Group items tagged

Europe’s dangerous addiction to Russian gas needs radical cure

“It really boils down to this: no nation should use energy to stymie a people’s aspirations,” Mr Kerry said in Brussels, just as Russia’s Gazprom raised the price it charges Ukraine for gas.

Bernstein Research has calculated that to do so, Europe needs to eliminate 15 bcm of residential and industrial gas demand, invest $215bn and incur $37bn of annual costs in the form of higher-priced energy. That works out as $160 for every single person in Europe.

Is Europe's gas supply threatened by the Ukraine crisis?

more than a quarter of the EU's total gas needs were met by Russian gas, and some 80% of it came via Ukrainian pipelines. Austria, France, Germany, Hungary, Italy and Poland soon reported gas pressure in their own pipelines was down by as much as 30%.

While it was eventually resolved through a complex deal that saw Ukraine buying gas from Russia (at full price) and Turkmenistan (at cut price) via a Swiss-registered Gazprom subsidiary

No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites — specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.

Consider the case of Spain, which on the eve of the crisis appeared to be a model fiscal citizen.

But with its warm weather and beaches, Spain was also the Florida of Europe — and like Florida, it experienced a huge housing boom. The financing for this boom came largely from outside the country: there were giant inflows of capital from the rest of Europe, Germany in particular.

How Putin Forged a Pipeline Deal That Derailed

The pipeline, known as South Stream, was Mr. Putin’s most important European project, a tool of economic and geopolitical power critical to twin goals: keeping Europe hooked on Russian gas, and further entrenching Russian influence in fragile former Soviet satellite states as part of a broader effort to undermine European unity.

The bill that Parliament took up on April 4 was arcane. But it swept aside a host of European regulations — rules that Mr. Putin did not want to abide by — for a pipeline that would deliver gas throughout southern Europe. Continue reading the main story Related Coverage In Diplomatic Defeat, Putin Diverts Pipeline to TurkeyDEC. 1, 2014

With the dexterity of thieves stripping a vehicle for parts, they remove each van’s engine, bumpers, tires, drive shaft, fuel tank and the exhaust system.

Next, the crews pack everything into steel freight containers, which begin a journey by river barge and cargo ship to Ladson, S.C., near the port of Charleston. There, American teams put the vans back together again.

It would be more efficient to ship the vans in one piece, of course. But with current trade rules, efficiency is seldom the goal.

Weaning Europe From Russian Gas

European Union leaders at a summit meeting last week made a commitment to cut their dependence on Russian gas.

Russia gets about 14 percent of its entire export earnings from the gas it sells to other European countries.

A European Energy Executive’s Delicate Dance Over Ukraine

Major Western oil companies like BP and Exxon Mobil have extensive exploration deals in Russia that they fear could be jeopardized if the United States and European Union impose stiffer sanctions on the Putin regime.

“This is by far the toughest time for European energy security that I have seen,” said Mr. Scaroni. “This issue might stop the supply of Russian gas.”

Expansion was, for lack of other options, financed largely through short-term loans.

since the onset of the global financial crisis, eurozone-based banks’ subsidiaries in emerging Europe have been reducing their exposure to the region. In 2009-2010, the European Bank Coordination Initiative – known informally as the “Vienna Initiative” – helped to avert a systemic crisis in developing Europe by stopping foreign-owned parent banks from staging a catastrophic stampede to the exits.CommentsView/Create comment on this paragraphBut, in the second half of 2011, the eurozone-based parent banks that dominate emerging Europe’s banking sector came under renewed pressure to deleverage. Many are now radically changing their business models to reduce risk.

It’s true that the U.S. economy has grown faster than that of Europe for the past generation. Since 1980 — when our politics took a sharp turn to the right, while Europe’s didn’t — America’s real G.D.P. has grown, on average, 3 percent per year. Meanwhile, the E.U. 15 — the bloc of 15 countries that were members of the European Union before it was enlarged to include a number of former Communist nations — has grown only 2.2 percent a year. America rules!

Or maybe not. All this really says is that we’ve had faster population growth. Since 1980, per capita real G.D.P. — which is what matters for living standards — has risen at about the same rate in America and in the E.U. 15: 1.95 percent a year here; 1.83 percent there.

Broadband, in particular, is just about as widespread in Europe as it is in the United States, and it’s much faster and cheaper.

German exporters were major beneficiaries of this growth. German banks and financial institutions helped finance the growth.

Exports have provided the majority of Germany’s growth in recent years. Germany is heavily reliant on a narrowly based industrial sector, focused on investment goods—automobiles, industrial machinery, chemicals, electronics and medical devices. These sectors make up a quarter of its GDP and the bulk of exports.

Germany’s service sector is weak with lower productivity than comparable countries. While it argues that Greece should deregulate professions, many professions in Germany remain highly regulated. Trades and professions are regulated by complex technical rules and standards rooted in the medieval guild systems. Foreign entrants frequently find these rules difficult and expensive to navigate.

Investors Seek Yields in Europe, but Analysts Warn of Risk

Once again, foreign investors are piling into the government bonds of Ireland, Spain and Portugal — countries that got into such debt trouble that they required bailouts. Now these countries are able to sell their bonds at lower interest rates than they have seen in years, renewing hope that Europe has turned a corner.

Claus Vistesen, the head of research at Variant Perception, a London-based economic research group, sees the ratio of debt to economic output as a continuing threat to a euro zone recovery.“People think growth is coming back,” Mr. Vistesen said, “but at the end of the day, debt is still going up.”

Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Weber

Harvard professor Kenneth Rogoff said the launch of the euro had been a "giant historic mistake, done to soon" that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps.

"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said.

Young and Educated in Europe, but Desperate for Jobs

It is not that Europe will never recover, but that the era of recession and austerity has persisted for so long that new growth, when it comes, will be enjoyed by the next generation, leaving this one out.

She spent two years bouncing between short-term contracts, which employers have sharply increased during the crisis to cut costs and avoid the expensive labor protections granted to permanent employees.

Across Eastern Europe, Military Spending Lags

After years in which a combination of fiscal pressures and a complacent trust in the alliance’s protection may have led them to drop their guard,

many countries are building from a very limited ability and remain years away from fielding anything resembling a formidable force against a military as large as Russia’s.

“A car tested for safety in the United States could be sold in Europe without further tests, while a drug deemed safe by Brussels would not have to be approved as well by the U.S. government,” according to a Reuters report that cited examples of the benefits of a free-trade agreement.

No, of course not. Today, we live in a currency zone that, despite everything, is significantly more stable than where the dollar or yen are used. The euro has brought growth and prosperity to Europe.

Actually, the euro was a mistake with particularly serious consequences. A monetary union requires its members to pursue the same policies and be similarly productive. The so-called convergence criteria were meant to ensure that this would happen. But -- as the dramatic developments in Greece are now showing -- they didn't.

Unfortunately, our fears have become a reality. The monetary union was launched with real self-deception.