Oil Minister Mohammed al-Busairi saidinternational markets need more oil, and that the Gulf country con-siders the current price of crude very reasonable. He noted thatKuwait's daily production exceeded three million barrels last month.
Three consortiums are bidding to buildFrance's first offshore wind parks. GDFSuez, EDF unit EDF Energies Nouvellesand Spain's Iberdrola are eyeing parts offive wind parks with three gigawatts ofcapacity in a €10 billion first phase off theNormandy and Brittany coasts. "GDFSuez is a central figure in renewable en-ergies," GDF Chief Executive GerardMestrallet said in a statement. "Thegroup, [a] leader in wind energy inFrance, wish to bring with its partners allof its expertise as an integrated energygeneration expert in order to develop thisambitious offshore wind project and con-
tribute to the emergence of a French in-dustrial chain." The French energy com-pany already has 1,000 megawatts ofwind energy installed in France. It aimsto reach 2,000 MW for onshore wind ca-pacity by 2016.
The French government set of goal of6,000 megawatts of installed wind capac-ity by 2020. As of 2011, at least five off-shore wind farms are planned for theFrench coast. France launched the tenderlast July under plans to meet 23% of en-ergy demand from renewable sources by2020. A second phase, for which the ten-der opens in April before French presi-
dential elections, would double capacityto six gigawatts by 2020 and lift total in-vestment to €20bn. "Obtaining a criticalmass to develop abroad is hard whenthere's no domestic market," EDF Ener-gies Nouvelles Chief Executive DavidCorchia said. France's goal of doublingcapacity by 2020 would lay the basis forthe industry to grow, Corchia said.
France, which produces 75% of its elec-tricity through nuclear energy, operates 58atomic reactors. But the country's relianceon nuclear power has been increasinglycalled into question since Japan’sFukushima nuclear disaster.
Energy & Climate
Page 12 |New Europe NEW EUROPEJanuary 15- 21, 2012
Wind turbines at sunset at a Wind Farm near Dieppe, Seine-Maritime, France, 27 December 2011. The French government set of goal of 6,000megawatts of installed wind capacity by 2020. |EPA/HORACIO VILLALOBOS
ENERGY|OIL
Iran, Nigeria concerns sustain high oil prices
Turkish energy company Genel Energysaid it plans to upgrade facilities and apipeline at the Tawke oil field in the Kur-dish north of Iraq. This could boost thefield capacity limit by 25,000 barrels of oilper day to 100,000 barrels of oil per day
by the end of the year, the company saidin a statement. Tony Hayward, chief ex-ecutive of Genel Energy and former bossat British energy company BP, said thework in the Kurdish provinces under-scores his company's confidence in re-
source potential in Iraq's north. "We aredelighted by the upward reserves revision,which further reinforces our belief thatthese are genuinely world-class assets inan area of outstanding geological her-itage," Hayward said in a statement.
ENERGY|OIL
Genel Energy to boost Tawke oil field capacity
ENERGY|RENEWABLES
France plans major wind energy projectsENERGY|EXPLORATION
API: Gulf of Mexico moratorium hit economyThe American Petroleum Institute (API) said the falloutfrom a 2010 moratorium on oil and natural gas developmentin the US waters of the Gulf of Mexico is still prevalent. APIPresident and CEO Jack Gerard said the moratorium is stillhaving an impact on the economy. A study prepared for APIby Quest Offshore Resources found at least 90,000 jobs andbillions of dollars were lost to slow permitting processes inthe gulf. US Interior Secretary Ken Salazar said Washingtonhad ensured offshore oil and gas development is safer thanwhen the moratorium on deepwater exploration was lifted inlate 2010. Capital and operating expenditures in the gulfhave plunged by $18.3 billion in 2010 and 2011 relative topre-moratorium plans, according to the study. Eleven deep-water rigs have left the gulf since 10 April 2010, to work offBrazil, Egypt, Angola, and elsewhere, it noted. “Through2015, the investment in other regions instead of the US as-sociated with these rigs is estimated to be over $21.4 billionincluding drilling spending and associated project equipmentorders, even accounting for the portion of equipment thatwill likely be manufactured in the United States,” it said. Theresulting decreased domestic investment due to the morato-rium reduced total US employment by an estimated 72,000jobs in 2010 and 90,000 jobs in 2011, it added.
ENERGY|NUCLEAR
German nuclear tax within EU law, court saysGermany's tax on nuclear fuel rods doesn't violate theconstitution or European Union laws, said a regional fi-nance court in southern Germany on 12 January. In awritten statement, the Stuttgart finance court of theGerman state of Baden-Wuerttemberg said "there areno serious doubts over the constitutionality" of the levy.EON and RWE, Germany’s biggest utilities, fell inFrankfurt trading after the court said the fuel tax didn’tbreak the law. Germany’s utilities are cutting costs andselling assets to curb losses related to the government’sdecision to exit nuclear power by 2022.
ENERGY|EXPLORATION
ENI makes major new discovery in Barents SeaItalian energy major ENI announced the Havis oil andgas discovery in the Barents Sea, about 200 kilometresoff the Norwegian cost. The discovery, made with theHavis 1 NFW exploration well in a 365 metre area ofwater and at a depth of approximately 1,750 metres, re-vealed between 190 and 315 Mbbl of recoverable oil andbetween four and six GScm of gas, ENI said in a pressrelease. Havis field represents the second major successin a row obtained by the company in the PL 532 Li-cence, after Skrugard's discovery in 2011 drilled just 7kilometres from the new discovery. The recoverable oilreserves unveiled in the PL 532 Licence area, which alsoincludes the Skrugard discovery, amounts now to around500Mbbl. This will provide the partners with the po-tential to carry out a fast and cost-effective developmentplan for the discoveries. ENI plans to carry out furtherexploration activities in the Barents Sea in 2012, wherethe company will drill the Bonna prospect in the PL 529license area and the Salina prospect in the PL 533 li-cense area. In autumn 2012, ENI will also start drilling22 production wells for the Goliat project. Havis dis-covery will allow ENI to further strengthen its leader-ship in the Barents Sea where it will be the first operatorto produce oil in 2013 with the launch of Goliath, thepress release read.
ENERGY & CLIMATENew Europe|Page 13NEW EUROPEJanuary 15- 21, 2012
France’s energy major Total announcedthat it has signed two exploration li-censes with the Mauritanian govern-ment that gives it, as operator, a 90%interest in the following blocks: BlockC 9 in ultra deep offshoreand Block Ta29 onshore in the Taoudeni basin, apress release read. The National oilcompany SMH will hold the remain-ing 10%.
The block C 9 is located approxi-mately 140 kilometres offshore West-ern Mauritania, covering an area ofmore than 10,000 square kilometres, inwater depths ranging from 2,500 to3,000 metres. The Block Ta 29 is lo-cated in the Saharan desert, 1,000 kilo-metres east from Nouakchott andnorth of the Block Ta 7 in which Totalis already conducting exploration activ-
ities. For both blocks, a seismic acqui-sition campaign is planned as the firstphase of the exploration programme."With this ultra deep offshore award,we are entering into a high-potential,frontier play, known as the abrupt mar-gin, in which major discoveries havebeen made recently, like in FrenchGuyana" said Marc Blaizot, Total'sSenior Vice President, Exploration.
ENERGY|EXPLORATION
Total awarded 2 licences in Mauritania
The energy deal signed between Russia and Turkey will notaffect the realisation of the Nabucco project, Hurriyet quotedTurkish Minister for Energy and Natural Resources TanerYildiz as saying. "All the statements that implementation ofNabucco project will slow down after the signing the agree-ment on the South Stream, are wrong," Yildiz said, adding thatthese projects will contribute to the economic development ofTurkey and all countries of the region.
Turkey and Russia signed the deal in December 2011.Turkey permitted Russia to build the South Stream Pipelinein the Black Sea. It will have a maximum capacity of 63 billioncubic metres annually. The sea section of the pipeline will be900 kilometres long from the Russkaya compression station to
Bulgaria. The project is worth €15.5bn. In addition to Russiangas monopoly Gazprom, three major Western European en-ergy companies - Italy's ENI, France's EDF, and Germany'sBASF are shareholders in the project.
The Nabucco project is designed to transport gas from theCaspian region and Middle East to the EU countries. Con-struction of the Nabucco project is planned to start in 2013and the first supplies are scheduled for 2017.
The total length of the pipeline will be 3,900 kilometres witha maximum capacity of 31bn cubic metres per year. Nabuccoshareholders are Austria’s OMV, Hungary’s MOL, Bulgaria’sBulgargaz, Romania’s Transgaz, Turkey’s BOTAS and Ger-many’s RWE.
ENERGY|GAS PIPELINE
Turkey: Permission for South Stream not against Nabucco
Gazprom focuseson South Stream’s onshore section
After Ankara issued permits in late December for
Gazprom’s South Stream to be built under Turkish territo-
rial waters, Russia has turned its attention to the onshore
route of the planned natural gas pipeline. On 11 January,
Gazprom CEO Alexei Miller discussed South Stream with
Russian President Dmitry Medvedev with the latter say-
ing that he hopes that execution of the project will be in-
tensified in the context of the decisions made by the
Turkish party. Miller said that upon granting a permit
to build South Stream in its exclusive economic zone,
Ankara actually resolved all those issues that Gazprom had
faced at the early construction phase of South Stream.
“Pursuant to the Government decision, Gazprom approved
in late 2011 the relevant documents on stepping up the op-
erations within the South Stream project as well
as on launching the project construction in late 2012 in-
stead of 2013,” Miller said, referring to Russian Prime
Minister Vladimir Putin’s order to speed things up.
Denis Ignatyev, head of Gazprom’s Foreign Mass Media
Division, told New Europe on 11 January that the com-
pany is now working on South Stream’s implementation
and is in negotiations with its partners but could not make
public any information about the routing until everything
will be ready. According to media reports, Miller earlier
presented to Putin an alternative route that showed that
instead of splitting in Bulgaria, a single pipeline would con-
tinue to Serbia, Hungary, Slovenia, and Northern Italy.
Gazprom would not comment on the media comments
that South Stream was planning to drop the Bulgaria-
Greece-Southern Italy pipe. Such plans would reduce
Sofia’s role as a transit hub. “The proposal to drop the Bul-
garia route is undoubtedly linked to Bulgaria’s intransi-
gence over the Burgas-Alexandroupolis oil route,” Chris
Weafer, chief strategist at Troika Dialogue in Moscow, told
New Europe on 13 January. “Russia is very keen to build
both a northern Bosporus bypass route in addition to the
Turkish bypass route but has become very frustrated by the
Bulgarian refusal to back the project. But, until the deci-
sion is finally made whether to build South Stream or not,
the actual route network remains an academic political
rather than an engineering discussion," Weafer said.
It still makes much more commercial sense to upgrade the
Ukraine transit pipe and expand the existing Europe network
than to go ahead with South Stream, Weafer said. Therefore,
the political rhetoric and apparent urgency concerning South
Stream is a way for Russia to keep pressure on Ukraine to
concede ownership over the transit pipeline, he said. “If Kiev
does agree to allow Gazprom an equity position in the pipe
and the original proposal to also allow some EU involvement
in the pipeline is also agreed, then I believe both the South
Stream and Nabucco projects will be shelved,” Weafer said.
“But, Putin’s determination to push ahead with South Stream
negotiations shows that he is determined to get one or the
other and quite soon; either Russia gets some ownership of
the Ukraine transit pipe and Nabucco dies or the South
Stream pipe will be built and the Ukraine route will gradu-
ally be marginalised even more,” he added. This latter out-
come would be Kiev’s worst nightmare.
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ENERGY INSIDER
With Iran threatening to block theStraits of Hormuz, the International En-ergy Agency (IEA) said it wasn't takingaction to calm markets because therewere no supply disruptions. “We remainprepared to respond to any significant oilsupply disruption, but as no specific sup-ply disruption is under way, we are notactively considering any action at thepresent time,” the Paris-based advisersaid on its website. The IEA said it wasmonitoring developments in the MiddleEast and elsewhere. A force majeure wasdeclared in parts of Nigeria and politicaltensions in Iraq were blamed for some ofthe energy market activity.
In 2011, the IEA called on memberstates to release oil from strategic reservesin order to offset market disruptionsbrought on by the war in Libya.
The IEA and the Organisation of Pe-troleum Exporting Countries (OPEC)have expressed concerns on the likelyoutcome of the planned sanctionsagainst Iran by the United States and theEuropean Union. The sanctions includeembargo on importation of Iranian oilby US and EU to compel Iran rescindon its nuclear programme.
The last monthly oil report by theIEA, from mid-December, asserted thatmeasures by the EU and others “may notbe agreed until end-January,” in order to
allow for alternative sourcing by affectedcustomers and coinciding with a seasonalfall in European refiner demand. The re-port added that the embargo would in-volve almost 600,000 barrels per day,while a broader embargo that includedsales to states in the Organisation forEconomic Cooperation and Develop-ment (OECD) would boost that num-ber to 1.3 million barrels per day. Someof the most exposed EU countries in-
clude Greece, Italy and Spain.OPEC cites Iran as China’s second
largest oil supplier, with 600,000 barrelsper day. India, Japan, South Korea andTurkey also rank highly in the currentbuying list of Iranian oil.
The IEA said tighter sanctions wouldhinder Iranian production capacity, fore-casting a decline by 890,000 barrels perday to under three million barrels per dayin 2016.
ENERGY|OIL
IEA monitors developmentsin the Middle East, Nigeria
British Royal Navy destroyer HMS Daring heads to the Gulf for its first mission at a time oftensions over Iran's threat to close the strategic Strait of Hormuz, a key transport route foroil, 11 January 2012. The IEA said it was monitoring developments in the Middle East andelsewhere. |AFP PHOTO / GLYN KIRK
By Kostis Geropoulos
EU WORLD
Page 14 | New EuropeNEW EUROPEJanuary 15- 21, 2012
Russian Prime Minister VladimirPutin told a government meetingthat trade and economic issues be-tween Russia and Ukraine mustbe settled on a partnership basis."We have a great volume of tradeand economic relations, a verydeep degree of co-operation, but,as you and we understand, we areliving in market conditions, andeach country defends its own in-
terests. Of course, all this shouldbe done in a partner-like manner,but there are things that are muchdeeper and more important," TheKiev Post quoted Putin as saying.That applies to our historical rootsand shared culture, he said. "Wehave yet to discuss an agreementthat will solidify the regulatoryframework for Russian informa-tion and cultural centres in
Ukraine and for the Ukrainianones in Russia, accordingly," Putinsaid.Among the issues on the govern-ment's agenda is the strengthen-ing of humanitarian contacts withUkrainian partners.Meanwhile, Ukraine is an activedebate about the transfer of con-trol of the Ukrainian gas trans-portation system (GTS) to Russia.
On 12 January, Ukraine's EnergyMinister was due to address theParliament in a bid to convincelawmakers to support a govern-ment plan to lease the country'spipeline network to Russia in ex-change for a lower gas price.The opposition has accusedUkraine’s government for playingup to Moscow undermining thecountry’s national interest. Deputy
Chairman of the Verkhovna Radaof Ukraine Mykola Tomenko ofthe Bloc of Yulia Tymoshenkosaid that a time out in the negoti-ations with Russia on gas supplyagreement was taken because theUkrainian authorities plan to meetRussia's demand to reorganise andprivatise Ukraine's gas transporta-tion system and the national gascompany Naftogaz Ukrainy.
EU-RUSSIA-UKRAINE|ENERGY
Putin calls for Russian-Ukrainian partnership
Ireland has taken over the chair at the Or-ganisation for Security and Cooperationin Europe (OSCE), the largest and mostsuccessful regional security body, spanningthe Northern Hemisphere from Vancou-ver to Vladivostok. Although not as wellknown as the EU or the UN, the OSCEplays a vital role in ensuring the securityand stability of Europe and the OSCE re-gion as a whole. During the Cold War, itwas a key forum for building confidenceand reducing tensions between east andwest. Its continuing work on arms controland military transparency remains as cen-tral to the security of Europe as it wasover thirty years ago.
The OSCE is not just about buildingconfidence on security issues. The greatinnovation of the OSCE is the notionthat security is not just a military matterbut one that is linked to a properly func-tioning economy, a sustainable environ-ment, and the enjoyment of human rightsby all. It offered a parallel track to thosewho saw no alternative to the confronta-tion between two ideological blocs. Itsstrong focus on human rights providedsuccour to those whose rights were abusedand contributed to the development ofmore democratic societies. The OSCEhas also made a significant contributionto post-conflict rehabilitation and statebuilding in South-Eastern Europe.
I have been asked many times since tak-ing up my position why Europe still needsthe OSCE, over twenty years after theend of the Cold War, and what Irelandcan bring to the Organisation. The ColdWar may be over but much work needs tobe done to build on the OSCE’s goal ofcomprehensive security. The global finan-cial crisis has had a powerful impact onEurope and has demonstrated the needfor collective action, as no one country candeal with the impact of the crisis in isola-tion. The same applies to the transna-tional threats the OSCE now deals with.Whether it be organised crime or terror-
ism, cyber security or trafficking in humanbeings, no one country can tackle these is-sues without the cooperation of its neigh-bours. The OSCE is also to the fore indealing with the so-called protracted con-flicts: we support efforts of the MinskGroup on the Nagorno-Karabakh con-flict, participate in the 5+2 talks on theTransdniestrian settlement and theGeneva International Discussions dealingwith the August 2008 conflict in Georgia.Its field operations from Albania toUzbekistan are doing essential work insupporting host countries to better re-spond to the needs of their people.
Every Irish Government has championedeffective multilateralism. We take our mem-bership of international organisations seri-ously and have a proud history of successfulEU Presidencies and election to non-per-manent seats at the UN Security Council.
Taking over the chair of the OSCE givesfirm expression to Ireland’s commitment tothe maintenance of international peace andsecurity under the UN Charter, and to re-spect for international law.
The priorities I outlined in my addressto the OSCE in Vienna on 12 Januaryrepresent an ambitious, but balanced, ap-proach to the challenges we face. I willwork together with all participating Statesof the OSCE to build consensus around anumber of decisions that will reaffirm theOSCE’s central role as a guarantor of fun-damental freedoms. In particular, I believethat citizens should have the right toenjoy long-standing human rights, such asfreedom of expression and freedom of themedia, regardless of the form in whichthey are exercised. I will host an InternetFreedom Conference in Ireland, the In-ternet Capital of Europe, in June this year
to look at this issue. I also intend to drawon Ireland’s unique experience of conflictresolution by organising a conference inApril which will present aspects of theNorthern Ireland example as a case study.
In the lead-up to the fortieth anniver-sary of the 1975 Helsinki Final Act thatled to the creation of the OSCE, I com-mit myself to work with the incomingChairmanships to equip the Organisationto deal with current and future threats.Just as the original text committed ColdWar adversaries to a new way of conduct-ing their mutual relations, we must ensurethat the OSCE, forty years on, is ready forthe challenges of an uncertain world.
Eamon Gilmore is the Deputy Prime Minis-ter and Minister for Foreign Affairs andTrade of Ireland. Since 1 January, he has beenthe Chairperson-in-Office of the OSCE
OSCE
Building confidence and reducing tensions
The 18th Organisation for Security and Cooperation in Europe (OSCE) Ministerial Council in Vilnius, Lithuania, 6 December 2011. Ireland has taken over thechair at the OSCE. |EPA/VALDA KALNINA
By Eamon Gilmore
FASHION & STYLENew Europe | Page 15
NEW EUROPEJanuary 15- 21, 2012
As flickering light bulbs die out
and memories of the past year
grow ever more distant, shop-
pers eagerly await the January
sales as an occasion to treat themselves, all
the while taking a clever peek at the new
arrivals for next spring.
After a careful screening of the
spring/summer accessory collections, we
happily discover these mini-sculptures,
too often influenced by 21st century inte-
rior design.
Owning a strong ‘plastic’ character and
a ‘solid’ structure, next spring’s shoes offer
a wide variety of heels: thick and enduring
see-through ‘columns’ à la Charlotte Per-
riand (Casadei), small anchor points that
refer to furniture parts like office chair
‘aluminum’ feet or wooden Scandinavian
armchair bases (United Nude), minimal
chessmen (Givenchy), or coral-like pillars
(Chanel). Heels definitely lead an independent
life, as they add a touch of fantasy and
humor to otherwise conventional forms.
Round shapes contrast asymmetrical
ones (Aperlai), as the ‘grafting’ of materi-
als turns shoes into hybrid art objects.
Wood, porcelain, glass, leather, fabrics and
precious metals are imitated in a pastiche
spirit, as designers question functionality
and industrial production versus craft
making.
Jean Paul Gaultier’s heel-less ‘tattoo’
boot resembles a Dutch china vase, while
Roberto Cavalli’s metal-sculpted plat-
form shoe, is inspired by silversmith art or
woodcraft. Giambattista Valli’s acces-
sories clearly reference tapestry and wall-
paper prints, as clutches evoke Art Deco
bookbinding and its use of exotic skin
patchwork and embossed geometric mo-
tifs (Givenchy, Etro and Elie Saab).
Resin and plastic take a candy-like form
(Missoni) or even punk-ily mimic fur
(Max Kibardin).
All in all, the foot is preciously enclosed
and put on a pedestal, elevated as it is, by
a spectacular heel that likens a contempo-
rary sculpture stand. Well-thought out
and luxuriously adorned, next spring’s ac-
cessories convey a sense of quirkiness that
perfectly suits the philosophy of the mo-
ment: to stand out by showing off a world
of one’s own.
Louise Kissa [email protected]
CHANEL© Chanel
CHANEL© Chanel
GIVENCHY© Givenchy
ETRO© Etro
UNITED NUDE© United Nude
APERLAI© Aperlai
UNITED NUDE© United Nude
ELIE SAAB© Elie Saab
CASADEI© Casadei
MAX KIBARDIN© Max Kibardin
GIAMBATTISTA VALLI© Giambattista Valli
ROBERTO CAVALLI© Roberto Cavalli
GIVENCHY© Givenchy
JEAN PAUL GAULTIER© Jean Paul Gaultier
MISSONI© Missoni
Keeping our feet on the groundACCESSORY TRENDS: SPRING/SUMMER 2012
BRUSSELS AGENDA Page 16 | New Europe | NEW EUROPEJanuary 15- 21, 2012
BRUSSELS AGENDA New Europe | Page 17
NEW EUROPE January 15- 21, 2012Welcome to NE’s Brussels Agenda. All youneed to know for a complete professionaland personal life in Brussels.
Would you like to advertise in New Europe’s BrusselsAgenda? Ask for more info [email protected] ordon’t hesitate to call us at +32(0)2 5390039
In an elegant and pleasant environment, George Tsigkalidis invites you on a journey to discover the gastronomic pleasures of Greece.
Th is year, L’Ouzerie also opens its doors during lunchtime, and invites you to experience the fi reworks of fl avour.
Ouzerie Mezedopolio235 chaussée d’Ixelles à 1050 Bruxelles T: +32(0)2 646 44 49 M: +32(0)476 28 35 47
Email: [email protected]/ouzerie
Open for lunch: Monday-Friday 12:00 to 14:30 dinner: Monday-Saturday 19:00 to 23:30
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
RESTO BITES
The worldwide phenomenon that isVoca People is coming to Brussels nextmonth. It is well worth seeing but bewarned: tickets are selling fast.For the uninitiated, Voca People is anIsrael-based ensemble performing vocaltheatre combining a `cappella´ and ´beatbox´ vocals to reproduce the sounds ofan entire orchestra.The Voca People claim to be aliens fromanother planet where the main methodof communication is sounds. Dressed completely white in appearanceexcept their lips, which are red, theyfloat around in space in their ship, which
is powered by nothing more than music. They arrive on Earth which has a greatrepertoire of music. They have performed in Spain, NewYork, Italy, France, England and Israeland incorporate the public into theirsongs and change or add bits dependingon which country they are in.The creators, Lior Kalfo and ShaiFishman, envisioned a group of per-formers dressed completely in whitewith red lips. The Voca People claim to come from thePlanet Voca (somewhere behind the sunto you and me) where all communicationis based on music and vocal expressions.Their motto is: "Life is music and musicis life."
They became famous through a clip onYouTube, which had over 15 million hitsin less than one year, and a series of tele-vision appearances. Later they alsoappeared on Domenica In and theItalian X Factor.Their show is full of humour, comedyand energy and the talented eight-strongensemble are backed by a subtle musicalarrangement overseen by Fishman, theshow´s composer and musical director.They have been lauded by everyone fromParis Match magazine to CBS News inAmerica and this is a rare chance tocatch them live.They perform at Cirque Royal at8.30pm on 3 February. Ticket informa-tion from www.cirque-royal.org.
UB40 – 31 January20:00, Ancienne BelgiqueFor 30 years UB40 have been making music,selling over 70 million records and havingappeared in the British charts 50 times.Named after the unemployment benefit cardthat symbolized the rising unemployment inthe UK in the late 70s and early 80s, theyarrived with a bang. Their first record was adouble sided single, featuring Food forThought, about the Ethiopian famine andKing, a tribute to the American civil rightschampion. Of course, there have been manymore hits since, but back in 1979, reggae,multi racial bands and independent recordswere just breaking through. Their politicsreflected the harsh realities of recession hit
Birmingham, a city that was fast losing itsindustrial base. Their 81 hit, One In Ten,highlighted their social concerns, referring tothe current unemployment rate. Successcame at a price and lead singer, Ali Campbellleft in 2008, the first change in the band’s lineup and was followed by Mickey Virtue, citingconcerns over management. Ali was replacedby his brother, Duncan. The two departeeslaunched an investigation into the group’sfinances. This concern seemed to be justifiedwhen, in October 2011, the group’s companywas declared bankrupt.
Despite this, the band continued to play allover the world, including Reggae Sunsplashand, more unusually, a gig at the 24 hour LeMans race.
The ten percent
Voca People
Fornostar , Quai au Bois a Bruler, Sainte Catherine, BrusselsTel 02 201 30 22www.fornostar.beThis is the place to be in Brussels if you are after top quality foodat affordable prices.The owner used to run a string of restaurants in Ixelles but, a fewyears ago,sold up, travelled the world and, a couple of years ago,decided to return to the industry at this 56-seat restaurant.In summer, diners can enjoy a 100-seat terrace but,whatever theweather, you can be assured of both a great welcome and food tomatch.There’s a takeaway service and a two-course lunch at 15 euroswhich changes daily as well as the a la carte menu featured agreat range of pasta and pizza as well as meat dishes, includingveal, beef and lamb chops. A dish of olives and ultra thin slicesof salami are also served to guests. The interior is comfortablewith a relaxed ambience.Most of the food is sourced locally and there’s also a good choiceof delicious Italian wines. The name of the restaurant refers tothe wood burning stove in which the pizzas are baked by theItalian-born chef. Try the tiramisu for desert – it’s delicious!Starters are priced from 9 to 19 euros with mains from 7.50 to21 euros. Closed Mondays.Highly recommended.
TAKE A LOOK
For a country that is consideredflat, there is a lovely view fromoutside the Palace of Justice,over the lower town and beyond.A modern glass elevator willtake you down to the funky RueHaute and its lively bars, clubsand artisanal shops. Or you canjust watch the sunset.
PHOTO CREDIT: NIKOS ROUSSOS
icy-makers and market players on today'sbig questions, including: Aligning theInfrastructure proposals with the 3rdPackage; How to build a bottom-up andtop-down TYNDP for the infrastructureneeds of an internal energy market;What can we do to encourage changes in
customer behaviour.
25 Jan – Energy And Climate ExchangeSeries 2012: Energy Market DevelopmentsIn France12:45, Bruegel Office, 33 rue de la CharitéThis event will cover the energy marketdevelopments in France. Three panelistsfrom academia, regulatory authorities, andindustry will present to facilitate an activedialogue and debate.
25 Jan - On Narrow Paths and throughShallow Waters? - Discussing theSubstance of EU Democracy Promotion13:15 - 14:30, CEPS Conference room,Place du Congrès 1While democracy promotion seems tobecome ever more important to EU foreignpolicy, it is still unclear what the EU aims tofurther in third countries.
26 Jan -Warming up for the Citizens'Initiative09:00 - 17:30, CharlemagneThe ECI will allow 1 million citizens from atleast one quarter of the EU Member Statesto invite the European Commission to bringforward proposals for legal acts in areas wherethe Commission has the power to do so.
26 Jan -The crisis as downgrading spiral oflabour law and workers’ rights: trends andconsequences for future (European) socialregulationITUH (International Trade Union House),5 Boulevard du Roi Albert IIAt this first Monthly Forum for 2012 theETUI would like to map these downwardspirals in workers’ rights and discuss theirconsequences and the challenges faced inthe future in relation to the preservation ofexisting arrangements as well as the need todevise new national and European socialregulations.
19 Jan - Electricity Markets At TheCrossroads: Which Market Design for theFuture?08:30 - 17:15, Hotel Marriott, A. Orts 3-7/Grand PlaceThe development of a truly European elec-tricity market in the face of a large marketpenetration of intermittent generation isbecoming an increasingly pressing issue. Atthe same time, European energy and cli-mate change legislation over the last fewyears has intensified, leading to a morecomplex set of Directives and Regulationswith -sometimes - unclear mutual implica-tions. The ability of electricity markets todrive progress towards a carbon-neutralsociety, integrate a high level of intermittentgeneration and fulfill mandatory energyefficiency targets remains largely untested.
24 Jan -The Economic Crisis, Educationand the Labour Market09:00 - 16:30, EESC, JDE Building,Room 52, 99 rue BelliardEurope is undergoing a far-reaching finan-cial, economic and social crisis, with thou-sands of companies going out of business,higher unemployment, falling salaries, bud-
get cuts in social security systems, risingpoverty and social exclusion. How canyoung people be better integrated into thelabour market? How can we meet the chal-lenges of lifelong learning? How can theskills of older workers be improved andtheir potential better harnessed? These aresome of the questions we want to look atduring the conference.
24 Jan – Bruegel/World Bank PolicyDialogue On The European GrowthModel12:45, Bruegel Office, 33 rue de la CharitéThe World Bank finds that the Europeangrowth model has been a powerful enginefor economic convergence, helping devel-oping countries in Europe catch up to theirricher neighbors and become high-incomeeconomies. But recent changes in and out-side Europe necessitate change.
25 Jan – CEER 2012 Conference:Infrastructure and Energy Efficiency09:30 - 17:30, With a focus on energy efficiency andenergy infrastructure, the CEER 2012Conference brings together regulators, pol-
For more events see www.agenda.be
16 Jan - Sophie Karthäuser20:00, La MonnaieAfter performances in The MagicFlute, La Calisto, Idomeneo and otheroperas, audiences at La Monnaie havetaken Sophie Karthäuser to their hearts.This Belgian soprano is also makingquite an impression abroad. For thisrecital she is joining forces with theflamboyant pianist Cédric Tiberghien.
20 Jan – Echo and the Bunnymen20:00, Ancienne BelgiqueThe Liverpudlian legends grab theirraincoats to perform their first twoalbums, ‘Crocodiles’ and ‘Heaven UpHere’ , in their entirety. This is going tobe special. That’s a promise.
26 Jan – Liz Green20:00, BotaniqueA Manchester-based singer-songwriter.She is linked with Humble Soulrecords. Green won GlastonburyFestival’s Emerging Talent Competition
for in 2007. The UK’s Guardiandescribed her performance: “Thesesmoky, jazzy numbers have the alluringfeel of Twenties Berlin cabaret, asGreen’s haunting voice wraps itself witha wistful sadness around heavy trumpetsand tubas”
16 – 26 January Brussels Agenda
WORKsuggest your event for our agenda: [email protected]
PLAYsuggest your event for our agenda: [email protected]
FRANCE · GERMANY· SPAIN · PORTUGAL
New Europe | Page 18 THE EUROPEAN UNIONJanuary 15- 21, 2012
SPAIN|ECONOMYRajoy: Regions should tackle deficits responsiblyThe task of tacking the budget deficit which by now hasbecome one of the menacing factors for the European econ-omy primarily rests with the central government but the re-gions too must tighten their belts, the Spanish premierindicated last week. In an interview last week cited widelyin Spanish media, Prime Minister Mariano Rajoy cautionedthat the influential regional governments must shoulder theresponsibility of trimming deficits. He reiterated that thedebt-laden regions had vastly overshot their budget targetsfor 2011, adding further troubles to the country’s economy.According to the government’s preliminary estimate citedby the premier, Spanish regional governments' budgetdeficits reached at around 2.7% of GDP last year. That, ifconfirmed, would mean that the regions had overshot their1.3% deficit target to almost double.
PORTUGAL|CEMENTCimpor launches research and development projectThe Portuguese cement company Cimpor signed on Jan-uary 3, 2012 a contract with Instituto Superior Técnico, thelargest and most reputed school of Engineering, Scienceand Technology in Portugal, to carry out a research and de-velopment project to explore the possibility of manufac-turing new materials as alternatives to cement. Research &Development is of strategic importance to Cimpor, whichpositions itself on the frontline of the future challenges ofthe industry. In the long term, the company aspires to findnew technology that will make it possible to produce a ma-terial with the same properties as cement on an industrialscale, using fewer natural resources and emitting less CO2.The contract now signed with Instituto Superior Técnico(IST) will be executed in parallel and complementary tothe research project that Cimpor has been undertakingsince 2008 with the Massachusetts Institute of Technol-ogy (MIT), relating to nano-engineering of calcium silicatehydrate (C-S-H) using computer simulation techniques.
PORTUGAL|PAPER INDUSTRYPortucel Group strengthens presence in MozambiqueAs part of its strategy of exploring opportunities for growthand sustained value creation in the southern hemisphere,the Portuguese paper firm Portucel Group has furtherstrengthened its presence in Mozambique by obtaining aprovisional Land Use Permit (DUAT) for an additionalarea of 182,886 hectares in Manica Province, issued by theMozambican government (Council of Ministers Resolu-tion of 19 December 2011). This new permit was grantedunder the agreement in principle reached between the Por-tucel Group and the Mozambican government in 2008,under which land use rights had already been granted foran area of 173,327 hectares in Zambezia Province.
PORTUGAL|AVIATION INDUSTRYTAP records a load factor of 76.3% in 2011Portuguese airline company TAP carried a total of 9.75million passengers in 2011 and recorded a load factor of76.3%, making the year the best ever for the Portugueseairline with respect to these indicators. The 9.75 millionpassengers carried represent an increase of more than660,000 passengers over 2010 figures, equivalent to agrowth of 7.3%. The load factor rose by 1.8% over the pre-vious year.
Despite previous warnings, the interna-tional ratings agency Fitch now doesnot see any imminent risks to theFrench banking system despite their ex-posure to some of the most vulnerablemarkets of the EU.
Somewhat dispersing the fears overof the probability of the need of recap-italising the ailing banks from the cof-fer, Fitch said it does not expect France’sgovernment to have to provide capitalto bolster its banking system. Fitch’smanaging director for sovereign ratings,
David Riley, stressed that it would prob-ably not have to recapitalise them al-though the risk was not totallynon-existant.
“It’s not our expectation that theFrench government will need to pro-vide...capital support to French banks,”Riley said in Paris. The credit ratingsagency put France’s AAA credit ratingon negative outlook last month and saidthat it was the triple A country the mostexposed to a deterioration of the Euro-zone’s debt crisis. French banks’ hold-
ings of debt from troubled states and re-liance on wholesale funding left themexposed as the crisis worsened last year,making them increasingly dependenton liquidity from the European CentralBank (ECB).
While admitting the banks’ troubleshad put some pressure on the Frenchstate, Riley said Fitch did not expect todowngrade France this year given thecountry’s current economic and fiscalfundamentals unless the Eurozone cri-sis worsened significantly.
Fitch confident on French banks
FRANCEBANKING
On 10 January, German chemical giant BASF and China’sSINOPEC inaugurated the $1.4 billion second phase of theirintegrated petrochemical site in Nanjing, bringing crucialchemicals to the China market that will support the devel-opment of more sustainable local industries, The Companyreported. “Through this successful partnership, we are able tobring vital chemical products and solutions to China that willdirectly support local industries as they strive to meet theneeds of a rapidly developing population,” said Martin Bru-dermuller, Vice Chairman of the Board of Executive Direc-tors of BASF SE, responsible for Asia Pacific. “At the sametime we are also investing in advanced production technolo-gies that themselves use less water, save energy and reduceemissions. The Nanjing site is a flagship example of our Ver-
bund system, which achieves extremely efficient productionand safety by clustering plants and re-using by-products,” hecontinued.
On the occasion of the inauguration ceremony, the partnersalso announced further plans for the expansion of the site.The second phase, inaugurated 10 January, includes expan-sions of existing plants and construction of new facilities. Thesite now has an integrated C4 complex comprised of a newbutadiene extraction plant with a capacity of 130,000 metrictonnes per year; a new isobutene extraction plant with a ca-pacity of 60,000 metric tons per year; a new plant for highlyreactive polyisobutene with a capacity of 50,000 metric tonsper year; and a new 2-propyl-heptanol plant with a capacityof 80,000 metric tonnes per year.
BASF, Sinopec complete 2nd phase of Nanjing investment
GERMANYCHEMICALS
German automakers are making yet an-other attempt to get Americans to buydiesel cars, The Local reported on 7January. Under the direction of the As-sociation of German AutomobileManufacturers, the companies are plan-ning a diesel offensive in the UnitedStates, where diesel motors are in abouttwo per cent of cars.
In Europe, nearly 50% of automo-
biles are diesel vehicles, the papersaid. German car-makers said theyare convinced that this time they canget Americans to switch to diesel,despite numerous failed attempts inthe past.
They believe their chances are goodat because of the ever increasing highprice of petrol, improvements in dieselmotors and a concerted effort by the as-
sociation and manufacturers to targetthe US market.
Matthias Wissmann, president of theGerman manufacturers' group, saidGerman automakers realise that dieseltechnology is not exactly widespread inthe US, but added “we’ve improved ourimage.” He told the Süddeutsche thatGerman carmakers are bringing theirtop models to the US.
German carmakers seek more diesel sales in US
GERMANYAUTO INDUSTRY
The entrance of former headquarters of the French bank Credit Agricole. Fitch now does not see any imminent risks to the French banking system despite theirexposure to some of the most vulnerable markets of the EU. |AFP PHOTO/LIONEL BONAVENTURE
AUSTRIA · SLOVENIA · ITALY · MALTA
New Europe| Page 19THE EUROPEAN UNION January 15- 21, 2012
AUSTRIA | ENERGYOMV oil production in Libya risesAustrian energy giant OMV said on 12 January that its oilproduction in Libya now stands at 60% of the pre-war level,up from 30 % in November, AFP reports. "At the momentproduction is 19,000 barrels per day, around 60 percent ofthe pre-war level," with output rising sharply in recentmonths as Libya recovers from the conflict that oustedMoamer Kadhafi, spokesman Sven Pusswald said. The com-ment tallies with that of other Western companies extract-ing Libya's highly sought-after low-sulphur crude, withItaly's ENI saying recently that output was now at 70 per-cent of pre-crisis levels. OMV chief executive Gerhard Roisshad said in December that production levels would reachpre-war levels in 12-15 months, a target that Pusswald saidthe firm was sticking to for now. In 2010, Libya's capacitywas just short of 1.7 million barrels per day, according to theInternational Energy Agency. Oil Minister Abdel Rahmanbin Yezza recently predicted production would be back tonormal in the second half of 2012. OMV, which relies onLibya for around 10 percent of its oil output, recently sent itsgeneral manager for the country back to the North Africanstate, but he is only staying there for a few days at a time forsafety reasons. "The situation is still too unstable and is beingconstantly assessed," Pussmann said.
SLOVENIA | INDUSTRYSlovenia’s industrial production risesSlovenia's industrial production increased marginally in No-vember, data released by the Statistical Office of the Repub-lic of Slovenia showed 13 January, RTT News reported.Industrial production increased 1% year-on-year in No-vember. Production of electricity, gas steam and air con-ditioning supply climbed 12 percent annually.Meanwhile, there was a 1.5 percent annual fall in out-put in the mining and quarrying industry, and a 0.2 per-cent decrease in the manufacturing sector. In theconsumer goods industry, production rose 5% year-on-year, while capital goods production advanced 4.1%.There was a 3.1%decrease in the production of inter-mediate goods during the month. Month-on-month,industrial output increased 1.2 percent in November. Inthe January-November period, production increased3.7% from the corresponding period a year earlier.
MALTA | ECONOMYMaltese exports suffer sudden downturnMaltese exports last October seem to have suffered a suddendownturn according to new data issued by Eurostat on 13Jnauray, the Times of Malta reported. While growth of Mal-tese exports until last September was booming, registering anincrease of 46% over the same value of 2010, a poor per-formance in October has slashed Malta's year on year growthto just 5%. According to Eurostat officials, the new datamight be another indication that the island will be hit bylooming economic prospects this year, with many memberstates expected to enter a recession. "Malta's exports dependmainly on demand from the EU's main markets and de-mand is slowing all over the EU," the officials said. Eurostatsaid that between January and October, Malta exported€2.3bn worth of products, an increase of €100,000 on theprevious year. At the same time, imports continued to rise,with an increase of €400,000 in value up to a total of €3.6bn.Eurostat said that all 27 EU member states managed to in-crease their exports during the first ten months of last year,with Estonia at the growth helm with an increase of 44%.On the other hand, imports only decreased in Greece andCyprus.
The European Commissioner Fülefor enlargement met with SamuelŽbogar, Minister of Foreign Affairsof Slovenia and Ms Vesna Pusic,Minister of Foreign and EuropeanAffairs of the Republic of Croatia on12 January, an IEWY news releasesaid.
Further to the regular contactswhich have taken place between thecommission and the parties, the pur-pose of the meeting was to discussthe next steps of the implementationof the Border Arbitration Agreementsigned by both countries on 4 No-vember 2009 in Stockholm. The Eu-ropean commission is neither party tothis agreement nor bound by its time-lines, but has been invited to performcertain functions under this agree-ment by the signatories.
Under the terms of the agreement,the president of the commission and
the Member of the Commission re-sponsible for enlargement are to estab-lish a list of candidates from which bothparties shall appoint by common agree-ment the President of the Arbitral Tri-bunal and two members recognised fortheir competence in international law.In case the parties cannot agree withinfifteen days from the establishment ofthis list by the commission, the Agree-ment foresees that the President andthe two members of the Arbitral Tri-bunal shall be appointed by the Presi-dent of the International Court ofJustice from this list.
Today’s meeting has been very con-structive and a useful opportunity todiscuss the modalities for the estab-lishment of the list and the processleading to the appointment of themembers of the Tribunal.
The commissioner informed theministers about the intention of the
European commission to communi-cate the list in the second half of Jan-uary in order to create the bestconditions for a successful launch ofthe Arbitration process.
Today’s meeting also discussed thesecretarial support to the ArbitrationTribunal.
The European commission contin-ues to provide its good offices to helpthe parties to reach a common agree-ment on the President and two mem-bers of the Arbitral Tribunal asforeseen in the Arbitration Agree-ment while respecting the confiden-tiality of the proceedings.
A common agreement would be apositive political signal for the furtherdevelopment of the good neighbourlyrelations between the two countriesas well as for the Western Balkans re-gions showing how difficult issuescould be solved.
SLOVENIA DIPLOMACY
Border Arbitration Agreementbetween Slovenia and Croatia
Štefan Füle, Member of the EC in charge of Enlargement and European Neighbourhood Policy | EUROPEAN UNION 20102
Italy's cost of borrowing has fallen at the government’slatest bond auction, though some analysts were disap-pointed by the level of demand, the BBC reported.
Italy raised its target of €4.75bn in a bond sale on 13January.
The interest rate on the government's benchmarkthree-year bond fell to 4.83% from 5.62% at the last auc-tion at the end of December.
The interest rate on Italian 12-month bonds also fellon 12 January after it raised €12bn.
"After the stellar bill auction in Italy and the very goodSpanish auctions yesterday, there will be some disap-
pointment in the market," said Marc Ostwald, strategistat Monument Securities.
The three-year Italian bond drew bids worth 1.22times the amount on offer. At Thursday's Spanish auc-tion, investors bid for almost four times the amount orig-inally offered.
Analysts say demand at recent auctions has beenboosted by cheap funds from the European CentralBank (ECB).
The ECB launched new, cheaper three-year loans on21 December that were snapped up by eurozone banks,who borrowed some €489bn.
Italy's borrowing costs fall
ITALYECONOMY
UK · BELGIUM · NETHERLANDS · LUXEMBOURGPage 20 |New Europe THE EUROPEAN UNIONJanuary 15- 21, 2012
UK| TRANSPORT
UK gives OK for high speed rail networkBritain will build a high-speed rail link between Lon-don, Birmingham and cities further north, TransportSecretary Justine Greening said, RTE Ireland re-ported. "I have decided Britain should embark uponthe most significant transport infrastructure projectsince the building of the motorways, by supporting thedevelopment and delivery of a new national high-speed rail network," Greening said. The cost of con-structing the whole network is expected to be £32.7billion, with the line to Birmingham completed by2026 and extensions to Manchester, Leeds and Lon-don's Heathrow Airport complete by 2033.
LUXEMBOURG| ECONOMY
Transaction volumeup in 20112011 was marked by a revitalization of trading activity onthe Luxembourg Stock Exchange as a result of the addi-tion of new members, including those from abroad, thusbroadening and stimulating market activity. On 30 De-cember 2011, the total transaction volume on the Luxem-bourg Stock Exchange stood at an amount of 262.44million euro, representing an increase of 19.75% comparedto 2010. The bond segment recorded a significant increaseof 163.46% over one year. Fixed income securities tradingvolumes accounted for 55.02%, or 144.40 million euro inabsolute terms. Growth in the bond segment was the ob-ject of a specific development strategy and almost 1,200bonds are now tradable in continuous mode. During 2011,the Luxembourg Stock Exchange continued its efforts toattract foreign members to its secondary market. A largeproportion of transactions during the year came frommembers established outside Luxembourg, especially fromthose in Belgium (25% of trades), France (15%) and theNetherlands (39%).
BELGIUM| TELECOMS
Recruitments at Belgacom up in 2011During 2011, Belgacom, a Belgian telecommunica-tions company, recruited a record number of appli-cants. As many as 2,100 people obtained a new job in2011, both internally (1,200) and externally (900). Thecompany currently has 15,617 employees. It placesBelgacom right at the top in Belgium with regard torecruitment. Belgacom invests strongly in training andoffers a large number of career development opportu-nities. The company strives for efficiency by keepingeverything as transparent as possible. It’s not for noth-ing that the “Simple & Friendly” focus is one of itsmain strategic pillars. Belgacom aims to absorb natu-ral attrition and support growth in new business areas.That is why it has also set ambitious recruitment ob-jectives for 2012. There are currently as many as 150vacancies for external applicants.
NETHERLANDS| TRANSPORT
Poles on the moveEast European – in particular Polish – transport com-panies are increasingly active in the Netherlands. Witha total value of €420 million, Poland was the largestprovider of transport services among the East Euro-pean EU countries for the Dutch private sector in2010. Polish transport services are predominantly en-gaged in road transport (93 percent).
German-owned British luxury car-maker Rolls-Royce on 9 January saidthat sales rocketed to an all-time highlast year, smashing its 33-year-oldrecord, driven by demand from Chinaand the US, RTE Ireland reported.
The group, which is owned by Ger-man auto giant BMW, said in a state-ment that production leapt 31% to3,538 cars in 2011. That comparedwith 2,711 in the previous year andwas the highest-ever output in the107-year history of Rolls-Royce. The2011 performance beat the previousrecord of 3,347 cars set in 1978.
Rolls-Royce also said China and theUS were now the "most significant in-dividual markets" for the maker ofultra-luxurious vehicles.
"We had an outstanding year in2011 and we should take a moment toreflect on this great British successstory," said Torsten Müller-Ötvös,chief executive officer at Rolls-RoyceMotor Cars.
"Our business is in excellent shape.
We are developing our dealer network,moving into new markets like SouthAmerica, expanding our manufactur-ing operation in West Sussex to meetglobal demand and have plans to de-velop our product range'', he said.
The company, purchased by BMWin 1998, said sales surged last year by47% across the Asia Pacific region, by
17% in North America and by 23% inthe Middle East.
In September, Rolls-Royce unveiledplans to expand its Goodwood factoryto meet strong global demand for thegroup's personalised range of 'Ghost'and 'Phantom' models. Expansionwork will start in February and takenine months to complete.
The Netherlands Competition Author-ity (NMa) has therefore decided to im-pose a fine of 7,719,000 euro on DutchNational Association of General Practi-tioners (LHV) for illegally restrictingestablishment options of general practi-tioners. In addition, two LHV officialsare imposed personal fines of €50,000and €25,000 respectively, because theNMa holds them responsible for mak-ing LHV’s recommendations to itsmembers. Almost every GP in theNetherlands is a member of LHV.General practitioners should be free todecide for themselves where they wantto establish their practices, NMa said in
a statement.Henk Don, member of the Board of
the NMa, denounces the situation: ‘Wealready made clear to LHV in 2001 thatit is illegal to restrict establishment op-tions of general practitioners. With therecommendations of LHV to acceptnew GPs in a certain area only if the es-tablished GPs in that area agree to suchan entry, the odds are very high thatnewcomers are not given a fair chance.’He continues: ‘This policy not onlyhurts new GPs, but hurts patients andinsurers as well, because they are leftwith fewer choices.’ And to eliminateany confusion regarding this issue, the
NMa has also imposed an order subjectto periodic penalty payments on LHV,requiring it to inform all of its membersand regional divisions that its establish-ment recommendations have been re-voked. The NMa launched theinvestigation into LHV after it had re-ceived indications from alarmed GPs.
The NMa’s actions supports thegovernment’s position on how healthcare should function: health careproviders who perform well, innovate,and who put patients first, should berewarded in that patients and healthinsurers choose them over those thatperform poorly.
NMa fines Dutch General Practitioners NETHERLANDS HEALTH
Rolls-Royce posts record car salesUNITED KINGDOMAUTOS
Belgium Satellite Services s.a. (BSS), a leading player in tele-port services and satellite communications, and Intersat AfricaLimited, one of the major satellite communications providersin Africa, on 10 January announced the signing of a partnershipagreement to expand their operations and service delivery inthe Middle East and African markets.
The combination of these two established and well-respectedindustry players, will create a dynamic new force for the Africanand Middle East market. The partnership includes a joint sales,marketing and product development organisation that will ex-pand the customer base and offer an enhanced range of reliablesatellite services.
Abdul Bakhrani, CEO and co-founder of Intersat, added:"The combination of our two companies will solidify our abil-ity to provide fast, responsive and flexible solutions for our cus-tomers in Africa and The Middle East through an enhancedinfrastructure, technical development and marketing coverage".
The strengths of both organizations will bring new and moreoptimized services to all types of customers from SME's tolarge corporations, telecom operators and ISPs. Although fibrehas reached the African continent, it has not fully met expec-tations in terms of reliability, availability and ability to reach asignificant portion of the population who live in rural areas. Asin-land fibre is far from ubiquitous, Internet via Satellite is formany people the only solution for communications connectiv-ity. Intersat currently offers Internet via Satellite connectivity tomajor organisations, government institutions and the privatesector through the African continent and The Middle East.BSS, formed following the acquisition of Belgium mobile op-erator Belgacom's satellite services division in 2007, providestailor-made, high-quality satellite networking solutions includ-ing hosting and hub services, IP over satellite, and TV andbroadcasting solutions from its large technical and operationalinfrastructure in Europe.
Belgium Satellite Services joins with Intersat to expandBELGIUMTELECOMS
A Rolls Royce car sits parked outside a luxury hotel in Shanghai on 10 January. |AFP PHOTO / Peter PARKS
POLAND · HUNGARY · CZECH REPUBLIC THE EUROPEAN UNION
New Europe | Page 21
January 15- 21, 2012
POLAND | BUSINESS
TP to pay €550m to Danish telecoms group Polish telecoms company Telekomunikacja Polska (TP)and Danish Polish Telecommunication Group (DPTG)came to an agreement regarding a dispute that had beendragging since 2001. The decision was taken on January12 that TP will pay €550 million to DPTG in settlement,reported Rzeczpospolita. The settlement concerns the dis-tribution of profits on a fiber optic project built in Polandbetween 1991 and 1993 by DPTG for Poczta Polska Tele-fon i Telegraf, the legal predecessor of TP. The Polish firmhad contested a clause granting the Danish companynearly 15 percent of profits over a 15-year period on the1,500 km network linking the north and south of Poland.“We have chosen a difficult solution that is, however, thebest one for TP and its shareholders,” Maciej Witucki,president and CEO of TP Group, said in a statement. “Thesettlement agreement ends a dispute that has a longer his-tory than TP, and allows us to focus solely on business ac-tivities,” he added. This should not affect the dividend TPplans to pay its shareholders for 2011, set at 1.5 zł per share(over zł.2 billion).
HUNGARY | ECONOMICS
Hungary called to order on economic governance On 11 January, the European Commission concluded thatHungary has not made sufficient progress towards a timelyand sustainable correction of its excessive budgetary deficitand recommended that the Council of Ministers decidesthat no effective action has been taken to bring the deficitbelow 3% of GDP in a sustainable manner. Belgium,Cyprus, Malta and Poland, who were also at risk of notmeeting their deadlines for 2011 or 2012 to correct theirexcessive deficit, have taken effective action. Therefore, theCommission decided not to pursue any further steps in theexcessive deficit procedure, though it will continue to mon-itor budgetary developments in these countries. This is thefirst time the Commission has applied the new rules of thestrengthened Stability and Growth Pact within the so-called "six-pack" on economic governance, which enteredinto force on 13 December 2011. Commission Vice-Pres-ident for Economic and Monetary Affairs and the EuroOlli Rehn stressed that today's report proved that the six-pack is already delivering. “It has given the European Com-mission teeth to act when countries fail to bring theirdeficits under control and reduce their debt,” he said. Rehnadded that fiscal discipline will be crucial to reinforce con-fidence in Europe's public finances and emphasised his de-termination to fully use the 'six-pack' from day one.
CZECH REPUBLIC | RELIGION
Czech government agrees tocompensation for religious ordersThe Czech government agreed on 11 January to pay €5bnin compensation to churches for property seized by the for-mer Communist government, AP has reported. The dealthreatened to topple the coalition government earlier thisweek after a junior partner voiced anger at the thought ofhuge sums being paid to churches in the middle of the Eu-ropean debt crisis. But even in a country where indifferenceto religion is strong, the compensation plan — to be spreadover 30 years — seems advantageous to both sides. The government would no longer have to pay priests’ salaries,and religious groups would finally receive payment after sev-eral previous attempts failed. Under the plan, the nation’s 17churches, including the Roman Catholic and Protestantsects, would get back 56 percent of their old property nowheld by the state — estimated to be worth $3.7 billion.
Hungary seeks economic resurgencethrough foreign investment
In turbulent and crucial times forHungary, the country is keen onseeking investments from India inthe automobile sector, particularlyauto components.
Addressing the members of theSouthern India Chamber of Com-merce and Industry Ambassador ofHungary in India Janos Terenyi said:“There are huge capacities in hiscountry that were supplying compo-nents to bus and truck manufactur-ing companies in the erstwhileSoviet bloc. The country now needsinvestments to revive those units.”
India sees Hungary as an impor-tant member of the European Com-mon Market and the EU, and withits strategic location in the heart ofEurope it can provide an importantgateway to Europe for them.
Currently, bilateral trade betweenIndia and Hungary is estimated ataround €24 million. Pointing thisout, Terenyi said that the trade be-tween the two countries is “on theupswing”, and collaboration, co-op-eration and joint promotion betweenthe two countries “in the fields of au-
tomobile and auto components sec-tors will further this”.
He added: “We want to maintainthe whole spectrum of relationshipwith India.”
Earlier, President of SICC Jawa-har Vadivelu said: “India's exports toHungary have touched $270m(around €212m), and about 58% ofIndia's imports from Hungary com-prise of mobile phones and chemi-cals.” He also said the HungarianPrime Minister Viktor Orban is ex-pected to travel to India on an offi-cial visit in the spring of 2012.
Simultaneously when Hungaryreaches out to India, Astra Resourceshas taken a significant first step inacquiring a steel works in Hungary.
The deal would include ownershipof an energy supply company on thesite. The sale is expected to close incoming months with final acquisi-tion of the steel mill to include own-ership of an energy supply companyon the site. The acquisition would befunded by Astra’s planned prospec-tus capital raising or by independentproject finance.
Current plant infrastructure andassets includes a five-stage ASEA-SFK ladle furnace and associatedtechnologies suitable for the manu-facture of premium grade steels.
Following the finalisation of theacquisition, Astra will refurbish theplant before bringing it back into op-eration.
The energy supply company willprovide power to the steel mill andother companies in the area, result-ing in a separate profit centre.
No doubt with such a favourableforint-euro exchange rate, the steelacquisition would enable Astra tosupply sought after premium qualitysteels to European markets, at prof-itable prices. However, as with theIndians, Astra is looking for a longterm investment with the Hungar-ian market. With all this mediahoopla going on with the centralbank law and the economic instabil-ity of Hungary, it seems that certainleading companies in large sectorsare not paying attention to the hypecreated and following their businessinstincts of sound investment.
HUNGARYECONOMICS
A Polish court on 12 January handed a two-year suspendedprison term to a communist-era interior minister for his rolein implementing martial law in Poland in 1981, AP reported.
The verdict is the latest effort by democratic Poland to holdcommunist-era officials accountable for abuses during theirrule.
The Warsaw Provincial Court found retired Gen. Czes-law Kiszczak guilty on charges of membership in an armedcriminal group that illegally declared the clampdown, aimed
at crushing the Solidarity freedom movement, and violatedthe freedom of many Poles. The 86-year-old Kiszczak wasabsent from court.
Former president and Solidarity founder, Lech Walesa, re-acted by saying that “full justice is not possible,” and that themain point of such trials is “not to punish, but to draw con-clusions for the future.”
“It is important that the matter was closed and we canmove on,” said the 1983 Nobel Peace Laureate.
Suspended sentence in martial law case
POLANDJUSTICE
Hungary’s Prime Minister Viktor Orban: the country is keen on securing investment from India, particularly in the automotive industry. |EPA/ARNE DEDERT
SWEDEN · DENMARK · FINLAND· IRELAND
Page 22 | New Europe THE EUROPEAN UNIONJanuary 15- 21, 2012
IRELAND | BUSINESS
AGI Therapeutics sold to AraviSAGI Therapeutics has been sold to Aravis Therapeutics for€6.6 million, a fraction of the € 85 million the pharmaceu-ticals group was valued at when it joined the Irish stock ex-change in 2006, RTE Ireland reported on 9 January. Sharesin the company soared on the Dublin stock exchange afterthe announcement. A failure to attract a development part-ner, as well as disappointing trials for a treatment for irrita-ble bowel syndrome and a share price in decline for almostthree years prompted AGI to accept the cash offer fromAravis, a privately run pharmaceutical group. The price of0.0917 cent per AGI share represents a 67% premium toAGI's closing share price at the end of last week and a pre-mium of around 130% to its average daily closing price forthe previous three months. "We believe the offer representsan attractive premium relative to our recent share price trad-ing history and when the offer is considered alongside otheralternatives the offer represents the best outcome for share-holders," Ronan Lambe, the company's chairman said.
FINLAND | TELECOMS
Nokia buys Nordic OS developerNokia has bought mobile phone software developerSmarterphone AS (Oslo, Norway), for an undisclosed sum,it was reported on 9 January. Smarterphone was founded asKvaleberg AS in 1993 and has developed an integrated op-erating systems and software application suite for mid- andlow tier mobile phones (feature phones) known as Smarter-phone OS. The acquisition was revealed by Smarterphoneinvestor Ferd Capital. Investor Ferd Capital said the dealwas finalised in November and that the company has al-ready established an OS that is "highly advanced function-ality on very moderate hardware".
SWEDEN | MINING
Ramirent Sweden lands €7.9million mining contractRamirent Sweden has been chosen by Boliden to sup-ply rental equipment for the expansion of its Garpen-berg mine. The 70 million Swedish crowns (€ 7.9million) contract will see Ramirent's Swedish opera-tion supply a wide range of equipment to Boliden overa three-year term, it was reported on 9 January. Stock-holm-based mining and smelting company Boliden isto expand production of zinc ore from the Garpenbergmine from 1.4 to 2.5 million tonnes per year.
DENMARK | EMPLOYMENT
Danish companies bring jobs back homeWhile many companies continue to offshore manufac-turing jobs in search of savings on labour and raw ma-terials, a small but noteworthy countertrend has begunboth here in Denmark and abroad, Copenhagen Postreported. One of those companies is T-Rex, which pro-duces guitar effects pedals. Seven years ago, T-Rexmoved its production offshore to China. Now the com-pany plans to bring it ‘inshore’ back to Denmark. InChina, “prices have risen on wages, duties and raw ma-terials. It’s a trend that began awhile ago, and we ex-pect it to continue,” Steen Meldgaard, the president ofT-Rex, said. “At the same time, production in Denmarkhas gotten cheaper,” Meldgaard continued, “becausecompanies have used the recession to automate and be-come more efficient”.
US pharmaceutical company Allergan has announced a majorexpansion of its botox facility in Westport in Co Mayo, withthe creation of 200 new jobs, RTE Ireland reported on 9 Jan-uary.
Speaking at the plant, Taoiseach Enda Kenny said this de-velopment would provide a major boost for the region, bring-ing further high quality jobs to the west of Ireland.
Allergan currently employs over 800 people in Westportwhere it manufactures and develops a range of medical devicesand pharmaceutical products, the best known of which isbotox.
The US multinational is now investing $350 million in a
new botox facility at its Westport site. The managing directorof Allergan, Pat O'Donnell, said that with the help of the IDA,the company had acquired the technology park adjacent to theplant to meet the growing demand for the product.
In addition to cosmetic treatments, the use of botox to treatmedical conditions is on the increase. The Irish MedicinesBoard has recently approved the use of botox in treating uri-nary problems and chronic migraine symptoms.
The 200 new jobs at Allergan will come on stream over thenext four years. A further 250 jobs are expected to be createdlocally when construction work on the new facility begins laterin the year.
200 jobs from Allergan
IRELANDPHARMA
Saab unions unhappy with bankruptcy receiversCash-strapped carmaker Saab’s fourmain unions are unhappy with the ap-pointed bankruptcy receivers but saidon 9 January that having them changed"would not help the situation", TheLocal reported.
“Nothing has been sent in writingto the district court calling for the re-ceivers' departure. At this point intime, it’s not relevant to send any-thing,” said the union’s chief lawyer,Martin Wastfelt.
The four unions met last Monday toconsult regarding the situation of thecompany's bankruptcy. However, no de-mands are yet forthcoming.
“We have found that it serves no pur-pose in this situation to demand thatthe receivers are changed,” he said.
The four unions were planning tocontinue discussions on 10 January.
“We will also meet with the receiversthis week, probably on Thursday,” saidWastfelt.
The appointed Saab receivers, lawyersAnn-Marie Pouteaux and Hans LBergqvist, have been criticised for their"ignorance" and for "not realizing thecomplexity of Saab operations" accord-ing to the Dagens Industri newspaper(DI). The unions IF Metall, Unionen,Ledarna and Akademikerna/Ingenjörs-förbundet believe that the informationthey have been given by the receivers isinadequate.
According to DI, it was confirmedthat the receivers don't really under-stand Saab, and that the company in-ventory is far from over.
At the same time, this makes it im-possible for the receivers to enter intonegotiations with those who have ex-
pressed interest in taking over whole, orpart, of the Saab Automobile business.
The two bankruptcy receivers werenow themselves flagging for a potentialconflict of interest. They have thereforerequested in writing to VanersborgsDistrict Court last Monday that a co-trustee be appointed.
This regards the handling of “ques-tions relating to the Saab brand, thelabel, the trade name and other relatedmatters”, according to the lawyers.
They have therefore proposed thatKent Hagglund, a lawyer at Advokat-firman DLA Nordic in Stockholm, isappointed as co-receiver. According toBergkvist and Pouteaux, he was askedand is willing to undertake the task.
Bergqvist’s office has earlier had var-ious assignments with the defence andsecurity company Saab Group.
AUTOSSWEDEN
Customers of the Elisa andSaunalahti internet service providerscan no longer use those internet con-nections to visit The Pirate Bay web-site. Helsinki District Court orderedthe ISPs to block the Pirate Bay lastOctober, but the block went into ef-fect, YLE News reported.
The companies said that the blockwill not affect customers’ use of otherwebsites. The Finnish branch of theInternational Federation of the Phono-graphic Industry, IFPI Finland, soughtthe block on The Pirate Bay in Octo-ber. Elisa was the first company pur-sued because more than one third of itscustomers use the torrent site. Thecompany has appealed the decision.
The Pirate Bay is a Swedish site list-ing torrents that facilitate the exchangeof computer files among internet users,some of which are copyright protected.
The website of Finland's CopyrightInformation and Anti-Piracy Centrewas unavailable last Monday afternoon,possibly because of a denial of service
attack by Finnish activists of the groupAnonymous, protesting the block im-posed on The Pirate Bay.
AnonFinland announced responsi-bility for the action in Twitter messages,referring to the court ordered ban onaccess as "elisagate" and criticizing it ascensorship.
As of last Monday evening, at least
one Pirate Bay mirror site in operationon servers outside Sweden was report-edly not blocked to Elisa andSaunalahti customers. Meanwhile, onedomain name that previously linked toThe Pirate Bay, but now takes users tothe website of Electronic Frontier Fin-land was blocked for Elisa andSaunalahti subscribers.
Pirate Bay block comes into force
FINLAND
INTERNET
One of the hundreds of supporters of file-sharing hub 'The Pirate Bay' who demonstrated in Stock-holm, Sweden on 18 April 2009 after charges were laid against its founders. |EPA/FREDRIK PERSSON
LATVIA · LITHUANIA · ESTONIA · SLOVAKIA
New Europe | Page 23THE EUROPEAN UNIONJanuary 15- 21, 2012
SLOVAKIA|TELECOMSSlovak Telekom sues regulator over decisionSlovak Telekom (ST) has launched a challenge at theSupreme Court against a decision by the Telecommunica-tions Office (TU), which regulates the sector, to turn downan application lodged by ST in January 2011 to prolong itslicence to operate mobile telephone networks. At the timethe law did not allow the state to charge a fee for licenceprolongation, Slovak spectator reported on 11 January. Alaw change, introducing a fee for extension of licenses andcancelling all previous proceedings, took effect in April2011, after which ST’s renewed application was resubmit-ted and granted – but only in return for a fee. SlovakTelekom, in its suit filed at the Supreme Court, is also chal-lenging what it says is the retroactivity of the amendment;it is also calling for verification of the amendment’s legal-ity by the Constitutional Court. ST will probably also suethe TU for its decision to charge a fee amounting to almost€ 48 million for prolonging the validity of its licences byten years. The Supreme Court is due to decide on the casethis week; if its judges accepted ST’s arguments, the statewould have to pay back the fee charged to Slovak Telekomand prolong its licences for free. This verdict could also af-fect another mobile operator, Orange Slovensko, whichcould also claim that the amendment, under which it paid€40.7 million for prolongation of its licences, is invalid. Slo-vak Telekom is 49% state-owned.
SLOVAKIA|EU AFFAIRSEU probes apparent loss of payroll taxes to SlovakiaFunds sent by the European Commission as payroll taxesfor the Slovak employees working for the European Unionbetween the years 1999 and 2003 have reportedly been lost.Though about €0.5 million arrived on the Slovak accounts,they were not received by the social insurer Socialna pois-tovna, Slovak spectator reported on 9 January. An investi-gation of the case has already been launched by bothSlovakia’s Office for the Fight against Corruption and au-thorities in Brussels. An unknown person is sought forharming the financial interests of the European Commu-nities, according to the spokesperson of the Slovak police,Denisa Balogova.
SLOVAKIA|DEFENCEMinistry proposes withdraw of units from Afghanistan Slovak troops are probably set to take part in the firstwave of withdrawals from the International Security As-sistance Force (ISAF) mission in Afghanistan, with theguards platoon from Tarin Kowt base (53 soldiers) andthe sapper unit from Kandahar (51 soldiers) expected toreturn home by the end of 2012, according to a proposaldrawn up by the Defence Ministry that has been sub-mitted to other ministries for comment, Slovak specta-tor reported on 6 January. "The importance of thedeployment of the sapper unit has been reduced latelydue to the increased use of contractor companies by thebase commander," said the Defence Ministry. Slovakiawants to boost its role in the training of the Afghan se-curity forces. It will send an additional eight soldiers toISAF headquarters, increasing the total number of Slo-vaks there to 20. In addition, a 12-member unit is set tosupport the deployed Slovak Special Forces. An 11-member operations and training team will be set up andfour military police officers will help to train the Afghanpolice. Overall, the number of Slovak servicemen inAfghanistan should be reduced from the current 348 to279 by the end of 2012.
CSD or the Central Securities Depository of Lithuania,recently elected new representatives for its managementboard, local reports revealed last week citing the officials.The management shakeup was well expected after the en-tity went under the ownership of NASDAQ OMX. In linewith the terms of the acquisition, the company has electedthe following the new NASDAQ OMX representatives toits board.
They are Vidmantas Drobelis, Catharina Hovemyr, Al-
gimantas Romeika, Teuvo Rossi, and Arminta Saladziene,head of Baltic markets, who was also elected as chair.
Mindaugas Bakas was appointed as new President of theCSD after Arturas Keleras was recalled from the position.Before this appointment, Bakas served as head of Vilniusmarket development department for almost five years andwas member of the Vilnius management board. He has 11years of securities industry experience in managing posi-tions in the large Lithuanian banks.
Central Securities Depository sees management changes
LITHUANIASECURITIES
The Latvian economy has successfullyevolved from the crisis setting asidemost of those factors which were re-sponsible for dwindles seen during therecessionary phase, a senior official ofthe World Bank indicated last week.After meeting Latvian with PrimeMinister Valdis Dombrovskis, WorldBank's country manager for Poland andthe Baltics, Xavier Devictor, praisedLatvia for having successfully solvedthose matters which were unbalancedbefore the crisis.
In his opinion, the Latvian economynow is much stable and there is notmuch left to worry about in regard tointernal economic risks in the country.However he noted that external risksremain. But on a positive note Devictorsaid he hopes that the Western coun-tries would carry out the necessary cor-rections. Nonetheless, the World Bankofficial stressed that it was still too earlyto make predictions on a possible sec-ond wave of the crisis.
Devictor also characterised the or-ganisation's mission in Latvia as suc-cessful. He said what Latvia hasachieved in the post-crisis period isworth admiring. The official noted thatLatvia's achievements have helped thecountry making the top ten of theDoing Business 2012 index, whichmeans that Latvia is attractive for for-eign investors. During his meeting withthe Latvian premier, the two sides alsodiscussed welfare issues, with Devictoradmitting that Latvia's welfare pro-gramme thus far remained very effec-tive. He also expressed hope that the
government will continue efforts to im-prove the competitiveness of Latvia'sworkforce, which would allow people tomore successfully return to the job mar-ket. Asked whether he believes Latviahas learned a lesson from the crisis, De-victor pointed out that this questionmust be addressed to Latvian them-selves. Latvian Minister Daniels Pavlutsalso had meeting with Devictorwherein they agreed to exchange expe-rience for the development of an indus-trial policy for Latvia. Pavluts, asreported in the local media, pointed outin the meeting that modern industrialpolicy is a way to create and coordinatestable foundations for Latvia's eco-nomic development, innovations,higher added value, improved produc-tivity and better-paid jobs. "For all thisto happen, it is important for Latvia to
learn from other countries' experience,so as to take the best and most suitableideas, and to proactively analyse risks,"stressed the minister. He also expressedLatvia’s interest in the World Bank'sideas and experience for the develop-ment of industrial policy, as well as pur-suing such policies and evaluatingcompetitiveness.
Devictor confirmed that the WorldBank was prepared for such co-opera-tion and information exchange withLatvia. Pavluts thanked Devictor for theWorld Bank's support for Latvia re-garding the removal of obstacles for thedevelopment of business environment.In 1999, the World Bank assistedLatvia in preparing its first business en-vironment assessment, which was fol-lowed by the first plan for improving theenvironment.
World Bank: Latvia more stable now
LATVIA ECONOMY
Expensive foods made Estoniansspend more last year pushing up theconsumer price index by 5%, accord-ing to the latest data published byStatistics Estonia. The year-on-yearincrease was mainly influenced bychange in food and non-alcoholicbeverages’ prices. There was a 9.7%price increase in prices of food and
non-alcoholic beverages, which gavetwo fifths of the total increase. Alsothe 6.2% price increase in the pricesof electricity, heat energy and heat-ing, and the 12.2% price increase inthe prices of motor fuel, togetheradded another fifth to the total in-crease.
In 2011 compared to the average
of the previous year, coffee was 45%and sugar 43% more expensive. Inspite of the price decreases at the endof the year, potatoes remained 34%more expensive than in 2010. Buteggs were 9.4% cheaper. The latestavailable indications also pointed to-wards surging price tags but detailswere yet to be available.
ESTONIAECONOMY
Consumer prices increase year-on-year
A teacher of pattern-design and student paint on material in a workroom at the Riga School ofArts and Crafts in Latvia. The World Bank praised Latvia for having successfully solved thosematters which were unbalanced before the crisis. |EPA PHOTO/EPA/ EUROPEAN COMMISSION/AFI EPA/AFI
GREECE · CYPRUS · BULGARIA · ROMANIA
Page 24 | New Europe THE EUROPEAN UNIONJanuary 15- 21, 2012
On 11 January, Greek Foreign MinisterStavros Dimas and his UAE counterpartSheikh Abdullah bin Zayed Al Nahyanwith the latter expressing UAE's keen-ness to strengthen ties with Greece, say-ing a joint committee's first meeting on11 January was a result of a sincere will tofurther bolster co-operation and coordi-nation on different issues. He said themeeting coincided with the EconomicForum "which constitutes an opportu-nity for the interested parties in the gov-ernment and private sectors to exchangeviews and to identify investment poten-
tials in Greece." The UAE foreign min-ister emphasised the importance of en-hancing the economic partnershipbetween the two countries by increasingthe size of direct investments and by fi-nalising ratification of the agreement onthe avoidance of double taxation. TheUAE ratified the agreement on 27 June2010. He indicated that the joint com-mittee meeting was due to discuss waysto strengthen bilateral cooperation incommercial, financial, investment andjudicial fields, as well as transport andenergy. It will also review draft Memo-
randa of Understanding for co-operationin higher education, defence, tourism, ar-chaeology and healthcare.
For his part, Dimas thanked theSheikh and his accompanying delega-tion for the participation of many im-portant UAE companies and investors.“We have a great friend of Greece, andwe assure him that our country will be alongstanding friend, ally and partner ofthe United Arab Emirates. Again, I wel-come him and the investors and busi-nesspersons from the UAE, and I wishthem every success," Dimas said.
UAE, Greece talk investment
GREECEDIPLOMACY
On 11 January, LNG Energy announced that the PeshteneR-11 well in Bulgaria has been successfully drilled to its totaldepth of 3,190 metres under the farm-in agreement withTransAtlantic Worldwide, a wholly-owned subsidiary ofTransAtlantic Petroleum.
The Peshtene R-11 well, located on the A-Lovech explo-ration license, targeted the Middle Jurassic age Etropole for-mation, LNG Energy said in a press release. Peshtene wassuccessfully drilled in a total of 56 days to a depth of 3190metres, including 354 metres of Etropole argillite. Numerousgas shows were recorded in the argillite, consisting ofmethane, ethane and propane. Over 289 metres of the Juras-sic age Etropole and Ozirovo whole core has been taken fromthe well. The Ozirovo formation produces nearby in the
Chiren Gas Field and in TransAtlantic's Deventci R1 dis-covery well 36 kilometres to the east.
Peshtene is scheduled to be completed and tested in thesecond quarter of 2012. Based on the data recovered to date,TransAtlantic's subsidiary, Direct Petroleum BulgariaEOOD, has applied to the government of Bulgaria for a Pro-duction Concession. The Stefanetz Concession is expected tocover an area up to 1,600 square kilometres for a term of upto 35 years. "We are excited with the very positive gas showsand data obtained in the Peshtene," LNG Energy Presidentand CEO Dave Afseth said. "We look forward to reviewingthe results of the core analyses that will enable us to designand implement an appropriate stimulation to flow test boththe Peshtene and Starogard wells."
LNG Energy successfully drills Bulgarian well
BULGARIAENERGY
Meanwhile, Bulgaria's EconomyMinister Traicho Traikov forecastedthat his country’s exports might reach€20 billion in 2012. During the an-nual Investors of the Year award cer-emony of the InvestBulgaria Agency,the minister said that “even the mostdaring business plans can be realisedin Bulgaria”.
He stressed that the Bulgarianeconomy is diversified, modern, andwith a great potential. In 2011 Bul-
garia saw substantial growth in pro-cessing industry, electronics and en-gineering, and pharmaceuticalindustry, he said. "This enormousgrowth doesn't come out of nowhere.In 2009, Bulgaria's exports amountedto €12bn, and in 2012 they will prob-ably reach €20bn," Traikov said.
Bulgaria’s exports have been increas-ing. There has been a 33.8% increaseyear-on-year in exports to other Euro-pean Union member states in the first
nine months of 2011, according to theNational Statistical Institute. Germany,Romania, Italy, Greece and Belgium ac-count for 66.7% of exports by Bulgariancompanies.
Exports to non-EU countries alsohave increased, by 26.5% in the first ninemonths of 2011 compared to the sameperiod of 2010, data from the instituteshowed. About 53% of Bulgarian ex-ports go to Russia, Ukraine, China andthe United States.
Traikov: Exports may reach €20 billion in 2012
BULGARIAECONOMY
CYPRUS|ENERGY
Greece, Cyprus may link power gridsNicosia and Athens may agree to link the power grids ofCyprus and the Greek island of Crete to raise security andincrease supplies, Greece’s Environment, Energy and Cli-mate Change Minister George Papaconstantinou said on11 January. “We will look into the financial and technical as-pects of linking Cyprus and Crete with the prospect of link-ing Crete with continental Greece,” Papaconstantinou saidin a statement during his visit to Cyprus. He said that healso discussed with Cypriot Commerce, Industry andTourism Minister Praxoula Antoniadou Kyriacou issues re-garding natural gas and renewable energy. “Especially re-garding natural gas, Cyprus has made big steps after thediscovery of gas reserves. Greece watches with great interestCyprus’ experience on that field,” Papaconstantinou said,adding that Greece is also trying to lure investors to developits oil and gas fields.
GREECE|DEFENCE
Athens, Tel Aviv vowto boost defence tiesOn 10 January, Israeli Defence Minister Ehud Barakpledged to ramp up defence co-operation with Greece at ameeting with his Greek counterpart Dimitris Avramopou-los in Athens. Avramopoulos said Greece is committed todeepening relations wtih Israel. “The relations have been de-layed for a long time," he said, adding that “our co-opera-tion is peaceful and honourable and is not against anyone.On the contrary, it can become a source of enrichment ofthe two people and also for other countries in the re-gion”. Barak thanked the Greek government for its assis-tance during the Carmel fire last year and stressed that “thetwo countries have common interests in solving the regionalproblems for the benefit of and stability of the Middle Eastand the southeast Mediterranean”.
ROMANIA|EU AFFAIRS
Romania to attract €6bn from EU funds in 2012Romanian Prime Minister Emil Boc said that in 2012 Ro-mania is expected to attract €6 billion in funding from theEuropean Union - from the Cohesion Fund and funds foragriculture. He added that the absorption of EU funds is oneof the necessary measures to create jobs, Romania Insiderreported on 10 January. Another objective for 2012, pre-sented by the Prime Minister, is to support the investments.A total of €8.7 million (38.1 million lei) will be allocated forthis matter in 2012, Boc said. Romania posted an economicgrowth of nearly 2% in 2011, above the official target of1.5%, and the country also managed to reach its budgetdeficit target of 4.4% last year. Boc said the main priorities for2012 include maintaining jobs and investments and in-creased absorption of EU funds, which are essential for“maintaining the 2.1% economic growth forecast for 2012”.
ROMANIA|ENERGY
Arpechim refinery to be taken over by the stateThe Romanian state is going to take over the refineryArpechim from the company OMV Petrom, local authori-ties in Pitesti said on 9 January, Romanian Times reported.Prefect of Arges county, Gheorghe Davidescu, said negoti-ations were in their final stage. He added in April at the lat-est, Arpechim Pitesti would operate under Romanian stateownership. Refinery Arpechim Pitesti is to be privatised af-terwards, he added.
Greek Foreign Minister Stavros Dimas and Foreign Minister of the United Arab Emirates Sheikh Abdullah bin Zayed Al Nahyan attend the first meet-ing of the UAE-Greek joint committee, Athens, 11 January 2012. |AFP PHOTO /ARIS MESSINIS
NORWAY · ICELAND · SWITZERLANDNew Europe | Page 25PARTNERS
January 15- 21, 2012
The Swatch Group has shaken off con-cerns over the strong Swiss Frank topost record sales for 2011, smashing the7 billion Francs ($7.3 billion) mark forthe first time, Swiss Info reported.
The world’s biggest watchmaker saidit had experienced the strongestturnover in the group's history in De-cember 2011 and was confident ofgreater growth in 2012.
Swatch, best known for its colourfulplastic watches as well as upmarketbrands such as Breguet and Omega,
said revenues had risen 10.9% to a newrecord of 7.14 billion Francs for 2011.
“Despite the strongly negative cur-rency impact during the course of theyear and our traditionally defensive pol-icy concerning price increases, groupmanagement expects good results foroperating profit and net income,” thegroup said in a statement last Tuesday.
The group said 2012 would be "amajor challenge", but it had begun thisyear well in all regions and price seg-ments.
The watch industry weathered theeffects of the strong Swiss franc wellthanks to strong demand in Asia. Over-all, watch exports rose 16.25 in Decem-ber, compared to a 3.8% riseyear-on-year in exports overall.
The group, which also supplies mostof the parts and movements to theSwiss watch industry, said sales in itsproduction segment rose 32.6 per centto SFr2 million. But it said it was stillgrappling with production bottlenecksdespite expanding capacity.
SWITZERLANDBUSINESS
Iceland opens its labor market for Bulgarians, RomaniansIceland has sent a positive signal bydeciding to lift labour market re-strictions for Bulgarians and Roma-nians in what was a largely expectedmove, Ice News was reported on 6January. Starting 1 January, Bulgari-ans and Romanians will no longerneed to get special residence andwork permits to live and work inIceland. The regulation is in accor-
dance with the provisions of the Eu-ropean Economic Area and the Ice-landic legislation.
Those who have residence andwork permits will not have to renewthem when they expire, while thosemoving into Iceland simply need toregister their stay with the NationalRegistry.
Iceland applied to join the Euro-
pean Union on 16 July 2009. Nego-tiations formally began 27 July 2010.
Iceland's move followed Italy's de-cision to give workers from Bulgariaand Romania unfettered freedom ofmovement.
Nine other EU members have de-cided to maintain these restrictions,with many citing the impact of thecrisis and high jobless rates.
ICELANDLABOUR
Danish media group Egmont has become the sole ownerof Norwegian commercial broadcaster TV 2, Egmont andNorwegian media group A-pressen said, Norway Post re-ported.
Egmont bought A-pressen's 50% stake in TV 2 for 2.1 bil-lion Norwegian crowns ($348 million) in cash, the groupssaid in a joint statement. Egmont said that through acquiringTV 2, it makes a strategic leap towards more TV in its busi-ness. ”As TV is a key element in our strategy, it was an obvi-ous choice for us to purchase. Today, Egmont makes asignificant strategic leap towards more TV and more live pic-tures in our business. TV 2 is now a wholly-owned subsidiaryof Egmont,” said Steffen Kragh, CEO of Egmont.
In 2010 TV 2 had the most profitable annual result so far,and the goal is to continue the positive development for TV2The acquisition does not in itself cause changes for TV 2.
”Egmont guarantees that TV 2 still is an independentmedia house with a local Norwegian profile and that TV 2continues to build good and close relations to the Norwegianpeople,” said Steffen Kragh.
Egmont is a leading media group in the Nordic region. Itsmedia world spans magazines, books, films, cinemas, interac-tive games and TV. Egmont publishes media in more than 30countries, has 6,500 employees and generates revenueamounting to €1.4 billion.
Egmont encompasses Scandinavia’s largest film company,Norway’s largest magazine publisher, book publisher andcommercial TV broadcaster as well as the largest children’spublishers in Scandinavia, Germany, Poland and Russia.
A-pressen has a majority stake in 49 local newspapers and46 online newspapers in Norway. It became a part owner ofTV 2 in 1995.
Norway's TV 2 sold to EgmontNORWAY
MEDIA
SWITZERLAND|BANKING
SNB tightens rules in wake of Hildebrand affairThe Swiss National Bank (SNB) has moved totighten internal rules for financial transactions madeby members of its governing board, Swiss Info re-ported. A meeting of the bank’s council decided pre-vious Saturday to subject all financial transactionsmade by members of the enlarged governing boardbetween 1 January, 2009 and 31 December, 2011 toreview by external auditors. “It became evident that,given the events of the past few days and develop-ments in financial markets, as well as with a view toimproving transparency, taking measures is in order,”the SNB said in a statement. The bank said it wouldundertake a comprehensive revision of regulations anddirectives governing private financial transactions in-volving financial instruments by members of theboard. Until the regulations review is complete, mem-bers of the board and staff with access to privilegedinformation must first obtain permission from theSNB’s chief compliance officer for foreign exchangetransactions that exceed 20,000 Swiss Francs ($20,939), the bank said.
NORWAY|BUSINESS
Scandic opens another hotelScandic and the Ogreid Eiendom have signed a contractto build a new hotel in the centre of Stavanger. The hotelwill open in 2013, it was reported. The architecturalunique hotel will get a prime location, close to the heart ofStavanger. The hotel will have 210 rooms, including roomsfor disabled guests. At street level there will be a restaurant,lobby bar and meeting rooms. There will be meeting fa-cilities for the total of 300 persons, where the largest meet-ing space can cater up to a group of 100 persons. Thebuilding will also have a underground garage, and of courseeverything you can expect from a Scandic hotel such as alobby shop, a gym and a leading sustainability program.“Scandic is growing rapidly in Norway –adding a total of7 new hotels since 2010. It’s an important market, makingthis an exciting development for Scandic in Norway,” saidScandic’s Country Vice President in Norway, Svein ArildSteen-Mevold. “Stavanger is one of Norway’s most im-portant cities, with a growing hotel market. The new Scan-dic in Stavanger will be a modern and inspiring additionto our chain” explained Steen-Mevold.
ICELAND|BUSINESS
Bauhaus to finally open Iceland storeGerman retail chain Bauhaus, which offers products forhome improvement, gardening and workshop, has triedsince 2003 to enter the Icelandic construction productmarket. Now, nine years later, its store will finally open onLambhagavegur in Reykjavík, Iceland Review reported.Bauhaus had actually already bought the lot and con-structed the store in 2008, and even hired employees,but a few months before it was scheduled to open inDecember that year the banks collapsed. The em-ployees were laid off and Bauhaus put its plans onhold. Ever since, the building with the Bauhaus signhas stood empty on Lambhagavegur. CEO ofBauhaus Mads Jorgensen said that even though theydon’t expect to generate profits in the beginning, it isfinancially more beneficial to open the store than keepit closed because it is also expensive to own the lot andbuilding. Bauhaus is now calling for applications, 60-80 positions need to be filled.
The chief executive of the Swiss watchmaker Swatch Group, Nick Hayek is looking at increased sales.| AFP PHOTO / FABRICE COFFRINI
Swatch watch top notch sales
CROATIA · ALBANIA · SERBIA · BOSNIAPage 26|New Europe CANDIDATESJanuary 15- 21, 2012
CROATIA|INVESTMENT
EBRD to invest inCroatian Post BankEuropean Bank for Reconstruction and Development(EBRD) had expressed interest in acquitting a share inCroatian Post Bank (HPB). The EBRD authorities finallydecided to offer a price which was unacceptable to the bank. However, a month ago Zsuzsanna Harditai, EBRD direc-tor in Croatia admitted that they were still interested: "Inthe last two years the bank importantly improved its businessresults, a clearing out and restructuring of the portfolio hasbeen carried out and with that it surely strengthened its ne-gotiating position," Harditai explained the change ofEBRD's opinion. Slavko Linic, the new finance ministerhad announced that the Croatian Post Bank and the Croa-tian Insurance company will be privatised.
SERBIA|ECONOMY
Serbia to maintain macro-economic stability in 2012Economic advisor to the Serbian Prime Minister Jurij Bajecsaid that irrespective of the crisis in Europe, Serbia willmaintain macroeconomic stability this year. He made thestatement as the government has allocated €1.5 billion inthe budget for capital projects and €600 million for subsidies,and has also signed a precautionary arrangement with theInternational Monetary Fund, Beta news agency reported. Bajec stressed that Serbia needs a cut in spending and im-plement a reform of the public sector and the tax system, inorder to achieve candidate status for EU membership. As aresult, Serbia will entice foreign investors on gaining mem-bership to the bloc. “These are definitely not all the neces-sary measures, because when you are a candidate for EUmembership, then investors see a long-term perspective ofwhere you are headed, and investments are long-term proj-ects. An investor would be more likely to come with the can-didacy as a sort of additional guarantee,” Bajec explained. He went on to say that Serbia will be able to gain funds onceagain from the EU, the World, Bank, the European Bank forReconstruction and Development, the European Invest-ment Bank. Some loans would be non-payable and undervery favorable terms. Bajec informed that Serbia is all gearedup to establish a development bank, which should help com-panies get cheaper loans through a system of business banks. Regarding monetary policy, the minister said the NationalBank of Serbia will be able to keep inflation at a consider-ably lower level compared to 2011, along with the referenceinterest rate.
ALBANIA|ECONOMY
Central Bank announce MonetaryPolicy for 2012-2014The Central Bank of Albania recently unveiled the mone-tary policy for 2012-2014. Under the terms of the docu-ment, the Bank of Albania will continue to adhere to theeffective policies followed in the last years consisting inmaintaining an inflation target of 3% and a free floating cur-rency exchange rate, AENews reported. Maintaining an in-flation rate near to 3% will help the bank to continuemonetary policy and contribute in the development of theAlbanian economy. The operational objective of the Bankof Albania will be the orientation of short-term interest ratesin the interbank market close to the key interest rate as wellas the limitation of their fluctuation. In the long term, thebank plans to keep the fiscal policy oriented towards main-taining the public debt under control and other parametersof budgetary health. The central bank of Albania also statedthat non-bank financial institutions in Albania increasedtheir loan portfolio by about 4% in the first half of 2011compared to the end of 2010.
Croatia launches EU referendum campaignCroatian Foreign Minister Vesna Pusichas officially launched a referendumcampaign by calling citizens to supportthe country’s accession to the EuropeanUnion, Javno reported.
Pusic said, "A decision whether Croa-tia belongs to Europe politically as it al-ways did geographically, historically andculturally, is to be made in the referen-dum," to be held on 22 January. As partof the campaign, two million brochureson the EU will be distributed to house-holds, while a special phone line for cit-izens to call for information has alsobeen opened. In this regard, Pusic saidthat the government is taking all effortto openly, clearly and precisely answerany questions and doubts faced by thecitizens over the EU issue.
"It is extremely important to send amessage that membership will dependon the citizens' decision -- if they say'Yes' Croatia is an EU member and ifthey say 'No' the whole thing is broughtto a halt," Pusic said. Around 60% ofCroatians supported the country's EUmembership compared with 33 percentwho voted against it, according to anopinion poll conducted by the IpsosPuls agency in December. Apart fromthe Croatian referendum, current 27member states need to ratify the treaty.
According to data from the Admin-istration Ministry, a total of 20,113Croatian citizens have applied to vote
outside their place of residence in theJanuary 22 referendum on Croatia'saccession to the European Union, Ad-ministration Minister Arsen Bauk saidon his Facebook profile. Of those20,113 citizens, 4,175 are people serv-ing prison sentences, 942 are peoplewho work as ship crew, and 100 aremembers of the Armed Forces. Thedeadline until which voters could reg-ister to vote outside their place of res-idence expired on Saturday, January 7.
Meantime, Nikola Ruzinski, formerstate secretary for environmental pro-
tection and Croatian negotiator withthe EU for Environmental Protectionand Energy recently stated that Croa-tia will need about €10.5 billion for di-rect investments to adjust to EU’senvironmental protection regulations.In addition with direct investments,the amount is expected to be muchhigher. The Environmental Ministryexpects the money to be offered fromEU’s structural and cohesion funds.Ruzinski said that together with agri-culture, this will be the most expensivearea of EU harmonization.
CROATIAEU
For years Bosniaks, Croats and Serbsfailed to agree on provisions in thecensus law concerning refugees anddisplaced persons. However after yearsof negotiations, the agreement reachedbetween political parties made possi-
ble Bosnia’s first census in 20 yearsscheduled to take place in 2013. Therecent agreement reached in Bosniawas mainly due to strong EU push tocarry out the population count.Re-cently lawmakers agreed to pass a crit-
ical law in February this year that willpave way for the first survey of Bosnia’spopulation since 1991, Fars newsagency reported. Since the last censusin 1991, Bosnia’s demographics havebeen based on estimations.
Bosnian Census scheduled for 2013BOSNIA CENSUS
Road construction company Koridori Srbije recently an-nounced that for this year €400 million should be invested inthe construction of motorways through Serbia, prioritisingCorridor 10 and the Belgrade - South Adriatic motorway(Corridor 11), Beta news agency reported.
Director of Koridori Srbije, Mihajlo Misic said that last yearthe completion of motorway sections from the Horgos bor-der crossing to Novi Sad, totaling 88 kilometers, and of thenew bridge across the Danube near the town of Beska markedthe realisation of the motorway through Vojvodina. He men-tioned that about 180 kilometers of the Corridor 10 motor-way has been underway over 2011.
European corridors are six lanes motorways, and Corridor10 is stretching over more than 800 kilometers through Ser-bia, including the routes Sid - Beograd, Kelebija - Subotica,Horgos - Beograd, Beograd - Nis - border with Macedoniaand Nis - Dimitrovgrad, toward the border with Bulgaria. Ac-cording to Misci, this year would witness the continuation of
construction of the bypass around Belgrade and of the easternbranc, from Nis to Dimitrovgrad, and the southern one, fromGrabovnica to Levosoje near the border with Macedonia. Hewent on to say that the construction works on the section fromPirot to the border with Bulgaria, the eastern branc of Corri-dor 10 are well underway, and the relevant tender proceduresregarding the other sections, are almost complete or thepreparatory works are still in progress.
“In 2012, we expect the completion of the construction ofsections of the route toward the Bulgarian border, as well asthe beginning of works on the southern branc of Corridor10 toward the Macedonian border and on the Belgrade -South Adriatic motorway,” Misic said. The 380 kilometersCorridor 10 motorway is scheduled to complete by end of2015. It should be noted that the route of the so-called Cor-ridor 11 through Serbia, is stretching from the border withRomania near the town of Vrsac to Boljare at the borderwith Montenegro.
€400 mln to be invested in roads in 2012SERBIATRANSPORT
Federal Chancellor Angela Merkel (L) salutes Croatia Prime Minister Jadranka Kosor after signing
Croatia's EU accession treaty.| AFP PHOTO / GEORGES GOBET
Turkish Foreign Minister AhmetDavutoglu recently had a meeting withJapanese counterpart Koichiro Gemba.In the course of talks, the Turkish min-ister assured that his country will col-laborate with Japan in the constructionof a nuclear power plant despite theFukushima disaster, Zaman reported.
“After the 2011 Tohoku earthquakeand tsunami, we are determined toproceed with this co-operation. Japan’sexperiences will further enrich the col-laboration,” he said. Citing the simi-larities between the two countries inthe level of energy required due totheir dynamic economies, the Turkishminister said that both countries havegreat potential to work on nuclear en-ergy and renewable energy with simi-lar projects. He added that Turkey andJapan are strong partners in regionalissues and pay special emphasis to de-veloping a common Asia strategy withthe country.
Both ministers agreed to extend tiesbetween Turkey and Japan into a strate-gic partnership and would establish amechanism between the ministries.
While commenting on bilateral eco-nomic ties, Davutoglu stressed that thesides would ink agreement to boosteconomic ties.
TURKEY · FYROM · MONTENEGRONew Europe |Page 27CANDIDATES
January 15- 21, 2012
MONTENEGRO|INVESTMENTRussian investors mullopportunities in Montenegro Russian investors have expressed strong interest in pur-chasing Montenegrin properties, according to Russiandaily Novaya Gazeta. The paper claims that the inves-tigation, in collaboration with the Centre for the Studyof Corruption and Organized Crime, an internationalorganisation that garners journalists and researchersfrom Eastern Europe, pored over cadastral records atthe Montenegrin Land Registry as part of its research,and found evidence of ownership of multiple proper-ties by the prominent Russians, including 150,000m2of land on the attractive Lustica peninsula, which wasonce owned by former Moscow Mayor Yuri Luzhkov.It was noted that an increasing percentage of Mon-tenegro property was owned by Russians, a trendstarted several years ago. For instance, Hotel Splendid(Budva) is one of the Russian-owned hotels in Mon-tenegro. A Russian language school in Budva also in-dicates the presence of Russians in Montenegro. TheRussian real estate invasion of the tiny Balkan capital- population 620,000, has left its mark, as large Russ-ian-owned hotels such as Hotel Splendid in Budvahave become recent and very prominent additions tothe coastal areas. It was reported that Russians wereattracted towards Montenegro as the latter is equippedwith beautiful coastline, fast-growing tourism sector,affordable real estate and low cost of living.
FYROM|TRADEExternal trade stands at $10.463bn in Jan-Nov 2011In the first 11 months of last year, external trade ofFYROM stood at $10.463 billion, according to pre-liminary data of the State Statistical Office. The ex-ports products comprise of supported catalysts withprecious metal or precious metal compounds as the ac-tive substance, ferro-nickel, iron and steel products(flat-rolled products), clothes, and petroleum oil prepa-rations. On the other hand, products in the imports in-clude platinum and platinum alloys, unwrought or inpowder form, the crude petroleum oils, motor vehiclesfor transport of persons and electricity. In the first 11months of 2011, FYROM’s export partners were EU's27 countries (60.7%) and Western Balkan countries(27.8%) while import partners were the EU's 27 coun-tries (54.5%) and developing countries (26.6%). Ac-cording to the total volume of internationalcommodity trade, the most important trade partnersof the Republic of FYROM are Germany, Serbia,Greece, Bulgaria and Italy.
FYROM|DEFENCESkopje expects NATO membership invitation Addressing representatives of the Association of Dis-abled Veterans, FYROM’s Deputy Defence MinisterEmil Dimitriev said that FYROM expects an invitationfor NATO membership at the forthcoming Summit inChicago after the verdict of The Hague-based Interna-tional Court of Justice (ICJ), MRTOnline reported. Theminister said that prior the summit, FYROM is mobil-ising all of its diplomatic resources to meet its objective.He said that military attaches, as an instrument of diplo-macy, have been instructed at all their meetings to pointout the ICJ's confirmation that FYROM has been pre-vented to access NATO membership despite the suc-cess by the country in meeting all membershipstandards.
Turkey's Prime Minister Tayyip Erdogan, right, shakes hands with Japanese Foreign MinisterKoichiro Gemba before their meeting in Istanbul, Turkey, 6 January 2012. Turkey will collaboratewith Japan in the construction of a nuclear power plant. |AFP PHOTO/PRIME MINISTER PRESS OFFICE/YASIN BULBUL
Turkish businessmen expects this year to be another year ofrapid export growth for the country with an almost $150billion year-end target likely to be met, Zaman reported.It should be noted that the statement was made amid thegrowing uncertainties over the shaky economy of the worldespecially in Europe. Last year the country earned $135bnin export revenue which is recorded as the highest in his-tory of Turkey marking an 18% increase compared to pre-vious year. In recent years, Turkey’s exports mainlycomprised of motor vehicles, chemicals, metals and textiles.As part of meeting $500bn target in 2023, this year thegovernment aims to bring the export volume up to $149bn.
“What we know is that we have reached an all-time highin export volume. This is certainly excellent, but we shouldnot see this as being sufficient and must raise the bar ofsuccess,” said Independent Industrialists and Businessmen’sAssociation (MUSIAD) President Omer Cihad Vardan.He is confident that Turkey will meet the $149bn targetthis year. In 2001 export volume of Turkey was merely$35bn but the export earnings quadrupled in a decade.Such developments are rarely witnessed in a country which
is yet to find a wealthy energy resource but has pended newand largely untapped markets, such as Africa, while grow-ing stronger in its traditional markets overseas. Meantime,Central Anatolia Machinery and Accessories Exporters’Union (Makinebirlik) President Adnan Dalgakiran as-serted that Turkey must continue to tackle its foreign tradedeficit, which recently increased to some 15% of its grossdomestic product (GDP). “With new incentives particu-larly for R&D investments, Turkey will make strides onthat front as well,” he said.
He also acknowledged Vardan’s views that that $150bnin export revenue at the end of this year is possible. Ac-cording to him, around 40% of Turkey’s exports head toEurope and the country will increase its exports more thanexpected if no crisis erupts in Europe. As a result, the coun-try will meet target of $150bn this year. Economy Minis-ter Zafer Caglayan said in Ankara that an importantincentive package would be announced before the end ofthe month. The package would facilitate domestic and for-eign investment in some sectors where Turkish industriesrely on foreign suppliers.
Turkey aim to meet target of $150bn in exports TURKEYECONOMY
The Turkish Statistics Institute(TurkStat) recently announced thatthe annualised inflation for consumerprices for 2011 was 10.45%, 0.45 per-centage points above an earlier esti-mated figure, news agencies reported.In the price index report, consumerprices increased by 10.45% and pro-ducer prices increased by 13.33% in2011 over the preceding year, TurkStat
said in a statement. In December 2010 consumer prices
were 0.585 while producer prices in-creased 1% over November 2011. Itwas reported that for the first timeTurkey has witnessed double-digit in-flation in three years.
Last year inflation was expected tobe around 10%. In the first quarter of2011, inflation remained below 5%
and the second quarter of this yearwitnessed speedy rise in inflation.Evaluating developments related toinflation, the Central Bank of Turkeysaid they were ready to take the nec-essary measures to maintain price sta-bility in markets. Expected inflation isexpected to decline in May of this yeartaking into account the country’s do-mestic demand growth.
2011 inflation up than estimated at 10.45%TURKEYPRICES
Turkey to co-operate withJapan in NPP construction
TURKEYENERGY
UKRAINE · MOLDOVA · BELARUSPage 28 |New Europe NEIGHBOURHOODJanuary 15- 21, 2012
Russian gas monopoly Gazprom said the amount of gasUkraine contracted to purchase in 2012 cannot be reducedto the annual 27 billion cubic metres Kiev is asking for. "Inaccordance with the contract, any change to annual vol-umes cannot in principle exceed 20%. In 2012, as every-one knows, the contracted volume is 52bn cubic metres andeven purely theoretically [it] could not be lowered to 27bncubic metres," Interfax quoted Gazprom representativeSergei Kupriyanov as saying. "No documents regardingchange to the volumes of Russian gas delivery to Ukrainehave been signed," he added. "And I would especially liketo emphasise that Ukraine did not raise the question of re-ducing volumes at the many negotiations over reducing theprice for Russian gas in 2012, at all."
Ukraine’s Energy and Coal Industry Minister Yury Boikosaid that in 2012 Ukraine plans to buy 27bn cubic meters of
Russian gas, which is almost twice less than it was plannedearlier. He added that gas talks between the two countrieswould continue. Boiko said that the talks would go on untilthe parties find a solution which is acceptable for Ukraine’seconomy. Under the current contracts, Kiev is to pay Moscowfor the purchase of 33bn cubic metres of gas annually re-gardless of the amounts of gas consumption. The head ofRussia’s Gazprom Alexei Miller stressed that the parties areworking under the formula “take and pay”.
Russia and Ukraine have been engaged in months of ne-gotiations on gas prices, which stand at $416 per 1,000 cubicmetres in the first quarter of 2012. Ukraine hopes that Rus-sia would reduce the price of gas but there is a catch - the saleof the Ukrainian gas transportation system to Russia and thecreation of a joint gas transportation consortium without theparticipation of the EU.
Gazprom against reducing Ukraine's gas purchases
UKRAINE
ENERGY
BELARUS|TRADE
Misnk ready to export goods to Armenia
Belarusian President Alexander Lukashenko said his countryis ready to intensify cooperation with Armenia not only ontrade-economic relations but also within international organ-isations, including the Collective Security Treaty Organization(CSTO). Lukashenko met with the Secretary of the Ar-menian National Security Council Arthur Baghdasaryan inMinsk. “We are included in the same military-political union-CSTO. We are ready to discuss any topic regarding bilateralcooperation,” Lukashenko said, adding it is necessary to in-tensify Belarusian-Armenian co-operation in the field of tradeas the bilateral trade turnover had decreased by one third. Ar-menia has offered expanding trade-economic relations withBelarus, in particular, delivering goods of agricultural ma-chinery, food. Lukashenko said that he sees no obstacle to im-plementation of the proposal. For his part, Baghdasaryan saidthat Belarus is an ally and strategic partner of Yerevan. “We areready to develop our trade relations and co-operation withinCSTO,” Interfax quoted Baghdasaryan as saying.
MOLDOVA|HUMAN RIGHTS
EU urges Chisinau to sustain anti-torture measuresThe Council of Europe's Committee for the Prevention ofTorture and Inhuman or Degrading Treatment or Punish-ment (CPT) published on 12 January the report on its lastvisit to Moldova in June 2011. It has been made public fol-lowing the request by the Moldovan Government that visitreports and responses be published automatically, the com-mittee said in a press release. In its report, the CPT notes thata significant proportion of detained persons interviewed byits delegation complained of police ill-treatment during themonths preceding the visit. Consequently, the Committeerecommends that the Moldovan authorities continue to im-plement anti-torture measures with determination. TheCommittee also recommends reinforcing the mechanisms forthe investigation of alleged ill-treatment. The CPT makes agenerally positive assessment of the conditions of detention atthe temporary placement centre for foreign nationals inChisinau, but recommends that the Moldovan authoritiesresolutely pursue the nationwide scheme to renovate policetemporary detention facilities. As regards prisons, in the lightof allegations received by its delegation, the CPT recom-mends that the Moldovan authorities exercise greater vigi-lance vis-à-vis the behaviour of staff at Penitentiaryestablishments No. 11 in Balti and No. 17 in Rezina towardsprisoners who have been segregated for their own safety. Al-leged beatings of inmates by other prisoners belonging to aninformal hierarchy within the prison population were anothersubject of concern, and the Committee recommends that ef-forts to counter inter-prisoner violence and intimidation bestepped up. As for conditions of detention, the CPT noteswith satisfaction that, in the light of the delegation’s prelimi-nary observations at the end of the visit, an action plan wasimmediately drawn up to combat overcrowding and improvematerial conditions in prisons.
Belarusian President Alexander Lukashenko |EPA/MAXIM GUCHEK / POOL
US Secretary of State Hillary Clintonsaid that Washington continues to ad-vocate for the release of jailed formerUkrainian prime minister and opposi-tion leader Yulia Tymoshenko. In a let-ter to Tymoshenko’s and the otherimprisoned former senior governmentofficials, Clinton also assured the US’commitment to free elections. “We willcontinue to advocate for judicial dueprocess and the release of you and theother imprisoned former senior gov-ernment officials as a critical step in thatprocess. Also, please be assured we arecommitted to free elections with theparticipation of all legitimate politicalcandidates and parties in Ukraine. Thisis another critical step toward EuropeanUnion integration and something yourcountry has done successfully in thepast. I hope this will again be the casein the October parliamentary elections,”Clinton wrote.
The Secretary of State said that shehas been following developments inYulia Tymoshenko’s case closely. “TheUnited States was disappointed theKyiv Court of Appeals upheld yourconviction without addressing issuesraised during the trial about selectiveprosecution and the administration ofjustice. Indeed, our concerns were thenheightened by the sudden decision totransfer you to a prison far from Kiev,
especially given reports about yourmedical condition,” the letter read.“We remain equally troubled by thecases against other former senior gov-ernment officials. I am heartened tosee that at this difficult moment youcontinue to support Ukraine`s inte-gration into the European Union andgood relations with all of its neigh-bours. Democracy and developmentgo hand in hand. Please be assured in
that regard that the United States willcontinue to support the aspirations ofthe Ukrainian people to transformtheir country into a prosperous Euro-pean democracy,” she said.
Brussels had said it was wary aboutKiev's commitments to the rule of lawlast year during meetings withUkrainian President ViktorYanukovych. Kiev has tried movingcloser to the EU.
Clinton reiterates support for Tymoshenko
UKRAINEHUMAN RIGHTS
Russian gas monopoly Gazprom maydemand to return the money paid forBeltransgaz, Prime agency reported.Gazprom has the right to require theBelarusian authorities to buy out Bel-transgaz’s shares earlier sold to Gazprom
at $5 billion in case of failure to performa number of provisions of the inter-gov-ernmental agreement on purchase andsale conditions and further activity ofBeltransgaz.
“On the demand of Gazprom, the
Belarusian party shall pay $5bn to buyout Beltransgaz’s shares earlier sold toGazprom and compensate Gazprom forthe losses that may occur in this regard”in case of failure to perform any condi-tion under the agreement.
Gazprom may demand $5bn from BelarusBELARUSENERGY
Former Ukrainian Prime Minister and opposition leader Yulia Tymoshenko, her husbandAleksandr, right, and daughter Evgenia, left, attending the City districts court session inKiev, Ukraine, 11 October 2011. |EPA/SERGEY DOLZHENKO
KAZAKHSTAN · TAJIKISTAN · TURKMENISTANNew Europe | Page 29NEIGHBOURHOOD
January 15- 21, 2012
At a recent government meeting, Turkmen President Gur-banguly Berdimuhamedov outlined the tasks for the min-istry of foreign affairs for this year, Turkmenistan.rureported. Under the terms of the programme of Action2012, Turkmenistan will host in the second half of this yeara seminar on security in Central Asia and the Caspian re-gion with broad participation of relevant delegations.
A political outcome of the conference would be an estab-lishment of an Advisory Council on Peaceful Developmentin Central Asia and the Caspian region. This May, anotherinternational meeting under the aegis of UN will be held toshare sharing Turkmenistan’s experience in granting citi-zenship to refugees and stateless persons. In the samemonth, Turkmenistan in its capacity as President of the CISfor 2012 will host a meeting of the CIS Council of Headsof Government.
In September, Turkmenistan will hold a meeting of theCIS Economic Council. In November, Ashgabat will host ameeting of Heads of CIS member states and a meeting of
the CIS Council of Foreign Ministers. In addition, Ashga-bat will host various meetings and conferences of the CIS.The Turkmen Head said that it is imperative for the coun-try to take part in the World Summit “Rio +20”, which willbe conducted by the United Nations in July 2012. He con-siders this forum as an important event for further progresstowards realisation of goals of sustainable development. Sev-eral specific initiatives would be made at the forum.
Turkmenistan also attach importance to participation inthe regular meeting of Shanghai Cooperation Organisationto be held in China in early June 2012.“Turkmenistan con-siders it essential to ensure strategic stability and peace andto fully adhere to the Charter of the United Nations. Ourcountry will continue to rigorously and consistently pursu-ing a policy of good neighborliness and peace-making, ac-tively promoting the work to achieve harmony andsustainable development,” the Turkmen Head said. Headded that Turkmenistan reject the use of military force asan instrument of foreign policy and international relations.
Berdimuhamedov outlines tasks for foreign ministryTURKMENISTAN FOREIGN AFFAIRS
This year Kazakhstan will celebratethe 20th anniversary of establishmentof diplomatic ties with several states.It was noted that the Central Asianation is finishing the implementa-tion of the “Way to Europe” pro-gramme and begins the developmentof the new agreements concerningthe enlarged partnership with theEuropean Union, Gazeta.kz reported.
Kazakhstan’s ties with Germany isbased on mutual trust openness andunderstanding. Besides cooperatingon the raw material in exchange forinvestments and technologiesscheme, both countries havestrengthened political, economic cul-tural and humanitarian interaction.
Meantime, the Czech Republic haslisted Kazakhstan among the top 12priority trade partners. Economistsand political scientists of the Czechrepublic have noted that Kazakhstan
is a stable, responsible and reliable in-ternational partner. Anarbek Kara-shev, Kazakh Ambassador to CzechRepublic said that the Czech Repub-lic being a member of the EuropeanUnion has not entered the Europeanzone and stayed with the conservativefinancial policy.
As a result, the country was alooffrom the financial crisis. Kazakhstanis working with its Czech counter-parts ion the development of regionalcooperation. Kazakhstan has ratifiedthe agreement between the Kara-ganda region and the South Mora-vian Region, which is the industrialregion of the Czech Republic. War-saw also pays special emphasis to co-operation the Kazakhstan andext5ends support to all internationalinitiatives of the central Asian nation.The Polish expatriate community inKazakhstan involved 50 thousand
people. Another state, Switzerland ispaying attention to inter-parliamen-tary links with Kazakhstan. Ties be-tween the two countries are based ona strong contractual basis. There isthe intergovernmental commissionon the trade and economic partner-ship.
Mukhtar Tleuberdi, Kazakh Am-bassador to Switzerland cited simi-larities between the two countries.Both are land-locked countries,multi-faith and multi-ethnic and theterritories of the two countries havenever witnessed wars. The aforesaidfacts indicate that both countries arepeace-loving nations. The ambassa-dor said that Switzerland knows thehead leader of the Kazakhstan verywell and hails him as a popular politi-cian, who has been able to create asuccessful and rapidly developingstate for 20 years.
Kazakhstan on the way to EuropeKAZAKHSTAN EU TAJIKISTAN|RELATIONS
Tajikistan, Afghanistan boostbilateral economic cooperationThe fourth meeting of the Tajik-Afghan commission fortrade and economic cooperation recently concluded in Kabul.The commission chaired jointly by Tajik Minister of Trans-port Nizom Hakimov and Afghan Minister of EconomyAbdul Hadi Arghandiwqal, Asia-Plus reported. Issues at themeeting covered bilateral cooperation between Tajikistan andAfghanistan in energy, transportation, agriculture, construc-tion, as well as science and social sectors. The commissionmembers also considered issues related to construction ofTajikistan-Afghanistan-Iran railway link. According to theAgency for Statistics under the President of Tajikistan, a two-way trade between Tajikistan and Afghanistan in January-November 2011 has amounted to more than $123.8 million,a rise by 53.8% than in the same period last year.
TURKMENISTAN|ELECTIONS
CEC registers Berdimuhamedowas presidential candidateTurkmen President Gurbanguly Berdimuhamedow has beenregistered as presidential candidate. He was registered at aregular session of the Central Commission for Elections andReferendums in Turkmenistan, Turkmenistan.ru reported. By now eight candidates have been registered.Berdimuhamedov, head of Lebaprurlushyk production as-sociation E. Gaiypov, director of Geotepe textile mill S.Batyrov, Deputy Energy and Industry Minister Ya.Orazgulyev, deputy head of Dashoguz region administra-tion R. Bazarov, head of Turkmengaz corporation depart-ment K. Abdullayev, manager of Turkmennebit concern G.Mallanyyzov, and Water Economy Minister A.Yazmyradov. All candidates are accorded equal rights andopportunities to meet with voters and familiarise them withelection programmes, campaigning, including the media.The registration of candidates will continue until January18. Under the law it begins 45 days before Election Dayand ends 25 days before. Berdimuhamedov has said thatthe future presidential election will be democratic and basedon the principles of openness and glasnost. Under Article51 of the constitution of Turkmenistan, eligibility criteriafor presidential candidate is a person born in Tajikistan,aged 40 to 70, having a command of the Turkmen language,who permanently lived in Turkmenistan for 15 years be-fore election, and working in the public or private sector.The elections will be monitored by both local (over 2,300)and foreign observers.
KAZAKHSTAN|BANKING
Halyk Bank awarded “BestTrade Finance Bank in 2012” In its annual trade finance survey covering 78 countries,Global Finance, a leading international financial magazineselected JSC Halyk Bank as the bets trade finance bank inKazakhstan 2010, Gazeta.kz reported. It should be notedthat JSC Halyk Bank is the leading financial services groupand the leading retail bank in Kazakhstan with the largestcustomer base and the broadest branch network. The mag-azine stated that criteria for selecting the bank as the leaderin trade finance business included transaction volume, scopeof global coverage, customer service, competitive pricingand innovative technologies. Umut Shayakhmetova, CEOof Halyk Bank is proud to see that efforts of the bank re-ceived recognition by such a reputable international editionas Global Finance. She said, “With export and importturnover accounting for more than 70% of GDP, trade playsessential role in the Kazakhstan's economy.” She informedthat that trade finance business increased by more than 30%in 2011 compared to 2010.
All roads lead to Brussels. Commission President Jose Manuel Barroso (R) and Kazakhstan President Nursultan Nazarbayev (L).| AFP PHOTO / JOHN THYS
PM: Public service system must be reduced
UZBEKISTAN · AZERBAIJAN · KYRGYZSTANPage 30| New Europe
NEIGHBOURHOODJanuary 15- 21, 2012
Kyrgyzstan’s Prime Minister OmurbekBabanov recently said the public servicesystem of the country must be reduced by3,200 officials. He told a recent session ofthe Commission on Public Service Sys-tem Optimisation that the state budgetwill be able to save one billion soms. “Themain task of the government is optimisa-tion of state service system and elimina-tion of agencies’ copy functions.
First of all 1,200 of 3,000 cars in the of-ficials’ car fleet will be reduced. In the firststage we will cut 700 cars. Only 21 platenumbers of KG Series - cars for ministers
and Prime Minister will be assigned tothe government,” the premier said. Headded that ministers will be deprived of astate plate number if they flouted roadlaws. The premier informed that two in-spections are created which will combinethe functions of 14 previously existingones. Babanov said, “The Technical andEnvironmental Inspection will includenine inspections and the number of em-ployees will be reduced from 700 to 400.Also they create the Veterinary and FoodInspection, which will undertake the for-mer duties of four inspections.
The number of Financial Police em-ployees will be cut from 418 to 200 peo-ple.” An interdepartmental commissionheaded by Vice Prime MinisterDzhoomart Otorbayev and Minister ofEconomy Temir Sariyev will be organised.The commission will select staff to Fi-nancial Police on basis of their compe-tence, non-participation in corruption.The head of the cabinet also said thatprobe of financial crimes should be solelymade by the Financial Police. Meanwhile,structural units of the government will bereduced from 21 to 14.
KYRGYZSTANPUBLIC SERVICE
KYRGYZSTAN|METALSStans Energy submits mining licenses for Rare Earth Stans Energy Corp announced the submission of docu-mentation for the licensing requirements to the KyrgyzGovernment for the Kutessay II Heavy Rare Earth De-posit and the Kalesay Beryllium deposit, news agencies re-ported. Stans Energy is a development-stage companyfocused on progressing Heavy Rare Earth (HRE) proper-ties in parts of the former Soviet Union. Rare earth ele-ments have many uses in the high-tech and clean techindustries. In 2009, the company acquired a 20-year min-ing license for the past-producing Kutessay II rare earthmine from the Kyrgyz Republic and in 2011 Stans com-pleted the purchase of the Kashka Rare Earth ProcessingPlant, the same plant that previously refined rare earth ele-ments (REEs) historically from Kutessay II. Stans Energy,COO, Boris Aryev, stated, “Mining licenses in Kyrgyzstanare comprised of two parts: License Certificate for the termof the license, which in Stans’ case is for the period 2009through to 2029; and a Licensing Agreement which typi-cally are negotiated for periods of two to five years with theKyrgyz Ministry of Natural Resources. This LicensingAgreement underlines scope of work which will be under-taken to move the project towards production.”
UZBEKISTAN|INDUSTRYUzbekistan to produce $916.9mn of localised products According to 2012 programme to enhance the localisationof production of finished goods, components and materialsapproved by the head of state, the industry of Uzbekistan isexpected to master production of more than 340 new typesof finished goods, components and materials worth $916.9million in 2011-2013. Machine building, electronics andaviation industries producing goods with high added value,account for about 40% of the forecast production, Uzbekre-port.com reported. Within a short duration, Uzbekistan hadcreated a whole system of the enterprises specialising in pro-ducing automotive parts for GM Uzbekistan. In past six toseven years, the number of domestic suppliers increased from20 to 200, while the level of localisation of production of pas-senger cars exceeded 60%, Uzavtosanoat, said in a statement.This year and the following year, implementation of 12 proj-ects will increase the figures to 80%. Enterprises of Uzel-tehsanoat association, which account for more than 13% ofthe import substitution finished products, components andmaterials was paid special emphasis. The industry orients onproduction of goods with high consumer properties - airconditioners, microwave ovens, household gas stoves, electricvacuum cleaners, energy-saving fluorescent lamps. Enter-prises included in the programme received incentives andpreferences. Until 2014, they are exempt from customs du-ties for imported production equipment and its spare partsand components not produced in the country.
AZERBAIJAN|BANKINGAzerbaijani Bank to double mortgage portfolio Samir Huseynov, chairman of Azerbaijani Texnika Bankrecently announced plans to allocate 40 million manat atmortgage lending this year, news agencies reported.Huseynov said, “We will develop our mortgage lendingat the expense of the Azerbaijan Mortgage Fund (AMF)in 2012, but we do not exclude that we will seek long-term funding to finance housing purchase within ourown mortgage programme.” Through the AMF, thebank has issued mortgages loans amounting to 30mnmanat. For this year, the bank will issue 10mn manatthrough the AMF and rest of the amount will be fi-nanced through attracted funds.
In the general context of the Arab Spring and the turmoil inKazakhstan, Azerbaijan President Ilham Aliyev has called foruplifting the living standards of the people of the country. Chiefof the Public Policy Department at the Presidential Adminis-tration Ali Hasanov said that one million jobs have been cre-ated in Azerbaijan with the unemployment level declining to5.5% and poverty ratio to 9%.
He added that Azerbaijan implements a programme of tar-
geted social assistance, which covers more than 500,000 peo-ple. Some 112,000 families monthly receive about an averageof $130. Noting the hike in salaries and pensions every year in-cluding last year, Hasanov said Aliyev is trying to strengthenthe population’s social security. As a result, the indicators madeAzerbaijan among the leaders on the CIS region. He alsonoted that Azerbaijan has a strong defence and security systemand it is impossible to exert external pressure on it.
Aliyev calls for improving people’s livesAZERBAIJANSOCIAL
Beijing pays special emphasis in devel-oping ties with Uzbekistan, Chen Zhili,special envoy of Chinese President HuJintao said at a reception organised bythe Chinese embassy in Tashkent wherehe participated in the events dedicatedto the 20th anniversary of establishingthe diplomatic relations betweenUzbekistan and China,Uzbekreport.com reported. The Chi-nese envoy expressed the readiness ofChina to be a true partner and friend ofUzbekistan. Citing the new directions ofrelations between the two countries, Zillisaid that various opportunities and broadprospects will open. "We are ready toimplement the agreements reached byour leaders together with the Uzbek side,to strengthen mutual political trust andto intensify the mutually beneficial co-operation in all fields," Chen said. Sherecalled that Hu and Uzbek PresidentIslam Karimov announced the course ofcreating partnership relations, friendshipand co-operation between the twocountries in 2004. The agreement onpartnership relations, friendship and co-operation between the two countries wassigned by the leaders of both countriesin May 2005.
The Chinese envoy met with Presi-dent of the Uzbek Senate Ilgizar Sabirovto further discuss relations between theirtwo countries. Chen, vice chairwoman ofthe Standing Committee of the NationalPeople's Congress (NPC), conveyed toSabirov greetings from China's top leg-
islator Wu Bangguo. Chen noted thatthe friendly and co-operative relationsbetween China and Uzbekistan have de-veloped smoothly since the establish-ment of diplomatic relations betweenChina and Uzbekistan 20 years ago. Thepast two decades has witnessed frequenthigh-level exchanges and an ever-ex-panding pragmatic co-operation in var-ious fields between the two countries,Chen said. The meeting between the twocountries' heads of state in Beijing lastApril elevated the co-operative friendlyties to a new level, Chen said. Accordingto Chen, inter-parliamentary co-opera-tion is an essential part of relations be-tween the two countries. The exchange
of visits between Wu Bangguo andSabirov last year gave a powerful impetusto inter-parliamentary co-operation be-tween the two sides, she added. Chensaid the NPC is willing to further en-hance exchanges and co-operation withthe Uzbek parliament, and to makegreater contribution to the developmentof bilateral ties. In turn, Sabirov said thatChen’s visit will contribute to compre-hensive deepening of the traditionalfriendship and mutually beneficial co-operation between the two countries. Heacknowledged that Uzbekistan attachesgreat importance to its relations withChina, and sees China as a reliable co-operative partner and good friend as well.
Tashkent, Beijing boost ties UZBEKISTANDIPLOMACY
Uzbek President Islam Karimov, left, and Chinese President Hu Jintao at a signing ceremony in Bei-jing, China in April 2011. Beijing pays special emphasis in developing ties with Uzbekistan, ChenZhili, special envoy of Chinese President Hu Jintao said in January 2012.|EPA/KOTA KYOGOKU / POOL
RUSSIA · GEORGIA · ARMENIA
New Europe |Page 31NEIGHBOURHOODJanuary 15- 21, 2012
Russian Prime Minister Vladimir Putinis preparing his presidential election pro-gramme based on sociological researchgathered by his United Russia party,Izvestia daily quoted his spokesman,Dmitry Peskov, as saying on 10 January.Putin is running to succeed PresidentDmitry Medvedev as president, in elec-tions scheduled for 4 March. Apart fromPutin, other candidates include Com-munist leader Gennady Zyuganov, Lib-eral and Democratic Party leaderVladimir Zhirinovsky, and Just Russialeader Sergei Mironov. Other possibleindependent candidates will have to col-lect two million signatures to becomeregistered.
United Russia People’s Programmehad been drafted for the 4 December par-liamentary elections and took into ac-count voters’ opinions as polled by theInstitute of Socioeconomic and PoliticalStudies. “Putin’s programme will not dif-fer from the People’s Programme a lot.This will be a compressed version. It will
have a lot in common, but also many newfeatures. The new worldview, connectedwith the changing world,” Peskov said.“This will be Putin’s personal personifiedworldview, as a person and as a politician,backed by arguments,” the official added.The parts that deal with economic policy,social programmes and international af-fairs will be the same in both programmes,but Putin’s personal programme will alsoinclude some personal preferences andsome concrete suggestions on the mosturgent problems facing Russian domesticpolitics. In particular, the program willdeal with reform of communal facilities,the problems of alcoholism and drug ad-diction, as well as crime and corruption.“These are housing and utilities services,alcoholism and drug addiction, crime andcorruption,” Vyacheslav Lysakov of Putin’selection staff told Izvestia. Peskov said theprogramme would be published by 12February.
Putin's popularity has taken a sub-stantial hit in the wake of recent anti-
government protests, a report from thestate-run Vziom research institute saidon 10 January. About 38% of Russianscurrently consider Putin the leadingpolitician in the country, a drop of 17points from the support he enjoyed inthe middle of 2011. Medvedev at presenthas only 19% support, a reduction of 18points from the popularity he enjoyed in2011, survey results published on the in-stitute's website said.
Nevertheless, Russian citizens havenamed Putin the political figure of 2011.Zhirinovski got 8% of the vote.Zyuganov got 7% of vote, a 5% im-provement compared with the previousyear. Mironov and billionaire MikhailProkhorov got 5% of vote. GrigoryYavlinsky, Alexey Kudrin and SergeySobyanin got 1% of vote each. About athird of questioned people (35%) couldnot name the politician of the year.
Football player Andrey Arshavin be-came the sportsman of the year for thefourth time.
Russia's Prime Minister Vladimir Putin chairs a conference call at the government headquarters in Moscow, 10 January 2012. |AFP PHOTO/RIA-NOVOSTI/YANA LAPIKOVA
RUSSIAPOLITICS GEORGIA|ECONOMY
External debt at $10.8bnThe National bank of Georgia recently announced that grossexternal debt of the country stood at $10.8 billion of which$3.6bn was public sector debt and $866.6 million of thecountry’s central bank as of 30 September 2011, Civil Geor-gia reported. The data recently unveiled by the central bankshowed that the banking sector accounted 18.1% share ofthe gross external debt amounting to $2bn. It said 95.3% ofthe gross external debt was denominated in foreign currency.In December 2011, credit rating agency Fitch had statedthat general government debt was set to decline in 2012-2013 from the peak of 37% of GDP reached in 2010. Fitchalso said that Georgia can still get loans from multilateraland bilateral sources as 79% of debt as in foreign currency. Itshould be recalled that Fitch had increased Georgia’s sover-eign-credit rating one notch to BB-, three short of invest-ment grade. “Concessional terms bring down debt servicingcosts relative to peers. Georgia has smoothed its maturityprofile following a successful Eurobond issue in April 2011,whose proceeds were used to buy back the majority of a Eu-robond maturing in 2013,” the credit rating agency said.Fitch stressed that Equity foreign direct investment will fi-nance around half of the CAD (current account deficit) in2012-2013 period. The remaining will receive finance fromboth public and private sector borrowing.
ARMENIA|ECONOMY Exports soar in 2011Data unveiled by the National Statistical Service (NSS)showed that the exports in Armenia amounted to $1.21 bil-lion in the first 11 months of 2011, a year-on-year increase of31%, Armenia liberty.org reported. The reason for increasein exports at a double-digit rate amid faster economic growth,were due to good performances in the domestic mining andfood-processing industries as well as the agricultural sector.However, exports were dwarfed by imports that went up by12.3% amounting to $3.75bn. The more modest rise in im-ports was enough to slightly widen the country’s massivetrade deficit in absolute terms. Taking into account thegrowth of the Armenian economy by more than 4% in 2011,the deficit is likely to have fallen as a share of GDP. The NSSdata also showed that base metals, ores and ore concentratescomprise nearly 58% of the Armenian export revenue in theJanuary-November 2011 period. Their exports were up byover 23%. A 53% rise in exports of precious metals and stonesand jewellery items that amounted to $180 million, readsNSS data reflecting upswings in the diamond-processing andgold mining industries. Armenia also exported $162.6mnworth of prepared foodstuffs, up by 40% year on year. Ex-ports of fruit, vegetables, livestock and other agricultural prod-ucts also witnessed a 34% rise, reflecting robust growth inagriculture as reported by the government.
ARMENIA|REFORMSPM pledges faster reformArmenian Prime Minister Sarkisian pledged that the gov-ernment will make parliamentary elections this May as themost democratic in history of the country, Armenia Libe-try.org reported. He said, “We must do everything to holdthe best elections in our post-Soviet history and make themas calm as possible so that our citizens do not feel any diffi-culty or trouble in their day-to-day life.” The premier sug-gested that implementation of reforms would make the lifeof citizens comfortable and ensure free and fair elections inthe country. In addition, faster pace of reforms would alsoearn the government a vote of confidence. Citing a WorldBank survey, Sarkisian said the investment climate in Ar-menia has improved as evident in the encouraging results of2011. He stressed that the business environment in thecountry must improve.
Putin turns to voters’ ideas to formulate programme
A delegation from Russian gas monopoly Gazprom was due toarrive in Dhaka on 9 January to finalise a draft of the deal todrill 10 onshore gas wells in the country. "We are eyeing to fi-nalise the draft of the deal with Gazprom this time,"Petrobangla Chairman Hussain Monsur said. The deal be-tween Petrobangla and Gazprom will be inked shortly, hehoped.
The government of Bangladeshi Prime Minister SheikhHasima on 20 December approved the contracts for drilling10 wells in existing gas fields by Gazprom. The move fol-lows the signing of an agreement with Russia for a nearly $2billion nuclear power plant that will be set up in Bangladesh.
Dhaka approved the onshore drilling contracts after almosttwo years of talks between Petrobangla and Gazprom.Gazprom is the first foreign company to partner Petrobanglain exploration without a production sharing contract (PSC).Gazprom will drill five development wells in the Titas andRashidpur gas fields. Gazprom will also drill five explorationwells in four gas structures at Shahbazpur, Semutang, Sun-dalpur and Begumganj, that are owned by Bangladesh Pe-troleum Exploration and Production Co Ltd (Bapex). Thedrilling is scheduled to be completed within 18 months ofapproval being granted. Gazprom will pay 5% of the totalcost as a performance guarantee.
RUSSIAENERGY
Gazprom close to finalising gas deal in Bangladesh
KASSANDRASilencing journalists may be easy, butwhen it comes to banks things aredifferent.
Page 32 | New EuropeJanuary 15- 21, 2012
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Eurozone defies the bad omens
Greek citizens were outraged to find out that, despite theunprecedented austerity measures they are subject to, theirpolitical parties have financial immunity, despite havingreceived €48.8m as state subsidies in 2010! This represents €4.52 per citizen, one of the highest suchcontributions in Europe. In comparison with countrieswith similar populations, state subsidies to political par-ties per citizen were €0.80 for Portugal, €1.84 for Hun-gary, €1.61 for Germany, €1.57 for Belgium, and €1.17 for
France. It should be noted that during the last 10 years theGreek political parties received state subsidies totaling€900m!This is only the tip of the iceberg, as most of the Greek polit-ical parties have taken huge loans, placing as guaranties their fu-ture state subsidies…even up to the year 2016! It is worthmentioning that the total exposure to bank loans of the twomajor parties exceed €114m for PASOK(Socialists) and €128for New Democracy (Popular party).
Considering the current political situation and outlook forGreece, it very uncertain if these two parties will exist in2016 or if they will maintain their electoral share (onwhich the state subsides are based).Are the representatives of the EU triumvirate aware ofthis? Wii the Athens-based head of the Greek Task Forcereport back to Brussels on this scandal? Or is austerity onlyfor the citizens but never for the politicians and their po-litical parties?
On 30 December 2011, New Europe reportedthat, according to the EU’s statistical serviceEurostat, the Eurozone recorded a trade sur-plus of €1.1 billion in October last year, follow-ing another significant positive foreign tradebalance in the preceding month of €3.1bn. InNovember this surplus reached €6.9bn accord-ing to the same source.
In reality, the Eurozone has been and willcontinue to be a positive external trade econ-omy, a fact that lies behind the strong perform-ance of the euro against the dollar, even duringthese times of grave financial difficulties.
According to any economic theory, foreigntrade surpluses constitute the most importantand unshakable foundation for a currency's ex-ternal value and the euro is solidly based onsuch a surplus.
In view of this, the current sovereign debtproblem in some Eurozone countries it doesnot diminish the fact that the Eurozone hasproved itself able to support its currency’s for-eign value.
Of course, sovereign indebtedness can un-dermine the value of a monetary unit, but fromthis point of view the Eurozone does not havea worse problem than the US or Japan.
The overall sovereign indebtedness of theEurozone is around 85% of GDP, while the USis at more than 100% and Japan more than200% of GDP. In fact, the Eurozone as a wholeseems very solidly based on much better foun-dations than the US and Japan, and it was forexactly these reasons that money markets havenot bothered much with Greece, Portugal andIreland’s over-indebtedness problems.
All those three economies taken together ac-counted for less than 5% of Eurozone's totalweight. Their combined problem could be con-tained and actually was solved just by creatinga €400bn financial backing facility at the be-ginning of 2011, irrespective of their individualefforts to reduce their government budgetdeficits.
In reality nothing seemed to threaten the for-eign value of the euro, until contagion affectedItaly. Rome's total sovereign debt amounted tothe ‘impressive’ total of more than €1.8 trillion– and any doubts over Italy's ability to pay backits debts may trigger an unpredictable chain re-action. International money 'sharks' have alsorushed to profit and, given the complete chaosin the global financial markets where nothing isclear or controlled, the Italian problem maythreaten the entire globe.
Fortunately, more than half of Italian sover-eign debt is financed at home, but investors
have nevertheless been alarmed and have ex-ited Italian bonds in panic. The problem wasaggravated by the inability of the EuropeanCentral Bank (ECB) to act as American ofJapanese central banks would and buy upRoman debt paper, due to the fact that theECB is not allowed to finance governments.
Germany insisted that the only role of ECBis to protect the money zone from inflation andthat the central Eurozone bank has no right torefinance sovereign debt. Berlin's old inflationfears left the ECB with half the standard man-date of a central bank, while Germany and theother surplus Eurozone countries did not wantto see the bailing out ‘sinner’ countries such asGreece so quickly and easily.
The stalemate over Italian- and Greek-debtrefinancing has taken on global dimensions,given that the New York and London financialmarkets expressed alarm at the prospect of anAthens or Rome default, and that US andBritish money spinners who had been playingwith Greek and Italian bonds in peculiar ways,were set to lose out.
Washington and London had always hadproblems with euro developing as a reserve cur-rency that threatened the position of both thedollar and the pound sterling, but they couldafford a total collapse of the Eurozone. So, boththe US and the UK are now pressing Germany
to allow the ECB to intervene and provide Eu-rozone banks and governments with badlyneeded liquidity.
Paris during the past year was of the sameopinion, given the large exposure of Frenchbanks to Greek and Italian debts. However, theECB still cannot directly support governmentsby buying their bonds in the primary market.
The ECB intervenesGiven, however, that the stalemate contin-
ued, towards spring 2011 the ECB began buy-ing Greek government bonds in the secondarymarkets, initially from French and Germanbanks, to help lenders but not the Athens gov-ernment.
As things have turned out in our financialworld, some banks are too big to fail but notgovernments, it would appear. In any case, theECB intervened during October 2011 in theItalian secondary sovereign debt market to buyup old bonds, after Berlin and Paris had tradedthis assistance to Rome for a change in the Ital-ian government. Then the ECB, just days be-fore 2011 ended, provided almost half a trillioneuro to more than 500 Eurozone banks in softliquidity loans.
It was the first time that the Eurozone hadused 'real' money to counter its debt crisis, giventhat a good part of what those 500 banks re-
ceived from the ECB went to finance govern-ments through bond buying by the banks.
This kind of money to banks, along with the€800bn allocated by the 9 December EU Sum-mit to EFSF/ESM financial support mecha-nisms and the IMF, to see that no Eurozonecountry defaults, have changed the rules of thegame.
The decision by 26 EU leaders, with the ex-emption of UK Prime Minister DavidCameron, also taken on 8 December, regard-ing the creation of a strong fiscal Union withinthe EU in 2012, was only a supportive measureto safeguard the Eurozone.
Incidentally, it should also be mentioned thatthe ECB has formed an alliance with the othermajor central banks (Fed, Bank of England,Bank of Japan, National Swiss Bank, Bank ofCanada). The six central banks mutually guar-antee the liquidity of all banks in all currencieswithin their territories. In short, the prospects ofEurozone for this year, 2012, are not too bad,given that the liquidity of all banks is fully guar-anteed in any major currency.
Banks versus governmentsThe fact however that the liquidity of all and
every bank in the Eurozone is guarantee at al-most zero cost (1% interest rate), passes thepressure to governments. The idea in Berlinand Paris is that governments may default butnon banks.
This will add pressure to 'sinner' administra-tions in Greece, Portugal, Ireland and Italy totake more austerity measures. In total the Eu-rozone through the EFSF/ESM - IMF andthe ECB is also guaranteeing that no one of itsmember states will be left to rot.
During 2012, there will be pressure on Eu-rozone member states to control budget deficitsand state debts but the 'game' will not containa way out, unless a member state requests it.
In November, however, a proposal by formerprime minister George Papandreou for a ref-erendum in Greece on the country's positionin the Eurozone cost him his job. He wasswiftly replaced by Loukas Papademos an exECB vice governor, who is expected to dowhatever it takes to keep Greece in the moneyzone. If Greece falls apart politically and sociallybefore mending its financial accounts, then itsexit from the Eurozone will not be followed byuncontrollable contagion effects.
There will be strong firewalls protecting allthe Eurozone banks and other member states,that may feel the heat from such a Greektragedy.
The Troika’s selective reporting
A poster reading "The Peseta is back" and displaying pictures of pesetas notes is pictured in Salvaterra de Mino,northwestern Spain, on December 15, 2011. In Salvaterra, on the border between Spain and Portugal, restau-rants, taxi drivers, pharmacies and about 50 other businesses have been accepting payments in the old Spanishcurrency for one month. |AFP PHOTO / MIGUEL RIOPA
