19th Year of Publication | Number 962 | November 20 - 26, 2011 | 3.

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NEWEUROPE
Gazprom to become a competitor to European energy suppliers |Page 16

www.neurope.eu

BLACK SEA
Tzvetan Vassilev, Chairman of the Supervisory Board, Corporate Commercial Bank, tells NE that co-operation within the Black Sea region can be a driver of economic growth and development

INTERVIEW
Bulgarian Transport Minister Ivaylo Moskovski answers NE's questions on current policy in the country, as well as Bulgaria's role in Europe's wider transport ambitions

EUROZONE
More than one member of ECB's governing council say that the European Central Bank will do whatever it takes to save the money zone's nancial markets from running out of cash

EU WORLD
For the EU the APEC meeting sent a clear signal. The US was turning full speed towards the Asia-Pacic region which Obama described as absolutely critical to America's prosperity Page 13

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Pages 6, 7

Pages 4, 6, 7

IN THIS ISSUE
EU Policy Against odds, Eurozone economy expands|Page 5 Parliament approves law for taming CDS|Page 13 EU-World EU-US urge Israel to scrap legislation against civil society|Page 13 Putin: Russia ready to help the eurozone|Page 14 Energy & Climate EU pushes for transporting Central Asia gas to Europe|Page 15 Turkmenistan, Pakistan agree to speed up TAPI pipeline|Page 16 Russia to meet APEC energy market demand|Page 17 Country news Sarkozy launches war on French sick leave syndrome|Page 23 New Italian government to focus on eliminating budget deficit|Page 25 New Greek government resumes talks with international creditors|Page 31 Committee recommends EP speaks out for Tymoshenko|Page 36 Russias GDP increases 4.8% in Q3|Page 39 Editorial & Opinion Eurozone is a dangerous place unless|Page 2 The last tango in Rome|Page 8 Is the West broke?|Page 9 Is this the final count down to a global financial calamity ?|Page 10 Should we ban cigarettes?|Page 11

Gas OPEC looms over EU

Russia, Qatar and Algeria to co-operate in EU gas market

Russias Energy Minister Sergey Shmatko smiles with satisfaction as he won the support of the Gas Exporting Countries Forum summit in Doha. |EPA/STR

FASHION & STYLE

Gaultier with an L

Page 19

On 16 November in Doha, Russias Energy Minister Sergey Shmatko won the support of the powerful Gas Exporting Countries Forum (GECF) over the need to co-operate in developing projects for production and sale of the blue fuel to raise prices and boost supply. In a declaration, the worlds 12 largest natural-gas exporters expressed the need to reach a fair price for natural gas based on gas-to- oil prices indexation. Given that Gazprom and China disagree over the price for a potential long-term gas supply agreement and Gazprom and EU consumers disagree over the existing long-term contracts, it was

important for Russia to gain support from other members of the GECF. But talks in Qatars capital stayed away from the creation of a Gas-OPEC. This is just talk about the potential formation of the gas prices but it is not a settled formula for global price formation, Moscow-based oil & gas analyst at Alfa Bank Maria Yegikyan told New Europe on 16 November. She said that Gazprom does not necessarily want to have a global gas price. That would make it necessary for the company to basically take away its monopoly for the pricing because currently Gazproms price is

much higher than prices on the global market, Yegikyan said. A worrying development for the European Commission, although it had no specific comment, could be an agreement between gas-producing majors Russia, Qatar and Algeria to co-operate in the European natural-gas market. The EU has looked at Qatar and Algeria as part of its diversification efforts. Meanwhile, the EUs reliance on Russia gas will increase even more as the second line of the Nord Stream natural gas pipeline between Russia and Germany is going faster than planned.

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Page 2 | New Europe November 20 - 26, 2011

NEW EUROPE

ANALYSIS

The Shooting Gallery

Eurozone is a dangerous place unless...
By Dionyssis Kefalakos
It is quite alarming, seeing the Eurozone turning to political solutions that in reality constitute a deviation from standard democratic procedures. At the same time, the rest of the world, as it has expressed through the so-called markets, seems to be becoming more sceptical about Europe's ability to effectively face to its sovereign debt problem. In short, the brief replacements of the governments in Greece and Italy by unelected technocrats, together with the fact that Berlin and Paris do not seem able to overcome their timidity vis--vis the real causes of the problem, which is none other than the politically inflicted inability of the Central European Bank to effectively cope with the crisis. All this paints an alarming political tableau and questions the ability of the Eurozone to solve the problem. Unfortunately, markets have come to the conclusion that these threats are becoming more severe every day. And infallible indicator of this is the 7.5% interest rate that world investors are now demanding, in order to continue financing Italy and 3.6% in the case of France. These interest rates are more than what Greece will be charged for its new 130 billion package, which means that France and of course Italy will finance Athens with loans carrying 3.5% interest rate, at very high cost to their taxpayers. This last problem will add to the instability of the political turmoil that prevails all over the Eurozone, and increase the danger of voters turning to extreme parties, as has happened in Finland and Holland. Even in debt-ridden Greece, the surprisingly high acceptance of Papademos by the public (to the tune of 73%, an all-time high) creates the danger of even greater disillusionment in the coming months, which may drive centreright voters to extreme-right parties, which are at present riding high on anti-immigration and anti-European policies. The same is true for Italy the initial wide acceptance of Mario Montis government will turn into equally widespread anger, when the citizens come to understand that their new prime minister stands for severe austerity measures and deep cuts in public spending. In both cases, Rome and Athens may turn into more explosive political situations, when austerity will be felt by everybody and people realise that technocrats have even worse solutions than politicians. The US had exactly the same financial problems after the credit meltdown that followed the real-estate crisis. Europe, however, does not possess the two American policy tools that helped Washington overcome its own crisis. For one thing, the American central banks, the Fed, did not hesitate to help the government and the banking sector by supplying them both with unlimited freshly printed liquidity, a critical tool that the ECB is not allowed to use. The next important advantage that the US had in comparison with Europe was that it was one state and one government, while in the Eurozone there are 17 and, while the ECB drawback may in the end be overcome if things turn more sour, the one government advantage is to remain only American, unless the entire Eurozone is being governed by technocrats appointed by the Berlin Paris axis, if indeed the Franco-German political bond survives the crisis. The markets and political arenas of the Eurozone have reached a point at which the incorrect steps will be very difficult to rectify it will take a truly central banking institution in Frankfurt and a real Eurozone financial ministry in Brussels to truly overcome this crisis. Even Angela Merkel the German Chancellor recognises that what it is done to face up to Eurozone's debt problems is not enough. So sooner rather than later the EU has to come up with long term sustainable ground braking solutions.

Is it safe?|

EPA/ALEXEI NIKOLSKIY MANDATORY CREDIT/RIA NOVOSTI

NE

15 YEARS AGO

In November 1996, Bill Clinton won a second term in the White House, while in Russia the star of Boris Yeltsin had already lost its glow, thus leaving the American leader as indisputable world supremo. This was the main fuel that Wall Street used to record a straight ten days continued rise of its basic indexes. The US leadership in the world was not threatened in any way. It must have been this sense of absolute supremacy that led the only super power of the world to a series of blunders like the futile invasions of Afghanistan and Iraq. Their immense cost, together with the twin American deficits in the foreign trade and the federal and states budgets, led the US to be over indebted to China.
EDITOR DIRECTOR Alexandros Koronakis akoronakis@neurope.eu MARKETING & ADVERTISING Panos Katsampanis pkatsampanis@neurope.eu EXECUTIVE LAYOUT PRODUCER Suman Haque suman@neurope.eu SUBSCRIPTIONS & DISTRIBUTION subscriptions@neurope.eu Subscriptions are available worldwide INDEPENDENCE BRUSSELS HEADQUARTERS Av. de Tervuren/Tervurenlaan 96, 1040 Brussels, Belgium Tel. +32 2 5390039 Fax +32 2 5390339 info@neurope.eu PUBLISHERS BRUSSELS NEWS AGENCY SPRL Avenue de Tervueren 96 1040 Etterbeek Belgium Tel. +32 2 5390039 info@neurope.eu EXTERNAL CONTRIBUTIONS

NEWEUROPE

Dennis Kefalakos dkefalakos@neurope.eu SENIOR EDITORIAL TEAM Kostis Geropoulos (Energy & Russian Affairs) kgeropoulos@neurope.eu Andy Carling (EU Affairs) acarling@neurope.eu Cillian Donnelly (EU Affairs) cdonnelly@neurope.eu Ariti Alamanou (Legal Affairs) aalamanou@neurope.eu Alexandra Coronakis (Columnist) acoronaki@neurope.eu Louise Kissa (Fashion) lkissa@neurope.eu ONLINE EDITOR James Drew jdrew@neurope.eu

Signed Contributions express solely the views of the writers and do not necessarily reflect the opinion of the New Europe is a privately owned independent newspaper. publication, and is not subsidised or financed in NE is printed on recycled paper.

any way by any EU institution or other entity.

ISSN number: 1106-8299

2011 New Europe all rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic or otherwise, without the permission of New Europe.

NEW EUROPE

New Europe |Page 3 November 20 - 26, 2011

ANALYSIS
BLACK SEA REGION|ECONOMY

Energy, economic co-operation within the Black Sea region to boost growth
All countries in the Black Sea region need state and private investments in energy infrastructure to solve a number of problems such as the need to increase energy production in response to growing energy demand, overcoming external energy dependence, diversification of energy supplies, and environmental protection, Tzvetan Vassilev, Chairman of the Supervisory Board, Corporate Commercial Bank told New Europe. The top banker, who later took part in the Black Sea Energy and Economic Forum in Istanbul on 17-18 November was organised by the Atlantic Councils Patriciu Eurasia Center, noted that in times of global hardship, co-operation within the Black Sea region can be a driver of economic growth and development. Asked by New Europe in which areas opportunities lie, the banker called for efforts to build a single energy market, which will result in growing energy production, diversification of energy supply and transport routes, increasing revenues, attracting higher investments, and enhancing the competitiveness of the energy sectors in the Black Sea region. All this would inevitably lead to increased economic growth. He also highlighted harmonisation of national energy laws and strengthening trade relations between countries, as well as the elimination of barriers to trade; cooperation in the field of security to create favourable investment conditions; preventing or limiting capital outflows from the region and fostering banking sector integration; co-operation in the field of environmental protection; and building an institutional framework which provides incentives for intraregional investments and strengthens the power of the Organisation of the Black Sea Economic Co-operation and the Black Sea Trade and Development Bank. Vassilev also said that unresolved war conflicts, efforts of some countries in the region to reinforce their role as monopolists on the energy market, and concerns of some countries that deeper integration could threaten their national sovereignty are the main challenges to cooperation and integration in the region. Vassilev stressed that the active role of the state entails providing tax reliefs, funding and other legal and political initiatives regarding the energy sector. There is growing consensus among the Black Sea countries that these problems can be solved effectively only through the establishment of a stable, integrated energy market. The first step towards the creation of such a market is the investment in joint infrastructure projects, he said. Vassilev noted that the main challenge make the creation of alternative crude oil transportation routes their main priority. Among them, Turkey intends to become a key regional energy hub and invests heavily in transportation and shipment of crude oil, as well as in the construction of new petroleum refineries (as in the case with Ceyhan). This in turn will boost domestic production and decrease import dependence. Vassilev said that the growing demand for natural gas, combined with the increasing importance of the resource for the countries from the Black Sea region, will attract more and more investments in the gas market over the coming years, distributed in two directions exploration and development of new gas fields and construction of transport infrastructure, such as the EU Southern Gas Corridor and South Stream Pipeline. The majority of these investments will be concentrated in Russia and Azerbaijan the main producers and exporters of natural gas in the region. While Russia invests heavily in keeping its leading position, the EU perceives Azerbaijan as the main alternative to Russian gas supplies for the European market and large investments will be made in the development of gas reserves in the country. In view of the substantial coal reserves available in the Black Sea region, the main priorities of the countries are the following: encouraging investment in the mining sector in order to increase production and the share of coal in the energy mix, reducing dependence on imports, improving quality and implementing technologies for environmental protection. Main investments are expected in Ukraine, Russia and Turkey, Vassilev said. In response to growing electricity demand, net electricity generation has been rising, both at regional and international level. In order to meet domestic demand for energy at reasonable prices, ensure sustainable development of the electricity market, and fulfil their environmental commitments, prompted by climate change, countries from the region have to improve security of domestic power generation and open up energy markets to competition. It is only through the liberalization of energy markets that the Black Sea states can attract the investments necessary for the modernization and refurbishment of the inefficient and, in many cases, obsolete power infrastructure. It is expected that the share of nuclear power in the total power mix of the Black Sea countries will increase in the long term, as at least half of the countries in the region are planning to refurbish the existing power plants or to build new ones (Russia, Ukraine, Bulgaria, Romania, Armenia and Turkey). The Black Sea countries have great potential for development of renewable energy sources (RES), Vassilev said. Government incentives promoting renewable power generation, such as preferential tariffs and guaranteed purchase of renewable electricity, are among the key drivers of investor interest of both local and foreign companies on the RES market. The countries with the greatest potential for attracting investments in the field of hydropower are Turkey and Georgia; in solar energy Greece and Bulgaria; in biomass Ukraine, Bulgaria, Russia and Romania; in wind energy Turkey, Greece, Bulgaria and Romania. The strategic geographic location of Bulgaria makes it one of the key players in the realization of a number of largescale energy projects in the Black Sea region. The country has the potential to become an energy corridor for the European market and an important energy hub of the Balkan Peninsula, by virtue of the oil and gas pipelines which are projected (the EU Southern Gas Corridor, South Stream Pipeline), Vassilev said. Some of the main prospects for investments in Bulgarias energy sector include construction of Belene Nuclear Power Plant, implementation of clean coal technologies and RES development. The growing interdependence between producing, consuming and transit countries in the Black Sea region requires sharing of responsibilities and strengthening partnerships among them. The concept of economic integration of the countries in the region is attractive and widely supported by the Black Sea countries themselves, and by the European Union and the United States, as well. A possible future integration of the energy markets in the region would have positive multidimensional consequences, such as rising energy production, diversification of energy supply and transport routes, increasing revenues, attracting higher investments, and enhancing the competitiveness of the energy sectors in the Black Sea region. All this would inevitably lead to increased economic growth. The creation of a single energy market in the region entails harmonization of national energy laws, strengthening trade relations between the countries, identifying existing barriers to trade and investment in the sector and seeking opportunities to remove or reduce them. The implementation of large-scale energy projects and the establishment of a common energy market will play a crucial role for the achievement of social cohesion and economic integration of the Black Sea region.

Tzvetan Vassilev, Chairman of the Supervisory Board, Corporate Commercial Bank.

facing the countries from the Black Sea region is growing energy consumption, which is at the core of an ever increasing need for investments in their energy sectors. Investments in all levels of the supply chain are critical for ensuring sustainable energy supply. As concerns the petroleum industry, in particular, this includes exploration, extraction, transportation, refining and distribution of the refined products to the end users. Russia and Azerbaijan are the driving forces of the Black Sea region petroleum industry. They act as a magnet for foreign investments in this area as they are the leading producers and the main exporters of crude oil in the region, Vassilev said. The investment climate improvements in Russia since 2000, achieved mainly through new regulatory instruments and fixed tax rates, have brought to the country international investors such as ExxonMobil, British Petroleum, and Conoco Philips. What is more, Russia is one of the few countries in the Black Sea region which continues to implement substantial investment programmes in its oil and petrochemical industries. The significant investments in Azerbaijans oil sector have boosted the economy of the country. The Contract of the Century, allowing major international companies to develop of the Azeri, Chirag, Guneshli oil fields, resulted in double-digit growth of Azerbaijani gross domestic product. This illustrates how the combination of natural resource endowments of a country and significant investments in its energy production sector can foster economic growth, even in a relatively small economy, Vassilev said. The other countries in the region are highly dependent on oil imports, which

Page 4| New Europe November 20 - 26, 2011

NEW EUROPE

ANALYSIS
ECB can save the Eurozone
By Dionyssis Kefalakos
Despite the ongoing confrontation between France and Germany about the role that the ECB can and should play in Eurozone's efforts to save face to its sovereign debt crisis, more than one member of ECB's governing council say that the European Central Bank will do what ever it takes to save the money zone's financial markets from running out of cash. The last to say so was Jozef Makuch, governor of the Bank of Slovakia and member of ECB's council. And despite the fact that he represents only a tiny Eurozone member state, Makuch is expressing a widespread opinion within ECB's governing council, insisting that the central bank cannot let Eurozone's banks and governments go penniless, a view seemingly shared by its new president, the Italian Mario Draghi. Jean-Claude Trichet, the until some weeks ago governor of ECB, despite the fact that he was adamant that central bank's role is not to bailout governments, he did not hesitate to intervene in secondary bond markets and bought back Greek, Italian and Spanish paper in order to support their prices, but refused to directly finance those governments. However ECB indirectly finances the Greek government through the country's banks, by accepting as collateral their bonds guaranteed by the Greek treasury. In no case though the ECB will act as lender of last resort for Eurozone governments. In view of the latest problems in Eurozone's bond markets, with all but the German bonds, the bunds, being under pressure in a clear cut message that investors are very worried about the zone's future, Berlin leaked a document which appeared in the British newspaper Daily Telegraph, only hours before Angela Merkel was to meet David Cameron last Friday, 18 November. The document contains a broad planning for the future of the EU, under a title, The future of the EU: Necessary integration policies for progress towards establishing a Stability union. The text does not contain any major new information about the way Germany sees the future of Eurozone. It states: To overcome the current debt crisis in the euro area permanently we need to meet four challenges: Firstly, more short-term crisis management is inevitable in order to deal with the situation in Greece above all, and the prevention to the contagion... Secondly, we must take decisive steps towards forging a real union of stability... This is the issue that we have to address in the coming days and weeks... Thirdly, with the construction of an economic and fiscal union of stability, questions about the political constitution of Europe will be posed in a new light. We will need to think about the functioning and democratic legitimacy of the European Union anew. Therefore in the longer term we need a debate about the way in which the EU will develop into a political union...we need to give Europe the financial constitution... Fourthly, for a permanent culture of stability to be useful corresponding economic growth is required... In short the document plans for an more political European Union, where sinners will be loosing their financial sovereignty every time they need to be saved by the European Stability Mechanism (ESM) which will develop into a European monetary fund. All that will demand only minor changes in the EU Treaty, which may be realised without conducting any referendums, says Berlin. It does not clarify however how the Greek problem is to be solved in the short run. There is phrase though saying that more short-term crisis management is inevitable.This may entail more ECB intervention in the current bond crisis. And this has to be done rather sooner than later. No doubt the Eurozone as a financial unit has the means to save Greece and Italy together in order to avoid later save also Spain, Belgium, Ireland and probably France, in a rather impossible effort.

ECONOMY

Mario Monti: an ideologue dressed as a technocrat

By David Cronin
Ive always been a little baffled by that word technocrat. There is something both chilling and comforting about it. It can bring forth an image of someone aloof, yet better educated and less vain than a politician fixated on image and poll ratings. Mario Monti is, if headlines are to be taken literally, the quintessential technocrat. It is beyond dispute that he is not tainted by the corruption with which Silvio Berlusconi, his predecessor as Italys prime minister, became synonymous. But does that make Monti less political? An analysis of his track record indicates he has an ideologically-driven desire to transform Europe and not necessarily for the better. To argue that he is not a compromised figure would not appear accurate, either. Monti is admired among some federalists for his work as Europes competition commissioner between 1999 and 2004. He is best known for blocking a merger between General Electric (GE) and Honeywell, much to the chagrin of that wealthy marauder Jack Welch. With all the publicity that Montis decision received, you would assume that he would be wary of taking a job with GE when his stint at the European Commission was over. Yet while Monti didnt go to work with GE directly, he became chairman of a think tank that was funded by it in 2005. The 2006 annual report for Bruegel, the economic policy outfit in question, lists GE as one of its corporate members. In that role, Monti pursued an agenda designed to make Europe dismantle its welfare states and morph into a purer capitalist economy like the United States. True, he was subtle in his pronouncements and he hinted at understanding the importance of social policy. But it is hard to see how he had any other real objective in mind. In one of the earliest articles he wrote wearing his Bruegel cap, Monti praised a 2005 blueprint for reform signed by Andr Sapir, one of his colleagues at the think-tank. In it, Sapir upbraided most EU governments for relying on strict employment protection laws at a time when old jobs and practices are no longer warranted. He then bemoaned the lack of progress with introducing the EUs services directive, contending that continued rigidities in services tend to discourage foreign direct invest-

Italy's new Prime Minister Mario Monti is given the bell by outgoing Prime Minister Silvio Berlusconi (not pictured) marking the moment he takes office at Palazzo Chigi, in Rome, Italy, 16 November 2011. |EPA/MAURIZIO BRAMBATTI

ment as the effectiveness of business services is a key factor in the location of multinational enterprises. Monti, it should be recalled, was a member of the Commission team which formally proposed the services directive (though it is usually associated with his Dutch colleague Frits Bolkestein). That legal measure was designed to open up the services sector generally to competition; its original draft contained no real guarantees that the essential purpose of healthcare would be to cure the sick, not to line the pockets of pharmaceutical or insurance executives. It also contained clauses aimed at making sure that firms are subject to the laws of their country of origin. As a result, an employee hired by a firm in an EU state with inadequate worker protection law would still be subject to that law if he or she was transferred to work in another EU state with higher protection standards. Just as the term technocrat baffled me, I have to confess that I used to be under false illusions about think tanks. Like many journalists, I have often phoned think tank representatives for quotes when writing news stories or features. Because they tend to have titles like research fellow, I was led to believe that they were akin to academics, who could be relied on to think independently. Now, I realise that think tanks are corporate cheerleaders in disguise. They are engaged in what Noam Chomsky and Edward Herman called manufacturing consent. The papers they pump out diligently are presented as contributions to public debates. In reality, those pithy pamphlets are furthering an agenda that

will only benefit the affluent. The European Policy Centre, for example, hosts discussions on the future of healthcare every so often. Yet the very notion that the EPC has altruistic motives falls asunder when you learn of its strong links to the tobacco industry. A 2010 report by the organisation Action on Smoking and Health detailed how the EPCs founder, the recently deceased Stanley Crossick, was a lobbyist for British American Tobacco (BAT). That firm was one of the main players in the EPCs risk forum. In 2003, the Commission bowed to pressure from the forum to agree that it would consult cigarette makers about any measures affecting their industry. Firms that sell cancer in a box merit contempt, not consultation. Indeed, the only industry that rivals tobacco in causing human misery is the arms trade, which also has think tank experts championing its bloody cause. A few weeks ago, the European Council on Foreign Relations published a paper lamenting how military budgets are shrinking. The paper was written by Nick Witney, former head of the European Defence Agency, an institution set up at the behest of weapons manufacturers. Unless steps are taken rapidly to improve Europes military capabilities, the EUs defence policy will by the end of 2012 be ready for its final obsequies, Witney warned. We should take Witneys warning seriously, albeit not for the reason he advocates. The militarisation of Europe is obscene and it must stop. Our political masters must be pressurised into combating poverty, instead, and to stop pretending that technocrats have the solutions.

NEW EUROPE

New Europe |Page 5 November 20 - 26, 2011

ANALYSIS
ECONOMY
New Europe content partner

Good fundamentals despite debt problems

Music to the rescue in the battle to save Europes languages

By Gutenberg
In February 2009, the Estonian newspaper Eesti Paevaleht announced the sad news of the death of Viktor Bertholds. Not only was this a tragedy for his friends and family, it was a loss for the whole world. Mr Bertholds was the last mother tongue speaker of Livonian, a language once used widely in part of modern day Latvia. Normally the death of the man would have meant the death of the language. But the young people of Livonia thought differently. They lobbied for their language, and today, although there are only 20 known speakers in Latvia, it is taught in universities in Latvia, Estonia and Finland Received wisdom tells us that globalisation and the advent of the internet means that the major tongues especially English, Spanish and Chinese are gaining dominance in the language jungle like predatory beasts. Received wisdom again tells us that only the older generation care. The evidence shows otherwise. Young people are taking up the cause of minority languages with music as their weapon. For eight years now, bands from all over Europe have competed at the Liet International to win the title of the best minority languages band. This year, the contest takes place in Friuli in Italy, where 12 bands will battle to be top. For the Council of Europe it is a chance to get involved with an event that promotes diversity in the liveliest of ways, and to showcase the importance of the Charter of Regional and Minority Languages, which is now protecting dozens of threatened languages by ensuring their day to day use and promotion. Liet has hit the right note in its fusion of ancient cultures and a modern format. With its Eurovision-inspired voting, youth-oriented marketing and appeals to the You Tube generation, it is capturing the audience that flock to the nu folk outings and follow the European festival circuit from Glastonbury in the UK to the EXIT festival in Serbia. The mix is eclectic, mainly folk influenced with pop fusion; a fitting setting to the multiplicity of languages on the bill. This years line up includes groups from Asturias, the Basque country, the Udmurt people of Russia and the Sami of Scandinavia. Songs are sung in languages ranging from Frisian and Gaelic to Valladar (a branch of the Rumantsch language of Switzerland) and Vepsian, a language spoken in the Russian republic of Karelia that is fast becoming extinct. We should care about threatened languages, just the way we care about threatened species, and for similar reasons. If languages die, they take with them a whole history of a people, the story of their culture and the richness of their traditions: the loss of a language impoverishes individuals and our whole European culture. Experts reckon that half of the worlds 7,000 languages are likely to disappear soon, with nine European languages on the critical list. In the face of these facts, it is all too easy to feel passively despondent about our ability to save language and cultures. Exciting, then, that a new generation are taking up their guitars, badhrain and pipes to sound the alarm and ton conjure life into dying cultures.

The DAX index curve shows considerable losses in the trading room of the stock exchange in Frankfurt/Main, Germany, 09 November 2011. |EPA/ARNE DEDERT

The Eurozone's fundamental macroeconomic variables give evidence of a healthy economic conjuncture. According to the latest Eurostat announcements, external trade in September reached a robust 2.9 billion surplus, while inflation remained in October unchanged at 3%, with price increase excluding energy at the even lower of 2%. Given that a recent Eurostat press release on growth showed that Germany and France had a rather good third quarter this year, the overall image is not at all bad.

EXTERNAL TRADE
According to the same source, the September 2011 Euro area external trade surplus was 2.9bn, compared with 0.5bn in September 2010. In September 2011, compared with August 2011, seasonally adjusted exports fell by 1.0%, and imports by 3.2%. The EU27 trade surplus increased

with the USA (48.5 in January-August 2011 compared with 44.8bn in January-August 2010), Switzerland (17.2bn compared with 12.2bn) and Turkey (16.8bn compared with 10.7bn). The EU27 trade deficit increased with Russia (-62.2bn compared with -50.7bn) and Norway (-31.5 bn compared with -24.8bn), remained nearly stable with China (103.0bn compared with -104.2bn) and Japan (-13.7bn compared with -14.8bn), but fell with South Korea (-2.8bn compared with -8.2bn). Concerning the total trade of Member States, the largest surplus was observed in Germany (100.6bn in January-August 2011), followed by the Netherlands (28.8bn) and Ireland (28.2bn). The United Kingdom (-76.3bn) registered the largest deficit, followed by France (58.0bn), Spain (-31.5bn), Italy (23.4bn), Greece (-11.9bn) and Portugal (-11.1bn).

INFLATION
In October 2011 Euro area annual inflation was stable at 3.0%, unchanged compared with September, according to Eurostat, the statistical office of the European Union. The lowest annual inflation rates in the EU member states in October 2011 was recorded in Sweden (1.1%), Ireland (1.5%) and Malta (2.4%), and the highest in the United Kingdom (5.0%), Estonia (4.7%) and Slovakia (4.6%). In the Eurozone the main components with the highest annual rates in October 2011 were transport (5.8%), housing (5.1%) and alcohol & tobacco (4.4%), while the lowest annual rates were observed for communications (-1.9%), recreation & culture (0.3%) and education (0.9%). The main components with the highest monthly rates were clothing (2.6%), alcohol & tobacco (0.9%) and housing (0.5%), while the lowest were education (-0.3%) and communications (-0.2%).

EUROZONE

Against odds, Eurozone economy expands

By Dionyssis Kefalakos
Considering the problems with the Eurozone's sinner governments and the financial problems in Athens and Rome, the rest of the zone is not doing badly at all, as far as growth in the real economy is concerned. During the third quarter of 2011, the largest EU economy, Germany, which accounts for almost one third of the Eurozone, actually increased its quarter-on-quarter growth to 0.5% from 0.3% in the second quarter. There were equally promising signs in the French economy, which grew by 0.4% in the third quarter, up from -0.1% in the second quarter. From a yearly perspective, compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1.4% in both the Eurozone and EU in the third quarter of 2011, following +1.6% in the Eurozone and +1.7% in the EU27. This growth charts a rather good development in the Eurozone in comparison with its major financial partners, the US and Japan. More precisely, during the third quarter of 2011, GDP in the United States increased by 0.6% compared with the previous quarter (after +0.3% in the second quarter of 2011). In Japan,GDP grew by 1.5% in the third quarter of 2011 (up from -0.3%). Compared with the same quarter of the previous year, GDP rose by 1.6% in the US(+1.6% in the previous quarter), and decreased by 0.2% in Japan(-1.0%). At this point, it should be noted that the statistical principles in the US and Japan permitted comparisons, while there is no possibility of this in the case of the other major world economies, such as China and India.

Page 6 | New Europe November 20 - 26, 2011

NEW EUROPE

ANALYSIS
INTERVIEW WITH IVAYLO MOSKOVSKI MINISTER FOR TRANSPORT

Dont blame the markets

By C. Kyrtsou and A.G. Malliaris
A few years ago a flashing idea gave birth to a mathematical work attempting to visualize the reaction of a market, subject to different kinds of informational signals. A market built on rational expectations, homogenous agents and perfect information was found capable to absorb efficiently shocks. Unfortunately, real markets differ. The prices are driven by inherent dynamics including heterogeneity in preferences and expectations, irrationality, high levels of risk and last but not least asymmetric information which emerges as a fundamental source of heterogeneous beliefs and fuels speculation. Under similar circumstances the prices can react brutally, disproportionally to incoming news and exacerbate feelings of insecurity. Controlling the diffusion of news in the financial markets may be a precious tool that policy makers could have at their disposal. Nonetheless, manipulation of information can evaporate any appreciable effect on the real economy. As far as market anomalies and pointless governmental intervention persist, the disturbances deteriorate giving rise to economic deficiency and social indigence. We have made frequent reference in our joint articles to the science of complexity and the failure of traditional economic theories to deliver realistic interpretations of real market dysfunctions. In spite of the prevailing atmosphere, it was hard to believe that the aforementioned theoretical representations would emerge a strong impression of dj vu some years later. In the aftermath of TV debates, political pronouncements, hostile revenue-based fiscal adjustments or even calls for referendum, the sudden resurgence of market instability translated into volatile spreads, explosive returns in the capital market and disturbing declines of Euro ringed alarm bells. Markets are complex environments and as such they have to defend all the attributes their complex nature implies. So, why blame the markets when they are persistently provoked to unfold their bearish assessments? The conclusion might as well be evident. Dont accuse the financial markets and speculators for performing their function which is to evaluate the impact of current events on the future of the economy, jobs, growth, inflation and corporate earnings among numerous other economic and financial variables. Our main point here is to differentiate between initial cause and effect in complex nonlinear double feedback mechanisms. While a substantial amount of uncertainty is endogenous to financial markets because of asymmetries of information, still political, regulatory, psychological and strategic decision making contributes in critical ways. What is currently needed to reduce this exceptionally high degree of uncertainty is positive information that our political leadership is capable of solving the problems it has created. It is time to stop blaming the markets. Professor C. Kyrtsou, is a member of Univercity. of Macedonia, Greece and Univercity. of Strasbourg & ISC-Paris. Professor A.G. Malliaris, is a member of Loyola University, Chicago.

Reform of the transport sector

The Bulgarian transport minister, Ivaylo Moskovski, answers New Europes questions on current policy in the country, as well as Bulgarias role in Europes wider transport ambitions. What are the governments current investment priorities for transport in the short-term (until 2013) and the longer term? An ambitious reform in the railways, accelerated construction of the infrastructure and improvement of the transport services are among the main short and middleterm priorities for the Bulgarian transport sector (until 2020). We try to achieve an optimal balance between all transport modes and to ensure their integrated development in the national transport system. The need of urgent measures for recovery of the railways is more and more tangible. Therefore the reform is very crucial for whole sector and we consider it will be one of the biggest challenges for Bulgarian Ministry of Transport, Information Technology and Communications in the next years. Also, the modernization of the transport infrastructure is a quite important task of our government. We have actively participated in the process of reviewing the TransEuropean Transport Network (TEN-T) Guidelines. The European importance of the national transport directions and nodes as well as their European added-value is a precondition for the receiving of EU funding. Numerous tracks were included in the new TEN-T maps and this is the background for the development of the Bulgarian transport network in long-term horizon (2030 and 2050). Additionally, the private sector has a key role in the modernization of the transport infrastructure objects. The national transport policy foresees the main Bulgarian ports and airports which have comparatively high attractiveness to be developed by public-private partnership schemes and investments. Currently the concession is the most widespread type of PPP in our transport sector. How is progress on transport infrastructure under TEN-T (to 2020) going so far? Are there any problems currently, or foreseen. If so, what are they and how can they be overcome? At the beginning of our EU membership different problems in the projects implementation process were identified including the lack of finished studies, slow and difficult project preparation, insufficient administrative capacity, etc. Now, 5 years later, we consider that these problems are addressed in appropriate manner and we gradually overcome the difficulties through acquiring the necessary experience and improving the administrative capacity of the Ministry and of the beneficiaries as well. The accelerated absorption of the EU funds find expression in the significant number of infrastructure projects which are currently under implementation including Danube Bridge 2 at Vidin Calafat, Trakia Motorway, Mariza Motorway, Plovdiv Svilengrad Turkish border Railway Line, part of Sofia Plovdiv and Plovdiv Burgas Railway Lines, etc. Similarly, many projects were prepared to the preliminary or technical design stages during the present programming period which is very important for their successful and timely implementation right at the beginning of the next period 2014 2020. What steps are being made to integrate Bulgarias transport system with regional and panEuropean transport networks? Bulgaria enjoys a favourable geographical location which transforms the country into a transport bridge between Western and Central Europe and Middle East and Western and Central Asia. Five Pan-European Transport Corridors pass through the Bulgarian territory (V, V, V, ). The east-west direction on Corridor X Belgrad-Sofia and then on Corridors IV: SofiaPlovdiv-Svilengrad-IstanbulTRASECA is a main multimodal link which is planned to be totally completed until 2020. The revised Trans-European Transport Network underlines once again the strategic location of Bulgaria. Numerous directions and nodes on Bulgarian territory were included in the new TEN-T maps which is

Bulgarian transport minister Ivaylo Moskovski

a good chance for our country to receive EU funding for them. The transport objects part of core network, should be completed until 2030 with the necessary European parameters and quality. An application of a corridor concept will contribute to the coordinated planning of investments, interoperability and better synchronization of actions between the different countries situated on the corridor. We consider that the construction of the Bulgarian part of the TEN-T will be one of the biggest challenges for the team of the Ministry of Transport, information Technology and Communications in a long-term plan. What is the governments policy on low carbon transport? What efforts have been made so far to ensure greener transport on land, in the air and on sea? The Governmental policy in the field of environment and climate protection is responsible, committed and adequate to the common European policy in this direction.

This is clearly stated in the Strategy for the Development of the Transport System of Republic of Bulgaria until 2020, approved by the Council of the Ministers in April 2010. One of the eight main priorities formulated in the Strategy is as follows: reduction of the transport sector negative impact on the environment and human health. This surely does not mean that before the approval of the strategic document nothing is done regarding this issue. In the field of the land transport in the last years the efforts are dedicated mainly to the improvement of the railway and road infrastructure which should ensure possibilities for optimal speeds of the vehicles and rolling stock and from the other hand should improve the energy efficiency of the transport and should lead to the greenhouse gas emissions reduction from the transport performance. The policy for the encouragement of the rolling stock renovation is implemented jointly with the abovementioned efforts, but this process is going with insufficient rapid rate

EUROZONE

Markets fear a new credit meltdown

By New Europe team
Markets are like public opinion, they change fast and are constantly influenced by mainstream news. It has been like this during the past ten days, when the Greek and the Italian Parliaments decided to call in the technocrats, to set a virtuous path and drive the two over-indebted countries out of their short term dead ends, and take care of their long-term problems. Initially stock exchanges gained a lot of ground, with the news from Athens and Rome appointing technocrats as prime ministers, but later on, in the first days of this past week, when the two countries came to markets to place new T-Bill debt paper, investors asked for interest rate near the 7% benchmark for the Italian five year bonds, and increased yields for placements in Greek government six month bills. After that, stock markets became deeply sceptical again about the chances the technocrats have to succeed, and losses appeared again all over the global equity markets. Eurozone debt issues from other member states, like Spain, Belgium, France, Holland and Austria also met a bad mood in markets with investors asking alarmingly high interest rates. On the other side of the Atlantic Ocean American banks started revealing their exposure to Eurozone risks, after a small US investment company, FM Global Ltd went

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New Europe | Page 7 November 20 - 26, 2011

ANALYSIS
New Europe content partner

in Bulgaria is crucial
due to economic reasons. The development of a system for state stimulation of the delivery and exploitation of the electric cars and hybrids is ongoing and is the main topic of the activity of especially assigned joint working group with the participation of experts from different ministries as well as producers and distributors of transport equipment. The air transport policy was directed to the encouragement of the rapid renewal of the operated aircraft fleet which aimed the replacement of older, Soviet production aircraft with some newer and less energy-consuming Boeing and Airbus passenger aircraft. So if in January 2004, the average age of operating passenger fleet in the country was 20 years, in January 2010 it decreased to 14 years and four months, which means relatively lower consumption of aviation fuel and a significant reduction of greenhouse gas emissions from the air transport. Furthermore, regarding the fulfilment of the obligations of implementing Directive 2008/101/EC of the European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, was created Permanent expert working group with the task to assist the Ministry of Environment and Water within its competence in the implementation process of the above mentioned Directives, in terms of the authorized Bulgarian aviation operators by the Republic of Bulgaria, respectively the Ministry of Environment and Water. Thus, from January 2012 our country will join its civil aviation in the European green house gas emission market. In the field of maritime transport, since 2005 Bulgaria has implemented Annex 6 of the International Convention for the Prevention of Pollution from Ships (MARPOL), restricting the use of shipping fuel more than 4% sulphur when sailing the high seas and no more than 1.5% sulphur for emissions controlled areas. This is a contribution in reducing the component of the sulphur compounds in the total emissions of greenhouse gases. We have certain achievements in increasing the relative weight of inland freight transport in total realized amount of transport performance (tonnes-km), from 2.6% in 2000 this share reached 20.7% in 2009. The general result of all these efforts can be illustrated by the fact that by 2009 the final energy consumption in our transport has increased by 16% compared to the reported in 1990, as against 30.6% average for the EU countries, and the greenhouse gas emissions from transport during the same period increased by 21% at 20.7% average growth for the member states. How are projects co-financed with the EU progressing generally? What are the states financial commitments? Also, are public-private partnerships being deployed, and if so are private investments hard to come by? Two years ago the absorption of the EU funds through the Operational Programme on Transport was delayed and the programme itself was poorly implemented. The contracted budget was a little over 440 million BGN and only 14 million BGN were paid. The team of The Ministry of Transport, Information Technology and Communications made great efforts in implementing numerous steps. First results are as follows currently the committed funds are over 2.828 billion BGN. The amount of the funds paid is also going up and currently theyre more than 722 million BGN. According to the analyses this number will reach over 1 billion BGN. Ten major (over 50m) infrastructure projects which are of great importance for the development and modernization of the Bulgarian transport infrastructure are currently under implementation. Of all ongoing EU-national transport programmes, which are on-track? Are there any programmes that are not on schedule or are delayed, at this point? If so, how are these being addressed? One of the implemented measures against the delay in the absorption of the EU funds is advanced selection and prioritization of an indicative list of infrastructure projects envisaged for financing under the programme. The operational programme is focused on several strategic priorities, and projects which were able to start in the shortest deadlines. Currently over 90% of the expected railway project funds are committed. The same ratio for the road infrastructure is 65% and for the intermodal projects around 85% committed funds along the budgets of the certain axes. We consider about the waterway projects because of the only one approved application form. Further analyses are to be made and I believe that we shall find the best way of absorbing these funds, as well. In general I consider that the implementation of Operational Programme on Transport is going well on time and if we succeed to keep this working schedule in short time Bulgaria could benefit from community financing. Are there any plans to expedite Community funding? The efficient absorption of EU funds is both a main priority outlined in the Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020 and a prime task for our team. The ambition of the MTITC is to make the best use of the Community funding. Therefore we make every effort to achieve maximum efficiency in the preparation process, to ensure the transparency of the tender procedures and to implement every project stage with high quality and on time. Special attention is given to the improvement of the administrative capacity of the structures responsible for the projects planning and execution. The Pan-European Transport Corridors passing through the Bulgarian territory give a great opportunity for the development of the transport infrastructure with the support of EU funds. It is also a big responsibility because we should ensure modern lines and roads available on these international directions. Since the construction of the infrastructure is a sourceintensive process we rely a lot on the EU financing for modernization of the still underdeveloped Bulgarian network. In this respect we shall try to accelerate additionally the absorption of the funds (because this process started 2 years ago) to such a degree that will guarantee an optimal balance between the effectiveness, quality and rapid implementation. Finally, it has been suggested that there may be plans to resurrect the old route of the Oriental Express through to Turkey. Can you say something about this plan - if, and when, it will be completed, how much will it cost, how will it be financed, etc? Bulgarian Railways have no direct bearing on plans to resurrect the old route of the Oriental Express. It is only within the rights of the trademark owners to trace the route of the legendary train. The Bulgarian carrier company Holding BDZ EAD and the infrastructure operator National Railway Infrastructure Company will always co-operatate for the Oriental Express to cross smoothly through the territory of our country.

Palestinian reconciliation efforts pick up

By Natalia Shapovalova
After nearly two months of diplomatic deliberations, the United Nations Security Council has reached a predictable conclusion: an agreement that no agreement can be reached on the Palestinian bid for statehood. Neither does the latest Quartet plan offer much beyond postponing the situation until the end of 2012. Meanwhile, the Palestinians continue to pursue diplomatic and non-violent alternatives. Other UN agencies are being asked to recognise the state; civil disobedience in the Occupied Territories is gaining popularity; and leaders of rival political factions are meeting in a bid to implement the stalled unity accord. Should the latter come to fruition, the EU must be prepared to deal with an interim government and respect and support election outcomes. According to the UNSC Admissions Committee Conclusions issued on 11 November, the Palestinian Authority has failed to demonstrate political unity and territorial control the two main political parties Hamas and Fatah remain two distinct governing entities in Gaza and the West Bank, respectively, distinct in everything from administrations to systems of jurisprudence. Leaving aside the ongoing Israeli settlements, which prevent territorial sovereignty, it follows that demonstrations of political unity will stand the Palestinians in good stead in their UN bid. The breakthrough in recent reconciliation efforts between rival Palestinian political factions can be attributed to this logic, along with Egypts and key European individuals mediation efforts. Palestinian leader Mahmoud Abbas and Hamass exiled leader Khaled Meshal are expected to meet in Cairo later this month, where they will discuss the formation of an interim government and elections for 2012. However, even if an agreement is reached in Cairo, implementation is far from certain. The unity pact in May of this year brought nothing of a tangible nature. Key sticking points include the make-up of the consensus government (Hamas does not want PM Fayyad to run), budget issues (the PA does not want their Western budget support cut), and security forces (Hamas is unlikely to cede control of the Gaza Strip, whilst Fatah will not give up generously funded policing missions in the West Bank). Nevertheless, in the event of consensus, Israel and the West will have to adopt a more nuanced attitude towards Hamas. It is not that dealings en contra the no contact rule do not exist (Israel negotiated with Hamas to close the mutually beneficial prisoner swap), it is that they happen behind the scenes. Anything but support for an electoral agenda in the Palestinian Territories would belie the EUs backing of transition processes in the Arab Spring. Realistically however, France, the UK and Germany will not agree on Palestine any time soon, nor risk challenging the United States. At best, the three big European states can find diplomatic ways to disagree. At the UN, it is called abstaining; in donor talk, it translates into continued funding; and at the European External Action Service, it means High Representative Catherine Ashton issuing alternate declarations of disappointment(with Israeli accelerated illegal settlement construction), and commitment (to Quartet-led bilateral peace talks). The US is mired in a sea of double standards and hypocrisy; each UNSC veto merely confirms this. The EU, on the other hand, still (just about) has its head above the waters. By endorsing Palestinian statehood and recognising that it is a precursor for not an alternative to bilateral negotiations, the EU will boost its legitimacy as a supporter of democratic transitions in its Mediterranean neighbourhood. In a process dominated by the US, it may be unrealistic for the EU to demonstrate leadership; it may be improbable for it to demonstrate unity; but it can at least hold true to its values. *Hlne Michou is a junior researcher at FRIDE.

bankrupt on its exposure to European debt paper. The big New York banks said that they have insured a large part of their exposure to Eurozone, but investors doubt it if those Credit Default Swaps will be honoured in a case of a widespread crisis. In reality, the Western financial system risks to return again to a conjuncture similar to the winter of 2008 and spring of 2009, when nobody believed anybody and banks stopped lending to each other, thus destroying the interbank capital market. It took two years to rebuilt this inter-

bank market and now again this autumn the five major central banks, Fed, ECB, the Bank of England, the Bank of Japan and the Swiss National Banks, had to intervene and guarantee the dollar liquidity of Eurozone banks. In total, the developed world financial system on its both crucial facets, liquidity and equity, is always under the protection of central banks and governments. If the Eurozone does not manage to quickly settle the Greek and Italian problems, a new and surely more severe credit crisis is to take hold of the world economy.

With the repercussions of credit melt down of 2008 still in the balance sheets of all markets agents, the new crisis will be much more powerful because everybody is now much wicker than three years ago. In short, if Greece and Italy helped by the Eurozone do not solidly prove that they can effectively heal their problems in the short- and long-term, then the financial stability will be at great risk. And this has to be done soon and in a clear cut way so as to convince everyone. As we said, markets follow the main news streams.

Page 8 | New Europe November 20 - 26, 2011

ANALYSIS
New Europe content partner

NEW EUROPE

ENVIRONMENT

The last tango in Rome

By Francisco Jaime Quesado
The imperative of a New Italy, after Silvio Berlusconi, is in large sense the imperative of a New Europe. Italy is a unique country, in terms of beauty, harmony and creativity but there is an evident urgency of implementing a solid social capital that gives Italian people sense of a strategic way to the future. The last tango that italian people are celebrating in the classical city of Rome is an effective commitment with a future of hope but at the same time the confirmation that the creation of value will be the right objective in this new time. The dimension of the crisis in Italy was the consequence of a strategic capacity of the public authorities mobilizing the italian civil society to a contract of value, based in the effective interaction in the centers of competence of the country. Italy has all the conditions to once again an example of social innovation, competitive creativity and global diferenciation and for that the commitment of its people is essential. Italy is not the country of mafias or camorras, but the country of a very intelligent people, devoted to a cause of an ambition of excellence. Italy is also the combination of different traditions that give the country a unique identity. From Florence to Naples, including the sensuality of Venice, Italy is the point of departure and the point of arrival in a New Europe. The answers that Italy will give to this time of complexity will be globally the answers that all of us, European citizens, will have to give to the difficulties we are facing in the present. The future is built in the present respecting the values of the future. Italy has a unique identity based on its strong culture. The Italian Culture is a unique asset. Italy must be able to involve other global partners in the construction of integrated projects focused on the development of culture as a driver for development. The reinvention of culture is itself a very innovative way to involve more and more the portuguese actors in this project for the future. The italian economy also faces a strong challenge. The Italian Companies are facing more and more of a strong competition from companies in the Middle East and Asia. Public Accounts of most of the european countries are facing unsustainable deficits. Thats why this New Time in Italy is more and more an imperative and it must be supported by the strategic proposals that demand for a new operational agenda. The New Italy is the point of departure to a New Europe! Where people know who they are and have a strong commitment with the values of freedom, social justice and development. This is the reason to believe that this renewal of Italy, more than a possibility, is an individual and collective necessity for the reinvention of the Italian People. Italy is a country of hope, a land of certainty, a field of different experiences. The last tango in Rome! Francisco Jaime Quesado is the General Manager of the Innovation and Knowledge Society in Portugal, a public agency with the mission of coordinating the policies for Information Society and mobilizing it through dissemination, qualification and research activities. It operates within the Ministry of Science, Technology and Higher Education

Seeming Green

Sun rises over a group of wind turbines, part of the Smoky Hills Wind Project in a pasture. The Smoky Hills Wind Project consists of hundreds of Vestas V80 1.8-megawatt wind turbines. | EPA/LARRY W. SMITH

By Bjrn Lomborg
COPENHAGEN When Denmarks new government ministers presented themselves to Queen Margrethe II last month, the incoming development minister established his green credentials by rolling up to the palace in a tiny, threewheeled, electric-powered vehicle. The photo opportunity made a powerful statement about the ministers commitment to the environment but probably not the one he intended. Christian Friis Bachs electric-powered vehicle was incapable of covering the 30 kilometers from his house to the palace without running out of power. So he put the electric mini-car inside a horse trailer and dragged it behind his petrol-powered Citron for three-quarters of the trip, switching back to the mini-car when he neared the television cameras. The stunt produced more carbon emissions than if he had ditched the electric car and horse trailer and driven a regular car the entire distance. Unfortunately, the story is not unique. Under the United Kingdoms Labour government in 2006, Conservative party leader David Cameron attracted attention for trying to green his credentials by cycling to work; the tactic went awry when it emerged that a car trailed him carrying his briefcase. But environmental hypocrisy in current politics runs deeper than photo opportunities. In Denmark, as across the developed world, politicians are promising to fix the globes financial mess by overseeing a transition to a greener economy. In the United States, President Barack Obama touts green jobs. Australian Prime Minister Julia Gillard has introduced a carbon tax to enable economic growth without increases in carbon pollution. And David Cameron was elected Prime Minister on a promise to lead the UKs greenest government ever. Denmark serves as a useful test of whether these leaders preferred policies yield the environmental and economic

benefits that they promise. In tune with international enthusiasm for green energy investment, the Danish government intends to expand wind power dramatically by 2020. That is a significant gesture, but, since the country is part of the European Unions emissions-trading scheme, it will mean absolutely nothing for global CO2 emissions. It will simply make coal power cheaper in other EU countries. Indeed, costly emission cuts in Denmark and elsewhere are likely to lead to a partial relocation of CO2 emissions to more lenient countries, such as China (where production is less climate-efficient), and thus to an overall increase in global CO2 emissions. The EU has reduced its emissions since 1990, but, at the same time, it has increased imports from China, which alone has produced enough emissions to offset those reductions. Some will argue that we must implement a comprehensive Kyoto-style agreement to cut emissions globally. But, as we saw at the farcical Copenhagen climate summit in 2009, such an agreement is impossible. Nobody expects a deal to emerge from next months summit in Durban, South Africa, and with good reason: even with Democrats in the White House and controlling Congress, the US could not implement an agreement on climate change, while emerging economies, led by China and India, are unwilling to implement measures that would impede growth. Danish politicians like politicians elsewhere claim that a green economy will cost nothing, or may even be a source of new growth. Unfortunately, this is not true. Globally, there is a clear correlation between higher growth rates and higher CO2 emissions. Furthermore, nearly every green energy source is still more expensive than fossil fuels, even when calculating pollution costs. We do not burn fossil fuels simply to annoy environmentalists. We burn them because fossil fuels have facilitated virtually all of the material advances that civilization has achieved

over the last few hundred years. Politicians in Denmark and elsewhere argue as if this were no longer true: a transition to a green economy will create millions of new green jobs. But, while green-energy subsidies generate more jobs in green-energy sectors, they also displace similar numbers of jobs elsewhere. This is not surprising: either customers or taxpayers must finance subsidies. Electricity prices will increase, implying a drag on private-sector job creation. If the goal is to create jobs, public investment in other areas such as the health care generates stronger, faster employment growth. To bring the point home, for years Danish politicians have insisted on subsidizing the worlds largest, Danishbased, wind-turbine producer, Vestas, arguing that Denmark wins when other countries spend subsidies on Danish wind-farm technology. But when the Danish Economic Council examined the situation in 2004, it concluded that the country had lost money overall from expenditures on subsidies. More seriously, in todays tough financial times, the solar and wind industries are downsizing production in expensive countries and shifting employment to cheaper economies. Last year, Vestas dismissed 3,000 employees in Denmark and Sweden. Many politicians are drawn to photo opportunities and lofty rhetoric about building a green economy. Unfortunately, the green-energy policies currently being pursued are not helping the environment or the economy. More likely, they will lead to greater emissions in China, more outsourcing to India, and lower growth rates for the well-intentioned green countries. Bjrn Lomborg is the author of The Skeptical Environmentalist and Cool It, head of the Copenhagen Consensus Center, and an adjunct professor at Copenhagen Business School. Copyright: Project Syndicate, 2011. www.project-syndicate.org

NEW EUROPE

New Europe | Page 9 November 20 - 26, 2011

ANALYSIS
POLITICS
EVERYTHING BUT ARMS

Is the West broke?

By Clem Chambers
The West is broke and its choices from here are limited, writes Clem Chambers, CEO of leading stocks and shares information website ADVFN.com and author of 101 Ways to Pick Stock Market Winners. Contagion is out of the bag in Europe. The course is set to run through Italy, Spain and onwards through France to the rest of the world. The situation is simply weird. Germany is blocking the necessary changes the European Central Bank (ECB) requires to get inflation going, which it needs to do to erode the unbearable debts built up by EU states. In doing so, Germany is dooming Europe to a great depression and its own collapse. If France falls, so will the US. Interest rates will rocket across the globe and the vast monies locked up in bonds will be incinerated. This untold wealth will go to money heaven, never to return. There will be a massive money-supply squeeze. The end result of will be a global recession that will land on Germanys doorstep. The nations obstinacy and refusal to endure 5-7% inflation seals not only Europes fate but the USs, too. Promising to have a solution to the problem sorted by the end of October, Germany then missed its self-imposed deadline completely, sparking the endgame that kicked off last week. If that isnt weird enough, the euro is still amazingly strong. If its about to implode then the shared currency should not be 1.35 to the USD. The euro is holding strong just as it would appear impossible that the currency will survive at all. How can this be? The choices from here are limited and stark. The simplest, or Occams razor answer is that the whole crisis is baloney and the all-powerful them paranoid traders talk about already know how this mess pans out and that it has a happy ending. I keep focusing on this, because as Occam posited, the simplest answer is often the right one. Yet as no one has a remedy, or even a sketch of one, Occam unfortunately doesnt cut it for me. Germany could be ready to bite the inflation bullet, but if it is, its decision makers are hiding it brilliantly while at the same time exacerbating the meltdown the nation so desperately needs to halt. A more likely answer is that the sovereign markets are so huge and the day-to-day momentum of currency and bonds so vast that, like a super

Getting the language of the debate right

By Cillian Donnelly
Science continues to get a bad rap these days; the popular image of the crazed scientist, from Dr Moreau onwards, repeatedly infests our minds with lurid pictures of wayward experimentation and unbridled hubris. In the imagination, it seems, science only ever gallops ahead at the expense of society, it never works in tandem with it. Science is something to be feared. This is far from the case, but, of course, modern scientific research is indeed far from perfect; it can be used to create genetically imperfect and dangerous clones and produce, waste time and money on technology that pollutes the environment and serve only the elites, and, yes, the smugly arrogant scientist has not entirely departed our conscience, but good science always comes from a rational base, it is evidence-based. But despite some noble endeavours, like the Oxford Universitys professorship for the public understanding of science, currently held by Marcus du Sautoy, science is still not seen as societys friend. Recently (at least in the wider public sphere), science has increasingly been dragged into the debate about the existence or not of the almighty. Science and religion are at opposite ends of the argument, naturally enough, and never the twain shall meet. What started out as a debate on the rational (the debunking, for example, of the literal interpretation of the bible) has since often descended into a back-and-forth gainsaying across the airwaves by religious leaders and the likes of the increasingly-smugly intolerable Richard Dawkins over the rights and wrongs of religion in both public and private life. More recently, the Pope has once again weighed into the morality of science debate. Speaking at a Vatican conference on 12 November, he reconfirmed the Catholic Churchs opposition to embryonic stem cell research. Five days later, a press release by the German Christian Democrat MEP, Peter Liese declared embryonic stem cell research has reached its end, following the decision by US-based company Geron to call a halt to clinical trails with embryonic stem cells. The tone was every bit as smug as the worst of scientific hubris. Liese, for example, dismisses Geron as pioneers of research (inverted commas, authors own), heavily implying a failure of their methods. He rejected their reasoning for abandoning its research as a budgetary one, suggesting that, what the company once claimed as a breakthrough in science, is in fact a bankrupt endeavour, and that society has mobilised against its practices. The MEP could have chosen a different line of attack, Geron have also delved into the murky areas of cloning, as well as stem cell patents, but instead chose (and this is a communication problem as much as anything) a line that tried a kind of false rationalisation against science itself, while all the while promoting what should have been an ethical or moral argument, which one may or may not endorse. Admittedly, it is a difficult sell, and regardless of whether one is a believer or not, the Catholic Church at least, has a consistent view on this, one which does not shy away from addressing the moral or philosophical, something which this particular press statement ultimately did. It was a religious agenda hiding behind the faade of parliamentary rationale, and sadly sought to obscure rather than enlighten. Arrogance cannot be met with arrogance. CDonnelly@NEurope.eu

A symbolic tombstone with an inscription in German meaning: 'R.I.P. Greed of Gain' is set up on the grounds of the protest camp next to the Euro symbol outside the European Central Bank ECB in Frankfurt am Main, Germany, 08 November 2011. |EPA/MARC TIRL

tanker running aground, the euro is just grindin on across the land, disintegrating in slow motion. Stocks crater in minutes but when they crash it is like a bar brawl - short and brutal. A currency crashing is like a war -with a prelude, unfolding conflicts and final, ghastly resolution. The sovereign markets could be just too big to crash and burn fast; this drawn out torture could just be a function of giant scale. The last option is that the market thinks the weak European countries will simply flunk out of the euro and the frontier of the currency will pull back into the states that have their economies in order. This contraction will automatically strengthen the euro as its membership gets smaller. The euro will retract to an imperial guard of countries. Under this model, the ECB would end up with a lot of cheap euro bonds from satellite countries who had reserves outside of the Eurozone. Once back within their own inflating currencies, the weak EU countries could talk debt hair cuts or deferral, keeping the debts technically alive. The ECB prints its own money. It can lose euros and then print them again. Money would flow from the solid core to the flaky EU periphery, but few would notice or care. Chronic economics always win out in a paycheck to paycheck world. The excess euros in the system, after various exits, would help juice the new smaller eurozone with money supply. Then, when the bear market finally reversed, the ECB could end up with an appreciating cache of once-questionable bonds and normality would have resumed. This would be a tortuous process; one so radical that the euros current

value still seems way too high. So, the mystery is unresolved - why is the euro still too high? Im tempted to imagine the real Occams razor answer is that China has huge reserves stashed in euros and is scrabbling to keep this position whole. That would be ironic, indeed. Based on obscure technical insights, a year ago I argued the market was about to experience a new era. At the time, I said I had no idea whether the new era would be for the better or worse, however the signs said a financial cycle was concluding and a new economic episode was about to begin. I hoped for the best, but it turns out that optimism was the wrong call, at least for the initial phase of this new economic dynamic. This crash will not only reshape the world economy it will also reshape our society. Already two European Prime ministers have fallen: Papandreou and Berlusconi. More will follow, with even Obamas second term now in doubt. The West is broke. Two decades ago, Western social capitalists finally conquered Eastern communists. Now Eastern capitalists are destroying Western socialists. The wealth of the West has gone East. The trillions of surplus in the East is basically equivalent to the trillions of deficit in the West. Until that flow is rebalanced or the drain at least dramatically slowed, chaos will reign. The saga of the euro is the beginning and it seems that time has run out for the old order: period. Only the value of the euro gives me any doubt. That final thread could snap at any moment. Clem Chambers is CEO of ADVFN, Europe and South Americas leading financial website (www.advfn.com).

Page 10 | New Europe November 20 - 26, 2011

NEW EUROPE

EU WORLD
WORLD ECONOMY

Is this the nal count down to a global nancial calamity ?

By Dr. Robert J. Shapiro
Ground zero of the European sovereign crisis has moved from Greece to Italy, and thats very bad news for Europe, the United States, and most everywhere else. For a year, Angela Merkel and Nicholas Sarkozy have looked for some way to both prevent Greece from defaulting outright and reassure bond investors that Italys sovereign debt will remain sound. This week, the price that Italy pays to borrow money soared as global investors determined that holding Italian bonds is increasingly risky. The salacious Silvio Berlusconi is on his way out, but that wont change the markets judgment that Merkel and Sarkozys stratagems have failed. Europe now faces a real and present danger that major banks across Germany and France, along with Italy and Greece, could fail soon. Such a meltdown would take down the American expansion with it. Its still premature for a post mortem. But for the past year, domestic European politics, not international finance, has squeezed the acceptable options to solve the Eurozones metastasizing sovereign debt problems. Merkel and Sarkozy have long known that their countrymen and women would pick up pitchforks if their governments moved to bail out big banks a second time. If that wasnt enough to inspire street demonstrations, the contemplated bailout this time would go to stabilize financial conditions in other countries. So Merkel and Sarkozy came up with a plan that appeared to spare French and German taxpayers. Unfortunately, it also couldnt pass a laugh test by worldwide investors: The plan has Eurozone financial stabilization board raising $1 trillion from those investors to back up Italys debt, with a pledge that Eurozone governments would guarantee the first 20 percent of any losses. Think about it: Italy, Greece, Ireland, and Portugal , all hanging by a thread or worse, would help the rest of the Eurozone cover the initial losses from bonds used to bail out Italy, Greece, Ireland and Portugal and if things go south, probably Spain as well. The $1 trillion commitment kept a meltdown at bay for a few days, much as the Bush Treasurys commitment to spend $700 billion to bail out Wall Street staved off a market collapse after Lehman failed. The original Paulson plan also didnt pass the laugh test, but no one doubted that the U.S. Government could raise the $700 billion. This time, the Eurozones $1 trillion commitment has bought them at most a few weeks of breathing space, as investors wait for Merkel and Sarkozy to come up with a real plan to raise it. But

President of the Euro group Luxembourg's Prime Minister Jean-Claude Juncker (L), German Finance Minister Wolfgang Schaeuble (C) and Greek Finance Minister Evangelos Venizelos (R) chat at the start of a Euro Group European finance ministers meeting at the European council headquarters in Brussels, Belgium, 07 November 2011. To prevent contagion, eurozone leaders had agreed last month to boost their bailout fund's firepower to 1 trillion euros (1.37 trillion dollars). |EPA/OLIVIER HOSLET

those investors already are eyeing the exits. Interbank lending to Europes biggest institutions dried up this week, just as it did here in the days before Lehman sank. And interest rates on Italian bonds are now so high that, according to the industrys financial models, Rome will be unable to service its debt much longer. All of this means that neither global investors nor European taxpayers are prepared to bail out the Eurozone. Even at this very late date, however, there are ways out of this mess: Under the least bad of the options left, the European Central Bank (ECB) would become the Eurozones bond buyer of last resort. The ECB could pay for them by printing enough Euros, for starters, to stabilize Italian bond markets. It wouldnt be pretty. The Euro would weaken. European interest rates might edge up as Europe slowed. And the ECB would have to come up with another credible plan to withdraw the excess Euros once the crisis passed. But the alternative is much worse. In a period of worst case scenarios, heres what could well happen later this month. Start with the fact that Italy alone has $2 trillion in outstanding government debt. Most of those bonds are held by Italian, French and German banks, including the biggest banks in the world. Anything approaching an Italian default would wipe out the capital of those banks, leaving them insolvent; and most of the Eurozone economies would grind to a halt. It gets worse, because a financial meltdown centered on sovereign debt is much more dangerous than one triggered by mortgage-backed securities. In effect, a sovereign debt crisis strips sovereigns of

their ability to act to contain the crisis. With Italy and Greece in default, for example, who will believe those governments as they move to head off general bank runs by, say, guaranteeing money market balances as the United States did successfully in the days after Lehman? And if the biggest banks in France and Germany go down, Sarkozy and Merkel wouldnt have the credibility to do much about it either. The bad news doesnt end with Europe. Our own big financial institutions, along with those in Britain and Japan, have thousands of deals going that involve the major banks in Germany, France and Italy. Overnight, all of those deals become suspect, which could spread financial panic beyond the Eurozone. And remember the credit default swaps that destroyed AIG? No one knows precisely how many of those guarantees are out today against Italian government bonds and the commercial paper of French, German and Italian banks. The fact that no one knows could be a big problem in itself, since that, too, could breed a broader financial panic. In any case, theres little doubt that those credit default swaps involve, at a minimum, hundreds of billions of dollars, Euros and pounds. That would leave American, European and Japanese financial institutions on the hook for those losses. And if they cant make good on them, they could go down as well. Their only hope would be another bailout if Congress could approve one before the Tea Party and Occupy Wall Street folks pick up their pitchforks. All this is not yet inevitable. But much of it might well unfold, and probably in a

matter of weeks, unless the Eurozones leaders face the grim music and finally find their way to a real program to head it off. Dr. Robert J. Shapiro is Co-founder and Chairman of Sonecon, llc. In addition to chairing Sonecon, Dr. Shapiro is also a Senior Fellow of the Georgetown University School of Business, advisor to the International Monetary Fund, director of the Globalization Center at NDN, chairman of the U.S. Climate Task Force, co-chair of America Task Force Argentina, and a director member of the Ax:son-Johnson Foundation in Sweden. From 1997 to 2001, Dr. Shapiro was U.S. Under Secretary of Commerce for Economic Affairs. In that position, he directed economic policy for the Commerce Department and oversaw the Nation's major statistical agencies, including the Census Bureau while it planned and carried out the 2000 decennial census. Prior to that appointment, he was co-founder and Vice President of the Progressive Policy Institute and the Progressive Foundation. He also served as principal economic advisor to Bill Clinton in his 1991-1992 presidential campaign and senior economic advisor to Al Gore and John Kerry in their presidential campaigns. In 2008, he advised the campaign and transition of Barack Obama. Dr. Shapiro also was as Legislative Director for Senator Daniel P. Moynihan and Associate Editor of U.S. News & World Report. He has been a Fellow of Harvard University, the Brookings Institution, and the National Bureau of Economic Research. Dr. Shapiro holds a Ph.D. and M.A. from Harvard, a M.Sc. from the London School of Economics, and an A.B. from the University of Chicago. He is widely published, and his most recent book is Futurecast: How Superpowers, Populations and Demographics Will Change the You Live and Work (St Martins' Press, 2008).

NEW EUROPE

New Europe | Page 11 November 20 - 26, 2011

ANALYSIS
HEALTH

Should we ban Cigarettes?

By Peter Singer
PRINCETON US President Barack Obamas doctor confirmed last month that the president no longer smokes. At the urging of his wife, Michelle Obama, the president first resolved to stop smoking in 2006, and has used nicotine replacement therapy to help him. If it took Obama, a man strong-willed enough to aspire to and achieve the US presidency, five years to kick the habit, it is not surprising that hundreds of millions of smokers find themselves unable to quit. Although smoking has fallen sharply in the US, from about 40% of the population in 1970 to only 20% today, the proportion of smokers stopped dropping around 2004. There are still 46 million American adult smokers, and smoking kills about 443,000 Americans each year. Worldwide, the number of cigarettes sold six trillion a year, enough to reach the sun and back is at an all-time high. Six million people die each year from smoking more than from AIDS, malaria, and traffic accidents combined. Of the 1.3 billion Chinese, more than one in ten will die from smoking. Earlier this month, the US Food and Drug Administration announced that it would spend $600 million over five years to educate the public about the dangers of tobacco use. But Robert Proctor, a historian of science at Stanford University and the author of a forthcoming blockbuster entitled Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition, argues that to use education as ones only weapon against a highly addictive and often lethal drug is unpardonably insufficient. Tobacco control policy, Proctor says, too often centers on educating the public, when it should be focused on fixing or eliminating the product. He points out that we dont just educate parents to keep toys painted with lead-based paints away from their childrens mouths; we ban the use of lead-based paint. Similarly, when thalidomide was found to cause major birth defects, we did not just educate women to avoid using the drug when pregnant. Proctor calls on the FDA to use its new powers to regulate the contents of cigarette smoke to do two things. First, because cigarettes are designed to create and maintain addiction, the FDA should limit the amount of nicotine that they contain to a level at which they would cease to be addictive. Smokers who want to quit would then

CONSTRUCTIVE AMBIGUITY

The end of politics

By Andy Carling
I was, very briefly, cheered by the news that a technocratic Frankfurt group was to take over the EU, at least until I remembered that Kraftwerk came from Dusseldorf. If nothing else, the arrival of Florian Schneider and friends could mean replacing the turgid Ode to Joy with something better, probably Europe Endless. The Frankfurt Group, who show their seriousness by renaming themselves as the much sillier sounding, Groupe de Frankfort, are a mix of the unelected and the soon to be unelected, and they alone are running the failing union, but theyre happy to depose elected governments and replace them with technocrats, to the extent that Italy has no elected politicians in government. Of course, Italy is a byword for instability. Berlusconi brought stability and a government that could hold for more than a few months, a complete transformation of the political scene, but it came at a cost, turning the nation into a ruin and a source of bitter laughter from the rest of Europe. Looking at the grotesque Premier, the world had one question for our Italian friends; are you all completely nuts? In Greece, the PM, looking at imposing a decade of brutal austerity on his people needed either an agreement with the other political parties, or to go to the electorate in a referendum. And with the R word, he doomed his government, which was duly handed over to the bankers, the people who got us all into this mess. By replacing politicians with technocrats the EU has sent a clear message that there is no need for politics. It has failed and the technocrats have to take over. The proof of this is easily demonstrated. If politics were working, people would join political parties. They would also fund the parties. As they dont, the politicians have looked for another constituency, the business world where they whore themselves to the big donors. How can it be right that business is allowed to fund political parties? An example of the rottenness of politics is in the continual scandals, the expenses fiddling, the cozy backroom deals and so on. It is especially unpleasant to look at the parties that espouse free trade and the market forces, but that core belief never stops them from filling their wallets from the public purse. We have pan-European parties, each with their pet foundation, all funded by the never ending generosity of the European taxpayer. Whatever austerity measures are brought in, we can safely bet that party funding will not feel the sharp edge of the axe. Although all groups are in the frame, take a look at the EPP, a group who cannot be accused of being overly modest. The current financial crisis has brought to the fore, Messers Barroso, Van Rompuy, Merkel, Sarkozy and Berlesconi, all EPP members and their combined inability to get their act together when all is collapsing around them and showing a style of leadership that makes a bunch of headless chickens look like they have the grace and elegance of a synchronized swimming team should provoke European citizens to ask why the Hell were paying for their glorified crony employment service. To all groups, show us the value for money, in real, concrete terms. But the invasion of the technocrats is proof that our political leaders are not fit for purpose. One reason the crisis is so deep is their incredibly poor leadership and it is the citizens who are paying. The poor are paying the highest price. Shame on you all. . ACarling@NEurope.eu

An Indonesia man holds a cigarette during break time inside a building in Jakarta, Malaysia, 29 May 2009. |EPA/MAST IRHAM

find it easier to do so. Second, the FDA should bear history in mind. The first smokers did not inhale tobacco smoke; that became possible only in the nineteenth century, when a new way of curing tobacco made the smoke less alkaline. That tragic discovery is already responsible for about 150 million deaths, with many times that toll still to come, unless something drastic is done. The FDA should therefore require that cigarette smoke be more alkaline, which would make it less easily inhaled, and so make it harder for cigarette smoke to reach the lungs. Much of Proctors book, which will be published in January, is based on a vast archive of tobacco-industry documents, released during litigation. More than 70 million pages of industry documents are now available online. The documents show that, as early as the 1940s, the industry had evidence suggesting that smoking causes cancer. In 1953, however, a meeting of the chief executives of major American tobacco companies took a joint decision to deny that cigarettes are harmful. Moreover, once the scientific evidence that smoking causes cancer became public, the industry tried to create the impression that the science was inconclusive, in much the same way that those who deny that human activities are causing climate change deliberately distort the science today. As Proctor says, cigarettes, not guns or bombs, are the deadliest artifacts in the history of civilization. If we want to save lives and improve health, nothing else that is readily achievable would be as effective as an international ban on the sale of cigarettes. (Eliminating extreme poverty worldwide is about the only strategy that might save more lives, but it would be far more difficult to accomplish.)

For those who recognize the states right to ban recreational drugs like marijuana and ecstasy, a ban on cigarettes should be easy to accept. Tobacco kills far more people than these drugs. Some argue that as long as a drug harms only those who choose to use it, the state should let individuals make their own decisions, limiting its role to ensuring that users are informed of the risks that they are running. But tobacco is not such a drug, given the dangers posed by secondhand smoke, especially when adults smoke in a home with young children. Even setting aside the harm that smokers inflict on nonsmokers, the free-to-choose argument is unconvincing with a drug as highly addictive as tobacco, and it becomes even more dubious when we consider that most smokers take up the habit as teenagers and later want to quit. Reducing the amount of nicotine in cigarette smoke to a level that was not addictive might meet this objection. The other argument for the status quo is that a ban on tobacco might result in the same kind of fiasco as occurred during Prohibition in the US. That is, like the effort to ban alcohol, prohibiting the sale of tobacco would funnel billions of dollars into organized crime and fuel corruption in lawenforcement agencies, while doing little to reduce smoking. But that may well be a false comparison. After all, many smokers would actually like to see cigarettes banned because, like Obama, they want to quit. Peter Singer is a professor of bioethics at Princeton University and Laureate Professor at the University of Melbourne. His books include Animal Liberation, Practical Ethics, and The Life You Can Save. Copyright: Project Syndicate, 2011. www.project-syndicate.org

Page 12 |New Europe November 20 - 26, 2011

NEW EUROPE

EU WORLD
POLITICS

EU-US urge Israel to scrap legislation against civil society

The Israeli government, with the support of Prime Minister Benjamin Netanyahu, has proposed legislation limiting the funding by foreign governments of Israeli nonprofit organisations. The EU's ambassador to Israel Andrew Standley has applied pressure on the office of Israel's PM by contacting his national security advisor, Yaakov Amidror, urging that the proposed legislation be scrapped and that passing it could harm Israel's standing in the West as a democratic country. The United States, Canada, and Norway have also joined the EU in pressuring Israel to do away with the legislation, while Britain and the Netherlands have begun to take individual action. Specifically, the proposed law would bar political non-profit organisations from receiving more than NIS 20,000 from foreign governments or international agencies such as the UN or the EU. An explanation in support of the bill said it was necessary in light of what were called "acts of incitement by many organisations operating in the guise of human rights organisations that seek to influence political discourse, the character, and policy of the State of Israel." The EU is said to be promoting civil society activity in Israel and the proposed laws would be viewed as an attempt to limit that and part of a wider disturbing development. In addition to individual EU countries, including Denmark, Belgium and Spain, as well as the U.K. and the Dutch government, the EU itself funds Israeli non-profits. The United States and Canada do so too, and the American embassy has registered its own concern to the prime minister's office.

Israeli Prime Minister Benjamin Netanyahu at a weekly cabinet meeting in his Jerusalem office. |EPA/SEBASTIEN SCHEINER POOL

TRADE

Parliament approves law for taming CDS

The European Parliament voted into law a regulation to curb short selling and trading in credit default swaps (CDS), a financial product for insuring against default. The rules seek to impose more transparency and effectively ban certain CDS trades, thereby making speculation on a country's default more difficult. The regulation now also requires the trader to locate and have a "reasonable expectation" of being able to borrow the shares from the located party. The parliament has obtained a ban on naked CDS trading (purchasing default insurance contracts without owning the related bonds). Purchasing Italian CDS, for example, will now be possible only if the buyer already owns Italian government bonds or a stake in a sector highly dependent on the performance of these bonds, such as an Italian bank. Rapporteur Pascal Canfin said: "These rules prove that the EU can act against speculation when the political will is there. This rule will make it impossible to buy CDS for the sole purpose of speculating on a country's default." The short selling and trading in credit default swaps is one of the key regulations pushed through by the Commission to tackle the financial crisis. Both short selling and CDS trading are accused of having fuelled market volatility, with CDS trades moreover having been widely blamed for potentially aggravating Greece's troubles. The sole exception is an option for a national authority to lift the ban for a maximum of 12 months in cases where its sovereign debt market is no longer functioning properly, and then possibly renew it for a further 6 months. Additionally, the European Securities Markets Authority (ESMA) would be able to publish an opinion on its web site as to the utility of the ban within 24h hours. A negative opinion from ESMA would carry some political weight. Moreover, the ESMA will also be allowed to determine measures for judging what may be deemed a reasonable expectation for being able to borrow the shares from the located party. Another key to strengthening the Commission proposal is stepping up reporting requirements. The extra information to be provided to national and European supervisors under the regulation will allow them to carry out their preventive work better, by alerting them earlier to potential risks. The powers of the ESMA, in particular to restrict short selling, to be an arbiter of a national authority's wish to introduce measures to address exceptional situations, and to require other authorities to introduce exceptional measures to deal with difficult situations, were preserved by some MEPs that were part of groups sponsoring the deal. The report was passed with 507 votes in favour, 25 against and 109 abstentions. The new regulation must be formally approved by the Council in the coming weeks, and will enter into force in November 2012.

MEPs set guidelines for EU-US summit

On 17 November, the European Parliament passed a resolution urging the EU and US to step up their cooperation in pushing for a resumption of talks between Israel and the Palestinians and supporting emerging democracies in North Africa. MEPs are calling on the EU and US to "address the legitimate demand of the Palestinians to be represented as a state at the United Nations as a result of negotiations within the UN framework". Parliamentarians said that the EU and the US should maintain strong pressure on Iran, using all political, diplomatic and economic means, including sanctions, to deter and contain the Iranian nuclear programme poses to international security. In the wake of the EU-US summit at the end of November, MEPs called on a more ambitious US commitment to achieving progress at the forthcoming Durban conference, and urged the US Senate to avoid passing a bill that calls for a ban on US airlines taking part in the EU Emissions Trading Scheme. MEPs welcomed the opening of negotiations on the EU-US agreement on personal data protection, and reiterated that the proposed EU-US Passenger Name Record Agreement needs to be consistent with the Parliament's previous resolutions. In addition, MEPs recommended a joint EU-US transatlantic initiative for jobs and growth, promoting trade and investment, and highlighted that the US should refrain from introducing any 'Buy American' requirements for public procurement.

EU aims to prevent further famine in Africa

The European Commission's Humanitarian Aid and Civil Protection department (ECHO) has increased its funding to the Sahel region of Africa to protect the lives of half a million people in a rapidly developing food crisis. Seven million people are already facing severe food shortages in Niger, Chad, Mali, Mauritania, Nigeria and Burkina Faso, accompanied by major shortfalls in food production, giving a gloomy outlook for food availability next year. The Commission added 10 million to the existing 45m in humanitarian funding it has already provided to the Sahel this year, assuring that a further 500,000 people from the most vulnerable households in the worst affected areas will be protected for the forthcoming three months. The International Co-operation, Humanitarian Aid and Crisis Response Commissioner Kristalina Georgieva emphasised the importance of timely actions and anticipating the crisis in avoiding the terrible suffering that has struck in another part of Africa this year". "The real effects and the extent of this situation will only be visible in a few months, when the poorest will have no food reserves or money to buy much dearer food, as prices are already rising," Georgieva said. The commissioner underlined that there has not been sufficient time since the last crisis in 2010 for a hunger weakened population to recover. That is the vicious circle we want to break, but one single donor will not be able to face this huge challenge. I call on everybody to respond to this emergency before it becomes a crisis," Georgieva stressed.

EU WORLD
DEVELOPMENT

NEW EUROPE

New Europe | Page 13 November 20 - 26, 2011

US focus on Asia will affect the EU

By Fraser Cameron
For the EU last weeks APEC meeting in Honolulu sent a clear signal. The US was turning full speed towards the Asia-Pacific region which President Obama described as absolutely critical to America's prosperity. As both the US and Europe revise their economic growth forecasts downwards to under one per cent for 2011 they can only dream of the six per cent average growth rates in Asia. Secretary of State, Hillary Clinton, was even more direct. The 21st century will be Americas Pacific century. The US has also welcomed the prospect of a Trans-Pacific Partnership (TPP) which would lead to free trade negotiations between nine APEC members. Most significantly was the decision of the new Japanese Prime Minister Yoshihiko Noda, to join the talks despite the traditional hostility of Japanese farmers to free trade. This weekend the US will also attend the East Asia Summit in Indonesia for the first time. The EU is still trying to round up support to take a seat in the back row. These moves demonstrate Washingtons commitment to deepen its ties with Asia. This change in strategy will have a number of implications for Europe. First, the EU will only be taken seriously if it puts its house in order. The EU was always known as a trade power in Asia but in recent years, thanks to the strong euro and the regulatory impact of the single market, it was beginning to be regarded as an economic power. On the political and security front it was largely invisible. Now the sovereign debt crisis has thrown a huge shadow over the EUs pretensions to be a global actor. US Treasury Secretary, Tim Geithner, voiced the concern of all APEC members when he called on Europe to quickly put in place a strong plan to restore financial stability. Chinese President Hu Jintao said that Europe must not become a brake on global growth. Other Asian leaders spoke in a similar vein. Second, Europe will have to take more responsibility for its own security. Whoever wins the US election next November there will have to be significant cuts in defence expenditure. The Iraq and Afghan wars have been ruinous for the American economy. As Robert Gates told a stunned Brussels audience just before he left office it is by no means certain that future US leaders will recognise the added value of the transatlantic alliance if Europe is not pulling its weight. The UK and France took the lead in Libya but few other member states were involved. Overall there is damaging reluctance in Europe to prepare for a more efficient use of scarce defence resources. As America turns to face what could be an Asia-Pacific region

Chinese Foreign Minister Yang Jiechi (R) with US Secretary of State Hillary Clinton (L) during their bilateral meeting at the 44th Asean Ministerial Meeting in Nusadua, Bali, Indonesia on 22 July 2011. |EPA/MADE NAGI

of increased tensions Europe will have to do more on the defence front. The US is increasing defence ties with Australia in what many experts view as a containment policy towards China. Clinton rejected such a view stating in Honolulu that Chinas economic, diplomatic and military rise should not be seen as a threat. We believe a thriving China is good for China and good for America, she said. Third, Europe will have to become more engaged in Asia. Speaking in Zurich recently, EU President Herman Van Rompuy warned that the Asia-Pacific region was showing signs of militarisation that could lead to an arms race. He pointed to the significant arms build-up and confrontational psychology in Asia. The EU, as a key trading partner to Asian countries had a significant stake in regional stability and through increased ties could contribute to promoting stability. Mr van Rompuy may have been exaggerating slightly but he had the right message the EU needed to increase its engagement with Asia and not just on the trade front. Hillary Clinton made a point of attending the ASEAN regional Forum (ARF) meeting in Bali in July. Regrettably Catherine Ashton was not there. Fourth, the EU must view Asia as wider than China. Too many ministers and Commissioners only visit China on their Asian trips. At least Ashton, after her recent visit to China, also visited Australia and Japan. But the EU needs to beef up not only its presence in Asia but also its bilateral relations with growing powers such as Korea, Indonesia, Vietnam and Malaysia, not to forget India. It was unfortunate that this years EU-India summit had to be postponed until next February due to lack of progress in the

FTA negotiations. But David OSullivan, the Chief Executive of the EEAS, was in India this week seeking to accelerate progress on a range of issues. There are some signs that EU leaders and senior officials are waking up to the importance of Asia. The next step is de-

veloping a strategy to deepen relations with the region that could soon account for half of global trade, GDP and investment. The EU has no time to waste. Fraser Cameron is Director of the new EU-Asia Centre, www.eu-asiacentre.eu

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Page 14 | New Europe November 20 - 26, 2011

NEW EUROPE

EU WORLD
EU-RUSSIA|ENERGY

Ukraine pressure: Nord Stream line two speeds up

By Kostis Geropoulos
The second line of the Nord Stream natural gas pipeline between Russia and Germany is going faster than planned, Nord Streams Deputy Communications Director Jens D. Mller told New Europe on 16 November. In general, the Nord Stream project is on schedule. Based on the huge experience from laying line 1, the construction of line two is going currently faster than planned, he said. The Nord Stream pipeline runs under the Baltic Sea from Vyborg near St. Petersburg to Greifswald in Germany. It was officially opened on 8 November in a ceremony attended by German Chancellor Angela Merkel and Russian President Dmitry Medvedev. The $10.4 billion line that runs 1,224 kilometres under the Baltic Sea could eventually supply Western European consumers with up to 27.5bn cubic metres of natural gas per year, and will be joined by a twin line with similar capacity. The completion of line 2 was originally scheduled for October 2012. The total design capacity of the pipeline is 55bn cubic metres per year. The new link has been brought online in the wake of Germanys decision to phase out all of the countrys nuclear power plants by 2022. The decision was made following the earthquake that caused the Fukushima nuclear disaster in Japan. Russian gas giant Gazprom holds 51% of Nord Stream, Germanys E.ON Ruhrgas and Wintershall each hold 15.5%, while Nederlandse Gasunie and GDF Suez hold 9% each. Nord Stream bypasses traditional transit states Ukraine, Belarus and Poland. Nearly 80% of Russian exports to Europe transit through Ukrainian territory. Disputes between Kiev and Moscow over the price of gas sold to Ukraine, and pipeline transit fees paid to Ukraine to ship Russian gas to Europe, have brought shipments to European

Nord Stream pipes in Lubmin near Greifswald, Germany. |EPA/STEFAN SAUER

countries to a near-total halt in 2006 and 2009. The 2009 gas crisis led to a deal between Kiev and Moscow which the present Ukrainian leadership says burdened the country with an exorbitant price for Russian gas. Moscow-based Alfa Bank oil and gas analyst Maria Yegikyan told New Europe on 16 November that the fact that Nord Stream has been launched has significantly reduced Ukraines leverage power in negotiations with Gazprom. Moreover, the fact that line two of the Nord Stream pipeline is going faster than planned is even more pressure on Ukraine with Gazprom negotiations, she added. Talks to renegotiate the 2009 gas deal between Russia and Ukraine are in progress.

Kiev aims to significantly reduce the price from the current level of about $400 per 1,000 cubic metres to $220-$230. The Ukrainian press speculates that the new contract will be signed by the end of the year. However, Gazprom has not confirmed any agreement yet. Ukraine hopes that a lower Russian gas price will allow it to cut its budget deficit without raising gas and heating prices for households, something the International Monetary Fund (IMF) has insisted should happen. Gazprom has said it would be willing to reduce the price of gas sold to Ukraine if Kiev agrees to sell a controlling stake in Ukraine's state-owned gas transportation network but Ukrainian President Viktor

Yanukovych has said it is not for sale. Yegikyan said that there will probably be some trade off involved between Russia and Ukraine. Essentially Gazprom has no other reasoning to lower the price for Ukraine unless the country provides some benefits or preferential treatment for acquisition of Ukraines gas transit system so I think thats one of the quotas for the price reduction for Ukraine especially in line with the fact that Nord Stream has launched and Ukraines leverage power and negotiations with Gazprom are significantly down, she said. Meanwhile, Russia is working to construct the South Stream gas pipeline which also bypasses Ukraine and it is meant to transport Russian gas to Europe under the Black Sea beginning in 2015.

EU-RUSSIA|ECONOMY

Putin: Russia ready to help the eurozone

During a meeting with German business leaders in Moscow, Russian Prime Minister Putin again confirmed that Russia is prepared to provide practical, real aid to help the eurozone solve the debt crisis. But, repeating what state officials have previously said, Russia is only interested in providing assistance via the International Monetary Fund (IMF). Russia, holder of the worlds thirdlargest international reserves, is ready to join and in fact has already joined in solving the problem of overcoming the crisis, including in the euro zone, Putin said. Putin urged taking coordinated action to overcome the crisis. In a modern global economy, all processes though that doesnt mean we dont have certain difficulties. The eurozone reducing the number of its members may cause irreparable damage, Russian President Dmitry Medvedev told chief executive officers on 12 November at a summit as part of the Asia-Pacific Economic Cooperation (APEC) forum in Honolulu. We are fans of the euro and of the euro economy. Chris Weafer, chief strategist at Moscows Troika Dialogue, wrote in an e-mailed note to investors on 17 November that Putins statement that Russia is only interested in providing assistance via the IMF is also shared by other big developing economies; no direct aid but via IMF. And thats the issue. Currently Russia only has a 3% share in the IMF but would expect to see that share, and influence, increase with any additional major contribution; same position for China and (presumably) the other big developing economies, Weafer wrote. This is a very good opportunity for the so-called BRICS (Brazil, Russia, India, China and South Africa) to push for a bigger say in the IMF. Neither the major European countries nor the US will want to accommodate a bigger role for the BRICS, i.e. at a cost of a cut in their dominant position. But the issue is clear from the perceptive of the BRIC countries you want our cash? These are the terms That's a maybe then.

Russian Prime Minister Vladimir Putin attends an International Financial conference dedicated to 170 years anniversary of Russian Sberbank generation in Moscow, Russia, 12 November 2011. |EPA/SERGEI ILNITSKY

are interlinked and risks at some markets are inevitably reflected on

the general market, Putin said. Russias situation is quite stable, al-

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New Europe |Page 15 November 20 - 26, 2011

ENERGY & CLIMATE

ENERGY|GAS PIPELINES

EU pushes for transporting Central Asia gas to Europe

During a visit to Turkmenistan, German Foreign Minister Guido Westerwelle has expressed condence that the planned Nabucco gas pipeline will be built. "I am sure that the talks on Nabucco will have a successful outcome and both Turkmenistan and Azerbaijan will join this project," Westerwelle said is Ashgabat. He discussed the plans for Nabucco with Turkmen President Gurbanguly Berdimuhamedov. Turkmenistan is also in talks with international companies to assist in construction of a proposed 800-kilometre East-West pipeline that would take gas from the hugely prospective South Iolotan eld to the shore of the Caspian Sea, Amanali Khanalyev, chairman of state gas rm Turkmengaz, said on 17 November. There, it would join a European Union-backed undersea supply route to Azerbaijan and beyond. The new pipeline system would enable the Central Asian state to supply 30 billion cubic metres of natural gas annually toward Europe along a route that would bypass Russia. Khanalyev told an industry conference that Turkmengaz and energy-focused construction rm Turkmenneftegazstroi were already building separate sections of the East-West pipeline. "We are also conducting negotiations with a host of international companies that have the requisite experience, technical capability and the means for raising nance to full construction work on separate secItaly (ITGI) or the Trans Adriatic Pipeline (TAP) project. The Southern Gas Corridor is a priority EU energy project diversifying energy supply routes and sources and increasing security. In related news US Special Envoy on Eurasian Energy Richard Morningstar supports Southern Corridor, the U.S. embassy in Azerbaijan said in a press release. The embassy noted that the remarks Richard Morningstar made in Baku at a press conference on 15 November were reported about in an inaccurate manner in local media. Ambassador Morningstar underscores U.S. support for the Southern Corridor, which will carry Azerbaijani natural gas to Europe, and consist of one or more pipeline projects that are commercially viable and strategically signicant. Nabucco continues to be a highly desirable political and strategic option. As with any pipeline, it must be commercially viable, the US embassy statement read. There will ultimately be large amounts of gas to ship through Georgia and Turkey to Europe. If a smaller pipeline is chosen to ship the rst Shah Deniz gas to Europe, we believe it should provide gas to vulnerable countries in Europe and there should be concrete, written guarantees that the pipeline will be expanded as more gas becomes available. We will support any pipeline in the Southern Corridor that meets these conditions.

German Foreign Minister Guido Westerwelle, left, and Turkmen Minister of Oil and Gas Industry and Mineral Resources Bairamgeldi Nedirov view a map indicating raw material reserves of Turkmenistan during the international fair Oil and Gas of Turkmenistan in Ashgabat, Turkmenistan, 17 November 2011. |EPA/MICHAEL KAPPELER/POOL

tions of the pipeline," he said. Meanwhile, Azerbaijan and Turkey have started work on a trans-Anatolian gas pipeline project costing some $5-6bn, Azeri state oil company SOCAR said on 17 November, adding to an array of planned energy projects crossing Turkey. "Azerbaijan and Turkey have started work on a Trans-Anatolian gas pipeline project from Anatolia's east-

ern border to its western border," SOCAR President Rovnag Abdullayev said at the Third Black Sea Energy and Economic Forum on 17 November. He said this did not mean the end of the Nabucco projects. Abdullayev also said a decision would be made soon on whether gas from the Shah Deniz II project would be supplied to Nabucco, the Interconnector Turkey-GreeceADVERTISEMENT

CLIMATE|CO2

IPCC warns of climate change risks

On 18 November, the Intergovernmental Panel on Climate Change (IPCC) warned in a report that climate change is likely to make extreme droughts and flooding more frequent, and governments must design new ways to cope. The UNs top climate panel released a summary of its Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation (SREX) ahead of the report's full publication in February. It also comes before UN talks on climate change open in South Africa."There is high confidence that both maximum and minimum daily temperatures have increased on a global scale due to the increase of greenhouse gases," said Qin Dahe, co-chair of one of the IPCC working groups responsible for the report. "Changes in other extremes, such as more intense and longer droughts, are observed in some regions, but the assessment assigns medium confidence due to a lack of direct observations and a lack of agreement in the available scientific studies," he added. "Confidence in any long-term trend in tropical cyclone intensity, frequency or duration is assessed to be low." And in a section likely to be hotly debated, it says some extremes have changed as a result of anthropogenic influences, including increases in atmospheric concentrations of greenhouse gases. The report says it is likely man's activities have raised sea levels, as well as extreme minimum and maximum temperatures, while the IPCC has "medium confidence" severe rainfall has increased as a result.

ENERGY|NUCLEAR

IRSN: France needs to improve nuclear safety

France needs to improve safety norms at its nuclear facilities to protect against natural disasters, Frances institute for radiation protection and nuclear safety (IRSN) said in a report on 17 November. In a review commissioned in the wake of Japan's Fukushima disaster, IRSN said there was a "need to develop some of the installations' safety references without delay." At the same time, the report said, France's 58 nuclear reactors could "legitimately be considered safe." Giving examples of areas where safety needed to be stepped up, the IRSN said some plants had insufficient reserves of water to power backup steam generators and that the connection points of some pipes would not withstand an earthquake. "These are small defects that could have serious consequences," Jacques Repussard, director of the IRSN told a press conference.

Page 16 | New Europe November 20 - 26, 2011

NEW EUROPE

ENERGY & CLIMATE

ENERGY|ELECTRICITY

Gazprom to become a competitor to European energy suppliers

By Kostis Geropoulos
Striving to become a competitor to European energy suppliers, Gazprom is seeking greater exposure to the final consumer and has already built up a substantial energy distribution business in the United Kingdom. The Russian gas giant made one more step in this direction by acquiring German retail power company and telecommunication operator Envacom Service. UK-based Gazprom Marketing & Trading announced on 14 November that it has acquired Envacom. The new entity will market its products and services as Gazprom Energy in Germany. We will be looking to invest heavily on that business on the power side and hopefully generate new commercial customers, Simon Garcia, a Britain-based spokesman for Gazprom Marketing and Trading, told New Europe on 14 November. The purchase is a step into the German power market for Gazprom Marketing & Trading. This is very much the first step. We only signed the deal on Thursday (10 November) late at night and we are announcing today so this is literally day one so we are starting now. We are focused solely on investing and growing this business, he said, adding that the power business is now our foundation for generating further business in Germany. The retail division of Gazprom Marketing and Trading, based in Britains Manchester, has already been supplying power to the UK industrial and commercial businesses for the last two years and now with this acquisition they will be able to supply power to the existing customers of Envacom in Germany. Jozua Knol, Managing Director of Gazprom Energy in Germany, said: "The acquisition of this business represents a significant step for Gazprom in our strategy to accelerate growth in our power business." Gazprom Marketing & Trading aims to stabilise the supplier's business in the short term. many, Britain and the countries of Benelux. Moreover, Gazprom will most likely agree to a change in the way gas-import prices are calculated for RWE, Rzeczpospolita reported. The change is expected to be favourable for the German firm. The change to RWE's contract will reportedly involve the use of a new formula to calculate the price of the company's gas imports. The current formula ties the price of natural gas with the price of oil, whose value fluctuates significantly. Gazprom, which in 2010 sold gas to European companies at an average price of $306 per 1,000 cubic metres, is currently demanding $400. It has announced that the price per 1,000 cubic metres may reach $500 in December of this year, Rzeczpospolita wrote. Gazprom, the world's largest gas company supplies a quarter of Europe's gas. Last week, in the northern German city of Lubmin, Russian President Dmitry Medvedev and German Chancellor Angela Merkel inaugurated the Nord Stream pipeline, which pumps Russian gas to Western Europe. Russia is strengthening its presence in the United Kingdom and Germany, Justin A. Urquhart Stewart, the Director of Seven Investment Management Limited in London, told New Europe on 15 November. Something Ive been expecting for some time: The Russians wanting to actually control production, delivery and final distribution so they own the entire flow right the way through the process. Not only it gives them maximum opportunity to make money out of it, it also gives them maximum control. Good news you got competition, bad news the countries need to be careful about necessarily the security of their supplies, Urquhart Stewart said. Russia has in the past had a habit of turning the tap off rather with different circumstances not always due to them but it terms of certainty of delivery there is always a question mark over it.

The company logo of Gazprom Germania headquarters in Berlin, Germany. Russian gas giant Gazprom is seeking greater exposure to the final consumer. |EPA/HANNIBAL HANSCHKE

The first step in the short term is obviously to ensure the existing business the supply of power to end consumers is solid and it is sound and that we turn around the customerservice levels and we used to have some issues so we are making a completely fresh start there, Garcia told New Europe. We are really focusing on customer service and, of course, taking a good look at our processes and our systems and our stuff and stuff training to make sure that we invest in the right places and also use the business to grow. Gazprom Marketing & Trading bought 100% of Envacom in a friendly deal. This isnt a hostile takeover. Its entirely amicable and weve been discussing the deal with them for quite some time now on and off, Garcia said. Gazproms interest in the purchase of Envacom is an image-strengthening step, experts say.

Assets like Envacom may characterise Gazprom as an environment-friendly innovative company in the area of energy production and IT. Envacom does not sell natural gas. Envacom, which was founded in 1999 and has 500,000 customers, was not acquired by Gazprom Export or Gazprom Germania but by Gazprom Marketing and Trading, a UK company that is not necessarily controlled out of Moscow. Nevertheless, Gazprom Marketing and Trading is part of the same group and analysts say the acquisition strengthens the Russian gas giants foothold in the power market of Germany, which is Europe's largest economy. According to reports last month, Gazprom and German power utility RWE and BASF have been in negotiations on setting up an energy-producing joint venture to service Ger-

ENERGY|GAS PIPELINE

Turkmenistan, Pakistan agree to speed up TAPI pipeline

On 14 November, Turkmenistan and Pakistan agreed to expedite a multibillion-dollar gas pipeline project to transport Central Asian natural gas to South Asia. The agreement was reached in a meeting between Turkmen President Gurbanguly Berdimuhamedov, who was in Islamabad for a one-day official visit with his Pakistani counterpart Asif Ali Zardari. Berdimuhamedov said the talks focused on the TurkmenistanAfghanistan-Pakistan-India (TAPI) gas pipeline project. The steering committee had been holding regular meetings and had also submitted its input since it was inked in December last in Ashgabat, he added. He said a consortium was required for the final implementation of the TAPI project and appreciated that Pakistan had co-sponsored the proposal of Turkmenistan made to the United Nations for a secure and stable energy carriers. He said the TAPI project would benefit the people of Afghanistan and other participating states. Zardari said the pipeline would provide energy security and help ensure economic stability in the region.

ENERGY|OIL

Libyan accelerates oil production, sees 800,000 bpd by December

Libyan oil production is coming on stream faster than expected with pre-war production levels anticipated by the end of next year, the BBC quoted Libya's National Oil Corp. head Nuri Berouin as saying. The International Energy Agency (IEA) states that oil made up nearly all of Libya's export earnings in 2010. Oil production since the war began in March, however, had slumped to around 350,000 barrels per day, far shy of its estimated prewar output of more than 1.3 million bpd. "Right now we are producing 600,000 barrels per day, and out of that 140,000 go to the refinery," Berouin said in Qatar's capital Doha, where the Gas Exporting Countries Forum took place on 1315 November. "The country is expected to reach 800,000 barrels per day before the end of December and will reach pre-war level before the end of next year." Much of the Libya's energy infrastructure was damaged by the war, however, and Berouin said repairs could cost "hundreds of millions of dollars."

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New Europe|Page 17 November 20 - 26, 2011

ENERGY & CLIMATE

ENERGY|GAS

Russia to meet APEC energy market demand

ENERGY INSIDER

Gas producers of the world, unite!

By Kostis Geropoulos
On 16 November in Doha, Russias Energy Minister Sergey Shmatko won the support of the powerful Gas Exporting Countries Forum (GECF) over the need to co-operate in developing projects for production and sale of the blue fuel to raise prices and boost supply. In a declaration, the worlds 12 largest natural-gas exporters expressed the need to reach a fair price for natural gas based on gas-to- oil prices indexation. Given that Gazprom and China disagree over the price for a potential long-term gas supply agreement and Gazprom and EU consumers disagree over the existing long-term contracts, it was important for Russia to gain support from other members of the GECF. But talks in Qatars capital stayed away from the creation of a Gas-OPEC. This is just talk about the potential formation of the gas prices but it is not a settled formula for global price formation, Moscow-based oil & gas analyst at Alfa Bank Maria Yegikyan told New Europe on 16 November. She said that Gazprom does not necessarily want to have a global gas price. That would make it necessary for the company to basically take away its monopoly for the pricing because currently Gazproms price is much higher than prices on the global market. For instance, Henry Hub and other gas benchmark prices, so I really dont think that it would be a benefit for Gazprom to have a global price on gas, Yegikyan said. The EU and Russia disagree over long-term gas contracts. Shmatko said that, the supremacy of the long-term gas contracts with partners is a primary target for the future. Negotiations between Gazprom, the world's largest natural gas producer, and European companies over long-term contracts are continuing. Russian gas is often sold above the spot price, and European consumers would like to see more flexibility from Gazprom on price than the Russian gas giant is willing to give. Brussels wants to abolish the link between oil and gas prices which would free the market, and eventually make Russian gas cheaper to European consumers. Russia appears to have demonstrated some flexibility. Gazprom has lowered the price for several customers, Yegikyan said. Talking about the role of gas in the coming years, the European Commission told New Europe on 18 November that global and European gas markets are changing. This will increasingly require flexibility from the market players if gas is to keep its important place in the energy mix, an energy press officer said. Following the policies taken recently by some EU Member States, there is reason to believe that natural gas will have an important role to play in the years to come. But the importance of gas in the future energy mix will also depend on how suppliers adjust to these new circumstances, as well as on technological evolutions such as carbon capture and storage, she added. A more worrying development for the EU, although it had no specific comment, could be an agreement between gas-producing majors Russia, Qatar and Algeria to co-operate in the European natural-gas market. The EU has looked at Qatar and Algeria as part of its diversification efforts, but may have to kiss that goodbye. KGeropoulos@NEurope.eu follow on twitter @energyinsider

Left to right, Canadian Prime Minister Stephen Harper, Australian Prime Minister Julia Gillard, Russian President Dmitry Medvedev and US President Barack Obama; back row, left to right, New Zealand's Deputy Prime Minister and Finance Minister Bill English, Prime Minister of Malaysia Najib Tun Razak, President of South Korea Lee Myung-bak and Mexico's Secretary of the Economy Bruno Ferrari at the APEC summit in Honolulu, Hawaii, US, 13 November 2011. |EPA/MIKHAIL KLIMENTYEV/RIA NOVOSTI/KREMLIN POOL

Planning to extend its global operations, Russian gas monopoly Gazprom said it is ready to meet the growing energy demand of the Asia-Pacic Economic Cooperation (APEC) member states. Gazproms CEO Alexei Miller told journalists on the sidelines of the APEC-2011 summit in Hawaii that talks which have taken place during the summit might become a platform for international energy integration. Gazprom wants to strengthen its international image as a reliable innovative global partner. The implementation of Russias gas projects in the east would ensure sufficient deliveries to the region, Miller said. "Gazprom has rm plans for long-term co-operation with countries in this region and the implementation of the Eastern Gas Programme will create the export capacity needed for this," Miller said. "The main priority in the creation of our eastern export corridor is the production of LNG

(liqueed natural gas) and the APEC countries will become a consumer. It can be condently stated today that the meetings and negotiations taking place during the summit will be a basis for inter-regional energy integration," he added. Participating as a member of the Russian delegation, Miller took part in the meetings of Russian President Dmitry Medvedev with Vietnam President Truong Tan Sang, Indonesian President Susilo Bambang, Malaysian President Najib Razak, and Japanese Prime Minister Yoshihiko Noda. Miller predicted an 80% increase in the use of fuel in APEC countries by 2030. The consumption of fossil fuels in APEC countries is expected to surge 80% by 2030 and Gazprom is already preparing to meet Asia's growing demand for energy resources," Miller said. APEC is a forum for 21 Asia-Pacic countries with about 40% of global population.

Meanwhile, Russian President Dmitry Medvedev said on 13 November that Russia expects to supply as much natural gas to China in the future as it currently supplies to Europe. "It is obvious that the Chinese market can consume a considerably greater volume of energy products. This is what we are currently agreeing with our Chinese partners," Medvedev said at the APEC summit. Russia can supply natural gas to China via the western and eastern routes, Medvedev said. "Now we are continuing talks with our Chinese partners on the terms of natural gas supplies. As soon as they are over and the price is always the main issue, all the obstacles will be removed and gas will be supplied in large volumes," Medvedev said. "I believe that the potential of pipeline gas supplies to China is comparable with the volumes we supply to the European part of our continent, to West European countries," he said.

ENERGY|BUSINESS

Khan: TNK-BP still worth $65 billion

German Khan, one of BP's partners in oil company TNK-BP, said the Russian-British joint venture is worth $65 billion. This is close to the valuation offered to Khan and his partners in a buyout attempt by BP and Rosneft. "While the BP-Rosneft deal was being discussed, on possible changes to the makeup of TNK-BP's shareholders, we put fair value for the whole company at $65 billion," Vedomosti newspaper quoted Khan in an interview on 14 November. "I think that is what it should be worth today." But he suggested he and his partners were not keen to sell. "We are not planning to retire," he said. TNK is Russia's number three oil producer. Khan is a partner of Mikhail Fridman in the Alfa Group, a Moscow-based industrial consortium with Viktor Vekselberg's Renova and Len Blavatkin's Access Industries. As the Alfa-Access-Renova (AAR) consortium, they collectively share control of TNK-BP 50-50 with the British major.

ENERGY|GAS

Russia wants expertise in LNG from Qatar

Russia's Energy Minister Sergei Shmatko said his country wants to accelerate an agreement which will see Qatar, a major player in the liquefied natural gas market, take part in the construction of an LNG plant on the Yamal Peninsula in Siberia.The project is expected to produce five million tonnes of LNG a year starting in 2016, and reach 15 million tonnes by 2018. Qatar's Energy Minister Mohammed al-Sada expressed interest in the project. Shmatko noted that Qatar is a major professional player with wellknown achievements in developing LNG transport.

Page 18 | New Europe November 20 - 26, 2011

NEW EUROPE

ARTS & CULTURE

Nuances - The Forberg collection
Austria - Vienna - Albertina - until - 22 January 2012 The Forberg Collection was presented to the Albertina in 2007 by Mathias and Eva Forberg on a permanent loan basis. Comprising 38 outstanding artworks, it complements the Albertinas own collection especially in the area of Classical Modernism. The collection features works on paper, prints, sculptures, and paintings of exceptional quality by artists such as Picasso, Lyonel Feininger, and Fernand Lger, and by representatives of the Blue Rider (Der Blaue Reiter) movement, such as Alexeij Jawlensky and Wassily Kandinsky, as well as August Macke, who was associated with the group. In addition, it includes works by the Bridge (Brcke) painters Ernst Ludwig Kirchner, Otto Mueller, and Max Pechstein as well as by the Bauhaus artists Lazlo Moholy-Nagy and Oskar Schlemmer. At the core of the Forberg Collection, however, is an exquisite selection of works by Paul Klee. The basis of the present Forberg Collection was established by Matthias Forbergs father, Kurt Forberg. Interested in various art genres, Kurt Forberg was particularly committed to the field of the fine arts. Starting in the 1950s, he began to put together an extensive collection that distinguished itself through its founders great knowledge of and passion for modern arts. After Kurt Forbergs death, the collection was divided up through inheritance and parts of it were scattered throughout the world as a result of sales. The Albertina presents the original Forberg Collection for the first time, along with the works that were acquired later by Mathias and Eva Forberg.

Roger Ballen - Animal Abstraction

August Macke In der Tempelhalle, 1914 photo: Albertina

The Netherlands - Amsterdam- Galerie Alex Daniels / Reflex Amsterdam - until 12 December 2011 Roger Ballen is regarded as one of the world's foremost practitioner's of black and white photography. He has been shooting in monochrome for nearly half a century, from his renowned documentary images of South African villagers to his recent extraordinary explorations of the psyche and its aesthetic. Ballen's work has been exhibited across the globe, and is widely collected by the world's important art institutions, from Moma in New York, to the Centre Georges Pompidou in Paris to the Stedelijk Museum in Amsterdam. The Reflex Gallery, Amsterdam, presents a rare opportunity to view a selection of Ballen's work from over the past 20 years.

The Collection of Groundkeeper Wilhelm Werner

NUDE -An exhibition by Eva Caridi

illusions but only a constant walking ahead, in one direction. The discrepancy between actual time and our perception of it is magnified by the sound installation that leads the visitor through the twisting iron corridors, forcing him to proceed. The path culminates into the core of the work: a space in between, an inhabited void that hosts Caridis video installation.. Now the scenario changes, and the visitor finds himself in an inverted process that manifests itself in the opposite way to the first one: a fragmented labyrinth where the sculptures free themselves of the weight of structures, of the superfluous and the ephemeral, to finally reveal their purest essence. The impressive scale, the interactive element and the powerful concept the work is impregnated with, all contribute to the impact of the exhibition: the artist places the visitor at the centre of the oeuvre and lets them perform the work.

Willem Grimm. Blankenese im Winter. Privatsammlung in der Hamburger Kunsthalle

Germany - Hamburg - Hamburger Kunsthalle -15 January 2012 An exhibition showing the private collection of one-time Hamburger Kunsthalle employee Wilhelm Werner will offer a first insight into one of the most unusual private collections of modern art from Hamburg in the 20th century. Werner began his employment as an assistant attendant on July 5, 1914 and retired as a groundkeeper in 1952. As head of the general maintenance staff he was always in direct contact with the artists that exhibited in the Hamburger Kunsthalle. He was responsible for both handling and hanging the artworks and very often made frames at the

artists' request. When the National Socialists began their purge of "degenerate" art in the summer of 1937, it was Werner who saved the work of Jewish artist Anita Re from seizure from among the Kunsthalle's holdings. In a unique and courageous act of moral courage, he hid paintings by Re who had committed suicide in 1933 - in his apartment at the Kunsthalle. It is also thanks to Werner and his fellow custodian colleague - both of whom had not been drafted into the Second World War - that the Kunsthalle building survived the Hamburg bombardment with relatively mild damage.

United kingdom - London - Ambika P3, University of Westminster- 11t 22 January 2012 Nunzia Perrone is pleased to announce the forthcoming solo show by the artist Eva Caridi that will be hosted by Ambika P3, University of Westminster,

London. The exhibition, curated by Francesca Nannini, will open its doors to the public on January 11th, 2012. A monumental, interactive labyrinth that unfolds over a surface of 14000 sq ft, stages a representation of time as human condition. There are no dead ends, no

arts@neurope.eu

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New Europe | Page 19 November 20 - 26, 2011

FASHION & STYLE

Gaultier with an L
persona was staged in his advertising campaigns while his spirit of fun, youth, diversity and pop culture were promoted worldwide. Once described as being: More French than French, Jean Paul Gaultiers muse is definitely Paris: The City of Lights of his fantasy world where one meets Existentialists, Dadaists, demi-monde artists, cocottes, bourgeoises, cabaret folk, Toulouse-Lautrec Cancan dancers, accordionists, Latin lovers and concierges, while dresses are named after Parisian neighborhoods: Place Pigalle, Jardin de Montmartre, Rue Fontaine or Barbs. His Parisienne usually has a long, lean silhouette, wears berets, polka-dotted scarves, turbans, black trench coats, stilettos, red lipstick and nails, with a cigarette holder in hand and a sensual, slightly provocative but ever elegant allure. Gaultier humorously reworks clichs of pre and post war French cinema. Sexuality has always been a central theme in Gaultiers work, as he likes to question the androgynous side in women and the feminine one in men and notoriously uses models with unconventional physical types to reflect the infinite complexity and diversity of human nature, the variety of tastes and possibilities. His emblematic coneshaped corset and girdle, lingerie worn as outer clothing, gay culture symbols, bondage and fetishistic references as well as the skirt and cosmetics line for men all challenge gender boundaries. Diversity can also be found in the

Jean Paul Gaultier, 2009 Sofia Sanchez and Mauro Mongiello

he Montreal Museum of Fine Arts organized an impressive exhibition that pays tribute to one of the last monstres sacrs of contemporary fashion, French Couturier Jean Paul Gaultier. The Fashion World of Jean Paul Gaultier: From the Sidewalk to the Catwalk which showcases as many as 130 accessorized ensembles for men and women, is currently hosted at the Dallas Museum of Art (November 13th February 12th, 2012) before stopping by San Francisco, Madrid and Rotterdam. Throughout his 35-year career to date, this quietly ironic observer has long been credited for finding beauty in the shady corners of Parisian nightlife, the fierce looks of London-

ian punks, the suburban melting pot, or the peculiarities of underground misfits and sexual minorities. Despite his anti-establishment disposition and being a true autodidact (even though he had two mentors, modernist Pierre Cardin and Jean Patou), Gaultier never hid his admiration for the great French Couture tradition and his love of rare crafts, luxurious materials, impeccable cuts and perfect finishings. In 2002, he fulfilled his dream of a lifetime by creating his very own Haute Couture collection or classicism revisited . Recognizable in the 80s for his peroxide blond hair, trademark sailor shirt, Scottish kilt, Doc Martens and pidgin English, and with his very own sense of disguise, Jean Paul Gaultiers comics

JEAN PAUL GAULTIER Barbs collection Women's prt--porter fall/winter 1984-1985 30th Anniversary Retrospective Runway Show, 2006 Patrice Stable/Jean Paul Gaultier

JEAN PAUL GAULTIER Les Indes galantes [Romantic India] collection, Lascar dress Haute couture spring/summer 2000 Patrice Stable/Jean Paul Gaultier

street, where Gaultier observes the cultural and racial mingling of urban tribes: leather and lace biker jackets, tattoos, piercings, ripped jeans, latex, boxing-glove red accessories, utility work clothes and protection gear with lingerie, military khaki outfits, sports shoes and shorts, beaded necklaces, large earrings, and his well-known tin-can bracelets are all involved in a punk parody of kitsch collage and recycling. Ever present in Gaultiers collections are exotic elements, tales of journeys to far-away places. Inspired by Asia, Russia, Africa, and more recently the Caribbean islands and Latin America,

Gaultier seems to flip through the pages of a picture book with a childs curiosity for the wonders of the world. More exotic than religious were also his Chic Rabbis collection (1993-94) inspired by the traditional costume of Hassidic Jews and his Virgins collection (2007) reminiscent of popular Catholic imagery. All in all, Gaultiers most remarkable quality is undoubtedly the syncretism of his work: layers of condensed meaning, historical, cultural, social, real or imaginary references and connotations that often coexist in a single item of clothing. Louise Kissa lkissa@neurope.eu

JEAN PAUL GAULTIER Mexico collection, Wedding dress Haute Couture spring/summer 2010 Patrice Stable/Jean Paul Gaultier

JEAN PAUL GAULTIER Les Vierges [Virgins] collection, Apparitions dress Haute couture spring/summer 2007 Patrice Stable/Jean Paul Gaultier

JEAN PAUL GAULTIER Parisiennes collection, Les Particules lmentaires dress Haute couture fall/winter 2010-2011 Patrice Stable/Jean Paul Gaultier

JEAN PAUL GAULTIER First collection Women's prt--porter spring/summer 1977 30th anniversary retrospective runway show, 2006 Patrice Stable/Jean Paul Gaultier

Page 20 | New Europe | November 20 - 26, 2011

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New Europe | Page 21 November 20 - 26, 2011

Just in Town
Justin Townes Earle 27 November, Ancienne Belgique The New Country movement has reviatalised a traditional musical form, putting the singer songwriter at the fore with a harder edge more obvious, rather than hidden between sweet tunes, but theres always a place for a talent with a family background in Nashville and beyond. Justin is the son of hellraiser Steve Earle and his middle name comes from a legend, Townes Van Zandt, who influenced father and son. Townes was also a hard living musician and the young Justin has embraced the wild side, taking drugs since the age of 12 and having several periods of incarceration and rehab since. But it is his talent that shines. Last month, he won the award for Song of the Year for Harlem River Blues from the album of the same title. Released in late 2010, Harlem River Blues was also nominated for Album of the Year at the years honors ceremony. I love touring, too. I mean I don't love it as much as I did in the past when I would sleep in the van....and shower at the truck stop, if I even showered, and live off popcorn. I wouldn't go that far anymore, he said before embarking on his latest tour, this time also crossing the Atlantic and visiting Europe. Guitar Aficionado said of him, Earle sings like a honky-tonk hero and thinks like a 21st century man. Hes sharp and young, and has soul to burna traditionalist that is not afraid to play ragtime and cover the Replacements punk anthem Cant Hardly Wait. If thats not enough, Earle combines a hard work ethic with a touch of style, being named by GQ magazine as one of the 25 most stylish people in 2010. The evening is going to take Brussels to the south of the Mason Dixon line to see the finest performer of the latest generation to make their mark in what is called, the true American music.

Brussels Agenda
21 Nov Latin America's New Dynamic 11:00 19:30, Friends of Europe, Bibliothque Solvay Latin America has leapt to centre stage of late. Brazils growing political selfconfidence and economic muscle is being repeated in various degrees throughout Latin America by an assertive new spirit of industrial innovation and social progress. What are the global implications of a more dynamic Latin America in areas ranging from the battle against climate change to the G20s search for a fairer international rulebook governing financial services and investment? 21 Nov The New NATO Strategic Concept: An American View 13:15 - 14:30, Centre for European Policy Studies (CEPS), Place du Congrs 1 H.E. Ivo Daalder, Ambassador of the United States to the NATO gives his views. 22 Nov Second EU Russia International Conference 09:00 17:00, Permanent Representation of the Czech Republic to the EU, Rue Caroly, 15 This second meeting will focus on the prospects for a new strategic partnership between the EU and Russia. The aim will be to explore concrete steps which the Russian and European policy communities might take in order to build a more durable and meaningful partnership. 22 Nov Science Diplomacy with the Arab Peninsula 11:00 - 13:00, European Parliament, ASP 5E-2 The purpose of the meeting is to identify an adequate format for scientific dialogue and cooperation between the Arab Peninsula and the EU within the context of the broader EU-GCC cooperation. 23 Nov - Europes Uncertain Energy Future 9:00 15:30, Friends of Europe, Bibliothque Solvay,

21-30 November
In the wake of the Arab spring, the Eurozone crisis and Fukishima, Europes transition to a low-carbon energy system has undergone a dramatic change due to the rise of oil prices and nuclear scepticism. So what new trends will be highlighted in the International Energy Agencys World Energy Outlook (WEO) 2011 and what are the implications for EU and national policymakers? 25 Nov -Which Challenges For The EU Budget? 12:25 14:30, International Trade Union House, Room B, Boulevard du Roi Albert II, 5 According to the Commission, the draft EU budget has undergone a substantial reform so that it can contribute to increasing growth and jobs in Europe, encourage greener agriculture, and establish a more environment-conscious and internationally prominent Europe. At this Monthly Forum the ETUI will provide the opportunity to discuss these ambitious targets. 30 Nov - Publishing On The Move 9:30 13:00, EESC, Rue Van Maerlant 2 As the largest cultural industry in Europe, book publishing is a crucial player in the economic and social development of Europe. It produces a market value of over 40 billion, employs hundreds of thousands of people and enriches Europes cultural diversity with half a million new titles per year. As it enters the digital switch, the publishing industry is undergoing a process of modernisation that carries important consequences. For more info on events in Brussels, visit www.agenda.be 23 Nov Jan Verwoert Weils How to speak with a mouthful of ghosts? is the latest lecture on Alina Szapocznikow. Jan Verwoert is a critic and writer on contemporary art and cultural theory, based in Berlin. He asks, with her art being strongly overshadowed by the story of her life, crucial questions we have to face when we look at Alina Szapocznikow's work are: How can we speak about the pain in her lifeher suffering in the concentration camps and death of cancerwithout reducing her to a victim and her work to a mere symptom 25 Nov Lunchtime concert 12:30 13:30, La Monnaie Every Friday from early October to midJune, the atmospheric Main Bar at La Monnaie is the setting for the lunchtime Concertini, forty-five minutes of chamber music closely or loosely related to the main themes of the opera, concert and recital programme. 26 Nov Scorpions 20:30, Forest National The Teutonic kings of heavy metal are going to blast the roof off Brussels as their latest tour swings into town. Theyre also planning a 3D documentary of this tour, after over 40 years on the stage. 27 Nov Justin Townes Earle 20:00, Ancienne Belgique The highly acclaimed son of Steve Earle has won awards for his songs, find out why. 30 Nov Bombay Bicycle Club 20:00, Botanique The London indie rock quartet have a rapidly rising reputation as one of the most interesting and accomplished bands around.

WORK
TAKE A LOOK
Boy Wonder

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PLAY

Kubrick goes to war

Paths of Glory 24 November, Cinematek This 1957 film is regarded as one of the most powerful anti-war films ever made. The film stars Kirk Douglas as Colonel Dax, the commanding officer of French soldiers who refused to continue a suicidal attack. Dax attempts to defend them against a charge of cowardice in a court-martial. The young Stanley Kubrick had just suffered a box office failure with his previous film, but some at the studio had faith in him. After looking through countless scripts, failing to find a

suitable project, Kubric remembered a novel that had already been turned down by every major studio. Kubrick eventually got Kirk Douglas interested and that led to backing for the film. It was controversial on release, especially in Brussels. After the showing many criticized the poor light it cast on the French army, but the most offended was the Spanish dictator, Franco and it was banned in Spain until 1986, over a decade after Francos passing. Kubricks notorious control over every aspect and his demands for perfection were recalled by Kirk Douglas, He made the veteran actor Adolphe Menjou do the same scene 17 times. "That was my best reading." Menjou announced. "I think we can break for lunch now." It was well past the usual lunch time but

Kubrick said he wanted another take. Menjou went into an absolute fury. In front of Douglas and the entire crew he blasted off on what he claimed was Kubrick's dubious parentage, and made several other unprintable references to Kubrick's relative greenness in the art of directing actors. Kubrick merely listened calmly, and, after Menjou had spluttered to an uncomplimentary conclusion, said quietly: "All right, let's try the scene once more." With utter docility, Menjou went back to work. "Stanley instinctively knew what to do. But there was some brightness for the director. The only female role in the film was played by Christiane Harlan, who later became Mrs Kubrick, staying with him until his death in 1999.

RESTO

Yes, hes the most recognized symbol of Brussels and his story is that of legend, but the little chap does represent something of the anarchic spirit of the city. The real thing is a copy from 1965, after the last in a long line of thefts, but he can be seen in many places, not least a station in Tokyo, where the proud workers continue the tradition of dressing him up in costumes for special events. A football team in Rio de Janeiro also has a statue and made him a team mascot. And, of course, visitors to Brussels can buy him in many forms as a souvenir. La Cantina Cubana 6 rue des Grands Carmes, Brussels Tel 02 502 6540 Would you like to escape the bitter weather and step into another world without airline fares? Look no further than the intimate and sizzling world of La Cantina Cubana. A few steps off Blvd Anspache or from the Manneken Pis, this gem will delight at first sight. The dcor (complete with digital scenes from Cuba and a glass case of rums and other Cuban specialties), music and meals will transport you into Cuba at its finest. Start with one of the many cocktails offered; they use their own mojito recipe, which will surly impress. Entres are between 7-9 and include Ensaladita (salad with goat cheese and Cuban dressing), Rellenitos (banana, herb and goat cheese-filled dough), and Sopa de Frijoles (black been soup). Main dishes range from the national dish, Ropa Vieja (pork with garlic sauce, rice, and various sides), to Pollo Al Chocolate (chicken fillet with a wine and cacao sauce), to varios fish and vegetarian dishes. The fried plantains and African potatoes, which are included as sides in many dishes, should not be missed. The typical main dish is a steal at around 15. No trip to Cuba would be complete without a flan or a banana, coffee and rum dessert. So remember, when you need to escape life in Brussels, La Cantina Cubana is there to spice up your evening.

The Japanese Manneken Pis|Yoggy

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Page 22 | New Europe November 20 - 26, 2011

NEW EUROPE

ANALYSIS

The Queen has a Twitter?

Top Tweets
@ElyseeFranglais ElyseeFranglaise As France declare 65Bn Euro austerity package N #Sarkozy suggests people to 'eat more cake'. #France 7 November Sarkozy channelling Marie Antoinette in dealing with austerity measures.

Depends on who you ask

By Jordan Shapiro
With nearly half-a-million followers Elizabeth Windsor certainly commands respect on the twitter sphere. Those followers, however, might be surprised to learn their queen has a fond love of gin and has knighted some devoted subscribers. The Queen's followers might also be disappointed to learn this fun-loving, alcohol indulging character is a fake. Fake Twitter accounts of the world's most influential people have become mainstream and popular as shown by the Queen's follower count. Some have contended these satirical accounts and parodies are misleading and dishonest by projecting opinions and personalities that are fake onto real people. Many politicians across the globe have used social media as a more effective tool to promote their policies and increase communication. Satirists are now also using the new media to mock those politicians. German Chancellor Angela Merkel's fake Twitter account often weighs in on the debt crisis. Tuesday @Angela_d_Merkel tweeted, Regling asking if he can try a Christmas buy-one-get-one-free offer to shift his godforsaken bonds. #EFSF #Shambles. Twitter has a policy regarding these false accounts, which says the fake accounts must clearly distinguish themselves as being parody. Recently, Twitter took action to remove the account, @ElyseeAnglaise, for impersonating the official residence of the French President. The creator of the fake Elysee account has rebounded with a new @ElyseeFranglaise account and says his tweets are not misleading, but based in satire. Great satire should run the knife edge of plausibility, the fake Elysee creator told New Europe. The Elysee author created the account due to the comic potential [he] saw in dry organizational tweets. Mr Sakozy clearly has nearly as high an opinion of himself as whoever is tweeting his praises and is therefore a satirical dream. The author added that he used the official Elysee logo on his account, which he thinks led to it being take down by Twitter. The Queen's parody account distinguishes itself in the description which reads: Queen, Head of the Commonwealth, Defender of the Faith, wife to the DoE. One's book, Gin O'Clock, is available now from Amazon and good book shops. (fictional). Whether or not the parody and satire of fake Twitter accounts does too far is uncertain, but they sure make politics more entertaining.

@Queen_UK Elizabeth Windsor In response to the ongoing crisis in Europe, one is having a latenight constitutional gin. 8 November The Queen dealing with her frustrations over the euro crisis.

Eurocrats are revolting

EU staff are ghting workplace cutbacks
In June, Inter-institutional Relations and Administration Commissioner Maro efovi announced plans to shave 1 billion off the budget by making changes to the staff regulations, hoping to reduce staffing levels by 5%, increase working hours from 37.5 to 40 hours per week and raise the retirement age from 63 to 65. This is in response to demands from member states, which are concerned about the effects of introducing harsh austerity measures at home while maintaining EU staff's perks and good working conditions. This has angered the staff associations, who have formed a Common Front to fight the planned changes. On 9 November, they held a wellattended meeting in the Commission HQ, where they agreed on their key demands. In it, they accused the institutions of using blackmail to push the reforms through and insisted that the Commission will ensure that once the proposal is submitted to the Council and the European Parliament, it will not accept changes without coming back to the Common Front. They also demanded that Berlaymont bosses defend to the end of the negotiation the unicity of the Staff Regulations, the attractiveness of the European civil service in all locations including working conditions, careers, salaries, pensions, the equal opportunities and the European schools. These are essential and are a prerequisite to begin a real dialogue. Their next step was sending an email to all staff, seen by New Europe, asking staff to contact Barroso and express their support for the Common Front demands and a letter to the Commissioners, which stated: We, the co-workers of the European Commission, are deeply worried by the risk of reducing the dynamic of the European co-operation. In the current crisis, European countries cannot weaken their main policy and operational tool to design effective counter-measures. The European Union is the only obvious credible force because it is the only structure which can bring solutions at the same scale than the problems faced. If each country is logically preoccupied by the future of its own citizens, no member states would be sincerely ready to go and fight alone this global battle. In order to ensure the best possible defence, the European Union needs powerful institutions, capable of competing with the other actors challenging our socio-economic standards. In this context, we can accept to show our concrete solidarity, even if this is insignificant economically, in order to send a positive political message, but we refuse to change the working conditions of the institutions personnel in a way that would jeopardise their strength and quality of action. The quality of the human resources, which is directly related to the attractiveness of the working conditions, is essential for building a powerful and proactive Europe, capable of resisting the continuous attack of its model. We therefore fully support the resolution adopted on 9 November by the Interinstitutional General Assembly of the personnel gathered by the Common Front of Unions and invite the College to reach a compromise with the Common Front, with a view to presenting to the legislator an agreed balanced and fair regulation, safeguarding the independence and highest quality of the European Public Function." This puts the Commission in a difficult position, wanting to show discipline and an awareness of the member states cutback requests in an age of austerity while upholding staff relations. At the 9 November meeting, which New Europe attended in a non-official capacity, one of the staff representatives addressed the meeting saying, We need more staff to deliver more Europe! Speaking off the record, one official said: We should accept that theres no pay rise this year, we know that things are tough and it doesnt look good for us to be somehow exempted from cuts.

@Queen_UK Elizabeth Windsor One can confirm that the Olympic Torch will visit Clarence House, where it will be used to light a cigarette for the Duchess of Cornwall. 7 November The Queen prepares for the London Olympic festivities

@Angela_D_Merkel Angela Merkel Text from Papademos: "OMG WTF". Sending him a crate of Dortmunder Export and some cigarettes. #greece 14 November Merkel providing support to her fellow eurozone colleague.

THE EUROPEAN UNION

New Europe | Page 23 November 20 - 26, 2011

FRANCE GERMANY
FRANCE GOVERNMENT FRANCE|BUDGET

Sarkozy launches war on French sick leave syndrome

French President Nicolas Sarkozy last week launched an offensive against the country's "sick leave syndrome," announcing that state pay for ailing public and private sector workers will only be applied after an additional day off. French civil servants took on average 22.6 days of sick leave in 2010. Private sector workers, on the other hand, took an average of 14.5 sick days. In Britain, by comparison, the average in 2009 was 8.3 sick days in the public sector and 5.8 days for private sector workers. The French government is trying to clamp down on people who abuse the system by getting doctors to write them off work even when they are healthy. "Stealing from social security is betraying the confidence of all French people," Sarkozy, who has been struggling to cut public spending in order to protect France's AAA credit rating, said. In the private sector, the state currently pays sick leave after three days absence, with employers usually picking up the tab for the first three days. Now, the state sick pay will only apply after four days -- a measure that

Lower house of parliament approves 2012 budget

The lower house of France's parliament on 16 November approved the 2012 budget, which Prime Minister Francois Fillon had presented as one of the toughest since World War II. The budget bill cleared the National Assembly, with 315 votes in favour and 198 votes against. In order to become law, it had yet to be approved by the senate. The opposition socialists who retain majority in the senate had already described the proposed budget, which included over 12 billion in tax increases and spending cuts, as "unjust" and "obsolete." President Nicolas Sarkozy's conservative government has defended the austerity measures as necessary to cut France's budget deficit and safeguard the country's AAA credit rating.

FRANCE|BANKING

BNP Paribas to cut 1,400 jobs

France's biggest bank, BNP Paribas, said on 16 November it would cut 1,400 jobs in its investment banking division, of which 373 jobs would come from inside France. The bank told trade union representatives that the current market context required staff cuts. The announcement came a day after Societe Generale, the country's second-biggest bank, announced "hundreds" of jobs cuts, also mainly in investment banking. France's banks have been stung by their heavy exposure to Greek sovereign debt. BNP Paribas, Societe Generale and Credit Agricole all announced sharply reduced profits in the third quarter, after taking a 60% writedown on their holdings of Greek debt.

French President Nicolas Sarkozy shakes hand with people as he arrives to deliver a speech in Bordeaux, southwestern France, 15 November 2011. |EPA/PIERRE ANDRIEU/POOL

would save the state 200 million ($271 million) a year, Sarkozy announced in Bordeaux. As for civil servants, whose sick leave is entirely covered by the state, they will not be paid for the first day's absence, Sarkozy said. That part of the measure would require a new law, the government said.

Opposition parties and trade unions accused the government of "punishing the sick." The national secretary of the CFDT union, Veronique Desacq, said it was "unacceptable" to "designate all employees potential fraudsters." Force Ouvriere, another trade union, pointed out that "sick people do not auto-prescribe their sick leave."

FRANCE|AIRLINES INDUSTRY

FRANCE ECONOMY

Airbus, Qatar Airways finalise $6.5 billion deal

Airbus on 15 November clinched a deal with Qatar Airways for the purchase of 50 A320 Neo medium-range planes and five A380 superjets, hours after the airline said it had suspended negotiations with Airbus because of "technical differences." France-based Airbus announced the deal, which has a catalogue value of $6.5 billion, at the Dubai Airshow. "The A320 Neo promises to be a great aircraft, which is why we have chosen it to form the backbone of our future singleaisle expansion," Qatar Airways CEO Akbar Al Baker was quoted in the Airbus statement as saying. Earlier, Al Baker had said he was "pessimistic" about the possibility of finalising the deal at the show. "Airbus is still learning how to make airplanes, and we will postpone the deal due to technical differences," he told reporters. Airbus, for its part, had called off a press conference announcing the deal. The Dubai show had been experiencing intense jostling for business between Airbus and its US arch-rival Boeing.

French economy grows 0.4% in third quarter

The French economy grew 0.4% in the third quarter of 2011, slightly faster than expected, the national statistics office INSEE announced on 15 November. The government had forecast the economy would grow 0.3%. At the same time, INSEE released revised figures for second-quarter growth, which showed the economy actually contracted by 0.1% in the quarter instead of growing as previously announced. So far this year gross domestic product has grown 1.7%, meaning that, bar a contraction in the fourth quarter, France should reach its growth target for the year of 1.75%. In the first quarter, gross domestic product (GDP) grew 0.9%. Next year, however, growth is forecast to slow sharply.The government has forecast growth of 1% for 2012. The European Commission expects it to be little over half that, at 0.6%.

GERMANY PHARMACEUTICALS

Bayer plans further expansion in Asia

The Bayer Group plans to further expand its production, distribution network and research activities in Asia and considerably increase its sales in the region in the coming years, The Company reported on 16 November. "We aim to achieve a more than 60% increase in our sales in Asia by 2015," Management Board Chairman Marijn Dekkers said on 16 November at Bayers international press conference "Perspective on Growth in Asia," held in Shanghai, China. This would mean annual sales of well over 11 billion by 2015 at todays exchange rates. Of this figure, Greater China is planned to account for some 6bn. Dekkers officially inaugurated a new production facility for TDI - a raw material for the production of flexible foams - at the Bayer Integrated Site Shanghai. He said the Bayer Group already does a significant proportion of its business in Asia. Twenty years ago, Asia accounted for only about 10% of sales, equivalent to just over 2bn. In the Asian region, Bayer achieved sales of 6.9bn in 2010, including 2.9bn in Greater China, and anticipates further growth in Asia in 2011. Another megatrend is the growth in the world population, which is expected to increase by another 2bn to 9bn over the next 40 years. At the same time, more and more agricultural land is being used for energy production. All the Asian countries are intended to play a part in achieving the sales increase targeted for 2015. Apart from China, this applies particularly to India, where sales are expected to grow from just over 0.5bn last year to about 1bn. Sales in Japan are planned to rise from just under 2bn to around 2.4bn. To meet its growth targets in Asia, Bayer plans to develop the necessary personnel resources, Dekkers continued. The companys Asian workforce has increased by nearly 8% in the past 12 months alone.

GERMANY|BANKING

Deutsche boosts Russian asset management

Germany's biggest bank Deutsche Bank said on 11 November it is strengthening its asset management business in Russia by raising its stake in one of the leading players in the sector there, The Local reported. Deutsche Bank said in a statement it would increase its stake in Deutsche UFG Capital Management - one of the top 10 players in the Russian asset management industry - from 40% to 100%. The financial terms were not disclosed. "With this transaction Deutsche Bank's retail asset manager, DWS Investments, further strengthens its footprint in Russia, one of the most important growth economies in the world," it said. "

New Europe | Page 24 November 20 - 26, 2011

THE EUROPEAN UNION

UNITED KINGDOM IRELAND

UK | AIRLINES UNITED KINGDOM CULTURE

EasyJet pays dividend as profits rise

British budget carrier easyJet reported a sharp rise in pretax annual profits to 248 million ($ 394 million) as passenger numbers increased by nearly 12%, DPA reported. The figures through September compare with a pre-tax profit of 154 million in 2010. Revenues rose by 16% to 3.45 billion. EasyJet confirmed that it would pay a special dividend of 150 million in addition to an ordinary dividend of 10.5 pence per share, making a total pay-out of 195 million. EasyJet said the annual result, which was at the higher end of expectations, was due largely to more people using the airline for business travel. Punctuality rates had been improved by 13% to 79%, the company said. A total of 54.5 million passengers used easyJet over the past year - an increase of 11.8%. Over 9 million of those passengers bought business class tickets. The airline, which saw its fuel bill rise by 100 million during the year, also warned of difficulties ahead. "The macroeconomic environment remains challenging for all airlines as weak consumer confidence across Europe slows the rate at which higher fuel prices and increased taxation can be passed on to passengers," said Chief Executive Carolyn McCall. The results were achieved "despite the headwinds of higher fuel costs and a weak and uncertain economic outlook," she added. Following the example of rival Ryanair, easyJet will start trials on seat allocation on certain routes next April, allowing passengers to purchase seats in advance.

Sony and Universal to buy EMI

Coldplay arrives at the 2011 MTV Europe Music Awards in November. | EPA/Ian West.

IRELAND | JOBS

Prometric to add 150 Dundalk jobs

Up to 150 new jobs will be created over the next three years in Dundalk, according to Prometric, RTE Ireland reported. Speaking at the formal announcement last Monday, Prometric CEO Michael Brannick said the company had chosen Dundalk for a variety of reasons, including its location and workforce available to the company. Prometric is establishing a global test development service business. The company already has a staff of around 75 in Ireland and is expected to start recruitment immediately for the Dundalk facility. ''Our decision to invest in Ireland allows us to expand our employee base globally, work in closer proximity to many of our customers and to provide test development services virtually around the clock," said Michael Brannick, president and CEO of Prometric. "This announcement by Prometric is very significant for Dundalk and will provide excellent employment opportunities in the North-East region,'' commented IDA Ireland chief executive Barry O'Leary. ''Ireland is experiencing strong growth in international business services - a key target area in IDA's strategy which is contributing significantly to Ireland's impressive export performance," he added.

Katy Perry, Coldplay and Pink Floyd are getting a new boss - Universal Music, the worlds largest record company, said it had joined up with Sony Music to buy legendary record company EMI in a $ 4.1-billion deal, DPA reported. Under the terms of the sale Universal will pay EMIs owner Citigroup $ 1.9 billion for the companys recorded music division, while Sony will splash out $ 2.2 billion for EMIs publishing division. The transaction came during a tumultuous period for the music industry which has seen sales tank over the last

decade as sales of CDs tumble due to the spread of downloadable music over the internet. Citigroup snapped up EMI in February when previous owner, the private equity firm Terra Firma, which had paid $ 6.8 billion for the company in 2007, defaulted on its loan. Universal Music CEO Lucian Grainge said the new deal would ensure the legacy of the record company, which counts stars such as the Beatles, Perry, Norah Jones and Coldplay on its roster. "EMI was the pre-eminent music

company that I grew up with," said Grainge in a media release. The deal, which still must be approved by European and US regulators, will cement Universals status as the worlds largest record company, with some 35% of industry sales. EMIs back catalogue, which includes such classics as Singing in the Rain and Over the Rainbow will bolster Sony ATV, which is co-owned by the Michael Jackson Family Trust and which holds the rights to the songs of the Beatles, Elvis Presley, Eminem and Bob Dylan.

UNITED KINGDOM ENERGY

Iraq natural gas joint venture gets nal approval

The Iraqi cabinet approved an agreement with Royal Dutch Shell (Shell) and Mitsubishi Corporation, forming a joint venture to gather raw gas from three major oil fields. The joint venture held 51% by Iraqs South Gas Company, 44% by Shell and 5% by Mitsubishi Corporation., will be called Basrah Gas Company (BGC) and will gather raw gas that is currently flared because of a lack of infrastructure to collect it. Shell will provide project management and technical expertise with the intention to facilitate learning and development of Iraqi staff to progressively assume key positions in the management of the company. The joint venture will collect and process raw gas from the Rumaila, Zubair and West Qurna 1 and Majnoon fields in the southern part of the country. The primary market for the gas will be Iraq, but any surplus can potentially be exported. Some 700 million standard cubic feet of gas is currently burned off each day in southern Iraq. At current prices, the gas is worth about $ 1.8 billion per year. Burning it creates as much greenhouse gases each year as 3.5 million cars. In September 2008, Shell signed a preliminary agreement with the Iraqi Ministry of Oil for a gas gathering project. The agreement established the commercial principles to establish a joint venture between Shell and the South Gas Company. An official signing ceremony will be scheduled in the near future. In Iraq Shell is the operator of a consortium providing technical assistance in the development of the Majnoon field.

IRELAND | ENVIRONMENT

Coillte to supply 10 million trees

Coillte Nurseries, which is part of the Coillte group, has announced a new deal with the Northern Ireland Department of Agriculture and Rural Development Forest Service, RTE Ireland reported. Coillte will supply, deliver and offload ten million forest plants between Janauary 2012 and the end of 2016. About two million plants will be supplied every year by Coillte to the Northern Ireland Forest Service over the course of the five year deal. The plants will come from Coillte's Killygordon Nursery in Donegal. Sitka spruce trees will make up the vast majority of the requirements but broadleaf, pine and other conifer stocks will also be supplied.

UNITED KINGDOM BUSINESS

Burberry's rst half prots jump

British luxury goods company Burberry said its net profits jumped 41% in the group's first half, RTE Ireland reported. Burberry saw its net profits jump as fashion-conscious consumers around the world snapped up the British group's luxury clothes and handbags. Burberry, famous for its trench coats and trademark red, camel and black check design, said profits increased to 117.2 million in the six months to the end of September from the same time last year. Revenues rose 29.4% to 829.6 million in the six month period. "Burberry has delivered a strong first half, reflecting our continued investment in innovative design, digital marketing and retail strategies," chief executive Angela Ahrendts said. She added that Burberry was "mindful of, and prepared to react to, any local or global uncertainties as we drive for long-term sustainable growth." Burberry is enjoying robust growth on strong demand for its products in emerging markets such as China, India, Latin America, the Middle East, Russia and Turkey. As of September 2011, Burberry globally had 187 retail stores, 210 concessions, 44 outlets and 52 franchise stores. The company, which is headquartered in London, was founded in 1856.

THE EUROPEAN UNION

New Europe | Page 25 November 20 - 26, 2011

ITALY SPAIN PORTUGAL

ITALY GOVERNMENT ITALY|AID

New government to focus on eliminating budget decit

Italian Prime Minister Mario Monti's newly appointed government expectedly received backing from former prime minister Silvio Berlusconi's conservative People of Freedom and the centre-left Democratic Party the largest parties in Italy -- to pass the mandatory parliamentary hurdles. In the upper house of the parliament, the new government won by 281 votes to 25. The negative votes came from the senators of the Northern League party, the junior partner in the former government. Monti's cabinet formally sworn in on 16 November with a gigantic task of rearranging the countrys finance in a time when the Eurozone is passing through a continuing quandary arising out of sovereign debt crisis in some member states. Earlier Monti outlined his government's programme -- focussing on eliminating the budget deficit in 2013 and stimulating economic growth, including through changes to the country's rigid labour market. "We must overcome the situation in which Italy is the weak link of the chain in Europe," Monti said in speech delivered in the senate, ahead of the confidence. "With the reforms the spread will narrow," Monti said, adding: "The choices made by investors who buy public debt are guided

EU pledges aid to help region recover from floods

The European Union's executive on 17 November pledged millions in aid to help a region in Italy to recover from severe floods last year and a town in Spain recover from two earthquakes in May. Two consecutive earthquakes, with 5.2 magnitude on the Richter scale, hit Lorca in southern Spain on May 11, killing nine an injuring about 300 people. The European Commission proposed to pay out 21 million to help "relief operations, (the) clean up of affected areas and repair of basic infrastructure," it said in a statement. In Italy, flooding affected the Veneto region in the north east, provoking nearly 700 billion worth of damage as roads, housing, businesses and crops were ruined. In response, the commission offered to provide 16.9m in aid, mainly to help repair infrastructure. The money comes from the EU Solidarity Fund.The disbursements for Spain and Italy still need to be approved by the bloc's government and the European Parliament, a formality that normally takes a few months.

SPAIN|ECONOMY
New Italian Prime Minister Mario Monti, centre, during the reading of his Government's program in the Italian Senate, Rome, Italy, 17 November 2011. |EPA/CLAUDIO ONORATI

Spain admits it will not meet growth forecast

The Spanish government on 16 November revised downwards its economic growth forecast for this year, while official statistics confirmed that the economy had stagnated in the third quarter. Gross domestic product (GDP) would grow only 0.8% in 2011, instead of the initially foreseen 1.3%, Economy Secretary of state Jose Manuel Campa said. The government's new forecast was slightly higher than that of the European Commission, which expects Spain's GDP to grow by 0.7%. The official statistics body INE, meanwhile, confirmed central bank data that the economy had stalled in the third quarter, mainly due to a 1.1% cut in public spending and to a continuing crisis in the construction sector. Spain's borrowing costs, meanwhile, continued to rise, with the yield for 10-year bonds climbing to 6.35%, Spain's highest since joining the euro.

by their expectations on what (the economy) of Italy will be like in 10 and 20 years time." Monti was referring to the recent spike in Italy's borrowing costs and market doubts over the country's credit-worthiness. These already had pushed to more than 500 basis points the spread between the premium demanded by investors for Italian government bonds compared to Germany's. Monti said sacrifices would be necessary but that the "distribution of sacrifices would be a fair one." At one stage the new premier

was interrupted by applause. "Don't applaud, listen!" Monti said. He explained that his government would aim to eliminate Italy's budget deficit by 2013, a pledge first made in recent months by former prime minister Silvio Berlusconi. To achieve this, Monti indicated that further cuts to state spending would be required. These would include cuts to public administration costs, which the premier said would result in the scrapping of the country's more than 100 provincial government entities -- an un-kept election promise made by Berlusconi.

SPAIN TAXES

SPAIN|AUTO INDUSTRY

Madrid relived as EU court rejects Gibraltar tax reform

The Spanish authority last week was gifted with a welcome victory circling the Gibraltar issue. A reform of the tax code that would have attracted foreign companies in the British oversea territory of Gibraltar was struck down on 15 November by the European Court of Justice. "The proposed tax reform constitutes a scheme of state aid which (Britain) is not authorised to implement," the Luxembourg-based court said in a statement after it ruled on the matter. The scheme linked corporate tax to the amount of land occupied and the number of people employed -- essentially freeing companies with no physical presence in Gibraltar from the obligation of paying any tax at all. It also limited corporate taxes to 15% of profits and exempted non-profitable companies from any tax obligations. The European Commission rejected the tax scheme in 2004, but British and Gibraltar authorities successfully appealed to the EU Court of First Instance, which reversed the commission's findings in 2008.

New car sales in plummet in Spain

Data from the European Automobile Manufacturers' Association (ACEA) confirmed that the Spanish car market too heavily felt the pinch of recession in October in line with the overall bleak situation of the European economy. In Spain, new car registrations slumped 6.7% on month in October, the ACEA data showed. Between January and October registrations tumbled by 19.7% in the country. The monthly falls in the three cash-strapped nations that have tapped the EU-led bailout out Greece, Ireland and Portugal were even more dramatic. Registrations plunged 51.8% in Ireland, 40.5% in Portugal and 35.7% in Greece.

PORTUGAL LOANS

EU-IMF group clears Portugal bailout payment

Portugal should get an 8 billion instalment from its bailout package, despite slippages in its budget deficit for 2011, experts from a group of international lenders concluded on 16 November. Due to reckless spending, mainly in the region of Madeira, Portugal's 2011 deficit would overshoot targets by 1.5 percentage points, a troika of experts from the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) said after a mission in Lisbon. However, given the government's plans to make up for the loss by getting banks to inject assets into social security funds, the EU-ECB-IMF team predicted that the country would still respect the 5.9% of gross domestic product (GDP) deficit target. In a statement, international lenders also praised the fresh austerity measures in the draft budget for next year, estimating that it would allow Portugal to meet the "ambitious fiscal target of 4.5% of GDP in 2012." If Eurozone finance ministers and the IMF executive board were to approve these findings, Portugal would be in line to receive its bailout instalment "in December and January," the EU-ECBIMF team said. The funds are part of the 78bn, three-year loan that Portugal secured last year, becoming the third Eurozone member after Greece and Ireland to resort to a bailout.

PORTUGAL|LABOUR

Jobless rate rises in third quarter

Unemployment continues to rise in recession-hit Portugal, where the national statistics body INE on 16 November estimated a jobless rate of 12.4% for the third quarter, representing a 0.3% rise on the previous three months. Among people aged between 15 and 24 years, unemployment stood at 30%. "A very considerable adjustment" was needed to "correct instabilities that have been accumulating over the past years," Economy Secretary of state Pedro Martins said. However, the government saw no need to revise its forecast of a 13.4% unemployment rate for 2012, Martins said.

New Europe | Page 26 November 20 - 26, 2011

THE EUROPEAN UNION

AUSTRIA SLOVENIA MALTA

SLOVENIA|AUTOS

Government to fund Revoz

The Slovenia government has earmarked 45.5 million to the Novo Mesto-based car maker Revoz.The Renault-owned assembly plant will get the funds pending EU approval, the Government Communications Office said on 14 November, Balkans reported. The subsidy funds are to be awarded for a project, worth an estimated 326 million, to assemble in Novo Mesto the new generations of Renault's Twingo and the Smart Forfour as part of the Edison projects, a joint venture between Renault, Nissan and Daimler Benz.

AUSTRIA TRANSPORT

Vienna U6 hesitation may axe 300 jobs

AUSTRIA|BANKING

UniCredit losses put BA under pressure

Bank Austria (BA) chief Willibald Cernko said he plans to reduce the financial institutes workforce level to get through the crisis, Austrian Independent reported on 15 November. The banker announced BA would have only 10,000 employees in Austria in 2015, 800 fewer than it had at the moment. Cernko underlined that sackings were not planned. He explained some staff may leave the company for personal reasons. The BA boss added that the bank planned not to replace retiring employees. BA manages UniCredits operations in the whole of Central and Eastern Europe (CEE) except Poland. Cernko said BA would not leave any of the markets it was currently doing business in despite UniCredits troubles.The Italian bank, which owns BA, sustained a loss of 10.6 billion in the third quarter of 2011. UniCredit chief Federico Ghizzoni said on 14 November his bank planned a capital increase next month. It has to be seen whether shareholders give the green light to the endeavour considering the tumbling value of UniCredits stocks. Contracts say that BA will run UniCredits CEE businesses until 2016. UniCredit has 160,000 staff. It plans to lay off more than 5,000 in the coming years, according to Italian business dailies. Cernko said BA planned to increase workforce levels in Eastern Europe (EE) by 1,135 in the next four years despite a decrease of value of UniCredits affiliates in Ukraine and Kazakhstan. Investors from Qatar and China consider bolstering UniCredit with their assets, it has been reported. BA achieved a net profit of 4.5 million in the first nine months of this year, down from 723.5 million in the same time span of 2010. The CEE business operator of UniCredit had to lower the value of Greek government bonds it was holding due to the economic turmoil in the debt-stricken member of the European Union (EU) and the Eurozone. Cernko warned already in December of last year that the tougher rules and higher taxes may increase banks difficulties in finding investors. He made clear many times in the past months that his bank would pass on extra costs created by a disputed bank levy to customers.
The U6 line (right) remains unpopular .| Herbert Ortner

Hundreds of jobs may be at risk if the Viennese government refuses to give the go-ahead for a 66-million assignment, according Bombardier Austria head Germar Wacker, Austrian Independent reported on 15 November. The Viennese government coalition of Social Democrats (SP) and Greens puts the order for 20 underground trains on hold to evaluate the assignment again due to empty city coffers. The federal capitals debts soared by 1.87 billion to 3.07 billion in 2010. Now the head of the Austrian representation of Canadian company Bombardier said 300 of the 600 jobs at its plant in Vienna-Donaustadt could be endangered by the end of 2012 if the city abstained from giving the green light to the construction of 20 U-Bahn trains in the remainder of this year. Asked by the Kurier newspaper why an assignment of 66 million could have such immense effects on an enterprise with more than 65,000 employees and a two-digit million-Euro turnover, Wacker made aware of the research department at Bombardier Austrias Viennese factory. He argued its operations were strongly linked to the manufacturing branch as staff developed public transport solutions for cities all over the world there. "Public budgets shrank because of the crisis. Many invest-

ments were delayed," he said about the general situation. Wacker refused to reveal whether his company could allow the city of Vienna to cough up the full sum for the assignment with some delay. However, he underlined that the "signals are positive" that Bombardier Austria finds a solution in cooperation with the city government to get the order on track. The company serves 2.2 million passengers a day. It had 839 million passengers last year, up from 612 million in 1990. Wiener Liniens U6 trains differ in size from the wagons used on its other U-Bahn connections. The U6 is Viennas busiest and, according to a recent poll, least popular underground line. Wiener Linien officials recently admitted that coping with the effects of the shutdown of the U1 underground line next summer "will certainly be a challenge." The service will be put out of business between Reumannplatz station in the south and Stephansplatz station in the city centre for around seven weeks. A Wiener Linien expert explained the repairs of the services outdated electronic appliances and train tracks made a total closure in both directions necessary. Company managers are currently checking whether a motorised traffic collapse could be rather avoided by increasing the servicing of buses or if setting up an additional tramway link would be the better alternative.

SLOVENIA BUSINESS

Gorenje Group halves prots

The group around the Velenje-based household appliance maker Gorenje generated a net profit of 7.8 million in the first nine months of 2011, which is less than planned and 53.6% less yearon-year. Sales revenues meanwhile grew by 9.8% year-on-year to 1.06 billion, the company said on 11 November, Invest Slovenia reported. Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at 62.1 million, which is 11.5 million less compared to the same period last year, when the 6% EBITDA margin is taken into account. According to Gorenje boss Franjo Bobinac, the group's results were affected by the high prices of materials, lower income stemming from lower sales and changes in the structure of sales. The profit was also affected by the negative results of the Swedish subsidiary Asko. However, Asko operated with a profit in the third quarter and the negative effect on the group's results is expected to be levelled out next year. To address the difficult conditions, Gorenje has prepared a strategic plan until 2015, which envisages revenues of 1.5 billion at an average growth rate of 4.5%, which is more than the expected market growth. The group intends to consolidate its position on its traditional markets and expand sales in BRIC countries (Brazil, Russia, India and China) and other overseas markets, which allow higher levels of growth than Europe. To improve its financial state and protect itself from the deteriorating market conditions, Gorenje will sell non-essential assets by 2015, normalise cash flow and deleverage.

SLOVENIA|BUSINESS

Terme Catez Group posts profit

The group around spa operator Terme Catez generated a 3.4 million net profit in the first nine months of 2011, which represents a 38.2% increase over the same period last year. The core company concluded the first nine months with a 3.2 million net profit, improving its results by 11.4% year-on-year, Invest Slovenia reported on 14 November. Operating profit of the group decreased by 11.8% to 6.5 million, while Terme Catez alone increased its operating profit by 4.6% to 5.4 million in the first nine months, said Terme Catez in a press release on 14 November. The number of overnight stays went up by 1.7%, while the number of visitors at thermal pools remained unchanged. The overnight stays of Slovenian guests decreased by 3%, while the overnight stays of foreign guests went up by 7.8%.

MALTA CRIME

Car bomb injures three

Three people were injured when a car bomb exploded in Malta on Wednesday, police said. The car blew up in the residential area of Hamrun, in the Inner Harbour Region, dpa reported. The injured were passersby. Police said their injuries were not life-threatening. The explosion reverberated over a large area of the normally tranquil Mediterranean island. The car belonged to a man released from prison last week, according to police.

THE EUROPEAN UNION

New Europe| Page 27 November 20 - 26, 2011

BELGIUM NETHERLANDS LUXEMBOURG

THE NETHERLANDS SECURITY THE NETHERLANDS|RETAIL

Fox-IT and TNO develop Cyber Attack Detector

Fox-IT, an IT Security provider headquartered in The Netherlands, and TNO, an independent research organization, announced the award of a grant from the Ministry of Economic Affairs, Agriculture and Innovation in The Netherlands to develop a new Cyber Attack Detector to protect businesses and governments against digital espionage. The threat of targeted cyber attacks, especially digital espionage is increasing rapidly. The current security measures against cybercrime focus primarily on the detection of massive and indiscriminate attacks. To protect businesses and governments against cyber espionage Fox-IT and TNO are developing the Cyber Attack Detector (CAD). Analyzing a large number of digital espionage indicators will allow users to be instantly alerted when there are activities that indicate fraud or espionage. The Ministry of Economic Affairs, Agriculture and Innovation in The Netherlands has granted 800,000 via the Innovation for Public Security program for the development of this joint solution. Digital espionage threat is increasing, protection lagging The social and economic impact of cybercrime is increasing, as is the demand for an effective

Sales turnover up slightly

In the third quarter of 2011, retail turnover grew by 0.3% relative to the same period last year. Retail prices were 2.9% higher, volume declined by 2.6%. According to the latest figures released by Statistics Netherlands, non-food shops pushed down sales and volume in the retail sector, Statistics Netherlands reported on November 15. Non-food shop sales dropped by approximately 2%. Higher prices did not entirely compensate for the volume decline by nearly 4%. Turnover declined in nearly all branches of the non-food sector. Clothes shops and consumer electronics shops had to cope with loss of turnover. Turnover generated by food, drinks and tobacco shops was nearly 2% higher than in the same quarter last year, entirely due to higher prices. Volume contracted marginally. Supermarkets realised a higher turnover, but specialist shops performed less well than in the same quarter last year. Mail order firms and online shops realised a turnover growth by nearly 6%, petrol stations achieved a turnover growth by more than 5%. Sales were down in most branches of the retail sector. The loss is almost entirely due to non-food shops. Altogether, non-food turnover dropped by nearly 6% in September, volume shrank by more than 7%. Clothes shops, consumer electronics shops and textile supermarkets recorded considerable turnover losses.

Security experts examining the code of a virus.| EPA/Kay Nietfeld

protection against cybercrime. The attack methods of the digital spy have become more sophisticated, with increasing reports of very specific and targeted attacks. Traditional protective equipment such as intrusion detection systems, firewalls, virus scanners, and log analyzers offer inadequate protection. The purpose of the CAD project is to develop a sensor that enables organizations to determine in their Information and Communications Technology networks whether they are

victims of espionage. Early detection of infiltration means that espionage or an attack can be prevented or stopped. To facilitate this, a number of cybercrime indicators are combined intelligently in the CAD. A cyber espionage attack follows in practice a fixed pattern: entice, contaminate, collect and exfiltrate. The CAD lays down tripwires for each step. Every feature in itself does not have to be a sign of a digital attack, but the combination of characteristic features can be.

LUXEMBOURG|MEDIA

ASTRA offers 3D TV
SES, Luxembourg-based Europe's premier direct-to-home (DTH) satellite operator, announced that it has signed a capacity agreement with High TV 3D, a worldwide 3D general entertainment channel, primarily for cable distribution. High TV 3D will be distributed via the ASTRA 23.5 degrees East orbital position (11778.00 MHz, vertical), benefiting from its optimal European footprint coverage and household reach. ASTRA 23.5 degrees East is the home of various international 3D channels such as Brava 3D, Penthouse 3D and the ASTRA 3D demo channel. "The sales of 3D enabled TV sets is expected to significantly grow over the next years," says Ferdinand Kayser, Chief Commercial Officer of SES. "The availability of compelling, high quality 3D content is of key importance to further drive the development of 3D. High TV 3D is a very valuable addition to our growing 3D line-up, and we look very much forward to a successful cooperation."

LUXEMBOURG FINANCE

Gabelli launches GAMCO merger arbitrage UCITS

GAMCO Investors, Inc announced that its advisory subsidiary, Gabelli Funds, LLC has launched GAMCO Merger Arbitrage, a sub-fund within the GAMCO International SICAV. This sub-fund will provide non-U.S. investors with direct access to GAMCO's merger arbitrage strategy in a UCITS form. The second sub-fund within the firm's Luxembourg based SICAV, GAMCO Merger Arbitrage will be offered outside of the United States to institutional and retail investors and will initially register retail shares in Switzerland, Germany, and Italy. Currency classes offered include U.S. Dollar, Swiss Franc, and Euro. The firm has been running merger arbitrage portfolios since 1985. Historically, this strategy is absolute return driven and seeks to preserve capital with low volatility and no correlation to the overall securities market. The Advisory Board of the SICAV consists of Karl Otto Pohl, former President of the German Bundesbank from 1980 to 1991 and one of the pre-eminent central bankers of our time, as well as Mario D'Urso, former Senator and Under Secretary of State of the Ministry of Commerce with the Exterior for the Republic of Italy. The Board of Directors includes John Birch, COO of Sentinel Asset Management; Anthonie van Ekris, Chairman of Balmac International Inc; and Oliver Stahel, Chairman of Viafina AG. The Administrator and Custodian is J.P. Morgan Bank Luxembourg S.A. and the Auditor is Deloitte S.A. The subfund will provide daily liquidity and has an annual management fee of 1% for institutional investors and 1.5% for the retail share class. The performance fee is 20% and is subject to a high water mark. MDO Management Company S.A. serves as the Management Company.

BELGIUM|TELECOMS

Belgacom and Fon set up the largest wireless Internet network

Belgacom has started to build the largest Wi-Fi hotspot network in Belgium, thanks to the partnership announced in June with the Spanish company Fon: this year, Belgacom Internet customers will be able to surf on their laptop, tablet or smartphone (Android & IOS & Blackberry) for free via over 100,000 Wi-Fi hotspots. In 2012, this network will be extended to more than 500,000 Wi-Fi hotspots in Belgium. In June, Belgacom announced its cooperation with the Spanish company Fon, world's largest Wi-Fi community, with over 4 million customers sharing their wireless Internet access with each other worldwide. While most providers of public hotspots install the equipment themselves, Fon configures the modems of Wi-Fi Internet customers so that, besides their own network, they become part of a semi-public network on which Fon users can register. Both networks are completely separate from each other. Sharing the Wi-Fi connection is also completely safe.The wireless Internet connection of Belgacom customers at home is opened to members of the Fon Wi-Fi community, in a secure way. Their modem has two access points: one for private use and one to share with other users. The shared use will have no noticeable impact on their own Internet experience or their TV quality, which will always be given priority. The traffic is completely separated.

BELGIUM PHARMA

Ablynx reports slight fall in total revenues

Ablynx, a Belgium-based biopharmaceutical company, announced its nonaudited business update, for the first nine months of 2011. Total revenues for the period were 16.6 million with R&D income at 15.3 million. Total operating expenses increased to 50.8 million euro, mainly driven by higher R&D costs as a result of the progress of the product pipeline. The net loss for the period was 33.1. The net cash burn during the third quarter remained well under control at just 8 million, resulting in a net cash burn for the period January-September 2011 of 31.2 million. Ablynxs cash, cash equivalents, restricted cash and short term investments were 84.6 million at 30 September.

Page 28 |New Europe November 20 - 26, 2011

THE EUROPEAN UNION

POLAND HUNGARY CZECH REPUBLIC

HUNGARY|PHARMA POLAND POLITICS

Teva to expand production in Godollo

Israeli generic drug maker Teva will soon complete construction of a new production hall at its plant in Godollo, just outside Budapest, as part of an almost HUF 30 billion investment, communications chief Peter Paplanos, said, Budapest Business Journal reported. The plant will start producing the active ingredient for the cancer drug 5-fluorouracil next year. Several hospitals in Hungary have run out of 5-fluorouracil recently, according to reports. Antal Feller, CEO of pharmaceutical wholesaler Hungaropharma, said there is a shortage of the product across Europe as the plant making the drug in the Netherlands has been temporarily shut down due to a technological problem. TEVA announced a 65 million expansion at the Godollo plant in January 2010. The drug maker said the project, to be completed by the end of 2014, will mainly affect the production of cancer drugs, eye drops and injections.

Law and Justice Party set to split

CZECH REPUBLIC|ECONOMY

Deficit cuts set to counter stagnated growth

The ongoing turmoil in the Eurozone has started taking its toll on the Czech economy but that wont be let loose to intensify its affect, the Czech cabinet indicated last week. Local reports said citing the finance ministry that further cuts would be made to trim the budget deficit. This followed the publication of the latest economic figures by the Czech statistics office. The data showed Czech Republics real GDP remained unchanged in the third quarter from the previous three months, signalling economic stagnation. However, year-on-year growth was 1.5% in the third quarter, slightly below forecasts by analysts. The agriculture and construction sectors were particularly affected by the slowdown. Household spending was also down in the quarter. But foreign trade grew, even though demand was weighed down by the ongoing crisis. The performance, given the sovereign-debt crisis in the Eurozone, wasnt too low from being called satisfactory but the Czech cabinet seems set not to take any chances. The apprehensions on the crisis effects on the former communist nation made many analysts to believe that a soft handling of the economy may be on the cards as it looked unlikely for the government to take further unpopular stringent actions to tame the defict. However, the finance ministrys last weeks announcement confirmed that the government would intensify trimming the budget deficit despite the bleak economic-growth outlook. The ministry has cut the target for the 2011 publicfinance gap to 3.7% of economic output from an original goal of 4.6%. The goal for 2012 deficit has been reduced to 3.2% of GDP, from 3.5% set in the 2012 budget draft. The ministry now foresees the GDP growth for next year at 1%, down from the 2.1% advance forecast for 2011. Despite the sharply worsening outlook for the global economy, with a potential significant negative impact on the export-oriented Czech economy, the medium-term fiscal consolidation targets are still being preserved, the update of the finance ministrys fiscal outlook read. However experts noted that fiscal consolidation may not be enough to retain the economic health as the export-reliant economy remain susceptible to offshore threats. The Czech Republic relies on demand from the EU to drive its economy as the bloc buys about 80% of its exports, including Skoda cars. The finance ministry now predicts that the Czech GDP should expand 2% in 2013 and by 3.3% the following year. Premier Petr Necass Cabinet wants to avoid a repeat of 2009, when the worst economic contraction since the fall of communism hurt state finances and widened the fiscal deficit.

Taking the PiS? Leader of Law and Justice Jaroslaw Kaczynski delivers a speech.| EPA/JACEK TURCZYK

Poland's right-wing opposition Law and Justice party looked set to split Tuesday after it expelled 17 party members from its ranks when they formed a separate political club in parliament. Law and Justice's governing body decided Monday night to expel 16 members of parliament and one senator after they formed a new political club called Solidarna Polska (Solidarity Poland.) The politicians had held back from declaring a new political party, however, and said they wanted to remain members of Law and Justice.

The politicians had received an ultimatum that they must leave Solidarna Polska or be excluded from Law and Justice. One of the grouping, parliamentarian Andrzej Dera, called that move a bad attempt to break our solidarity, speaking to broadcaster TVN24 on Tuesday. Dera added that the members would not return to Law and Justice, and were set to form a new rightwing political party. There will be more of us, he said. If Law and Justice could not be changed from the inside, maybe our

group will make those changes happen anyway. Law and Justice has been criticized for its harsh attitudes to Russia and Germany, Poland's historical foes. It has also been accused of using last year's plane crash, which killed thenpresident Lech Kaczynski of Law and Justice, and 95 others, for political gains. The Solidarna Polska club is loosely centred around Zbigniew Ziobro, a former justice minister who is considered a main rival to Law and Justice leader Jaroslaw Kaczynski.

HUNGARY BUSINESS

MOL Q3 prot falls

Net income of Hungarys MOL fell 60% to HUF 36.4 billion in the third quarter from the same period a year earlier as margins narrowed and financial losses grew, Budapest Business Journal reported. The result was far better than the HUF 32.7 billion loss estimated by analysts. Revenue rose 14% to HUF 1,366.0 billion in Q3 from the same period a year earlier. But cost of raw materials and consumables climbed at a faster rate, increasing 18% to HUF 1,066.7 billion.Total operating costs were also up 18% at HUF 1,315.2 billion, causing operating profit to drop 39% to HUF 50.8 billion. MOL booked an HUF 18.3 billion financial loss in Q3, well over the HUF 10.3 billion loss in the base period. MOL noted that the price of Ural Blend jumped 48% and the price of Brent was up 47% during the period. MOL had net income of HUF 183.0 billion in Q1Q3, well over the HUF 67.9 billion in the base period. Costs rose at about the same rate as revenue and the company had a slight financial gain compared to a big financial loss in the base period. Revenue rose 23% to HUF 3,876.6 billion. Cost of raw materials and consumables was up 29% at HUF 3,078.7 billion, but total operating costs rose at the same pace as revenue to HUF 3,638.2 billion. MOL booked a tiny HUF 71 million financial gain in Q1-Q3 compared to a HUF 59.9 billion loss in the base period. Downstream operating profit plunged 68% to HUF 13.2 billion. Upstream revenue was up 7% at HUF 565.9 billion and operating profit climbed 42% to HUF 234.4 billion. The gas and midstream segment had revenue of HUF 281.5 billion, down 48%, but operating profit rose 42% to HUF 48.9 billion. MOLs capital expenditures came to HUF 165.1 billion in Q1-Q3, down 31% from the base period. MOL said it paid more than HUF 20 billion during the period on a crisis tax levied on energy companies. MOL had total assets of HUF 4,771.1 billion on 30 September, 2011, up 3.2% from twelve months earlier. Net assets rose 11.7% to HUF 2,156.5 billion.

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New Europe | Page 29 November 20 - 26, 2011

SWEDEN DENMARK FINLAND

SWEDEN AUTOS

No breakthrough in sale talks-Saab owner

The Dutch owner of ailing Swedish carmaker Saab said there was no breakthrough in talks on the sale of the group, dpa reported. Swedish Automobile issued the statement prior to an extraordinary shareholders meeting at its headquarters in the Netherlands. Two Chinese firms - Zhejiang Youngman Lotus Automobile and Pang Da Automobile - recently signed a preliminary deal to buy Saab for 100 million. However, the deal has come into doubt as General Motors (GM), Saab's former owner, has said it would not allow Saab to transfer technology licences to potential Chinese buyers. Talks were continuing with GM and the Chinese firms, said Swedish Automobile, a small Netherlands-based group that took over the carmaker from GM in 2010. Production has been at a virtual standstill since April as cash-strapped Saab has struggled to pay salaries and suppliers. Saab is currently undergoing voluntary reorganization and is protected from creditors. The Chinese takeover would require approval from Chinese authorities, the European Investment Bank, the Swedish National Debt Office and GM. GM on 7 November said selling its intellectual property to a Chinese competitor would harm its interests in China, a key car market.

FINLAND|JOBS

Higher benefits for jobless

A Finnish parliamentary committee on 11 November approved increases in jobless benefits, News room Finland reported. The minimum unemployment benefit is to go up by 100 a month at the beginning of next year, with increases in other jobless benefits as well.

SWEDEN|AVIATION

SAS sells MD80 planes to US low-cost carrier

The SAS Group, operator of the joint carrier Scandinavian Airlines, said it was selling 13 of its MD80 airplanes to US low-cost carrier Allegiant Air as part of its efforts to modernise its fleet, dpa reported. The sale, to be completed by February 2013, is worth about $20 million and includes 12 spare engines, the airline said, adding that the deal would not affect its results. SAS plans to replace the aircraft with Boeing 737NGs and Airbus A320s. The buyer of the MD80s, Sunrise Asset Management, is an affiliate of Allegiant Air, an American low-cost carrier that has already bought other MD80s from SAS.

SWEDEN|RETAIL

Groceries tipped to top Christmas sales

Employee Anette Hellgren arrives at the Saab factory in Trollhattan, Sweden.| EPA/ERIK ABEL

FINLAND SAFETY

Finns nd re free fags

All cigarettes sold in the European Union are by Thursday to comply with new mandatory safety standards aimed at reducing the risk of fire. The introduction of so-called Reduced Ignition Propensity (RIP) cigarettes that self-extinguish when left unattended would "save hundreds of lives each year," the European Commission said in a statement. Around 1,000 deaths and over 4,000 injures in more than 30,000 cigarette-ignited fires were recorded in the EU between 2003 and 2008, the commission said. National authorities are to enforce the new measure. The commission cited data from Finland where the number of victims of fires cause by burning cigarettes was reduced by 43% following the introduction of RIP cigarettes in April 2010. Fire-safe cigarettes are already mandatory in the United States, Canada and Australia, it said.

DENMARK ENERGY

Maersk nabs Dong contract

Denmarks Maersk Drilling has secured a $125 million, 680-day contract with Dong Energy in the Danish North Sea. The contractor will provide its Maersk Resolute jack-up rig for work on the South Arne field in a seven-well contract. The company said in a statement last Monday that the contract would commence next October, with options for four additional wells of an estimated 400 days duration. Chief executive Claus Hemmingsen credited the companys work on the previous phase of the South Arne development for the contract win. Maersk Drilling is a drilling service provider to oil companies around the world, with a fleet of 26 rigs and a global staff of 3,200 people.

Online home-delivery grocery bags are likely to be the topselling Christmas gift in Sweden this year, a Swedish institute said, DPA reportred. The grocery bags offer several services for the customer including a weekly food menu, delivery to customers' doorsteps, and simple recipe lists, the Swedish Research Institute of Trade said. The institute, which tracks retail and wholesale sales, said sales of homedelivered grocery bags were a recent offshoot of online retailing. A combination of greater purchasing power and time constraints makes households willing to pay for convenience in their daily lives," the institute's chief executive Lena Larsson said. The institute has since 1988 predicted top-selling Christmas gifts as part of its projections for sales in the holiday season. In recent years, the institute's list has included items such as global positioning systems (GPS) devices, audio books and poker sets. Overall retail sales during the upcoming holiday season are estimated to be 65.2 billion Swedish crowns ($9.67 billion), a slight increase on 2010, the institute said. On average, that sum translates to about 6,900 crowns ($1,000) per person, of which 2,900 crowns was for everyday commodities.

FINLAND|ECONOMY

Incap may axe Helsinki factory

Finnish contract electronics manufacturer Incap said in a statement on 14 November it had launched job cut talks affecting its corporate services staff as well as the entire personnel of a factory in Helsinki, News room Finland reported. Incap added that closure of the factory was one of several options being considered. The factory employs 61 people.

SWEDEN SPORT

Stockholm to celebrate Olympic centenary

The centenary of the 1912 Olympic Summer Games held in the Swedish capital Stockholm will be marked with scores of events next year, organizers said, dpa reported. The anniversary year opens with an ice festival in January and includes sporting events and geared at children and youth during the spring and summer. A focal point is the Stockholm Stadium, inaugurated in 1912 and likely the oldest Olympic arena still in use. Athletes from all five continents competed at the 1912 Olympic Games where organizers introduced new technology, such as a photo finish device. The anniversary will also offer youth an opportunity to try out new sports events and exhibitions. "The aim is that the anniversary will be a party that attracts people to sports, just like 100 years ago," said Regina Kevius, Stockholm city councillor in charge of sports. Other organizers include the Swedish Olympic Committee and the Swedish Sports Confederation.

SWEDEN|BUSINESS

Bad weather affects Carlsberg

Bad weather in key European markets weighed on Carlsberg's third-quarter beer sales, dpa reported. Net profit in the quarter was 2.2 billion kroner ($406 million), compared to 2.1 billion kroner in the same period last year. The group said turnover fell 2% year-on-year to 17.4 billion kroner. Rising costs for production, sales and marketing also dampened profits, the group said.

Page 30 | New Europe November 20 - 26, 2011

THE EUROPEAN UNION

LATVIA LITHUANIA ESTONIA SLOVAKIA

SLOVAKIA|BUSINESS LATVIA ECONOMY

Samsung gets tax relief to keep producing in Slovakia

Korean company Samsung will not leave Slovakia, the head of its Samsung Electronics division, Boo-Keun Yoon, has promised Slovak Labour Minister Jozef Mihal. Though the announcement was intended to end speculation about a possible move by the Korean firms Slovak operations to Romania, Yoon admitted that the production of LCD screens faced serious problems, Slovak spectator reported on 16 November. I have to confirm that the production of LCD [screens] is in a very tough situation, so we are trying to reduce the number of localities where LCD panels are made, Yoon said, adding that in Slovakia his company plans to resume production and maintain its factories. Because of the crisis on the market, the company sought financial help from the Slovak government. Economy Minister Juraj Miskov already approved another subsidy for Samsung in the form of tax relief at 28 million, said Mihal. He added that the help should mean the Galanta-based company secures almost 1,000 jobs in Samsung and another 1,000 jobs in the supplying companies over the next five years.

Construction volume moves up

The Latvian construction sector ramped up notably in the third quarter.

SLOVAKIA|LABOUR

Law to freeze MPs, ministers' salaries fast-tracked

Slovakias Speaker of Parliament, Pavol Hrusovsky, will propose freezing the salaries of lawmakers and members of the government at current levels in 2012 based on a draft bill that will be taken up by parliament in fasttracked procedures, Hrusovsky and Prime Minister Iveta Radicova reported after their meeting last Monday, Slovak spectator reported on 15 November. Passage of the bill would mean that salaries of MPs and other salaries derived from them will stay the same in 2012 with the only exception being salaries of judges as any change in those salaries was already halted once by an injunction from the Constitutional Court. "We'd like to prevent the Constitutional Court from abolishing a freeze on our salaries because of its unconstitutionality," said Hrusovsky. Radicova also said that if it were up to the government, the measure would be even harsher, yet she has to accept a decision that will have a chance of passing in parliament.

The Latvian construction sector ramped up notably in the third quarter with the construction volume having increased by 19.6% year-on-year, data from Latvias Central Statistical Bureau informed last week. The breakdowns of the calendar adjusted data showed construction volume of buildings surged up by 25.3% in the quarter and construction of civil engineering structures, by 16.0%. In value terms, Latvian construction

volume comprised 301.8 million lats in the three months to September. In comparison to the first nine months of 2010, Latvian construction volume in the first nine months of 2011 at constant prices increased by 6.1%, of which construction of buildings by 8.9% and civil engineering structures by 4.0%. Compared to the preceding quarter, construction volume in the third quarter increased by 15.1% of which, construction of buildings ad-

vanced by 13.4% and construction of civil engineering structures were up by 15.5%. In comparison to the corresponding period of the previous year, the most notable increase in construction works and repairs was recorded in the construction of local pipe line and cable lines, and production buildings and warehouses by 144.3% and 106.9% respectively. In its turn, construction decline of 39.6% was recorded in construction of bridges and tunnels.

LATVIA ENERGY

Statoil, Neste, LUKoil are Latvia's largest retailers

The latest available data on the Latvian fuel sector revealed that Latvija Statoil, Neste Latvija and LUKoil Baltija R ranked as the top three fuel retailing companies in the Baltic state in the January-September period. As reported on baltic-course.com, the State Revenue Service's data on the sale of excised goods showed that the other largest top ten fuel retailers in the nine month period were Virsi-A, East-West Transit, Aparts, Ziemelu nafta, AstarteNafta, Ruslnafta and Gotika auto. The largest importers of oil products were Latvija Statoil, Neste Latvija, Lukoil Baltija R, Gulfstream Oil, Mazeiku nafta tirdzniecibas nams, East-WestTransit, LDz ritosa sastava serviss, Ziemelu nafta, Latvijas propana gaze and AVT Nafta. A total of 193.88 million lats was collected in excise tax on oil products in the first nine months of this year, which was 5.59 million lats or 3% less than in the same period of 2010.

SLOVAKIA|MANUFACTURING

LITHUANIA BANKING

Grapo Technologies gets new name and new owners

Grapo Technologies, the Slovakian wide format manufacturer that did not do well in the market has been given a new lease on life after a recent acquisition by a group of private investors. This acquisition will enable the company to significantly strengthen their position in the European wide format print market, it was reported on 15 November. The new company will be named SigmaJet. Branislav Oravec, previously Sales and Marketing Director of Grapo Technologies, has been appointed Chief Executive Officer (CEO). Alongside Oravec, the company and its owner investment group have put in place a strong international management team with considerable experience in sales, marketing, manufacturing and customer service. To support their strategy, the group is making significant investments in areas of manufacturing, R&D, training and customer support and is opening a new state-of the-art demonstration facility in Bratislava, Slovakia, in January 2012. We are very excited about the new opportunities that this partnership is presenting to us, it marks the start of a new and exciting chapter for SigmaJet, said Oravec.

Government nationalises Snoras bank

The Lithuanian government announced after an extraordinary meeting on 16 November that it had decided to nationalise the ailing Snoras bank. The governments decision was in line with market expectations as the Lithuanian central bank had already cautioned that Snoras obligations may have had exceeded its assets already. Some critics pointed that the governments move was imperative as otherwise the banks performance might have ended up as another scandal. The indications were clearly pointing towards the revelation that sizeable funds had recently been channelled from the bank which in-turn had negatively contributed to the Snoras fiscal health. As reported in the Latvian media last week, the government was planning to restructure the bank by transferring healthy assets into a state-owned bank in order to ensure the safe continuity of the bank's activities. Snoras activity was suspended on 16 November by the country's central bank before the government decision was taken.

ESTONIA ECONOMY

Estonia registers EU's strongest export growth

The latest set of European business data from Eurostat showed Estonias export volume grew significantly, by 50%, in the eight months to August this year. That placed the Baltic county on top of the list of EU member states. The other two Baltic countries Lithuania and Latvia registered 36% and 35% growth in their export figures respectively. That put Lithuania in the fourth place and Latvia in the fifth place on the list. According to seasonally-unadjusted data, all EU member states reported increases in their exports in the first eight months of 2011. As for imports, Estonias import growth was 46% during the period, while Lithuanias imports went up 36% and Latvias 34%.

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New Europe | Page 31 November 20 - 26, 2011

GREECE CYPRUS
GREECE ECONOMY CYPRUS|ECONOMY

Government resumes talks with international creditors

Public servants say not to blame for budget restraints

On 17 November Cyprus civil servants said that the economys problems were not their fault, as Finance Minister Kikis Kazamias warned that if the conditions were not reversed, Cyprus could soon be seeking a bailout to cover its needs for financing, Cyprus Mail reported. However, the government workers union PASYDY suggested they were not to blame for the situation and that eradicating tax evasion would solve the economys problems. Union boss Glafkos Hadjipetrou said government workers have already made several concessions. This cannot go on indefinitely, he told state broadcaster CyBC. Reports said that Kazamias has made a first failed attempt to get the union to agree to a pay freeze including cost of living allowance and pay scale rises for two years, in a bid to reverse the conditions created by the successive downgrades of the economy from all three credit rating agencies, which have made it virtually impossible for Cyprus to seek financing from the secondary market. In a memo submitted to the cabinet, Kazamias said the only thing keeping Cyprus from the European support mechanism so far were the partial refinancing and short-term financing from local banks and a 2.5 billion loan from Russia. If the situation is not reversed soon (and much worse, if new downgrades follow that will bring Cyprus in the non-investment grade) then Cyprus will soon be led to an increased need of resorting to the EFSF (European Financial Stability Facility) in order to cover its financing needs, the memo said.

Greek Prime Minister Lucas Papademos, right, talks with Finance Minister Evangelos Venizelos at the Greek Parliament, Athens, Greece, 18 November 2011. |EPA/SIMELA PANTZARTZI

On 18 November, Greece's new coalition government was to resume talks with its international creditors, who were due in Athens to assess ongoing efforts by the country to reduce its massive public debt. Envoys from the European Union, the International Monetary Fund (IMF) and the European Central Bank were expected to arrive in the Greek capital. In Brussels, officials said that Prime Minister Lucas Papademos would travel to the European capital on 21 November to meet European Commission President Jose Manuel Barroso and EU President Herman Van Rompuy. Greece's creditors have demanded broad political support for the debt deal, which envisages tough austerity measures, before they approve further loans under a 110-billion bailout programme. Without the next tranche of 8bn in emergency funding, Athens will default by mid-December, experts say. Greece is also in talks about a second EU/IMF bailout worth 130bn, on condition that banks and insurance funds accept a 50% loss on their existing loans to Greece. On 18 November, the 2012 state

budget was handed to the President of the Greek Parliament Philippos Petsalnikos, after it was approved at a Cabinet meeting. The budget will be debated by the parliament plenary on 3 December. The 2012 budget envisages cutting the country's budget deficit from 9% of gross domestic product this year to 5.4% in 2012. According to the budget, which was presented to journalists by Finance Minister Evangelos Venizelos, the country is expected to endure a long recession, with unemployment climbing to 17.1 next year. He added that the draft budget also foresees an additional 3.6 billion in tax collection. "For the first time in the last decades, the Greek parliament is called upon to discuss and ratify the budget under conditions of acute crisis and pressure," Venizelos said. Venizelos presented two possible scenarios affecting the budget deficit, one taking into account a bond swap foreseen in the latest European debt deal for Greece. The other disregards the swap. In the first case, the deficit would be reduced to 5.4% of GDP from the 6.8% foreseen in the budget. In the second scenario, the deficit would

drop to 6.7%. The finance minister insisted that the 2012 budget, which will be voted on in parliament on 7 December, constituted a "tool to exit the crisis that would help Greece move from the state of pessimism to a new beginning." Venizelos said no new austerity measures are needed to cover this year's budget shortfall. On 16 November, Greece's new coalition government, headed by Papademos, won a confidence vote in parliament with a comfortable majority. A total of 255 lawmakers in the 300-seat parliament voted in favour of the new government formed last week by the majority Socialists, main opposition conservatives and a small right-wing party. Only 38 voted against, while the remaining seven were absent. Papademos has been given a three-month mandate to fulfil the obligations of the debt-ridden nation under the bailout programme as well as to speed up long-term reforms. The new prime minister will also push forward a series of austerity measures already passed, including increased taxes and the layoff of 30,000 civil servants on partial pay.

CYPRUS|ENERGY

Block 12 gas estimates lower than expected

Block 12 may not hold as much natural gas deposits as some led us to believe, with Noble Energys initial estimates at a disappointing three to nine trillion cubic feet, at best, below the 10 trillion cubic feet initially estimated by government officials, Financial Mirror reported. In a statement issued in Houston, Noble said that drilling is underway at the Cyprus A prospect which has an estimated gross mean resource range of three to nine trillion cubic feet and a 60% chance of geologic success. Noble started drilling the offshore prospect at the end of September saying it would need 72 days for the first results. However, the administration of President Dimitris Christofias had been pressing Noble for earlier results in an effort to suggest that future earnings would help it avoid necessary cuts in the highly unionised public service in order to bring down its inflated budget deficit.

CYPRUS|PROPERTY

GREECE ENERGY

Law on transfer fees amended

ITGI along the other pipeline projects within the Southern Gas Corridor (Nabucco, Trans Adriatic Pipeline) have submitted final proposals to the Azerbaijani side, which will make its decision on preferable transportation route by the end of 2011. Gas, which will be produced within the second phase of Azerbaijani ShahDeniz gas field development is regarded as the main source for all projects. Traikov told Papakonstantinou that Sofia continued to back construction of the Greek-Bulgarian gas pipeline, a development that would boost the prospects that the ITGI will materialise. On 17 November, Cyprus parliament amended a law passed earlier in November that suspended for six months the payment of transfer fees on properties subject to VAT and cutting by 50% fees on properties where no VAT is paid upon registration of the title deed in a bid to boost the sluggish real estate market, Cyprus Mail reported. The legislation was amended after Cyprus President Dimitris Christofias refused to sign it into law and sent it back to parliament. Under the amendment, bills of sale which had been submitted before the passage of the law and which were withdrawn after the date on which the law came into effect are not exempt from the requirement of paying a transfer fee. In addition, no exemption from paying transfer fees shall apply for any bills of sale bearing a date preceding that on which the law came into force.

Greece, Turkey, Bulgaria discuss ITGI project

Greek Minister of Environment, Energy and Climate Change Yiorgos Papakonstantinou, Turkish Energy and Natural Resources Minister Taner Yildiz and Bulgarian Energy Minister Traicho Traikov discussed the Interconnector Greece Turkey Italy (ITGI) project during the 3rd Black Sea Energy and Economic Forum (BSEEF), organized by the Atlantic Council. Papakonstantinou said important decisions on ITGI project, which is one of the three corridors that envisage the delivery of Azerbaijani gas to Europe, will be made over the next three months. He expressed the confidence that the necessary work on the project will go ahead.

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THE EUROPEAN UNION

BULGARIA ROMANIA
BULGARIA|ENERGY BULGARIA ECONOMY

Minister calls for common EU rules for shale gas

On 11 November, Bulgaria's Energy Minister Traicho Traikov said that the European Union needs common legislation to regulate the exploration and production of shale gas. "Bulgaria has initiated the creation of common European legislation for research and production of shale gas," he was quoted as saying by the press on the sidelines of a forum on non-conventional gas extraction. Common regulations will guarantee not only economic improvement, but also high safety standards for the environment and population, he said. In June, Bulgaria's Government awarded US oil and gas group Chevron a licence to launch exploration works in northeastern Bulgaria.

Bulgaria's budget positive

On 17 November, international credit rating agency Fitch said Bulgaria's 2012 state budget that was approved by the countrys parliament on 16 November should put the Balkan state on a path to further reduce its deficit. Fitch said in a statement that it views Bulgaria's Outlook as Positive but that it is unlikely that the rating would be upgraded without economic growth and stabilization of the banking sector. "[Bulgaria's] draft budget targets a deficit of 1.3% of GDP. This is predicated on 2.9% economic growth, a level we consider optimistic given the slowdown in the eurozone. The European Commission, for example, puts Bulgaria's growth rate at 2.3%. However, Bulgaria has also based its figures on 1% revenue growth, which we consider to be cautious and achievable," Fitch points said. It also stresses that Bulgaria's fundamental credit position is on the right track. "The country's economy has displayed impressive flexibility in adjusting to the global financial crisis," it said. "However, exports have driven the recovery and we expect those to weaken given the increasing risk of a recession in the euro zone. It's this exposure to the eurozone that makes the Outlook uncertain, Fitch said. "Then there are problems with the banking system. For one, the amount of non-performing loans has contin-

BULGARIA|AUTO INDUSTRY

New car sales grow 24% in October

Bulgaria's car market grew by 26% in October, European Automobile Manufacturer's Association (ACEA) data showed on 16 November. According to ACEA's estimates, sales of passenger cars in Bulgaria stood at 1729, rising by annual 24.5%. In January-October, sales of new cars rose by 26.7% to 16 083. However, the data is far from the reality, since cars bought by dealers from abroad, mainly from EU countries, are also counted as vehicles sold in the country.

Bulgarian Prime Minister Boyko Borisov speaks at the Parliament in Sofia. Bulgaria's 2012 state budget was approved by the countrys parliament on 16 November. |EPA/VASSIL DONEV

ROMANIA|RETAIL

Altex Group opens shopping centre in Alba Iulia

Romanian company Altex Group, which runs the Altex IT&C retail chain in the country, has recently opened the Alba Iulia Retail Park, a new shopping centre in the Romanian city of Alba Iulia, in Transylvania, Romania Insider reported. Cometex, the real estate arm of this group, has invested 4 million in this new project. The Altex store in the new commercial centre has an area of 1,500 square metres and joins international brands like Takko Fashion, Deichmann, and Drogerie Markt. Altex Group representatives expect the new shopping center in Alba Iulia to attract over 7,000 visitors per day, hoping to see it grow by 20% in the first year. The new shopping centre was built on an area of 9,544 square metres owned by the company, and is located between the Profi and Kaufland stores in the city. Altex Group, owned by Romanian investor Dan Ostahie, includes Altex Distribution and Cometex.

ued to increase. It is encouraging that rate of increase has slowed compared with at the start of the crisis," it added. According to Fitch, foreign ownership of Bulgarian banks represents "another challenge." Meanwhile, the European Bank for Reconstruction and Development (EBRD) said that key priorities for Bulgaria in 2012 should include maintaining fiscal discipline. "Successive governments have pursued over the years strong fiscal discipline and it is vital that this is maintained, particularly given the strong commitment to maintaining the currency board," the EBRD said in its Transition 2011 report. A timely implementation of the Fiscal Stability Pact

and further progress on key structural reforms to the health care and pension systems would further support this, the report said. Another key priority for 2012, according to the EBRD, was for Bulgaria to make further progress towards increasing energy tariffs and improving the predictability of the process of deciding tariffs. "Regulated prices have been used to cross-subsidise certain groups (primarily retail buyers) and to keep prices below long-term sustainable levels; reversing this practice would lead to higher investment and a more effective operation of the market." Business environment improvements were needed, the EBRD said.

GSK Romania nalises investment in Brasov plant

GlaxoSmithKline (GSK) has finalised a $7 million investment in two production lines at its Brasov plant in Romania, Business Review reported on 15 November. The investment, which spread over a three-year period, was made in the lines manufacturing products in the companys global portfolio: the antidepressant Seroxat and the HIV treatment Retrovir. Up until three years ago, the plant was manufacturing only local pharmaceutical brands pertaining to the Europharm portfolio and intended to reach the local market exclusively. With this investment the Brasov plant is now exporting drugs in over 80 countries worldwide, compared to 50 countries reached at the end of 2010. The largest export markets for the Brasov plant are France and Italy, which take up around 24% of total exports. The GSK plant in Brasov started exporting in 2008, and today around 60% of its output is sent overseas.

ROMANIA PHARMACEUTICALS

ROMANIA|FOOD

La Lorraine Romania opens bakery products factory

La Lorraine Romania has opened a 17 million greenfield frozen bakery product factory in Campia Turzii, Business Review reported on 14 November. Almost 3mn of the money comes from European funds (80%) and the Romanian state (20%). The company is the result of a joint venture between local Macromex, a frozen and refrigerated products distributor, and Belgian milling and bakery group La Lorraine. Works on the 6,000 square metre project which is located in the Reif Industrial Park in Campia Turzii started 15 months ago. At present the factory operates only one automated production line with a capacity of 5,000 baguettes or 25,000 rolls per hour. The investors have announced plans to expand capacity by adding up to seven more production lines over the next years which will require an investment of about 40mn. Distribution will be covered by Macromex and will include both the modern and traditional retail as well as horeca.

Burberry store to open in Bucharest

The first Burberry store will soon open in Bucharest at the ground floor of the Radisson Blu Hotel in the capital city, Romania Insider reported on 14 November. The British brand will join other luxury fashion brands with stores in Bucharest, like Louis Vuitton and Gucci. These two also have stores in five-star hotels in Bucharest: Louis Vuitton in JW Marriott and Gucci in Athenee Palace Hilton. Investment company Global Eye will bring the new fashion brand on the Romanian market under a franchise contract, according to Ziarul Financiar newspaper. The five-star Radisson Blu complex includes the hotel, with 424 rooms, and the apart hotel, with 294 apartments, as well as commercial areas. Burberry is a British luxury fashion brand that posted total revenues of 830 million in the six months ending on 30 September, a growth of 30% on the same period last year. The European market brought Burberry 271 million, the highest revenue of all its regions. On 30 September, 2011, Burberry globally had 187 retail stores, 210 concessions, 44 outlets and 52 franchise stores. The company, which is headquartered in London, was founded in 1856.

ROMANIA CLOTHING

PARTNERS

New Europe | Page 33 November 20 - 26, 2011

NORWAY ICELAND SWITZERLAND

SWITZERLAND BANKING SWITZERLAND|BUSINESS

Julius Bar bank sheds jobs

Private bank Julius Bar said it is slashing 150 jobs as part of its third cutting round this year, Swiss Info reported. All sectors will be affected by the programme to be effective by the middle of next year, according to a company statement. The bank hopes to achieve cost reductions of 40 million Swiss Francs ($44.4 million) annually. Julius Bar already implemented similar measures in February and June. The Zurich-based bank, which reported 166 billion Francs assets under management in October, employs around 3,600 staff worldwide.

Demonstrators angered by Novartis job cuts

At least 1,000 people have taken part in a demonstration in Nyon, protesting at job cuts at Novartis and the planned closure of a plant in the town, Swiss Info reported. Last month, the Basel-based pharmaceutical giant announced it would cut 2,000 jobs, with slightly more than half to be shed at operations in Switzerland. Demonstrators carried banners with slogans like, a wounded region is ready to fight. If Novartis goes ahead with the plan, more than 300 jobs would be lost at the Nyon plant, which makes non-prescription medications. Some of the work will be outsourced, according to the company, which said it would create 700 new positions in China and India and other low-wage countries. Novartis revealed the plans to slim down its workforce during the announcement of its thirdquarter results. It posted a 7% increase in net profit and earnings to $2.49 billion, up from $ 2.32 billion from the same period last year.

Headquarter of the Swiss private bank Julius Bar in Zurich.| EPA/STR

SWITZERLAND BUSINESS

NORWAY|TERRORISM

Holcim accused of price xing in Brazil

Swiss cement firm Holcim, among six cement companies, are under suspicion for price fixing, the Brazilian justice ministry said, Swiss Info reported. The allegations were made upon publication of a report previous Thursday, the result of five years of investigation into the matter. The report will now be handed over to the countrys competition authority. The companies concerned could be in line for fines the equivalent of 30% of gross turnover for 2005, the year before the investigation started, news wires reported. In all, the six firms cited control 90 per cent of the Brazilian concrete and cement market. According to the Brazilian justice ministry, by fixing prices the smaller competition was driven out of the market. Brazil is the worlds fifth-largest cement producer after China, India, the United States and Turkey. In a statement previous Friday, Holcim said that it was aware of the report and that it had always supplied all information requested by the Brazilian justice ministry's Secretariat of Economic Law (SDE). But it said it did not agree with the report's conclusions. "Holcim (Brasil) SA confirmed, as it has already done to the SDE in several occasions, that it has not engaged in any illicit conduct," said the statement.

Terror trial begins

Three men on Tuesday denied terrorism charges at the opening of a trial in Oslo, where they are charged with planning bomb attacks in Norway and on a newspaper in neighbouring Denmark, dpa reported. The three were arrested in July 2010 after the Norwegian security service PST foiled their attempt to order bomb-making materials including hydrogen peroxide-based chemicals from a pharmacy. According to the charges, the three had targeted the Danish daily Jyllands-Posten, which in 2005 published caricatures of the prophet Mohammed, and Danish newspaper cartoonist Kurt Westergaard who drew an image of the prophet Mohammed with a bomb in his turban. Plans to bomb the Chinese embassy in Oslo were also discussed. Prosecutor Geir Evanger said in his opening statement that the case centred on the trio's efforts to acquire bomb-making materials as well as their plans against various targets. The prosecutor said the PST in August 2009 began to investigate the three men. One of the three, a 40-year-old Norwegian national of Uighur ethnic background, was considered to be the ringleader. The prosecutor said the man also had ties with the al-Qaeda terrorist network and had visited a training camp in Pakistan. A media player seized in the man's home contained bomb-making manuals, videos and audio files with extremist propaganda, the prosecutor said. "I understand the charges and I refute them," the 40-year-old said according to reporters at the Oslo district court. The two other defendants were a 33-year-old ethnic Uzbek refugee and a 38-year-old Iraqi Kurd who lived in Oslo on an unlimited Norwegian residency permit.

ICELAND CLIMATE

Eruptions hold key to climate change

While volcanic ash can disrupt air travel as shown by recent volcano eruptions in Iceland and Chile, the ash can also help scientists track historic climate change, a Swedish researcher said, dpa reported. Studies of historic climate fluctuations have in the past often focused on studying glacier ice, peat mosses or sediment that serve as an archive for changes in weather conditions. But studying how tephra particles in volcanic ash spread over land and sea can also help researchers track and date climate change, said Ewa Lind of the Department of Physical Geography and Quaternary Geology at Stockholm University. By studying and dating ash deposits, known as tephrochronoloogy, researchers can create timelines and compare different data since the ash is spread over large areas. The method can be used to study rapid climate change that took place after the transition from the most recent ice age into the so-called Holocene, a geological era that goes back to 13,000 to 9,000 years BC. Lind's research was presented in a doctoral thesis. She has focused on the North Atlantic region.

NORWAY ENERGY

SWITZERLAND|ENERGY

Aker Solutions wins new subsea contract

Aker Solutions has signed a contract with Lundin for the engineering, procurement and construction of a subsea production system for the Brynhild project on the Norwegian Continental Shelf, Norway Post reported. The scope of work includes one template-manifold structure, one riser base, three subsea trees, three wellhead systems, control system, a tie-in system, 38 kilometres of umbilicals, HP riser and rental tooling. The contract contains several options for additional equipment, including other field developments. The Brynhild field is located northwest of the Ula field and 38 kilometres east of the Pierce field. The water depth is approximately 80 meters. Brynhild will be developed as a fast track subsea tie-back to the Pierce FPSO. Management, engineering and procurement of the subsea production system will be primarily performed at Aker Solutions' headquarters in Oslo, Norway. Fabrication of the subsea trees will be completed at Aker Solutions' manufacturing centre in Tranby, Norway and production of the template-manifolds will be carried out at the company's fabrication yard in Egersund, Norway. The umbilical will be manufactured in Moss, Norway and the control and wellhead systems will be delivered out of Aberdeen, UK. Installation and commissioning will be handled by Aker Solution's service base in Aagotnes, Norway. Final deliveries will be made in Q2 2013.

Swiss energy group shuns Russian nuclear fuel

Switzerland's energy group Axpo said it was stopping taking uranium fuel from Russia's Majak reprocessing plant because it lacked information about conditions there, The Local reported. It also said it would ask French supplier Areva to boycott Majak as long as the plant's delivery process remained unclear. Instead Axpo said it would take its fuel from Russia's Seversk plant, which was inspected by a team from the Swiss company last month. MSZ Electrosal, Majak's operators, barred a similar team from visiting the site 2,000 kilometres east of Moscow in June, saying it was in a military zone. Environmental campaigners Greenpeace accused both Majak and Seversk of contaminating the area and harming the local population by using defective uranium.

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CANDIDATES

CROATIA ALBANIA SERBIA BOSNIA

CROATIA|ECONOMY CROATIA EU

Losing purchase
Out of the 42 European countries surveyed, Croatia gained 31st position among the countries whose purchasing power is less than half of the European Union average or 5,011, Javno reported. The European Union average is 12,774. Amongst European Union candidates, Croatia is placed third, behind Iceland and Turkey. Compared to the last two years, Croatia witnessed a decline several places, from 27th in 2007 and 29th in 2009. The people of Zagreb have the highest purchasing power in the country or 6,507, 30% above average.

Croatia to sign Treaty of Accession

Speaking at government headquarters, Croatian Prime Minister Jadranka Kosor recently stated that the country would sign a Treaty of Accession to the European Union on 9 December in Brussels. The document would be signed by the Premier and President Ivo Josipovic, Javno reported. "On December 9, I will sign the Accession Treaty. Based on my proposal, the Treaty will also be signed by President Josipovic. And by no one else," Kosor said when asked about the possibility of the winner of the forthcoming parliamentary election attending the signing ceremony or being a member of the Croatian delegation at the signing ceremony. Kosor said this is great news for Croatia, the government and personally for her. It should be noted that after signing the treaty, Kosor will be the first Croatian Prime Minister to attend a session of the European Council. Croatia will become an EU member after inking the treaty. The Polish EU Presidency affirmed that the document would be signed within the framework of a meeting of EU member countries' heads of state or government. Spokesman for the Polish EU Presidency, Konrad Niklewiecz said that the treaty will be signed prior the start of a meeting of the European Council, which will be hosted by Prime Minister Donald Tusk in collaboration with the attending heads of state or government. The Premier said that current government made possible the completion of EU talks. She recalled that in 2009 the talks were blocked and that it was her government which resolved the border dispute with Slovenia and resumed the talks. She thanked all who had taken part in the negotiating process, notably Croatian citizens.

SERBIA|ECONOMY

Soskic: Serbia hit by second wave of crisis

The Governor of the National Bank of Serbia (NBS) Dejan Soskic recently attended a round table organised by the Faculty of Economics in Belgrade, Beta news agency reported. Speaking at the event, Soskic said that the country is already hit by the second wave of economic crisis, adding that prepared mechanism will help the country to tackle the crisis period better compared to other countries. He said that Serbia need to be prudent and provide all the mechanisms needed to lessen the harmful effects. Soskic pointed out that there is no way we can avoid the negative affects, he pointed out. Serbia has showed great potential in increasing public awareness of the need for fiscal consolidation and kept the budget deficit under control. He also stated that banks in Serbia do not exhibit worrisome behaviors and that NBS, as the supervisor, has access to all transactions and follows banks' behavior on a daily basis. No insecurity of any kind is apparent but some activities need to be closely supervised. Soskic said that economic activity in Serbia has suffered greatly due to developments in the EU, and the growth is expected to be very conservative. Meantime, the NBS Executive Board decided to lower the reference interest rate by 0.75% to an even 10%, after reviewing current economic trends and the projected inflation for November, the NBS said in a release. Inflation continued to drop just as the report the NBS published in August had predicted. Inflation is expected to keep declining in the coming period, says the release, adding that the key disinflation factors will include weakened pressure on food prices, low aggregate demand and a slower rise in regulated prices. The Executive Board again expressed belief that year-to-year inflation will continue to drop and that inflation will return inside the target range in the first quarter of next year. Any future changes to the reference interest rate will depend on the projected inflation and risk realization, particularly in the international environment and in the area of fiscal policy.

Croatian Prime Minister Jadranka Kosor shows a copy of the draft of the accession agreement between the European Union and Croatia.| EPA/ANTONIO BAT

SERBIA ECONOMY

Crisis in Italy may have impact on Serbia

Speaking at the event of awarding the Quality Oscar, Serbian Minister of Economy and Regional Development Nebojsa Ciric said that Italy is among the leading investors in Serbia and one of the largest export markets for both Serbian products and products of Italian companies manufactured in the country. However an impending threat to Serbias export is possible due to a crisis in Italy. A decline in demand for Serbian products, as a consequence of a drop in demand and deepening of the crisis in Italy, will yield a negative effect on export performances and business of companies. However despite a danger to decline in demand of Serbian exports, the existing projects in the country will not be affected, Beta news agency reported. Ciric added that Italian investments in Serbia such as Fiat are not jeopardized, and pointed out that the Italian company Lames Group promoted investment of 8 million in Sremska Mitrovica, allocated for the opening of a manufacturing plant with 250 employees.

ALBANIA|ECONOMY

IMF revised projection for Albania's 2012 economic growth

The International Monetary Fund (IMF) representative Gerwin Bell recently stated that the Bank has revised Albanias economic growth. IMF has revised its early projection of the growth by slashing it from 3.5% to 1.5%, AENews reported. The fund has expected an expansion of 2.5% in the countrys GDP growth but this year it was below 2%.The revision reflects expectations for slower economic growth in the EU coupled with negative developments on the international financial markets. Bell noted that the Albanian government remains positive in its macroeconomic framework for 2012 budget. This according to him, would result in a mid-year budget revision, such was the case in the previous two years. IMF called on the government to introduce cuts to social spending in order to meet its fiscal targets. On the revenue side, the flat tax rate needs to be increased from the current 10% to 15%.

BOSNIA EU

EU has pledged to work in partnership with BiH

Top officials of the European Commissions Enlargement Directorate Director General Stefano Sannino and Western Balkans Director Pierre Mirel recently chaired high level meetings with counterparts from Bosnia and Herzegovina authorities, Fars news agency reported. During the meetings, they discussed the co-ordination of future funding for the country and the region from the European Commissions Instrument for Pre-Accession (IPA), sub-committees on transport and energy, and meetings on TRANSCO and Corridor Vc. On 17 November, the European Commission launched the programming of IPA funds for 2012 and 2013, offering more than 200 million of grant assistance. The Head of the Delegation of the European Union/EU Special Representative Ambassador Peter Sorensen said that EU has vowed to work in close collaboration with BiH. He said that EU has resources and expertise ready, including some of the most senior officials of the European Commission, to make progress on issues those matters to citizens as well to European integration. He outlined opportunities to make improvements in the transport and energy sectors of BiH. EU envoys will discuss these issues with the BH authorities and utilise the partnership.

CANDIDATES

New Europe |Page 35 November 20 - 26, 2011

TURKEY FYROM MONTENEGRO

TURKEY ECONOMY

Turkey to recover faster than other economies

MONTENEGRO|METALS

Government seeks strategic investor in smelter

Speaking at a business lunch organised by the American Chamber of Commerce (AmCham), Montenegro's Economy Minister Vladimir Kavaric said that the government invites a long-term strategic partner for investment in the aluminium smelter KAP and the Niksic ironworks, Montenegro Times reported. The minister stressed that the government welcomes all to participate in the investment. On being asked whether the cooperation between the Niksic ironworks of Niksic and German company Scholz had ended, Kavaric said that Scholz has expressed its interest but reaction was not adequate. As a result, the German company decided to buy the Ironworks of Split. He went on to say that Ironworks and Scholz, were normal in their communication in the market and no problems in cooperation or potential termination of agreement is apparent. He added that the Commercial Court was conducting the privatisation and bankruptcy proceedings of the Ironworks, pointing out that the Niksic-based company had seen a considerable progress in the last several months, and it even started exporting to the EU market, as opposed to the previous several decades. Kavaric expects the Ironworks to have long-term prospects with a good investor. He admitted there are certain constraints as the sale is going on in parallel with the bankruptcy proceedings, but the government expects an investment in the Ironworks to be commercially feasible.

The Bosporus bridge in Istanbul. Turkey will be one of the few economies to witness a rapid economic recovery. |EPA/KERIM OKTEN

Experts recently claimed that Turkey with its strong public finances, low budget deficit and political stability can tackle any fresh wave of economic crisis. Compared to other economies, Turkey will be one of the few economies to witness a rapid economic recovery, Zaman reported. Just like other countries, Turkey will also feel the turmoil for a short term but will resume its strong economic growth soon. In the past decade Turkey has already proved its resilience against the crisis by strengthening its public finances and reducing the budget deficit. The countrys gross domestic product (GDP) managed to witness a rise by 9% in 2010 after it contracted by nearly 5% a year earlier due to global economic turmoil triggered by the US credit crunch. It was declared as the fastest growing economy across the globe with

10.2% in first half of this year. Mediumterm Economic Programme (OVP) of the Justice and Development Party (AK Party) government expects the Turkish economy is expected to produce a lower public debt to GDP ratio and lower budget and current account deficit (CAD). A recent prognosis states that Turkeys CAD, one of the few issues the country faces in the eyes of most observers, is expected to be 8% of the GDP next year, and the CAD to domestic output ratio will drop to 7.5% in 2013 and to 7% in 2014. OVP also states that public debt to GDP ratio will retreat until 2015. The programme expects a positive CAD in next three years. It expects 8% of the GDP next year the CAD to domestic output ratio will drop to 7.5% in 2013 and to 7% in 2014. Regarding exports, Turkey ex-

pects to earn $135 billion this year. According to the latest statistics of the Turkish Exporters Assembly (T?M), Turkey earned 47% of its exports revenue from the merchandise it sold to European countries this year. Despite such a rise in export revenue, its CAD spiked to nearly 9% of the GDP due to the rising energy bill and industrys dependence on foreign intermediate goods to produce merchandise to be sold overseas. According to former vice-president of the countrys Privatisation Administration (OIB), Suleyman Yasar, Turkeys CAD was due to its high public debt, but presently it has a gap due to private indebtedness. Even if they default on their debt, there will be no direct impact on the countrys balance of payments since there is no state guarantee over those private debts, he added.

MONTENEGRO|BUDGET

Government proposes 2012 draft budget

After a recent cabinet meeting, Montenegros Finance minister Milorad Katnic stated that the draft budget 2012 proposed by the government envisage a cut in expenditures by 1.252 billion. The budget is less by 26 million compared to this years plan, Montenegro Times reported. The budget expects real economic growth of 2% and nominal growth of 4%. Katnic said that the pronosis is more conservative compared to the one by International Monetary Fund and the World Bank which proves our additional seriousness and responsibility. In addition with the estimated expenditure of the municipalities, the total public spending will amount to approximately 41% of gross domestic product, without fiscal consolidation. GDP is expected to be below 40% in case fiscal consolidation is included, Katnic added.

TURKEY REAL ESTATE

Residential property prices, rental values rise

Turkey witnessed a rise in the value of residential property with average house prices rising by 0.73% in September 2011 compared to the previous month, the recent REIDIN.com index states, Zaman reported. It also showed that in the aforesaid period, rental values also increased by 0.90%. According to data released by the Association of Real Estate Investment Companies (GYODER), property sales reaching 107,308 in the country in the second quarter of this year, an increase of 17.8% over the first quarter. GYODER also states that the construction sector in the country went up by 13.2% in the second quarter of this year. UN World Tourism Organization (UNWTO) also placed Turkey in the seventh position in the list of most visited global destinations. The increased confidence in the market urged the foreigners to invest over $1.3 billion in the Turkish property market last year, the Turkish government said in a statement. Taking into account this trend, the projected demand of 2.9 million houses by 2015 has led investors into the lucrative Buy-to-Let world where there is high demand for good quality rented housing in Istanbul and surrounding areas with Property Frontiers recognising the growing potential of Istanbul as a lucrative property investment hub. Located in the western suburb of Beylikduzu, one of the fastest growing areas presents best opportunities for property investment but cheaper property price tags compared to the rest of Europe. On the other hand, those looking to invest in a key asset class in the proven market of Istanbul can look no further than the booming student accommodation sector. A leading guidebook publisher and travel website Frommers recently stated that 51% readers selected Turkey as their top destinations for 2012. Despite strong contenders such as Paris, Italy and Hawaii, Turkey was announced as the readers top destination amongst a list of 10 destinations compiled by Frommers. Described as a Frommers favourite since the publication of Turkey on $5 a Day in 1971, the nations economic powerhouse, Istanbul, has been marked as one of the worlds most cosmopolitan cities as well as one packed with a rich Byzantine history, divine architecture, fantastic street food, and one-of-a-kind shopping.

FYROM|LOANS

EBRD lends 65 million to FYROM power utility

The European bank for Reconstruction and Development recently announced a 65 million sovereign loan to FYROM's state-owned electricity generation utility ELEM, a press release read. The fund would be utilised to construct the Boskov Most hydropower plant which will have a generation capacity of 70MW, to be located near the town of Debar in the western part of the country. The construction of the hydropower plant will start in first half of 2012, and electricity generation is expected to begin in 2016. The total cost of the project is 107mn and rest amount of 42mn would be provided by ELEM, the press release read. EBRD said in a statement that Boskov Most will help ELEM meet FYROM power demand, which is volatile and characterised by high peaks. FYROM relies on electricity imports for almost a quarter of its consumption needs. The EBRD Shareholder Special Fund is providing 340,000 in grant financing for technical and environmental due diligence.

Page 36 |New Europe November 20 - 26, 2011

UKRAINE MOLDOVA BELARUS

NEIGHBOURHOOD

BELARUS|ENERGY

Belarus past debt to Gazprom doubles

Belaruss external overdue debt for the imported natural gas was 601.8 billion Belarusian rubles ($106.7 million on the exchange rate of the National Bank) in October, InterfaxZapad reported, citing the National Statistics Committee of Belarus. The overdue debt was 267.4bn Belarusian rubles ($52.36mn) on 1 September. So, the debt to Gazprom increased twofold during September. Belarus did not have a past debt for gas on 1 August 2011. Gazprom reported that Beltransgaz asked the company for a delay in paying for gas in the third quarter and also pay $245 per 1,000 cubic metres instead of $279.16 as specified in the contract. Belarus imported 4.231bn cubic metres of gas in from July to September. The underpayment in the third quarter is $34.16 for 1,000 cubic meters, or $144.5mn. Belaruss internal overdue debt for energy demonstrates fast growth. The Statistics Committee says the internal overdue debt for fuel and power resources was 1.1 trillion Belarusian rubles on 1 October 2011, having increased twofold during nine months with the September 1.7-fold growth. The overdue debt for energy resources rose three times in the last 12 months. Belarus and Gazprom were reported to have reached an agreement on granting a delay in the fourth quarter payment and distributing the debt amount in equal proportions to 2012, when the agreement on decreasing coefficient will come into force.

Committee recommends EP speaks out for Tymoshenko

On 17 November in Strasbourg, the Committee for Foreign Affairs of the European Parliament has suggested that the parliament should again express concern over the imprisonment of former Ukrainian prime minister and opposition leader Yulia Tymoshenko, and urge the Ukrainian authorities to guarantee that Tymoshenko and other opposition leaders have the right to participate fully in the current political process and in upcoming elections. The leader of Ukraine's opposition, Tymoshenko was sentenced to seven years in prison in October for illegally ordering the signature of a 2009 natural gas deal with Russia. She had been head of Ukraine's government at the time. On 17 November, relevant amendments to the recommendations to the European Commission and the Council of the European Union on the negotiations on the EU-Ukraine Association Agreement were adopted at a meeting of the Committee on Foreign Affairs in Strasbourg. This document will be the basis for a resolution of the European Parliament that will be put to a vote at a plenary session in early December. This provision was absent from the previous draft of the recommendations and was added during the amendment process. According to the recommendations, Tymoshenko's sentence "is widely seen as either an act of revenge or as part of an attempt to convict and imprison opposition members in order to prevent them from standing and campaigning in next year's parliamentary election and the 2015 presidential election". The document emphasizes that the law selectively applied against Tymoshenko dates back to Soviet times and makes provision for criminal prosecution for political decisions; whereas Articles 364 and 365 of that law, which are currently under review by the Verkhovna Rada, do not conform to European and UN standards.

UKRAINE EU AFFAIRS

Former Ukrainian prime minister and opposition leader Yulia Tymoshenko was sentenced to seven years in prison in October for illegally ordering the signature of a 2009 natural gas deal with Russia. |EPA/SERGEY DOLZHENKO

MOLDOVA|EU AFFAIRS

Chisinau sees free trade area with EU by late 2011

Negotiations on the creation of the free trade area with the EU are likely to be launched by late 2011, Moldpress quoted Foreign and European Integration Minister Iurie Leanca as saying, while unveiling the principal results of his recent visit to Brussels at a today's news briefing. Leanca said Moldova continues to remain the European Union's most dynamic partner in the Eastern Partnership's region, and the Moldova-EU dialogue is open and constructive. At the same time, the foreign minister noted that the European partners praise Moldova's outstanding progress in terms of fulfilment of the commitments seen in the first stage of the visa free regime process, which regards the adjusting of the legal framework to the European norms and standards. Leanca showed confidence that, "if Moldova manages to advance in the same way in continuation, in early 2012, the European Commission will present a report to the European Parliament, and a decision will be taken to shift to the second phase of this process." "Afterwards, we will have a visa free regime with the EU," Iurie Leanca stressed. At the same time, Leanca specified that both the visa free regime and the setting up of the free trade area depend on the fulfilment of all the commitments assumed by Moldova within the talks with the EU, as well as on the situation in the EU member states.

The committee proposes to urge the Ukrainian president and government to establish a political, legal and administrative system in the country that is in compliance with the agenda of the association, and support the proper governing and respect to the rule of law as a fundamental principle in relations between Ukraine and the European Union. The document urges the European Parliament "to insist that Tymoshenko and the other leaders of the opposition be allowed to exercise their right to participate fully in the political process, both as of now and in the forthcoming elections in Ukraine." On 15 November, Ukrainian prosecutors were interrogating Tymoshenko although she was too ill to move from a prison bed, said Serhy Sobolyev, a member of Tymoshenko's Baktyvshchina (Motherland) party. Defence lawyers were at the same time unable to meet with Tymoshenko, who is being held in a Kiev prison, because wardens have declared her too

sick to receive personal visitors, said Serhy Sobolyev, a member of Tymoshenko's Baktyvshchina (Motherland) party. "When it's necessary to interrogate her, then the so-called doctors at the prison are happy to forget the Hippocratic oath and give the OK," Sobolyev said, according to Channel 5, an independent television news station. "Questioning without the presence of a lawyer, that's fine. But she can't talk with her lawyer," he continued. The ban on lawyers meeting with Tymoshenko has been in effect "for a week," he said. On 11 November, prosecutors formally charged her with four counts of tax evasion, alleging she concealed more than $165 million of corporate income while running a natural gas import company in the mid-1990s. Tymoshenko has denied all wrongdoing and said she intends to appeal her October sentence. She has said she believes herself to be the victim of a government campaign to eliminate political opponents of president Viktor Yanukovych.

UKRAINE ENERGY

MOLDOVA|POLITICS

No candidates for presidency of Moldova

On 17 November, Moldovas governing Alliance for European Integration said it would not propose interim President Marian Lupu for the post because it is unlikely that he would win the 61 votes that are needed. Parliament was scheduled to vote on 18 November in an attempt to break a political deadlock that began in July 2009. Ruling pro-European parties have only 59 seats. Three lawmakers recently quit the opposition Communist Party but said they will not vote for Lupu, who has been interim president since 30 December.

Naftogaz wants to pay roubles for Russian gas

The head of the group of advisors of the National Bank of Ukraine, Valery Litvitsky, said that if Russia would agree to a long mutual settlement with Ukraine over energy in rubles, not dollars, it would be much easier for the Ukrainian economy. "We want Russia as quickly as possible to agree to a set of measures which will help it join the club of countries who are the owners of the reserve currencies. The sooner this happens the better it will be for Ukraine because Russia is by far the largest trading partner of Ukraine. The wish is that the Russian currency became convertible as soon as possible. This will be a positive for us," said Litvitsky. According to him, Russia's transition to settlements in rubles will strengthen the ability of Ukraine to serve all the transactions. However, Russia is in no hurry to move to settlements in rubles. And this is the case in the next increase in energy prices could further destabilise the situation in Ukraine. Experts have been called on the authorities of the Commonwealth of Independent States (CIS) countries to switch to payments in rubles on the territory of CIS countries in as many branches of economy as possible. First of all it concerns energy resources. Once the parties agree on payment for oil and gas in rubles, it will gradually turn the ruble into a steady currency in many countries.

NEIGHBOURHOOD

New Europe | Page 37 November 20 - 26, 2011

KAZAKHSTAN TAJIKISTAN TURKMENISTAN

TAJIKISTAN FINANCE KAZAKHSTAN|SOCIETY

IFC helps introduce risk management experience

The International Finance Corporation (IFC) in collaboration with the Global Association of Risk Professionals (GARP) will help the Tajik banks and microfinance institutions become more sustainable and offer greater financial products and services by strengthening their risk management capacity and practices. This statement was made at a recent meeting in Dushanbe by Zarrina Odinayeva, manager of the IFC AzerbaijanCentral Asia Financial Markets Infrastructure (ACAFI) project in Tajikistan, Asia-Plus reported. This initiative is part of the IFC AzerbaijanCentral Asia Financial Markets Infrastructure Advisory Services Project and the IFC Financial Markets Crisis Management Project, funded by the governments of Austria, Switzerland, Finland and the Netherlands. The aim of these projects is to strengthen financial markets in the region through strengthening credit information systems, risk management practices and education as well as facilitating the distressed loan resolution. Odinayeva recalled that earlier IFC and GARP signed an agreement to develop a formal risk management education and certification programme that will be implemented for the first

Peace Corps to leave Kazakhstan?

The Peace Corps, which provides volunteers in public health, education and business development, is pulling out of Kazakhstan, according to unconfirmed reports. Volunteers said they have been ordered return home within the next couple of weeks 18 years after the first contingent arrived in Kazakhstan. Lisa Murray, a youth development volunteer in South Kazakhstan Region, blogged on 17 November that the Peace Corps will be leaving Kazakhstan next week all volunteers evacuated and staff disbanded.This serious decision was made largely [due] to growing safety issues, including terrorism and what has apparently become the highest sexual assault/rape level among PC countries worldwide. She reported four incidents of rape or sexual assault of volunteers in Kazakhstan within a year, but added that her personal experiences were ones of warmness, kindness, and hospitality, underlining she did not believe Kazakhstan was a dangerous place. However, there is a certain sense of hostility towards the Peace Corps. In October, the main Russian newspapers in the west of the country published on their website a harsh attack on PC's volunteers, accusing them of being under-qualified for what they were doing and immoral. In addition, the papers suggested they may be US spies sent to Kazakhstan by intelligence agencies.The Peace Corps have remained silent thus far - one of the circulated theories suggests that Kazakhstans current Minister of Education is opposed to the presence of Peace Corps Volunteers in the schools and universities and colleges of the country.

Positive economic signs are reported by the National Bank.| Lauras512

time in nine post-Soviet countries including Armenia, Azerbaijan, Georgia, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine and Uzbekistan. The programe is dedicated to train employees from local financial institutions to reduce vulnerabilities of local institutions to future financial shocks, Odinayeva noted. He added that the programme will help participants identify and mitigate financial risks such as credit, market, and operational risks. Odinayeva, said, IFC is helping build the capacity of

financial intermediaries to better manage risk. She stressed that joint collaboration between IFC, GARP and local training partners in bringing this Risk Certification Program to the region will provide risk managers and other financial professionals with an opportunity to prepare and take exams under the auspices of an internationally recognized certification programme in their own countries. This in turn will deepen the financial risk management culture and climate in the region.

TAJIKISTAN|RELATIONS

Russia statement on imprisoned pilots hasty

The Qurghon Teppa city court sentenced Captain Vladimir Sadovnichiy (Russian national) and Captain Aleksey Rudenko (Estonian national), working for Rolkan Investments Limited which is domiciled in the British Virgin Islands, to 10 years in prison. The pilots were detained on charges of violation of international air carriage regulations, smuggling and illegally crossing borders. They were detained after landing at the Qurghon Teppa in March with their two aircraft on a flight from Afghanistan bound for Russia. Both aircraft and the contraband aircraft engine were confiscated. The pilots maintain their innocence. Suhrob Sharipov, the head of the Centre for Strategic Studies under the President of Tajikistan said that sensations initiated by the Russian Foreign Ministry around this issue should not be described an efficient policy of the Russian authorities to protect the pilots, Asia-Plus reported. By releasing such hasty statements regarding this issue the Russian Foreign Minister just wants to conceal oversights in work of the Russian diplomatic mission in Tajikistan, which responded to the arrest of those pilots only after media outlets released reports on that case, the head of Tajik think tank noted. He was also surprised why not a single Russian official has admitted yet that the two detained pilots have committed a crime as they crossed Tajikistans border illegally and are involved in smuggling an aircraft engine. Russian MFAs described the verdict regarding the verdict passed on Russian-hired pilots in Tajikistan as too harsh and politically charged. The ministry warned that the verdict could hamper relations between Russia and Tajikistan. Russian Foreign Ministry spokesman Aleksandr Lukashevich slammed the sentences as politically motivated and said they could negatively affect Moscow's relations with Dushanbe. He said Tajik authorities failed to provide any evidence which could prove the men guilty. Lukashevich said, Tajikistan is blatantly violating existing international norms. This verdict does not help strengthen our existing relationship as allied strategic partners, in fact it is damaging it seriously. Commenting on the statement, Sharipov noted, If the Russian authorities state with or without reason that relations between the two countries will deteriorate, it will be so.

TURKMENISTAN RELATIONS

Turkmen, Hungarian presidents hold talks

The Turkmen and Hungarian presidents Gurbangulu Berdimuhammedov and Pal Schmitt have held talks in an expanded format at the Presidential Palace Oguzkhan in Ashgabat, Tukmenistan.ru reported. Members of government delegations of both countries were also present at the talks. During the meeting, the sides discussed the state and prospects of bilateral cooperation between Turkmenistan and Hungary and international issues. They also defined specific areas of cooperation between the two countries. The sides agreed to continue activities aimed at implementing the great capacity of cooperation in political, tradeeconomic, cultural, scientific, educational and other fields. Both sides discussed issues relating to cooperation between the two countries in the field of energy. Berdimuhamnedov voiced the interests of both countries in further developing trade and economic ties. "The current Turkmenistan-Hungary trade turnover does not fully meet the countries' capabilities and requires a systematic rise," he stated. He also stressed the countrys aspiration to diversify the routes for exports of hydrocarbon resources. Hungary has great technological and technical capacities and experience in running the fuel and energy sector. This opens up rather broad prospects for joint work in this area, and it is particularly important to accelerate mutually agreed actions between the EU and Turkmenistan to take Turkmen gas to the European markets. Turkmenistan-European Union was also an agenda item at the talks. The Turkmen head said that Turkmenistan is willing to hold joint consultation with Hungarian partners and establish contacts between the energy ministries of the two countries.

KAZAKHSTAN ECONOMY

National Bank says real economy improving

The National Bank recently published the outcome of the real sector of Kazakhstans economy. It was noted there was a decline in the number of enterprises, whose finance state depends on the national currency rate against the euro and the ruble, Gazeta.kz reported. The Bank study shows that the change in the tenge rate against the euro affected enterprises and other economic activity. The Russian ruble also shrank in the third quarter. At the same time, the number of companies that were exposed to negative effects due to the change in the exchange rate of the tenge against the US dollar rose by 3%. However, there is no need for dramatizing the situation, said Marchenko, as the national currency of Kazakhstan is stably controlled by the republics National Bank. He added, The exchange rate wont strengthen any further as we will not let it set at less than 147 tenge.

Page 38| New Europe November 20 - 26, 2011

NEIGHBOURHOOD

UZBEKISTAN AZERBAIJAN KYRGYZSTAN

UZBEKISTAN|DIPLOMACY AZERBAIJAN DIPLOMACY

Tashkent, Budapest ink bilateral documents

Hungarian President Pal Schmitt recently paid an official visit to Tashkent upon invitation of Uzbekistans President Islam Karimov. The heads of state accompanied by members of official delegations from both countries held bilateral talks, Uzbekreport.com reported.The main focus at the talks was paid to issues related to deepening trade-economic and investment co-operation. Large-scale reforms implemented in both countries yielded positive outcome in both countries along with an associated increase of attractiveness of national economies. Both sides aimed to develop ties. During his visit to Uzbekistan, the Hungarian President was accompanied by a large delegation of executives from leading Hungarian companies in key sectors of national economy. Regarding the level of bilateral trade, both sides noted that the growth in 2010 surpassed 37% but it was reported that the trade volumes do not reflect the real economic potential of both countries. However efficient use of available reserves and expansion of trade capacity is expected to increase the trading volumes. The Uzbek side can continuously supply Hungary's demand in cotton fabric and yarn, made-up textile products, cable and wiring products, rare and nonferrous metals, chemical products and much more. During the meeting, some documents of key importance include cooperation in oil and gas industry, standardisation and certification, metrology signed between Chambers of Commerce of the two countries.

Hungary highlights energy co-operation with Azerbaijan

Hungarian President Pal Schmitt accompanied by 50 businessmen recently paid an official visit to Azerbaijan where he participated in a meeting of the intergovernmental commission of Azerbaijan and Hungary. He attended the second session of the intergovernmental commission for economic co-operation and a set of other meetings. At the meeting, the committee discussed the current situation and prospects of economic cooperation between the two countries. The meeting was chaired by the Minister of Economic Development Shahin Mustafayev representing Azerbaijan and the Secretary of State and Ministry of National Economy Rosa Nagy representing Hungary. In the course of talks, the Hungarian President said that Azerbaijan is a big friend and strategic partner for Hungary in the South Caucasus. Schmitt spoke about such joint projects of Hungary and Azerbaijan as the Southern Gas Corridor, Nabucco and AGRI. The sides have opportunities for further development of cooperation in the non-energetic sphere, he said. Relations will be improved in politics, economy, energy, technologies, culture, education, tourism, con-

Hungarian President Pal Schmitt visited Azerbaijan. |EPA/VASSIL DONEV

AZERBAIJAN|DIPLOMACY

Chinese, Azerbaijani ruling parties meet in Beijing

Senior officials of the Communist Party of China (CPC) and the New Azerbaijan Party (NAP) recently had a meeting in Beijing.The NAP delegation was invited to China by the International Department of the CPC Central Committee, news agencies reported. At the meeting, the parties pledged to further enhance the relationship between the two ruling parties. He Guoqiang, head of the CPC Central Commission for Discipline Inspection, said the CPC and the NAP have maintained close communication and exchanges since the establishment of ties in 1999, which yielded great success in the development of China-Azerbaijan relations. He told the NAP delegation that during stay in China, they will feel the Chinese people's kindness and have a comprehensive understanding of China and the CPC. He expressed the willingness of CPC to work with NAP in further expanding their co-operation and foster relations between Azerbaijan and China. Ahmadov said that the sound co-operation between the CPC and the NAP plays an important role in promoting bilateral co-operation and friendship between the peoples of both countries.

tacts between peoples. The Hungarian head-of-state stressed that the aim of his country is diversification of sources and routes for energy resources, especially gas. Azerbaijan may play the key role in the issue. Hungary supports Azerbaijan in its European and Euro-Atlantic integration. Hungary welcomes Azerbaijani talks on EU association

and co-operation with NATO. Concerning the Nagorno-Karabakh conflict, Hungary sees need for progress in the peace process basing on the international law. Sustainable settlement of the issue may be achieved via peaceful means with account of territorial unity and sovereignty of interested states, Pal Schmitt concludes.

UZBEKISTAN ECONOMY

GDP growth projected at 8.4%

This year the GDP growth of Uzbekistan is expected at 8.4%, industrial output at 9.3%, agriculture at 6% and capital investments at 7.9%. These figures were announced at the meeting of the Uzbek Parliamentary Legislative Chamber's Budget and Economic Reforms Committee, Uzbekreport.com reported. The meeting discussed issues related to priority directions for tax and budget policy and the draft state budget for 2012. The meeting noted that the fiscal policy concept for 2012 revolves around the further development of social services, targeted assistance to the population, as well as strengthening of social orientation of budget expenditures. In accordance with the implementation of the proposed fiscal policy activities in 2012, the state budget revenues to the GDP ratio stands at 21.1%. It is expected to reduce the single tax rate from 6% to 5% for businesses in the industry in order to foster the accelerated development of small businesses in 2012. If the activities as envisaged in the tax policy concept for 2012 is met, there is a possibility that tax burden on the economy will be reduced 0.7% compared to the previous year. It was also learnt that the implementation of measures to improve the consistent wage employees of the budget organisations, pensions, stipends and welfare payments, will improve people at large.

AZERBAIJAN| TECHNOLOGY

Azerbaijani IT minister meets UK envoy

Newly appointed British Ambassador to Azerbaijan Peter Bateman recently met with Azerbaijans Minister of Communications and Information Technologies Ali Abbasov in Baku, news agencies reported. In the course of talks, Abbasov briefed the ambassador on recent activities of the ministry, as well as large-scale projects important for the country and the region which includes Regional Innovation Zone, Trans-Eurasian super informational highway, E-government State Programme. The minister recalled that talks with chairman of British Telecom at the World Economic Forum held recently in the Chinese city of Dalian, were fruitful. At the forum, the sides discussed the cooperation of relevant institutions of Azerbaijan with the company.

KYRGYZSTAN PRIVATISATIONS

Nationalised companies up for sale

Kyrgyzstan's president-elect Almazbek Atambaev recently announced plans to proceed with privatisation of companies and other assets nationalised after the April 2010 revolution, news agencies reported. The countrys State Property Committee aims to raise 5.5 billion som from the sale of these nationalised assets but last month under 40 million som had been raised. Despite donor assistance and a strong recovery this year as stated by the International Monetary Fund (IMF) forecasts 7% growth in 2011, there is not enough in government coffers to fund both the reconstruction of the south after the June 2010 ethnic violence, as well as salary increases for state workers. Selling off assets seized from the family of ousted president Kurmanbek Bakiyev and alleged associates was one of the ways adopted by the Kyrgyz government to reduce country's budget deficit. Tax revenues slumped in 2010 when the revolution sent the economy into temporary freefall. Assets sold so far include agro-business Asia Agroresource and sugar producer Ditis, as well as hotels and holiday homes owned by former government officials or their relatives. The largest asset put up for sale, the Cha kan Hydropower Plant has failed to find any buyer. Other assets coming up are of high profile origin. Two large and highly controversial assets, a stake in mobile telecommunications company Megacom and Zalkar Bank, the successor to Asia Universal Bank (AUB), are expected for sale in November.

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New Europe |Page 39 November 20 - 26, 2011

RUSSIA GEORGIA ARMENIA

RUSSIA ECONOMY GEORGIA|DIPLOMACY

GDP increases 4.8% in Q3

Russia's GDP grew 4.8% in the third quarter this year, the state statistics agency Rosstat said on 14 November. This figure was more modest than the earlier forecast by Economic Development Ministry, which had predicted the growth in the third quarter would exceed 5%. Previously the Economy Ministry speculated that growth would be 5.1% or 5.2%. Not a major game changer by any means, more a small disappointment that had a disproportionate effect on investor sentiment because of the deteriorating global markets backdrop, Chris Weafer, chief strategist at Moscows Troika Dialogue, wrote in an e-mailed note to investors, on 15 November. Our economics team take the view that this number is too low and inconsistent with other previously published data. In October, the ministry also said the GDP would grow in the fourth quarter of 2011 by 3.8-3.9%. According to the Rosstat, the higher pace of GDP growth in the third quarter corresponds with the low starting base of the same period in 2010, when the economy has grown by 3.1% only. The GDP growth in the second quarter was 3.4%. The government's official forecast says the GDP will grow 4.1% in 2011 as a

Armenia and Georgia expand co-operation

Armenian Transport and Communications Minister Manuk Vardanyan recently had a meeting with visiting Georgian Economy and Stable development Minister Vera Kobelia in Yerevan, Armenia Liberty.org reported. In the course of talks, the sides discussed issues regarding cargo transportation, infrastructure, road construction, and customs tariffs. Outlining transport as a priority, the sides are willing to cooperate in several sectors. The Armenian minister said that both countries develop an agreement on interstate co-operation in the sphere of transport and communications. He mentioned that Georgia has great expertise in road construction which could benefit Armenia. In turn, Georgian minister said that co-operation between Armenia and Georgia will enable to solve a number of problems in this sphere. She said that amicable ties between the two countries have already established which will eliminate the obstacles for free trade, cargo transportation and introduce special customs system between Armenia and Georgia. An Armenian delegation headed by Vardanyan recently paid a visit to Tbilisi to participate in the conference which is organised by the World Bank. High representatives of the transport sphere of the South Caucasus attended the conference. The aim of the conference was to develop donor programmes and to adopt those programmes to the national programmes and strengthen donors system, press service of Armenian Ministry of Transport and Communication said.

Tverskaya Street in downtown Moscow. Russia's GDP grew 4.8 percent in the third quarter this year.

whole, while the IMF is more optimistic with its 4.3% forecast. Russian Prime Minister Vladimir Putin, who will run for president next year, is seeking annual growth of between 6% and 7% and turn the economy into one of the worlds five largest. Agriculture also made a substantial contribution to growth last quarter, according to Tsepliaeva. Russian farmers harvested 95 million metric tonnes of grain as of 25 October, according to the

Agriculture Ministry. Thats about 50% more than in the same period of 2010 and bolsters the industry following the countrys worst drought in at least a half century last year. The sovereign-debt crisis in Europe, Russias most important export market, is hurting demand for manufactured goods. Industrial production grew 3.9% in September from a year earlier, the slowest pace since it began expanding in October 2009.

GEORGIA|HUMAN DEVELOPMENT

UNDP presents HDI report in Tbilisi

Head of UNDP in Georgia Jamie McGoldrick recently presented the Human Development Report 2011 in the UN House in Tbilisi,The Messenger reported.The Human Development Index, based on the data of UN human population division, UNESCO and the World Bank aimed to assess the HDI progress dynamic from 1980 to 2011. The report underlines the Human Development Index (HDI) which represents a long and healthy life, access to knowledge and a decent standard of living considered as a summary of three basic dimensions of human development. McGoldrick said in the report that Georgia was placed in the high human development category which was ranked 75th position out of 187 countries and territories. HDI of the country went up compared to last year but poverty and gender equality remained areas of concern. Among the three Caucasus countries, the Gender Inequality Index in Georgia remained high due to low representation of women in the parliament.

RUSSIA DIPLOMACY

Syrian opposition urges Russia to pressure al-Assad

On 15 November, a key Syrian opposition figure called for a tougher stance by the Kremlin against the government of President Bashar al-Assad to end the violence in Syria. Interfax quoted Burhan Ghalioun, head of the Syrian National Council, as saying Russia should join international efforts to pressure al-Assad to halt army attacks on protesters seeking his ouster. "We did not succeed in changing Russia's position, and they did not succeed to change ours," he said, referring to Moscow's position against Western efforts in the United Nations to further isolate al-Assad. "The pre-condition for any dialogue would be a regime declaration of its conversion to a democratic system. Without that, there can be no talks," Ghalioun said in a press conference in the Russian capital. A day earlier, Russian Foreign Minister Sergei Lavrov said that western nations are illicitly providing arms to Syria's opposition to force the overthrow of alAssad. "Nobody is commenting on it and no one is admitting it, but the facts are impossible to contradict: weapons are being smuggled into Syria from Turkey and Iraq," Lavrov said. "Armed extremists are using peaceful demonstrations to provoke Syrian government violence," Interfax quoted Lavrov as saying. Calls by NATO countries on the alAssad regime to stop using force to maintain order are self-serving, Lavrov said, considering that some of those very nations are providing weapons to a Syrian opposition responsible for violent protests. "Russia is deeply disappointed by this," Lavrov said, singling out France and the United States as countries he felt were being especially hypocritical on Syria. Commenting on a recent Arab League decision to suspend Syria's membership of the organisation, Lavrov said the Kremlin felt the measure was unjustified and that the censure would reduce, rather than increase, the chances of ending violence in the country. "We consider it (the suspension) improper. It looks like it was planned ahead of time. Those who made that decision threw away a very important chance to transfer the situation to a more transparent level," he said.

ARMENIA|INDUSTRY

Sargsyan urges businesses to upgrade their products

Armenian president Serzh Sargsyan while addressing the sixth congress of the Union of Industrialists and Employers of Armenia urged the local businesses to upgrade their products quality to make them appealing world-wide, Armenia Liberty.org reported. The congress was attended by representatives from the private sector and senior government officials. Among the invited guests was head of Ukraines state-run oil and gas company Naftogaz Ukrainy Yevgeny Bakulin. Speaking at the event, the president said that Armenia must win new international markets and create products which will be in demand worldwide. He stressed that private entrepreneurship is new in the country so it must grapple to work in accordance with international business trends. According to him, the private sector is getting stronger with every year and the process should be designed to meet the needs of modern citizens. He stressed that Armenia needs to build a strong society with a steady economy.

RUSSIA DIPLOMACY

Lavrov: Potential for sanctions against Iran exhausted

The potential for pursuing sanctions against Iran has been exhausted, Russia Foreign Minister Sergei Lavrov said. On the possibility of new sanctions against Iran: We believe the potential of pursuing sanctions against Iran has been exhausted, Lavrov said on 13 November at the Russian Foreign Ministrys official Twitter account, following the damning report on the matter by the International Atomic Energy Agency (IAEA) two weeks ago. Lavrov also reportedly criticised the United Nations nuclear agencys report on Iran, saying it contains nothing new and provided no further evidence that Tehran was developing nuclear weapons.

Page 40 | New Europe November 20 - 26, 2011

Kassandra@NEurope.eu

KASSANDRA
Follow me on twitter @Kassandra_NE

Once upon a time in Brussels...

The eurocrats are planning to strike over planned changes to their hours etc. Perhaps they are demanding to be paid in Renminbi?

All right in the EFD?

The troubled EFD Group in the European Parliament appears to be reaching out to the far right. After a series of defections and rumours that two more EFD MEPs might jump ship, the group, had a precarious 27 members, two above the threshold for holding a group. Searching around, they managed to acquire Frank Vanhecke, formerly of the Belgian Vlaams Belang. Supporters insist that the new member is more moderate than his party and this is why he left, but the association with the Belgian party, formed by Nazi sympathizers, will cause concern. More alarmingly, the EFD Group invited Andreas Molzer from the Austrian Freedom Party to give a presentation to a group meeting in Strasbourg. Mozler gave a long presentation, mainly explaining how popular they are in Austria, and bizarrely, Japan, and tried to explain away the many quotes from the party that could be interpreted as anti-semitic. The debate then turned to Israel and Palestine, where Mozler tried to reassure the skeptical deputies that he wasnt too pro-Palestine, or at least not enough to upset Bastiaan Belder, who is on the parliaments Israel delegation, including showing some photos from a recent visit there.
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Heading towards the EFD? Filip Dewinter of Belgian right wing party Vlaams Belang, and Heinz-Christian Strache, of Austrian right-wing party FPO (Freedom Party of Austria)|BELGA/JORGE DIRKX

The debate went on for some time until Godfrey Bloom, UKIPs intellectual powerhouse, interrupted with a cry of Israel, Palestine. Who gives a shit? When it came to joining the group, there was considerable resistance throughout the room. However, there are two interesting points. Despite the UKIP members voting against joining a pan-European party, Mr Bloom is ac-

tually the President of one, the European Alliance for Freedom, where he presides over a motley crew of the far right, including the Vlaams Belang, the Lithuanian Order and Justice, Sweden Democrats, and of course, Andreas Mozler and his fellow Freedom party MEP, Franz Obermayr. The latter is also Treasurer. But there is another problem that isnt going

away, Mario Borghezio the Lega Nord ufo enthusiast and conspiracy nut. Beyond that, the Italian MEP has praised Norwegian mass killer, Anders Breivik, saying his ideas were just fantastic. Farage wants Borghezio out, and tried to claim to UKIP members that he had been thrown out of the group. But Borghezio remains, unrepentant. Its not as though he has done much about it. When asked to speak directly with the leader of Borghezios Lega Nord, Farage refused, on the entirely reasonable grounds that Umberto Bossi didnt speak English! It may be that the meeting was a chance to politely kill off the Austrian dream of joining the group. Nigel Farage is positioning UKIP, who are more active in UK politics than EU affairs, to attract disaffected Tory supporters, who feel that David Cameron is too Brussels friendly for their taste. It is also a time when the skeptics have been shown to be right with the crisis in the Eurozone and moving to the far right will endanger that. New Europe contacted the EFD and UKIP on their approach to the Austrian far right party but their normally garrulous spokesmen have gone deathly quiet!

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