EU in Turmoil and not only in Financial One

July 8, 2012

The two dominating trends among EU leaders are to cut losses of players in virtual economy at the expense of taxpayers and to guide EU towards strict federation at the expense of democracy.

(Ari Rusila)

The financial crisis has been in headlines already few years. Despite continuous emergency meetings between EU and especially Eurozone countries no light can be seen for better future. Despite more and more ”effective” measures the markets are not satisfied more than few hours or days. In my opinion it is time finally admit that selected strategy to save euro has been disaster – not maybe to banks and speculators but to ordinary citizens at least. It is time to make alternative visions not only for Euro but for whole EU too, time to whistle game out, collect losses and start new game in Day after Euro/EU context.

Today strategic decisions are hard to agree due 27 different circumstances in 27 member-states (and more to come with enlargement). Also “European Monetary Union” is dead as economies inside Eurozone differ too much. It would seem nowadays that the Eurozone leaders have decided to place the region under Martial law. Old principles about democracy, subsidiarity etc are forgotten.

From my viewpoint intervene again and again into something that is not going to work in the long run is the wrong medicine. The two dominating trends among EU leaders are to cut losses of players in virtual economy at the expense of taxpayers and to guide EU towards strict federation at the expense of democracy. Change to this is needed for saving 99 % of people instead saving profits of the rest one per cent.

Grexit best for all

Eurozone countries have tried solve financial crisis in Greece with different measures – such as bailout packets – already few years with about € 320 billion. However this amazing solidarity of Eurozone has not helped average Greek. Instead foreign banks and financial speculators have been beneficiaries of the aid money. The still ruling government in Greece has also decided to invest aid money to new submarines and other military equipments instead the needs of their citizens. Btw as Nato country why Greece does not apply same strategy like Iceland who has outsourced e.g their military air-control to other member-states. Anyway on the bottom line Greece had public debts on 2009 some €300 bn and after aid packets it now has €420 bn . GNP is decreasing so debt problem is coming more difficult to solve every day. Same time the living conditions of average citizens has dropped dramatically and extra loans have not made ground for new entrepreneurship or new export business or helped still existing companies. When unemployment is rising the share of debt compared to GNP doing the same. (See e.g. ”Common Appeal for the Rescue of the Peoples of Europe”  )

Euro-zone, European Central Bank and IMF seem to have only one ultra-liberalist strategy to solve problem – cutting salary, public services and social benefits from ordinary citizens and saving some financial institutions, funds and speculators from bigger losses. But the problem will not be solved with this strategy and the reason is that these financial institutions and speculators have created a virtual financial world ( derivative markets, futures, hedge-funds …) which value is about ten times more than the real economy. I am not an economist but anyway how could this equation be solved with selected strategy.

Grexit now would be best for all. The new currency should be introduced at a one-for-one rate with the euro. But it will soon depreciate by something like 30-50% giving a boost to Greece’s international competitiveness. The government should renominate its debt in the new national currency and make clear its intention to renegotiate the terms of this debt.

Different analysts estimate that the overall debt load continues to grow faster than the economy, then large-scale debt restructuring becomes inevitable. Greece has been in a state of slow motion economic collapse on the scale of past economic collapses such as that of Argentina but so far without the ability to default, devalue and inflate.  It is to be noted that the case of Argentina shows one successful example how to copy in a similar situation.

Strategic miscalculation

“The euro should now be recognized as an experiment that failed”

(Martin Feldstein, an American economist in 2012)

Many economists, mostly from outside Europe, condemned the design of the Euro currency system from the beginning and have since been advocating that Greece (and the other debtor nations) unilaterally leave the Eurozone, which would allow Greece to withdraw simultaneously from the Eurozone and reintroduce its national currency the drachma at a debased rate. However the political will, or fear, has kept Eurozone leaders in their expired visions – current political leaders might be affraid to apply Modern Monetary Theory or post-Keynesian views. The European bailouts are largely about shifting exposure from banks and others, who otherwise are lined up for losses on the sovereign debt they recklessly bought, onto European taxpayers. However I believe that many of them will be either be replaced or finally they have courage to take new appraoach.

There are clear advantages to ridding Europe of the euro. Countries now suffering with debt could return to their national currencies, devalue, and regain competitiveness more easily. They wouldn’t have the same financial safety-net – at Eurozone level – but their freedom would also allow them to chart their own course. The poor outsiders could negotiate debt restructurings and a more fair division of losses would result and same time the rich outsiders could probably put their economies on a stronger growth path by using their money for supporting investments in real economy of their country instead supporting saving efforts of speculator money in virtual economy.

One viewpoint is that the debt should be characterized as odious debt. This definition is famous earlier from cases in South America and Africa uder military dictatorship. For example the Greek documentary Debtocracy examines whether the recent Siemens scandal and uncommercial ECB loans which were conditional on the purchase of military aircraft and submarines are evidence that the loans amount to odious debt and that an audit would result in invalidation of a large amount of the debt. (See more e.g. Liège based NGO Committee for the Abolition of the Third World Debt /CADTM)

EU Scenario: Dissolution, Federation, Confederation, EU Lite …

A lot of English people like the economic advantages, but are happy to keep the frogs and krauts and spics and eye-ties at a healthy distance.”

(One view from U.K. in web)

Now Eurozone as well EU as construction is on the verge of tumbling down. EU bureaucracy is implementing their only truth by trying to guide EU towards federation. Earlier agreements in Maastricht, Barcelona and Lisbon were only soft exercises. Now financial crisis has enabled stronger methods. In March 2011 a new reform of the Stability and Growth Pact was initiated, which provides for automatic penalties and obligations for states in case of breaches of either the deficit or the debt rules. By the end of the year, Germany, France and some other smaller EU countries went a step further and vowed to create a fiscal union across the Eurozone with strict and enforceable fiscal rules and automatic penalties embedded in the EU treaties. (More e.g. Wikipedia).

With the “golden rule” the Stability and Growth Pact, the political choices of national parliaments are limited. Besides killing the democracy the Pact will kill growth too so putting people in misery and dismay. The Pact is new tool for the plundering of the public services and the destruction of social rights in all EU countries.

The best scenario from my point of view could be some kind of EU Lite version. A bit of similar ”privileged partnership” agreement than planed with Turkey. EU Lite should be build simply to EU’s early basics as economical cooperation area including a customs union, the EU tariff band, competition etc linked to idea of the Common Market. EU Lite could also apply a structure of Confederation. Also some kind of fiscal confederation can be shaped. EU Lite could be described also as a political union and there could be some forum for national parliamentarians and party leaders. Federalist intentions, the EU puppet parliament and the most of EU bureaucracy should from my point of view put in litter basket together with high-flown statements and other nonsense.

The investors face normally e.g Interest rate risk, credit (i.e default) risk, volatility risk, structure risk, counter-party credit risk, prepayment risk, general market risk, liquidity risk, extension risk, transparency risk, political risk, and currency risk and now also with Euro a dissolution risk. As said this is normal and because of those risks also the profits are huge. But the basic principle in is that with investments and not to speak even speculations there is two sides – wins and losses. In my opinion the loss should no more be paid by taxpayers.

Many – still non-member – Balkan countries, Turkey and one disputed region (Kosovo) have some vision about EU association. While considering this in my opinion three aspects should be highlighted:

Why to join? Due the needs of people or due the needs of Brussels or elite?

When related to time-line? Association process is long and circumstances are changing, after EU/Eurozone crisis who know what kind of EU if any still exists, same time other regional and global power-centers are rising and options should be open.

Where? Now it is open question if country is joining in future to strict federation with martial law, to some sub-category of loose federation, confederation, open discussion forum or free trade zone only.

After this the forth question – how – is the easy one. (More this with example of Serbia in Serbia’s EU association is not a Must )

My bottom line

With today’s strategy there is a risk that the combination of economic insecurity and political paralysis has been recipe for an increase in extremism and xenophobia. It is slow motion death spiral of economic collapse. That is the base to my view that people should be the first priority and not virtual economy, fiscal system, euro or even EU.

I would like to see following principles – related to current Eurozone crisis – to came again to agenda:

  • People first system after
  • Real economy instead of virtual economy
  • Investor risk instead of taxpayers risk

As interests even inside Eurozone differ these new principles in my opinion have best change if implemented at national level. So e.g each country could nationalize their bankrupting banks, each country could start implement Toby’n (or transaction) tax by national decisions. And when different countries find common interests so new formations, forums and cooperation can be established.


Ukraine: Choosing a New Way

January 17, 2010

When we get Russian gas, the problem is not the supplier, but the fact that 80 percent of the pipeline is located in the Ukraine. We should look for independence not from Russia, but from such transit schemes,” (Gerhard Schroeder)

Just after 2004 Orange Revolution Ukraine took course towards Nato and EU, the new leadership had popular backing to fulfil fast forward hopes its policy. Instead of the fast forward progress scenarios the outcome has been a totally different crisis scenarios including possible confrontation between Ukraine and Russia in Crimea due the Black Sea Fleet, a new dispute over the supply of Russian natural gas to and via Ukraine, different ethnic tensions with minorities and of course declining economy with all social impact.

The dominant factor in Ukrainian political life has been the inability of political leaders – President Victor Yushchenko and his prime ministers – to work together to promote high-flown ideas. Now however the course is changing again in January elections. According different opinion polls President Yushchenko will lose the game already on first round and the winner of second round early February will probably have a pragmatic approach towards Russia and potential to implement more balanced policy. Ukraine is likely to pursue a more modest pace in developing its relations with NATO, a more measured tone on support for Georgia, and more moderate relations with Russia.

Ethnic tensions

Internally Ukraine has a big divide between the Russian friendly and ethnic Russian regions against the more westward looking regions. There is ethnic tensions also between central government and the (Trans-Carpathian) Rusins – an East Slavic people that is the indigenous population of the Carpathian Mountains; the Crimean Tatars and nowadays also with supporters of radical Islam. An of course there is some 9-17 million Russians in country total population of 46 million.

During Yushchenko’s presidency Ukraine has been eager towards Nato membership; same time there has been speculations what will the near future foresee after 2017 for the Russian fleet in Sevastopol? In the worst case the situation might even instigate or support an effort by Crimea to break away from Ukraine. The new president probably is ready to end these speculations.

It is also possible that despite results in election separatist movements are gaining more support and one compromise can be creation some kind of federation with strong minority rights which also can block Ukraine’s former western dreams.

From Subject to Object

From my viewpoint Ukraine has during last presidency lost its regional importance mostly due the geopolitical energy game. GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) Group was founded 1999 with help of US to foster favourable conditions conducive to economic growth through development of an Europe-Caucasus-Asia transport corridor. GUUAM was dominated by Anglo-American oil interests, ultimately purports to exclude Russia from oil and gas deposits in the Caspian area, as well as isolating Moscow politically.

Now GUUAM is coming to end of its short road. Already earlier Uzbekistan withdraws from it leaving behind a stump GUAM. Then Georgia started its aggressions with false idea of western support leading today’s situation. Moldova was aiming towards Nato and EU but after conflict in Georgia it started to look other alternatives. Political attitudes of Azerbaijan and Russia have approached each other. Russia again took the initiative acting as a mediator between Armenia and Azerbaijan to solve long term conflict of Nagorno-Karabakh. The last piece of GUUAM is Ukraine and also this last fortress has degenerated to stagnation. More e.g. in article “Is GUUAM dead?

The adventure after Orange revolution in foreign policy issues finally lead to situation where Ukraine turned from a subject of politics into an object of (geo)politics.

Energy game

One of the real parts of Euro-Asian Oil Transportation Corridor is the Odessa-Brody oil pipeline from Ukraine to Poland for transportation oil from Caspian Sea region to Baltic Sea. However completed in 2001 up to Brody near the Polish border, that pipeline remained empty for three years. In 2004, Russian oil companies began to transfer oil from Brody to Odessa instead of original from East to West plan. However, Ukraine still looks to extend this pipeline so that it can carry Azerbaijani oil arriving from the Georgian port of Supsa to Odessa and then take it to the Polish refinery at Plock and potentially to the port of Gdansk. Some 500 kilometres of pipeline have to be built for that to happen. Meantime other players have been taken more and more Azerbaijan’s energy resources for other markets.

The latest gas dispute made it clear that Ukraine is not reliable transmitter of Russian gas to Europe. This boosted EU’s Nabucco –plan to new level. The same is true also with Russia’s South Stream pipe line. The both pipelines are bypassing Ukraine. When implemented – probably until 2015 – the new line(s) are invalidating the significance of Ukraine as transit route of energy. Turkey is taking this role as most important energy hub for Europe. More e.g. in article “The Nabucco-South Stream race intensifies”.

Declining economy

For a short-sighted and selfish political motivation (the weakening of Russia and its sphere of influence) of West has helped divide and devastate Ukraine. However the EU can’t afford Ukraine economically, geographically and politically, nevertheless in an attempt to weaken Russia EU attempted to lure it away form the Kremlin’s sphere of influence. The result has been economic catastrophe for Ukraine which has seen significant rises in its gas and oil bills along with other economic misfortunes.

The unsolved economic and social difficulties accompany the young state since its declaration of independence. The outbreak of the world economic crisis in 2007/08 with its financial and industrial breakdown accelerated and deepened these problems such as a general credit crunch, an enormous devaluation of the currency, a decline of production following the decline of steel-prices on the world-market and a remarkable reduction of foreign-trade which effects are reflecting from one side the integration of the country into the market economy and Ukraine’s peripheral position from the other side.

Despite the greatest media freedom Ukraine has position 155 in press freedom and is described as partly free in Freedom House survey. Threats, harassment, and attacks against the media continued as the country’s weak and politicized criminal justice system failed to protect journalists from regional politicians, businessmen, and criminal groups. Ukraine would definitely be an interesting case study in criminal justice degree courses.

One of the main tasks of the new political leadership is to provide a balanced position between Brussels and Moscow. This may be realistic when the EU same time is searching a possible “third way” between EU member- and non-membership with some innovative model of “privileged partnership” discussed especially with case of Turkey. The model – when first created – could be copied also with some other countries which now are in enlargement process or included in Eastern Partnership program like Ukraine.

Conclusions

Ukraine tried play important role in U.S. backed GUUAM to create East-West transport corridor for energy blocking Russia from Caspian Sea energy resources and isolating Moscow politaically. However Russia implemented its own initiatives making North-South energy corridors stronger and helping to transfer East-West corridor some hundreds of kilometres southwards. As a result GUUAM is nearly dead, both EU’s and Russia’s new pipelines are bypassing Ukraine, Turkey is coming the main energy hub to Europe.

I wait that during this election Ukraine will finally get rid off Mr. Yushchenko already in first round, which will be won by Mr. Yanukovich. However last round will bring victory to Mrs. Timoshenko and so the country will get both pragmatic and charismatic new leader.

The new president in Ukraine will probably have more pragmatic approach towards cooperation with Russia. Ukraine is likely to pursue a more modest pace in developing its relations with NATO, a more measured tone on support for Georgia, and more moderate relations with Russia. The outcome can very well be easing tensions not only in energy policy but with ethnic and military fields too.



EU’s visa-freedom dividing Balkans

July 25, 2009

The “European perspective” is key concept for integrating western Balkans into EU. The main carrot for ordinary people during this millennium has been visa-free travel after some 17 years of isolation. On 15th July 2009, the European Commission submitted its proposal on visa-free travel for citizens of Western Balkans countries. After a non-binding opinion of the European parliament on the EC proposal the Council comprising EU interior ministers will take the official vote and at best case free travel to Schengen area could be possible January 2010.

But not for all! European perspective will be true only for some when visa ban still will be existing for some countries or even to some ethnic groups inside a country. Instead of connecting people of western Balkans with western Europe the EC proposal will divide again people according their nationality or location. From EU’s side the reason for division is seen technical related to common standards; from western Balkan’s perspective the reasons for division can be seen political or even related to religion.

The Schengen wall was erected against most of the Balkans during the early 1990s, when the breakup of former Yugoslavia created an image was ongoing and bloody wars were spreading from Croatia to Bosnia and Kosovo. Before breakup the citizens of Yugoslavia enjoyed relatively free travel possibilities if compared to rest of countries in central and eastern Europe. After visa ban and trade embarco only the most criminal elements found it easiest to evade the regulations.

EC proposal

Briefly of the five regional states involved in the visa-liberalisation process, Serbia, Macedonia, and Montenegro have been approved for visa-free travel within the EU, as of January 2010. Bosnia and Herzegovina and Albania have been told that they might receive EU visa-free status later. Kosovo, on the other hand, has not been included in the process, as five of the 27 members of the EU have not recognised Kosovo’s independence. (Source BalkanInsight )

An EU law (Council Regulation 539/2001) lists the countries whose nationals need a visa to enter the Schengen area (Schengen Black List) and those whose nationals do not (Schengen White List). The Commission proposes following:

  • visa-free travel for the citizens of Macedonia since this country has fulfilled all the conditions listed in the visa roadmap; technically, this should be done by moving Macedonia from the “black list” onto the “white list” annexed to the relevant Council Regulation;
  • visa-free travel for the citizens of Serbia and Montenegro on condition that these two countries meet a few remaining conditions by the date of adoption of the proposal by EU member states;
  • exclusion from visa-free regime for Serbia of holders of the new Serbian biometric passport who reside in Kosovo and persons whose citizenship certificate has been issued for Kosovo, due to “security concerns regarding in particular the potential for illegal migration from persons residing in Kosovo”; the new passport can be issued to Kosovo residents solely by the Coordination Directorate at the Interior Ministry of Serbia, which will make these passports recognisable;
  • formalisation of the existing visa requirement for Kosovo residents by adding Kosovo (under UNSC Resolution 1244/99) to the black list, under the special category of “entities and territorial authorities that are not recognised as states by at least one member state” where the Palestinian Authority and Taiwan are already listed;
  • no change of the status for Albania and Bosnia and Herzegovina, which remain on the black list since they have not fulfilled all conditions, but the Commission “intends to propose transferring them to the positive list as soon as they have fulfilled the necessary benchmarks”.

(Source and more information about “White list project” one may find from web-pages of European Stability Initiative – ESI – institute)

Divided rights in Bosnia-Herzegovina

Bosnia-Herzegovina is an international creature established by Dayton Agreement on 1995 which split Bosnia into two semi-independent entities – the Serb Republic and the Muslim-Croat Federation. Three ethnic groups – Croats, Serbs and Bosniaks – are trying to lead state together and separately. Entities are united by weak central institutions, while at same time administration is quite heavy loaded with some 170 ministers and whole system is supervised by international presence.

Most Bosnian Croats already have Croatian passports and since Republika Srpska residents can apply for and obtain Serbian passports, the EC proposal for Bosnia would affect the majority of Bosniaks and those Bosnian Serbs, Jews and others that live in the Muslim-Croat Federation. The EU’s message now weakens already non-existent national identity and opposes EU’s earlier multi-ethnic ideals.

While earlier dispute was between Serbs and Bosniaks, last year showed serious dissension between Bosniaks and Croats and EC proposal will make ethnic divisions deeper at time when Bosnia-Herzegovina is on the stage of transition from an international protectorate to one responsible for its own reform dynamics. So instead of an inevitable EU member, Bosnia is more likely to remain an unwelcome, dysfunctional and divided country, with an aggrieved Bosniak (Muslim) plurality, a frustrated, increasingly defensive Serb entity, and an anxious, existentially threatened Croat population. (More about Dayton and situation in BiH e.g. In My article “Bosnia Collapsing” )

Mess-up in Kosovo continues

The Kosovo case is dividing international community as well EU. EU started its huge rule & law mission late 2008 under UN umbrella. Besides UN/UNMIK and EU/EULEX there is also other players twisting arms who is leading the international protectorate. There is European Union High Representative who simultaneously leads International Community Office wondering his role, same time Nato-troops (KFOR) tries to keep ethnic tensions moderate, OSCE do not know its role nor length of its mission’s mandate in Kosovo, EU delegation office, few influential foreign liaison representatives and of course sc. Kosovo government based to local tribes. It shows amazing creativity to establish this kind organizational nightmare in one tiny province and more amazing is that after nearly nine years of international administration and capacity building and squandered billions of Euros both the administration and the situation on the ground are beneath all criticism.

According the new report made by Minority Rights Group International (MRG) gives a bare picture about worsening situation of minority rights in today’s Kosovo. Instead to return to their homes after ethnic cleansing implemented by Kosovo Albanians after Nato intervention 1999 minorities are beginning to leave Kosovo, because they face exclusion and discrimination. This negative process is happening in international protectorate where EU is implementing one of its biggest civil crisis management operations and once again demonstrates the huge gap between high flown ideas, aims, programmes and statements made in Brussels and their implementation on the ground.

In the letter to the EU, the NGOs state that Kosovo`s exclusion from the visa-liberalisation process threatens to transform Kosovo “into a ghetto without any way out”. The head of the Club for Foreign Policy and co-signatory of the letter, Veton Surroi said that Kosovo’s citizens would be further isolated by the EU’s decision, hindering the integration of the country.

“Today, one of the [factors] which impinge on the dignity of Kosovo’s citizens […] is the issue of visas. Go to any embassy in Kosovo or in Skopje today and you will see how degrading the approach towards Kosovo’s citizens has become. And today we are worse off than we were 15-20 years ago”, Surroi said in a press conference on Tuesday. (Source BalkanInsight)

In line with the Commission’s (visa-free) proposal, the 3.5 million Serbs living outside Serbia, including the Serbs of Bosnia, will be eligible to receive Serbian passports allowing visa-free travel within the EU. The residents of Kosovo, meanwhile, will not. The argument for discrimination is a follow-up of of administrative mess-up mentioned earlier. According EC proposal

“Since 1999 Serbia has not had the possibility to make on the spot verifications regarding persons residing in Kosovo under UNSCR 1244/99 … the Commission and the Member States experts were not in a position to verify the issuing of breeder documents and the integrity and security of the procedures followed by the Serbian authorities for the verification of the correctness of data submitted by persons residing in Kosovo when applying for new Serbian biometric passports”.

So when EU and international have not implemented during last 10 years UN resolution the residents in international protectorate must suffer. From the bright side now the majority of former Kosovo Serbs can have visa-free travel abroad as they are residing in Serbia because they could not return to their homes in Kosovo after ethnic cleansing made by Kosovo Albanians on 1999 and 2004. (More about this topic e.g. in my article “Kosovo March/February 17th: Pogrom with Prize”)

Politics or standards

For one hand one can see some European hypocrisy towards the region as in both cases – Bosnia-Herzegovina and Kosovo – EU and international community have guided and supervised these regions towards “European standards”. So has EU failed with this task as those countries without outside supervision are getting visa-freedom earlier?

There is also well based arguments that the EU is isolating three mainly Muslim European states/regions – Albania, BiH and Kosovo – and Turkey as some in the EU fear the presence of such a large, Muslim community inside traditionally Christian Europe. Of course EU denies political aspects and highlights only the technical ones but from Balkan perspective the impression can differ.

Be the proposal based on political or technical reasons the outcome now however is that while visa-freedom sure is good step forward for (FYR) Macedonia, Serbia and Montenegro the Commission’s proposal same the gulf between ethnic groups in Bosnia-Herzegovina and Kosovo will deepen further.



Serbia’s European Perspective developing – energy deal with Russia signed

December 25, 2008

On Spring 2008 Serbia signed two strategic agreement. The one was a Stabilization and Association Agreement (SAA) with European Union and the second one was a preliminary energy deal with Russia. The first is since then suspended but the second one got some flesh on the bones on Xmas-week. Both deals are implementing Serbia’s European perspective although from different angels.

Pipes are comingSAA paperwork

SAA could be described as a roadmap guiding Serbia’s way into EU. When implementation really starts it means starting long negotiations where some 80.000 pages of EU regulations are applied to Serbia’s legislation. During the process and especially afterwards with membership the carrots include e.g. access to EU’s structural funds and different (~500) development programmes. With these promises or visions EU is using its sc. “soft power” to integrate the key player of West Balkans under the influence of EU.

More about SAA & Serbia e.g. my articles “Montenegro and Serbia on the way to EU – maybe”  and “Two approaches from Balkans towards Europe”  and my Serbia’s NPI & SAA documents in my Document library

Serbia will come to an energy hub of West Balkans

Xmas eve Russian and Serbian Presidents and related companies from both sides signed an umbrella agreement including three parts:

  • Under the contract for the sale of NIS, Gazprom will purchase a 51 percent stake in the company for EUR 400mn, and invest a further EUR 547mn in restructuring. The contract, adopted during a government conference call, states that the buyer will secure a loan of EUR 500mn, repayable over 14 years, in order to implement the investment.
  • Second part includes construction the underground gas storage facility in Banatski Dvor that would be able to hold 300 to 800 million cubic metres of gas.
  • Thirdly the Presidents signed an umbrella agreement providing political guarantees that Serbia will receive a stretch of the €10 billion South Stream gas pipeline project is planned to distribute gas from Russia through Serbia and Bulgaria, branching out finally to Western European countries.

Sure NIS was sold under today’s market prices.  However if the two other parts of deal will be implemented the deal will be win-win both to Russia and Serbia.

NIS would also provide Gazprom’s first refineries outside of Serbia. With a network of about 500 gas stations allocated in Serbia (including Kosovo), as well as in Bosnia and Herzegovina and Montenegro, Serbia’s oil monopoly is strategically significant in the supply of neighbouring regions as well. Also when South Stream is completed and fully operational (est. 2015), the pipeline would make Serbia an energy hub in the region.

More over global energy game in my article “Powerplay behind the new Cold War”.

Conclusion

While EU has used its “soft power” and promises to Serbia Russia has used hard currency. In regards of Serbia’s European Perspective this does not necessary mean any swift from pro-Western to pro-Eastern side. From my point of view the situation and its prospected development will allow to Serbia a more balanced approach to its future. While energy will be on the top of EU’s priorities Serbia will have same time more leverage with its negotiations over SAA and other relations with the EU.


War on Pipes: Transport corridors as core of US-Russia confrontation

September 9, 2008

GUUAM

When speaking about interests of West I would like to make a difference between US – or Anglo-American -interests and EU interests. After “Cold War” US has all the while expanded its influence post-Soviet territory with aim to guide those region’s natural resources under US companies. GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) Group was founded 1999 with help of US to foster favorable conditions conducive to economic growth through development of an Europe-Caucasus-Asia transport corridor.

As pointed out by Michel Chossudovsky in his book America’s ‘War on Terrorism,’ (presentation of Anglo-American war policy from the 1990s Balkans to the present), GUUAM has been “dominated by Anglo-American oil interests, ultimately purports to exclude Russia from oil and gas deposits in the Caspian area, as well as isolating Moscow politically.”

More specifically, the US-led military invasion – in close liaison with Britain-responds to the interests of the Anglo – American oil giants, in alliance with weapons producers, private security organizations and service providers (like Halliburton). One could say that the “Anglo-American axis” in defense, foreign policy and especially corporate capital is the driving force behind the military operations in Balkans, Central Asia and Middle East.

SRS

Just five days before the bombing of Yugoslavia (19 March 1999), the US Congress adopted the Silk Road Strategy Act, which defined America’s broad economic and strategic interests in a region extending from the Mediterranean to Central Asia. The Silk Road Strategy (SRS) outlines a framework for the development of America’s business empire through development of an Europe-Caucasus-Asia transport corridor.

The stakes involved with the current conflict are identical to those of the previous war: control over the oil of the Caspian Sea/Black Sea/Caucasus basin, and the control of multiple key oil pipelines criss-crossing the region. The most critical pipeline, the infamous Baku-Ceyhan pipeline supported by the US government and a consortium of US-allied transnational oil interests (including Royal Dutch Shell, Unocal, and BP) takes oil from the Caspian Sea across Azerbaijan (another US-supported regime), whereby it crosses Georgia (bypassing Iran and Russia), then on to the Black Sea, where the oil is carried to Western Europe, and the rest of the world.

The Baku-Ceyhan pipeline has been viewed by the Bush/Cheney administration as one of its brightest geostrategic successes. All of the Anglo-American empire’s pipelines and oil facilities, including Baku-Ceyhan, are threatened, if the conflict escalates. Same time the successful implementation of the SRS requires the concurrent “militarization” of the Eurasian corridor as a means to securing control over extensive oil and gas reserves, as well as “protecting” the pipeline routes on behalf of the Anglo-American oil companies.

Power play and EU

The effect of Nato enlargement is to swing the Iron Curtain to the east. Russia”s opposition to NATO expansion has only increased in recent years. On economical field Russia’s “South Stream” looks more successful so far than Nabucco while the leverage of the United States government over Russian foreign policy has decreased dramatically during last years. US policy is turning into a zero-sum competition with Russia for influence in the post-Soviet regions.

For EU the situation brings few questions such as

  • Is there a difference between EU and Anglo-American interests related to SRS?
  • How to balance aims of energy and security (military) strategies?
  • Is there a difference between EU’s energy policy and interests of corporate capital?

I am not sure if EU would like to answer to these questions, however my point is that this background may have some influence – more than official concern about human rights, rule & law etc. – to EU policy in Balkans and Caucasus.


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Western Balkans and European perspective

June 23, 2008

All non-EU states in western Balkans have been sad to have European perspective e.g. that sooner or later BiH, Serbia, Montenegro, Croatia, Macedonia, Albania and even Kosovo – inside or outside Serbia – would be future EU members. I can not avoid some questions, like

  • Can EU any more absorb new members and simultaneously keep alive some its ideas?
  • Are European perspective and EU membership the same?
  • Are benefits from joining to EU bigger or less than being outside it?
  • Is there any alternative strategic alliances to EU?

Today´s EU

EU was meant to be an association of independent regions that pursue their own policies and serve the interests of their people. Today´s EU has Parliament sitting and travelling between Strassbourg and Brussels with zero power and authority. Instead Commission, their army of bureaucrats, lobbyists from different interest groups are keeping EU as their playground. Due the high risk of corruption EU tries to limit damages with Auditors (In Brussels I once heard that there is more auditors in EU than people who are really implementing some practical task). The Parliament´s Puppet democracy is showed by interpreting all speeches/documents to all EU languages and verse, sad that no one is listening or reading them.

EU is today already so big that democracy and efficiency are in constant conflict. When Ireland last week said no to Lisbon Treaty in democratic referendum it same time paralysed EU structure. If EU is enlarging even more the decision making mechanisms and maybe the tasks of EU should be reconstructed again – it should find the core functions again and cut off extra branches, trim the budget and administration. Today EU member states are paying more or less their taxpayers money to common budget and are receiving more or less back through some 500 different EU programmes. When common bureaucracy, Puppet democracy and corruption are taking increasing share so on the field one sees less money and actions. The bottom line is that EU´s ability to absorb enlargement is questionable and even if it could come bigger what´s the idea to join to it.

European perspective vs. EU membership

One common custom is to equate European perspective and EU membership. I totally oppose this equivalence. Almost half of Europe´s territory and 30 % population is not EU members. Does anyone believe, hat e.g. Switzerland and Norway have less European perspective than member-states. Western Europe shows only one part of wholeness of our continent, eastern Europe and also Byzantium are part of continent´s history. Perspective can point East as well than West.

EU has brought many benefits to its citizens – visa-/passport-free traveling and healthy competition over borders, more market economy instead protectionism, comprehensive multidimensional standards numbers of public and private fields. EU has also offered a forum to manage conflicts with peaceful manner.

However some of these benefits can be applied also without EU. For instance one can travel from Finland or Sweden (EU) more easy to Norway (non-EU) than from Hungary to Romania (both EU). Some standards outside EU can be better than worse than inside but one should remember that those standards are decided closer in one state and are not some compromise made in Brussels.

Being outside EU does not mean to be outside EU financing. EU has e.g. its border programmes with neighbors to finance transnational projects and also some inside programmes are open to non member-states. Economically inside EU each member has different case if they have surplus or deficit and how much with their EU budget, the same is valid future new members.

With this article I have highlighted some negative aspects with EU. In case of my home-country Finland I must confess that I have enjoined about many positive things EU has brought to my country, many projects and wider view which could be impossible without membership. Critical questions I have arised to break simple black and white picture which is familiar in simplified mainstream media in western Balkans. The question is too important to let it only to join or not level.

Some options for strategic alliances

So big question is if there is any alternative strategy to joining EU? I would like to see following options to taken into consideration in all non-member-states of western Balkans :

  • Strategic linkages to the BRIC countries – Brazil , Russia , India , China. These countries are representing rising economical, cultural and political powers (and markets) in three continent while Western Europe and USA are more and more going towards stagnation or moderate development at most.
  • Association Agreement without goal to come member-state could be good alternative and realistic also. Because EU can not absorb Turkey this kind of arrangement can be the most used alternative to enlargement by membership. Every country can negotiate their own association and cooperation agreement and highlight those topics which are important each individual state. Cooperation can be very wide with most of EU member benefits, of course also EU gains its share about cooperation e.g. with logistics through trans-European transport (roads, railways, energy, telecommunication …) corridors.
  • European ‘Free Port Zone’ – models could be e.g. Kaliningrad, Singapore, Luxemburg, San Marino. This position can make non-member state popular with people who want to live in Europe but do not like high taxes and with businesses that engage in international manufacturing, trade and commerce.

EU is not miraculous power which brings economic and other development with membership status. More important is what people are doing in each western Balkan state. They can develop their societies with or without EU depending individual needs and priorities. If they can develop good country for themselves (not because EU) it can be good country also for outsiders and e.g. diaspora can start to invest back to their old home-country like one can see now for instance in Russia.