new europe print edition issue 986
TRANSCRIPT
NEWEUROPE19th Year of Publication | Number 986 | 13 - 19 May, 2012 | € 3.50 www.neurope.eu
Helen Clark, formerly the longest servingNew Zealand premier, has just announcedthat she will be seeking a second term as thefirst female head of the UN DevelopmentProgramme (UNDP). While visitingBrussels, she spoke to New Europe, about therole of the UNDP in a global context, its rela-tionship with the European Union and Asiaand the unique perspective she feels she has, asa New Zealander, in observing global affairs,both politically and economically. “We’reWestern but Southern hemisphere”, she says.
“New Zealand is the most remote devel-oped country, geographically. If you look at thecircle of relationships, it’s Australia and thePacific islands, it’s into the network ofASEAN, the East Asian summit, then there’sanother layer, the Commonwealth, and thenthe old friends in Europe we have bilateralrelationships with and America. We are well
positioned. While we retain a very stronginterest in the markets of Europe and NorthAmerica, in the future we would be increas-ingly tied to East Asia, but we do retain a widebasket of trading partners, we’re not ever tooexposed to anyone. It doesn’t hurt to be nextdoor to Australia because it kept growingwhile others floundered.” Looking beyond thecurrent situation, she says that one of the maintasks of the UNDP is in patiently buildingdemocracy and capacity in the developingworld, something that takes time. In Europe,she says, while it took only a few hundred yearsfrom the Magna Carta to universal suffrage,elsewhere it will be longer: “If you look at it inthat framework what developing countries arebeing asked to do it a tremendous challenge.We forget that Northern societies have gonethrough tremendous convulsions to get wherethey are today”.
There are several indications thatGermany is now preparing to help therest of the Eurozone's ailingeconomies. They will have a popularcharacter too; generous wage increases.
Of course, this will take place incountries which can safely afford it,like Germany and the other surplusEurozone member states. The rest willgain indirectly. This move is now visi-ble in Germany and goes in parallelwith Angela Merkel's political needs,given the grave difficulties she faces inregional elections. At the same timethis policy will give an answer to thoseEuropean leaders who demand a newstrategy for growth, no less FrançoisHollande.
So it was not by chance that lastweek the German central bank, theBundesbank, a linchpin for Germanand Eurozone financial affairs, sur-prised us all by announcing that whatGermany and the Eurozone need nowis more inflation! This is quite new to'Buba's' tradition. This new turn how-ever is not the only indication thatsomething is changing in Germany.Only some days ago the minister ofFinance Wolfgang Schaeuble, said hewas backing the idea that the on goingnegotiations between trade unions andemployers in Germany over salaryincreases in the private sector, may givethe country's consumption demand astrong push. Schaeuble also agreedsome weeks ago to salary increases for
the German public employees, of theunusually high percentage of 6%.
This does not mean that Germanywill agree to other Eurozone countriesdoing the same. Berlin's lines fordeficit reduction in the over-indebtedmember states will hold well. Againstthis background Berlin will proposethat the countries which can safely
increase salaries and wages likeGermany will do this and thus helpindirectly the rest of the Eurozone bynot only increasing their their importsof goods and services (tourism) butalso by reducing their competitivenessand indirectly make the rest of theEurozone more competitive.
Germany favours wage increases
Meaningful development, sustainable growth
· Pages 3, 4, 6
Social Europe returnsEUROPERarely has an election resonated so widely acrossthe European Union as theFrench presidential ballothas done...
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POLITICSThe political agenda ofPresident-elect FrançoisHollande was broadly basedon the promise to restore amore just distribution...
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SERBIADays after the general electionsin Serbia, the two parties whichwere the backbone of the previ-ous government ag reed to con-tinue political co-operation...
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RUSSIAIn Russia, there is a secondNew Year, the Old NewYear, which takes place afterthe regular New Year. Onthat note...
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German Chancellor Angela Merkel with Finace Minister, Wolfgang Schaeuble. Will the countryaccept a relaxation of austerity measures? | EPA/WOLFGANG KUMM
While many are concerned about cli-mate change, Tony de Brum, Minister-in-Assistance to the President of theMarshall Islands has reason to be a wor-ried man. With the islands being only 2metres above sea level, they will be thefirst nation to disappear under thewaves if climate change is not adequate-ly tackled. The Islands were among rep-resentatives, gathered for informal talksahead of a UN debate later in May.Organised by Climate CommissionerConnie Hedegaard as a ‘coalition of theambitious’.
Marshall plan
·Page 10
Fan mailPage 15
FASHION & STYLE
INTERVIEW: HELEN CLARK
ANALYSIS Page 2 | New Europe NEW EUROPE13 - 19 May, 2012
NE 15 YEARS AGOA possible successor as Climate Change Commissioner?|BBC
The Shooting Gallery
All over central Europe and in the new countries that emerged from the ex USSR, the fall of communism and withit the dissolution of their centrally planned economies led to an unprecedented drop in living standards in a briefperiod of time. The worst hit sector was the social protection and the pension and health systems, which had beengenerously subsidised in the past. In the 1990s however, it proved quite impossible to maintain the standards of theold system. The real value of pensions kept diminishing very fast and millions of old people were confronted evenwith the phantasm of starvation. For many years and in many cases until today, pensions became just tokens and oldpeople relied on relatives and philanthropy.
After ‘Merkozy’Ladbrokes and William Hill have apparently stopped takingbets on Greece withdrawing from the single European curren-cy. According to the bookmakers, it is an inevitability, a racingcertainty. If it does indeed happen, and, despite the bookies fer-vour, it is not inevitable, it will be a severe blow to theEuropean project, and a heartening event for its detractors. Butyou will Europe react to this would-be devastating setback tothe ongoing process of transnational integration?Already for the past number of years, it has furiously been indefence mode; imposing cuts, preaching austerity and spend-ing discipline, scrutinising budgets and looking for ways toform a united front of economic policies, policies that oppo-nents said would effectively spell the end of Keynesian eco-nomics. Austerity would prove to be a victory for the politi-cal right.For a while, European citizens agreed with all this. At the lastEuropean elections in 2009, the centre-right consolidated itsposition as the most powerful group across the EU. But thingschanged since then, governments, under increasing financialpressure, and, in cases like Greece and Ireland, apparentlyunder the yoke of the EU (as well as the international banks),began to see protests, of varying degrees of intensity, on thestreets. Since the beginning of the financial crisis, over tenEuropean governments have changed, as voters look to punish.Now, in response, everyone is talking about growth.Essentially the preserve of the centre-left, austerity is beenchallenged, and strategies for jobs and investments are beingcalled for. Even the centre-right have been dragged-in. Anextraordinary European summit is due on the very topic atthe end of the month.Largely, the catalyst for this is the election of FrancoisHollande as president of France. Growth was a main campaignpromise. As one of the engines of Europe, along withGermany, what a French president preaches is always worthtaking note of. On 16 May, a day after his inauguration,Hollande will travel to Germany to meet Chancellor AngelaMerkel. What comes out of the discussion will be a big indi-cation of future Eurozone policy.Germany, of course, want control of the Eurogroup; currentfinance minister Wolfgang Schaeuble, is angling after currentEurogroup chairman, Jean-Claude Junker’s job when the lattersteps down on 1 July. This, and other appointments, will bediscussed at the official summit at the end of June. But, even inthe run-up to these two meetings, Germany has agreed to bemore conciliatory in growth policies. ‘Merkozy’, the twin-headed economic powerhouse is now officially dead, and a newstart is promised. And Europe does need a new start. Emboldened left-wingparties are forcing pressure on heads of state, brining them intothe growth discussion. They have declared the failure of aus-terity policies; and in this, they are correct. But this should notbe seen as a partisan issue; the recent history of grand coali-tions has shown us that Europe is not in a fractious mood. Onone side, there is the unacceptable side of protest, the extremes,on the other a citizenry, many socially vulnerable, the elderlyand the young, who, through no fault of their own find them-selves under attack, and looking for protection. Electoral poli-tics and games-playing may squeeze out the extremes, butthere are still people who need looking after. For them, growthis the right way to go. For this, though, a strong Europe isneeded. Over to you, Mr Hollande. Promises are one thing,delivery is another.
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ANALYSISNew Europe |Page 3NEW EUROPE
13 - 19 May, 2012
Chancellor Angela Merkel speaking at theGerman Bundestag has appeared uncompro-mising with her position of whatever plan is tobe discussed over enhancing Eurozone'sgrowth potential cannot be financed with bor-rowed money and more government budgetdeficits. This was a clear answer to what theFrench president elect François Hollande hasbeing advocating all along his electoral cam-paign and also during this past week. In herspeech Merkel delivered a wholesale answer tocentre-left politicians in her country and else-where in Eurozone, Hollande included, whosupport a new strategy for growth partly fi-nanced with public money.
By the same token they ask for a relaxation ofthe austerity measures imposed on the entireeuro area. Centre-left politicians insist thatpublic investments in infrastructure can bepartly financed with Eurobonds, attracting alsoprivate investments. They propose that the newpublic deficits should not be included in thegovernment accounts as regular budget deficits,but rather be considered as investments ex-cluded from the 3% of the GNP upper limit.Merkel answered that growth financed withmore government borrowing will lead at a laterstage to an even deeper recession. She addedthat more growth has to come from structuralmeasures and not from more public spending.Merkel also dismissed leverage and Eurobondsto be used to finance large infrastructure proj-ects in the Eurozone, concluding that the onlysane way for Eurozone to exit from its presentcrisis, is to take a long and painful way to re-duce indebtedness and increase productivity,sticking to the old German tradition of austereideology.
Right after that Francois Hollande send amessage from Paris that he is not backing fromhis initiative to change the strategic target ofEurozone from austerity to growth. The newFrench president elect met in Paris with thepresident of the European Union, Herman vanRompuy, and the president of the Eurogroup,Jean-Claude Juncker, in an attempt to enhancehis European Union strategy towards a newway of decision making, away from the'Merkozy' patent. Given this the 16 May meet-ing between Merkel and Hollande in Berlinbecomes all the more important, with marketsand and the entire economy waiting for theoutcome.
Apart all that the bleak reality in Eurozone ishowever that almost all its member states areheading deeper and deeper into recession, at thebright exemption of Germany. The centralbank of Holland warned on Thursday 10 Maythat the Eurozone is running the danger of fol-lowing the Japanese 'lost decade' trap, withweak or negative growth, low consumption, lessinvestments and expensive money. This realitymust have been in the background of the sur-prise announcement by the German centralbank, the Bundesbank, that what Germany and
Eurozone need now is more inflation!This is quite new for 'Buba's' tradition, which
for decades has been a jealous safeguarding ofthe value of the Deutsch Mark in the past andthe euro during the last ten years, protectingthem from any inflationary threats, even imag-inary at times. This new turn is not a sole indi-cation that something is changing in Germany.Only some days ago the Federal Minister of Fi-nance Wolfgang Schaeuble, said he was back-ing the idea that the on going negotiationsbetween trade unions and employers in Ger-many over salary increases in the private sector,may lead the country's consumption demandto as strong improvement. It was exactly thesame line of thinking when this same politicianagreed some weeks ago to salary increases forthe German public employees, of the unusuallyhigh percentage of 6% over the next eighteenmonths. This is a strong indication that Ger-many is not afraid any more of some more in-flation above the current levels of 2.7%. It mightalso betray a tendency in Germany to help theentire Eurozone, by increasing the consump-tion expenditure in the country, thus helpingnot only the Mediterranean countries withhigher demand for holidays but also its tradepartners in the euro area with more imports ofconsumer goods.
This new policy line of a little bit more in-flation and increased consumption demand inthe Eurozone's power house economy is alongthe lines of what Will Hutton suggested in anexclusive interview to New Europe some timeago. William Hutton is an English writer,weekly columnist and former Editor in Chiefof The Observer. He is currently Principal ofHertford College, Oxford, and Chair of the BigInnovation Centre, an initiative from TheWork Foundation (formerly the Industrial So-ciety), having been Chief Executive of TheWork Foundation from 2000 to 2008.
Hutton, when asked by New Europe about
the grave concerns over the Eurozone's aus-terity policy he said “What should happen isthat Europe is encumbered by too much pri-vate debt. There’s too much private debt in
relation to Europe’s GDP. What Europeneeds, and what Germany will never accept,are five or six years of inflation. What Europeneeds is five or six years of inflation around6%. We need the ECB should set up targetfor the growth of money GDP in the Euro-zone of 6% to 8% and for it to organize mon-etary policy to organize money growth at thatlevel, which will make the private debt sup-portable. That would allow countries such asIreland, Spain to stay in the Eurozone”.
“That should happen, but it won’t. I think thedecisions to be taken in the next few days andweeks are fundamental and I fear that the fudgeor economic 'impossibilism' in Europe and thatwe may watch the European project crack up. Iam very, very concerned”.
Fortunately it seems now that the strongGerman denial for any kind of inflation andconsumption led growth is now changing. In-flation will also help reduce the real value ofthe sovereign and the private debt, given thatinterest rates are not following the inflationhike, at least not closeely. In short the Ger-man answer to Hollande may be that Berlincould accept a new growth policy led by pri-vate consumption, while also tolerating moreinflation.
ECONOMY
Germany to accept consumption-led growth and more inflation
German chancellor angela Merkel (front) and German Foreign Minister Guido Westerwelle (R) speakswith advisors at the lower house of parliament Bundestag.|AFP PHOTO / ODD ANDERSEN
By Dionyssis Kefalakos
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Page 4| New Europe NEW EUROPE
ANALYSIS13 - 19 May, 2012
On Tuesday 8 May in Athens, amidstthe political turbulences that the re-sults of Sunday's election brought tothe country, it was very interesting towatch the Greek Treasury raising eas-ily €1.3 billion in T-Bills at an onlyslightly increased interest rate. The in-terest cost was formed at just 14 basicpoints higher at 4.69%, instead of4.55% one month earlier. The debtpaper issue was easily covered by offersthat exceeded the amount asked by 2.6times, instead of 2.62 times during thelast similar auction. This developmentdoesn't mean of course that the coun-try is self sufficient in financing itsdebts, but it is a good sign that in-vestors do not fear a Greek bank-ruptcy, at least not in the short term.In any case, the offers must have comefrom the Greek commercial banks,which received last week an injectionof liquidity of €28bn from the Euro-pean Financial Stability Facility, as anadvancement of the approximately€48bn recapitalisation exercise infavour of the Greek lenders, to be re-alised over the next few months.
This money will be coming from theEU-ECB-IMF troika, which is the onlysource of new loans for Athens. The re-capitalisation of the banks will take placeirrespective of what government thenewly elected Parliament may or may notproduce, and be dissolved. In any case theGreek lenders find it a good business tolend their government money at 4.69%,having themselves paid almost nothingfor it.
LiquidityIn any case it is not only the liquidity
of the Greek banks that needs a lot ofsupport, but more so the cash-flow of theGreek government which is at stake.
As things stand now, the Papademosgovernment, which still runs the country
as a caretaker administration, only re-cently signed the second memorandumof understanding (MoU) with Greece'sofficial lenders, namely the EU-ECB-IMF. However, Athens is expected toapply more austerity policies to go withthe new soft loans, and it was exactly thisGreek voters rejected last Sunday in a leg-islative election, which changed all to-gether the political scenery in the country.
Not forgetting that Greece, after threeyears of austerity and recession, has lost atleast 15% of its incomes and production.Consequently, the political parties thatbrought the country to the present deadend were penalised by citizens, who voteden mass for those who reject the addi-tional austerity measures. Given this,whatever government is formed from thisnew Parliament or from the one thatmight be brought about after a probablenew legislative election on 10 or 17 ofJune, the austerity programme providedby the MoU, will be rather impossible tobe applied.
GrowthThe victory of François Hollande in
the French presidential race and hispromises for a new growth-led overallpolicy mix in Eurozone, is actually goingthe same way as the rejection of the moreausterity/recession prospects the Greeksjust choose. It is not an exaggeration tosay that the results of the Sunday electionsin France and Greece are bound to forceBrussels and Berlin to change their coursetoo. Incidentally, the outgoing presidentof the Eurogroup, Jean-Claude Juncker,speaking on the ZDF network said thatEurope must focus now on growth andused the case of Greece, to stress the re-sults that continuous austerity policiesmay have on the political structure. Headded, “we have to give hope. The elec-tion results in Greece shows us what canhappen without hope. We got to solve
this dilemma”.On this same lines, on the need for
growth policies, the usually careful headof the IMF, Christine Lagarde, ap-peared positive for relaxed measures incase of countries in recession. He said,“with the wrong policies we run thedanger to lose one whole decade ofgrowth, one whole generation of youngpeople and miss the opportunity toplace the world economy on a safe base”.Both those policy makers hold in theirhands very important policy instru-ments and their comments are not to betaken as a mere analysis, but down toearth policy proposals. In Germanyhowever the economic policy narrativechanges. The Federal Minister of Eco-nomics, Wolfgang Schauble, speakingtoday (8 May) to the ARD network saidthat Germany will not renegotiate theFiscal Pact and he added that he is con-vinced that France, under the new lead-ership, will follow the same policy. Heknows for sure, however, that Paris isgoing to ask for at least a growth en-hancing addendum to the Fiscal Pact.So his remarks can be read in the inverseand be interpreted as a readiness to dis-cuss the new Paris proposals.
If one adds to that last week's insinua-tion by Chancellor Angela Merkel thatGermany might accept the drafting of anadditional 'Growth Pact', then it is easilyunderstood that policy directions areabout to change in the Eurozone. Alreadythe President of the European Union,Herman Van Rompuy, has announced anextraordinary European Summit with the27 leaders on 23 May to discuss thosematters.
Before that however Hollande is ex-pected to travel to Berlin to meet Merkelon 16 May, the next day after he takes theoath as President of France. The results ofthis meeting will act as a compass for theEuropean Summit of 23 May.
ECONOMY
Eurozone: Planing for growthand fiscal consolidation
Francois Hollande's victory in the French presidential election on 6 May has given rise to the hope that new, growth-led policies will emergein Europe. |AFP PHOTO JEAN-PIERRE MULLER
Focusing on Hollande-Merkel meeting
The day after he is to take the oath as president of France,François Hollande, is expected to travel to Berlin on 16May to meet the German, Chancellor Angela Merkel. Inthe best scenario, Europe and the world is expecting tohear from the two that a new compromise has emergedover the direction Europe is to take in view of its darken-ing political and economic horizon. If the worst scenariomaterialises, the two will break up holding on to their vis-ibly differing lines over the right solution for Europe's fi-nancial problems, thus putting in danger the short and thelong term future of the EU.In her message congratulating Hollande for his victory,Merkel said “it is us who have to take the necessary deci-sions for the EU and the Eurozone in order to prepare oursocieties for the future and guarantee their well-being”. Asis already known, Hollande asks for deep changes providingfor growth enhancing policies to be inserted in the auster-ity infested Fiscal Pact, the 25 EU leaders have signed onemonth ago. Hollande however has made the notion ofgrowth as the main issue in his electoral rhetoric that wonhim the French presidency last Sunday.On this issue Pierre Moscovici, a close aid to Hollandeand director of his electoral campaign said that there hasto be a compromise solution with Germany on growth.Asked about the new strong refusal by Merkel to waterdown the Fiscal Pact, Moscovici said that “the new Frenchpresident does not want to under-sign a pact under itspresent form and he wants to add to it a growth facet”.The quest to add a growth chapter to the Fiscal Pact hasnow gathered momentum after prominent German econ-omists and politicians have started to talk loudly aboutthis. Peter Bofinger, a member of the German govern-ment’s and the Bundestag's council of economic advisersand member of the powerful council of “five wise men”asked for a relaxation of the severe austerity measures ap-plied in Eurozone's over indebted countries suffering alsoof deep recession.The co-leader of the German Greens Entzem Endzemiralso asked Merkel to change course. In any case marketsdo not seem to be in turmoil after last Sunday's electionsin France and Greece as many analysts predicted.Greece however remains politically in the air while theSpanish government is languishing to support the coun-try’s banks. On Sunday 6 May the Greek elections pro-duced a completely fragmented political scenery, with thenew Parliament being unlikely to produce a government.In this way, Athens is again in the forefront of the Euro-zone's problems, being not only the most indebted mem-ber state but now also almost ungovernable.As things stand now, the Papademos government, whichstill runs the country as a caretaker administration, onlyrecently signed the second memorandum of understand-ing (MoU) with Greece's official lenders, namely the EU-ECB-IMF. According to it, Athens apart the more softloans is expected to apply more austerity policies. This wasexactly what Greek voters rejected last Sunday. Not to for-get that Greece, after three years of austerity and reces-sion, has lost at least 15% of its income and production.Consequently, the political parties that run the country overthe past two years were penalised, and citizens voted en massfor those who reject the additional austerity measures. Giventhis, whatever government is formed in Athens from thenew Parliament or from the one that might be broughtabout after a probable new legislative election on 10 or 17 ofJune, the austerity programme provided by the MoU, willbe rather impossible to be applied. New growth-led policiesas proposed by Hollande could provide a way out for Greeceand the other debt stricken Eurozone countries..
Note BookNE
INTERVIEW
New Europe |Page 5NEW EUROPE13 - 19 May, 2012
Helen Clark, formerly the longest servingNew Zealand premier, has just announcedthat she will be seeking a second term asthe first female head of the UN Develop-ment Programme. While visiting Brussels,she spoke to New Europe.
Does coming from the Southern hemi-sphere give you a different perspective?Yes. New Zealand is the most remote de-veloped country, geographically. If youlook at the circle of relationships, it’s Aus-tralia and the Pacific islands, it’s into thenetwork of ASEAN, the East Asian sum-mit, then there’s another layer, the Com-monwealth, and then the old friends inEurope we have bilateral relationshipswith and America.
With the shifts in the global economythat’s a good place to be todayIt’s a good place and people ask how NewZealand has fared and the truth isnowhere near as badly as Europe becausewe are strategically positioned vis-a-visthe most dynamic growth engines in theworld today, and we took a strategic deci-sion when I was Prime minister, whichwas a big call, to go for a free trade agree-ment with China and we became the firstwestern economy to conclude such anagreement.We are well positioned. While we retain avery strong interest in the markets of Eu-rope and North America, in the future wewould be increasingly tied to East Asia,but we do retain a wide basket of tradingpartners, we’re not ever too exposed toanyone. It doesn’t hurt to be next door toAustralia because it kept growing whileothers floundered.
This prepares you for your role at thehead of the UNDPYes, we’re Western but Southern hemi-sphere.
With the China FTA, you’re also pre-pared to go out there and engageYes, New Zealand has to make its ownluck and we have. It’s been through posi-tioning ourselves as an independentminded country and we are a countrywithout enemies, we only have friends, webuild relationships.
You’re building relationships in Brussels,could you expand on the EU partnershipagreement with UNDP?The agreement is with the development
arm of the Commission and it reflectsthat nearly €300 million flows from theEU to the UNDP, overwhelmingly intocrisis prevention and recovery. We’re alsoinvolved in preparing elections, on aver-age one every two weeks, which the EU isa big funder. Enlargement fund us on ac-cession, like Croatia. We’re in all the east-ern partnership countries and theSouthern neighbourhood where, after theuprisings, we’ve moved from stable butauthoritarian systems to states that arefeeling their way along a new path andthere are plenty of bumps along the way.
It did take a long time for European na-tions to develop democracyFrom Magna Carta to universal suffrage,you might say. A few hundred years! If youlook at it in that framework what devel-oping countries are being asked to do it atremendous challenge. We forget thatNorthern societies have gone throughtremendous convulsions to get where theyare today.
What more would you be looking forfrom the EU.The EU is not a military power, it has po-sitioned itself as a community of values,that’s why we had good relations with it,because of shared values. The EUanalysed the spending and found thatUNDP can operate far more effectivelythan the union can unilaterally and we canoperate in sensitive areas. They recognize
the role we play in co-ordination.
We seem to be run by accountants, butimprovements in development can behard to quantifyDevelopment is heard to measure. 22years ago UNDP started producing thehuman development index because GDPis not a satisfactory indicator of progress.We’ve seen fast rising GDP growth, inAfrica for example in Mali two years ago,it had had growth of 6% to 8% for years.Had poverty reduced? No.The human development index is prettygood but it doesn’t say if we’re wreckingthe planet so some kind of sustainabilityadjustment would be desirable.We are not a charity, we’re not a charity,we’re not a bank. We don’t inoculate chil-dren, countries should do that, what we dois support a countries capacity to do that.How do we measure the effect of sup-porting a parliament, but we know that
these things will be positive, but not easyto put into a simple matrix.
How has austerity affected your ability todeliver programmes and are there any les-sons you’ve learned for Europe.When you consider just how difficult thelast five years have been, our funding hasheld up pretty well and that speaks vol-umes about our ability to add value. TheCommission and other countries, like theUK, have kept up their commitments. Wekeep looking at our model and try to cutcosts.If I was standing back and looking at whatwe see around the world, and what lessonsthere might be for Europe, I say keep thatcommitment to social cohesion, the socialmarket is a balance, as Jospin used to say,‘I believe in a market economy but not amarket society.’ There’s a balance and ifyou tip too far, you upset the balance andundermine cohesion.
Helen Clark UNDP Head.|UNDP
By Andy Carling
DEVELOPMENT
Meaningful development, sustainable growthUNDP Chief brings a Southern perspective
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Page 6 | New Europe NEW EUROPE
ANALYSIS13 - 19 May, 2012
Only few days after defeating the incum-bent Nicolas Sarkozy, French President-elect François Hollande has to startthinking about the upcoming challenges.However, one issue seems to be dominatingHollande's agenda – the forthcoming par-liamentary elections in June.
Hollande is aware that without a majority inthe parliament, he will be a 'lame duck', unableto pass any reform through the legislature andto deliver on his pre-electoral promises. That iswhy everything, from forming a new govern-ment to preparing for participation in the ex-traordinary European Council on 23 May, isaimed at securing a Socialist majority after Juneelections.
Hollande will officially take over fromSarkozy on 15 May, leaving him just enoughtime to make some crucial manoeuvres beforethe elections. He started wisely, by reiteratinghis key, seemingly impossible promise – torenegotiate the fiscal compact deal with the EU.As these things in the EU take forever, Hol-lande will have just enough time to replicateMerkozy stalling from the last summer, drag-ging any concrete action on the compact till
after the elections and than doing the onlything possible.
In the meanwhile, Hollande will have agovernment to form, with veteran Jean-Marc Ayrault topping the list of candidatesfor premier post, though Socialist Partyleader Martine Aubry leads in all polls as
the preferred candidate. Hollande alsoagreed to include representatives of theGreens in his cabinet.
Strategy seems straightforward – prom-ises need to hold water until 18 June [elec-tions take palce on 10 and 17]; have themost popular Socialist [Aubry] lead the
electoral list; include Greens in the govern-ment, erasing clear borders between the twoin the first round of elections and gathertheir votes [few, but very important in someconstituencies], trying to dominate the po-litical left, scooping votes of the communistsin the process; use the rise of the NationalFront and the electoral system [special ma-joritarian, which allows any candidate whowins more than 12.5% of all registered votesin a constituency to proceed to the secondround and at a projected turnout of 70%,that number is 17.85% of cast ballots, whichis roughly what Le Pen won in the firstround of the presidential elections] to winover as many seats from Sarkozy's centre-right UMP party.
Parliamentary elections that immediatelyfollow presidential ones have a tendency tofavour the political option which won thepresidency, but Sarkozy and his partypledged to put up a fight of ideas and con-cepts, not just persons. Socialists currentlyhave 204 members of the lower chamber,while UMP has 317. However, aside fromthe two major parties, only far-left and cen-trist libearls and several independent candi-dates sit in the parliament.
POLITICS
Hollande's primary concern- parliamentary elections
Hollande's Socialists could benefit from reaching out to Greens | AFP PHOTO / POOL / FRED DUFOUR
By Ivan Delibasic
ADVERTISEMENT
European Commission’s forecasts showthat Europe is facing one of the worsteconomic crises in history.
At a meeting held by the Danish Pres-idency today in Copenhagen and at-tended by Herman Van Rompuy and bythe Danish Prime Minister Helle Thorn-ing Schmidt, Gianni Pittella, First VicePresident of the European Parliament,commented the economic forecast re-leased today by the European Commis-sion. "The message is clear and worrying:Southern Europe is experiencing one ofthe worst recessions in its history andeven the German economy is stagnating".
In his intervention, Mr Pittella calledfor a change in European economic pol-icy. "Austerity alone cannot be the answerto the crisis. To reduce sovereign debt weneed growth. The European Parliamenthas shown the way to boost oureconomies: More funding should begranted to the European InvestmentBank, project bonds should be imple-mented and devoted to major initiatives.Structural funds have to be used better.The European Parliament is also sup-
porting the introduction of eurobonds."" We also have to reconsider the golden
rule in order to support public invest-ments" has added the Vice President ofthe European Parliament.
"European citizens see that we are notable to put forward a serious strategy tosave Europe and they are worried. Onlyby listening to our citizens, we will findthe energy to overcome this crisis".
Gianni Pittella MEP (IT, S&D) is first Vice-president of the European Parliament.
ECONOMY
Priority should be growth, not austerity
By Gianni Pittella MEP
Rarely has an election resonated so
widely across the European Union as
the French presidential ballot has
done. Rarely has a leadership change
in one EU member state created ex-
pectations of a real policy shift.
Remarkably, a new European
demos and public sphere are emerg-
ing from the economic crisis. Euro-
peans are recognizing how
interdependent they are. One coun-
try’s failures can threaten the entire
European economy, and can call into
question the fruits of 60 years of in-
tegration. Peace, solidarity, and pros-
perity are not irreversible
achievements; only 27 countries
working together can guarantee
them.
François Hollande’s victory is a
fresh chance for Europe. It should
spell the end of a policy oriented ex-
clusively towards austerity, which has
paralyzed our economies and divided
the EU. The new French president’s
commitment to a European growth
policy has brought hope to citizens,
and should not alarm anyone – cer-
tainly not the financial markets.
Hollande’s plans for a growth ini-
tiative fall on fertile ground, espe-
cially in the European Parliament,
which has repeatedly called for such
measures. I am delighted that this
message is increasingly echoed by the
political mainstream, including most
recently by European Central Bank
President Mario Draghi. Likewise,
the European Commission is work-
ing on a “growth pact” to be dis-
cussed by EU leaders in June. Indeed,
Europe needs a master plan to avoid
a tailspin of recession, growing un-
employment, and weakening bank-
ing systems.
A new master plan for growth
would not be about printing money.
Fiscal discipline remains essential, as
are deep structural reforms. The
growth pact can be properly financed
by new sources of revenue, such as a
financial-transaction tax and joint
project bonds for infrastructure in-
vestment, or by curbing tax evasion
and tax fraud and eliminating tax
havens, as well as by more efficient
and intelligent use of structural
funds.
What is to be done? First, targeted
investment should be given priority.
The European Investment Bank
would be a good vehicle – in addition
to new project bonds – to boost
spending on major infrastructure
projects (for example, in the energy
sector). The EIB could be given sig-
nificantly more resources to boost its
loan programs. In the longer-term,
we should revisit the idea of joint
Eurobonds.
Channeling EU structural funds
towards innovation is essential, given
that spending on research and devel-
opment is alarmingly low compared
to our global partners. Fundamental
reform of the Common Agricultural
Policy should not remain a taboo. In-
deed, the CAP is ensuring neither
sustainable agriculture nor decent in-
comes for all farmers. Undoubtedly,
tough negotiations lie ahead on this
front, including with Hollande.
Second, young people must be a
top priority. Our responsibility here
is twofold: to put growth back on
track, but also to respond immedi-
ately to the human tragedy that has
hit our youth. The eurozone’s unem-
ployment rate, at 10.9%, is at its
highest level since the euro was in-
troduced, and young people every-
where, as the first to suffer the
consequences of the crisis, are paying
a disproportionally high price. Youth
unemployment in Spain, for exam-
ple, is above 50%.
We cannot afford to sacrifice a
generation, or, rather, risk creating a
lost generation that could destroy
Europe’s social fabric and stability.
We need an immediate contingency
plan: invest to finance job training,
improve educational opportunities,
and, crucially, create incentives for
employers to hire young people.
The ECB has been offering long-
term loans to banks at a favorable
rate. This money should be loaned
out to small and medium-size enter-
prises, which are the lifeblood of Eu-
rope’s economy. The EU also needs
common initiatives to replace piece-
meal bilateral agreements on tax eva-
sion and tax havens, which
undermine the goal of a fair society.
Third, member states should not
cut the EU budget indiscriminately
during negotiations on the Union's
long-term spending plan for 2014-
2020. If we are serious about a mas-
ter plan for growth, we need to
provide the necessary means. The
EU budget is an investment vehicle
that boosts economic growth and
creates jobs. It finances crucial pan-
EU transport and energy links. It
helps to foster innovation and boost
research and development. The EU
budget leverages investment, allows
for economies of scale, and cannot
run a deficit.
The EU’s lack of solidarity, imagi-
nation, courage, unity, and vision in
recent years has made Europe a sym-
bol of division for some, if not many.
We cannot let this continue. Hol-
lande’s election offers us a valuable
opportunity to meet the challenges
that the EU faces. Alternatively, we
can allow growing poverty, fear, and
anger to give rise to xenophobia and
racism, and thus place at risk the
EU’s greatest accomplishments.
But let us be optimistic. It is not
too late. Europe can still emerge
stronger from its current economic
woes. The EU is changing direction
at last, and Europe’s leaders will find
an energetic partner in the European
Parliament.
Martin Schulz MEP (DE, S&D) is
President of the European Parlia-
ment.
Copyright: Project Syndicate, 2012.
www.project-syndicate.org
ANALYSISNew Europe | Page 7
NEW EUROPE13 - 19 May, 2012
POLITICS
Europe’s opportunity in Hollande
By Martin Schulz
Given the chaotic political and economic environmentthat reigns in Greece after last Sunday's election, a dis-orderly bankruptcy in Athens becomes more likely withevery passing day.Incidentally, on 15 May a foreign law bond of €450million expires and it is not clear if Athens will pay itor not. The caretaker Minister of Finance, PhilipposSahinides, said he cannot take the decision to pay itor not alone and he has asked the political party lead-ers of the new Parliament to decide on that, but no-body seems to care.In any case the troika of EU-ECB-IMF, which is theonly life line of soft loans to Athens, is about to releasedthe first tranche from the second loan package in favourof Greece. However the board of the European Finan-cial Stability Facility said that they are not going to re-lease the full May tranche of €5.2 billion but only €4.2billion, to cover just the expiring old debts. This meansnot one euro will be used to finance the current expensesof the Greek government. As for the June loan tranche,the troika has clarified that it will be released only ifGreece is complying with the agreement the Pa-pademos government signed some weeks ago.According to the agreement, Athens has to producemore salary and pension cuts, and lay-offs of person-nel in the public sector. It will be very difficult how-ever for any Greek government to apply the terms ofthe new Memorandum of Understanding the countryagreed with the troika at the beginning of March.The political scenery in Athens is now so fragmentedthat there is scarcely any leader who can undertakethe task of sitting in a table and face the officiallenders of the country.In view of all that, a disorderly bankruptcy is becom-ing every day more probable. May 2012 however isnot December of 2011, when the Eurozone had dif-ficulties even thinking about Greece going bust.Today the EFSF/ESM mechanisms are there with anoverall financial fire-power of around €700 billionplus the new IMF instrument in favour of Europe ofabout €200 billion. All Eurozone member states, theBrussels Commission, the Frankfurt based ECB andthe IMF have also been preparing over the pastmonths for such a possibility.The clear cut ultimatum that the Eurozone and theIMF dignitaries issued to Greece after the Sunday elec-tion, that there won’t be any more loans if Athens doesnot comply with the terms, is a strong indication thatEurope will not be paralysed by the idea of a Greekbankruptcy. On top of this, markets and private in-vestors are not any more too exposed to the Greek debt,especially after the realisation of the Private Sector In-volvement exercise at the beginning of March, underwhich the privately held Greek debt had a deep haircutof at least 53.5%.Now the largest part of the Greek debt is widely spreadbetween the ECB and the Eurozone governments andnone of them want to risk suffocation after a disorderlyGreek bankruptcy.In short the message from Europe and the IMF toAthens is clear: you have to comply with the terms ofthe MoU otherwise you are on your own. Still however,there are voices of conciliation mainly coming fromRome saying that an exit of Greece from the Eurozonewill be a catastrophe and others will follow if Athensopens the door. Madrid and Lisbon also appear terri-fied over the idea of a Greek bankruptcy and MarianoRajoy and Pedro Passos Coelho said they hope Greecewill remain in the Eurozone.
Economics
France's newly elected president Francois Hollande waves to supporters at the Place de la
Bastille early on 7 May. Socialist candidate Hollande won the French presidential election,
ousting right-wing incumbent Nicolas Sarkozy. |AFP PHOTO / FRANCK FIFE
Troika to Athens: Complyor face the consequences
Page 8 | New Europe NEW EUROPE
ANALYSIS13 - 19 May, 2012
A sense of urgency
There is a Sense of Urgency in Europe. Where peo-ple know who they are and have a strong commit-ment with the values of freedom, social justice anddevelopment. This is the reason to believe that a newstandard of Participation in Europe, more than apossibility, is an individual and collective necessityfor all of us, effective European citizens. MichaelFoucault is more than ever present – the difference ofEurope will be in the exercise of the capacity of theindividual participation as the central contributionto the reinvention of the collective society. There is a sense of urgency in a new social model. It isconstructed by all the actors in a free and collaborativestrategic interaction.In a certain sense, we need a newthird way for Europe. When Karl Popper spoke aboutthis special global capacity of creating a new commit-ment between the Europeans toward the challenge ofthe future, he was in fact speaking about this commit-ment with a New Democracy in Europe. Based in newstandards of Social Innovation, this kind of New Wayis above all the confirmation that in Europe the indi-vidual performance in a complex society is possible, de-sirable and above all necessary for the future.There is a sense of urgency in a new strategic com-petitive model. In this way it´s essential to learn thelessons that more than ever emerge from a Europethat is trying to rebuild its competitive advantageand to reinvent its effective place in a complex andglobal world. In the New Global Economy and In-novation Society, Europe has a central role to playtowards a new attitude connected with the creationof value and focus on creativity. There is a sense of urgency in a new collaborativemodel. Europe must confirm itself as an “enableractor” in a very demanding world, introducing in thesociety and in the economy a capital of trust and in-novation that is essential to ensure a central leader-ship in the future relations with America and themore and more dynamic developing world. The ac-tors from Europe should be more and more global,capable of driving to the social matrix a unique dy-namic of knowledge building and selling it as a mo-bile asset on the global market. There is a sense of urgency in a new hope. Rein-venting Europe and giving the European Actors(States, Universities, Enterprises, Civil Society) theopportunity of developing new challenges focused oninnovation and creativity is in a large sense giving acentral contribution to a New Global Order. TheReinvention of Europe is the reinvention of its peo-ple and institutions. An active commitment, in whichthe focus in the participation and development ofnew competences, on a collaborative basis, must bethe key of the difference.
Francisco Jaime Quesado is the General Manager ofthe Innovation and Knowledge Society in Portugal,a public agency with the mission of coordinating thepolicies for Information Society and mobilizing itthrough dissemination, qualification and research ac-tivities. It operates within the Ministry of Science,Technology and Higher Education
New Europe content partner
By Francisco Jaime QuesadoAs a pious child, I was terrified ofmortal sins. Every Monday morning,a giant schoolteacher enquiredwhether we had gone to church theprevious day. If anyone admitted afailure to attend mass, our sadistic ed-ucator would conjure up images of asoul being blackened. Hell beckoned.
There is a new commandment thatmust be obeyed: thou shalt not criti-cise the European Central Bank.
Over the coming week, a group ofleft-wing activists plan to occupy andblockade – or blockupy - the ECB’sheadquarters. Their intentions are thatthe protest will be peaceful; organisershave stated that the police are publicservants and should not be consideredas the enemy. In one of the worst af-fronts to civil liberties we have seen inWestern Europe during recent times,the Frankfurt authorities havenonetheless banned the protest. Block-upy is verboten.
Within a few years of those Mon-day morning guilt trips, I was ques-tioning the Catholic hierarchy’steaching. I came to the conclusion thatan institution which considered con-sensual sodomy as more troubling thanchild poverty had strayed far beyondthe core tenets of Christianity (love,justice, tolerance, compassion). Whenone of the priests who taught me reli-gious studies was convicted – a fewdecades later - of raping young boys, Ididn’t feel vindicated. I felt ill.
The ECB is in a similar, if not iden-tical, position to that of the Catholichierarchy during my childhood. Likea long list of popes, the bankers ofFrankfurt regard themselves as infalli-ble. We must take their medicine,even if it has unfortunate side effects.Nations who refuse to gulp it down arecalled “deficit sinners”. In an intrigu-ing twist on the concept of sackclothand ashes, they have been threatenedwith having their flags flown at halfmast.
It is time to ask awkward questions.What is sinful about spending on
education (hopefully a more enlight-ened version of the one I received)?What is sinful about equipping hospi-tals? What is wrong with having apublic transport system? Or post of-fices? Or libraries?
Why must these vital services besavaged on the orders of a bunch ofsuits?
If the men and women of Blockupyask these questions, then they cancount on my support. In the spirit ofChristianity, I will even forgive the
person who came up with the terriblename Blockupy.
Perhaps the questions should gofurther.
Mario Draghi, the ECB’s president,called recently for a “growth compact”.This call was welcomed by some left-leaning political figures and, inevitably,became a talking point in France’spresidential election campaign.
But what kind of growth doesDraghi want? On 3 May, he detailedthe key ingredients in his recipe. Oneof the first to be sprinkled into his mixwould be labour market reforms, of thekind designed to increase “flexibility”.Translated into lay person’s terms, thatmeans Draghi wants to allow employ-ers pay peanuts and to be able to firetheir workers with ease.
Draghi insisted that there is “ab-solutely no contradiction between agrowth compact and a fiscal compact”.I assume he was referring here to theEU’s latest treaty, which will force sub-standard public services on many gen-erations if it enters into force. Draghithinks that requiring hospitals to limpby without medicines or equipment isa good idea. Instead of saying that ex-plicitly, he used the fancy term “fiscalconsolidation”. Like many jargon ad-dicts, he might have hoped his choiceof words would prevent his real agendafrom being discovered. But he gave thegame away when he said “it is certainlymuch better to consolidate throughthe reduction of expenditure ratherthan through increases in taxes.”
It is telling that Draghi didn’t feelany inclination to elaborate on thatpoint. He was merely reciting anothercommandment that we must obey:thou shalt not tax the rich.
The need for economic growth is
something that seems to unite politi-cians, regardless of whether they arefar-left, far-right or middle of the road.But if economic growth relies on theingredients favoured by Mario Draghi,then I don’t want it.
Earlier this month, I attended a con-ference titled “EU in Crisis”. It fea-tured the “progressive” economistTrevor Evans, who did a fine job ex-plaining why Draghi’s and AngelaMerkel’s prescriptions are ruinous. Yetwhen Evans was asked if the idea ofgrowth needed to be rethought, he ac-cepted that this is a crucial questionbut signalled that it was not the righttime to ask it.
I respectfully disagree. Draghi and his old mates in Gold-
man Sachs are using the economic cri-sis to force through measures that theywould not get away with under differ-ent circumstances. Nothing seems tobe off limits to them. Elected govern-ments should be vassals of anonymousbankers, according to their blueprint.
If they are not afraid to take boldsteps, we should not be afraid to askbold questions. The notion thatgross domestic product must con-stantly grow is a dangerous one. Toachieve growth, governments andindustries depend on the relentlessexploitation of labour and resources.The pursuit of growth at all costs isa major contributor to climatechange and biodiversity loss. Theseissues are not separate from the eco-nomic crisis; they result from thesame tunnel vision.
Catholic publications are still cen-sored by the Vatican. Frankfurt bansprotests against the ECB.
We should defy the gagging orders.Some sins must be committed.
ECONOMY
A 21st century heresy: the ECB is not infallible
The Occupy camp in front of the European Central Bank (ECB) in Frankfurt am Main on8 May, 2012. The "Blockupy Frankfurt" action, organised by a diverse group of anti- global-isation activists and left-wing movements, is due to take place in the western German cityfrom 16 May. |AFP PHOTO / DANIEL ROLAND
By David Cronin
ANALYSISNew Europe | Page 9NEW EUROPE
13 - 19 May, 2012
Herman’shermit kingdom
I’ve been long intrigued by the enigmatic Council
President, many months ago he accepted my invita-
tion for a quiet drink in the boozer of his choice, but
with all the summits and whatnot, we haven’t managed
to go out on the razzle yet, but I’m still hopeful.
Part of my interest is legitimate, wanting to learn more
about a holder of high office, but the main part is quite
simply because he remains a mystery, a sort of walking
zen koan. In fact, I am open minded to the question of
is he an alien or not, and I’m not alone, but I did watch
the remastered 2001 A Space Odyssey last night and
the star child did look a bit familiar.
So, when I heard that he was going to take part in a
question and answer programme to mark Europe Day,
I thought that I’d try to sneak in. I’m justifying that
on the grounds that the president is, like some other
leading figures, pretty expert at avoiding the media.
Sure, he’ll hold the occasional press conference and
answer one or two questions, but unless you’re in the
tame section of the media, you’ve got no chance of a
serious interview.
So, I submitted a question, on how he thought the
presidency should be chosen, and was pleased to learn
that I’d made it and on Monday, I was bustled into the
Council meeting room with a couple of other lucky
inquisitors. As it was being filmed for Euronews, we
had a little rehearsal then we had a break for sand-
wiches, where we had a choice of ham or salami. At
least in the snack department, Council is a Christian
food supplier.
Then we all went back and waited. Then the room
meat arrived, mainly interns, it appeared. There
seemed to be a minor technical hitch, but I had a view
of the doorway and then I saw him just outside, Her-
man.
He was hiding. It’s a mental image that will stay with me.
The president has never seemed comfortable under the
glare of the media, sometimes with the look of a rab-
bit entranced by an oncoming car’s headlights, but at
this event, he looked relaxed and comfortable. No
playing to the crowd or trying to ingratiate himself.
Frankly, he’s good at this sort of thing and should do
it more often, but he won’t. It’s almost as if he’s afraid
of people and too shy.
Not your average politician. He made his case very
clear. He isn’t some sort of super president, but a hum-
ble organizer of meetings, a mere fonctionnaire, and
this is exactly what Lisbon demanded, but he suffers
because of the perception that the job was going to be
very high profile.
The first reaction is that, if the job is as he describes,
he is overpaid by a massive amount.
The second is more pertinent, and damning.
I get the sense that, for the last two years, the Euro-
pean public, watching the fine dreams of our leaders
turn to ashes and aware that their own lives, under the
cosh of austerity, have become uncertain and fragile
and are looking for one thing. Someone who can look
them in the eye and tell them what’s going on. But
that requires respect and trust.
Who can fill that role?
Constructive Ambiguity
By Andy CarlingDays after the general elections in Serbia,the two parties which were the backboneof the previous government – DemocraticParty (DS) of Boris Tadić and SocialistsParty of Serbia (SPS), whose long-termleader was Slobodan Milošević – agreedto continue political cooperation, effec-tively deciding on the next government ofSerbia, as well.
Part of the agreement is for the coali-tion around SPS to give open and unan-imous support to Tadić in the secondround of the presidential elections on 20May, which could prove to be the boostneeded for his re-election. Also, the twoblocks will work together in the city as-sembly of Belgrade, as well as in provin-cial government in Vojvodina.
Though the final point of the agree-ment stated that personal solutions forpositions in the new government will bediscussed after the second round of pres-idential elections, the results of the elec-tions, as well as rhetoric and dynamics inthe aftermath of the elections draw afairly clear picture of possible scenarios.
Nominal winners of the elections is theright-wing Serbian Progressive Party(SNS), who won 73 seats in the parlia-ment. The list led by DS got 67 mandates,while SPS coalition will have a 44-strongcaucus. They were followed by anti-Eu-ropean nationalists from the DemocraticParty of Serbia (DSS) of the formerprime minister Vojislav Koštunica, whowon 21 seats, Liberal-Democratic Party(LDP) with 20 and the centre-rightUnited Regions (URS) with 16. Parlia-ment also entered minority parties ofHungarians, with 5 seats, Bosniaks, with2, a mishmash of several minorities withone and a nominally Vlach minority party(None of the above) also with one.
Since DS would be the strongest partyin the presumed new government, theywill be given the mandate to name theprime minister. However, DS never cameup with a candidate for that position, ob-viously calculating coalition potential.SPS leader Ivica Dačić on the very nightof the elections said that it was “obviouswho is going to be the next prime minis-ter”. He added that his party will not joinany government which would includemembers of LDP, narrowing down pos-sibilities to form a parliamentary majority.In addition, Dačić reportedly demandedthat his party gets ministries held in theprevious government by URS.
Senior officials of SPS indicated thatthe next government will be formed bycoalitions around DS, SPS and URS, sig-nalling that a mutually acceptable agree-ment was reached. URS had hintedduring the elections night and the weekthat followed that they would happilyspend the next four years in opposition,unless there is an absolute agreement on
their programme. However, G17 Plus,which is the backbone of URS coalition,is the only political force in Serbia whichhas participated in all governments sincethe breakdown of Milošević regime in2000, always with either DS or a supportof SPS.
DS, SPS and URS would have an ab-solute majority in the parliament andwith participation of minority parties,which are traditionally always includedin the governing majority, it would be, ineffect a continuation of the previousgovernment, which was the first in Ser-bia's democratic history to finish the full4-year term.
Dačić would most likely become theprime minister and SPS would keep min-istries of interior and infrastructure, URSwould probably get ministries of economyand rural development, as well as agricul-ture and with Tadić's re-election, thatwould seal the deal. URS was the firstparty to support his re-election bid and,despite pre-electoral rhetoric, cooperationbetween decision-making structureswithin DS and URS are fairly good andDS has already offered them to partici-pate in governance of Belgrade wherethey failed to pass the threshold, whichURS leader Mladjan Dinkić rejected.
Another option is a coalition govern-ment of DS and SPS with LDP. How-
ever, it is hard to imagine a reconcilableway to put Milošević's Socialists and LDPon the same team, but it has alreadyworked out for DS. Even if negotiationswith LDP take place first, as it has beenspeculated in Belgrade, they will mostlikely serve as a cover for a deal with URS,which would have the 'ultimate responsi-bility' to ensure continuity of a pro-Euro-pean governance once talks with LDP fail.
The foreseen left–centre-left–centre-right government would operate in amuch different environment, without amilitant far-right in the parliament forthe first time and with openly anti-Euro-pean forces reduced to 7% [nominallypro-European, nationalists did win themost votes and seats, granted]. It gives thepresumed pro-European governmentand president a clear mandate to carry onthe agenda of the European integrations,including concessions on Kosovo.
After all, local elections did not takeplace in Kosovo, and parliamentary andpresidential were conducted as if it was aforeign country. Yet, voters in Serbia didnot punish the governing parties, did notreward extreme right [though, combinedthey did win some 9%] and in what wasdescribed as another referendum vote infavour or against the EU integrations,voted in favour of the country's Europeanfuture.
POLITICS
New-old government in Serbiato continue EU integrations
They can do it twice: Tadić, Dinkić and Dačić | EPA/ALEKSANDAR PLAVEVSKI
Page 10 | New Europe NEW EUROPE
ANALYSIS13 - 19 May, 2012
While many are concerned about climatechange, Tony de Brum, Minister-in-Assistance to the President of the Mar-shall Islands has reason to be a worriedman. With the islands being only 2 me-tres above sea level, they will be the firstnation to disappear under the waves if cli-mate change is not adequately tackled.
The Islands were among representa-tives, gathered for informal talks ahead ofa UN debate later in May. Organised byClimate Commissioner Connie Hede-gaard as a ‘coalition of the ambitious’. Theminister spoke to New Europe about thefuture of the islands.
Your nation has become a symbol in thebattle against climate change, what dan-gers do you face?
My country is composed of atolls. Thereis sand, a little topsoil and a lot of coconuttrees. We have 34 islands in the atoll andthey are all a metre, some a little more,above sea level, so we are the most vulner-able on earth to climate change and wehad the least to do in creating this prob-lem. It is the other countries that do thedamage. We are trying to convince theworld that this is not a fair and equal way
of treating neighbours.
Do these nations accept a moral re-sponsibility?
I’m not sure that they all do yet, but Ithink that some of that is being accepted.For example, this meeting wants to dosomething, they want to be family, but
they really have to put their foot downand speak for a 30% emission cut, dealwith mitigation funds to let these coun-tries that are affected survive.
Now, the Marshalls, are not only suffer-ing from a rise in sea level, but other ef-fects. We cannot go out into the worldand look for investments because nobody
wants to invest in a sinking island. We’realready suffering lack of interest in devel-oping hotels, tourist infrastructure, lack ofinterest in buildings and infrastructure be-cause people say ‘why should we be in thisbecause in a few years we’re going toabandon them?’
This whole climate change phenomena isalready putting its marker on us. We’re alsolosing valuable gardens and soil, throughsalt innundation. Our fresh water systemunderground in some islands is already shot.
You said that climate change is a mat-ter of survival for you, for your culture.Will the world come to your rescue intime?
If the effects of climate change affectthe islands in such a way that we have tomove or go under, then that is a sign forthe rest of the world. It doesn’t mean thatthe problem stops with the Marshall Is-lands, but that they are like a canary in thecoal mine.
I believe there is a chance if we keepplugging away at the conscience of thepolluters, we can try to push the increaseto below 2 degrees. If we can keep it underthat, then we have a chance.
The reality is that polluters should stoppolluting and pay for the damage.
CLIMATE CHANGE
Wanted: a Marshall planPacific islanders want stronger response to climate change
By Andy Carling
Tony de Brum, Minister-in-Assistance to the President of the Marshall Islands at a meeting in the Euro-pean Commission
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ANALYSISNew Europe | Page 11NEW EUROPE
13 - 19 May, 2012
The EU and the Japanese Peace Boat havecertainly one thing in common: peace. Theship from Nippon has it already in its name,and European integration as its main aim.This concord has remained with me since Iboarded the all-Japanese Peace Boat to dis-cuss about issues of Omnilateralism as wellas the EU and its current crisis.
The Peace Boat has also had its crises,though unlike the EC during de Gaulle’stime, it does not suffer from an internal“chaise vide” as it is mostly fully booked. In-stead it encounters problems abroad, for in-stance with no passports for Japanese to enterNorth-Korea, no permit to land in the USAbecause of a prior visit to Cuba, or –more re-cently-- refusal to come closer to MonteCarlo because of the old boat’s pollutingemissions.
The EU until today remains an elite-dri-ven project, ‘top down’ proposed by the Schu-man Declaration of 1957. The Peace Boatbegan 1983 as a movement truly ‘bottom up’with a non-governmental organisation initi-ated by three students. Their aim for theJapanese boat was to contribute to peaceoverseas, by having passengers learn to over-come conflict through concrete communica-tion on the spot. Thus at the beginning thePeace Boat sailed to peoples that have asso-ciated rather war and not peace with Japan.
New members of the EU have to musterin an elaborate process of admission alongthe Copenhagen Criteria. However, toboard the Peace Boat some young peopleearn their entry in kind by sticking postersall over the Japanese archipelago. This ad-vertisement invites Nippon’s oldies to payclearly less than for a commercial cruise.And that is the point: a voyage on thePeace Boat is affordable for youngsterswho have the time with prior contribu-tions to socially engage for the NGO. It islikewise meant for retirees that have themeans and minds to spend three monthson a ship sailing around the world withpolitically open ears and eyes, and not justsightseeing cameras.
Together, I saw them work on common is-sues for the displays in the upper deck gal-leries where on your usual ocean cruiser youfind fashion and commercial goodies. Here,youngsters and oldsters alike had paintedpictures and compiled graphs to call atten-tion to their interpretation of the nuclear ac-cident in Fukushima. Drawings of thedisastrous tsunami rising up to 30m andcrashing buildings were hanging next tocolourfully painted maps of the dangerousradiation spreading into the countryside as ared wave. Farther on, you saw symbols for thefragility and beauty of nature in the form offlying cranes in Japanese tradition of ornateorigami (folded paper) around constructiveinformation on the possible abundance of re-newable energy from wind and sun.
Activists of the NGO Peace Boat wereamongst the first in March 2011 to organisehelp on the spot in the worst affected areas ofNorth Eastern Japan. When critique ofatomic power was still rare on Nippon’s is-lands, Peace Boat already had engaged inpointing out the risks of nuclear fission forenergy. The NGO was among the few tobreak the official taboo of linking it to theWWII experiences of Hiroshima and Na-gasaki. Its actions helped enlighten peopleleft in the dark by officials during the disas-ter and contributed to the fact that since earlyMay all but one of the 54 atomic powerplants in Japan now are switched off, at leastfor rolling safety checks.
Accordingly, excursions on land during thecruise also often focused on themes relatedto atomic energy. From its start in Yokohama,the Peace Boat sailed directly to Tahiti wherelocals and Japanese fishermen had sufferedfrom radioactive harm during 30 years ofFrench nuclear testing. Together with peopleon the spot, ten surviving hibakusha (nuclearvictims) from Hiroshima described their suf-fering in real-life stories.
Until very recently, in Japan the term hi-bakusha on purpose was used only for vic-tims of WWII and not for anybody sufferingfrom power plant radiation. Prime MinisterKan Naoto last year had to resign over theaccidents in Fukushima, but he explained itas evident in later interviews: since the 1950sin Japan the omnipresent lobby of the ‘Atom-Power-Village’ (genshiryoku mura) had madeup the myth of risk-free and cheap energyfrom atoms. This had grown into a collusive‘consensus’ amongst Tokyo’s almost uninter-
ruptedly ruling political, business and mediaestablishment.
In most of ‘Old Europe’ nuclear energy isless of a taboo. However, for us EuropeansPeace Boat can set an inspiring example of asuccessful business model taking up commonconcerns in general. It is mixing elements ofa public interest NGO with a sort of socialenterprise to run its more touristic side. PeaceBoat itself has attained official status of aNot-for-Profit Organisation in order to re-ceive contributions exempt from taxation, anessential element to work effectively in thepublic interest.
In cooperation with its commercial travelagency Japan Grace Ltd it offers cheap andengaging cruises. The clearly higher paidexcursions on land with Japan Grace in par-ticular serve a more commercial purposeand must considerably chip in to balancethe budget of the attached NPO. The babyboomers’ generation pay more in cash whiletoday’s mainly single youngsters contributein kind by translating and serving them in-
ternationally. Hence, Peace Boat may not bebridging completely the wide gap between‘the 1% and the 99%’ that the Wall Streetprotesters have attacked. But it could helpsome ‘Indignados’ communicate their plightwith people on the other side.
Europe could also greatly benefit fromsuch a social enterprise through voyages on a‘EUR-Boat’. Perhaps, anciens fonctionnairesof the EU could sail along the Europeancoast from Helsinki in the Baltic to Con-stanta in the Black Sea with Alumni fromthe Erasmus programme and other youngpeople? They might even travel on rivers,like the Moselle up to symbolic Schengen, toactually see all member states almost entirelyborderless. In ports, they would conversewith locals in the new language just learnedon board …
Unlike the present old Peace Boat of Japan,however, the new ‘EUR-Boat’ can only be(Y)our boat if it is clean, perhaps even e-mo-bility green, and not polluting the skies or thewaters in the European environment!
TOURISM
Japanese ‘Peace Boat’ as business model for ‘EUR-Boat’?
The Peace Boat in Istanbul - between Asia and Europe
By Wolfgang Pape
Dr Wolfgang PAPE retired after 30 years in 2011 from the European Commission and is cur-rently Research Fellow with CEPS in Brussels after a Fellowship in Seoul. Born and educated inKassel and New York (High School Diploma), he studied law and economics at the universitiesof Marburg (D) and Geneva (CH), researched Competition Law for two years at Kyoto andHarvard after learning Japanese; Dr. iuris cum laude in Freiburg(D) in 1981. He worked twoyears as Advisor at the Japanese Embassy, Bonn. Until 2001 in charge of Asia at the 'Cellule deprospective' of the EC President, i.a. preparing ASEM and White Paper on Governance. Previ-ously, coordinated cases of anti-dumping and served EC as diplomat in Tokyo in 1980s, wherehe later co-managed the EU-Japan Centre for Industrial Cooperation while also at EC Delega-tion as First Counsellor from 2004 to 2008.
His publications cover issues of trade, integration, governance and culture in Europe and EastAsia (i.a. his blog “The Omnilateralist”), and he occasionally lectures at universities and for ‘edu-taining’ on cruises in his four working languages world-wide.
The Russian-backed South Stream gas pipeline
has never been a European priority, a European
Commission spokeswoman told New Europe on
10 May. “Why? Because it diversifies routes but
not supply as it is supposed to bring Russian gas
to the EU,” she explained.
Two days earlier, in a further effort to reduce
the EU’s reliance on Russia, MEPs said in a re-
port adopted by the Energy Committee that
"diversification should mean new non-Russian
sources of oil, gas and electricity for those
Member States which are overly dependent on
this single supplier".
The rapporteur MEP Edit Herczog from
Hungary said in her report – adopted on 8 May
with 47 votes in favour, 11 against and one ab-
stention - that energy should be seen principally
as a commodity and should not be used as a for-
eign policy tool. She also stressed that Europe is
a major purchaser of energy globally and if it used
this in a coordinated manner and took a firm,
common negotiating position with third coun-
tries it would nearly always be in a good bargain-
ing position.
The MEPs said diversification of suppliers,
routes and sources is deemed necessary in order to
secure EU's energy supply. They called for more
action in order to increase its share of liquefied
natural gas (LNG) and create real competition
between the EU's external gas suppliers.
The MEPs welcomed the intensified efforts for
co-operation with Switzerland as well as the pro-
posed EU-Southern Mediterranean Energy
Partnership which aims to grasp the enormous
solar energy potential of the region and asked the
Commission to elaborate joint energy roadmaps
with key suppliers and partners.
The Commission spokeswoman told New Eu-
rope on 10 May that the report of the EP is pretty
much in line with the Commission’s diversifica-
tion goal. “The Southern Corridor comprises of
several pipelines such as TAP and Nabucco,
TANAP (Azerbaijani-Turkish gas pipeline Trans
Anadolu) and SEEP (South East Europe
Pipeline),” she said.
The spokeswoman reiterated that Nabucco
creates the possibility to transport large volumes of
gas through a dedicated infrastructure under a
clear and transparent legal framework. “But the
Commission is neutral where the gas ends up in
Europe and the Commission supports all
pipelines in the EU, not only Nabucco but also
TAP for example,” she said.
“Our policy remains that we: firstly, want to
see a dedicated pipeline to be built outside the
EU, and if its capacity is limited at the start, it
should be ensured to legally and technically in-
crease the capacity to transport higher volumes
at a later stage when these become available, i.e.
making the pipeline capacity scalable. Secondly,
we want a clear and transparent legal framework
for the pipeline which would ensure uninter-
rupted gas supply to the EU. Not only is more
gas expected to come from Azerbaijan, but also
from Turkmenistan through the Trans Caspian
Pipeline that is currently being discussed,” she
said. “South Stream on the contrary has never
been a European priority,” the Commission
spokeswoman said.
But Brussels has been slow in implement its di-
versification energy policy while EU member
states sign bilateral energy deals with Moscow.
“More pressing current economic issues pushed
long-term energy planning well down the prior-
ity agenda in Brussels. That allowed [new Russ-
ian President Vladimir] Putin the time to
completely out-manoeuvre Nabucco,” Chris
Weafer, chief strategist at Troika Dialogue in
Moscow, told New Europe on 11 May.
Putin wants South Stream partly to reduce
future vulnerability to any one transit coun-
try, he said. “It is now widely accepted that
South Stream is an urgent political priority
for Putin. It is going to be built unless, at the
very last minute, Kiev gives in on Russia’s de-
mand for a significant equity stake in the
Druzhba pipeline. That seems very unlikely,”
Weafer said.
He also noted that the project is now urgent
because of the looming threat from EU sourced
shale and liquefied natural gas. “Putin referred to
this threat in recent policy statements. He wants
the pipe in place with customers locked well be-
fore the alternative energy options become viable.
Once the infrastructure is in place and energy
barter deals agreed, then it is only a case of annual
pricing rather than competing for energy sourc-
ing,” Weafer said.
“In the ideal world, the EU, like the US and
China, would of course like to have as much en-
ergy diversification as possible. We don’t live in
an ideal world – we live in a world where en-
ergy security is much more important than di-
versification. We also live in a world where
environmental concerns hold greater political
sway than energy diversification and will so long
as there is no medium term threat to existing
energy sources. That puts a huge question mark
over the timeline for developing Shale Gas in
Europe,” Weafer said.
For Putin, South Stream represents good busi-
ness and good politics. That is always the goal
when it comes to energy deals, Weafer said.
South Stream Transport spokesman Sebast-
ian Sass told New Europe on 11 May that
South Stream plans to move forward since it
does not rely on EU funds. “Our shareholders
see that there is a demand and a secure, solid,
commercial basis for our project and in the end
it’s the market deciding to find demand. The as-
sumption of our shareholders is that there
clearly is demand and supply for a project like
South Stream and those are the underlying eco-
nomic factors on the basis of which the project
will be established,” Sass said.
For the EU, the only currently available safe
source of large volume energy is Russia,
Weafer said. Russian gas accounts for only
24% of gas consumed EU-wide but in 12 out
of the 27 Member States it accounts for more
than 48%. “Germany accepted that fact a long
time ago so that, today, it has much greater en-
ergy security via Nord Stream while also be-
coming the dominant foreign investor in
Russia,” Weafer said. "EU bureaucrats
dithered too long over Nabucco and that al-
lowed Russia first mover advantage,” he said.
“Short of a miracle in the form of a large
source of gas on the western side of the
Caspian Nabucco is far too high risk."
ENERGY & CLIMATEPage 12 |New Europe NEW EUROPE13 - 19 May, 2012
Pipelay barge Castoro 10 lays pipes for Nord Stream pipeline off Lubmin, Germany, 5 July 2010. Germany
accepted the fact that the only currently available safe source of large volume energy is Russia a long time
ago so that, today, it has much greater energy security via Nord Stream while also becoming the dominant
foreign investor in Russia. |EPA/STEFAN SAUER
ENERGY|GAS PIPELINE
EU slams South Stream, calls for ‘non-Russian sources’ of gas
By Kostis Geropoulos
ADVERTISEMENT
ENERGY & CLIMATENew Europe|Page 13NEW EUROPE
13 - 19 May, 2012
The shareholders of Nord Stream AG have asked the companyto conduct a feasibility study of possible options to further increasethe capacities to transport natural gas from Russia to the EUthrough the Baltic Sea, the company said in a press release. Overthe next eight months, Nord Stream will make an assessment ofvarious criteria of up to two potential additional pipelines, includ-ing technical solutions, route alternatives, environment and fi-nancing.
The feasibility study is intended to assist the shareholders inevaluating possible solutions to meet the need for the EU to in-crease its imports of natural gas over the coming decades and tosecure gas deliveries under existing contracts. The shareholderswill consider the findings of the feasibility study as the basis for fur-ther decisions.
The launch of the new feasibility study shows that NordStream’s shareholders continue to explore ways to enhance the
EU’s long-term energy security by providing reliable and com-petitive natural gas supplies and diversified transportation capac-ities, Nord Stream said.
Nord Stream AG’s five Shareholders are: Russia’s Gazpromwith a 51% stake in the joint venture, the German companiesBASF SE/Wintershall Holding GmbH and E.ON Ruhrgas AGeach with 15.5%, and the Dutch gas infrastructure company Ned-erlandse Gasunie and the French energy company GDF Suezeach with 9% stakes.
The first of Nord Stream’s two parallel pipelines becameoperational in November 2011. Each line is approximately1,220 kilometres long and has a transport capacity of 27.5bncubic metres per year. Line 2 has already been laid and is un-dergoing pre-commissioning. When it goes on stream in late2012, both lines together will provide a capacity of 55bn cubicmetres per year.
ENERGY|GAS PIPELINE
Nord Stream eyes ways to up volumes through Baltic Sea
On 9 May, ConocoPhillips CEORyan Lance confirmed that the USenergy major plans to sell its Nigerianassets, but said a deal was not immi-nent. "We're testing the market on ourNigerian assets," Lance told reportersafter the company's annual meeting.
The Nigerian portfolio for Cono-coPhillips is one of its "least excitingelements," Bloomberg News quotedPavel Molchanov, an analyst at Ray-mond James & Associates Inc., as say-ing. Conoco may look to offload asmuch as $10bn worth of assets during
the next year. He said that Nigeria ac-counted for less than 3% of the UScompany’s total daily output last year."It's definitely one of the least excitingelements of the Conoco asset base," hesaid. "I can definitely see why they'dwant to exit."
ENERGY|BUSINESS
Conoco confirms sale of Nigeria assets
Russian oil major Rosneft and Norway'sStatoil signed a groundbreaking co-oper-ation agreement to explore mostly un-tapped offshore frontier areas in theArctic. Statoil has big expertise in offshoreoil drilling. "We aim for early access atscale in new and promising basins, posi-tioning us for high impact exploration,"Statoil Chief Executive Officer HelgeLund said in a statement. "This agree-ment is at the core of our strategy, sup-porting our long term growth ambitions."
Work on exploration wells in the li-cense areas could begin as early as 2016,Statoil said. Statoil joined US-basedExxonMobil and Italy's ENI, which havesigned similar deals, in the scramble forthe Russian Arctic, following Moscow'sapproval of tax breaks for the potentiallyrich offshore fields. "The terms for every-one are the same," Rosneft President Ed-uard Khudainatov said. He noted thatStatoil in turn invited his firm to partnerup and bid in Norway's coming licensingrounds. That offers an entry ticket to oneof the world's most developed offshore oiland gas sectors, aiding the government'sgoal of building its top companies into re-spected global players.
Output from Russia's Soviet-era oilprovinces is declining and the countryfaces high costs and technological chal-
lenges at remote new fields to retain itsstatus as the world's top crude oil pro-ducer.
The agreement covers a block in theBarents Sea, the Perseyevsky, and threefields in the Sea of Okhotsk, with overallprospective recoverable resources of 2bnmetric tonnes of oil and 1.8trl cubic me-tres of gas, Rosneft said.
The four blocks' resources are far fromthe largest in Rosneft's portfolio. Khu-dainatov said that if the fields' resources
were confirmed, exploration costs for allfour could total $2.5bn."The resourcebase (of Perseyevsky) is 1.4bn metrictonnes, according to current estimates. Ifthat is confirmed (total investment) couldbe $35-40bn," Khudainatov said. "ForMagadan-1, Lisyansky and Kashe-varovsky (in the Sea of Okhotsk) we esti-mate $10-$20bn, depending onconfirmation of resources and difficulty ofextraction. I took a minimum numberhere so as not to scare you."
Statoil’s Statfjord A oil platform in the North Sea off the Norwegian coast. Statoil and Rosneft signed an
agreement to explore mostly untapped offshore frontier areas in the Arctic. |EPA/STATOILHYDRO/OYVIND HAGEN
ENERGY|EXPLORATION
Statoil, Rosneft to developArctic resources
EU delays give
Russia first-
mover advantage
In a report adopted on 8 May by the Energy Committee,
European Parliament Members said coordination at EU
level and diversification of suppliers including "new non-
Russian sources of oil, gas and electricity" for dependent
Member States should be the key elements of EU's ex-
ternal energy policy.
Asked if the effort to avoid new Russian gas supplies may
aggravate relations with Moscow, a Commission spokes-
woman told New Europe on 10 May that the report of
the EP is pretty much in line with what the Commission
policy goal is since many years: the diversification of the
EU’s energy supply and especially gas supply. “By the way,
this is the concept of the Southern gas Corridor,” she said.
Chris Weafer, chief strategist at Troika Dialogue in
Moscow, told New Europe on 11 May that he doesn’t see
any major risk of an increase in tensions. “Russia and the
EU need each other too much and both sides know it very
well. Russia needs inward investment and the involvement
of foreign expertise as it looks to create greater economic
diversity,” Weafer said. “The EU needs continued energy
security and the export potential that the Russian market
affords. Energy dependency/vulnerability is the wrong
way to look at the arrangement – energy barter is a better
description,” he added.
The European Commission has always aimed to open the
Southern Gas Corridor for the EU in order to directly
and physically link the EU gas market to the largest de-
posits of gas in the world in the Caspian Sea basin and
the Middle East, the Commission spokeswoman said.
The Southern Corridor comprises of several pipelines
such as TAP (Trans-Adriatic Pipeline) and Nabucco,
TANAP (Azerbaijani-Turkish gas pipeline Trans
Anadolu) and SEEP (South East Europe Pipeline), she
said, reiterating that Nabucco meets the EU's strategic in-
terest in opening the Southern Corridor.
“South Stream on the contrary has never been a Euro-
pean priority. Why? Because it diversifies routes but not
supply as it is supposed to bring Russian gas to the EU,”
she said, referring to the gas project spearheaded by Russ-
ian’s new President Vladimir Putin and gas giant
Gazprom.
For Putin, South Stream represents good business and
good politics, Weafer said. “More pressing current eco-
nomic issues pushed long-term energy planning well
down the priority agenda in Brussels. That allowed Putin
the time to completely out-manoeuvre Nabucco,” the
Troika Dialogue chief strategist said.
It is now widely accepted that South Stream is an urgent
political priority for Putin. “It is going to be built unless,
at the very last minute, Kiev gives in on Russia’s demand
for a significant equity stake in the Druzhba pipeline. That
seems very unlikely,” Weafer said. “Putin wants South
Stream partly to reduce future vulnerability to any one
transit country. He also wants it because it ties in many
more countries to a Russia energy and revenue stream, i.e.
the latter via transit fees,” he said.
"EU bureaucrats dithered too long over Nabucco and that
allowed Russia first mover advantage,” Weafer said. “Short
of a miracle in the form of a large source of gas on the
western side of the Caspian Nabucco is far too high risk."
follow on twitter @energyinsider
Energy Insider
By Kostis Geropoulos
ADVERTISEMENT
TECHNOLOGYPage 14 |New Europe NEW EUROPE13 - 19 May, 2012
“The only communication mediathat has a popular mission is theradio”, a senior said on 9 May atthe European Parliament. “Theradio is the media par excellenceof the civil society and citizenscan listen to it in an anonymousway”, he added.
Emmanuel Boutterin, vicepresident of AMARCInternational, defended in thedebate “Communication Rightsin the Digital Spectrum” thenecessity of the community radiosto ensure plurality and diversity inthe media.
AMARC, an internationalnon-governmental organization,serves the community radiomovement to amplify the voicesof the excluded and marginalizedtrough community media andnew ICTs. “The radio is a socialmedia of proximity and we needto defend the territorial values”,he said.
The Community Radio Sector,has proposed during the last yearsmany measures that are helpingto create a plural DigitalEnvironment. However, there isstill a lot of work to do and thesector call the European Unionand its Member States to “create abalance between the public and
commercial services”, accordingwith Emmanuel Boutterin.
One of the main objectives ofcommunity radios, is to ensure anequitable distribution of the spec-trum between public, commercialand community broadcasters.Access to information is a right,but the problem “is the articula-tion between a fundamental rightand the democratic use of a scarcepublic resource”, said BernardDubuisson, Head of Radio Unitfor the Belgian Media RegulatoryAuthority, during the debate.
We live in a world full of digi-tal platforms and with moreaccessibility than years before;
but the broadcasting did notchange at the same level. Thissituation affects directly to thecommunity radios, which haveless resources to participate inthe digital revolution.
These kind of media have astrong popular support, reachesmany millions of people acrossEurope and are an essential con-tributor to freedom of expressionand access to information. That'swhy “we have to stimulate publicradio's interests to not fallbehind”, explained EmmanuelBoutterin.
The spectrum policy is chang-ing at the same time technology
does. Nowadays, internet is theprincipal way people have accessto information, but not every cit-izen has access to it and, in con-sequence, to community radios.The European Union is workingon this necessity, investing€9,000 millions on technology,and promoting cable connectionsas the safest way for transmitinformation.
Besides all the good intentionsand efforts of the radio sector andthe EU, European professionalsof the media think that there isstill lack of financial resources, oflegislation, and of recognition ofthe contribution of this sector tomedia pluralism.
During the debate, some ofthem explained the need of anapproach in three levels: the EUmust insist Member States to ful-fil the objectives, ask countries tocreate a legislation based onHuman Rights and the unifica-tion of all platforms, to defenddiversity and pluralism. “We needmore energy from the EU ”, said amember from the EnglishCommunity Media Association.
About the spectrum's distribu-tion, they agree that is not only anEU issue, is also a national andsolidarity problem. All countrieshave to create a effective systemto organise this media space. “It'sjust a question of solidarity”, said
a journalist from Antwerp, “isnecessary to protect weakestaddressees”.
To guarantee a true pluralismtowards producers and consumerson community radios, there mustbe a regulation. According to NeilO' Brien, member ofBroadcasting Authority ofIreland (BAI), “content's pluralityis important and we have toensure it with regulations and itsperformances”. “The regulator isnot always the bad person, he alsohas a role in the communityradios”, he added.
Pluralism is basic on media,and community radios are thebest example. These communica-tion media represents the realthinking of the society and theiropinions about issues that maybecommercial radios forget toemphasize. The cultural diversityallows citizens and professionalsto have more complete informa-tions and learn about problems inother countries, where the mainactors of the stories live.
European Parliament and theEuropean Commission careabout the problem of the digitalspectrum and pluralism in com-munity radios, but after thedebate the conclusion was: “weare not asking only for moremoney, we are asking for morehelp”.
COMMUNICATION
Community radios to protect plurality
Somalia Radio Music. |EPA/NIC BOTHMA
By Nerea Rial
FASHION & STYLE
New Europe | Page 15NEW EUROPE 13 - 19 May, 2012
At a time whenit could becompromisingfor a lady to
thoughtlessly blink inchurch, fans, like gloves,were ‘mobile communica-tion’ accessories, usingcoded language for secretmessages and intricateerotic play: a fan carried inthe left hand meant,“Come and talk to me”,when open and shut, “Youare cruel”, whereas a fanheld wide open sent theunequivocal invitation: “At
what hour?”…somethingof a vintage SMS!
The hand fan is a thou-sand-year-old invention,which provided the Kingwith shade and a coolingbreeze, while keeping awayflies. The Cairo Museumof Egyptian Antiquitiesexhibits two unique rigidfans with ivory, gold andprecious stone handles,and fully preserved whiteand brown ostrich feathertrimming, that belonged toPharaoh Tutankhamun, asin Egypt, the sacred use of
the fan dates back to 3200BC.
Ancient pottery showsthat fans, made of myrtleor lotus leaves, known asrhipis, were used in Greecesince the IV Century BC,while in China wovenbamboo fans date back tothe II Century BC. How-ever, the folding fan as weknow it today, said to havebeen inspired by bat wings,was invented in Japan inthe VI Century A.D., andintroduced in Europe fromthe Middle East and theFar East in the XVI Cen-tury by Venetian and Por-tuguese traders.
Queens Caterina deMedici’ and Elizabeth Iwere famous precious fancollectors as fans becamecourt etiquette accessories,social status indicators andmarked all major events ina lady’s life: mourning,court balls, weddings,childbirth…
Less fashionable at thetime of the French Revo-lution and under the Em-pire I, the XIX Centuryshowed a renewed interestin fans, as artists likeManet, Renoir, Pissarroand even Gauguin paintedminiatures on them.
The materials used tomake fans were alwaysprecious: African or In-dian ivory, mother ofpearl, exotic woods likemakassar, ebony, rose-wood, tortoiseshell, boneand horn for the frame
and ‘swan skin’, the finestkid leather, silk, organza,lace and gold for the leaf.This makes the restora-tion of these items diffi-cult, as the production ofmany materials used, likeivory, is now controlledand specialized craftsmenare seldom.
At auctions, collectors canchoose between XVIIICentury pastoral and ro-mance settings, mythologi-cal tales, Art Deco flowerythemes, precious Fabergéenamel decorations, ItalianGrand Tour celebrations,XIX Century political orhumorous scenes.
In France, amateurs canadmire a collection ofaround 1000 fans at theMusée de l’Eventail, ledby Anne Hoguet who be-longs to a family of éven-taillistes since 1872. In heratelier, Hoguet restores
antique fans, teaches FineArt students and also cre-ates special pieces for theOpera, theatre, cinema(Sofia Coppola’s MarieAntoinette) and Haute
Couture, having workedwith Dior, Gaultier,Lacroix, Nina Ricci, Tor-rente and Karl Lagerfeld.
Louise Kissa [email protected]
Eugene de Blaas, The Red Fan, 1892
Louis XIV, Passage du Rhin fan Le Grand Tour, Italy 1792© Anne Hoguet
Anne Hoguet in her atelier© Anne Hoguet
Detail of an XVIII Century fanSalomon and the Queen of Sheba
Fan mail
BRUSSELS AGENDA Page 16 | New Europe | NEW EUROPE13 - 19 May, 2012
BRUSSELS AGENDA New Europe | Page 17
NEW EUROPE 13 - 19 May, 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
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
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RESTO BITES
One World International Human RightsDocumentary Film Festival14 – 23 May, Various locations
For the sixth year, the film festival settlesdown in Brussels for a showing of some ofthe most interesting and challenging fac-tual films. The festival is held under theauspices of Martin Schulz, the Presidentof the European Parliament andAmbassador Milena Vicenová, PermanentRepresentative of the Czech Republic tothe European Union.Part of the festival is a competition andnine movies are aiming for the award ofbest film, decided by Victoria Pirker,Human Rights Without Frontiers; DavidNichols, Amnesty International and YinMyo, women’s rights activist fromBurma.The films include ‘Back to the Square’where the director follows people involvedin the uprising and how life has changedfor them, not always for the better.
‘Belarusian Dream’ has an anonymousguide who tells of the hope for electoralchange, dashed by vote rigging and vio-lence. A hard look at Europe’s last dictator-ship. ‘The Boxing Girls of Kabul’ is selfexplanatory, but shows the determinationof women who wish to compete in sport. These are just a few of the films beingshown, more information is at:http://www.oneworld.cz/2012/brussels
Brussels Agenda 14 – 24 May
Le Chapeau Blanc200 rue Wayez, BrusselsTel 02 520 0202www.lechapeaublanc.beIf you thought typicalBrussels brasserie was onthe way out, think again.This is a terrific example ofthe genre with a great,classic brasserie interior tomatch the wonderful food.Being so close toAnderlecht FC, it is easy touse football metaphors but,really, it would be hard tofind a match for this eatingestablishment.It's been a restaurant for 25years and features all thetraditional dishes you'dexpect at such a place,including delicious scampiand croquettes for starters,plus the likes of kidneys, fishand steak for mains, all very
tasty. House speciality iswaterzooi and spare ribsand there's an extensivewine list.There's also a popular lunchmenu, from Monday-Friday, featuring a starterand main for a veryreasonable €8.50.The upstairs area, which
like the restaurant seats upto 75, is regularly used forfunctions, such as one-manshows and everything isexpertly overseen by thevery helpful MichaelSturbois, who started as abarman and is now themanager. Highlyrecommended.
Some events may require registration15 May – Young People and Sexual Health:Integrating and Implementing theEuropean Knowledge9:15 - 16:00, Silken Berlaymont Hotel, 11-19, Boulevard CharlemagneThis timely international symposium willprovide a valuable insight into the latestbehavioural surveillance methods used inEurope, raise awareness of sexual reproduc-tive health related challenges and exploreinnovative solutions. Delegates from all sec-tors will have the opportunity to exchangeideas and share best practices in improvingsexual health education and awareness forall young people in Europe.
15 May - Reforming The EU's Long TermBudget: Now Or Never?12:00 – 14:00, Friedrich-Naumann-Stiftung , 71 Avenue de CortenberghAs the negotiations over the next long-termmulti-annual financial framework, for theperiod 2014-2020 intensify, this eventbrings together experts and policymakers todiscuss how the budget should be reformedto reflect the tough economic climate thatEurope currently faces.
22 May -Trust In Justice: How TheEuropean Social Survey Can Inform Policy
10:00 – 13:00, CEPS Conference room,Place du Congrès 1This seminar, the first of the European SocialSurvey Policy Seminar Series, presents theresults of the 2010 survey on Europeans' atti-tudes to the legitimacy of justice institutions -the police and courts. The seminar will con-sider the implications of survey results forcriminal justice policy asking 'Does publictrust in justice flow from people's contact withthe police and their experience of proceduraljustice? Does trust in justice shape perceptionsof institutional legitimacy? And does legitima-cy affect compliance and cooperation with thepolice and the courts?
23 May -Water Security: Policies For BetterAccess14:00 – 18:00, Bibliothèque Solvay, ParkLéopoldThis summit will focus on how to tackleAfrica’s water scarcities and how to improveAsia’s water governance. The debate will beover ways African governments should addresswater scarcities and what the private sector cando to boost infrastructural investment.
For more on events in Brussels checkwww.agenda.be14 May – Takacs Quartet20:00, BozarSince its foundation in 1975 the TakacsQuartet has travelled the world, perform-ing in leading international concert hallsand at numerous festivals. Since 1983 it hasbeen in residence at the University ofColorado in Boulder. The evening's pro-gramme opens with one of Haydn's mostcelebrated quartets, known as "The Lark".Janacek's poignant Second Quartet is at theheart of the programme; it will be followedby Ravel's Quartet, one of the composer'smasterpieces.
16 May – Tommy20:00, Forest NationalThe Who’s legendary rock opera comes toBrussels in a new production.
16 May – Thomas Dolby20:00, Ancienne BelgiqueOut of the 80s electronic and synth-pop,Dolby stood out as something odder andmore interesting than many of his contem-poraries and he’s coming to Brussels, possi-bly with a time machine.
18 May - After Life - 4 Stories of Torture
by Mervi Junkkonen20:00, BozarKebi, Serge, Musa, and Hector come fromdifferent parts of the world, but they haveone thing in common: they have all beentortured in their home countries. Contraryto their expectations, they survived the tor-ture and they now all live in Finland. Lifegoes on, but with certain limitations.
24 May - Mâäk & Albert AnagokoEnsemble : KOJO20:00, BozarThe adventurous Belgian-French jazzcombo Mâäk (formerly known as Mâäk’sSpirit) has always been interested in themusical traditions of other cultures. TheirKojo project engages with vodun, theincantatory trance music of Benin. Theresulting infectious compositions rangefrom free improvisation to meticulousorchestration. For the occasion, the ensem-ble is joined by the Beninese master per-cussionist Albert Anagoko and seven otherpercussionists/singers/dancers.
WORKsuggest your event for our agenda: [email protected]
PLAYsuggest your event for our agenda: [email protected]
The reel world
Dog day afternoon
Zinneke Parade19 May, BrusselsBrussels’ most eccentric and colourful parade is back!Held every two years, the Zinneke Parade involves 2,500people from the communes of Brussels, who gathertogether in groups of up to a hundred, to express them-selves around a theme.Perhaps with a look back over the financial crisis, thisyear’s theme is ‘Disorder’.But this isn’t just a parade. Zinneke is a participatorycreation, an open space for everyone to experiment withcooperative living in the 21st century city, a city inhabit-ed by Zinnekes proud of their mixed roots. Above all, it’sa fantastic celebration in the city, unique and 100%human - without amplification or motors.Those new to Brussels may wonder about the name, butit is something that represents the spirit of the city, notfrom the big halls, but from the streets. Zinneke is thename Brussels people give to the small Senne/Zenneriver that circles Brussels, protecting it against flooding.Zinneke is also used to refer to a stray dog or mutt…some of which end up in the river. And so we getZinneke: meaning one of multiple origin and symbol ofthe cosmopolitan and multicultural nature of Brussels.It is an extraordinary sight, with a riot of colours, musicand an incredible variety of creativity.If you’ve never seen it, you should go, if you have, thenyou’ll already be planning spending the afternoon in thecity centre watching it and having a great day.
Angola - Dream and Reality
Preparing for this years Zinneke parade
FRANCE · GERMANY· SPAIN · PORTUGAL
New Europe | Page 18 THE EUROPEAN UNION13 - 19 May, 2012
GERMANY|BANKINGCommerzbank first quarter profits plunge Germany's Commerzbank said on 9 May that its first quar-ter net profits plunged 62.5% to €369 million, RTE Irelandreported. Revenues before loan loss provisions were alsodown to €2.585 billion from €3.616 billion a year ago. Thedrop was mostly due to a high comparison base from in2011 when numbers were inflated by a one-off item, Ger-many's second biggest private lender said. Provisions forlosses from loans also fell by about a third to €212 millionfrom €318 million, due to the robust German economy andthe reduction of risk in commercial property financing.Commerzbank said uncertainty arising from the Europeandebt crisis continues to "pose a challenge" to its revenues."But the Core Bank still is well positioned even in a difficultmarket environment thanks to its customer-centric businessmodel," said its chief financial officer Stephan Engels.
SPAIN|ECONOMYSpain’s industrial output plummetsData from Spain’s national statistic institute last weekshowed the country’s industrial output slowed by 7.5% inMarch in annual comparison. The productivity drop wasthe highest in nearly three years, exceeding February's5.3% fall and January's 4.4% drop, the data showed, at-tributing the performance to the shrinking GDP andburgeoning unemployment numbers. Earlier reportsshowed Spain's GDP fell 0.3% in the first quarter, thesame decrease in the fourth quarter of 2012. Spain isEurozone's fourth-largest economy. High unemploy-ment has plagued the country, leading to labor strikesand protests against austerity measures. Spain's unem-ployment rate raised to 24.4% in the first quarter, up from22.85% in the fourth quarter, the worst in the Eurozone.Spain's government forecasts a 1.7% fall in GDP thisyear, following 0.7% growth in 2011.
PORTUGAL|TRANSPARENCYPortugal’s anti-corruption efforts inadequate, TI saysA national integrity system assessment presented on 7 Mayby Transparencia e Integridade, Associacao Civica (TIAC),the Portuguese affiliate of Transparency International, ac-cessed Potuguese anti-corruption efforts as below par andstressed that a lot is needed to be done. A communiquépublished on the website of Transparency International in-formed that the study – conducted in association with thePortuguese think thank INTELI and the Institute of So-cial Sciences of the University of Lisbon (ICS-UL) – foundthat poor coordination between various agencies, lack ofspecialised judicial enforcement authorities and a lack ofpolitical will to adopt a coherent strategy against corruptionare the main flaws in Portugal's anti-corruption efforts.According to TIAC, there's a big gap between the legal in-frastructure that's in place in Portugal and the way institu-tions conduct themselves in practice. “The legalmechanisms are generally satisfactory, but the authorities'effectiveness is hindered by the lack of a comprehensiveand coherent prevention and enforcement strategy,” thecommuniqué read. Results also pointed out the corrup-tion risks associated with the austerity policies currentlybeing implemented as a result of Portugal's bailout by theEU and the IMF. The report said that measures such asprivatisations, the renegotiation of public-private partner-ships or the restructuring of the defence sector should beabsolutely transparent. “Sadly, the rush with which thesepolicies are being undertaken can hide very shady deals,”TIAC said.
Figures published on 10 May by France’s statistical officeInsee showed French manufacturing output managed to re-cover from a decline in March and was up on month.
France’s manufacturing output in March increased aseasonally and working-day adjusted 1.4% month-on-month, following a revised 0.9% drop in February. Thelatest gain was the biggest since July last year, when out-put rose 1.7%. However, overall industrial production de-clined 0.9%, erasing the similar size gain logged inFebruary. Production fell for the first time in threemonths. The monthly decline was partly due to base ef-
fect as energy consumption had surged in Februaryowing to the cold weather.
Year-on-year factory output fell 0.3% in March, after drop-ping 3.2% in February. It was the third consecutive month ofdecline. Industrial production fell for the fourth month in arow, down 0.9% in March. In the three months to March,manufacturing output declined 0.5% from the previous threemonths, while industrial production slipped 0.1%. Comparedto the corresponding quarter of 2011, France’s factory outputfell 1.7% and industrial production slid 1.4%, the datashowed.
Manufacturing output soars in March
FRANCEECONOMY
German services labor union ver.di andDeutsche Telekom AG said they havereached a wage agreement for some50,000 workers at domestic unitTelekom Deutschland, it was reported.
Marion Schick, Deutsche Telekomboard member for personnel, said thenegotiations had been "difficult andlong." The majority of pay scale em-
ployees will get a pay increase of 6.5% inthree steps over two years, ver.di said ina press release. As of the start of thismonth, wages will rise 2.3%, both par-ties said. In a second and third step nextyear, salaries will be further increased by2.1% respectively, they added.
At the end of April, the union andthe company reached an identical deal
for around 17,000 employees workingat the German telecommunicationsgiant's head offices in Bonn.
A separate wage dispute for employ-ees of Deutsche Telekom's T-Systemsunit still hasn't been resolved, and ne-gotiations for the 18,500 representedworkers will go into a fifth round on 15May.
Deutsche Telekom strikes wage deal in Germany
GERMANYTELECOMS
Spain criticises Bolivia’s TDEnationalisation, but softly The Spanish government last week wasexpectedly critical over Bolivia's nation-alisation of a Spanish-owned electricpower company but the tone was com-paratively softer than that was againstthe Argentine government’s take overof the Spanish firm Repsol's majoritystake in the energy company YPF.
Though Economy Minister Luis deGuindos warned that the decision oftaking over the Bolivian subsidiary ofREE, Transportadora de Electricidad(TDE), by the government would deterinvestment, he noted that Bolivia hadagreed to pay compensation. PresidentEvo Morales ordered the takeover ofREE's Bolivian subsidiary saying it hadnot invested enough in Bolivia.
But de Guindos argued that TDEhad been providing Bolivians with a"good service." The company owns andruns around three-quarters of Bolivia'spower grid. "The Spanish governmentdoes not like such decisions, becausethey fail to provide legal security forSpanish capital investment in countrieslike Bolivia," Guindos said.
Media was immediately weighing thedeal against Argentina’s nationalisationof Repsol's stake in YPF, but observersnoted the commercial and strategicvalue of TDE, which manages a largepart of Bolivia's electricity network, doesnot compare with that of YPF. The Eu-
ropean Commission however wasequally critical on the Bolivian movesaying that the move sent a "negativesignal" to investors.
But de Guindos’ comments weresomewhat measured and he was keento underline that Bolivia had promisedto pay REE a decent price for TDE.According to experts, Spin’s soft ap-proach may be was buoyed by their urgeto protect other commercial interests inthe country and the continent.
The European Commission's tradespokesman, John Clancy, meanwhile
voiced concern at the Bolivian govern-ment's decision. "Actions like this onenecessarily send a negative signal to in-ternational investors over the businessand investment climate in Bolivia," hesaid.
However, de Guindos stressed thatthe case was "very different" from Ar-gentina's decision last month to nation-alise the oil firm YPF. He did notelaborate, but media speculated that thedamage to REE will be far smaller thanthat inflicted on Repsol by the nation-alisation of YPF.
SPAINBUSINESS
Military personnel stand guard around the headquarters of the Spanish-owned electric power com-pany Transportadora de Electricidad SA (TDE) in Cochabamba , after Bolivia's President EvoMorales issued a decree for its nationalizion and ordered the military to take it over.|AFP
AUSTRIA · SLOVENIA · ITALY · MALTA
New Europe| Page 19
THE EUROPEAN UNION13 - 19 May, 2012
ITALY|ECONOMY
Italian bankruptcy up in Q1The reform measures of the technocrat government areyet to reveal any positive sparks for the ailing third-largest economy of Europe with more businesses goingbankrupt, a recent unofficial data showed. A report fromthe Milan-based Cerved business consulting companycited in local media last week showed about 3,000 Ital-ian businesses filed for bankruptcy during the first threemonths of this year. The bankruptcy rate during thefirst quarter rose more than 4% from 2011 and has beensteadily increasing since 2008. Italy's economy is in arecession and is suffering the bite of the ongoing debtcrisis and the recessionary phase isn't expected to endthis year. Almost 12,000 businesses closed their doors in2011, the highest figure in 4 years. The economy con-tracted during the final two quarters of last year, mean-ing the economy was in recession. The IMF forecaststhe economy would shrink 2.2% this year. The govern-ment of Prime Minister Mario Monti recently passeda €20 billion austerity plan to reduce the €1.9 trilliondebt and balance the budget.
SLOVENIA|HEALTH
Tosama sues state after Govt revokes state aidTosama, a maker of medical supplies, is suing the stateafter the government revoked the decision of the previ-ous government to grant it €1.5 million in restructuringaid and a further € 4 million in state guarantees, InvestSlovenia reported. The suit has been confirmed in apress release following previous Thursday's correspon-dence session at which the government crafted a replyto Tosama's action. Tosama was granted state aid at oneof the last sessions of the Borut Pahor government inFebruary. At the time the decision outraged People'sParty (SLS) president, who would become minister ofeconomic development and technology in the new gov-ernment. The decision on state aid was revoked in lateMarch, with the government arguing that the companygot into trouble primarily because of debt that is a con-sequence of a leveraged buyout carried out in 2008. Theministry proposed that the government not grant stateaid for bailing out or restructuring companies in whichleveraged buyouts were carried out within four yearsprior to their application for state aid.
ITALY|CRIME
Nuclear firm CEO shot in ItalyRoberto Adinolfi, the CEO of an Italian nuclear engi-neering company, was shot on 7 May as he left his home,local media reports revealed. The incident caused a stir inthe port city of Genoa and the authorities immediatelylaunched investigation into the matter. Roberto Adinolfi,59, is CEO of Ansaldo Nuclear, a division of the state-controlled Finmeccanica company that specialises in nu-clear engineering and which has designed plants in China,the Czech Republic and Romania. Adinolfi has beenCEO since 2007. He was shot in the leg by an assailantwearing a helmet who fled the scene as a passenger on theback of a motor scooter. Adinolfi underwent surgery andwas in good condition, the reports said. Genoa's chiefprosecutor, Michele Di Lecce, was quoted as having saidthat all motives were being considered, including domes-tic terrorism. Finmeccanica's CEO Giuseppe Orsi said ifterrorism was confirmed, the attack "represents a signal ofalarm not to be underestimated" in terms of the economicdifficulties brought on by the financial crisis. He also de-cried any attempt to use the financial crisis "for ideologi-cal ends."
Austrian residents in the picturepostcard Alpine village of Hallstattare to sign a deal with a Chinesecarbon copy village which officiallyopens on 2 June, Austrian inde-pendent reported.
Residents of Hallstatt in Austriawere furious when their village wascopied and rebuilt in China but nowa legal challenge over the copyrightbreach has been dropped, and in-stead a delegation including Hal-statt mayor Alexander Scheutz is totravel to China to sign the friend-ship treaty between the two.
Scheutz said locals had decidedthat the decision by the Chinese tocreate a copy was in fact a compli-ment and can only help to furtherspread the fame of his own village of900 residents.
Never afraid to ‘borrow’ or imi-tate, Chinese planners were accusedof making the ultimate counterfeitwith a settlement copied wholesalefor the benefit of wealthy industri-alists and located just an hour or soby chauffeur-driven limousine fromtheir grim factories in Boluo inGuangdong province.
News of the plans for a fake ver-sion of the idyllic lakeside villagegenerated a mixture of astonish-ment, amusement and finally threatsof a legal challenge when it was re-vealed that ‘spies’ from a Chinesedeveloper had been secretly prepar-ing detailed blueprints on furtiveEuropean trips, posing as tourists.
No expense was spared on theproject. The original buildings werecopied and reproduced with star-tling precision by the China MineMetal Group. It includes Hallstatt’s1860 Protestant Christuskirche(Church of our Lord) at the heart
of the town. But the church will notbe used to worship – it's a restaurantand concert hall.
Horse-drawn carriages and flocksof white doves have even been im-ported to lend authenticity to theproject where a new villa here builtin the style of a 300-year-old lake-side home is being offered at be-tween 200,000 and 500,000, GBP,much higher than the real thing inAustria.
Some things don't measure up.The fake lake, for instance, is notjust muddy, it is 50 times smallerthan the original, a stagnant shallowpool. Then Chinese Halstatt lacksthe two-mile-high snowy moun-tains that surround the real thing,and instead is ringed by parched yel-low hills, a few hundred feet abovesea level.
And while the 800 residents ofthe real Hallstatt breathe pristinemountain air, China’s ‘Alpine’ resi-dents will gaze out only as far as thesmog allows across the nation’s blackindustrial heartland. Pollution ischokingly high in Guangdongprovince, known as the workshop ofthe world, causing sickness in al-most half the residents.
There are some geographicallyimprobable extras, too. Hallstatt,China, will include a replica of thestreet where Mozart was born, Ge-treidegasse, complete with a Mozartlibrary and a period ironmonger.Getreidegasse is actually inSalzburg. The neighbouring street isnamed after Vienna’s BelvederePalace, 200 miles from the realHallstatt, although the developershave stopped short of trying to re-produce the 18th Century castle.
Wealthy Chinese are the world’s
biggest buyers of fine French wines,and a taste for European culture isseen as a mark of sophistication.Luxury homes are often modelledon French chateaux while historicneighbourhoods in China’s owncities are bulldozed to make way forglitzy apartment blocks and shop-ping malls. China might have thou-sands of years of history andculture, but such things don’t seemto count.
Because the original is a UN-ESCO world cultural heritage sitelocals in Austria had announcedplans to take legal action over thecopy – but they have now decidedthat he the Chinese project is actu-ally good advertising - and an hon-our.
The original Hallstatt’s websiteeven now carries a motto: ‘Hallstatt– the original. Photographed a mil-lion times. Copied once.’
Mayor Scheutz said: "We onlyjust got the news that the otherHallstatt is almost finished and weare a bit surprised that they've doneit so quickly. They haven't reallybeen keeping us informed abouttheir plans but the feeling here nowis that it is an honour that they havedone this.
"We contacted the Chinese devel-oper and now we have been invitedto the official opening will takeplace on 2 June. They also asked if Icould bring a traditional Austrianband with me and I'm going tobring the local SalinenmusikkapelleHallstatt band with me, completewith lederhosen."
At the same time the Mayor plansto sign the friendship treaty withthe Chinese recognising their twinorigins.
AUSTRIA
COUNTERFEITING
A view of the construction site of a low-density residential-tourism complex suspected of copying the Austrian town of Hallstatt, in Boluo county in south
China's Guangdong province on 23 June 2011.| EPA/HUIZHOU
Hallstatt makes peace with Chinese copycat
UK · BELGIUM · NETHERLANDS · LUXEMBOURGPage 20 |New Europe THE EUROPEAN UNION13 - 19 May, 2012
BELGIUM|TELECOMS
Belgacoms’s revenue increases slightlyFor the first quarter 2012, the Belgacom Group reported a€1,588 million of revenue, 0.3% up versus the same periodof 2011. Excluding the impact from acquisitions, divest-ments and regulatory measures, Belgacom’s underlying rev-enue grew by 1% as a result of a revenue increase in theConsumer segment and BICS. The first quarter 2012Group EBITDA was €466 million, a 3.1% decline versusthe previous year. Regulatory measures reduced the firstquarter EBITDA by six 6 million euro (-1.3%). The re-ported EBITDA led to an EBITDA margin of 29.3%, or1pp lower than for the same period of 2011. Didier Bellens,Belgacom's CEO, commented: “Today we are clearly ben-efitting from our approach of having invested early andcontinuously in a high-quality fixed and mobile network.Our focus on improving our servicing to customers isworking, which helps Belgacom to be an even more at-tractive company in a competitive market.” Belgacom in-vested €186 million in the first three months of 2012, or11.7% of its Group revenue. In the first quarter of 2012Belgacom generated €179 million Free Cash Flow, or €60million less versus the same period of 2011. This is due tolower Cash Flow from Operating Activities, the acquisitionof the chain of The Phone House Belgium stores and byhigher Capex investments. Belgacom continues to have asound financial position with its net financial debt at€1,296 million end of March 2012.
LUXEMBOURG|INVESTMENT
Tenaris plans to invest $200 million in ColombiaTenaris, a Luxembourg-based leading supplier of tubes andrelated services for the world's energy industry, intends toinvest $200 million in its mill in Cartagena de las Indias,Colombia during a meeting with Colombia’s Minister ofCommerce, Industry and Tourism, Sergio Díaz Granados. The $200 million investments will include the constructionof a new heat treatment mill and the incorporation of newcutting-edge technology for ultrasound inspection and fin-ishing. The sophisticated products manufactured with thismachinery will be used in demanding applications bothdomestically and internationally, this was recently an-nounced by Tenaris CEO Paolo Rocca. The technology tobe implemented in the new facilities has been designed tomeet the company’s high environmental standards, asTenaris seeks to comply with leading international norms,while optimizing the consumption of energy and gas. Theplan is a continuation of the ongoing investments that havebeen taking place since the mill became part of the Tenarisin 2006. The new facilities are expected to be inauguratedin 2014. “The energy sector in Colombia is on an extraor-dinary path toward growth in the following years, driven bya favorable context and the government’s policies.
UK|BUSINESS
Administration on the cards for ClintonEmbattled UK retailer Clinton Cards is set to lose its fightfor survival after its largest supplier said it would force it intoadministration later on 9 May, Breaking News reported.The retailer, which operates 628 Clintons and 139 Birth-days stores, has requested that its shares be suspended onthe London Stock Exchange. The move came after itsbanks – Barclays and taxpayer-backed Royal Bank of Scot-land – sold the company’s £35 million (€43 million) of loansto its biggest supplier, American Greetings. But whereas thebanks waived certain loan conditions, American Greetingshas said it will push the company into administration.
Royal Bank of Scotland announced afirst quarter net loss of £1.52 billion(€1.87 billion) almost three times theamount posted a year earlier, RTE Ire-land reported.
RBS, 82% owned by the British gov-ernment after a massive bail-out in theglobal the financial crisis, posted a 2011first quarter net loss of £528 million.The lender said losses soared due to anincrease in the value of its outstandingdebt to £2.46 billion.
"As RBS's credit spreads tightenedduring the quarter, a charge of £2.456billion was booked for own credit ad-justments," RBS said in a statement.But the bank's underlying performancewas brighter, with RBS posting firstquarter operating profit of £1.18 billion.
RBS meanwhile confirmed that itwould repay the last of emergency stateloans totalling £163 billion.
"The start of 2012 has shown pleas-ing progress at RBS within the contextof a flat economic environment," chiefexecutive Stephen Hester said in thestatement. "Excellent progress contin-ues in removing 'mistakes' of the past.Non-core assets have fallen, again. Liq-uidity is stronger, again. Next week the
bank will repay the last of the UK gov-ernment-backed funding support wereceived during the crisis," he added.
At the height of the financial crisis,the British taxpayer stumped up £111billion to provide emergency liquidityassistance, while the US Federal Re-serve loaned around £52 billion.
Amid public anger over a raft of poorresults, Hester waived his latest annualbonus of shares worth £963,000, whichhad been due on top of his £1.2 million
salary for his work in 2011.RBS also revealed that it had set aside
a further £125 million to compensateclients who were mis-sold insurance,bringing the total expected outlay onthis count to £1.2 billion.
Last year, Britain's banks lost a highcourt appeal against tighter regulationof PPI, which provides insurance forconsumers if they fail to meet repay-ments on a credit product such as loans,mortgages or credit cards.
The European Commission has cleared under the EUMerger Regulation the acquisition of Flevo DeelnemingenIII B.V. by Koninklijke Ahold N.V., both of the Netherlands.The Commission concluded that the proposed transactionwould not raise competition concerns because of the limitedcombined market presence of the parties.
The parties' activities overlap in the online retail of books,toys, games, music and films in the Netherlands, where Flevois active via its subsidiary bol.com and Ahold via its onlineforum albert.nl.
The Commission's investigation found that the proposedtransaction would not raise competition concerns in thesemarkets because of the limited combined market presence ofthe parties and the small addition in market share resultingfrom the transaction as well as the presence of sufficient
strong competitors on the markets concerned.The Commission therefore concluded that the transaction
would not significantly impede effective competition in theEuropean Economic Area (EEA) or any substantial part ofit. Ahold is the Dutch parent company of an internationalgroup of quality supermarkets based in Europe and theUnited States. In the Netherlands, Ahold is active via its su-permarket chain Albert Hein, speciality stores for retail tradein health and beauty care products (Etos), and wine andliquor (Gall & Gall), as well as via its online forum albert.nlwith regard to products of all of these brands.
Flevo is a Dutch holding company active via bol.com inthe online retailing of books, e-books, DVDs, toys, music,games, software, consumer electronics, home appliances andcomputers. Flevo is active in the Netherlands and Belgium.
EC approves acquisition of online retailer Flevo by AholdNETHERLANDS RETAIL
The number of travellers to andfrom Dutch national airportsreached an unprecedented near 54million in 2011. The volume ofgoods shipped through the air barelyincreased from 2010 to 2011.
By the end of 2008 and throughout2009, the global economic crisis wasalso manifest in aviation. Subsequently,the economy made a modest recoveryin 2010. In 2011, air passenger trans-port grew by 11% to nearly 54 million
travellers, i.e. a higher number thanprior to the crisis, Statistics Netherlandsreported.
Amsterdam Airport Schiphol is byfar the largest airport in the Nether-lands. Over 92% of air passengers travelthrough Schiphol. In recent years, theshare of Eindhoven Airport has grownconsiderably – from 2% to 5% – but thisgrowth has hardly affected Schiphol.
With 2.7 million, the number of pas-sengers travelling to and from Eind-
hoven Airport was almost four times ashigh in 2011 as in 2004 (700 thousand).Proportionally, Schiphol’s growth wasless spectacular: from 42.4 to 49.7 mil-lion passengers.
The growing number of air pas-sengers is in sharp contrast with thevery modest growth of air freight.Last year, 1.59 million tons of goodswere shipped, a growth by less than1% from 2010, but still 2% downfrom 2008.
Number of travellers on national airports reaches a recordNETHERLANDS AVIATION
RBS Q1 loss triplesUNITED KINGDOMBANKING
RBS is still facing financial difficulties | epa/andy rain
POLAND · HUNGARY · CZECH REPUBLIC THE EUROPEAN UNION
New Europe | Page 21
13 - 19 May, 2012
CZECH REPUBLIC|ECONOMY
Unemployment downFigures published last week by Czech Republic’s ministryof labour and social affairs last week published the unem-ployment figures for April showing an 8.4% year-on-yearplummet in the numbers. The total number of joblessCzechs came down by almost 28,000 in the month takingthe overall unemployment total below the half millionmark to 497,322, the figures showed. March had alreadywitnessed a bigger than expected cut in the jobless rate withover 16,000 being wiped from the total and the overall rateslipping to 8.9%. However the volume of employmentgeneration was not very significant. The ministry said thatjust over 48,000 people found jobs in April with almost20,000 removed from the unemployment total for otherreasons. The number of new registrations by the joblessranged around 40,000. Meanwhile, the number of vacan-cies rose by around 1,800 to 41,707.
POLAND|FINANCE
Foreign exchange reservesreach all-time highAt the end of April 2012, Poland's foreign exchange re-serves as expressed in euro terms reached an all-time high.They were standing at €77.6 billion, representing an in-crease of nearly 3 billion euro on the month before. Ac-cording to the National Bank of Poland (NBP) releaseposted on 7 May, dollar-terms holdings of official reserveassets had also risen, from $99.7 at the end of March to$102.8 at the end of April. In managing the foreign ex-change reserves, the National Bank of Poland, while striv-ing to maximize the return on the assets, gives priority totheir safe investment and a requisite level of liquidity.
CZECH REPUBLIC|TELECOMS
Telefonica reports Q1 declineTelefonica Czech Republic AS (TCR) last week posted itsfirst quarter figures reporting a 6.9% plummet in net prof-its. The telco’s net profit in the three months to Marchdropped to 1.62 billion Czech crowns ($83.2 million) from1.74 billion crowns recorded in the comparable quarter of2011. The profit in the quarter was hit by slimmed revenue.TCR’s first quarter revenue came at 12.47 billion crowns,down 3.3% year-on-year. Operating income before depre-ciation and amortization fell to 4.78 billion crowns, from5.07 billion in the first quarter last year.
POLAND|ECONOMY
Tusk to splash out on firefightersThe Polish Prime Minister Donald Tusk participated inthe celebrations of the Fire-fighter’s Day and the 20th an-niversary of establishing the National Fire Service. “Polandis proud of its fire-fighters. The Poles are proud that theirsafety is protected by persons of such courage and highqualifications,” Tusk said. Donald Tusk also stated that it ishighly likely that fire-fighters would receive rises in au-tumn. “Looking at what is happening with the budget thisyear, and taking into account the lack of dramatic eventssuch as floods at the end of winter, we can say that it ishighly likely that we will keep this deadline and fire-fight-ers will receive rises in autumn,” he stated. “I am glad thatyou are working with the cutting-edge equipment, but eventhe best equipment will not replace the most valuable assetof the National Fire Service. It will not replace your heartsand minds, your courage, your strength, you determina-tion,” stated the head of the government when addressingthe fire-fighters assembled at Piłsudskiego Square.
Hungary to introduce e-toll system by mid-2013Hungary is to introduce an electronic toll system by July1, 2013 at the latest, a government resolution publishedprevious Friday showed, Budapest Business Journal re-ported on 7 May.
The resolution contains details of the planned toll systemwhich was part of the Szell Kalman Plan 2.0, an updated ver-sion of Hungary's structural reform program unveiled at theend of April.
The size of tolls in the new system will be determinedby distance travelled. The system at present uses vignettesvalid for time increments. Discounts up to 13% for fre-quent travel will be available from six months after thelaunch of the system.
The e-toll system will be mandatory for vehicles over 3.5tons, but passenger vehicles and buses may join voluntarily
starting six months after its introduction.Accelerated public procurement procedures to set up the
system will be called in the first half of 2012. The State Mo-torway Management Company (AAK), the collector of thetolls, will take out a loan to pay for equipment for the system.
The resolution mandates the national development minis-ter and the national economy minister to take immediatemeasures with a view to the provision of the funds and com-mitments worth HUF 214.5 billion necessary for the pro-curement of the electronic toll system and the financing ofthe service for 10 years.
The cost of the investment is expected to be recoupedwithin a few years. The e-toll system is expected to generatean additional HUF 150 billion of revenue a year, includingHUF 75 billion in 2013.
HUNGARYTRANSPORT
The latest meeting of the policy makersat the Czech central bank (Ceska Nar-odni Banka) voted to maintain thebenchmark two-week repurchase rate ata record-low 0.75% but two boardmembers called for a 0.5% cut, localmedia reports revealed. The rate hasbeen kept unchanged since May 2010 –the last instance when the rate was cut.At the latest meeting, four rate settersvoted for no change, two sought a de-crease to 0.5% and one wanted an in-crease to 1%, Governor Miroslav Singerannounced.
Observers noted that the eventshowed rising prospect of a looming ratecut. Investors raised bets on a Czech in-terest-rate cut after the meeting. TheCzech economy has been suffering inline with the dire state of the Europeaneconomy and pressures are increasinglyfelt on economic indicators with surg-ing inflammatory stress.
The government of Prime Minister
Petr Necas is pushing ahead with a planwhich would see a sales-tax increase tocut the fiscal deficit to less than the EUlimit of 3% of GDP next year. Howeverobservers fear that the significant slow-down in foreign demand and continueddomestic fiscal consolidation would in-evitably lead to a stagnation of the econ-omy this year.
Factors like weak domestic demandand slow wage growth are also likely topose serious challenges for the economythis year. The economy, which exportsabout 80% of its output, contracted inthe third and fourth quarters of 2011 asgovernment spending cuts outweigheddemand abroad for Czech-made vehi-cles, car parts and electronics goods. Theinflation rate rose to 3.8% in March, ex-ceeding the central bank’s 2% target fora sixth month.
In the present situation, a rate declinemight not be unlikely, experts noted.While the economy returned to a reces-
sion, Necas’s 20- month-old adminis-tration wants to push through 57 billioncrowns ($3 billion) worth of budgetmeasures to narrow the deficit to 2.9%of GDP next year from 3.1% last year.Necas recently won backing for his aus-terity program with the support of law-makers who split from a formercoalition party.
The central bank left its economic-growth forecast unchanged from theprevious outlook in February, when itsaw a stagnant economy this year and a1.9% expansion in 2013. It said the in-flation rate in the second quarter of 2013will be 1.5%, before falling to 1.4% inthe next three- month period. TheCzech central bank has prepared an “al-ternative” forecast scenario, which as-sumes the government pushing throughthe VAT increase as of next year, pro-jecting a deeper decline in interest ratesin 2013, before they rise again in the sec-ond half of the year.
CZECH REPUBLICFINANCE
Czech Prime Minster Petr Necas is trying to reduce the nation’s defecit.| EPA/FILIP SINGER
Czech policy makers siding with rate-cut demand
SWEDEN · DENMARK · FINLAND· IRELAND
Page 22 | New Europe THE EUROPEAN UNION13 - 19 May, 2012
IRELAND|AVIATION
Shannon Airport to be separatedfrom Dublin Airport AuthorityThe Government has announced plans to separate Shan-non Airport from the Dublin Airport Authority, and bringit together with Shannon Development into a single en-tity, RTE Ireland reported on 9 May. The new body willhave a commercial mandate in public ownership. Thetourism and enterprise support agencies in the region willalso be restructured to support the new arrangement.This is according to a statement from the Minister ofTransport, Tourism and Sport and the Minister for Jobs,Enterprise and Innovation. The statement from the Min-isters said the new entity will have a clear mandate, work-ing closely with IDA Ireland and Enterprise Ireland todevelop the potential of the aviation sector, and will exploreother opportunities with those agencies for further prospec-tive investments in the region. Shannon Development'sfunctions in relation to indigenous enterprise and foreigndirect investment will transfer to Enterprise Ireland andIDA respectively. A plan for the delivery of enterprise sup-ports in the region will be developed. The tourism func-tions of Shannon Development will transfer to FailteIreland. It is expected the move will be welcomed by busi-nesses and industrial interests in the Mid West, who be-lieve that independence from the DAA is in the bestinterests of the future viability of Shannon Airport. In re-lation to Cork airport, the Government has decided thatthe existing ownership of the airport by the DAA will bemaintained for the present. The DAA will be renamed toreflect the fact that there are now two airports and interna-tional businesses in the group structure.
FINLAND|TECH
Tieto cutting 500 jobs in FinlandThe Tieto IT services company has wrapped up personnelnegotiations with staff and announced 1300 jobs cuts, 500of them in Finland, YLE News reported on 7 May. Mostdismissals in Finland will be seen in company operationsin the capital area. Tieto has close to 6,000 employees inFinland, around 3,600 in the greater Helsinki region. Thefirst phase of job cuts will be started immediately, and dur-ing the autumn 2012 the company will initiate a secondphase covering job cuts related to decisions regarding itsnew operating structure. The negotiations concluded lastMonday in Finland are part of the earlier announced pro-gramme aiming to achieve around €50 million in annualsavings. The programme includes about 1300 job cuts ofwhich close to 500 will be in Finland, some 300 in Swedenand around 500 in other countries.
IRELAND|BANKING
Ulster Bank says ‘oh no!’Ulster Bank on 4 May reported an operating loss of €372million for the first three months of the year, RTE Irelandreported. Provisions for bad loans increased to €472 mil-lion due to the rising level of arrears and the continued de-terioration in asset values as property prices declined further.That was up compared to the final three months of last yearbut down on the impairment charge for the first threemonths in 2011. It said it was continuing to work with itscustomers who are in financial difficulty by offering a rangeof support initiatives. Before the impairment charge, UlsterBank said its operating profits came in at €101 million. Itsincome fell by £12 million during the three month perioddue to increased funding costs. Ulster Bank also said thatafter a period of consultation and mediation, it is now im-plementing the proposed restructuring plans which it an-nounced in January.
United Drug has reported a 7% increase in pre-tax profits forthe six months to the end of March, while revenues were flatat €894.2 million, RTE Ireland reported.The company said that its adjusted pre-tax profits for the sixmonth period came in at €35 million, while operating profitsalso rose by 7% to € 9.5 million.United Drug said that its businesses outside of Ireland nowaccount for over 70% of operating profits with 25% of the
group operating profits generated in the US.The board of directors have declared an interim dividend of2.48 cent per share, up 3% on the 2011 interim dividend.The company said that based on the good trading performanceso far this year, the outlook for the rest of the year and stabilityin current exchange rates, it expects adjusted diluted earningsper share for the year to the end of September to be between4- 8% ahead of last year.
United Drug interim profits rise by 7%
IRELANDPHARMA
Marimekko, the Finnish design house,has entered the Chinese market byopening its first store in Hong Kong.The Hong Kong store is located inCauseway Bay on a block that enjoysgrowing popularity among interestingfashion, interior design and lifestylebrands, it was reported.
Earlier this year Marimekko an-nounced that it has signed a partner-ship contract with Hong Kong-basedSidefame which specialises in retail-ing a range of fashion and lifestylebrands, and it is part of the FenixGroup. It currently operates over 70stores in China and Hong Kong fordifferent brands, such as Furla, 45R,Anteprima and Atsuro Tayama. Side-fame was also the first to bring Italian
fashion brand Prada to Hong Kong.The next store will be opened in
Shanghai as soon as suitable storepremises are found, and the intentionis to open 13 more Marimekko storesin China by the end of 2016. We havea common vision with Sidefame onhow to build the brand and expandthe store network systematically on afirm basis and without rushing, saidMarimekko’s President and CEOMika Ihamuotila.
Marimekko products are sold nowin 40 countries, and last year sales ofits products worldwide amounted toapproximately €170 million. Thenumber of Marimekko stores totalled90 at the end of the last year.
Marimekko is a Finnish textile and
clothing design company renownedfor its original prints and colours. Thecompany designs and manufactureshigh-quality interior decorationitems ranging from furnishing fabricsto tableware as well as clothing, bagsand other accessories.
Founded in 1951, Marimekkoproducts are sold in approximately 40countries. In 2010, brand sales ofMarimekko products worldwideamounted to approximately € 150million and the company's net saleswere € 73 million. The number ofMarimekko stores totalled 84 at theyear end. The key markets are NorthAmerica, Northern Europe and theAsia-Pacific region. The Group em-ploys around 430 people.
Marimekko enters the Chinese market
FINLAND
BUSINESS
Beer and wine sales fell by seven per cent in the first fi-nancial quarter, and retailers suggest that tax increases andmore Danes than ever taking their booze business downsouth are the reasons, Copenhagen Post reported.
According to the Coop shopping chain, one of the maincatalysts occurred on January 1 when the governmentraised wine taxes by 3.50 Danish crowns a litre and beertaxes by seven crowns per crate.
"It’s not because the Danes suddenly became teeto-tallers on New Year’s Day,” Coop food manager JensVisholm said. “There are indications that convey that theyare simply driving to the borders and getting their wineand beer there.”
And it seems like it’s mostly people living in the ruralareas that are driving down to Germany to restock theirbooze shelves. Coop recently made a regional examina-tion of their wine and beer sales and concluded that inCopenhagen sales had only fallen by a couple per centwhile in southern Jutland, sales had dropped by a stag-gering 20%. But this scenario is not something that Ger-man border shops, such as Fleggaard and Calle, recognise.They have seen a slight increase in beer and wine, butcredit a mild winter, rather than the new tax, for the in-creased business from Danes.
Within the halls of Christianborg, there was a differentspin on the falling sales numbers.
The Tax Ministry is scheduled to release a new bordertrade report sometime before the summer period.
RETAIL
DENMARK
Fewer Danes are buying their beer after a tax increase.| EPA/WEDA
Beer and wine sales plummet in first quarter
LATVIA · LITHUANIA · ESTONIA · SLOVAKIA
New Europe | Page 23THE EUROPEAN UNION13 - 19 May, 2012
SLOVAKIA|ECONOMY
Industrial output growth picks up pace The Statistical Office of Slovakia last week reported thatthe country’s industrial production accelerated to 12.1%year-on-year in March from 8.9% in the preceding month.Manufacturing output in March grew 14.7% year-on-year,while mining and quarrying rose 1.7%. Meanwhile, pro-duction and supply of electricity, gas, steam and air-condi-tioning fell 2.4%. After seasonal adjustment, industrialproduction increased 3.5% month-on-month. Over thefirst quarter of 2012, production increased 7.7% comparedto the same period last year. In a separate communiqué theoffice announced that Slovakia’s construction output de-creased 11% year-on-year in March. After seasonal adjust-ment, output rose 0.9% from a month ago.
SLOVAKIA|TELECOMS
EU criticises Slovak Telekom and its parent companyThe European Commission has announced that it has sentobjections to Slovak Telekom, as well as its parent com-pany Deutsche Telekom AG, pertaining to their actionstowards several wholesale broadband markets in Slovakia,Slovak spectator reported on 9 May. The Commission hasconcluded, albeit on a preliminary basis, that SlovakTelekom “has breached Article 102 of the Treaty on theFunctioning of the European Union (TFEU) that pro-hibits the abuse of a dominant market position”. “At thisstage, the Commission takes the view that Slovak Telekommay have refused to supply unbundled access to its localloops and wholesale services to competitors, and may haveimposed a margin squeeze on alternative operators bycharging unfair wholesale prices, in breach of EU antitrustrules,” reads the EC press release.
SLOVAKIA|ECONOMY
Finance minister ditches inheritance tax proposalFinance Minister Peter Kazimir has changed his plansto tax inheritances. While previous week he said thatsuch a tax would become part of his measures to raise thestate's income, he has now changed his mind and an-nounced that the tax will not be part of the FinanceMinistry’s immediate plans after all, Slovak spectator re-ported on 4 May. “Tax from inheritance will surely not beimposed with the effectiveness date as of 1 January ofnext year,” Kazimir said, as quoted by the Sme daily. Headded that the proposal for the new tax had only been hispersonal opinion, and had not been agreed upon by theruling Smer party. Jan Baranek from the Polis pollingagency said he assumed Kazimír’s plans had beenscotched by someone within Smer who was concernedabout the electoral impact of the new tax.
LATVIA|ECONOMY
Dombrovskis relishing ratings upgradeThe recent upgrade in Latvia’s ratings by Standard andPoor’s (S&P) endorsed the Baltic nation’s strong perform-ance buoyed by strengthened fiscal discipline, Prime Min-ister Valdis Dombrovskis said in Stockholm last week. Hewas visibly cherishing S&P’s decision to raise Latvia's creditrating to the investment level. According to the premier,the ratings upgrade attested to positive trends in the Lat-vian economy. He stressed that the government’s policy ofreducing public spending in order to overcome the finan-cial crisis was right move.
The Lithuanian cabinet on 9 Mayformally approved a strategic planon the construction of the new Vis-aginas nuclear power plant endors-ing Estonia’s 22% stake in thefacility. The terms of the concession agree-ment divulged by the local mediashowed Lithuania will hold a stakeof 38%, Estonia 22% and Latvia20% in the Visaginas facility. Therest will be contributed by theJapanese-American strategic in-vestor Hitachi.
Citing Lithuanian Energy Min-ister Arvydas Sekmokas the reportssaid that the construction of thepower plant will begin in 2015 atthe earliest. The Lithuanian parlia-ment had yet to pass a strategy,after which the planning process ofthe plant would begin.
The project will be financed inthree instalments -- €62m will beallocated during the 12 months fol-
lowing the parliament's decision.The next instalment of €150mwould be spread over the following18 month period.
The remaining sum, which is notexpected to be over €5bn, will haveto be earmarked by March 2015 atthe latest.
Estonia to take 22% in Lithuania’s Visaginas NPP
LITHUANIAENERGY
A report from Latvia’s economy ministry and finance ministryon the macroeconomic situation in the country last weekshowed Latvia’s exports are likely to grow at a comparativelyslower pace this year. Export trends in the first few months thisyear coupled with growth prospects in the main partner coun-tries of the Baltic nation have indicated that overall growth ofLatvian overseas trade is likely to dwindle on year. In full year2012, Latvian exports are likely to register a growth of around10%, according to the report presented to the government.
A growth in domestic demand is expected to somewhat off-set the slowed pace of export growth which, however, wouldn’tbe able to provide any notable uplift for the economy as house-holds' significant debts and also the relatively high unemploy-ment level would take their toll.
The investment dynamics will be affected by banks' cautious
lending policies, the report said. Investments in the private sec-tor would be determined by businessmen's expectations of fu-ture developments.
Altogether, Latvian economy is anticipated to grow at least3% this year. In the study, various business associations andLatvia's largest producers were surveyed regarding their oper-ations in 2011 and the first quarter of 2012, as well as expecta-tions of 2012.
The surveyed businesses and business associations said that,after a successful last year, they expected their production orservices volumes to continue to increase this year. They also saidthat export, the number workers at companies and their pro-duction volumes could also moderately increase this year. In-creasingly more companies were found to be planninginvestments into the development in the near future.
Exports growing slower this year
LATVIA ECONOMY
Estonia’s consumer price indexchanged by 4% year-on-year in Aprilwhile the monthly change was by ameagre 0.3%, Statistics Estonia re-ported last week. Goods were 3.0%and services 5.9% more expensivecompared in April compared to thecorresponding month of 2011. Reg-ulated prices of goods and servicesrose by 10.9% and non-regulatedprices by 1.7% compared to April ofthe previous year, the data showed.In the annual comparison, the indexwas mainly influenced by housing
expenditures which gave almost ahalf of the total increase. Comparedto April of the previous year, of foodproducts, the prices of eggs (45%)and smoked and salted fish (14%) in-creased the most. Price of eggs in themonth reached the highest level ofthe past years. Compared to the pre-vious peak in March 2008, eggs were12% more expensive in April2012.On the other hand, potatoeswere 62% and fresh vegetables 20%cheaper than a year earlier.
In monthly comparison, the con-
sumer price index in April wasmainly influenced by the price in-crease of food and motor fuel,which each gave more than a thirdof the total increase. The food indexwas mainly influenced by the 22.6%price increase of eggs, 3.9% pricedecrease of vegetables and 1.5%price increase of meat and meatproducts. Motor fuel was 1.8%more expensive than in the previousmonth. The bigger changes oc-curred also in the price of paprika(down 28%) and carrots (up 18%).
ESTONIAECONOMY
Inflation at 4% in April year-on-year
Interior view of the now closed Unit One in Ignalina nuclear power plant (IAE) in Visagi-na, Lithuania. The Lithuanian cabinet on 9 May formally approved a strategic plan on theconstruction of the new Visaginas NPP. |EPA/VALDA KALNINA
GREECE · CYPRUS · BULGARIA · ROMANIA
Page 24 | New Europe THE EUROPEAN UNION13 - 19 May, 2012
Due significant fluctuations of investors’ risk appetite and alsobecause of domestic developments in the electoral context, in itsmeeting of May 2, 2012, the Board of the National Bank of Ro-mania (NBR) decided to keep unchanged the monetary policyrate at 5.25% per annum and to maintain the existing levels ofminimum reserve requirement ratios on both leu-denominatedand foreign currency-denominated liabilities of credit institu-tions. It has also decided to ensure the adequate management of
liquidity in the banking system Recent developments in macro-economic indicators show continuing disinflation in line withNBR forecasts as well as a moderate recovery of lending activ-ity also as a result of the transmission of monetary policy signalsduring past months. At the same time the persistent aggregatedemand deficit as well as lower growth of exports amid a wors-ening of the short term economic growth outlook in Europeand globally are worth to be noted.
NBR to keep monetary policy rate unchanged
ROMANIABANKING
Romtelecom, part of Greek companyOTE, saw its revenues fall by 3.7% inthe first quarter of 2012, on the sameperiod in 2011, to €160.2m, BusinessReview reported on 10 May. “The de-cline in revenues is approximately 3percent year to year, compared to theapproximately 8 percent decline regis-tered last year, which reflects changesin the commercial strategy of the com-pany, the decline in amortisation and
the general stabilization of the econ-omy,” Romtelecom Executive Finan-cial Director Anastasios Tzoulas said.However, the company’s EBITDAprofit rose by 82% to €40.4m. Thenumber of landline telephony cus-tomers of the company continued todecline by 5.4% in the first quarter ofthe year, to 2.44m.
On the other hand, the number ofRomtelecom’s subscribers of broadband
internet went up by 8.9% to 1.15m whileDTH services, IPTV and digital cableservices also grew by 11.8% to 1.19m.Nearly half of the company’s clients arenow using TV or broadband and fixedvoice. This is the result of the strategy topromote packages that can be “cus-tomized by clients” and are also a goodapproach “to counter-balance the de-cline in the revenues of landline teleph-ony,” according to Tzoulas.
Romtelecom sees revenues fall by 3.7
ROMANIATELECOMS
On 9 May, Bulgaria celebrated 67 yearssince the end of the Second World War, aswell as Europe Day.
The country joined the EuropeanUnion together with Romania on 1 Janu-ary 2007. This was the fifth time Bulgari-ans celebrated their membership to theUnion. The day was an excellent opportu-nity for recapitulation of the “first five” forBulgaria, as well as for outlining new po-litical priorities and proposals.
On the occasion of Europe day, the Bul-garian foreign affairs minister, NikolayMladenov, stated ‘For Bulgaria, the acces-sion to the EU was a homecoming’. In ad-dition, minister Mladenov said that eventhough the country joined the Europeanproject at a later stage, today Bulgaria ‘hasa chance to be one of the examples that thisproject has not lost its force’.
Furthermore, the foreign minister alsosaid that the success of Bulgaria in the Eu-ropean project “depends on its choice to bea generator of ideas for the future of theEU and to work towards economicgrowth”.
In addition, Mladenov pointed out thatBulgaria could not expect to become richerand more successful, unless also its neigh-bours joined the European family andobeyed the same rules because “as long asthe success for some comes at the expenseof the rest – we all lose”.
The foreign minister also stated thatBulgaria may be the poorest country in theEU today, but historically the country was
the quickest in restructuring its economyduring the transition period.
The Bulgarian Commissioner, Kris-tanila Georgieva, visited the country inconnection with the day of Europe. In aninterview for the bTV television,Georgieva stated “difficulties were to uniteEurope before and Europe will get out ofthe crisis united because such a unifiedproblem-solving was in the interest of theEuropean citizens”.
Moreover, the Commissioner pointedout two major problems within EU whichrequired prompt reaction, namely the debtcrisis and the increasing unemployment.However, she stated that a lot was doneabout the debt crisis, but more attentionshould be paid to stimulation of growthand employment and called on for more
action in those fields.Georgieva also mentioned three possi-
bilities for potential EU policy develop-ment which could solve Europe’s problemsand were slightly overlooked, including lib-eralisation of the labour market, invest-ments in green economy and innovations.
The Commissioner stressed that morethan 20 million jobs could be opened, ifmarket liberalization was applied every-where in Europe equally and it was imple-mented in a flexible and competitive way.Furthermore, she said that the green in-vestments were the ‘future of Europe andof Bulgaria’ and could create 5m new jobopenings. Commissioner Georgieva alsostated that the main hindrance for the in-novations on European level were the lim-itations set for the development of patents.
Sofia recaps 5 years of Bulgarian EU membership
BULGARIAEU AFFAIRSGREECE|POLITICS
Renewed chances for a governmentThe third and the last exploratory mandate to form a gov-ernment was handed on 10 May from Greek PresidentKarolos Papoulias, to the leader of the party that came thirdin the elections of 6 May, namely Evagelos Venizelos presi-dent of PASOK. Initially Venizelos has said that he will notuse the mandate because he had been already contacted bythe other two political leaders who took the mandate beforehim. Antonis Samaras of New Democracy and AlexisTsipras of SYRIZA had in this sequence be given by thePresident the mandate but none of them managed to forma government backed by a parliamentary majority of 151 ina house of 300. In any case it seems that Venizelos is aboutto explore some more possibilities in an absolutely frag-mented Greek political scenery. After receiving the mandatefrom President Papoulias, Venizelos said he is going to try toform a parliamentary majority with parties which wantGreece to stay in the Eurozone (Pasok, New Democracy andDemocratic Left). He clarified that he will try to form a gov-ernment of national unity and to this end he will address hisproposals mainly to New Democracy and the DemocraticLeft, all of whom have a clearly stated choice for their coun-try to stay in Eurozone. If however Venizelos fails to form agovernment then according to the constitution the Presidentof the Republic will convene a council of all leaders of theseven parties that crossed the threshold of 3% and enteredthe Parliament. If this council does not arrive at formulatinga government then the President will dissolve the newlyelected Parliament and proclaim election for either the 10or the 17 June.
CYPRUS|EU AFFAIRS
Commission to finance cultural preservation The European Commission has launched a €2 millionproject to preserve the cultural heritage in Cyprus as a partof the aid programme for the Turkish Cypriot commu-nity. The Enlargement Commissioner Štefan Füle saidthat the project is aimed at preserving the island's culturalheritage, but also at fostering “trust and reconciliation inCyprus”. He stressed that "cooperation and joint effortsby all communities will be necessary to make this pilotproject a success”. The EU funding will support emer-gencz works on six sites which are part of a list of elevencultural heritage sites of great importance identified by thebi-communal Technical Committee on Cultural Heritage.The six sites were selected based on an in-depth study car-ried out in 2010.
CYPRUS|EU AFFAIRS
Cyprus Presidency presents logo to CouncilThe vision of the Cyprus Presidency is one for a Better Eu-rope, more hospitable, but also more efficient in facing today’schallenges. This is the message that the Logo of the CyprusPresidency of the Council of the European Union conveys,revealed on 9 May by the Deputy Minister for EuropeanAffairs Ambassador Andreas D. Mavroyiannis at a ceremonyin Nicosia. “Mainly we shall have the opportunity of mak-ing a maximum contribution as an honest broker in shapingand taking effective decisions concerning the design and im-plementation of policies for the benefit of the people of Eu-rope as a whole,” Cyprus President Demetris Christofias said.Referring to the vision of the Cyprus Presidency for a “Bet-ter Europe”, Christofias stressed that “we shall strive for aEuropean Union, which through its policies will function asa force of progress, peace, stability, social cohesion, security,development and prosperity”.
Bulgarian Prime Minister Boyko Borisov, right, welcomes EU President Herman Van
Rompuy prior their meeting in Sofia, 25 April 2012. |AFP PHOTO / DIMITAR DILKOFF
NORWAY · ICELAND · SWITZERLANDNew Europe | Page 25PARTNERS
13 - 19 May, 2012
Total subsea contract to Aker SolutionsAker Solutions has been awarded a con-tract by Total E&P Angola, to deliverseven new subsea tree systems to theDalia field located offshore Angola.Contract value is approximately 470 mil-lion Norwegian crowns, Norway Post re-ported. The contract covers sevenproduction subsea trees, seven wellheadsystems and seven well jumper systems,and may include some contract options."Our first subsea tree award was signedfor Dalia in 2003 and we have success-
fully delivered 71 subsea tree systems tothis field. We are very pleased to continuethis positive relationship with Total E&PAngola and look forward to executingthis project," said Alan Brunnen, execu-tive vice president of Aker Solutions'subsea business area.
Management and engineering of thesubsea tree systems will be performed atAker Solutions' manufacturing centre inTranby, Norway. Procurement, manufac-turing and assembly will take place in
Port Klang, Malaysia, and Aberdeen,UK. Equipment deliveries will be madein 2013 and 2014.
The Dalia field is located in block 17offshore Republica de Angola. The fieldis approximately 230 kilometres offshoreat a water depth of between 1200m to1400 metres, and covers an area of ap-proximately 230km².
Aker Solutions has established a state-of-the-art service base facility in Luandawith 130 employees.
NORWAYENERGY
Enlargement plans for East Iceland Alcoa smelterAlcoa Iceland is looking into the possibility of enlarging theAlcoa Fjaroaal aluminium smelter in Reyoarfjorour, east Ice-land, inviting representatives of pension funds to see whetherthey might help fund the project, Iceland Review reported.
Alcoa is preparing to increase electricity capacity in thesmelter, which would up its production capacity from 350,000to 370,000 tons per year. The pot rooms must be modified andthe project is estimated to cost more than $96 million (€73 mil-lion). Magnus Þor Asmundsson, CEO of Alcoa Iceland, saidthe company is also prepared to launch constructions whichwould increase the smelter’s production capacity by 180,000tons, provided agreements are reached on funding and elec-tricity purchase. The smelter would then produce 550,000 tonsannually. The project could be launched next year—providedthe conditions are fulfilled—with the enlarged smelter being
fully operational by 2018. The enlargement is estimated to cost$724 million (€551 million) and the addition would require270 megawatts of energy. Many jobs would be created duringthe construction phase and 120 future jobs once productionstarts, in addition to related jobs, Magnus said. Currently 480people are employed by Alcoa Fjaroaal and 300 by subcon-tractors. No formal discussions have taken place withLandsvirkjun, the national power company, but Magnus saidthey are aware of his company’s plans; among energy optionsare expanded operations of the Karahnjukar hydropower plant.
The enlargement plans for the smelter, for which there isroom in its current location, have been presented informallyto local authorities but Magnus pointed out they must un-dergo conventional urban planning procedures before any-thing is decided.
ICELANDBUSINESS
Swiss Re, the world’s second largestreinsurer, has reported profits of $1.1billion (1 billion Swiss Francs) for thefirst quarter, driven in part by lower-than-expected claims for major natu-ral disasters. The result compares to aloss of $ 655 million for the same pe-riod in 2011, Swiss info reported.
In a statement previous Friday,Swiss Re said strong underwriting andgood investment performance hadalso contributed to the positive result.Across the group, premiums earnedincreased by 21.7% to $6.2 billioncompared with $5.1 billion a year ear-lier and was driven recently by strongrenewals, the company said.
The reinsurance division reportedprofits of $660 million compared with a$632 million loss a year earlier, which wasdue in part to a “benign natural catastro-phe experience”. In 2011, Swiss Re washit by charges related to flooding in Aus-tralia and as well as earthquakes in Japanand New Zealand.
Reinsurance premiums earned in-creased by 38.2% to $3.1 billion in the
first quarter, driven by successful re-newals in January, the company said.
“We had a good start to the yearwith a very strong result in the firstquarter,” said CEO of the Zurich-based company, Michel Lies.
“This reflects our ability to performand grow as prices rise and an excel-
lent asset management result. But wealso benefited from an absence ofmajor claims from natural catastro-phes. All business units contributed tothis result. Going forward, we willnow seek to reap the benefits of ourcycle management, with a focus onprofitable growth.”
Calm first quarter boosts profits for Swiss Re
SWITZERLANDBUSINESS SWITZERLAND|BUSINESS
Le guerre Gruyereis overEmmi, the leading Swiss dairy producer, will nolonger name its US-made cheese after the traditionalSwiss product, Swiss Info reported. Le GruyereAOC, representing more than 170 producers of thefamous cheese, said previous Friday it was satisfiedwith the decision, saying Emmi was taking its re-sponsibility seriously and was showing respect to-wards a native quality product. Le Gruyere AOC hadpreviously criticised the Emmi dairies for damagingthe special origin label. Last month, the director ofGruyere AOC, Philippe Bardet, said Emmi dairiesacted unethically but within the law as there is noProtected Designation of Origin label in the US. Hevowed to seek global recognition for the label whichis presently only applied within the European Union.Emmi’s overseas subsidiary, Emmi Roth, dismissedthe allegations at the time, saying its Grand CruGruyère cheese was not comparable as it is made ofpasteurised milk while the Gruyère AOC varietyconsists of raw milk. The US is the most importantexport market for Gruyère cheese, where more than3,000 tons were sold in 2010.
NORWAY|TELECOMS
Continued growth for TelenorNorwegian Telenor Group reported revenues of 25.1billion Norwegian crowns, representing an organic rev-enue growth of 8% in the first quarter of 2012, NorwayPost reported. EBITDA before other items was 7.7 bil-lion crowns, EBITDA margin was 30.8%, and operat-ing cash flow was 5.3 billion crowns. Telenor’sconsolidated mobile operations added more than fivemillion subscriptions during the quarter. “I am pleasedto present another quarter with strong operational per-formance by the Telenor Group. We are maintainingthe growth momentum from 2011 with organic rev-enue growth of 8%, margins in line with last year andimproved operating cash flow,” said Jon Fredrik Bak-saas, President and CEO of Telenor Group. Based onthe high uncertainty in India, we are currently provid-ing financial guidance for 2012 for the Group not in-cluding Uninor. On a comparable basis, the positiveoutlook is maintained,” Baksaas said.
ICELAND|BUSINESS
No silicone enhancement for South IcelandÍslenska kísilfelagio hf has terminated its contractwith the American company Globe Specialty Met-als for noncompliance in regard to the planned sili-cone metal factory in Helguvík, southwest Iceland,Iceland Review reported. An investment agreementfor a 40,000-ton silicone metal factory in the regionwas signed by the government, Reykjanesbær mu-nicipality and Islenska kísilfélagio in February 2011and operations were supposed to begin last summer,ruv.is reports. However, Globe Specialty Metals haveallegedly been slow to live up to their end of theagreement, eventually investing in the bankruptcy es-tate of a silicone metal factory in Canada instead.CEO of Islenska kísilfelagio Magnus Garoarssonsaid the company had to terminate the agreement sothat the project can continue. An electricity supplyagreement with Landsvirkjun, the national powercompany, became invalid because of noncompliancebut new energy talks are ongoing.
The 2011 earthquake in New Zealand was a “benign natural catastrophe experience “ sayinsurers.| EPA/TRACEY NEARMY
CROATIA · ALBANIA · SERBIA · BiH
Page 26|New Europe CANDIDATES13 - 19 May, 2012
CROATIA | DIPLOMACY
Josipović: Croatia will continue toprogress and help others reformAccording to the Croatian President, Ivo Josipović, Croatiamust exploit the advantages of an open market and the ideaof solidarity within the European Union to develop its po-tentials. He also agrued that it would facilitate resolution tomany issues in the Western Balkans if there was a more ar-ticulate development policy and if the EU and its memberswould involve more actively in the region as friends, partnersand investors. "Croatia brings new energy into the EU and isencouraged by the recognition of its results and its accept-ance as a consolidated democracy and a constructive partner.We are aware, of course, that the process of transforming oursociety is not yet finished and even after the EU accession wewill undertake serious reforms", Josipović stressed at the con-ference ''Croatia - 28th member of the EU'' in Graz, Austriaon 9 May. Josipović also added that Croatia would like tooffer the specific experience of the transition process to othercountries undergoing similar processes – both in the West-ern Balkans and in the new democracies in Europe’s vicinity,such as southern Mediterranean. "It is important for Europethat all the countries in its neighbourhood are democraticand oriented towards peaceful resolution of conflicts by legalmeans rather than conflicts and threat of force – be it in homepolicy or foreign policy", Josipović said.
ALBANIA | WAR CRIMES
EULEX allowed to probe organs traffickingThe Albanian parliament adopted on 10 May a legislation al-lowing EULEX investigations into alleged human organtrafficking in the country. The law was approved unani-mously, which is the first joint vote of the government and theopposition in a while. Albanian Prime Minister Sali Berishastressed that for his country it was a priority to investigateorgan trafficking allegations made by Council of EuropeRapporteur Dick Marty, who wrote in a report from De-cember 2010, about ties between organised crime and for-mer Kosovo Liberation Army (KLA) members, includingKosovo's Prime Minister Hashim Thaci. Marty accusedKLA and Thaci of extracting and selling the organs of warprisoners in Albania. "Some Serbians and some AlbanianKosovars were held prisoner in secret places of detentionunder KLA control in northern Albania and were subjectedto inhuman and degrading treatment, before ultimately dis-appearing," Marty wrote. Both Kosovo and Albanian au-thorities denied the allegations and agreed to participate in aninternational investigation. The EU mandated Americanprosecutor for this case, John Clint Williamson,welcomedthe decision of the Albanian parliament as a step forward inuncovering truth. In June 2011, EULEX formed a task force,made up of seven prosecutors and investigators, to look intoMarty's claims, after a preliminary investigation.
BiH | BUDGET
MPs cut their own salariesLawmakers in the national Parliament of Bosnia and Herze-govina agreed on 10 May to reduce wages to all public ser-vants, including themselves. Unusual austerity measures cameamid growing dissatisfaction with the proposed budget andpublic spending. Minister of Finance and Treasury of BiHNikola Špirić explained that salaries will be reduced by 4.5%,adding that the reduction will not apply to those public ser-vants whose salaries are less than 500 BiH marks (about€250). The adoption of the legislation on wages reduction isa prerequisite for adoption of the BiH budget for 2012. Thecountry was running without a proper budget for more thana year and a half, due to political gridlock.
PM urges EU recognition of effortsKosovo Prime Minister Hashim Thaci urged Brussels to pro-vide a concrete support to Pristina's EU integrations, lament-ing on the lack of appreciation of his country's reforms andprogress.
Thaci stressed the significance of the EU integrations onstrengthening still fragile peace and stability in the WesternBalkans. He called on the EU to give a clear and undoubtedmessage of an EU future for Kosovo, pointing out that Pristinastill does not have a contractual relationship with Brussels.
Kosovo's prime minister pointed out that Pristina has made
a considerable progress in addressing the EU requirements,such as inter-ethnic tolerance, respect for minority rights andthe fight against the organised crime and corruption.
However, lack of any tangible progress on visa liberation andlack of clarity regarding the EU future started yielding firstsigns of Euroscepticism. In many ways, Kosovo is still seen asa black hole of the region, where the international communitytook over great responsibility after 1999 NATO campaign,but, as usual, came unprepared to challenges ahead and 13 yearslater, most of the systemic problems still linger.
KOSOVOEU
The Republic Electoral Commissionhas declared the final official resultsof presidential elections in Serbia,proclaiming that Democratic Party(DS) candidate Boris Tadić, with25.31%, and his contender from theopposition Serbian Progressive Party(SNS) Tomislav Nikolić, with25.05%, progressed to the secondround on 20 May.
The 11-man Electoral Commis-sion from the opposition SerbianProgressive Party, Democratic Partyof Serbia, the Serbian Radical Party,Dveri Movement and Movement ofWorkers and Peasants voted against,claiming irregularities in the process.However, none of the internationalobservers found any major irregular-ities or electoral frauds.
According to final results, Tadićwon 989,454 votes in the first round,while 979,216 voters encircledNikolić's name. There were also174,660, or 4.47% spoiled ballots.Socialist Party of Serbia candidate,Ivica Dačić has won 556,013(14.23%), anti-European Democratic
Party of Serbia leader, Vojislav Koš-tunica, won 290,861 (7.44%), UnitedRegions candidate Zoran Stankovićwon 257,054 votes (6.58%) percent,while fifth place went to Liberal De-mocrats' leader Čedomir Jovanovićwith 196,668 votes (5.03%). Far-right candidates Jadranka Šešelj ofSerbian Radical Party (SRS) andVladan Glišić from Dveri Movementwon 147,793 votes (3.78%) and108,303 votes (2.77%) respectively,while the candidate of the Alliance ofVojvodina Hungarians Istvan Pasztorreceived support of 63,420 or 1.62%.
The second round was expected tobe closely contested, as the two can-didates finished within just above10,000 votes difference or about aquarter of a percent. IncumbentTadić can count on support and ma-jority votes of both the Liberal De-mocrats and United Regions, as theirmoderate policies and pro-Europeanstance are clearly contrasted toNikolić's more populist approach.
Tadić can expect, with the highestlevel of certainty to get votes of the
Hungarian minority living in Serbia,as well as most of the other minori-ties. However, despite the open sup-port he received from his coalitionpartners – the Socialist Party – thatlarge share of the electorate is likelyto split between two candidates. Aportion of Dačić's voters are loyal tothe party and will vote according tothe orders, a portion will abstain, buta number of his votes come from exMilošević's fans who will undoubt-edly support Nikolić.
Nikolić can also count on votes ofKoštunica, Dveri and a small portionof votes of SRS, whose leadershipurged their supporters to abstain anddo not vote Nikolić. However, as usu-ally, spoiled ballot voters tend to sup-port pro-European candidate in thesecond round, therefore giving addi-tional couple of percent to Tadić.
Mathematically, Tadić should beable to win the re-election with acomfortable margin and with apro-European government con-tinue a mandate for reforms andEU accession.
Flying start for Tadić in presidential run-off
SERBIAELECTIONS
Ground-hog election day will see Tadić and Nikolić facing off again | AFP PHOTO / ANDREJ ISAKOVIC
Less-buoyant external demand andworsening terms of trade whichmight entail economic rebalancing,has urged international credit ratingagency Standard & Poor to down-grade the outlook on Turkey's creditratings, reads a press release. Turkishexports in April fell 2.9% from April2011 to $11.4 billion, according tofigures released today by Turkish Ex-porters Assembly (TIM) PresidentMehmet Buyukeksi at a press meet-ing in the Balikesir province in west-ern Turkey. The Turkish automotivesector was the leader in exports inApril with $1.6 billion followed bythe chemicals sector at $1.5 billionand the steel sector coming in thirdat $1.3 billion. Exports to Africa inApril went up by 38% and exports tothe Middle East also increased by11%.The outlook on Turkey's long-term foreign and local currency sov-ereign credit ratings was lowered toStable from Positive.
The agency said that the stableoutlook reflects the assessment thatthe key risks to the Turkish economywill likely remain in balance in thenext 12 months. Effective policymaking and moderate and decliningpublic debt burden as well as itsmonetary policy flexibility, hasstrengthened the ratings. Howeverkey constraints on ratings are its ex-ternal vulnerability and risks relatedto the 2010-11 credit boom. The
agency expects Turkey’s gross exter-nal financing to reach 142% of cur-rent account receipts plus usablereserves in 2012, one of the highestratios for a rated sovereign. It wasnoted that heavy reliance on externalsavings might expose the nation toshocks. By 2015 the government willaim to stabilise net general govern-ment debt to GDP at around 35%.
Meantime, Turkish Prime Minis-ter Recep Tayyip Erdogan vehe-mently condemned S&P for itsdecision to change its outlook onTurkey from positive to stable. “Wewill make you pay the price of thismove by saying that we no longer
recognize you as a credit ratingagency,” Erdogan said, speaking atthe 5th Fashionable Ready-to-WearClothing Conference in Istanbul.“Moreover, you cannot convince any-one to believe your analysis is correctbecause everything -- work, produc-tion, exports, etc.is clearly out therefor all to see,” he added. Erdogan ex-plained that the agency had cut thecountry's sovereign rating outlookfrom positive to stable because itknew it had to upgrade the rating --something it did not want to do be-cause of ideological reasons -- afterit had kept the outlook positive forsome time.
TURKEY · FYROM · MONTENEGRO
New Europe |Page 27CANDIDATES13 - 19 May, 2012
MONTENEGRO|ECONOMYEBRD’s to improve Montenegro’s economyMontenegro’s Prime Minister Igor Luksic met withEBRD First Vice President Varel Freeman in Podgor-ica on 7 May. After he talks, Luksic said that the Bankwill play a great role in the recovery and developmentof Montenegro’s economy and in spur entrepreneurshipand development of key economies in particular, tourismand energy, reads a press release. Both officials agreedthat EBRD is one of the most important partners ofMontenegro in implementing development and othermajor projects. They also agreed that a diversified assis-tance programme will open up possibilities to broadenand improve cooperation. EBRD envoy hailed Mon-tenegro for gaining success in pursuing its European andEuro-Atlantic agendas and that EBRD will continueassisting projects in infrastructure, finance, energy, andtransportation sectors. He noted that Montenegro hasachieved “impressive progress” in various areas and thatit offers favourable conditions and advantages for in-vestment, attracting investors from the internationalcommunity. The Premier noted that amid global crisis,the government of Montenegro strictly adhered to eco-nomic revival and created preconditions for long-termand sustainable development. He stressed that the sup-port of EBRD on path to integration will be importantin encouraging entrepreneurship and development ofkey economies – tourism and energy.
FYROM|EU AFFAIRSSkopje, EU resume high-level accession dialogue FYROM's Vice PM in charge of EU integration, TeutaArifi recently presented a report before members of theNational EU Integration Council and Parliament's Eu-ropean Affairs Commission. The three month reportcontains past and future achievements of the country inregard to process of EU integration, MRTOnline re-ported. Arifi stressed a high level dialogue will com-mence with EU, which is expected to be most importantevent in recent months. EU Enlargement Commis-sioner Stefan Fule recently paid a visit to Skopje to holda working meeting with members of FYROM's Parlia-ment. Arifi reaffirmed FYROM Government's com-mitment to realising the set priorities on the country'sroad to the EU membership at a meeting with StefanFule. "Commissioner Fule praised the Government'soverall efforts and completed tasks that aim to bring thecountry closer to EU," the Secretariat for European Af-fairs said in a press release.
FYROM|TELECOMSNokia to open application development centreThe launch of Nokia’s regional centre for mobile appli-cation development in FYROM was initiated by FY-ROMn ministry of Information Society and theMicrosoft local office in FYROM. FYROM’s Ministerof Information Society and Administration, IvoIvanovski met in Helsinki with Nokia's Vice PresidentErkki Ormala to present to him the investment oppor-tunities offered by FYROM, MRTOnline reported. Inthe course of talks, the launch of the centre was agreedby both parties. “It will be the first of its kind in the re-gion with a direct cooperation with the Faculty of In-formation Sciences and Computer Engineering -FINKI. The opening is planned for early June 2012,"the Ministry of Information Society and Administra-tion has announced.
European Bank for Reconstruction & Development recentlyannounced a €135m loan to Turkish energy company Ener-jisa to construct a new wind farm in the country, reads a pressrelease. This is the EBRD's second wind farm in Turkey. Theloan would be utilised to build Enerjisa Bares WPP, an on-shore independent wind farm in Balikesir in western Turkey.Enerjisa Bares WPP will comprise of 52 wind turbines andhave a generation capacity of 142.5MW.
The EBRD financing is structured under the bank'sA/B loan scheme, with €100m on EBRD's account andthe rest on the account of commercial banks. EnerjisaCEO Yetik Kadri Mert said the company aims to in-crease the share of renewable energy sources in genera-
tion portfolio, in order to meet the electricity demand ofTurkey in the most reliable and environmentally-friendlymanner.
“With the addition of 142.5MW Bares WPP to our port-folio, we have taken a strong step forward in our wind powerinvestments,” added Mert. Enerjisa, jointly owned by HaciOmer Sabanci Holding and Verbund International is theleading privately-owned Turkish energy company active inelectricity generation, trading, wholesale and distribution. En-erjisa Bares to complete in second half of this year, will be-come Turkey's largest wind farm to date, increasing Turkey'scurrent installed wind generation capacity of around 1.8GWby approximately 8%.
EBRD offers €135m to construct Turkish farm
TURKEYECONOMY
Saudi Arabia’s Advanced Petrochemi-cal Company in collaboration with aTurkish firm plans to build apolypropylene production plant inTurkey, zaman quoted a companysource as saying. The chemicalpolypropylene which will be tapped inseveral fields including automotive, tex-tiles and packaging, will be operational
in Turkey by 2015. The plant to be constructed will be
one of the key installations for thecompany outside the Kingdom. How-ever the location of the plant or detailsof the Turkish partner is still not dis-closed yet. One of the fastest growingcompanies in Saudi Arabia, AdvancedPetrochemical operates a polypropy-
lene plant in Al-Jubail. For past fewmonths, Turkey’s chemicals sector haswitnessed large-scale investment inthe form of greenfield investmentsand acquisitions. In December 2011,India’s Aditya Birla Group announcedplans to set up a $510m viscose staplefiber plant in the southern Turkishprovince of Adana.
Saudi company to build polypropylene plant
TURKEYPETROCHEMICALS
S&P cuts Turkey's rating outlook
TURKEYECONOMY
A general view of Levent financial district seen from 261-metre-tall Istanbul Sapphire Tower in Is-tanbul. Standard & Poor downgraded the outlook on Turkey's credit ratings. |EPA/TOLGA BOZOGLU
UKRAINE · MOLDOVA · BELARUSPage 28 |New Europe NEIGHBOURHOOD13 - 19 May, 2012
On 10 May, German Chancellor AngelaMerkel said that Ukraine was a "dicta-torship" and likened it to authoritarianand isolated Belarus. Merkel has been anoutspoken critic of Ukrainian President
Viktor Yanukovich for his treatment ofjailed opposition leader
Yulia Tymoshenko. "Today, we in Ger-many and the European Union live inpeace and freedom," Merkel said in aspeech to German lawmakers. "Unfortu-nately, not all of Europe is, because inUkraine and Belarus people are still suf-fering under dictatorship and repression."
On 9 May, European Council Presi-dent Herman Van Rompuy saidUkraine’s Prime Minister MykolaAzarov should not come to Brussels for ameeting of the EU-Ukraine Co-opera-tion Council on 15 May, due to the situ-ation surrounding Tymoshenko.“[When] the Prime Minister of Ukraineannounced he would come to Brussels,we said: ‘Stay home!’ It is a clear signalfrom our side that they have to changeinside Ukraine. Ukraine was a model ofdemocracy in 2004 and it has to becomethat once again,” Rompuy was quoted assaying by the press. “The way Ukraine isdealing with the former Prime Minister,Yulia Timoshenko, is just unacceptable.We have said this very clearly, very clearlyto President Yanukovych,” Rompuyadded. "When once the Ukrainian primeminister announced intention to visitBrussels, we told him "don't come, stay athome."
On 9 May, Tymoshenko was movedfrom prison in the eastern Ukraine city ofKharkiv to the hospital for treatment forback pain, and ended her hunger strike.
Tymoshenko’s hunger strike after al-legedly being beaten, attracted the atten-tion of not only of Ukrainian society butthe entire world community.
The Ukrainian government hopes that
this move will somewhat ease increasingdiplomatic tensions over her mistreat-ment and over-politicised process, whichalready forced Ukraine authorities to can-cel a major summit of heads of states ofthe Central and Eastern Europe and nowthreatens to overshadow Ukraine's co-hosting of the Euro 2012 football cham-pionship.
On 8 May, Ukraine was reduced tocalling off the summit after a dozen headsof state, including the German andCzech presidents, had refused to attendthe Central and Eastern European sum-mit to be held on 11-12 May in theCrimean resort city of Yalta. The summitis held annually and aims to attract theattention of investors in Ukraine, tying uppartnerships between Ukrainian and for-eign businessmen and discussing globalgeopolitical and economic problems inEurope and worldwide.
Meanwhile, on the sidelines of the Bu-reau meeting of the Assembly of Euro-pean Regions (AER) in Odessa, MicheleSabban, President of the Assembly of
European Regions met with AlexandreMaline, Vice Governor of the Region ofOdessa. During this meeting, Sabban in-quired about the health of Tymoshenkoand expressed her wish to meet her. “As awoman, and as a European, I recognisemyself in the battle carried on by YuliaTymoshenko for the dignity of her de-tention conditions. I hope that she willrecover quickly, and the Ukrainian gov-ernment will reach an acceptable consen-sus to all.”
The Assembly of European Regionshas decided to maintain its arrival inUkraine, unlike other European organi-sations and institutions, because it said itbelieves that interregional co-operation isan essential key factor for the develop-ment of Regions, States and Europe.“AER wants to put its political strengthand experience at the service of theUkrainian regions to support them dur-ing their economic and social develop-ment process, and contribute to a betterdemocratic integration into the Europeanarea,” it said.
West increases pressure on UkraineUKRAINE HUMAN RIGHTS MOLDOVA|DIPLOMACY
Chisinau, Bucharest to speed up energy projectsOn 10 May, Moldova’s President Nicolae Timofti and hisRomanian counterpart Traian Basescu agreed in Bucharestto accelerate the development of energy projects already es-tablished, including Iasi-Ungheni (north-east country) gaspipeline. “We had discussions on how we can contribute tothe binding of the Republic of Moldova to the EuropeanUnion, via Romania, as the border country for the Repub-lic of Moldova, and we decided together to accelerate thedevelopment of the already established projects,” Basescusaid in a joint statement with Timofti at Cotroceni Palace.The projects include the Iasi - Ungheni gas pipeline, Falciu,Gotesti and Suceava Balti power lines, installation of opti-cal fiber between Isaccea and Chisinau, Iasi-Ungheni-Chisinau railway upgrading, building bridges over the Prutand many other projects. “Extremely important is that thegas pipeline to link the gas system of Romania to that of theRepublic of Moldova is partially funded by the EU, goingthat the two countries will bring their own contribution tothe project,” the joint statement read. Basescu believes con-struction of Iasi-Ungheni gas pipeline might be completedin 2014. Concerning the interconnection of the energeticinfrastructures of Moldova to those of Romania, he said thatit is an important project is the construction of the Iasi-Ungheni gas pipeline that might be completed around 2014.“At this moment, being financially backed by the EuropeanUnion we try to interconnect the energetic infrastructures ofthe Republic of Moldova to those of Romania and implic-itly of the EU. We have various projects and I would notwant to limit ourselves only to the Iasi-Ungheni gas pipeline,because we rely on the power lines Falciu-Golesti andSuceava-Balti - these are new electric lines, for 400 kW, tobe able to make a more rapid and better transfer of energy.
MOLDOVA|TRADEBelarus-Moldova trade increases 31.8% in Q1 In the first quarter of 2012 the trade between Belarus andMoldova totalled $83.9m, up 31.8% over the first quarter of2011, BelTA reported, citing data from the Embassy of Be-larus to Moldova. In January-March 2012 Belarus exported$66.7m worth of goods to Moldova, up 42.1% over the samemonths a year earlier. Moldavian supplies to Belarus grew 3%to $17.2m. Belarus’ surplus in Q1 stood at $49.5m, up 1.6times from January-March 2011. Belarus-Moldova trade lastyear totalled $319.7m, going up by 28.3% from 2010. Be-larusian exports to Moldova grew 46.5% to $242m, suppliesof Moldavian goods to Belarus dwindled by 7.4% to $77.7m.According to Ambassador of Belarus to Moldova VyacheslavOsipenko, the assortment of mutual trade is rather wide andcomprises more than 500 commodity items. Of them 388 arethe items of Belarusian exports to Moldova. Belarusian engi-neering products: tractors, buses, trucks, road constructionequipment are in great demand in Moldova. Moldova im-ports Belarusian household appliances, timber, fertilizers,pharmaceutical drugs, garment, furniture and ceramics.
BELARUS|DIPLOMACYMinsk, Baku hold political consultationsAn Azerbaijani delegation headed by Deputy Foreign Min-ister Khalaf Khalafov recently had talks with First PrimeMinister of Belarus Vladimir Semashko, Foreign MinisterSergei Martynov and Deputy Foreign Minister Igor Pe-treshenko, news agencies reported. Both sides discussedprospects for more intensive cooperation, news agencies re-ported. The foreign ministries o Azerbaijan and Belarushad political dialogue in Minsk.
On 8 May, Belarus’ President Alexander Lukashenko saidMinsk had one advantage in terms of the sale of the stateproperty. "We know exactly how not to privatise. The in-vestor does not always come to give the best technology, butstate ownership is not always good for business," he said,addressing a message to the Parliament and the people.
Lukashenko said privatisation will be carried out consis-tently in the framework of existing laws. There will be nolandslide and massive sales of property, Lukashenko said,adding that this position is supported by the internationalcommunity.
He said that the authorities have refused from the pri-vatisation lists "since it is a humiliation for the workers ofthese enterprises." "And I, as president, do not have the rightto use these humiliating measures. If investors are not sat-isfied with the conditions of privatisation - God bless you,"Lukashenko said.
Lukashenko said Russian investors were unlikely to
succeed in buying state properties in Belarus if they dis-agreed with the price sought by the Belarusian govern-ment. “I have recently read in the mass media that one offigures in Russia who was holding negotiations on theconversion of MAZ (Minsk Automobile Works) into ajoint stock company said that the Belarusian side hadasked too high a price. But if the price doesn’t suit you,don’t come here,” he warned.
He also cited the example of the country’s largest mineralfertilizer producer Belaruskali, a major source of budget rev-enues for the state. Last year, Russian firm Uralkali wantedto buy it for $14bn, but the Belarusian government set theprice at $30bn and the deal fell apart. “Let me repeat timeand again, we are even ready to privatise Belaruskali. Butprice is the issue, and we have named the price. Today thisis already not $30bn but $32bn, or may be $31.5bn. Thosewho wish to buy it, you are welcome. But if nobody wantsto buy, we’ll do without them,” Lukashenko said.
Lukashenko makes privatisation difficultBELARUSPRIVATISATION
Yulia Tymoshenko supporters hold portraits and placard reading "Free Yulia!" as they waitfor her arrival at a hospital in Kharkiv, 9 May 2012. Ukraine's jailed opposition on 9 Mayhalted a 20-day hunger strike after she was moved to a hospital to defuse a crisis overshad-owing the Euro 2012 football. |AFP PHOTO/SERGEY BOBOK
KAZAKHSTAN · TAJIKISTAN · TURKMENISTAN
New Europe | Page 29NEIGHBOURHOOD13 - 19 May, 2012
Tajikistan President Emomali Rahmonmet with the visiting Vice Prime Minis-ter and Foreign Minister of Belgium Di-dier Reynders and Defence Minister ofBelgium Pieter De Crem. The sides dis-cussed co-operation between the twocountries, the president’s press service re-ported. In the course of talks, special em-
phasis was paid to peace and consent inAfghanistan and development of tieswith Central Asia.
They also discussed implementation ofagreements signed in the course of Tajik-istan President’s visit to Belgium in Feb-ruary 2009. The Tajik head calledBelgium one of Tajikistan’s most impor-
tant partners in Europe and is confidentthat relations between the two countrieswill prosper in the future.
In turn, Reynders outlined the impor-tance of development of relations withTajikistan and extended invitation toRahmon on behalf of the government tovisit Brussels.
Rahmon sees better ties with Belgium
TAJIKISTANDIPLOMACY
A group of nine deputies of the European Parliament headedby Paulo Bertalochi recently paid a visit to Dushanbe to attendthe second session of the Committee for InterparliamentaryCooperation between European Union and Tajikistan, Asia-Plus quoted the Lower Chamber of Tajikistan’s Parliament assaying. The deputies met with Tajikistan President EmomaliRahmon, speaker of the Majlisi Namoyandagon of the Ma-jlisi Oli Shukurjon Zuhurov. They discussed further expan-sion of inter-parliamentary relations.
The first the first session of the committee was held in Brus-sels on 14-15 March 2011, according to the Tajik-EU Part-nership and Co-operation Agreement. Topics discussed at thesession includes human rights issues, supremacy of law, polit-ical situation in the country, political and socio-economic re-form, water resource management, implementation ofhydropower projects.
In the beginning of the meeting Zuhurov noted that de-spite quite strong ties between Tajik and European parlia-ments this is the first time when a delegation of high-rankedEP officials visited Tajikistan, a spokesman for the MajlisiNamoyandagon of the Majlisi Oli of Tajikistan Muham-madato Sultonov said. He expressed confidence that the out-come of the meeting will give a new impulse to thedevelopment of bilateral relations. Lower Chamber’s speakertold the visitors about parliamentary procedures and stressedthat primary attention is given to democratic reforms, humanrights reforms and reforms of judicial system. “Zuhurovstressed that experience of European parliamentarians willhelp their Tajik colleagues,” Sultonov said. Bertalozzi said theEuropean Parliament is familiar with Tajikistan’s achievementsin these spheres and expressed the readiness of EP to cooper-ate with Tajik parliamentarians in any possible directions.
Members of the European Parliament visit Dushanbe
TAJIKISTANEU AFFAIRS
In a recent meeting with TurkmenPresident Gurbanguly Berdimuhame-dov, US General Electric EnergyCEO for Eastern Europe, CIS andRussia Cristiano Tortelli said the com-pany attaches great importance to theongoing effective co-operation withTurkmenistan and intends to activelydevelop this co-operation further, news
agencies reported.GE Energy has installed gas turbines
at a number of new power plants in thecountry. Both sides discussed further op-portunities for expansion of co-opera-tion, given plans to further modernisethe energy infrastructure of Turk-menistan, as the growing national econ-omy needs more electric power and
exports of electric power increases. Thecompany CEO assured that with greatexpertise in this sector, the company willtake every step to boost co-operationwith Turkmenistan and the company ishighly interested in it.
In turn, Berdimuhamedov said he waspleased with the results of co-operationwith GE Energy.
GE Energy to modernise Turkmen energy infrastructure
TURKMENISTAN BUSINESS
KAZAKHSTAN|DIPLOMACY
Central Asian states to battle terrorism, crimeDuring a recent trip to Iran, Kazakh Prosecutor GeneralAskhat Daulbayev attended the first sitting of the generalprosecutors of the Economic Co-operation Organisationmember states, Gazeta.kz quoted the service of the KazakhGeneral Prosecutor's Office as saying. The participants at themeeting included heads of oversight bodies of Kazakhstan,Azerbaijan, Afghanistan, Iran, Kyrgyzstan, Pakistan, Tajik-istan and Turkey. Topics discussed at the meeting were issuesof improving the efficiency of interaction between regulatoryauthorities in the fight against terrorism, drug trafficking andmoney laundering in the region of the ECO countries werediscussed at the meeting. Kazakh General Prosecutor stressedthe terrorism endures significant change has become a majorthreat to international stability. He called on to unite the ef-forts of the international community, the development andimplementation of common methods of combating it.
TAJIKISTAN|MINING
Dushanbe bans coal exportsTajikistan recently announced that it has imposed a ban on coalexports. The government agencies have started to develop a na-tional programme to increase the volume of coal production andits use in the industrial sector, Asia-Plus reported. Tajikistan’scoal reserves are estimated at more than 4.5bn tonnes. Currentlythere are 12 different coal extraction companies at 14 coal de-posits and works on developing new fields are underway. Heavyreliance on imported hydrocarbons would be reduced by theTajik authorities through effective coal mining and its wide usein the industrial sector as an alternative fuel source. The Min-istry of Energy and Industry stated that the volume of coal ex-traction in the country increased by 18% to 237,000 tonnes in2011 compared to the previous year.
TURKMENISTAN|TELECOMS
Mobile TeleSystems to resume Turkmen operationsRussian mobile phone provider MTS plans to resume oper-ations to the isolated Central Asian nation of Turkmenistan,Vladimir Yevtushenkov, billionaire chairman of the holdingcompany that owns MTS said in a statement broadcast onTurkmen state television. He made the statement after talkswith Turkmen President Gurbanguly Berdymukhammedov,Turkmenistan.ru reported. The Turkmen government sus-pended the company’s license in December 2010. Yev-tushenkov said that the company would resume serviceswithin three to six months. A deal agreed between Yev-tushenkov and Turkmen President ends a bitter dispute thathad tarnished the former Soviet nation's image among in-ternational investors. The Turkmen authorities pulled MTSlicense which gave a devastating blow to the mobile phonesector in late 201, leaving 2.4 million subscribers without serv-ice. Left government-owned Altyn Asyr was the onlyprovider available to the population of 5m. "A year and a halfago, MTS stopped working in Turkmenistan due to the ex-piration of its license. Both MTS and, I think, the quality ofcommunications suffered in Turkmenistan because of that,"Yevtushenkov said. In response to the suspension of its oper-ating licence, MTS launched a public relations offensive urg-ing the international business community not to invest inTurkmenistan. Authorities promised to improve the qualityof service offered by Altyn Asyr, but progress has been neg-ligible. Last April, Turkmenistan signed deals with China'sHuawei Technologies and Finish-German venture NokiaSiemens Networks to help increase capacity at Altyn Asyr.Majority of Turkmen people rely on mobile connections tosurf the Internet, as the quality of landlines is poor.
Tajikistan President Emomali Rahmon called Belgium one of Dushanbe’s most important partners in Europe. |EPA/HEBERT KNOSOWSKI
Atambayev: Fate of US base not only about money
AZERBAIJAN · KYRGYZSTAN· UZBEKISTANPage 30| New Europe
NEIGHBOURHOOD13 - 19 May, 2012
Kyrgyzstan’s President Almazbek Atambayev recentlyannounced that the future of the Manas Transit Centre,US air base in his country would depend on how devel-opments in Afghanistan affect regional stability as well asincreases in rental payments. Any decision on Manascentre would be decided in the interest of the former So-viet Union, news agencies reported. All US troops mov-ing in and out of nearby Afghanistan travel throughManas. Large numbers of troops are set to come home in2014. The United States believes that the base would re-main in place if it gives higher rent, was dismissed by the
president as groundless. The US pays $60m annually forthe base. Atambayev's remarks signal slight shift from hisprevious stance that the base deal would effectively beterminated and that aircraft transit would take placethrough a civilian airport. According to him, the pres-ence of the base leaves his country vulnerable to retalia-tory strikes over US military action in the region. He alsoindirectly said that the future of the base also dependson Kyrgyzstan's close military ally, Russia, which has ob-jected to US presence. “We need to consider the opin-ions of our strategic partners,” Atambayev said.
KYRGYZSTANDEFENCE
UZBEKISTAN|EU AFFAIRSKarimov welcomes EU delegation head to UzbekistanNewly appointed European Union Delegation head toUzbekistan, Ambassador Norbert Jousten, recently sub-mitted credentials to Uzbekistan’s President Islam Kari-mov at the Oqsaroy, Uzbekreport.com reported. Karimovcongratulated the ambassador with a high appointmentand wished success in his honorable and responsible mis-sion. In turn, Jousten thanked the President for warm re-ception and assured that he would make every effort toadvance mutually rewarding cooperation between thetwo sides. It was learnt from the meeting that Uzbekistanhas attached importance to the expansion of mutuallyadvantageous and constructive cooperation with the EU,an entity that plays a significant role in global and re-gional politics entailing and shows economic and scien-tific-technical potential. Last January the top levelbilateral talks in Brussels also added a new impetus to themultilayered dialogue between Uzbekistan and the Eu-ropean Union.
KYRGYZSTAN|DIPLOMACY Bishkek, Baku to boost co-operation Deputy Prime Minister of Kyrgyzstan Ali Karashev re-cently stated that his country is willing to expand coop-eration with Azerbaijan, news agencies reported. Anagreement reached between the two countries envisagesformation of a bilateral commission for Azerbaijan's con-struction of an oil refinery in Kyrgyzstan. The ministersaid that both countries will also cooperate not only inenergy but education and agriculture as well.
AZERBAIJAN|TAXATION Taxation mechanism for private notaries changesAt a recent plenary meeting, the government of Azer-baijan recently approved changes to the Tax Code whichenvisage improvement of the taxation mechanism of pri-vate notaries in the country, news agencies reported. Headof the Parliamentary Committee on Legal Policy andState Building Ali Huseynli said the notaries' activity islucrative. He said that these changes will provide privatenotaries with the status of the taxpayer which will allowthem to enter into contracts with entrepreneurs. Thechanges envisage a 10% deduction of the total income ofnotaries received during the quarter. The notaries' incomeinclude the fees for services rendered by them, state dutyand other payments. It was reported that the tax legisla-tion does not provide a separate item of taxation for pri-vate notaries. Speaking on different approaches oftaxation applied to private notaries operating in Azer-baijan, Huseynli said some paid a simplified income taxwhile some with income before deducting expenses.
AZERBAIJAN|DIPOLMACYAliyev meets UN Secretary GeneralPresident of Azerbaijan Ilham Aliyev recently paid a visitto New York to meet United Nations Secretary-GeneralBan Ki-moon. The UN envoy considers the visit as sig-nificant as this is Aliyev’s first visit to New York since thecountry has taken over the UN Security Council presi-dency, news agencies reported. In the course of talks, thePresident discussed of threats to international peace andsecurity caused by terrorist acts" onto the agenda of theUN Security Council, as a successful step, stressing it asan urgent issues in today’s world.
Speaking in Baku, International Mone-tary Fund (IMF) Middle East and Cen-tral Asia Department (MCD) DeputyDirector Nadeem Ilahi said prospects forthe development of Azerbaijan's econ-omy in the short term are generallyfavourable, news agencies reported. Herecalled that last year the main indicatorof economic development of the countrynamely the non-oil GDP grew by 9.9%,marking a good indicator.
This year he expects non-oil GDP
growth at 6% while the volume of hy-drocarbon production is unlikely to in-crease. Overall IMF prognosis showsthat Azerbaijan's economy will stand ata level of 3%. “The inflation rate in Azer-baijan which, as world food prices haverecently declined, could reach five percent by the end of the year,” Ilahi said.He went on to say that prudent fiscalpolicy is a key factor in maintainingmacroeconomic stability in the shortterm. He suggested that reduction of the
non-oil budget deficit by limiting capitalexpenditure will help keep inflation thisyear at a low level. IMF mission hailedthe plans of Azerbaijani authorities toavoid any additional expenditure in-creases this year in connection with therecent and projected in future increasesin world oil prices. So far, IMF as allo-cated loans for six programmes in Azer-baijan and will continue repayment ofloans previously borrowed from theFund until 2013.
IMF predicts economy to stand at 3%AZERBAIJANECONOMY
The Ministry of Justice of Uzbekistanrecently organised seminars for heads ofregistration inspection of business enti-ties at the district (city) administrations(khokimiyats), which opened at theCentre for Advanced Training of lawyers,Uzbekreport.com reported. The expertsat the session made presentations whichare in accordance with the requirementsof legislation in the sphere of registrationof business entities. The workshops con-sider relevant proposals to improve themethodological guide, prepared in orderto prevent deficiencies in this directionand correct application of the law.
According to the Regulation on theMinistry of Justice of Uzbekistan, ap-proved by the Decree of the Presidentof the Republic of Uzbekistan of 23August 2011, one of the main activi-ties of the ministry are issues of con-trol over the observance of legality inthe activity of inspections of businessentities registered in the district (city)khokimiyats as well as providing themwith methodological assistance. It wasreported that work conducted by theministry and its territorial offices toidentify and address deficiencies re-vealed during inspections of business
entities registration in the district(city) khokimiyats, strengthens thelegal basis for further improvement ofthe sphere.
Analysis of the practice showed thatcertain inspections for registration ofbusinesses allowed errors and deficien-cies in the activity. The Ministry of Jus-tice evaluated the general condition oflaw observance in registration and aboli-tion of business entities. In order to pro-vide them with guidance activities ofinspections of Andijan, Samarkand,Tashkent regions and Tashkent city havebeen selected for analysis.
Lawyers improve law enforcement practicesUZBEKISTANJUDICIARY
Workers from Oil platforms enjoy the sun on the beac|h of the Caspian Sea near Baku. Prospects for the development of Azerbaijan's economy in theshort term are generally favourable. |EPA/FILIP SINGER
RUSSIA · GEORGIA · ARMENIA
New Europe |Page 31NEIGHBOURHOOD13 - 19 May, 2012
In Russia, there is a second New Yearrecognised – the Old New Year (stariynoviy god), which takes place after theregular New Year more universally ob-served. On that note, Russians joke thatVladimir Putin is the old new RussianPresident. On 7 May, Putin took backthe formal reins of power he ceded toDmitry Medvedev in 2008, when hefaced a bar on a third straight term aftereight years as president.
But Putin's return to the Kremlin fora six-year term has sparked a new waveof protests. “He has to change becausethe level of trust has been so low that thefeeling that he really has no alternativebut to now make Russia more open andresponsible with greater rule of law,greater transparency and therefore openfor business. It’s not in his interest to dootherwise,” Justin Urquhart Stewart, Di-rector of Seven Investment Manage-ment in London, told New Europe on 8May. “However, he’s on a honeymoon sothe honeymoon period for a second-hand president is even shorter than anew president. He’ll have a shorter hon-eymoon than Monsieur [France's presi-dent-elect Francois] Hollande becausethey have a new leader, Russians have asecond-hand leader and Greece has noleader at all,” he added.
Russian protesters also criticised a jobswap between Putin and Medvedev. Thelatter was confirmed on 8 May as thenew prime minister by the State Duma,the lower house of parliament.
“Former Finance Minister Alexei Ku-drin, or nearly any other high-level offi-cial, would arguably be a more effectivechoice. But effectiveness isn't Putin'sgoal,” Lilia Shevtsova, a senior associateat the Carnegie Moscow Centre, andDavid J. Kramer, President of FreedomHouse, wrote in their blog. “Instead, hiscriteria are based on loyalty, keeping acorrupt architecture intact, and eliminat-ing potential threats.”
Putin and Medvedev's private decisionto trade places angered many Russians
already aggravated by fraud-tainted leg-islative polls in December followed byPutin's controversial presidential electionvictory in March.
On 6 May, police officers arrested an-other 400 people following an anti-Putinrally in Moscow. While Putin was beingsworn in on 7 May, police cleared cen-tral Moscow streets and confronted pro-testers, detaining 300 more, according tonews reports.
On 7 May, Putin called for unity andpledged to strengthen democracy in hisinaugural address. "We will achieve ourgoals if we are a single, united people —if we hold our fatherland dear, strengthenRussian democracy, constitutional rightsand freedoms."
Putin said he and the Russian peoplehad already trodden a difficult path to-gether. "We believed in ourselves and inour powers, strengthened the countryand restored the dignity of our great na-tion. The world has seen Russia reborn,and this is the result of the efforts of ourpeople — shared, intensive work inwhich everyone has made a personalcontribution."
Russian stock futures climbed as Putinreturned to Russia’s presidency vowingto forge ahead with state asset sales andimprove the country’s investment cli-mate. Urquhart Stewart told New Eu-rope that the same applies for Medvedevreturning to the post of prime ministeragain. “The markets listen to the rheto-ric and they are giving him the benefit ofthe doubt for the time being on the basisit’s not in his interest to do otherwise.However, in a few months unless westart seeing some tangible openness andgreater confidence being built, then hemay well find the same markets beingworking against him,” he said.
Opening his speech before the StateDuma on 8 May, Putin congratulatedMPs on the upcoming Victory Day on9 May. “We all know DmitryMedvedev as an experienced politician,aimed at reforms and development, asa true patriot of his country,” Putin said.“I believe Dmitry Medvedev will be
open for further constructive co-oper-ation with all parties and movements,with the country’s parliament and itsfactions,” he noted.
Putin is under pressure to show he canadapt to the new political landscape andpush much-needed reforms go to im-prove the investment climate. The $1.9-trillion economy is in better shape thanmost European Union countries, but re-lies heavily on export commodities,mainly oil and gas. Putin has said hewants to attract more foreign investmentby improving the business climate, reducecorruption and red tape, and end Russia'sheavy dependence on energy exports.
Putin will probably continue to propelthe economic modernisation initiated byMedvedev, and will introduce tax re-forms to support agriculture and infra-structure construction. Acknowledgingthat the state-owned sector accounts fortoo high a percentage in the nationaleconomy, Putin will continue to developa market economy and welcome privateinvestment. But while implementingmarket reforms Putin is also going tohave to improve social welfare and med-ical treatment.
Putin may also increase his anti-West-ern rhetoric if the domestic situationworsens. His foreign policy will proba-bly become tougher, based on his viewthat the world should be multi-polarised,and in which Moscow needs a greatersay. Putin will probably pay special at-tention to the Commonwealth of Inde-pendent States (CIS) and CustomsUnion. At the same time he will try toimprove relations with the EuropeanUnion.
Regarding energy, during his cam-paign, Putin wrote in an article that Rus-sia must construct a united energy policywith the EU. “He began to speak aboutthe unification of our energy strategiesbetween Russia and European Union,”Konstantin Simonov, head of Russia'sNational Energy Security Fund (NESF)in Moscow, told New Europe. “It’s outof question that European Union is stillour main consumer,” he added.
Russia's President Vladimir Putin, centre, speaks during a reception marking his inauguration ceremony in Moscow’s Kremlin with Putin's wife, Lyudmila,right, and former Russian President Dmitry Medvedev attending, 7 May 2012. |AFP PHOTO/ RIA-NOVOSTI/ ALEXEY DRUZHININ
RUSSIAPOLITICS GEORGIA|EU AFFAIRS
Georgia with highest EU visa refusal rateCiting a recent survey by recent Tbilisi Liberal Academy,Georgian Minister for European and Euro-Atlantic Integra-tion Giorgi Baramidze said Georgia received the highest EUvisa refusal rate in the region, Civil Georgia reported. He said,“Visa rejection is very serious problem... At the same time,however, Georgia is leading with regards to visa permission.”Noting the growing number of rejected visa applications,Georgian President Mikhail Saakashvili has discussed theissue. He told EU member states structures that they havebeen opposing the agreement, which the EU Commissionersigned with Georgia on behalf of EU member states,Baramidze said. The government intends to raise their con-cerns to the EU Commissioner. Baramidze noted that someEU member states complicate visa issuance procedures in-stead of the promised facilitation of the visa regime. The re-port states that the Netherlands has the highest rate of refusal,at 26.6% in 2011, compared to 21.4% in 2010. Czech refusalsrose to 19.9% from 18.9% in the same period, while Germanydenied 12% of Georgian visas, up from 10.9%. Refusals fromEstonia, Greece, and Lithuania were at the top of the list. Thesurvey reveals that the Georgian government meets 90% of re-admission requests. Germany (230 requests), Austria (160 re-quests) and the Netherlands (81 request) lead in terms of theserequests, with 687 requests approved out of 758 as of 1 March.Parliamentary Committee on European Integration Chair-man Davit Darchiashvili said the rise in number of refusals isdue to an increase in applications and mobility from Georgia.
ARMENIA|DIPLOMACY Kuwait, Armenia to deepen co-operationKuwaiti National Assembly Speaker Ahmed AbdulAziz AL-Sadoun recently welcomed Armenia’s Ambassador to KuwaitFadey Charchoglyan. In the course of talks, both sides dis-cussed expansion of inter-parliamentary co-operation betweenthe two countries, Armenia Liberty.org quoted the ForeignAffairs Ministry as saying. The interlocutors also reflected onstimulating ties between the inter-parliamentary friendshipgroups of both countries. Charchoglyan noted that Armeniastance on the level of mutual visits by the inter-parliamentarydelegations is more active. In this connection, he underscoredAL-Sadoun’s visit to Armenia. The ambassador briefed theKuwaiti speaker on the latest developments in the Nagorno-Karabakh conflict’s settlement process and the state of affairsin Armenian-Turkish relations and reflected on Armenia’sparliamentary elections. For his part, the Kuwaiti Speakerhailed Armenia’s effort in resolving the Karabakh issuethrough dialogue. He stressed that Kuwait also supports apeaceful settlement to this conflict. The speaker was also im-pressed with the Kuwaiti Armenian community and the Ar-menians’ role in the country’s prosperity. He said that Kuwaitis willing to expand ties with Armenia.
ARMENIA|DIPLOMACYYerevan, Tehran discuss issues of bilateral interestThe eighth session of the joint consultations was recently heldbetween Armenian and Iranian Ministries of Foreign Affairsin Tehran, the Armenian Foreign Ministry reported. The par-ties discussed issues of bilateral interest and agreementsreached during the previous meeting, hailing the progress inco-operation in consular, judicial and legal fields. They furthergave positive assessment to the meeting between relevant serv-ices at Norduz- Meghri frontier point, expressing readinessfor expansion of co-operation in struggle against drug traf-ficking in both countries. Upon completion of the two sidessigned a memorandum of understanding. The parties agreedto hold the next meeting in Yerevan.
The old new Russian president
By Kostis Geropoulos
The political agenda of Presi-dent-elect François Hollandewas broadly based on the prom-ise to restore a more just distri-bution of income within Frenchsociety, going to such extremes asto include a 75% taxation rate forhigh incomes, those exceedingone million euro per year. Presi-dent Obama’s tax agenda in-cludes similar, though not soprovocative, provisions in orderto finance his entitlement poli-cies in favor of the poorer.
The fact is that fighting in-equality, that is the “abnormal”distribution of income, wealth,and the burdens of financial cri-sis, has been a central theme inmost western-European and USpolitics for some time now. So-cial movements such as “OccupyWall Street”, “the 99 percent”,anti-globalization movementsetc are in essence a more or lessconscious attempt to denounceinequality.
Yet, so far, all the problematicabout inequality was focused onthe social side of the problem,stressing the moral aspects of in-come and wealth unbalanced dis-tribution. The new element thathas become predominant nowa-days is that inequality is moreoften viewed as a purely macro-economic parameter. In-depth
economic research, well publi-cized among others by formerIMF’s chief economist Raghu-ram Rajan in his book FaultLines, has shown that inequalityis a serious impediment togrowth. Growing concentrationof income leads to the so-called“savings glut”, a situation reflect-ing the fact that the rich and thesuper-rich tend to save a largerpart of their income, especially inultra-conservative forms of in-vestments such as treasury bonds,thus impairing effecting demand.
Another aggravating factor isthat income concentration is sus-
pected to be the main cause ofover-borrowing by lower andmiddle-income people, facili-tated by policies of low interestrates, and easy consumer andhousing credit. Pro-market eco-nomic policies, followed by mostwestern governments over thelast 30 years, have profoundly af-fected income and wealth distri-bution. According to DeanBaker, another well-knowneconomist who researched thesubject, a “massive upward redis-tribution of income” has startedin the US since President Rea-gan’s time, due to policies that
changed the before-tax distribu-tion of income, not the reductionin tax rates on the wealthy. A setof policies was put in place inorder to press downwards thelower and middle wages, beforetax cuts affect the income distri-bution to the detriment of thepoorer even further.
A quick look at some key statis-tics in the US confirms thesetrends. Corporate profits are at anall-time high; top ten percentearners are capturing a highershare of national income than theyhave anytime since the 30s; CEOs’pay is the highest in 20 years. On
the other hand, total tax to na-tional income ratio is at its lowestsince the early 80s and, what’smore, average hourly earnings inconstant dollars (when inflationhas been removed) are at the lev-els of the early 70s…
In this context, it’s not surpris-ing that both households andgovernments had to borrow mas-sively from the banking systemand the markets in order tomaintain and improve their stan-dards of living, and their offer ofpublic services, respectively.Hence, the present mountains ofprivate and public debt, at na-tional and international level.
According to this analysis,both the weak demand and thedebt problems are not the conse-quence of some policy “mistake”,but rather the fruit of a long-term well-thought set of policies,meant to alter the distribution ofincome and wealth. After threedecades of such policies, thatdate back to the Reagan-Thatcher era, the ensuing ex-treme inequality of income andwealth have caused a fundamen-tal imbalance in westerneconomies. Without addressingthe inequality issue, it won’t bepossible to stabilize the financialmarkets, and find a viable solu-tion to the current mess.
Christos Kissas, PhD, is a Financial Economist
KASSANDRADavid Cameron used to end his text messagesto Rebekkah Brooks, Sun editor with LOL,until she explained that it meant laughing outloud and not as Cameron thought, lots of love!
Page 32 | New Europe13 - 19 May, 2012
Once upon a time in Leveson...
Follow me on twitter @Kassandra_NE
The Visit Greece campaign received anunexpected boost during the Commis-sion's meeting of 18 April. As eu-roblogger Ronny Patz discovered, after adiscussion on Greece, according to theminutes, President Barroso "asked eachCommissioner to travel to Greece tosupport the communication actionsthere and demonstrate visibly not justthe Commission’s support for the Greekpeople but everything it had done to laythe groundwork for inclusive growthand sustainable development in Eu-rope."In a demonstration of obedience andsolidarity, not one has done so, almost afull month later.Perhaps the Commissioners would liketo explain why they are refusing to showsolidarity? Surely, they can't all be afraidof the Greek hospitality?Can't they?
Will the Commissioners obey Barroso?
By Christos Kissas
There are a host of events celebrating Eu-rope Day, but this photo of the 2008event, run by the Estonian foreign min-istry shows a novel approach; frighteningchildren.
Inequality – the real issues
Anti-austerity protesters. "Without addressing the inequality issue, it won’t be possible to stabilize the financial markets" |EPA/CHRISTOPHE KARABA
Can such a decaying structure be restored?|AFP PHOTO/LOUISA GOULIAMAKI
The Estonians promote Europe in their ownway|Estonia foreign ministry
Homo Euro!