19th Year of Publication | Number 955 | October 2 - 8, 2011| 3.

50

NEWEUROPE
Can the sun save Greece?|Page 17

www.neurope.eu

UNION
Commission President Barroso called for a united Europe to deal with the debt crisis. Later, MEPs gave their nal approval to the the so-called six-pack agreement on economic governance Page 3

FINANCE
The EU could potentially raise 57 billion a year with the introduction of a nancial transaction tax (FTT). The tax will be levied on all transactions on nancial instruments Page 5

GREECE
The EU-ECB-IMF which monitors and nances the Greek economy landed last week in Athens, after they had broken off negotiations with the government early September Pages 2, 9, 31

PIRACY
Swedish MEP Christian Engstrom writes that todays copyright legislation is out balance, and out of tune with the times. It has turned the entire young generation into criminals Page 4

IN THIS ISSUE
EU Policy CAP must uphold its equitable goals|Page 11 EU-World EU-US criticised for tepid response|Page 13 Energy & Climate Off-shore oil spills require government -industry co-operation, not more regulation and expanded liability|Page 10 Oettinger calls for internal energy market as EU raids companies|Page 16 Gazprom to take major stake in Belarusian pipeline soon|Page 17 Country news Sarkozy backs Moroccan democracy reforms|Page 23 Spains parliament dissolved ahead of November election|Page 25 Serbia close to becoming EU candidate|Page 34 EU sees Ukraine gas transit role for years to come|Page 36 Kudrin resigns following spat with Medvedev|Page 39 Editorial & Opinion What will Germany do for the Eurozone?|Page 4 No future for human rights without social rights|Page 5 German taxpayers reluctance to shoulder all debts is understandable|Page 6 The answer to life, the EUniverse and everything|Page 11 Which new Middle East?|Page 12

Europe needs Med gas

Schulz warns Turkey: Cyprus gas belongs to the EU

Martin Schulz, centre, Guy Verhofstadt, right, and Joseph Daul at one of the plenary sessions in Strasbourg. |EPA/OLIVIER HOSLET

FASHION & STYLE

Un Viaggio Esotico Page 19

Martin Schulz, leader of the Socialists & Democrats (S&D) group in the European Parliament, told New Europe on 27 September that a potential major discovery south of Cyprus could help boost EU energy security. Asked if it would decrease reliance on Russia, Schulz said in an interview at the European Parliament in Strasbourg that diversification of energy supply is a co-element of the EU energy strategy. Its not only Cyprus. We need gas imports from northern Africa, oil imports from northern Africa, were in a close co-operation with Algeria, for example, for the gas fields so I think its reasonable and it is needed to look if Cyprus has gas

fields, he said. The European Union to be independent must be carefully to spread the energy supplies so you are right and the question is right we should not be dependent neither from one side - Russia for example - nor exclusively from Northern Africa. Therefore, Yes it is on our own interest that Turkey is looking behind the possibility to get gas in this area. The previous two gas crises between Kiev and Moscow affected many European countries. Asked whether there will be another gas crisis between Russia and Ukraine in the coming months, Guy Verhofstadt, leader of the Liberals and Democrats (ALDE) group at the

European Parliament, told New Europe in Strasbourg: It is always possible but there are the new links in the north of Europe who are now there and could help. He was referring to the Nord Stream pipeline that could see natural gas from Russia start flowing to Germany through the Baltic Sea as early as October. Meanwhile, MEP Adina Valean from Romania told New Europe that the accumulation of conditions which made the previous crisis possible are not present anymore, hence the political context is not the same either. In addition, aware of our interdependence, the EU should continue strengthening its energy policy by including its close neighbours.

Pages 14, 15

Page 2 | New Europe October 2 - 8, 2011

NEW EUROPE

ANALYSIS

The Shooting Gallery

A plan to save Greece and the Eurozone
By Dionyssis Kefalakos
With Greece pushed again to its limits, the Eurozone is trying once more to avoid the unavoidable, which is a good haircut for this overindebted country's sovereign debt. Obviously the aim is to avoid the unpredictable repercussions on the European banking system of the unlikely prospect of an uncontrolled bankruptcy of Athens. However a haircut of 25%-35% of the Greek debt could be painful but manageable for the European banks exposed to sovereign debt. But lets follow the facts as they developed over the past weeks. Taxation Athens is introducing one package of fiscal measures after another. In early September, it was the property tax to be levied through electricity bills. Then, it was a new package of measures providing for further cuts in pensions and public sector salaries by an average of 15% and 150.000 less governmnet jobs until 2014, with 30.000 layoffs until the end of this year. This past week more measures followed, introducing a new retroactive taxation package, with reduction of the non-taxable income from 12,000 to 5,000 annually. This means that all wage earners who pay income taxes at source, and their income taxed monthly, will see their take home pay to be greatly reduced during the last three months of the year in, order to make up with the increased taxation retroactively from 1 January 2011. Average income earners in Greece have now lost account of what they owe to the tax authorities. On top of that, over the past days taxpayers received the notes imposing on them the special surtax levy on incomes earned in 2010, which was decided last July. Unfortunately the Greek authorities keep squeezing the same parts of the population, which are the salaried people and pensioners. No effort is visible to extend the tax base to those who have been traditionally avoiding taxation, that is almost 80% of all professionals and the small businesses. The obvious way to arrest those incomes which traditionally avoid taxation is the introduction of objective criteria in assessing their tax obligation. Such criteria were introduced in the mid 1990s but were gradually abandoned later on, because of their unpopular character. Consecutive governments relaxed them in pre-election periods in order to increase their electoral potential. It is very interesting to watch what this government will decide on this front, because presently they are preparing the new tax law under which the tax returns of next year will be cleared and the tax liabilities of 2012 will be calculated. If this 80% of professionals will remain once more in the clear, it will be very difficult for Greece to continue hinging its fiscal reform and long term equilibrium with the tax base containing mainly wage earners and pensioners. In reality, the management of the Greek tax base is gradually becoming a major impediment for Eurozone reform, since the soundness of Greece's long term equilibrium hinges on brining its tax base in line with the rest of the Eurozone and the other developed economies. Private Sector Involvement The other crucial point in managing the Greek crisis is the PSI. That is the private sector involvement, in a swap of Greek bonds for EFSF guaranteed ones, as provided by the 21 July agreement.There are indications that the sharp fall of prices of the Greek debt paper during the past weeks in the secondary market, has created new incentives for the banks to participate in the PSI arrangement. Participation seems to reach or even exceed 90%, which is the overall participation rate threshold that the Greek government has set for the deal to go ahead. The haircut provided in this exchange of Greek bonds for new EFSF guaranteed ones has been set at 21%. The revived interest of investors in the PSI however, makes a haircut of 21% look like being on the low side and has raised hopes about increasing it and turn this bond swap into a real opportunity, to substantially reduce Greeces overall sovereign debt to manageable levels bellow 100% of the GNP, presently at 165%. This prospect though may lead mainly the French and the Greek banks which have large exposure to Greece, to insurmountable problems of both liquidity and capital adequacy. To address those problems of the banking sector, Eurozone authorities are left to understand that they might quadruple the dowry of the EFSF from 440 billion to 2 trillion. If all that goes well, then Greece's and the Eurozone's problems might be resolved.

Two's company, three's a crowd.| EPA/RADEK PIETRUSZKA

NE

15 YEARS AGO

Towards the mid 1990s, the central European countries that emerged as independent economic entities after the fall of the Warsaw Pact embarked on the tremendous task of preparing for entry into the European Union. However their internal realities and their external trade and economic relations were far away from being near to EU standards. To overcome these difficulties in a organised way they formed between them a free trade area, the CEFTA, the Central European Free Trade Agreement. Poland, Hungary, Slovakia, the Czech Republic and Slovenia agreed to drop a long line of import tariffs and transform the subsidies structure in the agricultural sector, so as to come nearer to the EU aquis. Not to forget that at that time the most important European Union common policy was by far the CAP, the Common Agricultural Policy.
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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 Anna Vvedenskaia (EU Affairs) annav@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

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NEW EUROPE

New Europe |Page 3 October 2 - 8, 2011

ANALYSIS
ECONOMY

Barroso calls for stronger central economic governance as MEPs approve 'six-pack'
By Kostis Geropoulos
STRASBOURG - On 28 September, European Commission President Jos Manuel Barroso told MEPs that Europe must be more united as it struggles to deal with the debt crisis in Greece and protect the euro. In a State of the Union speech at the European Parliaments plenary in Strasbourg, France, Barroso called for creating a true economic union and economic governance with the Commission at its heart. We are at a crucial moment in history because if we do not move forward with more unification, we will suffer fragmentation, Barroso said. "I think this is going to be a baptism of fire for a whole generation," Barroso added. The EU will be able to gather the political strength to come up with overall solutions to its crises, he said, adding that work was continuing on a tax on financial transactions. Martin Schulz, leader of the Socialists & Democrats (S&D) group in the European Parliament, in his keynote speech welcomed Barrosos agreement to the S&D groups long-standing demand for a tax on financial transactions. He condemned EU governments for shuttle diplomacy between EU capitals. Schulz demanded that the EU act as a community and meet economic, environmental, social and cultural challenges together. There is nothing wrong with European integration, he said. There is no crisis of ideals. We have a crisis of leadership. In his concluding remarks, a fiery Barroso hit back at one MEPs Eurosceptic comments. If Britain believes that it can - because of the past empire or because of its dimension defend its interests in the world alone try to get that point in your country. But I think that the majority here believes that to protect our interests, to defend our values in the world of globalisation, to
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European Commission President Jos Manuel Barroso delivers his State of the Union report during the plenary session of the European Parliament in Strasbourg, France, 28 September 2011. |EPA/CHRISTOPHE KARABA

speak with one voice with our American friends or China and Russia we need a stronger European Union. "And this stronger European Union is a way to reinforce also our countries, the countries that we all represent around this house, Barroso said, prompting applause from MEPs. He hailed Poland, which earlier in the day stated its commitment to the community approach as it holds the current presidency of the Council. Are we going to build the European Union against each other or with each other? Barroso asked. One of the problems is political confidence and we need to make the case for Europe. In the vote following the State of the Union address, MEPs gave their final approval to the agreement reached two weeks ago with the Council on the six legislative acts on economic governance, the so-called six-pack which improves on

the existing framework for macroeconomic surveillance in Europe. As expected, the plenary vote was tight. Immediately after the poll, European Parliament President Jerzy Buzek told a press conference that the EU was facing the biggest challenge of its history due to the sovereign debt crisis. Buzek said that the 'six-pack' was a new economic rule-book for avoiding next crises and a powerful and resistant arm against future crises. The six-pack is much more than sanctions. It is about prevention thats very important. It recognises that prevention is better than cure. And the second importance is that it is also about more than fiscal discipline. It is about keeping Europe competitive to create jobs through sustainable growth, Buzek said. He also appealed to all the national parliaments to approve as soon as possible the bail-out package of 21 July for

Eurozone countries. Any delay is playing with fire, he told the press conference. MEP Diogo Feio, one of the rapporteurs of the six-pack, told New Europe after the press conference on 28 September that coming from Portugal he knows very well that if the states have good public accounts, a good deficit and a good debt, they have sovereignty. Now were in a situation that we have a programme with the IMF, with the European Commission, with ECB and it is better that were doing it now and complying with everything and do it more because we want to choose our way and we know very well that with stable public finance well have growth, Feio said. I think like Barroso said this morning that this package is a package of stability and also a pact of growth. In the last years we just talked about stability and were now acting to the growth also, Feio added.

Page 4| New Europe October 2 - 8, 2011

NEW EUROPE

ANALYSIS
COPYRIGHT

What will Germany do for the Eurozone?

By Dionyssis Kefalakos
The deep political question that Germany faces today is not only if it is worthwhile helping Greece, Portugal, Ireland and probably Italy, Spain and the French banks, but, if this European economic engine should go for more Europe or not. Many German politicians and analysts say that since their country appears to be a world champion in exports, and seems to enjoy a peaceful future guaranteed for the long term, why undertake the burden of supporting the less competitive economies of the Eurozone? On the face of it the answer appears to be a straightforward no. But to answer a question of this magnitude, simplicity is the not the way to do it. On top of this, Germans are well known for their deep philosophical thinking, and this answer requires a mental exercise that not even the least educated citizen will avoid undertaking.The blunders of the past century committed by many of Berlin's leaders have turned the average man in the street very sceptical about what is obvious and what is correct. Not forgetting that everybody in Germany agrees that the European Union was the golden key which opened the door to today's welfare society and led to the reunification of the country. However, it is human nature to consider the present as a given and standard reality, not recognising the underline forces that drove us there, and omitting to count the costs to others for the present welfare. But let us see what answers have being given so far to the above question. Merkel and Schuble In many respects this crucial political question for Germany has been answered by Chancellor Angela Merkel. Her statements and decisions so far over the sovereign debt problem in the peripheral Eurozone countries are based on the assumption that the Eurozone is the best guarantee for the long term welfare of her people. On the same line, Wolfgang Schuble the Minister for Finance, and a politician who worked to create the euro, is also adamant about the need to safeguard the Eurozone. Of course, they both put a price on helping the sinner Eurozone countries, but at the same time they are being careful not to make this price unbearable, and put the entire edifice at risk. Those two however have not forgotten to take into account the moral issues around the bailouts. If Germany had just put all its reserves on the table and made its citizens guarantee all loopholes in the Greek and the other sinner economies, this would have totally given the wrong message, and would have probably driven the whole Eurozone to a dead end. So Merkel and Schuble, in a long term sustainable way. work for more Europe. Rsler and Issing On the other side of the fence we have a number of German politicians like Philipp Rsler, minister of Economics, Vice Chancellor and President of the Free Democratic Party (FDP), and economists like Otmar Issing, member of the Executive Board of the European Central Bank from 1998 to 2006 and advisor to Goldman Sachs. Both have being speaking out against the role of Germany as the linchpin of the Eurozone and the main force behind the bailouts. Both of their priorities, though, can be checked. Rsler thought that being an advocate of less Europewill help him and his party in difficult times. However with the catastrophic electoral results the FDP had in regional elections, he cynically made a U-turn. As for Issing, his conservative ideology, his neo-liberal monetarist approach and his carrier in the banking sector and academia in Europe and the US are more than good reason for him to prioritise the banks ahead of the well being of all Eurozone citizens. All in all, Angela Merkel and Wolfgang Schuble have so far shown their ability to answer the crucial question for the good of all Germans, but not for some of them.

Copyright law turns kids into criminals

Reform will enrich artists and the public

Supporters of the Pirate Party cheer at the election party after first computer predictions of the election for the state parliament in Berlin, Germany, 18 September 2011.|EPA/STEPHANIE PILICK

By Christian Engstrom
Todays copyright legislation is out balance, and out of tune with the times. It has turned the entire young generation into criminals in the eyes of the law, in a futile attempt at stopping the technological development. Yet, file sharing has continued to grow exponentially. Neither propaganda, fear tactics, nor ever harsher laws have been able to stop development. It is impossible to enforce the ban against non-commercial file sharing without infringing fundamental rights. As long as there are ways for citizens to communicate in private, they will be used to share copyrighted materials. The only way to even try to limit file sharing, is to remove the right to private communication. In the last decade, this is the direction that copyright enforcement legislation has moved in, under pressure from big business lobbyists who see their monopolies under threat. We need to reverse this trend, in order to safeguard the fundamental rights. At the same time, we want a society where culture flourishes, and where artists and creative people have a chance to make a living as cultural workers. Fortunately, there is no contradiction between file sharing and culture. This is something we know

from a decade's experience of massive file sharing on the internet. In the economic statistics, we can see that household spending on culture and entertainment is slowly increasing year by year. If we spend less money on buying CD records, we spend more on something else, like for instance going to live concerts. This is great news for the artists. An artist will typically get 5-7% of the revenues from a CD record, but 50% of the revenues from a concert. The record companies lose out, but this is only because they are no longer adding any value. It may well be that it will become more difficult to make money within some parts of the cultural sector, but if so, it will become easier in some other including new ones, that we have not even imagined so far. But as long as the total household spending on culture continues to be on the same level or rising, nobody can claim that the artists as a group will have anything to lose from a reformed copyright. Should this also have the side effect of loosening up some of the grip that the big distributors have over cultural life, then so much the better for both artists and consumers. When public libraries were introduced in Europe 150 years ago, the book publishers were very much

opposed to this. The argument they used was the same one that is being used today in the file sharing debate: If people could get access to books for free, authors would not be able to make a living, and no new books would be written. We now know that the arguments against public libraries were wrong. It quite obviously did not lead to a situation where no new books were written, and it did not make it impossible for authors to earn money from writing. On the contrary, free access to culture proved to be not only a boon to society at large, but also turned out to be beneficial to authors. The Internet is the most fantastic public library that has ever been created. It means that everybody, including people with limited economic means, has access to all the world's culture just a mouse-click away. This is a positive development that we should embrace and applaud. The Pirate Party has a clear and positive agenda to end the criminalization of the young generation, and provide the foundation for a diverse and sustainable cultural sector in the Internet age. We invite all political groups to copy our ideas. Sharing is caring. Christian Engstrom is an MEP for the Swedish Pirate Party

NEW EUROPE

New Europe |Page 5 October 2 - 8, 2011

ANALYSIS
FINANCE
New Europe content partner

EU to raise 57bn through nancial transaction tax

By Cillian Donnelly
The European Union could potentially raise 57 billion a year with the introduction of a financial transaction tax (FTT). The tax, announced on 28 September as part of European Commission President Jose Manuel Barrosos state of the union address, will be levied on all transactions on financial instruments, such as shares, bonds and derivatives, between financial institutions if at least one of the institutions is established within the EU. The exchange of shares and bonds would be taxed at 0.1%, with derivatives at 0.01%. According to the European Commission proposal on the tax, issued in the wake of the Barroso speech, , the FTT will ensure financial institutions make a fair contribution to covering the costs of the recent crisis, and to ensure even taxation of the sector vis--vis other sectors, and will create appropriate disincentives for overly risky transactions and to complement regulatory measures aimed at avoiding future crises, and will help avoid fragmentation in the internal market for financial services, bearing in mind the increasing number of uncoordinated national tax measures being put in place. Under the proposal, the tax is due to take effect from 1 January 2014. The tax has a twofold purpose, according to a Commission source: to ensure fairness in the tax system, and to establish a co-ordinated taxation framework for the member states. Currently, ten EU member states have some form of FTT, and the proposal aims to minimise current tax rates while also harmonising the existing varieties of taxes. This is not about raising revenues, this is about harmonising, said the source. The revenue raised from the FTT will be shared between the EU budget and member states, with the decision on priority spending down to individual countries. The idea, said the Commistaken from emetas comments that the issue does not fade away. Politically, the proposal was broadly welcomed by the political groups in the European Parliament, albeit with some qualifications. The Greens, welcoming the FTT as better late than never, in common with many NGOs want the tax introduced on a global level. In a statement, Green economic and finance spokesperson Sven Giegold urged the EU to find other allies around the world for the introduction of an FTT beyond Europe, to help raise revenue to address global poverty and combat climate change. The EU must push for this at different international fora: the G20, the forthcoming UN climate conference in Durban, next year's Rio +20 summit. Meanwhile, the British Conservative party, which sits with the European Conservatives and Reformist group, have expressed displeasure at the FTT. In commom with many UK-based financial institutions, it is being viewed as an attack on the City of London. The big fear is that Londons finacial centre will see its institutions depart Europe. According to the Commission, however, In order to mitigate these risks, the proposal provides for low tax rates, a very wide tax base, appropriate criteria to determine the territorial application of the tax, and harmonised scope. The proposal still has to be discussed at Council level, where the FTT already has support from certain member states, such as Austria, Belgium,Finland, France, Germany, Greece, Hungary, Luxembourg, Portugal and Spain. It then goes to the European Parliament for opinion. The Commission has also indicated it will explore ways to introduce the FTT on a global level. EU finance ministers are expected to discuss the proposal on 4 October ahead of G-20 and EU summit meetings in October and November.

No future for human rights without social rights

By Gutenberg
What a year 2011 has been so far! North Africans taking to the streets to call for democracy; the Greeks and Spanish protesting against austerity; riots in England condemned by some as pure criminality, but seen by others as a sign of deep social malaise: the year the news refused to stop has left us with a barrage of unanswered questions and an uneasy feeling that something is deeply wrong with society. Events like these put pressure on politicians to come up with fast solutions. Austerity is one answer to the Eurozone problems but those on the end of it are paying a heavy price. Riots bring calls for revenge, with families facing eviction from their homes for the bad behaviour of one household member, and jobless people threatened with benefits cuts. Knee jerk responses can be the quickest path to even wider social strife; and voices such as IMF head Christine Lagarde and the UNs International Labour Organisation have already warned that riots are the logical result of economic crisis. And what if, by failing to look after social welfare, European governments are acting not only immorally but illegally? The idea that fair access to resources will create a better society is nothing new. It was the impetus behind the work of the great social reformers such as Joseph Rowntree in Britain and Adolph Kolping in Germany, along with thousands of other social reformers worldwide. It was a philosophy that built the modern welfare states and led to core social values being accepted in most rich countries. So influential was the social rights movement that when the European Human Rights Convention and the Court came into being many argued that social rights should be included. They lost the battle, but won the argument the result was the European Social Charter, a means to promote and protect social rights for Europes citizens. In the 50 years since its launch, it has wrought changes to national laws to create better housing, improved health care and fairer working conditions. Its system of monitoring social rights in Europes countries has led to changes for the better across the board, and its system for collective complaints has made it easier for NGOs and campaigning groups to fight for justice. We may never be able to predict the future, but we can learn from the past. We know very well where economic crisis, coupled with insecurity and fear, lead. Society may be able to survive without a system for maintaining social rights, but that society will be frail and unsustainable. The capacity of a population to grow, contribute and in turn sustain their economy depends on each member having fair access to jobs, education, and training, with the guarantee that they will be decently housed and able to provide for their families. A Europe that respects social rights is a Europe protected against the fault lines formed when an economy turns and public trust no longer holds. Social rights are human rights and an anchor for our future.

The EU hopes to raise billions of euros by placing taxes on the transactions of shares and bonds. | EPA/ORESTIS PANAGIOTOU

sion source, is that member states can tax what they want to tax without the tax base walking away. Each member state will set their own priorities on what to spend this revenue on, including climate change, said the source. This appears to contradict a view expressed by the EU Commissioner for Taxation, Algirdas emeta in the French newspaper Le Monde, in which he said that revenue should go towards development and climate change issues. In an article in the paper, the Commissioner said that Europe should set an example and speak with one voice for the introduction of a global tax on financial transactions with its partners in the G20. It is necessary to find a global so-

lution for the challenges of development and climate change that threaten us all. Since the prospect of some form of EU-wide tax on the financial sector was first seriously touted as part of the Commission Communication on the EU Budget Review in October 2010, followed by the Proposal for a Council Decision on EU own-resources earlier this year, many development, climate and human rights NGOs have been pushing strongly for revenue raised from any FTT to be specifically set aside for development or climate issues, in a so-called Robin Hood tax. The current proposal doesnt quite add up to what some were expecting on this score, but some hope may be

Page 6 | New Europe October 2 - 8, 2011

NEW EUROPE

ANALYSIS
THE GREEK PATIENT

German taxpayers reluctance to shoulder all debts is understandable

By Ralph T. Niemeyer
German Chancellor Angela Merkels political future had been in jeopardy as she had considerable difficulty to win the German Bundestags approval for the enhanced European rescue mechanism (EFSF) by her own majority. She was so desperate to get it pushed through against a growing number of dissidents from her own party that she had to rely on votes from the oppositional Social Democrats and Greens, the smallest fraction in the German parliament. In the end, Mrs Merkel managed to have all but 15 votes of her governing coalition behind her covering up the dissent and unease of liberal-conservative members of the lower house of the German parliament. Social Democrats and Greens were demonstrating their pro-EU stance as both parties are eager to regain power in 2013 for which they might need support from Socialist party DIE LINKE which opposed the bank-shareholder - rescuing mechanism known as EFSF citing unfair burdens for taxpayers as well as brutal social cuts that go hand in hand with stringent austerity imposed by the Troika. When talking about the Greek debts causing the first state-bankruptcy in Europe after WWII one hardly hears anything about those who benefited from that debt. It is a known fact that Deutsche Bank AG, Goldman Sachs, Nathan Meyer Rothschild, HSBC, Lazard Freres SAS and others had made billions by speculating with Greek bonds and Credit Default Swaps (CDS) and were later employed by the Greek government as advisors to select the raisins in the pie that need to be privatised in order to fulfil the Troikas demands. Then, ALPHA BANK A.E., N M Rothschild & Sons Ltd. and UBS Ltd. got appointed by the Greek government to sell off all table silver. Of course, all these banks have rich clients who might want to buy the profitable pieces of Greece's assets. As corrupt as all this already sounds, this is not the bottom of the barrel, yet. One may wonder where all these debts came from and why Greeces population was not incredibly rich (except for their upper class). Closer scrutiny reveals that Greece chronically suffered from a negative trade balance. That is not a did privately accumulated wealth, and both for the same reasons, firstly because of the EU-wide tax-dumping competition that EU Commission and every member state government entered into and secondly because of the bank-rescuing. Public hands needed to increase their debt while corporate taxes were lowered by every single deregulation and harmonisation wave that came from Brussels over the years. The bonds EU member states issued for covering their budgets after major corporations were given legal ways for tax evasion were bought by institutional and private investors. This is why the debts of the states are the wealth of the ultra high net worth individuals (UHNWIs as Merrill Lynch calls them) in our society who own banks and hedge funds. Not only Warren Buffett and George Soros, legendary speculators, advocate what no democratically elected government or parliament ever dared to call for: a wealth tax for the UHNWIs. That, indeed, would be the only way capitalism could be rescued and that this is in the interest of the upper class could hardly be doubted. Italian minister-president Silvio Berlusconi is not the only one who did not understand that, yet. When Greece declared its bankruptcy, then also Spain, Italy and others will not be able to re-finance themselves under normal conditions any longer either. This does not speak against a radical debt-cut but against a system in which a few investment bankers, hedge fund junkies and insane rating analysts, who had already provoked the crash in September 2008 by their chronically erroneous conclusions, dictate to sovereign, democratically elected governments their profit maximization conditions. When Socialism collapsed 21 years ago, it accepted to be dictated the conditions by the winners. Now, that Capitalism finds itself in a similar position, its protagonists still believe they can dictate how they shall be rescued. That is absurd as it not only leads to the bankruptcy of entire states, but also to the end of democracy. Ralph T. Niemeyer is the editor-inchief of EUchronicle (editor@euchronicle.eu)

German Chancellor Angela Merkel (C) is surrounded by Members of Parliament during the roll-call vote within a session in the German 'Bundestag' parliament in Berlin after they voted to expand the eurozone bailout mechanism. | EPA/MICHAEL KAPPELER

big surprise either. Greece imported more than it exported. Not new. And, like almost all Eastern and South Eastern EU member states Greece piled up debts because of an enormous trade imbalance resulting from consumer goods. All EU member states (except for the Czech Republic) who joined in 2004 were forced to import topshelf products from the West while their own industries ran out of business or were taken over by Western companies. But, in case of Greece all this wouldnt add up. Greece did not notice such a rise in consumption that the newcomers from Eastern Europe did. Greece imported something else that was far more expensive and that could hardly be consumed: arms. At the same time when Greeces debts skyrocketed, Germany under the Social-Democratic-Green government of Gerhard Schrder and Joseph (Joschka) Fischer, doubled its arms export. Most of the weapons were exported to Greece. One may fear that the government in Athens might find some of these arms useful in fighting off the citizens revolt against the Troikas torture-tools. So, it has not been the average Greek citizen who indulged in the consumption of luxury goods and by this created the tremendous debts that EU and IMF pretend had to be bailed out, for which a harsh austerity program is to be imposed leading to brutal wage cuts and barbaric

social cuts. But although hundreds of billions are being pumped into the system, through the means of the EFSF, Greeces, Irelands, Portugals and Spains debts are not shrinking, but still growing. Instead of dumping ever more billions on the graveyard of the financial markets one should grant governments direct access to loans from the European Central Bank (ECB) at low interest rates, by this finishing with the perversion of the system in which private banks get a credit line for next to nothing from the ECB handing out loans to states for an exorbitant interest that is artificially fuelled by speculation and a conspiracy between banks, speculators and rating agencies. Instead, the programs presented by the Troika are not aid but killerprograms. Greece will never be able to pay back its debts. Everyone knows this, so why, one may wonder, are our elected leaders so eager to prolong the death of the Greek patient? The answer is easy: the political leadership wants to put the entire burden of Greeces inevitable insolvency onto the taxpayers shoulders. The later Greece will be declared bankrupt, the better for institutional investors, banks, hedge funds and speculators, and the more expensive for the taxpayer. Already today a 50% cut of the Greek debts would cost the German taxpayers 14 billion, but German banks, insurance companies and other speculators would lose only 6

billion, the reason why the majority of German citizens reject dumping more money in that black hole of the financial market. One and a half years ago this relation would have been reversed. It is clear that the international banking federation under Deutsche Bank AG CEO Josef Ackermann had been the mastermind behind the Euro-Groups plan for exchanging Greek bonds when releasing the next tranche for Greece in October, because that plan makes sure that when in future the Greek taxpayers cant service the new bonds any longer, the international financial mafia will sit on dry land already and wont be forced to write off not a single euro. There is no such thing as a rescue mechanism for the euro, but for the bankers and speculators who brought about the trouble. The financial mafia pockets every euro that Greece receives from the EFSF and IMF. It is, of course, understandable that people like Mr Ackermann have an interest in keeping the public billion-euro-pipelines afloat, but the EU Commission, Euro-Group and Council obviously forgot whose interests they ought to represent. But, what usually gets forgotten about when talking about the debts of the PIGS (Brussels-vocabulary for Portugal, Ireland, Greece & Spain), is the wealth that is standing on the other side of the balance sheet. Not only have public debts exploded over the past few years, so

NEW EUROPE

New Europe | Page 7 October 2 - 8, 2011

ANALYSIS
ECONOMY

Dont turn Brazil into a corporate playground

By David Cronin
Children are protected from danger by their parents. The UN has recognised a principle called the responsibility to protect. So what is wrong with protectionism? It is by shielding vulnerable sectors of the economy from competition that countries develop. This method has been used extensively in Europe and North America in the past; yet the rhetoric from our modern leaders indicates it is sinful for governments to nurture infant industries and prevent them being submerged by global corporations. Brazils president Dilma Rousseff is expected in Brussels this week for two summits: one with the EUs political representatives; the other with its business elite. More than likely, both events will hear pleas for protectionist urges to be restrained. Inevitably, the objective of introducing a free trade agreement between the EU and Mercosur the common market banding together Brazil, Argentina, Uruguay and Paraguay will be a dominant theme at these meetings. Talks about framing such an accord have been conducted with interruptions since 1995 and, despite occasional predictions that a deal is on the horizon, none appears imminent. For a start, the enthusiasm for an agreement expressed by the European Commission is not shared by governments in France, Ireland and some other EU countries worried about pitting their beef industries against increased imports from South America. Rather than taking on the meat industry in this continent, Karel de Gucht, the EUs trade commissioner, has blamed Argentina for the deadlock. Speaking in April, he described the Buenos Aires government as the great obstacle towards reaching an agreement. Argentinas protectionism is creating problems and they are making our exporters nervous, especially in the automotive industry, he said. If several of the Unions own leaders are hostile to these trade talks, then who is pushing for them to succeed? In 2004, the European Services Forum (ESF) told Pascal Lamy, then the Unions trade chief, that Mercosur countries must be willing to open their economies more to foreign firms. The ESF gave a list of the sectors it wanted liberalised: financial services, telecommunications, maritime transport, computer technology and environmental services. Almost certainly, environmental services was code for water, as one of the ESFs members Veolia is

Can Europe save itself and avoid pulling down the U.S. recovery?
By Dr. Robert J. Shapiro
At last weekends IMF/World Bank annual meetings in Washington, the question on everyones minds was, whats happened to Europes instinct for economic survival? While our Congress squabbles over bookkeeping for disaster assistance, the talk in the corridors of the IMF was that Europe is two to three weeks away from financial meltdown. It would start in the sinking market for Greek government debt, followed by turmoil in much-bigger markets for the public debt of Italy and Spain, as well as Portugal and Ireland. And if Europes leaders cant head that off, it will likely take down most of Europes large banks. Angela Merkel, Nicholas Sarkozy and their counterparts across Europe get this. What they dont want to face is that the only solutions ultimately lead to a radical rewriting of postwar social contracts across the Eurozone. The financial carnage wouldnt stop at the continents shores. British banks have large holdings of Spanish, Italian and Irish government bonds, so they would be very vulnerable. Our own banks sold most of their portfolios of European government bonds over the last year. But U.S. officials worry privately that U.S. banks are holding unknown billions of dollars of credit-default swaps against both those bonds and the European banks that hold them. That puts them in a position that recalls AIG in late August 2008, as insurance providers for a catastrophe that now lies somewhere between the possible and the likely. Finally, a meltdown of European finance would mean horrendous recessions across Europe and an end to our own recovery. The sober minded men and women at the IMF arent given to nightmare scenarios. They believe in data, and its the analysis of those data that now points to impending crisis. Over the last six months, for example, the shares of the largest banks of Greece, Italy, Spain and France have sunk 30 percent to 50 percent. Even scarier, the costs to insure against the failure of those banks reached the same levels last week as they did here for Lehman Brothers a few weeks before its collapse. And the costs to insure against the complete default of Greek, Italian and Spanish government debt financial Armageddon have risen 60 percent to 80 percent. Merkel, Sarkozy and the Dutch and Finnish members of the Eurozone in effect, should pledge their own good credit to guarantee the same for the Eurozones profligate southern countries. So far, theyve thrown a lot of money at Greece, hoping it would satisfy global investors. We now know that hasnt worked, and that much harder adjustments lay ahead. In fact, Europes crisis is even more serious than our own in 2008... The Eurozones rescue fund so far has focused on delaying Greeces default. In the next two weeks, it will have to, at once, inject capital into unknown numbers of large banks and buy massive amounts of Greek, Spanish, Italian and Portuguese debt on the open market. The politics of pulling that off are daunting, because it will require the unanimous support of 17 Eurozone governments. The European Central Bank could underwrite it it still says no to that or the rescue mechanism could guarantee losses of up to 20 percent on sovereign bonds. If the Eurozone can find its way to guaranteeing the sovereign debts of all of its members, their future debts will have to be centrally and uniformly constrained. In short, the solution to the crisis could spell the end of each governments autonomous right to conduct its own spending and tax policies, since thats what generates sovereign debt. That would require fundamental revisions of the long-time social contracts these governments have with their peoples. 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. From 1997 to 2001, Dr. Shapiro was U.S. Under Secretary of Commerce for Economic Affairs

Dilma Rousseff, President of Brazil, speaks during the general debate of the 66th session of the United Nations General Assembly at United Nations headquarters in New York City | EPA/Justin Lane

eyeing private water contracts throughout the world. Water privatisation has proven catastrophic in Latin America. In the mid-1990s, the World Bank gave Bolivia a loan on the condition it would sell off public water utilities in its main cities. The result was that the poor were unable to afford clean water. By 2005, the cost of having proper water and sanitation in a La Paz household came to $450; to fork out that amount a worker on the minimum wage would have to put aside his or her entire pay for a nine month period. But, of course, the realities of life in impoverished barrios will not be exercising the minds of the executive types in Brussels Palais dEgmont, where the EU-Brazil business summit is taking place. The association of European chambers of commerce (Eurochambres) has a leading role in this jamboree. Almost a year ago, its secretary-general Arnaldo Abruzzini gave a grim warning about the consequences of the talks with Mercosur failing: If we dont reach agreement, China will overtake the EU [in its business with South America]. Ah yes, the spectre of Red China. Ignore, please, the obligatory references to shared values like human rights and democracy when Rousseff meets EU bigwigs. The real agenda here is beating the Chinese. Energy is of critical importance in this race. The business summit will be taking stock of what has happened since the European Commission recommended forming a strategic partnership with Brazil in 2007. The Commissions paper stated that Brazil has huge natural resources and that while its already a major investment hub for European companies, it will offer major additional openings. Bio-

fuels were identified as an area where Brazil and Europe can cooperate more closely, given that the Commission is determined to press ahead with increasing the use of food crops to power cars. Findings by the Commissions own in-house scientists that biofuels are not a solution to climate change have been glossed over. Instead, the Unions most senior officials are more eager to please Repsol, the Spanish energy firm that is active in the Mercosur-EU Business Forum, one of the participants in this weeks summit. Luiz Incio Lula da Silva made some appalling decisions as Brazils president. Last year, he promised the French arms industry $6 billion in immediate contracts, money that should have been used to combat poverty. Yet he should be praised for overruling a patent on efavirenz, an AIDS treatment drug, in 2007, to ensure that affordable generic versions of the medicine would be provided to those who needed them. If the EU has its way, Brazil would be restricted from putting public health before the commercial interests of pharmaceutical giants in the future. The Commission wants strict rules on intellectual property included in a free trade agreement so that generic medicines wont be as readily available. The agreement coveted by the EU is often compared to the Free Trade Area of the Americas that the US wanted to introduce. Luckily, that initiative was killed off six years ago because it encountered massive public opposition. The challenge is to encourage the same level of opposition to an equally ruinous EU-Mercosur accord. Corporations should not be granted planning permission to turn South America into their private playground.

Page 8 | New Europe October 2 - 8, 2011

NEW EUROPE

ANALYSIS
New Europe content partner

SPORT

The New Way

By Francisco Jaime Quesado
There is a sense of New Way in 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 a new standard of Democracy in Europe, more than a possibility, is an individual and collective necessity for all of us, effective European citizens. Karl Popper is more than ever present the difference of Europe will be in the exercise of the capacity of the individual participation as the central contribution to the reinvention of the collective society. This is a process that is not determined by law. It is effectively constructed by all the actors in a free and collaborative strategic interaction.In a certain sense, we need a new third way for Europe. When Anthony Giddens spoke about this special global capacity of creating a new commitment between the Europeans toward the challenge of the future, he was in fact speaking about this commitment with a New Democracy in Europe. Based in new standards of Social Innovation, this kind of New Way is above all the confirmation that in Europe the individual performance in a complex society is possible, desirable and above all necessary for the future. Europe must regain its Internal Competitive Advantage but at the same time must be able to reinforce its Global Situation. In this way its essential to learn the lessons that more than ever emerge from a Europe that is trying to rebuild its competitive advantage and to reinvent its effective place in a complex and global world. In the New Global Economy and Innovation Society, Europe has a central role to play towards a new attitude connected with the creation of value and focus on creativity. In a time of change, Europe cant wait. Europe must confirm itself as an enabler actor in a very demanding world, introducing in the society and in the economy a capital of trust and innovation that is essential to ensure a central leadership in the future relations with America and the more and more dynamic developing world. The actors from Europe should be more and more global, capable of driving to the social matrix a unique dynamic of knowledge building and selling it as a mobile asset on the global market. Europe is facing a new strategic challenge. Reinventing Europe and giving the European Actors (States, Universities, Enterprises, Civil Society) the opportunity of developing new challenges focused on innovation and creativity is in a large sense giving a central contribution to a New Global Order. The Reinvention of Europe is the reinvention of its people and institutions. An active commitment, in which the focus in the participation and development of new competences, on a collaborative basis, must be the key of the difference. 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

Platini: Lets give a red card to match xing

Zimbabwean President, Robert Mugabe and FIFA chief, Sepp Blatter join forces to fight corruption.| EPA/AARON UFUMELI

By Andy Carling
French football legend, Michel Platini joined the Council of Europe in calling for sterner action against match fixing by betting syndicates. European sport is afraid because of a match-fixing phenomenon that is developing in connection with largescale online betting activities. The growth of betting-related match fixing is alarming, especially because it is a problem to which no sport and no country is immune, he told the Committee of ministers, who had just approved a recommendation to member states on the promotion of the integrity of sport. Platini is President of UEFA, the body overseeing 53 European football associations. Match fixing is as old as the sport, with one early scandal between Manchester United and Liverpool occurring in 1915, when players on both teams had been betting on a 2 0 Mancunian victory. More recently, a group of Croatian fixers have confessed to arranging the results of a large number of matches, including a World Cup Match, and an under-21 national team, Champions League, Europa League and games in 9 different countries. There have also been investigations in the UK, Turkey, Italy, and Finland which revealed that organized crime has turned match fixing into a billion dollar industry. The international football association, FIFA has also had to deal with financial scandals and allega-

tions over vote buying that have tarnished the organization and the sport. FIFA President, Sepp Blatter agrees with Platini over the dangers of match fixing, saying, Fans will no longer go to football matches if they know theyre fixed and if that happens everything thats been created in 107 years in FIFA will count for nothing. Blatter has sought to fight the menace by signing accords with Interpol and planning an anti-corruption centre in Singapore. The move came after investigations into illegal betting in Asia during last years World Cup. The operation led to 5,000 arrests and the seizure of $26 million, part of an estimated $2 billion wagered in illegal gambling dens. FIFA is also providing 20 million to Interpol, over 10 years, to investigate match fixing. There is concern that FIFAs tarnished image could damage their attempts to clean up the sport. Another concern amongst crime fighters is that tampering with results is a high profit, low risk crime. Platini addressed this in his speech to the Council of Europe, saying, the criminalisation of sports fraud is far from universal. And this deficiency is, in part, why match fixing is still going on. Its international nature aggravates the situation further still. He called for action, This is why I believe the Council of Europe now needs to intervene. It needs to intervene in order to encourage its member states to criminalise sports fraud and it needs to act in order to promote the indispensable cooperation between

public authorities and sports governing bodies required in this regard. He added, It is a question of responsibility, a question of ethics, a question of justice. His call was supported by investigative journalist Declan Hill, author of the best selling The Fix: Organised Crime and Soccer which has been translated into 15 languages. Hill told New Europe, This is excellent. Platini, as an ex-football player, has really taken the lead in fighting against corruption in sport. His speech is just what is needed. He added, The onus is now on European governments and politicians to ensure that the right laws are on the books to stop corruption in sport. This is not brain surgery. Put the legislation up for debate. Pass it. (Who would possibly oppose it?) And help preserve sport. Hill is regarded as the worlds leading expert on match fixing, and has interviewed all those involved in the crime, from players and officials to mafia bosses and hitmen. With this experience, he says, The real issue is the devastation that corruption can cause to sport. I have worked in Asia. I have seen firsthand the destruction of sports shrinking attendance, faltering TV revenue, but most importantly, fewer young people playing sports - all caused by fundamental corruption. He stressed the necessity of urgent action, We do not want this phenomenon in Europe. We have a few short years to put measures in place, to stop it. Platini's speech is a good start.

NEW EUROPE

New Europe | Page 9 October 2 - 8, 2011

ANALYSIS
ECONOMY
EVERYTHING BUT ARMS

Greece gradually shapes its fate

The 6th loan installment to be released but not a 7th one
By Dionyssis Kefalakos
The troika of the representatives of the EU-ECB-IMF which monitors and finances the Greek economy, finally landed last week in Athens, after they had broken off negotiations with the Greek government at the beginning of September. At that time Athens had asked for a postponement of its obligations, with most important amongst them an increase of the allowed deficits for 2011 from 7.5% of the GNP to anything around 9%. These deficits are financed by the European Union, the European Central Bank and the International Monetary Fund along with the old debts which gradually mature. Obviously, the new deficits are added to the old ones, making it even more difficult to attain a long term equilibrium and render impossible a regular market servicing of the country's obligations. After two weeks of flip flop the Greek government agreed to do what it had signed and sealed. The problem is that the long list of additional measures presented last Thursday to the minister of Finance, Evagelos Venizelos, by the three representatives of the EU-ECBIMF contain far stronger policies that Greece seems impotent to apply. STRUCTURAL DIFFICULTIES Central amongst these measures are new taxes on property and income, new and large reductions of pensions and public sector wages and last, but not least, an extended programme of structural changes in the labour and services markets along with a long list of privatisations. While Athens appears ready and able to proceed to new cuts in pensions and government sector wages, it appears very difficult to honour the structural reshuffle demanded by the troika. In this respect, despite the fact that the deep restructuring of the economy and the state machine are long overdue, the Greek government has being reluctant or unable to make any progress. Lets see why. It is now clear to all onlookers that the political structures in this country are interwoven with the distortions in the functioning of the economy and the state machine, which produce hefty incomes for some groups. For example, the functioning of the taxation system permits, if it does not promote, the private negotiations between the tax men and citizens, to the detriment of what finally is paid to the state coffers. In this way almost 80% of professionals and small businessmen are allowed to declare an annual income below the taxable level. Then the tax authorities begin negotiating privately

All kinds of everything

By Cillian Donnelly
There are seven candidates in this years presidential election in Ireland; not an astonishing fact in itself, but remarkable considering that last time out there was only, sitting president, Mary McAleese. Presidential elections are usual prosaic events in Ireland, the office often seen as a mere rubber-stamper, but following the elevation of the presidency to something approaching grandeur by the last two incumbents, McAleese and Mary Robinson, plus the fractured nature of the general election earlier in the year, which changed the Irish political landscape, everyone is seemingly up for a grand ideological battle. Media attention so far has been focussed heavily on the entry to the race of Sinn Fins Martin McGuinness, current Deputy First Minister in the Northern Ireland Assembly. McGuinness, a self-confessed previous member of the provisional IRA, which he claims to have left as far back as 1974, has been largely playing up his role as peacemaker, as bringing Sinn Fin, the political wing of militant republicanism, into the political fold, and being a key component of the 1998 Good Friday peace agreement. Few can doubt his progress in this regard, and the trust he has helped forge between both communities of Northern Ireland have won him many plaudits from both sides of the political and sectarian divide. His chuckle brothers routine with the Reverend Ian Paisley became an iconic media representation of the path both sides had taken to power-sharing. McGuinness no doubt feels that elevation to president will cement him as a true statesman. It will certainly represent Sinn Fins elevation to the mainstream. Right now, however, his party, which scored its best ever results in the Irish general election in February, is still seen as something of an outsider. As such, McGuinness knows that he can play the outsider card, the victim card, and history be damned. The media have already shown signs of backing off, concentrating instead on his knowledge of, and connection with, the Republic of Ireland and its political and diplomatic structures; apparent bullying will only play into his hands. In contrast, Dana Rosemary Scallon, former MEP and Eurovision Song Contest Winner Dana, is a late entry to the race. As a former presidential candidate, she is not totally removed from things, and will no doubt score a respectable share of the vote. But her old-time Catholicism, her strong views on abortion and the like will not endear her to the majority of the population, despite potentially picking up votes from discarded Fianna Fil voters, whose party, so dominant in past elections, have failed to field a candidate this time out. Certainly not the the supporters of David Norris, who polls suggest is one of the frontrunners along with McGuinness and Michael D Higgins from the Labour Party. Norris, an early favourite who previously withdraw from the campaign after it emerged he had written a letter to an Israeli court pleading clemency for a former partner, Ezra Nawi, who was accused of statutory rape of a 15 year-old boy, has managed to claw his way back, and is now regarded as a very serious contender for the post. Norris, a Joycean scholar and openly gay, is seen with a certain amount of affection form the electorate, despite his often bombastic image (his frequent media tag of flamboyant is seemingly both a euphemism for his public persona as well as his sexuality). He is both a contrast to Danas buttoned-up campaign, as well as providing a magnet for the liberal-left, keen for some form of supposedly radical change, but not willing to let things go too far. CDonnelly@NEurope.eu

Citizens wait in line at a tax bureau office for the payment of the solidarity special tax in Athens, Greece, 30 September 2011. |EPA/ALKIS KONSTANTINIDIS

with those citizens about the truthfulness of the tax returns. Only wage earners and pensioners duly pay their tax obligations. Unfortunately, all the new taxes imposed by the Papandreou government over the past eighteen months are levied on those who dutifully pay their obligations to the state, leaving the tax evaders untouched. Then come the services market, where lawyers, notary publics, pharmacies, charted accountants, engineers, whole sale trade in a number of products and the entire transport sector, are all being well protected from competition forces, with legally imposed fees , margins and controls. Last but not least, the overstaffing in all and every public service as well as the mal-functioning of some of them with crucial importance for the economy as for example the Urban Planning Offices, the Forest Service and many others, has not been under serious screening by the government. In reality the entire state machinery, local authorities included, seem to be there just to serve the people operating them and not the society and the economy as a whole. In the unholy alliance to block changes in all those fronts, are all political parties of the Parliament, from the extreme right to the Communist Party of Greece. For example in higher education the unproductive cooperation between student unions and the management of schools, is under the protection of the two left Parliamentary parties. Then comes the hurdle of privatisation. Public utilities, sea ports, air ports, gambling and many other lucrative sectors are controlled and operated by state sector firms, with most of them operating in the red. Decades of petty political party practices, backed also by the trade unions, have led to overstaffing and corruption, and have created very strong and wealthy minorities. For example, GENOP-DEH the trade union of the

Public Power Corporation, the state controlled electricity monopoly, has declared that they will undermine the government decision to impose a property tax which is to be cashed in through the electricity bills. It is very characteristic that the strongest opposition to the privatisation drive and the much needed structural reform in all these fronts, comes from within the governing PASOK party and all the other parties in the Parliament irrespective of ideology, left and right alike. The leader of New Democracy, Antonis Samaras, declares on every occasion that if he was prime minister there would have been no layoffs in the state sector, that he would have reduced taxation, put again the economy in a growth path and re-negotiate the needed changes with the lenders to the country. The left parties follow even more populist rhetoric promoting the den plirono (I don't pay) destructive movement. Even the Chambers of Commerce all over Greece depend on government subsidies, while participation in them is compulsory, irrespective if their members really need or not a subscription. In view of all that, the private sector of the real economy, or what is left of it, has abandoned hope. The problem is getting worse and worse every day, because the government and along with them the entire political party system, does not want to see its grip on the country being relaxed. All those distortions, however, need years to correct, even if the corrective policies are wholeheartedly applied and finally lead to a new and bright growth era. In the short term thought the country will not be able, to serve a still growing sovereign debt. This becomes every day more evident and after the 6th installment of financial aid/loan to Greece from the troika of EU-ECB-IMF to be probably released this week, there would surely be a hair cut.

Page 10 | New Europe October 2 - 8, 2011

NEW EUROPE

ANALYSIS
ENVIRONMENT

Off-shore oil spills require government-industry co-operation, not more regulation and expanded liability
By Lucas Bergkamp & Barbara J. Goldsmith Since the April 2010 Deepwater Horizon Incident in the US Gulf of Mexico, governments around the world have scrambled to determine whether changes are needed to prevent and address similar incidents. The European institutions are currently considering proposals that would harmonize and tighten requirements for offshore activities at the European level, expand the Environmental Liability Directive (ELD) to include all marine waters, which are currently excluded from the Directives scope, and potentially require that European-headquartered companies apply EU standards to their activities worldwide. These pending proposals, however, are premature and need to be assessed carefully relative to status quo and other alternatives. The Commissions October 2010 Report Facing the challenge of safety of offshore oil and gas activities identified areas where action was deemed necessary to maintain environmental and health safety for offshore activities in Europe. This report was followed by opinions from two committees of the European Parliament, and a Parliament resolution setting forth recommendations to prevent offshore oil spill incidents and address them if they were to occur, including possible expansion of the ELD to all marine waters. These proposals would be necessary to close gaps in the European legislative framework. Clearly, offshore drilling and safety is an issue of great interest to both private and public sectors alike, as evidenced by nearly 75 submissions -ranging from individual citizens to industrial companies to government authorities to NGOs -- in response to the April 2011 Directorate General of Energy public consultation on improving offshore safety in Europe. Opinions on whether expansion of the ELD and more regulation are effective ways to prevent and address off-shore oil spills, however, diverge. The EU is considering expansion of the ELDs scope, although the experience with the ELD panies can prevent incidents. In fact, there is little empirical support to back the theory that increased government control leads to better prevention, more safety and ultimately fewer accidents. The proposition that EU-headquartered companies should be required to apply EU standards to all of their activities worldwide, or risk losing their EU licenses, would lead to counterproductive responses, such as restructuring to avoid this responsibility or moving headquarters to outside the EU, and thus be ineffective. Instead of imposing liability and sanctions, the EU should collaborate with industry to prevent future offshore accidents through measures such as encouraging self-reporting of non-compliance and unsafe situations so that they can be addressed in a proactive manner. The pressure to adopt new, more stringent and expanded legislation in response to the Deepwater Horizon Incident is understandable; however, superimposing new requirements, without truth testing them relative to the underlying need for such change, may not be prudent. A stronger course would be for the international community to examine, expand, and bolster via more rigorous enforcement or modifications, as necessary, the current schemes in place to prevent and address oil spills in international waters. The strong base of existing international oil pollution conventions and treaties can address the concerns of governmental authorities and others and would enable a truly international and effective approach. An international regime could provide proper incentives to companies, no matter where they are headquartered in the world, to prevent, mitigate and effectively respond to offshore incidents. In this way, the response to the Deepwater Horizon Incident can be a truly international and effective one. Prof. Lucas Bergkamp is a Partner at Hunton & Williams, Brussels Barbara J. Goldsmith is the Founder & President of Barbara J. Goldsmith & Company, Brussels

The BP Deepwater Horizon oil rig, which exploded in July 2010, dumping oil into the Gulf of Mexico | EPA/Bob Pearson

regime is very limited. In 2007, the Environmental Liability Directive established a common framework for the prevention and remedying of environmental damage to land, water and protected species and habitats. The ELD was to be implemented in the Member States by 30 April 2007, but it was not until July 2010 that it was in fact transposed into the national laws of all 27 Member States. Actual case experience is still nascent, including the determination of applicability of the ELD to specific incidents; whether damage is significant; to what extent remediation is required to offset environmental damage, and which of several remediation options is the most appropriate option. As noted by another Commission report issued in October 2010, the ELD itself continues to be a developing regime; as such, its actual effectiveness is not proven and application among Member States is inconsistent. While the ELD, if properly applied, has the capacity to prevent and remedy environmental

damage to land, inland water and protected species and habitats, it is too early to expand the ELDs scope to all marine waters. Fortunately, there is a more suitable mechanism for addressing the issue of off-shore accidents. Extensive experience with environmental damage liability suggests that the extension of the existing international liability regimes would be a preferred option. These international regimes are driven and managed by industry and government jointly, and have been successful in addressing oil spills in international waters. Since they are not limited to EU off-shore waters, they would be also apply where the ELD does not. After all, off-shore oil pollution does not respect national boundaries and some of the affected countries will not be part of the EU. Likewise, proposals for additional commandand-control regulation, which would supplement the expanded liability program, assume that the government is able to specify in detail how com-

ENVIRONMENT

Aviation chief calls EU Emissions Trading System misguided

Europes plans contravene international law
Civil Aviation Organisation(ICAO). IATA is not opposed to emissions trading. We support the concept as a possible mechanism for the fourth pillar of our environment strategy. But the EUs unilateral and regional approach to ETS could not be more misguided. It is distracting governments from focusing on the real solution - a global approach through ICAO, he told delegates at a Greener Skies conference. He also claimed that the scheme breached national sovereignty. Tyler continued, Europes plans contravene international law with the extra-territorial application of taxes. What right does Europe have to charge an Australian carrier for emissions over China? It is an attack on sovereignty that is being challenged by governments. China, India and the US are among states formally opposing the EU ETS. And the US is even processing a bill that will prohibit its carriers from participating. While the EU sees its actions as supporting a positive environmental agenda, the rest of the world sees it as an attack on sovereignty. He added, While the EU sees the ETS as environmental policy, the rest of the world sees it as an attack on sovereignty. The colonial era, when Europe imposed taxes on the world ended some time ago. He also remarked, And finally, there is no requirement for monies collected through the European ETS to be spent on environment projects. They just go to the general treasuries of governments. This is not acceptable. He did see value in trading schemes, but insisted they had to be global. Managing carbon emissions is a global problem. Aviation is a global industry. And we need a global solution. All roads lead to ICAO. It is time for Europe to refocus on a Plan B that is centered on a global solution through ICAO. He said that the ICAO had a work program in place for the 2013 Assembly to agree to a global framework, but he said, Unfortunately, Europes ETS plans are distracting attention from this important work. Tyler heads an organization of 230 airlines from 118 countries.

Tony Tyler, Director and CEO of IATA

Speaking in Hong Kong, Tony Tyler, CEO of the International Air Transport Association, slammed the EUs planned Emissions Trading Scheme, due to start in 2012, and called for action via the International

NEW EUROPE

New Europe | Page 11 October 2 - 8, 2011

ANALYSIS
COMMON AGRICULTURAL POLICY

CAP must uphold its equitable goals

By Cillian Donnelly
The current application of EUs Common Agricultural Policy (CAP) must not be allowed to continue to undermine its stated goals of ending global inequalities in farming, a leading NGO has said. Speaking on the occasion of the launch of a new report complied by ActionAid on 27 September, Trine Pertou Mach, Chair of ActionAid Denmark, said that the CAP has an in-built obligation to end deficiencies in global food and agriculture markets. On a political level, CAP cannot be a negative force. It cannot undermine those gaols, she said. The report, Milking the Poor, illustrates how subsidised EU milk is causing unfair competition to poor farmers in Bangladesh, suppressing investment in the dairy industry and undermining EU investments in food security. In addition it contends that European taxpayers continue to fund the EU to harm the livelihoods of poor dairy farmers in the developing world, while at the same time as funding aid programmes designed to help them. According to the reports findings 5 billion is given per year to dairy farmers in the EU,while the lack of export limits allows farmers to raise production and sell their milk products outside of Europe at below cost prices. It also says that subsidydriven EU milk exports are damaging local markets in developing countries, and threatening the livelihoods of millions of people employed in the dairy industry in Bangladesh. Its release comes as the European Commission prepares to release a legislative proposal on the Common Agricultural Policy (CAP) on 12 October. The CAP reform is obliged to ensure that the global food system is equitable,

CONSTRUCTIVE AMBIGUITY

The answer to life, the EUniverse and everything

By Andy Carling
The state of the union speech by President Barroso was the highlight of the week for EU nerds. The Commission had plugged the event on Twitter and asked people to use the hashtag #soteu. Thus, we were able to get a snapshot of the global reach of the speech. Using websites that can match use of the hashtag to geographic location, we found that those following the official tag were almost entirely in Brussels. The one exception, in Copenhagen was quickly traced to Jon Worth, the tireless commentator on the EU, who was at a conference there. Of course, this was a little odd as the speech was given to the Strasbourg plenary. According to the hashtag, few, if any at all, of the good citizens of Alsace had any interest in the historic event. In a moment of glorious timing, the day before Barrosos state of the union speech (which should have consisted solely of a prolonged primal scream), it was discovered by Bruno Waterfield of the UK Telegraph, that the parliament was planning spending an additional 30 million on larger offices in the city, that would be used for one day a week. These are the people lecturing Greece about fiscal responsibility. It was a better than average session, with more passion than usual, and the sight of the surprisingly full chamber was a pleasant change. The main topic was the financial crisis. The scene was enlivened by the very real possibility that the roof might fall down again, a metaphor made real. But the speech did answer questions about Europe, the bailouts, and the hopes and dreams emanating from Berlaymont. Sadly, the answer was the same for every question: More Europe! This was announced to a parliament that, despite tens of millions being spent on promoting the institution, fewer and fewer citizens have any interest in. At each election two things happen; The EU announce survey results showing voter turnout will rise significantly, and later, the actual figures show turnout has, yet again, dropped. More Europe! There is little sign that the half a billion people who live in the EU want more Europe, and less likelihood that they are going to be asked. This raises the prospect that More Europe means that the EU will become more distant from the citizens. This gap is already uncomfortably large and it remains Brussels dirty little secret. We occasionally, just occasionally, refer to democratic deficit. It is hard to see how More Europe will do anything but widen that gap, possibly to breaking point. If we are to have more Europe, can we have a fiscally responsible Europe? Could more Europe mean having a modern parliament, you know, in just one place. You dont see the House of Commons buggering off to the Shetland isles every month. Can the new improved Europe be one that listens to the citizens? The people want Strasbourg closed and as long as it remains an occasional residence, the message from the EU has gone out, loud and clear to all: We dont give a damn what you think. Thats the problem. We may need More Europe, but that is secondary. What we need before then is a better Europe that puts citizens above the interests of the lobbyists. ACarling@NEurope.eu

Dairy farming in the EU. A new report by NGO ActionAid highlights the negative effects the subsidy-heavy European dairy sector has on countries in the developing world, such as Bangladesh. | BELGA

says Trine Pertou Mach. It is stated clearly that the CAP end all elements that distort competition for developing countries. It has to fight hunger and poverty. The EU is obliged to live up to this goal. The report highlights the example of the joint Swedish-Danish dairy giant Arla Foods, which produces Lurpak butter and DANO milk powder and has received nearly 1 billion in CAP subsidies since 2000, as an example of a subsidy-heavy producer that is causing market distortion in Bangladesh. Bangladeshi farmers can hardly sustain a living, says Pertou Mach. Due to subsidies, Danish producers are able to export, even without a great amount of export subsidies. Without this help, the country wouldnt be able to produce enough for its internal market. Instead, EU-subsidised exports to countries like

Bangladesh are destroying local markets, driving-down prices and forcing farmers into a situation that can hardly sustain a livelihood. Local farmers, she says, are not afforded the opportunity to increase their milk production. If such an opportunity was available, the local industry would be able to create between 40 and 50 times more jobs than currently exist. The equation is simple, she says, more jobs means better revenue, means better lives for families. The CAP and the EU is obliged to live up to that goal, she says of the policys supposed commitment to creating fair global market for agriculture. We are not looking for a phase-out of the CAP, just a change to those distorting elements of it. We need to take all those elements out, and ensure that the global food system works for everyone.

HEALTH

European medial research network launched

Europe will get better access to medical infrastructure research with the inception of a new transnational research network on 1 October. EATRIS, a pan-European network of translational research infrastructures in medicine initiated by the European Strategic Forum on Research Infrastructures (ESFRI), aims to improve the translation of biomedical research into medicines, diagnostics and medical devices. It will provide a one-stop-shop access to the technologies and expertise residing in Europes best research institutions and companies and other research groups collaborating with it can expect more effective translation of their fundamental scientific breakthroughs into promising products. Key disease areas are cancer, cardiovascular, neurology, immunological, metabolic and infectious diseases. According to Giovanni Migliaccio, Scientific Director of EATRIS, the pharmaceutical industry yearly spends $ 60 billion on R&D of new medicines, many healthcare challenges remain. Only 10% of the medicines under development, mostly for treatment of common diseases, will reach the market and this makes novel medicines extremely expensive. Moreover, even the medicines which are approved are (to variable extent) only effective in a small proportion of the indicated patient group and hence a paradigm shift is needed in which academics and industry share facilities and expertise. The new coordination & support offices of EATRIS are located on the campus of the VU University Medical Center in Amsterdam. Key objectives include creating a simple and effective one-stop-shop access platform via the coordination office, and bringing the infrastructure consortia to project readiness.

Page 12 |New Europe October 2 - 8, 2011

NEW EUROPE

EU WORLD
POLITICS

Which new Middle East?

By Joschka Fischer
BERLIN Regardless of whether democratization in the new Middle East succeeds or authoritarian forms of government prevail once again, one fundamental change has already become clear: no one will be able to govern without taking into account domestic public opinion. This change will shift the foreign-policy parameters of the Middle East conflict (understood as both an Israeli-Palestinian conflict and as a conflict between Israelis and Arabs more generally). Despite wars in Lebanon and Gaza, and the intifadas in the occupied West Bank, these parameters have proven surprisingly stable for decades, anchored by the peace agreements with Egypt and Jordan and the Oslo accords with the Palestinians. All this is about to change. And, while the tectonic shift in the region was triggered by the Arab Awakening, its players are not limited to the Arab world or to the confines of the Middle East conflict. The United States, Europe, Turkey, and, in a certain sense, Iran all play a role some more directly than others. Lets begin with the US. President Barack Obamas speech in Cairo two years ago created great expectations, but few or none have been fulfilled. Instead, the US allowed a political vacuum to form in the absence of any movement on the part of Israels government. This vacuum has now been filled by the Arab Awakening. Europe, meanwhile, is preoccupied with its own crisis. But, in the last few years, the Europeans, led by German Chancellor Angela Merkel and French President Nicolas Sarkozy, have de facto slammed the door to European Union accession in Turkeys face. As a result, Turkey has embraced a neo-Ottoman foreign policy, in which the Arab world even more than the Caucasus, Central Asia, and the Balkans plays the central role. Of course, Turkey, in accordance with its political, security, and economic interests, has no choice but to pay close attention to its southern neighborhood, and must try to prevent chaotic developments there. Turkey would be facing to Mahmoud Abbass Palestinian government, with the objective of signing a comprehensive peace treaty. Security questions must be taken seriously, but they carry less and less weight, because a sufficiently long period can be left between the treatys conclusion and its full implementation to resolve them by mutual agreement. But Israels current passivity with all of its negative long-term consequences for the country is likely to continue as long as Prime Minister Binyamin Netanyahu considers his coalitions survival more important than a decisive peace initiative. At the same time, the pressure of the Arab revolutions is transforming the Palestinians into a dynamic political factor. For example, in view of the looming fall of Syrias President Bashar al-Assad, the pressure of the Egyptian revolution, and the new role of Islamism in the region, Hamass alliance with Iran is becoming increasingly problematic. It remains to be seen whether, in the end, the Turkish course will prevail against the radicals in Gaza or not. In any case, Hamas faces some risky and consequential decisions of its own all the more so should its main rival, Abbass Palestinian Authority, succeed in its current diplomatic campaign at the United Nations. Obama had promised a Palestinian state within one year, and Abbas is now building upon that promise. But what happens next is crucial. Will Abbas be able to keep the Palestinians on a diplomatic path, or will the situation degenerate again into violence and another disaster? And what will the Palestinian road towards peace look like after the UN decision to recognize some form of statehood for Palestine? Given the current pace of change in the Middle East, we might not have to wait long for answers or for more questions. Joschka Fischer, Germanys foreign minister and vice-chancellor from 1998 to 2005, was a leader in the German Green Party for almost 20 years. Copyright: Project Syndicate/Institute for Human Sciences, 2011.

Libyan Amazigh people attend a rally at Martyrs' square on 2011 in Tripoli, Libya, 27 September. | EPA/Mohamed Messara

the same risks even if it were integrated into a European context, but its priorities would then be completely different. Because of Europes short-sightedness, Turkey has in effect abandoned its ambitions for EU membership and opted for the neo-Ottoman project of becoming a Middle Eastern power a policy shift that reflects both interests and ideology. On the one hand, Turkey views regional dominance as a stepping-stone to a greater global role; on the other hand, it views itself as a role model for successful modernization of the Middle East on an Islamic-democratic basis. This bid for regional preeminence will sooner or later bring Turkey into serious conflict with neighboring Iran. If Turkey prevails, Iran and the radicals in the region will be caught on the losing side of history and they know it. While Turkish Prime Minister Recep Tayyip Erdoans government is trying to maintain good relations with Iran, its ambition to become the leading Sunni power means that

Turkey must sooner or later contest Irans influence in Iraq, as well as in Syria and Palestine. And that means conflict. The drastic deterioration in Turkeys relations with Israel is related to this emerging IranianTurkish rivalry. To be sure, this rivalry also has a positive side from the Israeli point of view the weakening of Iran and other regional radicals. But, for Turkey as an aspiring regional leader, the interests of the Palestinians are naturally more important than its relations with Israel. This has become all the more true in light of the revolutionary changes in the Arab world, and is at the root of Erdoans foreignpolicy reorientation. As a result, Israel is in an increasingly difficult situation. Without a strategic re-orientation of its own to remain passive is a risky endeavor in a rapidly changing world order Israel would further delegitimize and isolate itself internationally. A viable Israeli answer to the dramatic changes in the region and to their already foreseeable consequences can only take the form of a serious offer of negotiations

ARAB SPRING

British Ambassador slams Syria's regime

By Jordan Shapiro
As international pressure continues to mount on Syria's treatment of peaceful protesters, Britain's ambassador in Damascus released on official blog post condemning the regime's behaviour. Simon Collis' blog titled, The truth is what big brother says it is, lashes out against the Syrian government's response to protests for reform and how they have controlled the media to prevent the truth from coming out. The cruel reality in Syria is that they are doing all they can to pull the shutters down. Foreign journalists are refused entry. Any non-Syrian local correspondents are kicked out sometimes after a beating. Syrian correspondents, bloggers and citizen journalists are systematically tracked down and imprisoned, writes Collis. Collis also discusses the regime's attempts at reform and how they fall well short of their lofty aims. Like pretty much all of its reform programme to date, the regimes answer to its critics was to announce that there would be a new media law; and that a committee had been set up to draft it. But you dont need a new law to decide to let journalists in. You dont need a new media law to prevent the big brother mentality that prevails here, he said. Despite every effort to repress images of unrest in Syria, Collis points out there have been some people risking their lives to tell the truth. Brave individuals continue to find ways through to get out video clips that show Syrian security forces firing into crowds of unarmed protesters, or abusing detainees you can search for them on YouTube. Im constantly amazed at their skill, daring and ingenuity in finding ways to capture and upload pictures of events on the ground in something close to real time, he said. Since the uprising in Syria began six months ago, the United Nations has estimated that over 2,700 people have died. Protesters began rallying in Damascus for government reform. The Syrian regime, headed by Bashar al-Assad, has violently cracked down on the protests and demonstrations. Many, including the United States and the European Union, have condemned Syria's actions, but none of their statements have grasped the situation quite as well or said it as bluntly as Collis' blog.

NEW EUROPE

New Europe | Page 13 October 2 - 8, 2011

EU WORLD
ARAB SPRING

EU-US criticised for tepid response

Member states, not EU in the lead say experts
By Jordan Shapiro
The Arab Spring provided an unprecedented foreign policy dilemma for the European Union and the United States. As the old Arab regimes unravelled, both superpowers were left scrambling and on the sidelines. For the European Union, the response to the uprisings were less than harmonious and with the exception of a NATO led intervention in Libya, tepid. The reaction to the Arab Spring demonstrated how foreign policy differences at the member-state level undercut European interests. European states were in the lead, but once again Europe was not. Europeans have no collective idea whatsoever of their role as security providers in their own neighbourhood, said Sven Biscop, Europe in the World Programme Director, in the EUWashington 2011 Forum debate. Likewise, the United States, still reeling from widely unpopular wars in Iraq and Afghanistan, was hesitant to involve itself too closely in the conflicts. The US had to cope with unpopular sentiment amongst its own citizens, a divided government and a significantly damaged reputation in the Arab world. For Mr Obama, it has been crucial to avoid any suspicions being raised of a US leadership role on the ground, be it in Iran or Egypt. It is the protesters who should be leading the process, said Sebastian Grafe of Heinrich Bll Stiftung in the Forum. Given their problems on the home front and the disdain for outside intervention by the rebels, the EU and the US have had to strike a delicate balance in the region. They had to figure out how to exert their influence and yet at the same time remain on the sidelines and simply let the revolutions unfold. They favoured reform in principle, but they feared the unpredictable consequences endeavors and how the world's two largest economies will work together. The EU's failure to come together and impose a united front will damage its cooperation with Washington. Why would the US work with the EU, where it gets mixed signals, when it could work with the UK? Washington should continue to work with national governments who share its approach to tackling the threats of today and tomorrow, and Brussels should simply get out of the way, said Sally McNamara of the Heritage Foundation. Until the EU can adopt a truly cohesive foreign policy strategy it will be left on the sidelines again, just as it was for the Arab Spring. The US, however, must address its reputation in the Arab sphere, brought on by years of meddling and a close unwavering relationship with Israel. The US is currently facing a tremendous loss of influence in the region. Changing US policy toward authoritarian regimes has been like turning an oil tanker, Grafe said. Both the EU and US have significant challenges ahead in dealing with the Middle East, from Iran's nuclear program to Palestine's UN application for statehood. The answer lies in the EU setting aside national interests for the good of Europe and for the US to try again in the region.

Egyptians hold banners and shout slogans during a protest in September 2011 in Cairo. The Arab Spring has brought significant questions on the ability of the EU and US to influence global developments. | EPA/Mohamed Omar

of prolonged instability. To cap it all, the western powers credibility with the new democrats of the Arab street, after decades spent backing reform in theory while propping up the dictatorships in practice, was almost zero, said Simon Tisdall of The Guardian. The Western leaders lack of response to the Arab Spring was due in part to a lack of leverage to intervene as well as divided policy goals in their respective institutions. For Europe the division occurred with different interests at the member-state level, while in the United States President Obama was at odds with Congress over sidestepping their authority. Congress was not happy to be left out of the Libya decision and tried to undercut the President at every corner. Europe had its own problems with forming a united front on Libya. While NATO pressed forward with the air strikes under the leadership of the United Kingdom and France, Germany and Poland opted not to participate at all. Rather than showcasing post-Lisbon

EU leadership, European reactions to the Arab Spring were all too familiar as a cacophony of voices from individual European capitals drowned out Brussels-based institutions and personalities, said Eva Gross of the Institute for European Studies in the EU- Washington Forum. These divisions and therefore limited involvement in the Arab Spring pose significant questions about future Western

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INTERNET

New media landscape has to uphold human rights principles

States should be prepared to adopt a new, broader notion of what constitutes the media, which includes social media and video games, according to new recommendations put forward by the human rights body, the Council of Europe (CoE). Speaking in Nairobi on 27 September on the issue of Strengthening the protection of cross-border internet personal data, CoE Deputy Secretary-General, Maud de Boer-Buquicchio, said that this year marks the 30th anniversary of the Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data (Convention 108). Its purpose, she said, which is to secure for every individual the right to privacy, remains as valid today as it was 30 years ago. The increased use of Internet, the borderless nature of data flows and the development of new technologies lead to new data protection challenges.He comments come as the Council of Ministers of the CoE, adopted on 23 September two recommendations and two declarations calling on its states to uphold the value of free speech and online access to information. According to the CoEs declaration on internet governance, countries should, amongst others, ensure to maintain that the internet upholds the principles of human rights, democracy and the rule of law, as well as allowing for cultural and linguistic diversity.

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Page 14 | New Europe October 2 - 8, 2011

EU WORLD

NEW EUROPE

EU-UKRAINE

MEP rules out another gas crisis, sees closer co-operation with Ukraine
By Kostis Geropoulos
STRASBOURG In a debate at the European Parliament in Strasbourg last week, just before the Eastern Partnership Summit in Warsaw, MEPs expressed their concerns about the fate of Ukrainian former prime minister and leading opposition politician Yulia Tymoshenko and the objectivity of the Ukrainian judiciary. But MEP Adina Valean from Romania, a member of the delegation to the EUUkraine Parliamentary Co-operation Committee, told New Europe that Brussels would continue working with Kiev. Ukraine is expected to conclude talks with the EU before a bilateral summit in December. Asked if the outcome of the outcome of the handling and the outcome of the Tymoshenko trial could affect the signing of the Association Agreement at the December summit, Valean said, I think we must continue and conclude the Association Agreement and strengthen our partnership with Ukraine. The Timoshenko case will not delay the signature of the Association agreement but its ratication may well be delayed in some Member States who consider that the rule of law is not respected. The Timoshenko trial is also a question of political families and their interest for pushing the game in one way or another. Nevertheless, Ukrainian President Viktor Yanukovych faced criticism in Warsaw over the contentious trial of Tymoshenko. European leaders talked about the democratic backsliding in Ukraine rather than the free trade and visa deals, according to news reports. Yanukovych carefully avoided any mention of the issue during pre-summit press appearances with Polish officials, instead touching upon stronger economic relations with the EU and the Euro 2012 football

European Commission President Jose Manuel Barroso, left, European Council President Herman Van Rompuy, second left, Polish Prime Minister Donald Tusk, second right, and Hungarian Prime Minister Viktor Orban hold a joint press conference after the plenary session at the Eastern Partnership summit in Warsaw, Poland, 30 September 2011. Earlier last week in Strasbourg, MEPs expressed their concerns about the fate of Ukrainian former prime minister and leading opposition politician Yulia Tymoshenko and the objectivity of the Ukrainian judiciary. |EPA/TOMASZ GZELL

tournament, according to the reports. Tusk, however, stressed the "very high standards" that countries seeking association agreements and free trade deals with the EU must meet, including "the democratic fundamentals" related to the treatment of the opposition. EU President Herman Van Rompuy said at the summit that the 27-country bloc "acknowledges the European aspirations and European choice of some partners" and is ready to support them. But in the run-up to the meeting, EU heavyweights France and Germany clearly ruled out giving the Eastern Partnership countries any sense that they may eventually be able to join the bloc. Ukraine is the country in the Eastern Partnership that is furthest along in rapprochement talks with the EU and the key gas transit country for Russian gas supplies

to the EU. Regarding energy co-operation, Ukraine operates one of the world's largest natural gas transportation systems and is responsible for shipments of up to 80% of Russia's Europe-bound gas supplies. Valean ruled out another gas crisis in Europe in the event of another dispute between Russia and Ukraine. I do not think there will be another gas crisis because the accumulation of conditions which made the previous crisis possible are not present anymore, hence the political context is not the same either, she told New Europe. In addition, aware of our interdependence, the EU should continue strengthening its energy policy by including its close neighbours. This should be done through investments, developing and upgrading energy networks and infrastructure intercon-

nections with our neighbours and prioritising projects of EU interest within the many frameworks we have at our disposal, such as the European Neighbourhood Policy, the Eastern Partnership and the Energy Community. Now we may need less round-tables and more actions, Valean added. But Guy Verhofstadt, leader of the Liberals and Democrats (ALDE) group at the European Parliament, was less optimistic. Asked whether there will be another gas crisis between Russia and Ukraine in the coming months, Verhofstadt told New Europe in Strasbourg: It is always possible but there are the new links in the north of Europe who are now there and could help. He was referring to the Nord Stream pipeline that could see natural gas from Russia start owing to Germany through the Baltic Sea as early as October.

EU-RUSSIA

From the Baltic Sea to the Pacic Ocean: EU-Russia wrap up e-government project
On 29 September, the Delegation of the European Union to Russia was due to host a final conference of the EU-funded project Support to eGovernment in the Russian Federation Government-to-citizens electronic services. This 2-million project aimed to increase administrative efficiency and improve access to government electronic services by Russian citizens. The project started in August 2009 and run for 27 months, the EU Delegation to Russia said in a press release. The project was designed to support the governments various initiatives to promote e-Government as a primary instrument in the reform of public administration in the Russian Federation. It has specifically contributed to improving the relations between government and citizens by strengthening transparency and accountability of the state to its citizens, increasing administrative efficiency and improving access to government services. The project has increased the co-operation within and between Russian regions and established a sustainable co-operation on the eGovernment issues with the EU partners. This project was built on the results achieved under the previous EU-funded projects in the areas of eGovernment what were implemented between 2004 -2009 in the regions of the North-Western Federal Okrug, namely, in Arkhangelsk, Kaliningrad, Novgorod, Petrozavodsk and Saint-Petersburg. This time, the G2C project has covered the entire Russian Federation with specific e-services implemented in regions. The project touched about 25,000 people, mainly civil servants, from the whole of Russia. The project has provided training for 3,000 civil servants from 53 different regions. It has developed 9 e-Government services for the authorities of six different regions. The project has produced as well an important quantity of works on legal and strategic issues. The team took an active part in 56 conferences and roundtables about eGov issues across Russia. From the early stages, the project was designed to meet the priorities of the regions involved. The project was implemented by a consortium led by GDSI (Galway Development Services International). On the Russian side, the Ministry of Economic Development and the Ministry of Communications and Mass Media acted as the project partners with four pilot regions (Kaliningrad, Karelia, Ulyanovsk, Vologda) and three associated regions (Astrakhan, KhantyMansiisk and Petropavlovsk -Kamchatsky).

NEW EUROPE

New Europe |Page 15 October 2 - 8, 2011

ENERGY & CLIMATE

ENERGY|POLITICS

Schulz slams Turkey as Cyprus drills for gas

By Kostis Geropoulos
STRASBOURG - Martin Schulz, leader of the Socialists & Democrats (S&D) group in the European Parliament, told New Europe on 27 September that a potential major discovery south of Cyprus could help boost EU energy security. Despite Turkish objections, the US company Noble Energy started drilling offshore on behalf of Cyprus in an area termed Block 12, south of the island. Asked if it would decrease reliance on Russia, Schulz said in an interview at the European Parliament in Strasbourg that diversification of energy supply is a co-element of the EU energy strategy. Its not only Cyprus. We need gas imports from northern Africa, oil imports from northern Africa, were in a close co-operation with Algeria, for example, for the gas fields so I think its reasonable and it is needed to look if Cyprus has gas fields, Schulz said. The European Union to be independent must be carefully to spread the energy supplies so you are right and the question is right we should not be dependent neither from one side - Russia for example - nor exclusively from Northern Africa. Therefore, yes it is on our own interest that Turkey is looking behind the possibility to get gas in this area, Schulz said. Turkish Prime Minister Recep Tayyip Erdogan has called the drilling madness, saying that exploration should wait until after a political settlement on the island. As retaliation, Ankara sent the Koca Piri Reis, a Turkish research vessel, into disputed waters south of Cyprus in search velop in a direction like Turkey, which is more or less a parliamentary democracy, I would be happy and if Erdogan contributes in countries like Egypt or Tunisia or Libya in such a direction that is helpful. On the other hand Im worried about this aggressive rhetoric against Israel and also the aggressive reaction of Israel against Turkey so there is a tension and absolutely unacceptable, he added. Schulz also said that the threat that Turkey, which is a candidate state to the EU, expressed against Cyprus, which a member of the EU, concerning the gas fields in the Mediterranean is absolutely unacceptable. Asked if Turkeys threat to send warships in the area could disrupt Turkeys relations with the EU, Schulz said, Turkey is a candidate state and Cyprus is a member state and I think the Turkish government should understand to join the European Union they need at the end the approval of all members of the European Union and this is not an encouragement neither Cyprus nor for other countries to consider them as a constructive partner. But he highlighted Turkeys importance to the EU as a key partner. The negotiations are going on. We need each other. They need us, they need the European market and we need Turkey as a partner. This was my opinion since Im here member of the European Parliament, Schulz said. But my impression is that in Turkey slightly the view on the European Union is changing and Erdogan is looking more to other parts of his neighbourhood than to Europe and this is, in my eyes, not meaningful.

Martin Schulz, leader of the Socialists & Democrats (S&D) group in the European Parliament, delivers a speech at the European Parliament in Strasbourg, France. He told New Europe the Turkish government should act in a more constructive way regarding Ankaras conflict with Cyprus over energy rights in the eastern Mediterranean and expressed his concern regarding tensions between Turkey and Israel. |EPA/CUGNOT MATHIEU

of oil and gas. The Turkish government described the vessel's mission as a reply to Cyprus exploratory drilling in the region. As Members of European Parliament prepared to debate Tensions between Turkey and the Republic of Cyprus later on 27 September, the S&D leader, who is considered a shoo-in for the Presidency of the European Parliament in 2012, urged the Turkish government to act in a more constructive way regarding Ankaras conflict with Cyprus over energy rights in the eastern Mediterranean and expressed his concern regarding tensions between Turkey and Israel. Schulz said that nobody is

preventing Turkey from looking for oil and gas in the Mediterranean but this must happen in the frame of mutual trust and confidence, not in any kind of implied military threat. The way in which Turkey is acting against Cyprus, making a reference to the split of the country and the northern part of the island shows that it is not about energy, he told New Europe. It is about policy and about the strategy of the Turkish government concerning Northern Cyprus and this is a mistake and my recommendation to the Turkish government is to try to solve the problem in a more constructive way, Schulz said.

An agreement between Israel and Cyprus sets out the exclusive economic zone where Noble Energy started working on 18 September. The deal has further aggravated the already tense relationship between Turkey and Israel. I think the development in the Middle East and in the Mediterranean as a whole is very fragile. The relations between Turkey and Israel for the stability in the region are of the highest importance and Im worried about the tensions between Turkey and Israel for today, Schulz said. I think we should take into account that there are two developments. If the states of the Arabian Spring would de-

ENERGY|GAS

Egypt's gas pipeline to Israel, Jordan sabotaged again

On 27 September, a blast hit an Egyptian pipeline that transports gas to Israel, Jordan, Syria and Lebanon, according to a statement by Ampal-American Israel Corporation. The pipeline is run by Gasco, Egypt's gas transport company, a subsidiary of the national gas company EGAS. Neither [East Mediterranean Gas Co.] EMG's site nor EMG's pipeline were damaged as the affected GASCO's pipeline is not a part of the EMG pipeline system, Ampal said. There have been six attempts on the pipeline since the February ouster of former president Hosni Mubarak. The last, botched, operation was in August, prompting army and police forces on the Sinai to step up security to protect the pipeline. Both Israel and Jordan depend heavily on Egyptian natural gas, with it generating 40% and 80% of their energy needs respectively. Unknown individuals attacked the pipeline in the village of al-Meedan, around 25 kilometres west of al-Arish city in Egypt's northern Sinai Peninsula, witnesses said, Deutsche Presse-Agentur (dpa) reported. Initial investigations showed that the blast was caused by a remote-controlled bomb.There was also a landmine that did not explode in the attack. Fire trucks and ambulances rushed to the scene in the early hours of 27 September as flames and a column of smoke rose from the site, witnesses added. No casualties were reported, and no suspects were detained following the attack, which caused damage to several nearby houses. Gas exports to Israel are unpopular among Egyptians, even though the country has been pumping the gas to Israel since 2008 under a 15-year deal with preferential terms. Egyptian officials have been trying to amend the deal for the past seven months. Six former Egyptian officials, including former petroleum minister Sameh Fahmi, were charged in April with crimes related to the deal, including harming the public interest and corruption. The blast comes as relations between Egypt and Israel suffer their worst crisis since Mubarak was unseated. A group of Egyptians stormed the Israeli embassy in Cairo earlier this month, angered over the August killing of six Egyptian soldiers in the Sinai peninsula during an Israeli airstrike.

Page 16 | New Europe October 2 - 8, 2011

NEW EUROPE

ENERGY & CLIMATE

ENERGY|MARKET

Oettinger calls for internal energy market as EU raids companies

On 29 September, Energy Commissioner Gnther Oettinger discussed plans for the completion of the internal energy market. In 'Getting to 2014', Oettinger stressed the need for full member-state compliance in implementing the market: We would have 27 markets in Europe, with widely diverging market rules and network operation rules. Gas and electricity would not flow freely across borders. Energy companies would not be able to take full advantage of economies of scale. The level of competition would be much lower, and meeting our climate change objectives with 27 markets would be much more expensive and much less efficient." Problems have arisen however, with only 17 of the 27 member-states adopting the third energy package in the field of electricity and 18 in the field of gas. Oettinger said that the European Commission is to start formal legal proceedings against countries failing to adopt the EU's 2009 third energy market opening package into national legislation. The third energy package is an attempt by the EU to separate the operation of gas and electricity providing networks from the business of providing gas or generating power. Meanwhile, on 27 September, the European Commission used EU competition law to carry out raids on 20 gas companies in 10 mainly central and eastern EU countries, including Austria's OMV, German utilities E.ON and RWE, Poland's PGNiG, Russia's Gazprom Export and Slovakia's SPP. "The Commission is investigating potential anti-competitive practices in the supply of natural gas in Central and Eastern European member states," it said in a statement, noting that the inquiry is focused "on the upstream supply level." The Commission said it suspects the companies divvied up markets among themselves, blocked competitors from accessing pipelines and possibly drove up prices. OMV spokesman Sven Pusswald said: "I can confirm that we are cooperating with the commission," a position echoed by E.ON and Gazprom. OMV is active in several Central and Eastern European countries. Bulgaria's dominant state-owned natural gas firms Bulgargaz and Bulgartransgaz as well as private Overgas, 50% controlled by Russia's Gazprom, said on 28 September EU investigators were carrying out checks at their offices. None of the three companies commented on the substance of the allegations. A day later, the Commission denied that the raids on gas companies accused of price-fixing were politically motivated, saying they were solely a matter of competition law. The Energy Ministry in Moscow issued a statement demanding that no harm be done to the rights and interests of the Russian owners. It said they were entitled to protection under international agreements on investment and on gas supplies. Gazprom itself said it was cooperating with the inquiry and was open to dialogue with the Commission. A spokeswoman for Joaquin Almunia, commissioner for competition issues in Brussels, replied that the Commission would not let itself be influenced by the bad mood of any one company. It would intervene wherever it suspected breaches of competition law. Bulgarias Economy and Energy Minister Traicho Traikov said the EU raided the offices of 21 companies in Europe, mainly looking into long-term gas supply contracts with Gazprom and said Sofia was fully cooperating. "You know that the European Commission wants to look into these contracts. But there are some problems for the national companies to hand them out because of confidentiality clauses," Traikov was quoted as saying by the press. "In this case, (EU's) Directorate General for Competition has decided that they can take them this way from all these 21 companies in Europe," he said.

The blue lights of an ambulance car are pictured next to the company logo of Gazprom Germania headquarters in Berlin, Germany, 28 September 2011. During a trans-European raid, the facilities of different gas companies were searched. The European Commission suspects unfair competition and launched a raid in different European countries. Investigators focused on EON Ruhrgas and Gazprom Germania in Germany. |EPA/HANNIBAL HANSCHKE

"Gazprom has nothing to hide and calmly awaits the investigations," said Burkhard Woelki, spokesman of Gazprom Germania.

ENERGY|GAS PIPELINE

Bayerngas plans to become new Nabucco shareholder

On 30 September, Nabucco Gas Pipeline International GmbH welcomed Bayerngas intent on becoming one of the Nabucco shareholders, the company said in a press release. Negotiations with the six current shareholders will begin immediately to determine the future share split within the consortium. Bayerngas intention to join the Nabucco consortium will be discussed at a meeting between the Austrian Minister of Economy, Dr. Reinhold Mitterlehner and the Bavarian State Minister for Economy, Mr Martin Zeil in Vienna today, the press release read. Reinhard Mitschek, Managing Director, Nabucco Gas Pipeline International, stated: This is a great step forward for Nabucco. A strong downstream market is an important asset for the pipeline and something that a new shareholder such as Bayerngas will be able to strengthen. The Nabucco consortium is open to new shareholders as the project enters a new advanced phase. The start of negotiations with Bayerngas sends a strong message to the markets. Nabucco envisages gas supplies from the Caspian region and the Middle East to the EU countries. Participants of the project are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE companies. Each of participants has equal share to the amount of 16.67 percent. The project's construction is planned to start in 2013. The pipeline's maximum capacity will hit 31 billion cubic meters per year.

ENVIRONMENT|CO2

Environmentalists: Germany holding back EU on cutting car CO2 emissions

Germany is holding back attempts by the European Union to cut car emissions of carbon dioxide (CO2) as part of its efforts to limit climate change, a report by environmental lobby group Transport & Energy (T&E) said on 29 September. "Germany (is) holding Europe back," ran a headline in T&E's latest report, called "How Clean are Europe's Cars." The EU is forcing carmakers to reduce emissions to an average 130 grams of CO2 per kilometre (g/km) by 2015. Last year, emissions dropped to 140 g/km, leading the European Environment Agency to predict that the 2015 target will be met ahead of schedule. But, while the EU as a whole achieved a 3.7% reduction over 2009-10, Germany scored only a 1.8% improvement, T&E reported. In its ranking of the progress achieved by the EU's 27 members, Germany was 26th. This could be due to weak German tax incentives to buy fuel-efficient vehicles - a problem that is expected to grow worse under a new, green labelling system that unduly favours large, gas-guzzling models such as SUVs, T&E said. T&E suggested that the end of a generous car scrapping scheme in 2009, which had boosted sales of low-CO2 vehicles, may also explain Germany's disappointing performance. According to T&E's calculations, Italy's Fiat group sold the cleanest fleet of new cars in the EU in 2010, with average CO2 emissions of 126g/km, followed by Japan's Toyota and France's Peugeot-Citroen. Volkswagen, the highest-ranked German manufacturer in the list and the largest car producer in Europe, was 8th. Meanwhile, across the Atlantic, the US Energy Department said it was investing more than $8 million to develop technology to improve the efficiency of vehicle engines. Projects in Michigan, Massachusetts and Wisconsin would use federal money to focus on making engines and powertrain systems more efficient. This, the Energy Department said, would help improve fuel economy standards while reducing fuel costs and US demand for oil imports. "By encouraging innovations to help make America's vehicle fleet more fuel efficient, the Obama administration is working to improve the nation's energy security and reduce our reliance on imported oil," Energy Secretary Steven Chu said. US President Barack Obama unveiled new fuel efficiency standards for cars and light trucks in July.

NEW EUROPE

New Europe|Page 17 October 2 - 8, 2011

ENERGY & CLIMATE

ENERGY|GAS PIPELINE

Gazprom to take major stake in Belarusian pipeline soon

ENERGY INSIDER

Can the sun save Greece?

By Kostis Geropoulos
STRASBOURG - Helios, the Greek word for sun. The personification of the sun in Greek mythology was a handsome god crowned with the shining aureole of the sun, driving his chariot across the sky each day to earth-circling Oceanus, and, through the world-ocean returned, to the East at night. It is the power of the sun which may now help pull the debt-ridden Mediterranean country out of its worst financial crisis. The Greek government has announced that it is discussing with German companies proposals for the installation of 3-10GW of solar plants in Greece with an estimated investment cost of 10-30 billion, not including investments in transmission lines, Greek Greens MEP Michalis Tremopoulos told New Europe in Strasbourg, France, on 28 September. Especially in these times of economic hardship, foreign investment in green sectors in Greece is welcome, he said. A day earlier in Berlin, Greek Prime Minister George Papandreou, following his meeting with German Chancellor Angela Merkel, issued an invitation to German industrialists and entrepreneurs to invest in renewables in Greece, addressing the Federation of German Industry (BDI.) In Germany you have shown the way in developing renewable energy. With our natural assets, Greece has every reason to follow your lead. One of our most ambitious new projects is called Helios, Papandreou said, adding that Greece plans to develop and export solar energy to countries such as Germany. And investment in Greek sun yields 50% more than in Germany, for obvious reasons: sunshine. This is a win-win project for us both. Both green energy and waste management are at a nascent stage in Greece. So here there is a dynamic emerging market ripe for investment. So these are only some of the many bright prospects Greece holds out in the near future, Papandreou added. Sounds too optimistic? Tremopoulos noted that the whole discussion still lies in the sphere of ideas, revealing a worrying lightness in the approach of such important issues. It is noteworthy that the Greek government has discussed its plans only with the German investors and not with any stakeholder back home, despite the fact that it is about a huge project that could transform Greece and its economy, he said. The MEP said the whole project is about investments in renewables, not about Germany importing solar energy straight from Greece. The transmission costs would be enormous for that and many countries in between would like to have a share of that electricity. We should also note that even the power produced from 10GW of PV in Greece would only cover just 2% of Germany's electricity consumption, he said. Still, Greece is closer than Africa where the EU is planning its Desertec project, which aims to cover much of North Africa with solar panels to supply electricity to Europe. Tremopoulos cautioned that Greece is still off track to meet its 20% RES target for 2020 which translates to a 40% RES share in electricity, saying: We need commitments that any electricity produced under the Helios project will be additional to what is required under our RES target and that the Greek power system will no longer import electricity from third countries, on the contrary. KGeropoulos@NEurope.eu follow on twitter @energyinsider

The compressor plant of the gas pipe line Yamal-Europe, Nesvisg, Minsk region, 100 kilometres west from Minsk. |EPA/MAXIM MALINOVSKY

On 26 September, Russian gas monopoly Gazprom Chairman Alexei Miller said that a deal it to take a major stake in a strategic Belarusian pipeline used to deliver natural gas to Europe is "practically ready." "These talks have been extremely successful," Belapan quoted Miller as saying. "Belarus is an extremely important partner for Gazprom." Miller's comments in the Belarusian capital Minsk came after meetings between Gazprom executives and Belarus's authoritarian leader, Pres-

ident Aleksander Lukashenko. "I am extremely pleased with the results," Lukashenko said. "I hope we can continue in this spirit." Russian and Belarusian negotiators have agreed on contract terms by which Gazprom would purchase a 50% stake in the Belarusian natural gas transportation company Beltranzgaz, the report said. Gazrprom also will buy into other Belarusian companies supporting Belatranzgaz, which would allow major Russian investment into Belarus' gas

transportation infrastructure, Lukashenko said. A nal signing of the Beltranzgaz share sale agreement, along with a new contract for Russia natural gas deliveries to Belarus for 2012, should take place by the end of December, Miller said. Russia current ships approximately one-fth of its natural gas exports to Europe via pipelines crossing Belarus. The bulk of Gazprom's natural gas exports to Europe arrive to market via Ukrainian pipelines.

ENERGY|BUSINESS

Gazprom to increase capital investment

On 27 September, Russian gas monopoly Gazprom announced it was aggressively expanding its capital investment plan for 2011 to around $40 billion, as it steps up gas development and transportation projects in the Arctic, eastern Siberian and the Pacific Ocean regions. Gazprom, the world's biggest producer of natural gas, had planned some $25.2 billion of capital investments in 2011, but continued high demand for gas produced by the firm had brought substantial extra income, the company said in a statement said. Russian President Dmitry Medvedev and Prime Minister Vladimir Putin have called the expanding access to the country's vast energy resources a top national priority, and have said state-owned Gazprom must take a lead role in pushing the development. Gazprom is betting heavily on the Bovanenkovo field on the Yamal peninsula in Russia's Arctic and the Kirinskoye field off Russia's Pacific coast, according to reports. Both fields developments require construction of new pipelines. Gazprom also said it would spend more on its Medvezhye and Urengoy gas fields development.

ENERGY|GAS PIPELINE

TAP, Slovenian company ink memorandum

The Trans Adriatic Pipeline (TAP) and the Slovenian transmission system operator Geoplin plinovodi have signed a Memorandum of Understanding and Cooperation to support the development of natural gas markets in Southeast Europe and to enhance security of supply in this region, TAP said in a press release. Earlier this year TAP concluded similar memorandums with Croatian TSO Plinacro, Bosnia TSO BH-Gas, and the governments of Montenegro and Albania, all of which support the Ionian Adriatic Pipeline (IAP) project. Given the proximity of the IAP route to Slovenia, the memoradum between TAP and Geoplin plinovodi provides the Slovenian TSO the potential to access new natural gas supplies from the Caspian region via a new transport route. Furthermore, this initiative supports the development of the gas market in Slovenia and the wider Southeast Europe by bringing gas supplies to meet their growing demand, the press release read. We believe that the Slovenian transmission system could play an integral role in the future development of this gas market, Geoplin plinovodi CEO Marjan Eberlinc said.

Page 18 | New Europe October 2 - 8, 2011

NEW EUROPE

ARTS & CULTURE

Monet to Picasso -The Batliner Collection
guste Renoir, Paul Czanne, Amedeo Modigliani, Henri Matisse, Joan Mir, Pablo Picasso, Ernst Ludwig Kirchner, Paul Klee, Wassily Kandinsky, Marc Chagall, and Kazimir Malevich provide a survey spanning from the art of French Impressionism and PostImpressionism and the Fauves to German Expressionism, the Bauhaus, the Russian avantgarde, and Minimalism. The new presentation is realized in two steps: the first, chronologically arranged part covers the period from Impressionism to postwar art around 1960.The second part dedicated to contemporary painting will be presented in the Bastion Hall from June 2011. The Batliner Collection, which is one of the most important private collections of Modernism, has enriched the Albertina and Vienna, the city of museums, since the autumn of 2007. By transferring their precious collection to the Albertina, the art collectors and patrons Herbert and Rita Batliner have laid the foundation for the establishment of a permanent collection spanning from the late nineteenth century to contemporary painting, which has been a vital cornerstone in the Albertinas repositioning.

TOMMA ABTS

Tomma Abts, Tys, 2010 Privatsammlung Kln

Paul Cezanne Gehft in der Normandie, um 1885-86 l auf Leinwand Albertina, Wien - Sammlung Batliner

Austria - Vienna - Albertina - until 16 October 2011 New presentation of the permanent collection since March 23, 2011 The Albertinas permanent collection has returned to Vienna after having been seen by about 500,000 visitors at the National Gallery in Prague and the National Museum in Seoul during its successful inter-

national tour. 210 works from the collection are on exhibit in a new presentation in the Albertinas Kahn Galleries, which opened on March 23, 2011.The exhibition From Monet to Picasso. The Batliner Collection unfolds the most fascinating chapters from one hundred years of art history. Paintings by Claude Monet, Pierre-Au-

Germany - Dusseldorf - Kunsthalle Dsseldorf - until 9 October 2011 Born in 1967, German artist Tomma Abts ranks among the outstanding female painters of her generation. She was awarded the Turner Prize in 2006, and her work has featured in solo exhibitions at such renowned institutions as Kunsthalle Basel, the Hammer Museum in Los Angeles and the New Museum of Contemporary Art in New York. The show at the Kunsthalle Dsseldorf will be the London based artist's first solo exhibition at an institution in the Rhineland, where she has been teaching since summer 2010, having taken up a professorship at the Kunstakademie Dsseldorf.

Declining Democracy

SLICK 2011
renown as a space for introducing the upand-coming art scene to both a French and international public. In recent years, certain wellestablished galleries that present at the FIAC have joined the SLICK ART FAIR to showcase their emerging artists and contribute to the forefront of todays contemporary art scene. This October, special projects (installations and monumental works) by select galleries will also punctuate exhibition space, offering pockets of artistic inspiration. In order to highlight the increasingly important role played by the private sector in contemporary art developments, the fair will also welcome prestigious, private-sector collections in an exhibition that will bring together approximately thirty works. Three of the four young galleries presenting at SLICK have decided to organize collective shows in order to demonstrate their artistic direction to the general public. Opened in May 2011, White Project (Paris) will present a group show that brings together four artists: Clment Cogitore, Rafael Carneiro, Paulo ClimacHausta and Fabiano Gonper. Didier Gourvennec Ogor gallery, which has just opened a space in Marseille, will undertake the same approach, representing artists such as Dieter Detzner, Timothe Talard, Rob de Oude, Rgis Perray and Giancarlo Caporicci. Inception (Paris), managed by Mannan Ibrahim Chaudry the former curator for Slick Orient in 2010 will open this September with a Sarah Mapple solo show and an Ai Weiwei show in December.

Thomas Kilpper Installation view at CCC Strozzina, Palazzo Strozzi, Firenze Photo: Martino Margheri

Italy - Firenze - Palazzo Strozzi - CCCS - until 22 January 2012 The exhibition Declining Democracy proposes a critical reflection on the concept of democracy. Through works by international contemporary artists, the exhibition explores the contradictions and paradoxes of democracy, and its changing nature in our troubled world. They provide a reflection on the values and the inconsistencies that typify todays society. They investigate such themes as the clash between the individual and the community, the growing gap

between the man in the street and the political classes, the power and influence of economic lobbies and of the mass media, and the problem of immigration and the sharing or refusal of civic and political rights. At the same time, they explore the possible forms of democratic participation enabled by innovations in communication technologies, which have given people new tools with which to share opinions. This has led to a new interpretation of the notion of political and social participation and of the principle of the right to an opinion.

arts@neurope.eu

France - Paris- SLICK- 20 to 23 October 2011 For the second consecutive year, the 2011 SLICK ART FAIR will be pitching a 2,000m2 marquis tent on the esplanade between the prestigious Palais de Tokyo and Paris Museum of Modern Art. More than 40 international galleries and thousands of photographs, drawings, paintings, sculptures, videos and installations will be unveiled during the fair through solo shows and collective exhibitions. Since 2006, SLICK has become synonymous with emerging artistic talent and

NEW EUROPE

New Europe | Page 19 October 2 - 8, 2011

FASHION & STYLE

MILAN FASHION WEEK: SPRING/SUMMER 2012

Un Viaggio Esotico
stereotypes. Moorish ornaments, Chinoiseries, Japanese prints, African motifs and New Spain memories expressed their search for otherness. The Latin American and Caribbean heritage was a favorite theme. To begin with, Norwegian-born designer Peter Dundas for Emilio Pucci presented a more romantic than sexy version of the pirate princess: silk printed dresses in almost pastel hues, black and red lace detailing, fluffy ankle-length skirts with baroque touches, the iconic black crucifix necklace and typical Pucci scarves would all make a beautiful Hispanic genre painting. Following a similar path, Angela Missoni showed Mexican-inspired designs: flashy bright colors, poncho skirts, flounced necklines, asymmetrical tailoring and ethnicstriped prints, an overall daring and brilliantly thought-out collection. At Moschino, Rossella Giardini carried on with her torero theme, while adding Frida Kahlos hairstyle and taste for vibrant yellow to the recipe. Giardinis well-known Matador jackets were embellished with gold embroidery, as Mediterranean black was omnipresent. Also Hispanic but even more Caribbean inspired, was Anna Molinaris Blumarine show. Colorful as usual, Molinaris collection took a neon twist, with tropical floral prints, violet and pink raffia trims and flaring skirts with statement earrings and shoes. Palm trees in Hawaii and scuba diving in Hawaii

ANTONIO MARRAS Antonio Marras

AQUILANO.RIMONDI Aquilano.Rimondi

ETRO photo: Karl Prouse/Catwalking Getty Images

t would seem that a desire for adventure in far away places inspired Milans designers this season, as their collections were filled with Orientalist clichs and

In contrast, Antonio Marrass remained faithful to his favorite Asian designs and floral motifs while adding a spicy maid touch to the second half of his show. Pastel wallpaper prints, minute fan decorations, giant camellias, and lantern red adorned Marrass peculiarly retro Chinese collection. Asian influences were also noticeable in Tommaso Aquilano and Roberto Rimondi, a.k.a Aquilano.Rimondis collection, particularly in their use of embroidered flowers, pastel combinations, geometric bands, their lean, vase-like silhouettes and minute prints

on saturated, monochrome backgrounds, that reminded us of Chinese folding screens. African culture and its avatars, the Jazz Age and Art Deco design inspired Veronica Etros summer 2012 collection. Her prints have benefitted from an innovative method that involves printing and pleating a fabric several times over to create new burnt ink effects. Geometry and broken collage technique have contributed in rendering a vibrant, modern, and young Etro silhouette. Louise Kissa lkissa@neurope.eu

EMILIO PUCCI photo: Venturelli Getty Images

MISSONI Missoni

MOSCHINO photo: Daniel Dal Zennaro EPA/ANSA

BLUMARINE Blumarine

Page 20 | New Europe | October 2 - 8, 2011

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New Europe | Page 21 October 2 - 8, 2011

BRUSSELS AGENDA

Samba! Samba! Samba!

15 October Centre for Fine Arts Rue Ravenstein During this special samba night some of the big names of the genre will be performing. Go see Velha Guarda da Portela (an ensemble that worked with Gilberto Gil and Marisa Monte, among others), Teresa Cristina (nominated for a Latin Grammy), Mart'nlia, and Gafieira 8. In addition to these acts, the night will also includes dance, activities, and films focusing on this unique Brazilian form of music. The samba is a sociological phenomenon and a distinctive way of life developed in Brazil.

Brussels Agenda
How To Eliminate Hazardous Chemicals From Consumer Articles? 5 Oct 8:45-17:00 Rue Belliard 99-101 The conference aims to present different experiences and approaches on main consumers concerns on the use of hazardous chemicals in articles and propose ways forward. ANEC, ASI CC and BEUC have long been involved in promoting consumers rights and interests with regards to risks arising from hazardous chemicals in products. Considering To Invest In China Or In Hong Kong: How To Do This In A (Tax) Efficient Way? 10 Oct 13:30-16:30 Radisson Blue EU Hotel Brussels The meeting will discuss in detail on all cross border tax aspects of direct business in China as well as business in China through Hong Kong. In addition, the aspects of setting up a business in China and Hong Kong. Renovate Europe Day: Can we afford not to Renovate Europe? An initiative of EuroAce Hosted by Fiona Hall MEP 11 Oct 12:00-15:30 Stanhope Hotel, 9 rue du Commerce Renovate Europe day takes place in the context of the environmental, social and economic challenges that Europe faces. Renovate Europe will be asking policymakers and representatives of industry, workers and the environmental movement whether Europe can afford not to renovate its buildings by 2050. Building The Future Of E-Financial Services 11 Oct 20:00-22:00 Rue Wiertz 60 As the trend toward digital currency continues to gain momentum, consumers increasingly expect to make their purchases through a variety of solutions and technologies. This dinner debate aims at highlighting the current trends in these sectors, as well as the regulatoryframework in which they operate and the opportunities and challenges that they entail. World Standards Day 2011 Conference: Competitiveness Through Standardisation 14 Oct 8:00-16:15 Charlemagne Conference Centre Rue de la Loi 170 This year, the event will be devoted to the examination of the support that standardisa-

5-14 October
tion will continue giving to the competitiveness of the European economy in order to ensure innovation and growth for Europe in the world. The Conference will feature three panel debates: "How standardisation supports Intelligent Transport System (ITS)", "Standards as a tool for Security Industrial Policy" and "Standardisation for interoperability and competitiveness in Space" The Social Dimension In European Higher Education - Is European Higher Education Socially Balanced? 14 Oct 8:30-16:40 Rue d'Egmont 11 Key experts will present latest research findings. Among them are a soon-to-be released EURYDICE study on the issue, the brand new EUROSTUDENT 2011 report and the external evaluation of the social dimension in the Bologna Process.The seminar will also showcase the work of the 'Official Bologna Working Group' on the Social Dimension. The European Commission will present its latest policy position paper on higher education and the OECD will provide intelligence on if and how our universities and colleges are catering to students from migrant communities. 5 Oct-Avant and Premiere La Source de femmes (presence of the director) 20:00, Centre for Fine Arts The story takes place in current times, in a small villages somewhere between North Africa and the Middle East. The women fetch water from a mountaintop spring in the blazing sun. They've done that since the beginning of time. Leila, a young bride, urges the women to launch a love strike: no more hugs, no more sex until the men run water into the village. 6 Oct-Diptych Series Jerome Latteur 10:00-21:00, Centre for Fine Arts In 2007 the Belgian photographer Jerome Latteur found inspiration for a series of diptychs in the Centre for Fine Arts. Dreamlike interiors the black and white can be seen alongside monochrome pictures that zoom in on material textures. Latteur's work offers an unexpected angle on the ingeniousness of Horta's architecture and handling of detail. 9 Oct-Xzibit 20:00, Ancienne Belgique Alvin Nathaniel Joiner (born September 18, 1974 in Detroit, Michigan), better known by his stage name Xzibit, is an American rapper, actor, and host of MTV's Pimp My Ride. He began his music career as a member of the Likwit Crew, a loose collective of West Coast rappers including King Tee, Defari, and Tha Alkaholiks. He released his solo debut album 'At The Speed Of Life' in 1996 and has since released 5 more albums, his latest being Full Circle, released in 2006. 11 Oct-SBTRKT 20:00, Ancienne Belgique Young electronica god who, together with Mount Kimbie, James Blake and Magnetic Man, is pushing the post-dubstep genre into the charts. SBTRKT (consonants for Subtrakt) is the alias of British producer Aaron Jerome who prior to signing to Young Turks has already released tracks and provided remix-work on various labels for the likes of Radiohead, Goldie and Modeselektor. Now he's here with a brand new debut full of detailed beats & bleeps that have been enriched by fine vocal contributions from the likes of Sampha and Little Dragons Yukimi Nagano (listen to the single Wildfire).

Brazil.Brasil

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WORK

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PLAY

Tarsila do Amaral, Operrios. Courtesy of Acervo Artstico-Cultural dos Palcios do Governo do Estado de So Paulo - Europalia International

Orchestre Philharmonique Royal de Liege

8 October 20:00 Centre for Fine Arts Rue Ravenstein Composed in 1888, Sheherazade, Rimsky-Korsakov's most popular work, is inspired by the tales of the 1001 Nights. The work focuses on Sheherazade, who tells the sultan Domingo Hindoyan courtesy of Y Petit a story every night in order to have his lover's life, who is destined to die. The sultan is eager to hear what happens next, so he keeps postponing his mistress's execution to the following day. Hear the story unfold as the orchestra's music and brilliance bring to light a classic lover's tale.

TAKE A LOOK
On Avenue Louise and five other locations around Brussels, these Zen Cars can be found. They are 100% electric cars, contributing no pollution to the environment and are a part of an effort for Green Mobility. These Zen Cars can be rented to people who drive responsibly and are over 21 years of age.The manufacturer of the car is Tazzari Zero, an Italian based company who wanted to provide the world the first electric urban sports vehicle.

RESTO BITES

Centre for Fine Arts Rue Ravenstein Stemming from the 19th century modern Brazilian art has reflected the need for a specifically Brazilian identity. Breaking from its colonial past, the Brazilian art movement reflects how a people with a distinct identity emerged. This flagship exhibition offers a portrayal of an interesting and little known artistic period, illustrated by paintings and sculptures by the grand masters, and key works of

Brazilian archaeology and anthropology. First, the exhibition offers an official and academic portrayal, inspired by the monarchy and Europe, representing Brazil's colonial past. Then the portrayal by travelling artists, enriched with observations of ethnic, social and geographical diversity. Finally, the exhibit offers the portrayal by the modernists who, in the 20th century, returned to the origins of Brazilian diversity to reveal the very soul of their country in their art.

Il Viticolo Restaurant Rue Archimde 18-20

There are Italian restaurants and then there's Il Viticolo Restaurant. If there's better Italian food to be had in Brussels, I'd like to know where. Having worked as a chef for 13 years, Giuseppe Schichilone and his wife Aurore took over the restaurant in the middle of the EU Quarter earlier this year and have already acquired a reputation for producing top-notch Mediterranean cuisine. Such is his desire to get things right, the Sicilian-born owner even imports his mozzarella from Italy because he says that available in Belgian does not compare. Since taking over the 32-seat restaurant, they have changed the dcor and menu,which is a terrific mix of French and Italian food including seafish and fois gras in pasta. There is also a particularly impressive collection of Italian wines. Open only on weekdays. Highly recommended.

LAST MINUTE TICKETS FOR SHOWS & CONCERTS AT -50%

An initiative of the Foundation for the Arts, Brussels

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

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

Salle ltage Banquets - runions - Terrase en t Cosmo Cuisine Av. de Tervueren,105 1040 Etterbeek - Bruxelles Tel: 02/ 732 43 31 Fax: 02/ 733 61 17

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Avec le soutien de
LA COMMISSION COMMUNAUTAIRE FRANAISE

Page 22 | New Europe | October 2 - 8, 2011

A round-up of interesting blog posts of the past week, because bloggers deserve their voice.

IN THE BLOGS

NEW EUROPE

Read a blog post that you want to suggest for our new In The Blogs section? Send us an email: intheblogs@neurope.eu

Barrosos State of the Union 2011: My SOTEU bingo results

Barrosos State of the EU speech was followed by EU bloggers, who organized a game of buzzword bingo. Heres one contestants verdict:
By: Ronny Patz From: http://tinyurl.com/neweurope517 This morning, EU Commission President Barroso delivered his State of the Union. We at Bloggingportal.eu have called for a Barroso Buzzword/Bullshit Bingo to be played, and I have proposed my own list of 10 words/phrases to be said during the speech. Here is how I succeeded: Europe 2020 check 1x Crisis check 2x English, 10x French EU tax not exactly, but: savings tax within the European Union EFSF check 4x Solidarity check 5x Leadership check 3x Credible currency not exactly, but: a really credible euro area Fiscal consolidation check 1x Commitment check 2x English, 1x French (engagement) Necessary actions not exactly, but the instruments necessary That gives me 7 out of 10 possible points, with some bonus for close hits PS.: The speech was better than the one last year, better written and with a better delivery. Lets see whether words will be followed by actions.

Bingo master's breakout.|EPA

All aboard the euro crisis merry-go-round

By: Daniel Mason From: http://tinyurl.com/neweurope516 It is presumptuous of the United States' Treasury Secretary and Britain's Chancellor of the Exchequer to be lecturing eurozone leaders. But a week after the International Monetary Fund said there was a serious chance of a return to recession Timothy Geithner's warning that there was "not very much time" to get a grip on the debt crisis and George Osborne's insistence that there were six weeks to save the euro only reflected their fears of how much worse things could get. As President Barack Obama put it, what is going on in Europe is "scaring the world". And yet despite, or perhaps because of, the scale of the crisis European Union leaders and governments, drawn almost exclusively from the same centre-right political background, have consistently failed to build a consensus for decisive action. Measures agreed back in July to expand the size and scope of the eurozone bail-out fund, the 440bn European Financial Stability Facility, are only this week crawling through reluctant national parliaments in Germany, Finland and elsewhere. At the weekend a new plan emerged that would see the EFSF leveraged to 2tn but it was no surprise when the German and Spanish finance ministers later insisted that the fund would, in fact, not be expanded any further. At the centre of the mayhem is Greece, which is collapsing under the weight of enforced austerity even as Prime Minister George Papandreou insisted that it was "not a poor country". In the face of ongoing strikes and protests a new property tax has won the support of parliament as the government seeks to persuade the troika that it has done enough to secure the next 8bn tranche of financing it needs to avoid bankruptcy in October. But the arguments go back and forth. The 8bn is part of Greece's first bail-out; now euro area countries are embroiled in disputes about its second. The Financial Times reports that as many as seven countries want private creditors to take a bigger hit on Greek debt than the 21 per cent agreed at that now infamous July summit. The cacophony of voices all advocating different solutions and pulling in different directions is deafening. Many analysts say Greece must default and leave the euro. In his state of the union address today, European Commission President Jos Manuel Barroso was adamant that no country would be thrown out of the single currency. Federalists such as Guy Verhofstadt have called for the creation of common eurobonds, a European finance minister and deeper economic integration. Yet, outside the eurozone, members of British Prime Minister David Cameron's Conservative party see the crisis as a "once in a generation" opportunity for "serious reform" to pull the United Kingdom away from Europe. And plenty of others appear content to muddle through between one last chance and the next. It is a never-ending merry-go-round, with markets buffeted one way or the other as hopes of progress increase, dissipate then rise again. In the New York Times the economist Paul Krugman wrote that he was "both terrified and bored" by the endless negotiations over how to respond to the crisis. He is probably right that many others in Europe and beyond share that sentiment. Unfortunately, it doesn't look like going away any time soon not even after the Osborne ultimatum.

An idea for next years #SOTEU deliver it to the EP and the European Council
By: Jon Worth From: http://tinyurl.com/neurope514 Barroso has just finished delivering his State of the European Union address to the European Parliament. While as before we had a bit of a chuckle in the blogosphere with buzzword bingo, this was a serious occasion and Barroso rose to it, delivering a speech full of determination that contained a commitment to a financial transaction tax and a strong ideological appeal for a communitarian solution to the sovereign debt crisis facing the EU. While the speech was fine (and indeed I was more impressed than I thought I would be), the real issue will be how any of this will change the way the EU moves forward. Importantly what reaction if any will there be from Heads of States and Governments from the Member States of the EU? Sadly rather little I fear. The lesson from this year must be this: that next year Barrosos speech must be delivered to a special joint session of the European Council and the European Parliament. Confronting and challenging Member States, in public, would be a vital step in the EUs political and democratic development.

THE EUROPEAN UNION

New Europe | Page 23 October 2 - 8, 2011

FRANCE GERMANY
FRANCE DIPLOMACY FRANCE|DIPLOMACY

Sarkozy backs Moroccan democracy reforms

On 29 September, French President Nicolas Sarkozy gave strong backing to the political reforms of Morocco's King Mohammed VI, pledging political and economic support to the North African country. France "welcomed" the king's "vision," Sarkozy said in the northern Moroccan city of Tangier after launching the construction of a high-speed railway line together with the monarch, Deutsche Presse-Agentur (dpa) reported. He also mentioned the "exceptional success" of the referendum on a constitutional reform which was held in Morocco in July. The reform, which was approved with an overwhelming majority, increases the powers of the prime minister. It was the king's response to months of demonstrations demanding more democracy in an echo of the "Arab spring" protests in other countries. Moroccan protesters have criticised the constitutional reform as insufficient. Sarkozy said that Morocco "continued to move towards democracy." Together with the king, he launched the construction of a French-built high-speed TGV rail line which Sarkozy described as the first in the Arab world. The 20-billion-dirham ($2.5-billion) line will cover the 400-kilometre distance between Tangier and Casablanca start-

Sarkozy congratulates Merkel for parliament approval

On 29 September, French President Nicolas Sarkozy congratulated German Chancellor Angela Merkel for securing the German parliament's approval of an extension to the eurozone bailout fund. In a statement, Sarkozy's office said the French president had telephoned Merkel to congratulate her over the "very large majority" that approved changes to the fund, calling it "an important step" towards stabilising the eurozone. The president and the chancellor urged other eurozone members that had not yet legislated to inject more flexibility into the European Financial Stability Facility to do so "in the shortest possible timeframe." The two leaders also expressed satisfaction at the adoption by the European Parliament of the so-called "six pack" of reforms on economic governance, the statement added.

GERMANY|AUTO INDUSTRY

Continental, Draxlmaier to invest in Romania

French President Nicolas Sarkozy, left, and Morocco's king Mohamed VI during a ceremony to launch the construction in Tangier-Casablanca high-speed rail, in Tangier, Morocco, on 29 September 2011. |EPA/AZZOUZ BOUKALLOUCH/MAP HANDOUT

ing in December 2015. It is expected to draw up to 8 million passengers annually.Travelling at more than 350 kilometres per hour, the TGV will halve the travel time between two of Morocco's most important cities to 2 hours 20 minutes. Moroccan sources gave the budget as 20 billion dirhams. It will be paid out by Morocco, France, and funds in Saudi Arabia, Kuwait and Abu Dhabi, as well as the Arab Fund for Economic and So-

cial Development. The trains will be assembled in Morocco, in the first such operation by the French company Alsthom outside its home country.The Moroccan TGV was seen as a rare international success for Alsthom, which has so far only sold TGV technology to Spain, Italy and South Korea. The first agreements between the French and Moroccan rail companies - SNCF and ONCF - were signed in 2007.

The German car-parts makers Continental and Draxlmaier want to invest up to 169 million in Romania through 2013, Romanias Economy Minister Ion Ariton said, Business Review reported on 26 September. Ariton met previous week with representatives of two German companies that want to extend their investments in Romania. The meeting took place during the RomanianGerman Conference for SMEs. Continental is planning a 15.7mn expansion of the Contitech Fluid Automotive plant. Another 71mn will be put for expansion works in the western Romanian city of Timisoara. A new unit will be opened in Sibiu city, with a price-tag of 35mn, and a new fuel-pump plant worth 20mn will be opened in Brasov city. Draxlmaier is looking to invest 26.8mn in Romania, according to Ion Ariton who met with the management of the German company.

GERMANY AUTO INDUSTRY

GERMANY|AUTO INDUSTRY

VW gets green light to acquire MAN

The EU's executive Commission last Monday approved Volkswagen's acquisition of truck maker MAN, which Germany's biggest automaker eventually plans to merge with Scania, The Local reported on 27 September. "The Commission concluded that the proposed transaction would not significantly impede effective competition... because the merged entity would continue to face strong competition from other well established manufacturers," it said in a statement. Volkswagen announced plans in May towards a merger of German MAN and Scania of Sweden, in which it already owned considerable stakes, to create Europe's top truck maker and number two bus manufacturer. It noted anti-trust restrictions have posed hurdles for a tie-up of heavy vehicle acADVERTISEMENT

China approves Daimler's Chinese Truck JV

German auto maker Daimler AG received final approval from China's Ministry of Commerce for a truck-making joint venture between Daimler Trucks and Beiqi Foton Motor, the company said on 26 September. In a statement, Daimler said its 50% stake in Beijing Foton Daimler Automotive would give it a 50% stake in Foton's medium- and heavy-duty truck business. The joint venture would use Foton's Auman brand "as a platform to grow business in China and look at cooperation opportunities outside of China," the statement said. The joint venture will have a production capacity of 160,000 trucks per year, the statement said. The Chinese partner in the JV, Foton Motors, which is a unit of Beijing Automotive Industry (BAIC), sold 105,000 vehicles last year.

tivities from all three brands, however. "To enable a more indepth cooperation among MAN, Scania and Volkswagen, merger control clearance and further increase of Volkswagens holding in MAN are required," Volkswagen said in a statement at the time. Volkswagen raised its stake in MAN to above 30%, obliging it to make a mandatory share offer and seek anti-trust approval. VW owns 45.66% of the shares in Scania, along with 70.94% of the voting rights. MAN owns another 13.35% of Scania's stock. Volkswagen said in August when requesting the European Commission's approval for the takeover that closer cooperation between Volkswagen, MAN and Scania would allow it realise significant synergies and savings in purchases, development and production.

New Europe | Page 24 October 2 - 8, 2011

THE EUROPEAN UNION

UNITED KINGDOM IRELAND

IRELAND | AVIATION

Avolon seals deals with Ryanair and AirAsia

Irish aircraft leasing company Avolon has announced new deals with Ryanair and AirAsia, according to RTE Ireland. The company is leasing five Boeing 737s to Ryanair and four Airbus A320 planes to AirAsia, which is Asia's largest low cost carrier with a 95 plane fleet. Seven of the planes will be delivered this week with two more scheduled for early next year. Avolon's fleet now stands at 88 aircraft with 25 customers in 18 countries. Its total fleet is valued at over $ 4 billion. The company also said that it has increased its committed debt facilities by $ 600 million to $ 2.6 billion. It said this reflects the increasing ability of the business to access a broader range of debt structures and products. The Avolon team has a long history of doing business with both airlines having completed our first transaction with Ryanair in 1996 and with AirAsia on its launch in 2001, commented the company's chief commercial officer John Higgins.

BAE Systems to cut 3,000 jobs

UNITED KINGDOM DEFENCE

UK | PRESS

Daily Mail profits shrink

British media group Daily Mail & General Trust expects full-year earnings to be at the lower end of forecasts after weak advertising, particularly in travel and retail, hit its consumer business. The company, whose flagship Daily Mail newspaper is Britain's top-selling mid-market tabloid, said underlying revenue at its A&N consumer media business was down 3% in the 11 months to the end of August, due to higher printing costs and weaker ad revenues. The fall overshadowed a much stronger performance from the business unit, which hosts events and provides information on property, financial and other markets. Its underlying revenue was up 9%. But the fall in underlying ad revenues in the 11 weeks to 18 September showed a significant improvement on the previous quarter. Chief financial officer Stephen Daintith said the Metro newspaper had performed strongly in terms of advertising and said all advertising categories had started to recover at the Daily Mail. He said operating profits would be down by a midsingle digit percentage on last year and said he was still worried about the company's first quarter that starts in October. "Despite our continued focus on operational efficiency, the weak consumer advertising environment means that full year group operating profit will be lower than last year," chief executive Martin Morgan said. "We expect some growth in earnings per share compared to last year, given lower finance and tax costs, but at the lower end of market expectations," he said. Analysts are expecting operating profit for the full year of 298 million.

Visitors admiring the new US fighter jet F35 Joint Striker. The programme has slowed due to demands on defence budgets. | EPA/DPA-Ralf Hirschberger

Britain's leading defence manufacturer, BAE Systems, said it will cut around 3,000 jobs as a result of "huge pressures" on the defence budgets of customers nations. The cuts, from a total of 40,000 BAE employees in Britain, will fall mainly in the company's military aircraft division, following a slowdown in production rates for the Euro-fighter aircraft and the F-35 fighter aircraft from the United States. "Our customers are facing huge pressures on their defence budgets and affordability has become an increasing priority. Our business needs to rise to this challenge to maintain its competitiveness and ensure its long-term future," said BAE chief executive Ian King. The biggest job cuts will be at sites in the northern counties of Lancashire and Yorskhire, where the Euro-fighter - named

the Typhoon in Britain - is built. A BAE statement said that the four European partner nations in the Euro-fighter programme had agreed to slow production rates to help ease their budget pressures. In addition, "pressure on the US defence budget and top level programme changes mean the anticipated increase in F-35 production rates will be slower than originally planned, again impacting on our expected workload," said BAE. The proposed job cuts were aimed at putting the "business into the right shape to address the challenges," it added. The announcement came at a time when the Conservative-led British government is under pressure to prove that a programme of severe public spending cuts is accompanied by signs of economic growth through increased manufacturing and exports.

Domino's Pizza continues to grow

Pizza delivery firm Domino's Pizza UK & Ireland said it was on track to meet full year expectations after sales growth accelerated, benefiting from the launch of new stuffed crust and 'Gourmet' ranges. The company, which runs the British and Irish franchises of the global delivery brand, said its stuffed crust range had proved popular after being launched in response to customer demand. It added the 'Gourmet' range, which it hopes will appeal to a new sector of potential customers, had also been well received with its launch coinciding with Domino's sponsorship of high profile television show 'Red or Black'. Domino's, which operates 702 shops on a franchise basis, has performed strongly throughout the economic downturn, benefiting from cashstrapped customers staying in and ordering takeaways rather than going out to eat. "Although the economy as a whole is still very tough we are on track and confident that we will finish the year in line with market expectations," said chief executive Chris Moore. Domino's said sales for the third quarter to 25 September rose by 9.8% to 127 million. Sales at its 605 shops open more than a year grew by 3.9%. For the year to date, total sales were up 9.2% to 385.4 million, with comparable sales up 2.9%. Domino's said strong sales growth in Britain had offset a decline in sales in Ireland where trading remained tough. The company confirmed that Moore will step down as chief executive at the end of the year to be replaced by current deputy chief executive and exTesco Mobile boss, Lance Batchelor.

UNITED KINGDOM BUSINESS

IRELAND | TECHNOLOGY

Twitter to set up shop in Dublin

The social networking company Twitter will establish an international office in Ireland. IDA chief executive Barry O'Leary said Twitter's decision to locate in Dublin would be a fantastic addition to Ireland's digital media cluster. The Minister for Jobs, Enterprise and Innovation Richard Bruton welcomed the announcement which he said was a massive win for Ireland. He said it showed that, despite our difficulties, Ireland has real strengths as an economy. The company is to begin recruiting immediately for roles in finance, user support and marketing. Twitter is setting up an international headquarters which will service users outside the US. Files at the company records office show that it established a new company called Twitter International in Ireland earlier this month. It is hoped that the organization could employ up to 140 characters.

IRELAND BUSINESS

Irish Dairy Board continues Algeria expansion

The Irish Dairy Board opened an office in Oran in Algeria this month. The board said the move is the first in a series of international expansions for the Irish dairy sector and that the office will help Irish products to reach the North African market of almost 200 million consumers. Last year Algeria was Ireland's second biggest market for cheese. The board has also announced it is opening a Kerrygold packaging plant in Algeria with the capacity to pack 4,000 tonnes of Kerrygold products a year. Kevin Lane, the Irish Dairy Board chief executive said the board has been exporting to Algeria for almost 15 years. ''It has proven a stable and robust market that has grown consistently to become our second largest market for cheese worldwide,'' he added.

THE EUROPEAN UNION

New Europe | Page 25 October 2 - 8, 2011

ITALY SPAIN PORTUGAL

SPAIN POLITICS ITALY|TRADERS

Parliament dissolved ahead of November election

Spain's conservative opposition People's Party (PP) would take a landslide victory in the 20 November elections, an opinion poll found on 26 September as Socialist Prime Minister Jose Luis Rodriguez Zapatero dissolved parliament. Parliament will be reconstituted by 15 December following the elections. The PP could win a up to 189 seats, a clear majority in the 350-member parliament, its best result ever, according to the poll published by the Barcelona daily Periodico de Catalunya, cited by dpa. The elections were initially due in March 2012, but Zapatero moved them forward after coming under increasing pressure over the economic crisis. Spain has risen out of recession. However its 20% unemployment is the Eurozone's highest and growth remains slow.There has been concern that it might follow Greece, Ireland and Portugal in being bailed out by the European Union and the International Monetary Fund.The government would not adopt "significant" new economic measures ahead of the elections, given that Spain's financial credibility had increased, Zapa-

Spain and Italy extend bans on market short selling

Market short selling bans implemented by the governments of Italy and Spain are set to be renewed, noted a European regulator on 28 September. The bans had been set to expire on 28 September. The European Securities and Markets Authority said the moves, instituted in August to minimize market turmoil, had been taken in close consultation with the regulator. In short selling, traders sell shares with the intention of repurchasing them later at a reduced price, essentially a bet that the item will lose value.

ITALY|ENVIRONMENT

EU tells Italy to sort out Naples garbage again

On 29 September, Italy received a fresh warning from the European Union's executive to sort out the garbage crisis in Naples and the surrounding Campania region - and was reminded of the heavy fine it risks if it does not act. Because the EU Court of Justice has already condemned Italy's failure to address the situation, the bloc's executive, the European Commission, can ask judges to punish the country for failing to end the long-drawn-out crisis. EU Environment Commissioner Janez Potocnik took an intermediate step on 29 September, sending Italy yet another letter of warning. But he also signalled that payday was getting closer. "If Italy fails to comply, the Commission may bring the case back to the Court and ask for fines," the EU executive said in a statement.

Spanish deputies vote during the last session of the term in the Spanish Parliament in Madrid, Spain, 22 September 2011.The next Spanish general election will be held on 20 November 2011.| EPA/SERGIO BARRENECHEA

tero said at a press conference. Zapatero's Socialist government had been "a government for banks and markets" which had "undermined the interests of workers and of the social majority," far-left leader Cayo Lara said in a reference to the government's austerity policies. Zapatero is not seeking a third term in the elections. The Socialist candidate for prime minister is former interior minis-

ter Alfredo Perez Rubalcaba, who will challenge PP leader Mariano Rajoy. At the press conference, Zapatero also commented on an eventual surrender by the armed Basque separatist group ETA. He said that moment was coming "closer" after the majority of imprisoned ETA members announced they were adhering to a non-violent strategy in the campaign for Basque independence.

ITALY ENERGY

SPAIN|ECONOMY

ENI resumes oil production in Libya

On 26 September, Italian energy major ENI said it has resumed oil production in Libya months after the conflict in the North African country brought its operations to a halt. "ENI restarts production in 15 Libyan wells in Abu-Attifel, located at 300 kilometres south of Benghazi," the company said in a statement released in Milan. "Abu-Attifel field was the first 'giant oil field' discovered in Libya by Eni in the 1960's," according to the statement. ENI has been active in Libya since 1959, where it says it is the largest foreign investor in terms of hydrocarbon production. Libya sits atop Africa's largest proven reserves of conventional crude, and with a population of only six million, raked in $40 billion last year from oil and gas exports. Still, experts say it could take about a year or more to get Libya back to its pre-war production of 1.6 million barrels a day.

Spain warned of sluggish growth

The already active austere measures adopted by the Spanish government have fallen short of taking the countrys economy back in black, a recent caution voiced by the Central Bank of Spain indicated. The latest monthly report from Bank of Spain said that a major recovery is unlikely to be experienced by the country this year as the economic activities in the third quarter failed to reach the required momentum. The banks outlook practically contradicted the hopes of the government which, despite the risk of an erosion of their support base, pushed with painful cuts to heed to the economic markers. In real terms that meant Spains conservative opposition People's Party (PP) received some extra impetus over their socialist contender led by Prime Minister Jose Luis Rodriguez Zapatero and has been tipped to win the upcoming elections in November. However it had yet to be determined how much the government was responsible for the bleak figures and to what extent were the contributions made by the ongoing economic hullabaloo in Europe, more specifically in the Eurozone. According to the central banks statement released on 28 September, the data available thus far for the third quarter of the year showed generally lethargic activity. The banks economists voiced caution over a trend of low spending by Spanish households as that would undermine the hopes for a modest recovery. The depressing figures for the Spanish economy coupled with the towering 20.89% unemployment rate posed a serious concern for world markets, experts noted. Most analysts shared the view that Madrid would struggle to erase the red ink in its accounts and pay off its long-term sovereign debt. They noted that the latest central bank figures cast in serious doubt the government's target for growth of 1.3% this year.

PORTUGAL ECONOMY

Portas: Theres still hope of recovery

Portugals Foreign Minister Paulo Portas appeared overtly optimistic about his countrys chances of winning the battle against the debt crisis" while addressing the press at a joint conference with his US counterpart Hillary Rodham Clinton in Washington recently. Portas said the Portuguese governments aim is to meet our goals on the fiscal consideration and economic reform, to honour our commitments to the international institutions, to fulfil the program with the European Union and the IMF. He said that once the country manages to get its deficits well behind the red mark, the international observers would get to see Portugal as a state which honours its word and is making a tremendous effort to recover its autonomy. The Portuguese minister canvassed although the conference his governments efforts to rein in the ballooning deficit figures. "Tough efforts, but we know the goal is a better society, a better economy, and we'll win this battle against the debt," he added. Responding to US president Barack Obama's comment that "the crisis in Europe is scaring the world," and that he believed that "the political leaders in Europe have not taken the measures good enough to deal with the crisis," Portas said that Europe, which has a strong trans-Atlantic link with the United States, "can win together the battle for a better economy, for jobs creation, and economic growth." Clinton applauded Portugal's actions. She said Portuguese Parliament's approval of 85% of the Prime Minister's programme for the next four years is a resounding show of support under difficult circumstances that included a package of austerity measures that actually went beyond what the IMF and the EU had demanded in the original agreement. Clinton said the United States encouraged countries to continue reform measures that would bring about renewed growth and improve competitiveness for the future. She cited that Portugal had been given a very positive report in August by the so-called troika -- the IMF, the EU, the ECB -- following its first quarterly review.

New Europe | Page 26 October 2 - 8, 2011

THE EUROPEAN UNION

AUSTRIA SLOVENIA MALTA

AUSTRIA|AVIATION

FW grounds new hiring

The new chairmen of Flughafen Wien AG (FW) have presented a strict cost-cutting programme, Austrian independent reported on 23 September. Julian Jager and Gunther Ofner, who took over at the company which manages Vienna International Airport (VIA or VIE) on 1 September, announced they would not hire any additional staff in the coming years. FW currently employs 4,200 men and women. The firms new leadership explained employees who retired would not be replaced. The new FW board also pledged to reduce material expenses by 20% by 2015. FW envisages investing around 650 million in its facilities at the same time. Nevertheless, Jger and Ofner ruled out a capital increase. The city government of Vienna and the provincial parliament of Lower Austria are FWs main stakeholders. Both political bodies have a 20% interest in the firm which achieved a turnover of 280.3 million in the first six months of this year. Jager and Ofner promised to block all attempts of politically interference. The new FW bosses also revealed their incomes yesterday. They said their annual salaries were 250,000 each. Bonuses could help them to double these amounts. The decision to disclose their wages is seen as an attempt to disassociate themselves from their successors Herbert Kaufmann, Ernest Gabmann and Gerhard Schmid. The new FW boards promise to improve FWs facilities to increase customers satisfaction comes after managers of Austrian Airlines (AUA) managers expressed criticism about the state the arrival area and other parts of the airport were in. The airline bosses claimed many travellers were appalled by VIAs appearance. AUA is FWs most important business partner since more than one in two departures and take-offs are services of AUA and its affiliates. AUA officials have called on FW to reduce the fees it charges airlines as the airports service quality allegedly fails to match standards reached elsewhere in CEE. FW is understood not to implement a rise of charges aviation firms must hand over when operating at the aerodrome. Around 80 airlines are currently doing business at the airport which is situated south-east of Vienna. Swiss carrier SkyWork Airlines (SkyWork) became the latest to do so earlier this month. The airline, which was established in 1983 now operates between VIA and Bern-Belp Airport (BRN) in Switzerland. Almost 2.08 million passengers were registered at VIA last month, 4.3% more than in August 2010. Especially the number of people on planes to destinations in Eastern Europe (EE) soared by 14.7%.

AUSTRIA JOBS

Sacked truckers set to get 3.6 mln

EU Commissioner of Employment, Social Affairs and Inclusion Laszlo Andor is helping jobless truckers.|EU

Over 500 Austrian truck drivers who were made redundant in the crisis could receive millions of euro to help them find a job, Austrian Independent reported on 23 September. Laszlo Andor, the European Commissioner for Employment, Social Affairs and Inclusion said the European Commission (EC) decided to support the 502 Austrians with 3.6 million. The money will come from a fund of his department. The European Parliament is

expected to give the payment the goahead later this year. The Austrian government coalition of Social Democrats (SP) and the conservative Peoples Party (VP) asked the EC for support after the 502 lorry drivers lost their jobs in 2009 when the alpine nation and countries across the world felt the full impact of the economic downturn. All of the affected professional motorists were working for cargo companies

and transport firms based in the provinces of Lower Austria and Upper Austria. Firms of the branch argued a sharp decline of assignments left them with no other option but reducing their workforce. More than 8% of Austrians aged 25 or younger are currently out of work. The countrys overall jobless rate was 4% in June. Eurostat, the ECs statistics authority, underlined that this was the lowest percentage figure in the EU.

SLOVENIA AVIATION

Adria will be sold in 2013

The CEO of Adria Airways, Klemen Botjani, has said that the Slovenian state carrier will begin the search for a new owner at the end of March 2012, with the process to be completed by the start of 2013, Balkans reported on 27 September. The comments came a week after the state, together with the countrys banks, bailed Adria from an impending bankruptcy. Bostjancic added that in the next few months the airline will begin a difficult restructuring process which, when completed, will make the airline more attractive to potential investors and partners. The airline cannot be sold in its current state and needs to be partially restructured before any talks with potential new owners can begin. The restructuring process aims to cut costs and stop the airline from bleeding, Botjancic said. He added that Adria has had major problems with its accounting department which has, in the past, distorted the airlines financial performance by representing losses to be much lower than they actually were.

SLOVENIA|AVIATION

Slovenia seeking five new routes for budget carriers

Slovenia wants to increase the number of tourists arriving by air and plans to attract new budget carriers by cofinancing the marketing budgets for at least five new routes, according to plans unveiled by the government and the Slovenian Tourism Board (STO), Invest Slovenia reported on 27 September. The move is in line with a decision taken by the government yesterday to promote new routes linking Slovenia to the key tourist markets in 2012, which is one of the key measures to improve the competitiveness of Slovenian tourism. The co-financing will be carried out based on a public call for applications that the STO is expected to release shortly. Slovenia is currently served by two budget carriers. UKbased no-frills carrier Easyjet operates Ljubljana-London Stansted and Ljubljana-Paris routes and a start-up, Golden Air, has recently announced it will offer scheduled flights between Maribor and London Stansted from October.

MALTA BUSINESS

The Libya Commercial Office reopened

On 26 September, Malta Enterprise reopened The Libya Commercial Office which will provide a central point of contact for all services and support for businessmen and entrepreneurs seeking or willing to establish or further commercial and business links with Libya. More than 100 businesses have expressed their interest in a business delegation that will be visiting Libya. Enterprises in both countries whether Maltese companies interested in doing business with Libya or vice-versa will thus have a focal point that could also provide them with a range of practical services designed to facilitate business. Amongst others, these include assistance in the establishment of contacts, provision of business advisory and market research services, as well as identification and transmission of business opportunities including through a tender information service. The Minister responsible for the Economy, Tonio Fenech said this during explained that Governments priority was to ensure that jobs at these companies are safeguarded, but at the same time we also took care of those who lost their job, and through the ETC developed a Personal Action Plan to provide these workers with free courses to support them in looking for alternative employment. Since the beginning of the conflict, Malta Enterprise has assisted around 70 Maltese companies who had a commercial interest or presence in Libya with almost 200 separate issues. These ranged from speeding up payments owed to the companies by Government departments or entities, to deferring payments they owed themselves such as tax, VAT and social security.

THE EUROPEAN UNION

New Europe| Page 27 October 2 - 8, 2011

BELGIUM NETHERLANDS LUXEMBOURG

BELGIUM CONFLICT THE NETHERLANDS|DIPLOMACY

Support for UN struggle against sexual violence in war

In the margin of the 66th General Assembly of the United Nations in New York, Deputy Prime Minister and Minister for Foreign Affairs Steven Vanackere on September 22 attended a mini-summit on the fight against sexual violence during armed conflicts. This meeting was organised by the UN Special Representative Margot Wallstrm. The Belgian Minister for Foreign Affairs Vanackere confirmed that Belgium wholly supports this effort and announced a support contribution of 250,000 euro by the Belgian government. Women in conflict areas fall victim to sexual violence on a daily basis. This reprehensible form of violence all too often goes unnoticed and unpunished. It is of great importance that the international community gives these women a voice, and engages in this fight against impunity determinedly and continuously, minister was quoted as saying. In the presence of the UN Secretary-General Ban Ki-moon, the for-

UN urged to pass sanctions on Syria

The Dutch Minister of Foreign Affairs Uri Rosenthal has asked UN Secretary-General Ban Ki-moon to press for UN sanctions against the Syrian regime. According to Mr Rosenthal, it is high time for the UN to adopt sanctions against Assad's regime. The EU imposed sanctions, including an oil embargo, last month. These must now be extended to global UN sanctions, the minister argued on 27 September. Mr Rosenthal discussed the issue with the Secretary-General in the margins of the annual United Nations General Assembly in New York. Mr Ban said that Syria was one of his central concerns and agreed it is vital that the UN take a clear stand on Syria. He added that the Syrian president would ultimately be held responsible for atrocities committed against the Syrian people. The Secretary-General thanked Mr Rosenthal for the Netherlands' contribution to the international operation in Libya and its efforts to curb the spread of nuclear weapons. He also thanked the Netherlands for hosting the Organisation for the Prohibition of Chemical Weapons in The Hague.

Outgoing Foreign Minister and Minister of Institutional Reforms Steven Vanackere delivers a speech, Saturday 24 September 2011, at the United Nations General Assembly in New York City, USA. |BELGA PHOTO BENOIT DOPPAGNE

LUXEMBOURG|MINING

eign affairs ministers of various countries were in attendance, among them South Sudan, Liberia and Bosnia-Herzegovina. The team of experts in this matter, created in

1999 by UN Resolution 1888 and tasked with supporting countries in constructing effective policies to combat this terrible form of violence, put forward its progress report.

ArcelorMittal commences iron ore production in Liberia

ArcelorMittal, the Luxembourg-based world's largest steel and mining company, commenced commercial iron ore production from its mining operations in Liberia. The launch of commercial mining operations represents an important milestone in the recovery of Liberia's economy, which was devastated by 14 years of civil war. ArcelorMittal first entered this market in 2005, realising the potential of the country's rich mineral resources to facilitate repair of the country's industrial and social infrastructure. "It gives me great pleasure to announce the formal launch of our mining operations in Liberia," comments Lakshmi N. Mittal. Developing a sustainable mining operation in Liberia has necessitated finding solutions to a number of challenges. To date, ArcelorMittal invested $800 million in repairing roads and infrastructure, whilst also supporting the need for education and healthcare amongst the local population, through projects including the reconstruction of a 240 km railway, port, hospital and school facilities - developments that will serve local communities as well as enabling the iron ore mining operation to operate efficiently. By 2012, ArcelorMittal aims to ship four million tonnes of iron ore from Liberia each year.

LUXEMBOURG FINANCE

ALFI aims to boost asset management prole

The Association of the Luxembourg Fund Industry (ALFI) on September 27 announced that it has set out its ambition for the Luxembourg Fund Centre, to be a global centre of excellence for the asset management industry, thereby creating opportunities for investors, fund professionals and the global community as a whole. The five key objectives set out in ALFIs ambition paper are aimed at ensuring UCITS remains the best-in-class for investor protection, to help fund managers and institutional investors to leverage the development of regulated European alternative funds, with AIFMD. They are aim to stimulate innovation within the funds industry, to facilitate cross-border fund distribution and to ensure Luxembourg remains the partner of choice for the asset management industry. Marc Saluzzi, Chairman of ALFI, comments With a market share of over 30% Luxembourg has become the leading fund centre in Europe, thanks to its early adoption of UCITS. However, the recent crisis has demonstrated that investor protection is key and ALFI aims to highlight that UCITS already provides outstanding safety to investors. This Ambition Paper aims to tackle these issues, and centres on two statements which are very close to our hearts, first, that funds are good for you and, second, that Luxembourg is good for funds. Mr Saluzzi continued: By providing quality service to investors, asset management made in Luxembourg will also benefit the community as a whole - in Luxembourg, in Europe and internationally. It will help renew trust in long-term savings, facilitate capital investment, increase business confidence, create highly skilled jobs and fulfil the asset management industrys role in generating prosperity in the global economic value chain.

THE NETHERLANDS|SOCIETY

BELGIUM FINANCE

Number of first-time fathers over 40 rising

According to the data published by the Statistics Netherlands, the number of fathers over the age of 40 at childbirth is growing. One in six had passed the age of 40 last year. In recent years, the average age of first-time fathers was 32.4 years. First-time mothers are on average 3 years younger. Dutch parents are generally a bit older than parents in other European countries. Over 184 thousand children were born in the Netherlands in 2010. More than 60% of the fathers were in their thirties, as against 66% in 1996. In the over-30 age category, the share of fathers beyond the age of 35 has also increased in recent years. A growing number of fathers are in their forties. Last year, one in seven fathers were in the 4050 age bracket at childbirth versus one in eleven in 1996. The proportion of fathers older than 50 years varies around 1%. The age of first-time fathers averaged 32.4 years in 2010, ie 3 years younger than the average first-time mother. The average age of all fathers at childbirth was 34.0 years, also 3 years older than the average mother.

Delhaize offer 7 year bonds

Delhaize Group, the Belgian international food retailer, will offer 7year non subordinated bonds due 2018 (the Bonds) for a minimum amount of 250 million euro. The Bonds will bear interest at a fixed annual gross rate of 4.250%, the Belgian food retailer announced on September 28. The Bonds will be offered via an offer to the public in Belgium and in the Grand Duchy of Luxembourg with BNP Paribas Fortis acting as global coordinator. BNP Paribas Fortis and KBC Bank act as joint lead managers and joint bookrunners, and Dexia and ING Belgium are co-managers under the Bond Offering. The subscription period will start as of September 30, 2011. Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group said: "This retail bond issue is the first in its kind for Delhaize Group and is a great new opportunity for us to broaden our investor base as well as offer the general public the opportunity to be part of the successful operations of a well known brand. The proceeds from this issue will help fund the continued implementation of our New Game Plan strategy aimed at accelerating top line and profit growth whilst being a more efficient and sustainable operator, and will for a part be used to re-finance existing debt recently acquired as part of the Delta Maxi acquisition, he added.

Page 28 |New Europe October 2 - 8, 2011

THE EUROPEAN UNION

POLAND HUNGARY CZECH REPUBLIC

CZECH REPUBLIC|TELECOMS HUNGARY FINANCE

T-Mobile chooses Alcatel-Lucent

Telecom infrastructure and solutions provider Alcatel-Lucent has bagged a major contract to empower T-Mobiles network in Czech Republic with more data speed. A communiqu from the company recently revealed that select portions of T-Mobile's fiber-optic backbone network in the Czech Republic would be upgraded using its technical help to support transmission speeds of 100 gigabits per second, a benchmark required to be achieved to address the needs of enterprise customers. The operator is gearing up to provide individual services connecting data centers and international transit traffic at that speed. The new network would serve as the backbone for T-Mobiles 3G network supporting the companys broadband vision, the communiqu claimed. Development of fiber-optic communications has always been one of T-Mobile's priorities. Our fiber-optic backbone network now covers communication between more than 60 of the largest cities and towns in the Czech Republic, Frank Meywerk, technology director at T-Mobile Czech Republic, said in a statement. New types of cloud services and particularly high-definition video are leading to a 35% year-on-year increase of transmitted data volumes, said David Grundel, managing director of Alcatel-Lucent Czech. This trend is forcing us to continuously develop technological innovations, one of which is undoubtedly the 100G, he added.

Erste Bank Hungary to cease cooperation with loan brokers

Erste Bank Hungary will cease its cooperation with loan brokers from 1 October because of the unfavourable economic and regulatory environment, but it will not pull out of Hungary, the lender said on 23 September, Budapest Business Journal reported. The bank's lending products will only be available at Erste Bank Hungary branches from October. Erste Group's management confirmed their intention to continue the bank's activity as a defining and capitalstrong player on the domestic banking market, Erste Bank Hungary said. The bank also wants to maintain its strategic ties to Magyar Posta, Vienna Insurance Group and ING Biztosto, it added. Hungary's government is making banks shoulder the costs of an early repayment scheme for foreign currencydenominated loans at a discounted

A cyclist passes by a branch of Erste Bank, an affiliate of the Austrian owned bank by the same name, in Budapest, Hungary, 20 September 2011. |EPA/SZILARD KOSZTICSAK

exchange rate. Erste Group chairmanCEO Andreas Treichl warned that the measures by the government could cause investors to take their business to the Czech Republic, Romania or Slovakia for the short term.

He said Erste Group would not invest resources earmarked for business development in Hungary. It will, however, ensure sufficient capital for capital adequacy and liquidity to its Hungarian unit, he added.

POLAND|ECONOMY

Warsaw and New York Stock Exchanges to strengthen cooperation

Polish President Bronisaw Komorowski met with the Board of the New York Stock Exchange (NYSE). During the meeting the parties discussed the issue of strategic partnership between the Warsaw Stock Exchange and the New York Stock Exchange in the context of co-operation in Central and Eastern Europe. The partnership is part of a currently implemented concept of Warsaw - Regional Financial Center and is aimed at strengthening the role of Polish market in this part of Europe. While stressing its support for the leading role of Warsaw in the region, the Board declared that the NYSE will continue its strategic co-operation with the Warsaw Stock Exchange.

CZECH REPUBLIC POLITICS

Misdemeanor set to be stripped off Czech residency

Those who repeatedly commit delinquent acts are now set to be repelled by decision of their respective municipalities if a bill that was preliminarily endorsed by the Czech lower house last week would finally be turned into law. At the first reading on 27 September, the Czech lower house gave its approval to the bill that would make it possible for municipalities to ban the residency of people who repeatedly commit misdemeanors. The bill -- drafted by a group of coalition MPs led by the former chief magistrate of Chomutov, Ivana Rapkova -- survived a motion to reject it by the opposition social democrats and was headed to various committees for review. Once turned into law, the bill would empower the municipal authorities to ban misdemeanors such as begging, consuming alcohol or prostitution in places where municipal ordinances forbid such activities and the authorities would be able to ban those who repeatedly commit misdemeanors from residing on their territories for up to three months. Even though the MP's bill was submitted as a coalition effort, the cabinet of Czech Petr Necas reportedly expressed a negative view of it. Some even remarked that the bill was aimed against the interests of the Roma community. Stanislav Krecek, press spokesperson for the Czech social democrats (CSSD), warned against adopting laws that apply only to certain people and certain places. "That is the road to hell," he said, adding that he doubted restricting people's residency would make any sense as a sanction. However, Rapkova claimed that the proposed law wouldnt amount to something to be termed as antiRoma law but it would be a law against all who disturb public order. The bill must pass through the second and third reading phases, during which amendments to it will be discussed and its overall wording will be established. It would then have to be discussed by the Czech senate and signed into law by the president.

CZECH REPUBLIC|ENERGY

Czech-Poland gas pipeline operative

An interconnector gas pipeline connecting Czech Republic and Poland was formally put into operation last week through an opening ceremony attended by both the Czech and the Polish prime ministers. The pipeline, stretching approximately 31.5 km between the countries, has been lined up through a joint venture between Czech transmission system operator Net4Gas and Polish gas transmission operator GazSystem. The interconnection project consisted of two parts. Gaz-System built a 22 km gas pipeline from the PolishCzech border in the Cieszyn region to Skoczow, as well as a metering station in the region of Cieszyn which augmented the already constructed pipeline on the Polish side of the border. This section of the project was completed in 2010 and the metering station was completed in August this year. On the Czech side, Net4Gas constructed an approximately 9.5 km gas pipeline running from the Polish-Czech border to the Czech transmission system connection point in Tranovice, in the cadastral area of Zpupna Lhota. The inaugural ceremony was held at the Polish town of Cieszyn and on the Czech side near the village of Chotebuz. Both sections have been constructed with 20 inch diameter pipes and have an operating pressure of 6.3 MPa.

POLAND EDUCATION

Funding increased for the senior programme at University of the Third Age
Prime Minister Donald Tusk attended the ceremony of the 5th anniversary of the University of the Third Age at the Warsaw School of Economics. The head of government announced an increase of funding for the senior programme, from the next year on. The Prime Minister underlined that the level of engagement in voluntary services by older people in Poland remains very low. Our programme wietliki, realised on the commune and district scale, will be devoted to encouraging older people to be active,he underlined. This task will not only be fulfilled by Universities of the Third Age.We want a national network of health workshops to be launched, which will make mutual aid possible through health education, meetings with doctors and introduction of the elements of rehabilitation, the head of government explained. Wisdom, common sense, readiness to be active even if the circumstances not always make it possible - this is what makes you priceless people, also from the perspective of the interests of the whole state, said Donald Tusk. The University of the Third Age has been operating at the Warsaw School of Economics since 2006. Around 650 students attend the classes organised by the School.The University of the Third Age at the Warsaw School of Economics is a founder of the National Memorandum on the Universities of the Third Age assembling 55 institutions in the whole of Poland. All in all there are over 300 Universities of the Third Age operating in Poland, with over 100,000 students.The first University of the Third Age was established in Poland in1975, in Warsaw. It was one of the first institutions of this kind in the world.

THE EUROPEAN UNION

New Europe | Page 29 October 2 - 8, 2011

SWEDEN DENMARK FINLAND

SWEDEN TECHNOLOGY

Spotify and Facebook in a relationship

Facebook CEO Mark Zuckerberg announced a new partnership with Swedish firm Spotify, to make its popular music streaming service an integral part of the social media website's platform. Spotify is growing fast and reported this week that it now numbers more than two million paying users for its unlimited music service in nine countries worldwide. US firm Facebook has launched a slew of changes to the presentation and function of its platform recently and Zuckerberg presented the firm's plans, with Spotify founder and CEO Daniel Ek the first to join him on stage. "This is a big day for Facebook and big day for Spotify, musiclovers and artists," Ek said. Spotify is among 33 European launch partners to roll out "social apps" on Facebook as the social networking site seeks to move toward entertainment, including video, films, music, books and television. Spotify's application will allow Facebook users to listen to music with their friends and share their favourites and music listening habits via their profile. Facebook's 800 million users will gain access to music for free, while ensuring that artists are compensated for their work. Spotify was founded in 2006 by Swedes Daniel Ek, then in his twenties, and Martin Lorentzon. The service first launched in 2008 in Sweden and says it has since become the world's largest streaming service with over 10 million users worldwide.

DENMARK | TRANSPORT

DSB to lay-off hundreds

State rail operator DSB is preparing a lay-off round in order to deal with a revenue shortfall, according to the Copenhagen Post. I can confirm that hundreds of employees may be fired, union chairman Ulrik Salmonsen said. DSB would neither confirm nor deny the reports that lay-offs were pending, but chairman Peter Schutze said external consultants, working together with the Transport Ministry, have reviewed DSB in order to recommend how it can be streamlined. Salmonsen said that he predicts that as many as 1,000 employees will lose their jobs. On the chopping block are between 234 and 544 locomotive drivers and between 70 and 500 conductors and station employees. He said that the cuts are a result of the approximately 800 million Danish crowns shortfall following problems with DSBs privately owned rail operator DSBFirst. According to Salmonsen, the lay-offs will force DSB to cut nearly half of its departures, and that will hurt operations because many train conductors and operators already work overtime. Christian Roslev, DSBs managing director, wants both a better financial outlook and more passengers. But thats a tall order, according to Niels Lunde, a journalist and columnist for financial daily Brsen. He said Roslev is stuck between a rock and a hard place. DSBs challenge is to put more trains on the tracks even though the company faces deeper financial problems than Roslev foresaw when he took the job on 1 August.

FINLAND | LABOUR

Finnish PM rejects return to wage talks

Jyrki Katainen, the Finnish prime minister, told reporters that the government would lend its support to the next wage and conditions talks round but stressed that there was no going back to tripartite incomes policy talks, according to News room Finland. "The government stands ready to support [a moderate wage] solution, but it will stand or fall as a result of bipartite talks," Katainen said. Katainen refused to be drawn on the scale of tax incentives for modest wage demands by the unions, saying only that they could not be large.

Spotify co-founder and CEO, Daniel Ek, delivering a speech at the 'Mobile World Congress' in Barcelona, Spain, on 17 February 2010. | EPA/Xavier Bertral

DENMARK FINANCE

FINLAND | BUSINESS

Jyske Bank prepares for lay-offs

Jyske Bank announced that it would seek to reduce the size of its workforce by 6.5% as part of an effort to save 400 million Danish crowns annually, according to the Copenhagen Post. Some 150 employees lost their jobs effective immediately last week, when the bank also announced it was closing six of its branches in the Jutland area. Another 100 positions will be eliminated, but the bank said it hoped most of those losses would come through natural attrition. Jyske Bank, the countrys third largest bank, reported profits of 318 million crowns for the first six months of 2011 and was criticised for eliminating jobs before it was necessary. But according to managing director Anders Dam, the lay-offs came after the banks growth predictions for the coming year proved to be over-optimistic. He added that although Jyske Bank was seeing an influx of new customers, just as many of the banks borrowers were paying off their debts. As part of its savings package, Jyske Bank will also increase its interest rates. But even as it was announcing layoffs, Jyske Bank also said it planned to acquire the leasing company Finans Nord from the Spar Nord savings bank and keep all 50 Finans Nord employees. Dam defended the decision as part of an overall plan of working towards reducing costs while at the same time seeking to generate revenue. Finans Nord has been a successful business unit for Spar Nord, but at a time when borrowing money was more expensive for banks, it chose to focus on its banking operations. Jyske Bank is just the latest of the nations largest banks to announce that it was seeking to reduce the size of its workforce in order to deal with rising costs of borrowing money and falling income. Danske Bank, the nations largest bank, said it does not have any immediate plans to eliminate employees, but it said it could reduce its workforce by as many 1,500 over the next seven years through attrition. On 21 September, Danske Bank also announced an interest rate hike as a way to generate more revenue. Nordea Bank Denmark also announced at the end of August that it would be cutting 2,000 jobs, including 650 in Denmark. Here too, bank officials said that lay-offs would be just one of a number of measures the bank takes to get costs under control.

STX to build cruise ship at Finnish yard

South Korean shipbuilder STX said in a statement on 27 September it had won a cruise ship order from German tourism and logistics group Touristik Union International (TUI) and said the new vessel will be built in Finland. "The project will bring some 5,500 man-years of labour to STX Finland's Turku shipyard," the statement added. The 295metre ship, with a capacity of 2,500 passengers and 1,000 crew members, is scheduled to be delivered in 2014. The monetary value of the order was not disclosed.

FINLAND | YOUTH

Scouts association to cut jobs

The Guides and Scouts of Finland said on 26 September it would launch talks about cutting jobs, which would affect all 23 workers at the association's headquarters, according to News room Finland. Heidi Jokinen, the chairwoman of the association, said that membership in a number of youth associations was falling, resulting in the need to look for job cuts. With about 60,000 members, the Guides and Scouts is the country's largest youth association.

Page 30 | New Europe October 2 - 8, 2011

THE EUROPEAN UNION

LATVIA LITHUANIA ESTONIA SLOVAKIA

LATVIA|CITIZENS ESTONIA ECONOMY

Latvians residing abroad can get dual citizenship

Latvian Prime Minister Valdis Dombrovskis pledged to introduce necessary amendments to the existing laws to allow dual citizenship status for Latvians staying abroad. While addressing the annual meeting of the World Federation of Free Latvians (WFFL) on 28 September, Dombrovskis made the promise which he said would be complied with in the near future, though no time frame has yet been specified. WFFL President Ints Rupners also stressed on the necessity to allow persons to register as dual citizens once again in Latvia. According to Rupners, this would help the Baltic country with significant contributions swelling its coffer. Rupners also said that Russian and South American citizens of Latvian ethnicity who still have links to Latvia, but have never had citizenship, should be given the opportunity to become citizens of the country for its own benefits.

Estonian Central Bank head urges action

SLOVAKIA|POLITICS

Governing coalition gets partners support on ESFS

A junior coalition party of the Slovak government last week indicated that they had agreed on terms with Prime Minister Iveta Radicova on the issue of expanding the Eurozone bailout fund. The expansion of the fund, aimed at providing another lifeline to the highly indebted Greece, had already been facing strife to get pass through the parliaments of several EU member states. "We want to reach a solution that would meet two conditions: we won't block other countries from creating the rescue fund and it won't cost Slovak taxpayers anything," Jozef Kollar, chairman of the Freedom and Solidarity (SaS) caucus said after talks with the Slovak premier.

Estonian Central Bank Governor Andres Lipstok |EPA/VALDA KALNINA

Estonia's Central Bank Governor Andres Lipstok wrote in an article published in business daily Aripaev last week that the governments of the Eurozone member countries should take an even proactive role if they have to creep back in Black. He noted that the market turmoil should be calmed with some solid assurances followed by justifiable actions. The governments must take rapid and clear action to calm markets as the currency bloc struggles with the spill over

from its debt crisis, Lipstok wrote. "In light of the uncertainty on the markets, it is important that Eurozone governments act quickly and that the accompanying message is unified," Lipstok added. Estonia adopted the euro in January, making Lipstok the country's representative on the governing council of the European Central Bank. Lipstok said nations in the 17 member Eurozone should "implement fully and without delay" their 21 July agreement to tackle

the growing debt crisis by increasing the European Financial Stability Facility's (EFSF) lending capacity to 440 billion. He underlined that despite concerns, the Eurozone is not doing worse economically than other industrialised nations. "In light of the criticism of Europe, it is important to keep in mind that in the Eurozone as a unit, the main economic and financial indicators are in similar or better shaped than in other industrial states," he wrote.

SLOVAKIA|TELECOMS

Mobile operators' first appeal rejected

Slovakias Telecommunications Office has turned down the appeal of telecommunications operators Orange Slovensko and Slovak Telekom (T-Mobile) against the 88 million in fees they have been ordered to pay for extension of their operating licences for ten years, Slovak spectator reported on 27 September. Roman Vavro, spokesman for the authority, told SITA that the chairman of the Telecommunications Office and the second instance authority will now review the appeal by both companies. The deadline for that ruling is thirty days, with a possible further extension. The Telecommunications Office chairman's ruling is final and takes effect on the day of its delivery to complainants.

LATVIA CONSTRUCTION

Construction costs declines in August

The latest data from Latvias Central Statistical Bureau showed construction costs in the Baltic country declined marginally in August, thanks to the plummeted costs, both in labour and construction materials. In monthly comparison, Latvian construction costs decreased on average by 0.1% in August, being aided by a 0.5% decline in labour remuneration and 0.3% reduction in prices of building materials. The breakdowns showed that the decrease in labour remuneration was mostly observed in the construction of transport facilities as there was a noticeable drop in work volume. On the other hand, maintenance and operational costs of machinery and equipment increased by 0.7%. Decrease in costs for reconstruction and construction of industrial, agricultural and trade buildings had the greatest lowering impact on the overall level of construction costs. Year-on-year, the overall level of construction costs grew by 1.9% in August with maintenance and operational costs of machinery and equipment having increased by 14.2%. However, prices of building materials diminished by 2.0% and labour remuneration of workers decreased by 1.8%. The price data on construction resources are obtained from more than 150 construction enterprises and 30 trade enterprises. Construction enterprises provide price data for all resources, including remuneration of workers employed in the construction, while trade enterprises indicate only the prices of building materials. The samples taken by the central statistical agency included construction enterprises with the highest value of own account construction works in 2010.

SLOVAKIA|AUTO INDUSTRY

Kia ups production to meet demand in Slovakia

KIA Motors Slovakia will start hiring 1,000 new employees beginning on 26 September due to the production of new KIA models and the launch of three shifts per day beginning in the first quarter of 2012, Slovak spectator reported. New jobs will especially be created in production and they will be suitable for candidates with a technical education and work experience, said Dusan Dvorak, spokesperson for KIA Motors, adding that the recruitment process will last until the end of the 2011. New employees will attend a general, one-week training programme and then specialised training focused on their future job, the SITA newswire reported.

LITHUANIA DIPLOMACY

Vilnius calls on EU to complete deal with Ukraine

Lithuania has called on the European Commission to increase its efforts in negotiating the possible terms of a trade agreement with Ukraine. In a EU meeting in Brussels last week, Lithuanias Deputy Foreign Minister Egidijus Meilunas communicated their position on the issue. The meeting was focus on discussing the progress of the EU-Ukraine negotiations on a comprehensive free trade agreement. Also Russia's accession to the World Trade Organization (WTO) and other important issues of EU foreign trade policy were discussed at the meeting. Negotiations between the EU and Ukraine are ongoing since 2008 and thus far agreements on many important issues have been reached. Lithuania called on the EU executive to make every possible effort to complete the negotiations this year. Agreement between the EU and Ukraine would imply not only the mutual opening of markets, but also the harmonisation of Ukraine's legal acts and the EU law. The agreement would promote trade and economic relations between the EU and Ukraine which is expected to significantly benefit Lithuanian businesses. The same would also facilitate Ukrainian market access for Lithuanian exports.

GREECE CYPRUS

THE EUROPEAN UNION

New Europe | Page 31 October 2 - 8, 2011

Auditors continue Greek review

GREECE ECONOMY

CYPRUS|EU AFFAIRS

MEPs debate tensions between Turkey and Cyprus

On 27 September, in a debate with High Representative Catherine Ashton and Enlargement Commissioner tefan Fle, MEPs were united in their concern at the rising tensions between Turkey and Cyprus in the dispute over oil and gas exploration. They condemned Turkey's threats and stressed that any threat against one Member State was a threat against the whole EU. A number of Members pointed to the growing importance of Turkey as a player in the region and underlined the need for good neighbourly relations, stressing that Turkey, a candidate for EU membership, must accept Cyprus as an EU Member State. Many underlined that Cyprus has the right to explore for natural resources in its own economic zone while some suggested that both communities on the island should benefit from any exploitation of oil and gas resources.

GREECE|ENERGY

TAP submits first environmental study to Greece

The Trans Adriatic Pipeline (TAP) has submitted a Preliminary Environmental Impact Assessment (PEIA) to the Greek Ministry of Environment, TAP said in a press release. This application is an addition to the scoping documents that TAP submitted earlier this year in preparation for its full Environmental & Social Impact Assessment (ESIA). In addition to complying with Greek law, TAP has also decided to carry out its impact assessment in accordance with the stringent international guidelines from the European Bank for Reconstruction and Development (EBRD) to ensure that the project optimises environmental and social performance, the press release read.

European Central Bank's (ECB) Klaus Masuch, left, and European Commission Director Matthias Morse enter the Finance Minister's office in Athens for talks with Greek Finance Minister Evangelos Venizelos, 29 September 2011. |EPA/ORESTIS PANAGIOTOU

On 30 September, French President Nicolas Sarkozy and Greek Prime Minister Georges Papandreou were to hold talks on Greece's progress in implementing a cost-cutting programme that is vital to secure fresh bailout funds. Sarkozy said that his meeting with the Greek premier would be the occasion to say "exactly what our strategy is concerning the support we owe a European country like Greece." There is broad support in France for more intervention to shore up the euro. Prior to his arrival in Paris, Papandreou travelled to Warsaw for the bloc's Eastern Partnership summit, where he met with European Union officials, including France's Prime Minister Francois Fillon. Papandreou's trip to Paris comes as international auditors continue their review of Athens' austerity programme. Inspectors from the EU, the European Central Bank (ECB) and the International Monetary Fund were sent to the Greek capital to evaluate whether Greece had done enough in terms of implementing the austerity measures needed to secure a sixth tranche of bailout loans. Greece needs the funds to avoid a payment default. France is the second-biggest contributor, after Germany, to the eurozone bailout fund that is propping up the Greek economy. French banks are also the most exposed of European banks to Greek sovereign debt. Papandreou's visit to Paris comes just days after he travelled to Berlin to assure Germans that Greeks were making "big sacrifices" in return for Europe's support. Greek lawmakers on 27 September passed fresh measures which included a property tax bill, to be gathered through electricity bills to

make it easier for the state to collect, instead if going through the country's inefficient tax system. Finance Minister Evangelos Venizelos has drafted a plan which seeks to cut the budget shortfall to 7.6% of gross domestic product this year. Under the plan the government will cut the more than 750,000 public sector workforce down to a fifth and reduce the public wage bill by 20%. It will also lower overall pensions by 4% in addition to a 10% cut already agreed in previous plans. On 29 September, the German parliament overwhelmingly approved an extension of the European Financial Stability Facility (EFSF). In her meeting with Papandreou on 27 September, German Chancellor Angela Merkel said: "We know that the people of Greece are being made to endure a great deal at the moment." She said that Greece must fulfil all the terms to receive the aid. Earlier, speaking at a meeting of the German Federation of Industry (BDI) in Berlin, Merkel moved to face down critics of her handling of the crisis, declaring that Germany will do whatever it takes to overcome the financial problems that have engulfed Greece. "We really respect what Greece has done with respect to structural change," she said. "We all wish to strengthen Greece." Merkel said that Germany "will give any support possible to Greece ... so that we will not have bad news month after month." In his remarks to the BDI, Papandreou warned that the battle to haul Greece back from the brink could take years but insisted that Athens would meet its commitments. Papandreou told the business leaders: "Greece will live up to its promises (and) fight its way back to prosperity."

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Page 32 | New Europe October 2 - 8, 2011

THE EUROPEAN UNION

BULGARIA ROMANIA
BULGARIA|DIPLOMACY BULGARIA ECONOMY

Bulgaria, South Korea discuss co-operation

Bulgarian Prime Minister Boyko Borisov and his visiting South Korean counterpart Kim Hwang-sik have discussed bilateral economic, commercial and cultural ties, FOCUS News Agency reported. My visit to Bulgaria aims at reviewing the past 20 years and discussing bilateral relations in the next 20 years, the South Korean premier said. He expressed satisfaction with his meeting with Borisov, adding that Bulgaria offered many business opportunities for Korean companies. There is not a better investment oasis than Bulgaria, Borisov said later at the opening of a BulgarianKorean business forum. Bulgaria has the lowest taxes in the EU, a stable fiscal policy, 3% budget deficit and currency reserve, Borisov said, adding that the country was investing European funds in infrastructure projects.

Economy to continue improving in 2012

BULGARIA|ENERGY

Premier Power to install 16.2 MW of PV in Bulgaria

Premier Power said it will build four photovoltaic power plants in Bulgaria, totalling 16.2 megawatts (MW). The company said the plants will be located in Dimitrovgrad and, when complete, are expected to represent an over 75% increase in the countrys installed photovoltaic capacity since the beginning of 2011. The project is the result of a joint venture between Premier Power and Plaan Czech, s.r.o. While no project specifics have yet been released, the four installations will reportedly range between three and five MW in size. They will be funded by an unnamed, private investment company based in the Czech Republic. Meanwhile, construction is scheduled to start this month, with operations beginning by the end of the year. Bjorn Persson, executive vice president of European operations at Premier Power, said, "We look forward to building our presence in Bulgaria as the country aggressively targets its goal of reaching 16% renewable power by the year 2020."
A man chops firewood at an open air wood market in Sofia. Bulgaria's economy will continue to grow in 2012. |EPA/VASSIL DONEV

Bulgaria's economy will continue to grow in 2012 despite the debt crisis in the euro zone, according to a report by MKB Unionbank. For the rest of 2011, the analysts expect that the economy will improve at a slower pace, irrespective of the tough external environment. In addition, exports to emerging countries outside the European Union are seen to play an important role in Bulgaria's development. MKB Unionbank projects that the country's gross domestic product (GDP) will grow by 2.3% in 2011, rising further to three% next year. Foreign di-

rect investments are forecast to increase by 2.4% in 2011 and by 4.2% in 2012, while inflation is seen to go up by four% and 3.5% in 2011 and 2012, respectively. The country's economic growth for the rest of 2011 will be closely linked to the economic health of its major trade partners - Germany, Italy, Romania, Turkey and Greece, which account for 46% of the country's exports. Since 2010, there has been a gradual change in the geographical structure of Bulgarian exports, the analysts said. The share of exports to long-standing EU members contracted to 50.6% in

2009 from 45.6% in 2010. At the same time, the share of sales to countries outside the EU (Turkey, Russia and some Asian countries) in the same period grew by 3.9 percentage points to 39.1%. MKB Unionbank's analysis shows that the trend was maintained in the first months of 2011. "This suggests greater stability of the export sector in case of a more serious slowdown in European economies and shrinking orders to local businesses as economies such as Turkey and China are expected to continue to grow between six% and eight% in the coming years," the report said.

ROMANIA|RETAIL

Zara to open store in Sibiu

Spanish retailer Inditex has leased a 1,500 square metre building in the Romanian city of Sibiu, where it will open a Zara store, the third high street store under this brand in Romania, Romania Insider reported on 28 September. The building on Nicolae Balcescu St downtown Sibiu is owned by a subsidiary of BCR and has an underground level, a ground floor and two floors, and will undergo renovation. The lease has been intermediated by DTZ Echinox.The new Zara store is the retailers third high street store in Romania after Bucharest and Pitesti and is located in Sibius pedestrian area, in a villa which will be renovated. Inditex has 57 stores in Romania under the brands Zara, Pull&Bear, Bershka, Stradivarius, Oysho, Zara Home and Massimo Dutti. Zara had sales of 58 million in 2010 in Romania, up from 45.8 million in 2009.

ROMANIA BUSINESS

Nexia plans to double business in Romania

CRG Nexia, part of the global network consultancy Nexia, plans to double its business in Romania until 2012, after partnering Group Expert Consulting 2000, according to the company, Romania Insider reported on 27 September. The resulting company will operate under the CRG Nexia brand and will target the top 10 ranking in the audit, accounting and consultancy business. The partnership should be completed by the end of this year. This move is part of our five year global strategy, approved last November in Dubai, providing the consolidation of the global network, simultaneous to the recruitment of new partners at a local level, said Kevin Arnold, CEO NEXIA International. CRG Nexia currently has two offices in Romania, one in the capital city and one in the city of Constanta, but plans to open new offices across the country, in cities like Sibiu, Timisoara, Brasov. According to a study conducted by CRG Nexia, the Big Four companies in Romania, namely Deloitte, PriceWaterhouseCoopers, Ernst&Young and KPMG, remained the leading providers of audit, consultancy and accounting services in 2010 in Romania, even though their share fees decreased from 76.5% in 2009 to 72.12% in 2010.

ROMANIA ENERGY

ROMANIA|HEALTH

Medicover opens new centre in Bucharest

Private health care services supplier Medicover would open a new diagnostic centre in Bucharest last week and hopes to inaugurate a hospital North of Bucharest by the end of 2011, news agencies reported. The new diagnostic centre, to be opened on September 28, is located on Dr Grozovici St in the second district of Bucharest. Medicover currently runs four clinics in Bucharest and one in Cluj-Napoca, Constanta, Focsani, Iasi, Ploiesti, Timisoara and Brasov.

EBRD sets up energy efficiency nancing

The European Bank for Reconstruction and Development (EBRD) has launched a new financing facility for SMEs in Romania, worth 60 million, according to the institution. The funds will be channelled to the real economy of Romania, through local financial intermediaries such as banks and leasing companies, Romania Insider reported on 26 September. The EBRD is extending the first loan under RoSEFF, worth 20 million, to Banca Comerciala Romana (BCR), Romanias largest commercial bank and part of the Austrian Erste Group. Individual sub-loans are limited to 1mn and thus the focus is on smaller-scale investments. Sub-borrowers undertaking energy efficiency investments will be reimbursed by up to 10 to 15% of the sub-loan amount on the successful completion of the works, according to EBRD. The Romanian SME Sustainable Energy Financial Facility (RoSEFF) will help local companies maximise energy savings and improve their overall competitiveness, while contributing to a reduction in the countrys high energy intensity. EU supports the implementation of RoSEFF by a grant amounting to 12.05 million.

PARTNERS

New Europe | Page 33 October 2 - 8, 2011

NORWAY ICELAND SWITZERLAND

ICELAND TRANSPORT SWITZERLAND|BUSINESS

Iceland to boost public transport with more funding

The Icelandic government intends to attribute 6.3 million per year to reinforce public transport in the capital region in the next ten years. Minister of the Interior Ogmundur Jonasson stated the initiative will save vast sums of money for the community, Iceland Review reported on 25 September. A declaration of intent to that extent was signed by Jonasson, Minister of Finance Steingrmur J Sigfsson and representatives of the Icelandic Roads Administration and local authorities in the capital region on 22 September. The main goal is to double the use of public transport in the region. Iceland is behind neighbouring countries in terms of public transport usage, more often than not Icelanders prefer private vehicles over buses. Jonasson explained that the initiative includes all means of transport such as

Mugabe munches Nestle

Swiss food giant Nestle is one of 12 multinational companies being forced to sell 51% of its Zimbabwean operations to local citizens, Swiss info reported on 26 September. A law enacted in March 2010 requires any foreign company with assets valued at over $ 500,000 (453,000 Swiss Franks) to sell 51% to indigenous Zimbabweans. Nestl, along with Barclays Bank and British American Tobacco amongst others, has until the end of September to comply with the law or risk facing losing its license to operate in the country. Nestle Zimbabwe proposed a plan relating to indigenisation in November 2010, a Nestle spokeswoman said. We have also responded to a letter received from the Indigenisation Minister on 18 August, 2011, and have been in contact with the authorities since then. Nestle has been present in Zimbabwe for 50 years. The company employs some 200 people in its factory in the capital Harare, which produces cereals and powdered milk for the local market. In 2009, the factory was forced to close temporarily following pressure from government authorities to purchase milk from certain suppliers which were not under contract by the company.

Icelands outstanding natural beauty, such as the Gullfoss or Golden waterfall may be only a bus ride away.| O Palsson

SWITZERLAND|BUSINESS

bicycles. In addition to the funds provided by the state, local authorities will also participate in the funding of the joint campaign.

The minister admitted that the initiative is expensive but hopes that it will save significant amounts for the community in the long run.

Aryzta's yearly revenues and profits soar

Swiss based bakery group Aryzta said its revenues for the year to the end of July rose by 53.5% to 2.58 billion, as group earnings increased by 44% to 393.3 million, RTE Ireland reported on 26 September. Its chief executive Owen Killian said that the year had been one of substantial repositioning for the firm. He said that acquisitions completed the previous year and a doubling of bakery volumes saw Aryzta's food group revenue double. Aryzta's food revenues in Europe rose by 10.5%, while its North American revenues increased by 112% and revenues in the rest of the world jumped by 403%. The company also said that it had reduced its net debt by over 10% to 955.5 million since the first half of the year. Aryzta said that consumer confidence improved during the year. ''It remains a tough economic environment for consumers who are now also dealing with higher food costs and less disposable income'', commented Owen Killian. ''We remain focused on working with our customers to manage input price inflation in an effective manner to maintain affordability without compromising quality or service,'' he added. The company's CEO said that at this early stage of the year, the company's full year consensus forecasts appear reasonable and 'our stated earnings goals for 2013 are still attainable'.

NORWAY AUTOS

Increased tax on diesel powered cars

The Government is announcing increased sales tax on diesel powered cars in the coming years, after it has become clear that there is more pollution from diesel engines than previously estimated, Norway Post reported on 26 September. The lower tax on diesel powered cars was introduced in 2009, when it was believed that diesel engines polluted the local environment less than gasoline engines, Aftenposten wrote. New research showed that this not correct. In Norway today, seven out of ten new automobiles are diesel powered.

SWITZERLAND LABOUR

Construction workers rally for a better deal

Thousands of construction workers gathered in Bern on 24 September to protest against wage dumping and call for better health protection, Swiss Info reported. Organisers said 12,000 people had marched through the city centre to a rally on the square outside the parliament building. The demonstration was called by the Unia and Syna trades unions to strengthen their position in negotiations for a nationwide labour contract. The current deal with the Swiss building entrepreneurs association expires at the end of the year. Their main demands are for wages to be paid in full in case of illness and accident, rather than at the rate of 80% as at present, for better job protection for older workers and union activists, as well as for measures against wage dumping. The unions said the building industry increased its turnover by 3.1% last year, although it employed 3.5% fewer workers. They want employees to benefit from the boom in the industry through wage rises and an increase in minimum pay. Hansueli Scheidegger of Unia said the employers were dragging out discussions, and warned that if necessary the construction workers were prepared to go on strike For their part, the employers have said it needs more time to hammer out an agreement, and they have offered to extend the current one for six months. They have accused the unions of unwillingness to compromise.

NORWAY|BUSINESS

Qatar aluminium plant in full production

Norwegian aluminium producer Hydro has announced that the Qatalum aluminium plant in Qatar, a 50/50 joint venture between Qatar Petroleum and Hydro, has achieved full production capacity, Norway Post reported on 26 September. "This marks an important milestone in the Qatalum history. From being in a ramp-up phase, the plant will now transfer into an operational phase. Qatalum will be counted in the top league of the aluminium industry," said Hilde Merete Aasheim, head of Hydro's Primary Metal business area. Qatalum, which reached full production capacity on September 21, can produce 585,000 metric tonnes of high-quality primary metal per year from its 704 cells. In addition to Qatalum's twin 1.2-kilometerlong potlines, the plant complex in the Mesaieed Industrial City outside Doha includes a carbon plant, port and storage facilities, as well as a captive power plant.

SWITZERLAND ENERGY

Atomic power station switched on after repairs

The Mhleberg power station near Bern has been restarted after three months of annual checks and safety improvements, Swiss Info reported on 26 September. The Federal Nuclear Safety Inspectorate gave the go-ahead at the weekend for the plant to continue operations. The operator BKW Energy company said the checks on the plant one of the oldest in Switzerland had guaranteed its safety and long-term use. High-tech analyses were done on cracks in the shell of the reactor core and deemed them safe, the company said. The technology used enabled a closer inspection of the cracks, determining their length and depth. The company said the tests confirmed the tendency of cracks to stabilise. Alarm systems, turbines, alternators and electrical protection systems were also tested. Anti-nuclear protestors said the shell cracks are a security risk.

Page 34|New Europe October 2 - 8, 2011

CANDIDATES

CROATIA ALBANIA SERBIA BOSNIA

BOSNIA | EU AFFAIRS CROATIA EU AFFAIRS

Bosnia may lose EU visa privileges

The European Commission announced it is considering canceling Bosnia and Herzegovinas visa-free privileges. The Commission has confirmed reports that citizens of Bosnia and Herzegovina, an EU hopeful for which Brussels lifted visa requirements in November 2010, could again be subjected to the cumbersome procedure, due to the large number of asylum-seekers from this country. The EU countries which have recently experienced increases in Bosnian asylum-seekers are Germany, Belgium, Sweden and Luxembourg. Commissioner Cecilia Malmstrom sent a letter to the Ministers of the Interior from Serbia, Albania, Bosnia and Herzegovina, Montenegro and FYROM, asking for them to inform the Commission on the practical measures they have put in place to address the increased number of asylum seekers in EU member states. Malmstrom hopes that the current situation will be addressed adequately and without delay and calls for the full support and engagement from Western Balkan countries in order to avoid that negative developments endanger this otherwise successful process. The forthcoming Justice and Home Affairs EUWestern Balkans ministerial forum in Ohrid (3-4 October) will provide an opportunity to discuss the current situation, Michele Cercone, Malmstrom's spokesperson said. The shocking warning to the Bosnian authorities came from the recent EU-Western Balkans Ministerial Forum on Justice and Home Affairs. The European Commission could reintroduce visas for Bosnia-Herzegovina citizens due to the extremely high number of asylum seekers. Brussels is considering all measures contained in the control mechanism for the visa-free regime which were introduced right after the opening of European borders.

Croatia a step closer to EU

Croatian Prime Minister Jadranka Kosor (R) shows a copy of the draft of the accession agreement between the European Union and Croatia standing with her Polish counterpart Donald Tusk | EPA/Antonio Bat

ALBANIA | ECONOMY

PM: Albanian economy staying clear of euro crisis

Prime minister Sali Berisha said that after 20 years Albania is among countries with the highest middle incomes, a country with a functional democracy, rule of law, free speech, free elections and full respect of minorities' rights and excellent religious tolerance. He made the speech while addressing the 66th UN General Assembly in New York. Commenting on the world economic crisis, the premier said that Albanian economy remains one the fewest economies not affected by crisis, which did not register any recession. Noting the economic and social situation in the country, Berisha stressed that Albania fully backs Partnership for an Open Government, initiated by US president, Barack Obama and Brazilian President, Dilma Rousseff.

Polish Prime Minister Donald Tusk recently paid a visit to Zagreb to receive the draft of the EU accession treaty with Croatia. After talks with Croatian premier, Jadranka Kosor, Tusk said that the draft of EU accession treaty of Croatia will be signed in December paving the countrys way to become a full fledged member-state in 2013. When Croatia joins the EU, it is going to be an important influx of optimism and confidence for the future of the EU, Tusk said. The Croatian premier Kosor said that the draft of the EU accession treaty will enable the country to achieve its strategic and historic goal. Kosor went on to say that Croatia also needs to achieve a lot for its own welfare and not merely for the EU's good.

Looking back, Croatia went through many difficulties not experienced by other member countries. Croatia's delay was of political nature, and it took quite an amount of luck, wit and courage to sustain it, political expert Vedran Obucina said. SDP MP Tonino Picula suggested that Croatia should adhere to the reforms strictly to avoid any unnecessary sanctions after succession as happened in Bulgaria. I think this is the indicator of the situation we are in; but I am also quite sure and I hope that this public arrogance and the indifference is pointed at the current government, not at the EU itself, Picula said. Picula noted that support for Croatias EU accession has declined but a majority of Croats still support it.

However, Picula pointed out no candidate country has been in a situation like the one Croatia is currently facing. During the final phase of EU accession, the ruling party faced several controversies. For example deputy Prime Minister Damir Polancec was among the accused who was alleged of misappropriations of 54 million from local food producer Podravka. Following the scandal, the deputy premier resigned from his post. Taking into account the upcoming December vote, Picula said, Kosor has the same political destiny in this moment as former prime minister Ivica Racan as both did very important tasks on the EU front in the last months of their mandates, and then lost the parliamentary elections.

SERBIA EU AFFAIRS

SERBIA | DIPLOMACY

Putin to visit Serbia

Russian prime minister and presidential candidate Vladimir Putin is scheduled to visit Serbia for second time this year on 22-23 October. Earlier the Russian premier visited Serbia on 23 March and met Serbian president Boris Tadic, the Serbian government and prime minister Mirko Cvetkovic to discuss political and economic cooperation. The sources mentioned that Putin had presented to the Serbian government a list of local energy and infrastructure projects and companies in which Russia has expressed strong interest. As a result, there is a possibility that this issue might be a topic at the upcoming meeting. Meantime, the Putins decision just seven months later to revisit Belgrade triggered surprise among leading Serbian officials. The visit should be taken as part of his international activities ahead of the Russian parliamentary elections in December and presidential elections in March, Danas writes.

Serbia close to becoming EU candidate

Serbian Prime Minister Mirko Cvetkovic recently announced that his country has fulfilled all requirements for becoming an EU candidate country. He was pleased to state that Serbia has made great progress in recent months in fulfilling the conditions of the Action Plan for obtaining EU candidate status. The premier stressed that Serbia has no influence on whether the EU member states will set additional conditions in order to accept its candidacy, but he is positive such a situation will not take place. After talks with EU officials, the premier said that government has had a positive opinion regarding the European Commission on Serbia's candidacy. Regarding the situation in Kosovo-Metohija, the prime minister underlined that the most important thing is that disputed issues be resolved peacefully and that the authorities in Serbia are willing to reach agreements. The premier said that the citizens will never give up on its people in Kosovo-Metohija and called on citizens of the southern Serbian province to express their dissatisfaction in a peaceful way. He expressed the will of his country to prevent crime and corruption in Kosovo and also cooperate with the international community. The premier also made it clear that he has no objection to EULEX taking control over administrative checkpoints in accordance with the UN Resolution 1244. Speaking about the adoption of laws on restitution and public property, the Prime Minister observed that a majority is in favour of these laws, but there is a possibility to change the suggested solutions with some amendments. The adoption of the laws on restitution and public property will be a public step and is mere determination of the Serbian authorities to remedy injustices and enable more efficient management of public assets, rather than result of condition set by EU.

CANDIDATES

New Europe |Page 35 October 2 - 8, 2011

TURKEY FYROM MONTENEGRO

TURKEY ECONOMY

IMF revises year-end growth projection to 7.5%

Mark Lewis, the International Monetary Funds senior representative in Turkey, recently submitted the updated version of the World Global Outlook report. Lewis revised its projections for Turkey's economic growth from an earlier 6.5% to 7.5% after the country's growth figures in the second quarter turned out higher exceeding IMF projection, Zaman reported. The growth figure in second quarter outpaced our expectations and therefore we had to revise our projections, Lewis said. IMF based its revision based on many factors, such as the macroeconomic environment in a country, the inflation and the current account deficit (CAD). The bank predicted that the Turkish economy will grow by 7.5% by the end of this year and will slow down 2.5% by 2012. In an earlier report, the IMF projected that Turkey would grow by 6.5% and 2.25 in 2011 and 2012, respectively. Since the Justice and Development Party (AK Party) regime, Turkey has made significant progress over the last seven to eight years. Despite a contraction of 4.8% in 2009, the country clinched an 8.9% growth in 2010, became the fastest growing country in the world with 11% in

FYROM|BUSINESS

Greek businessmen express interest in FYROM firms

Entrepreneurs from Chalkidiki, Greece recently attended a business forum at the Economic Chamber of FYROM. The Greek entrepreneurs who made an attempt to establish direct contacts with FYROM firms, have expressed interest for cooperation with FYROM companies in the field of construction, food industry, agriculture, textile, real estate, MRTOnline reported. Speaking at the forum, Georgios Gilis, chairman of the Chalkidiki chamber of commerce said, We believe there is lots of room for cooperation and that is why we have 35 companies here today. We believe meetings with local companies will yield good results.This is the goal of the two chambers.He made it clear that Greek investors would not withdraw from FYROM if the situation worsened in Greece, believing they would overcome problems. Greek export has risen in the recent period, and on the other hand the European bank says it would continue to support Greek banks. Therefore, I believe there will be no problems in this regard, Gilis said.

FYROM|ECONOMY
Turkish Economy Minister Zafer Caglayan speaks during a opening ceremony of the Istanbul Finance Summit in Istanbul, Turkey on 28 September 2011. Turkey clinched an 8.9% growth in 2010, became the fastest growing country in the world with 11% in the first quarter of 2011 and achieved an 8.8% growth in the April-June period of 2011. |EPA/TOLGA BOZOGLU

GDP records 5.3% growth

According to the State Agency for Statistics data released for the second quarter, the FYROM economy witnessed GDP recording growth of 5.3%. This is the second largest GDP increase for FYROM amid a time when most countries around the globe are facing debt crisis. The biggest increase ever was recorded also in the second quarter, in 2008, when the GDP went up by 6.3%. In the first quarter, FYROM registered 5.1% in the first quarter. Experts claimed that the trend will continue if the country will surpass its expectations for this year. IMF earlier this year predicted growth of FYROM's economy at a minimum of 3.5%.

this year's Q1 and achieved an 8.8% growth in the April-June period of this year. Earlier in September, Turkish Economy Minister Zafer aglayan has said that Turkey's growth figure in the second quarter of the year is expected to slow down to 8%, adding that the annual growth expectation this year will be around 7%. On being asked whether the IMF is making a negative projection for Turkey's future growth figures,

Lewis said their growth expectations should not be seen as negative. The IMF report states that the global rate of growth will fall to 4% both this year and in 2012. The rate was 5% in the past year. Moreover, the report also underlined that the average growth rate of developed economies would be 1.6%, meaning that emerging countries would be driving force behind a 4% growth figure by the end of this year.

MONTENEGRO|DIPLOMACY

TURKEY DIPLOMACY

Finance minister meets IMF, World Bank officials

A state delegation headed by Montenegros Finance Minister Milorad Katnicis recently paid a visit to United States to participate in the regular annual session of the World Bank and International Monetary Fund IMF in Washington, Montenegro Times reported. A credit agreement was officially inked in Washington which the World Bank approved Montenegro in September. In addition to meetings with officials from the World Bank and IMF, members of the delegation meet with representatives of a large number of financial institutions and investment funds (Deutsche Bank, Credit Suisse, HSBC, JP Morgan, BNP Paribas, UBS Invest, Societe General). In addition, the delegation met envoys of the American administration (State Department), the official from the Ministry of finance said in a statement.

Oman, Turkey discuss trade, economic ties

Khalil bin Abdullah al Khonji, chairman of Oman Chamber of Commerce and Industry (OCCI), recently met in Muscat with Arshad Hurmuzlu, Turkish president's senior adviser for the Middle East affairs, Zaman reported. In the course of talks, both sides discussed bilateral co-operation and ways to promote current relations between the two countries in order to promote development and improve economic and commercial sector in the Sultanate and Turkey. The sides are also willing to cooperate in education, vocational training, experiment exchange in scientific and research sectors. The OCCI chairman invited Turkish firms in the Sultanate and the Turkish private sector representatives to cooperate in employing the Omani youth and providing them with on-the-job training due to its significance in reinforcing the labourer's capabilities and skills. Citing the deep and latest development of ties between the two countries, Al Khonji mentioned spoke on fostering the inter-trade and economic relations. The sides stressed the significance of activating the role of the Islamic Chamber for Commerce and Industry and the chambers of commerce to play more positive roles in terms of boosting trade ties with Turkey. The chambers were considered as a nexus between the Arab and Islamic markets and the Turkish and European markets.

MONTENEGRO|TENDER

TURKEY ECONOMY

Montenegro announces tender for lease of Lastavica

ment grade territory and also increased stocks in Turkey. The rating agency said that adequate capitalisation in the Turkish banking system entailed the upgrade.The ratings firm also noted that government debt is now predominately denominated in Turkish lira and issued at fixed, nominal rates. The ratings on Turkey could increase if the country is able to curb its current account deficits and slow domestic credit growth without hindering its fiscal accounts or financial-sector stability, S&P said. The government of Montenegro recently invited experienced international investors to participate for long-term lease of island Lastavica with fortress Mamula Herceg Novi, Montenegro times reported. The investors are required to have financial capacity and experience in the design, construction and management of complex tourist facilities, interested in long-term lease for a period of 30 years, with possibility of extension up to 90 years of the tourist resort Lastavica. The position of island Lastavica, together with the fortress Mamula requires the concept of an exclusive tourist resort, with amenities for recreational activities and relaxation.

S&P increases Turkey's local-currency ratings

Standard & Poor's Ratings Services recently raised upgraded its senior unsecured and long-term local-currency sovereign rating on the Republic of Turkey into investment grade territory. The reason for the raise in the countrys local-currency ratings was the current improvements in the financial sectors and the deepening of local markets, reads a press release. The outlook is positive. The one-notch upgrade, to triple-B-minus from double-B-plus, lands the ratings on the lowest rung of invest-

Page 36 |New Europe October 2 - 8, 2011

NEIGHBOURHOOD

UKRAINE MOLDOVA BELARUS

UKRAINE|EU AFFAIRS UKRAINE ENERGY

Yanukovych to visit Brussels in October

Ukrainian President Viktor Yanukovych will make a visit to Brussels in October. The meeting was scheduled during the president's meeting with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso in Warsaw on 30 September. The meeting took place at the office of the Polish premier, where on 30 September a plenary session of the Eastern Partnership summit took place. During a meeting with Yanukovych and Van Rompuy expressed a positive evaluation of Ukraine's striving for European integration. He said that the EU is awaiting a Ukraine-EU summit scheduled for December. According to the president of the European Council, work on bilateral documents should be finished by that time, so that Ukraine and the EU could take their relations to a new level. He also stressed the importance of further reform in Ukraine. In turn, Barroso said that he supports Ukraine's course towards European integration. He said Ukraine has an opportunity to become the first country of the Eastern Partnership project to sign an association agreement. Yanukovych said, "I highly appreciate this open, constructive dialogue between us and I am ready to continue it."

EU sees Ukraine gas transit role for years to come

BELARUS|EASTERN PARTNERSHIP

Minsk turns back on EU summit after crackdown criticism

On 30 September, Belarus was squarely back in the spotlight on the second day of the European Union's Eastern Partnership summit in Poland, after withdrawing from the event following blistering criticism over its crackdown on opposition figures, Deutsche Presse-Agentur (dpa) reported.The Belarusian Foreign Ministry accused Brussels of "discrimination," saying that summit organizers had prevented senior members of its delegation from attending the Warsaw talks. But a spokesman for the Polish EU presidency said that Belarus had made the decision to walk away on its own accord. "We regret that the regime decided to isolate the country's 10 million people from fruitful European cooperation within the framework of the Eastern Partnership," Konrad Niklewicz was quoted as saying by the press. Polish Prime Minister Donald Tusk nevertheless offered Belarus an olive branch as he welcomed leaders from the EU and its five other Eastern Partnership neighbours - Armenia, Azerbaijan, Georgia, Moldova and Ukraine - to the summit's first plenary session. "There is a spot waiting for Belarus symbolically today, but also a spot in the European family," Polish Press Agency PAP quoted him as saying. Diplomats told the agency that the summit would now issue a separate declaration on Belarus, which would be harsher in light of the withdrawal. Earlier on 26 September, German Chancellor Angela Merkel had described the Belarusian regime's handling of the opposition as "unacceptable."

Ukrainian President Viktor Yanukovych, centre, meets with Polish Prime Minister Donald Tusk, left, and European Council President Herman Van Rompuy prior to the official dinner at the Copernicus Science Centre in Warsaw, at the start of the two-day Eastern Partnership Summit, in Warsaw, Poland, 29 September 2011. |EPA/RADEK PIETRUSZKA

MOLDOVA|DIPLOMACY

Moldovan, Ukrainian parliament speakers sign agreement

Moldovas Acting President, Parliament Speaker Marian Lupu and the Chairman of Ukraines Parliament Volodymyr Lytvyn have broadened the consolidation and fosterage of the good friendship relations between Moldova and Ukraine in all the fields of common interest Moldpress reported. The parliament speakers also exchanged opinions on the Transnistrian issue and signed an agreement of bilateral cooperation between the Moldovan parliament and the Ukrainian Verkhovna Rada. In the context, Lytvyn advocated the fosterage and consolidation of the bilateral political, economic, scientific and cultural ties, mentioning the importance of the inter-parliamentary cooperation in this respect and the need to develop joint projects.

On 29 September, EU Energy Commissioner Gunther Oettinger assured Ukraine that it will continue to be the main transit route for Russian natural gas supplies to Europe, and agreed to disburse $308 million to upgrade its gas pipeline system. Meeting with Ukrainian Energy and Coal Industry Minister Yuriy Boyko to discuss the plans, Platts quoted Oettinger as saying that the money will be disbursed to make sure modernisation of the system begins in 2012. Ukraine will continue to be the most important country for transit of Russian gas to the European Union, Oettinger said at a joint press conference with Boyko. Oettinger said the money will be discussed in detail this week at a meeting involving officials of the World Bank, the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB). Russia has officially stated its interest of jointly developing Ukraines gas transportation system. However, Russia wants to own at least 50% of the Ukrainian pipes Meanwhile, Ukraine is negotiating with Russia a lower gas price for the former Soviet republic. Ukraine wants a steep discount in the price it is paying for Russian natural gas to $230 per 1,000 cubic metres from the current $355. Ukrainian President Victor Yanukovych also wants his nation to pursue a free-trade agreement with the European Union, something that would preclude Ukraine joining a Russian-led Customs Union. Russia, on the other hand, says

Ukraine is paying a fair market price for its natural gas and that further discounts would require Yanukovych to abandon the EU free trade hopes in favour of joining the Customs Union with Russia, Belarus and Kazakhstan. Ukraine operates one of the world's largest natural gas transportation systems and is responsible for shipments of up to 80% of Russia's Europebound gas supplies. Ukraine earns about $2.7 billion annually from rendering gas transportation services to Gazprom of Russia, but those earnings would come under threat if Russia continues to build bypassing pipelines like Nord and South Stream. A price dispute between Russia and Ukraine has led to disruption of EUbound gas supplies twice before. Yanukovych said he hopes to solve Ukraine-Russia energy cooperation issues. At the beginning of a meeting with Russian President Dmitry Medvedev, Yanukovych stressed that there are a lot of questions that need to be addressed, among them the holding of the meeting of the Ukrainian-Russian Intergovernmental Commission. In a statement on talks with Medvedev, and Russian Prime Minister Vladimir Putin at the presidential residence in Zavidovo of Russias Tverskaya Oblast on 24 September, Yanukovych said "progress" was made. During our talks, significant progress was achieved which gives reason to hope that concrete results in the interests of both countries will be achieved in the near future, he said. Yanukovych was quoted as saying during the meeting with Medvedev

that important issues have piled up between Russia and Ukraine which need to be solved, starting with energy relations. During the talks with Medvedev, Yanukovych stressed that constructive resolutions need to be found. I do not hide that there is concern over the energy question, but I am certain that in light of what we have achieved in the last year and a half - stabilising bilateral economic relations and much more - that here we will be right and constructive in solving this issue," Yanukovych was quoted as saying to Medvedev. Ukraine and Russia have moved away from an open confrontation and continue gas talks, but the Russians are unlikely to jeopardize relations, member or Parliament from the progovernment Party of Regions faction Vladimir Vecherko said on 28 September. He opined that the leaders of Russian and Ukraine do not want to aggravate relations between the two countries, especially on the eve of elections to the Russian Duma and the Russian presidential elections. He also said that representatives of the two countries may soon turn to the theme of diversification of gas supplies through Ukraine, as well as the establishment of a gas consortium. "The Ukrainian gas transport system has a throughput capacity of 240 billion cubic metres of natural gas. Neither North nor South Stream gas can reach such amount," he said. In his opinion, Ukraine should establish a joint management of its gas transportation system, which will include representatives of the Russian Federation and the EU.

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New Europe | Page 37 October 2 - 8, 2011

KAZAKHSTAN TAJIKISTAN TURKMENISTAN

TURKMENISTAN AVIATION KAZAKHSTAN|SPACE

Turkmenistan to continue cooperation with Boeing

President of Turkmenistan Gurbanguly Berdimuhamedov met with CEO of Boeing Commercial Airplanes James Alban in New York, Turkmenistan.ru learnt from the press service of the Turkmen government. In the course of talks, the Turkmen head said that the largest American company has been renewing the civil aviation fleet of Turkmenistan over recent years. Turkmenistan intends to continue replenishing its civil aviation fleet, purchasing modern aircrafts from the world's leading aircraft manufacturer, which has an advanced experience and newest technologies, the Turkmen leader said. He reaffirmed Turkmenistan's interest in continuing mutually beneficial cooperation, one of the important aspects of which is the sphere of services and training of qualified professional personnel, including flight crews, technicians and flight attendants. The President noted that the American companys sound experience is beneficial for Turkmenistan. Alban, in turn, expressed his "sincere ap-

Kazakhstan eager to join BelarusianRussian orbital group of satellites

Speaking at a recent meeting, Charge d'Affaires of the Republic of Kazakhstan in the Republic of Belarus Farkhat Abdukhalykov said that Kazakhstan is interested in joining the Belarusian-Russian orbital group of satellites, Gazeta.kz reported. Abdukhalykov said that cooperation in the space industry within the framework of the Customs Union is enticing for Belarus, Russia and Kazakhstan. We have been cooperating, including cooperation with Russia, in the space industry for a long time. We are interested in developing this partnership both with Russian scientists and Belarusian ones in the future, said Abdukhalykov. It was reported that a Belarusian satellite will be inserted into orbit together with a Russian one by the same booster rocket. Belarus will no longer have to buy space data collection and processing services from other countries. In the future Belarus and Russia plan to create a group of satellites that will be used for the benefit of the Union State. Meantime, Russia and Kazakhstan are planning to set up a joint air-defense system in the very near future, Col. Gen. Valery Gerasimov, deputy chief of the General Staff of Russia's Armed Forces, said. We already have such bilateral regional air-defense systems with Belarus and Armenia and in future we are planning to build a similar air-defense system with Kazakhstan, the senior Russian military official said. At present Kazakhstan's air-defense system is part of the integrated CIS air-defense system. A bilateral air-defense system with Kazakhstan could be created "in the very near future," he added.

They flew to Ashgabat. More Boeings to join fleet.|BOEING

preciation for the desire to continue active cooperation, stressing that Boeing is proud of reputation of a reliable and long-term partner of Turkmenistan". In an exchange of views on the state and prospects of bilateral cooperation

the representative of Boeing management briefed the President of Turkmenistan on the pace of implementation of the agreements reached earlier, taking into account comments and wishes expressed by the head of Turkmenistan.

TAJIKISTAN|BUSINESS

EBRD supports enterprises in Tajikistan

The European bank for Reconstruction and Development recently announced a syndicated loan of up to $8 million to Bank Eskhata, the fifth largest bank in Tajikistan and enjoys a dominant position in terms of branch coverage and number of clients in the North of the country, second largest and economically active region after capital. The loan is part of EBRDs strategy to support the development of the market economy in Tajikistan, reads a press release.The loan will enable the Bank to support its maturing micro and small business customers and also to reach out to new clients in the emerging small and medium-sized business sector.The EBRD will provide $2 million of its own funds, with the remainder syndicated to FMO, the Dutch development bank, which is providing $5 million, and to Germanys BANK Im Bistum Essen providing $1 million. Successful syndication of the loan with commercial lenders will introduce the bank to the international financial market. It was reported that for the first time, the German bank BISTUM, a cooperative bank committed to socially responsible lending, has invested in Tajikistan.

TAJIKISTAN RELATIONS

Tajik president, IMF mission head discuss cooperation issues

Tajik president Emomali Rahmon recently met with Todd Schneider, the head of the International Monetary Fund (IMF) mission. During the meeting, both sides discussed issues related to bilateral cooperation between Tajikistan and the Fund as well as coordination of activities of donor countries, Asia-Plus learnt from the presidential press service. The sides were pleased with level of bilateral cooperation and development of the countrys economy despite the effect of the external factors, in particular rise in food and fuel prices. They were confident that Tajikistans economic growth this year would stand at no less than 6% and inflation will be curbed at satisfactory rate. This would be possible due to implementation of an efficient tax and monetary policy, the sides said in a statement. At the conclusion of the visit, Schneider said, Discussions were productive and there was progress on the set of policies and actions for the rest of 2011 and 2012. The IMF envoy said that Tajikistans economic recovery continues to take hold. Real GDP growth reached 6.9 % through the first half of 2011. Rising remittances supported domestic trade and services, but growth is also seen in agriculture, construction, and industry. Inflation has been a significant challenge peaking at 14.8 % in May but since declining moderately. He predicted that real GDP growth should reach at least 6 % this year, particularly if prices for key exports remain high, and regional partners continue to grow. Global food and fuel prices are expected to stabilize in the coming year, but the mission welcomes the authorities intention to carefully coordinate fiscal and monetary policies to protect macroeconomic stability. Over the medium-term, the mission advises the authorities to develop and utilize targeted social programs to provide social assistance to the poor. Financial sector indicators have stabilized in recent months, but the mission urged the National Bank of Tajikistan to implement the Financial Sector Stability Plan, aimed at addressing non-performing loans in the banks, and to strengthen accounting and supervisory standards. Over time, this should help to bolster public confidence in Tajikistans banks, create room for private sector credit, and thus help support economic growth and employment, said Schneider.

TURKMENISTAN|BUSINESS

Appraisal activity law to advance Turkmen market relations

The Majlis in Turkmenistan recently adopted a law On appraisal activity which will act as a tool to foster development of market relations, and concretizes economic interests of business and government through effective property management, Turkmenistan.ru reported. Maral Paltaeva, a member of the Turkmen parliamentary committee on economy and social policy, said the reason for adoption of the law and forming an institute of professional appraisal in the country is program of transfer to International Financial Reporting Standards, which is currently under implementation. She said that a method of determining value based on costs of purchase, adopted in accounting, takes into account only the initial costs and amortization charges, which come under generally accepted accounting principles. However, the property can have a market cost greater or less than the cost of purchase and correction for accumulated depreciation at any concrete time.

KAZAKHSTAN FINANCE

2010 GDP exceeds 4 Central Asia states twofold

Speaking at the sitting of the Nur Otan fraction, Kazakhstans prime minister Karim Massimov said that the countrys GDP last year exceeded the combined GDP of 4 Central Asia states twofold, Gazeta.kz reported. In 2010 the national GDP exceeded $148 billion, twice more than the joint GDPs of the 4 Central Asia states Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan, Massimov said. He said that currently Kazakhstan is positioned among middle income countries such as Brazil, Malaysia and Turkey. The premier also recalled that external debt of the Kazakhstans banking sector for the last three years had been reduced by almost $30 billion from $46 billion in December 2007 to $16.6 billion in March 2011. This year the list of permits and licenses for business has been reduced by 331 items as part of move to enhance the business climate, added Massimov.

Page 38| New Europe October 2 - 8, 2011

NEIGHBOURHOOD

UZBEKISTAN AZERBAIJAN KYRGYZSTAN

KYRGYZSTAN|HUMAN RIGHTS KYRGYZSTAN ECONOMY

UN: Otunbayeva to implement recommendations

The head of Kyrgyzstan Roza Otunbayeva needs to implement the key recommendations made by the Kyrgyzstan Inquiry Commission in regard to last year ethnic clashes in the southern Kyrgyzstan, UN Secretary General Ban Ki-moon said in a statement. He stressed the significance of national reconciliation amid upcoming presidential elections, Irinnrews.org reported. Ki-Moon encouraged the Kyrgyz authorities to implement the recommendations contained in the report of the Kyrgyzstan Inquiry Commission and also expressed the willingness of the United Nations to offer its help, said a UN spokesperson. During the presidential elections UN would continue to render wider assistance in stabilization efforts in Kyrgyzstan, said Ki-Moon. The message also reads, The Secretary-General confirmed the commitment of the UN to provide technical assistance for the ballots, and he also noted the personal efforts of Otunbaeva to ensure that the elections are transparent and credible.

IMF assesses Kyrgyz economy

An International Monetary Fund (IMF) mission has returned from a 7-21 September trip to Kyrgyzstan with suggestions for the Kyrgyz economy. IMF team leader Christian Beddis praised the Kyrgyz economy for recovering strongly from the last years political turmoil and economic downturn, according to an IMF statement. He predicted 7% growth in real GDP this year and noted Bishkeks adherence to tight monetary policy. According to him, the IMF executive board approved a three-year programme for Kyrgyzstan. It is supported by the expanded financing mechanism. The total amount is about $106 million for three-year period. The second tranche should be $15mn. We expect to introduce the necessary documents for the Executive Board at the end of November 2011, Beddis said. Our mission having worked over the past two weeks welcomes the intention of Kyrgyzstan to continue tight credit policy, the restoration of safety in the area of macroeconomic policy and fiscal consolidation

A local Kyrgyz woman washing linen and clothes near her house, in the village of Shalta, 30 km south from Bishkek, Kyrgyzstan, 13 September 2011. The Kyrgyz economy recovered strongly from the last years political turmoil and economic downturn, the IMF said. |EPA/IGOR KOVALENKO

AZERBAIJAN|ECONOMY

IMF forecasts 7% GDP growth in 2012

The International Monetary Fund (IMF) report on World Economic Outlook September 2011 reads that IMF has updated forecasts for economic growth in Azerbaijan in 2011-2012, Trend news agency reported. The latest forecasts states that in late this year GDP growth will reach 0.2% in Azerbaijan. In 2012 GDP growth is forecasted at 7.1% and in 2016 at 2.3%. IMF predicted that in late this year inflation in Azerbaijan will reach 9.3%, whereas earlier the Fund forecast inflation for the current year was at 10.3%. IMF forecasts inflation for 2012 at 10.3% (7.5%), and in 2016 at 5.4% (5%). According to IMF forecasts, inflation in December 2011 will amount to 11.2% compared to December 2010, and 9.5% in 2012.The Funds estimates states that Azerbaijan will have a payment balance surplus of 22.7% of GDP in late September, in 2012 at 19.3% and in 2016 at 8.2%. Meantime, Asian Development Outlook Update for 2011 revised GDP growth and inflation expectations for Azerbaijan in 2011 and 2012. The recent ADB report shows that a 3% growth in GDP for Azerbaijan in 2011 and 4.5% in 2012. ADB kept inflation forecasts for Azerbaijan unchanged, with 7.5% in 2011 and 7% in 2012. The Azerbaijani government revised nominal GDP growth forecast in the summer, increasing it from 40.197.3 billion manat to 44.788.8 billion manat. Compared with the previous year, the growth in 2011 is expected to reach 7.66%. Azerbaijan's GDP growth rates by the end of 2010 amounted to five% and 7.9% the non-oil sector.

namely the reduction of the budget in the medium term. Deficit reduction over the medium term will be supported by a reasonable policy in the costs sphere, administration of tax policy. The authorities should continue targeted help in order to promote economic growth, Beddis said. The mission also recommended to finish the banks reorganisa-

tion efficiently as well as monitoring and control system-banks, he said. According to Beddis, the mission will come back to Kyrgyzstan in FebruaryMarch 2012 to discuss the status of the programme to the end of December.If all the indicators are fulfilled, there will not be any reasons not to give a positive evaluation, he stressed.

AZERBAIJAN LOAN

World Bank, Baku ink agreement on capital markets

The World Bank and Azerbaijan recently inked a loan agreement on Capital Markets Modernisation Project (CMMP). This is the 52th World Bank project in the history of Azerbaijan which is financed by the World Bank and the State Secretariat for Economic Relations of Switzerland (SECO). The SECO grant is designed for technical support within CMMP. SECOs assistance will be aimed at accomplishment of capital markets legislative and regulatory base, tackling of shortages and contradictions, work on development of the markets infrastructural architecture. For implementation of the grant programme the SECO is to sign the management agreement with the World Bank. During the signing ceremony, State Securities Committee of Azerbaijan Chairman Rufat Aslanli said that CMMP is meant for technical, information and organizational support for implementation of the securities market development program adopted this year, Trend news agency reported. Aslani stressed that ongoing reforms in the sector, affecting legislation, infrastructure and management practices aimed to curb operating and transaction costs in the stock market. CMMP supports development of management and clearing and settlement infrastructure of modern capital markets, improved access to capital markets, raising awareness of enterprises and potential investors about the tools of various capital markets and strengthening the potential of the State Securities Committee (SSC). CMMP is designed to support mediumterm growth of the private sector by providing opportunities for sustainable and alternative financing, thereby contributing to the first challenge of Country Partnership Strategy (CPS), adopted by the World Bank on Azerbaijan for 2011-14 strengthening the non-oil economy.

UZBEKISTAN|ENERGY

UZBEKISTAN DIPLOMACY

ADB backs electricity metering project

The Asian Development Bank (ADB) recently announced a loan of $150 million for an advanced electricity metering project in Uzbekistan. The government of Uzbekistan and Uzbekenergo will provide counterpart funds of $50 million, Trend news agency reported. Overall the project which amounts to $200 million is scheduled to complete by the end of 2014. The loan has a 25-year term with a grace period of five years and annual interest determined in accordance with ADB's LIBOR-based lending facility. ADB will fund the installation of digital smart electricity meters for one million residential and small commercial power users in the cities of Bukhara, Jizzakh and Samarkand. The meters will operate using an automated management system that will allow the utility company to reduce power losses and increase revenues.

Tashkent, Beijing agree on closer parliamentary exchanges

During a recent visit to Tashkent, Chinese top legislator Wu Bangguo had a meeting with president of the Uzbek Senate Ilgizar Sabirov, Uzbekreport.com reported. Wu visited Uzbekistan upon the invitation of Sobirov and the speaker of Parliament Legislative Chamber Dilorom Tashmukhamedova. Wu, chairman of the NPC Standing Committee said that NPC is ready to maintain highlevel visits and friendly exchanges with the parliament of Uzbekistan and support each other on major issues concerning core interests to contribute to nation-tonation relations. Wu called on the legislatures of the two countries to speed up the approval of agreements to facilitate cooperation on large projects related to energy, minerals and high technology. He stressed that it would benefit both countries if they exchange experience on how to promote economic development and secure social harmony, and take more effective legislative measures to improve the investment environment and protect the legal rights of enterprises and people. He also called on the two sides to enhance coordination within multilateral parliamentary organizations to play their constructive role in helping boost comprehensive cooperation within the framework of the Shanghai Cooperation Organisation. For his part, Sabirov said Uzbekistan regarded China as an honest ally and an important cooperative partner. He expressed his countrys willingness to cooperate with China in such areas as politics, and work with China to combat the "three forces" to safeguard regional security. During the meeting the sides mulled the development of bilateral cooperation in various spheres, including politics, trade, economics, and culture. They particularly noted the cooperation between two countries' parliaments, on the basis of legal agreements achieved during the meeting of the two countries' heads.

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New Europe |Page 39 October 2 - 8, 2011

RUSSIA GEORGIA ARMENIA

RUSSIA POLITICS GEORGIA|DIPLOMACY

Putin nominated as president

Tbilisi, Tehran to expand co-operation

On the sidelines of the 66th UN General Assembly session, Georgian Foreign Ministers Grigol Vashadze and his Iranian counterpart Ali Akbar Salehi discussed the willingness of both countries to expand mutual cooperation in all fields, Civil Georgia reported. The sides explored avenues for expansion of bilateral ties. Citing age old ties between the two countries, Salehi said that the current level of cooperation does not reflect the real potential of both sides adding it is necessary to identify and mobilise the possibilities and take the existing opportunities. In turn, Vashadze said he also was pleased with the growing ties between Tehran and Tbilisi. He called on both sides to further enhance the bilateral relations to a new level up through activating the two countries' cooperation.

GEORGIA|EU AFFAIRS

EU-Georgia free trade talks to begin soon

EU and Georgia made a great headway in identifying the last remaining steps in order to be able to soon start negotiations on deep and comprehensive free trade agreement (DCFTA), Gunnar Wiegand, a senior official from the European External Action Service in charge of Russia, Eastern Partnership, Central Asia and regional cooperation, said after a session of Georgia-EU cooperation committee in Tbilisi, Civil Georgia reported. The EU official said that EU and Georgia will start talks on free trade area if Georgia takes all pre-requisites required for launch of these negotiations. The date of talks is not finalised yet but the parties plan to start negotiations before the end of the year. Georgias Ambassador to the EU Salome Samadashvili said earlier in September that free trade talks with EU would start before the end of this year. After meeting with Polish Prime Minister Donald Tusk, Georgian President Saakashvili said that Georgia was expecting a serious breakthrough this autumn on its path of European integration. Tusk, whose country now holds EUs rotating presidency, said that Moldova and Georgia made a significant progress in recent years.

Russia's Prime Minister Vladimir Putin, left, and President Dmitry Medvedev greet United Russia party members at the XIIth United Russia Party Congress in Moscow, Russia, 24 September 2011. Putin becomes the next presidential candidate of the United Russia party, Medvedev announced at the congress. |EPA/YEKATERINA SHTUKINA/RIA NOVOSTI/KREMLIN POOL

Russia's Prime Minister Vladimir Putin will likely return to power as president next year after President Dmitry Medvedev nominated him on 24 September as the ruling political party's candidate for the March 2012 presidential elections. The announcement signalled Medvedev's willingness to step down after a single term in office, and to yield leadership to Putin, who served two terms as president 2000-08 but was barred from running again in 2008 due to term limits. The move ended speculation about the country's likely next leader. It is no great surprise. Putin has given plenty of clues that he intends returning to the presidency in 2012, Chris Weafer, chief strategist at Moscows Troika Dialogue, wrote in an e-mailed note to investors. The concept of a lame-duck presidency, i.e. for the remainder of the Medvedev term, is not relevant. It is clear that Putin has continued calling the shots since he formally left office in May 2008. The

reason for making the announcement so early is to shift the focus in the Duma election from United Russia to a plebiscite on Putin. Given United Russia's failing popularity and the real risk of a very low voter turnout, making the election a trial run for the presidential vote offers the party the best chance of retaining its current share of Duma seats, Weafer wrote. There will not be a return to the government style and agenda priorities of the previous Putin administration. That simply is not an option. It is clear that the current economic model, i.e. reliance on oil wealth, cannot sustain growth in economy. To achieve the targeted 5.0%-5.5% growth Russia will need to attract a significantly larger volume of investment and the involvement of foreign investors, Weafer wrote. I expect Putin will establish a very probusiness and pro-reform cabinet. Membership of the WTO is a priority. I do not expect any market reaction to the news - investors are more concerned

about global events and the weakening oil price, Weafer wrote. Medvedev's nomination of Putin triggered sharp criticism from Russia's opposition, which condemned the proposed power swap as an anti-reform move that will lead to economic stagnation. After the March elections, Russia's next president will serve six years instead of the previous four-year terms, under a constitutional change. Boris Nemtsov, deputy prime minister in the late 1990s, condemned the move as a "horror scenario." "Putin returns and everyone else leaves. Foreign capital will flee, and people will emigrate," he said. Putin said Medvedev should lead United Russia's party list for parliamentary elections scheduled on 4 December. If, as is considered highly likely by Russian political observers, United Russia were to win the 4 December elections, Medvedev would almost certainly take the job of prime minister, replacing Putin.

ARMENIA|EU AFFAIRS

EU calls on Yerevan to work on visa facilitation

Raul de Luzenberger, head of the EU Delegation in Yerevan, recently called on the Armenian authorities to adopt concrete measures to address European Union concerns about illegal migration. Such a move will help Armenia to secure less stringent visa requirements for Armenians travelling to EU, added the senior European diplomat, Armenia Liberty.org reported. Armenia is entitled to signing a visa facilitation agreement with the EU as part of its involvement in the latters Eastern Partnership programme for six former Soviet republics. The agreement would enable Armenia to help EU immigration authorities expedite the repatriation of Armenian illegal immigrants.

RUSSIA POLITICS

Kudrin resigns following spat with Medvedev

Former deputy prime minister and finance minister Alexei Kudrin said on 27 September that his resignation a day earlier was not spontaneous and acknowledged that it was directly linked to the weekend announcement by Russian Prime Minister Vladimir Putin and President Dmitry Medvedev that they would swap jobs next year. Kudrin's resignation on 26 September followed a televised spat with Medvedev in which Medvedev called on Kudrin to resign because the latter criticised Medvedev's policies in public. The two have a long-running disagreement over government spending priorities. In connection with the numerous commentaries about my resignation, I would like to clarify the following. My statement about how I do not see myself in the Cabinet of 2012 (after the elections) was well-thought out and considered. First, over the course of several months, despite my numerous objections, including public ones, decisions were made in budget policy that without doubt raise the risks to the budget. And risks to the budget linked most of all to inflated appropriations for defence and the social sector would inevitably spread to the entire national economy, Kudrins statement read. Second, on 24 September, the structure of the authorities in our country was determined for the long term. And I also made my determination, explaining my position. Emotions had absolutely nothing to do with this.

ARMENIA|ECONOMY

Government reports faster growth

During a weekly session of his cabinet, Armenian Prime Minister Tigran Sarkisian recently announced that economic growth in Armenia has accelerated in recent months and is expected to reach a target rate of 4.6 % projected by the authorities in Yerevan. The statistical data released by the government showed that the countrys Gross Domestic Product increasing by only 1.2 % year on year for the first quarter of this year.