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New Europe Print Edition Issue 1075

New Europe Print Edition Issue 1075

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New Europe Print Edition Issue 1075
New Europe Print Edition Issue 1075

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Published by: New Europe Newspaper on Mar 30, 2014
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he European Union is tak-ing unprecedented steps to reform Ukraine, using the experience of OLAF, the EU’s anti-fraud body.Giovanni Kessler, the head of OLAF, has joined a large delegation, led by Commissioner Fule, that flew into Ukraine Tuesday to begin large-scale reforms of the country’s economic base, shrunk after years of state sponsored corruption.The scale of corruption in the country has shocked citizens, many of whom wandered around former President Yanukovych’s palatial home,  which featured a mock galleon, fake ruins and an opulence that many Ukrainians could hardly imagine.The issue of corruption is the gravest facing the country and it is a  very smart move for the EU to tackle this as a first priority, not least be-cause there must be a serious reform and oversight of the EU funds, some €11.2 billion earmarked for the di- vided nation. It would be politically disastrous if this money ended up in the hands of black marketers, crook-ed politicians or those who have looted the nation for so long.This is going to be a tough test for OLAF, but they possess the ex-pertise and dedication the job re-quires. It is timely to remember that Kessler is a former anti-mafia pros-ecutor in Sicily.There is another advantage for the anti-corruption squad. Since  Yanukovych fled the presidency and country, teams of volunteers have  been steadily going through a large quantity of documents shredded prior to his sudden departure and there are other document dumps also.Enlargement Commissioner, Stefan Fule is in Kiev on his seven-teenth mission to Ukraine. With Fule is Commissioner Janusz Le- wandowski, who is in charge of Fi-nancial Planning in with him along  with 10 DGs or DDGs and 3 Heads of Cabinet, making up an unprec-edented delegation.Commissioner Fule is respected  by a wide range of Ukrainian politi-cians, civil society and others, mak-ing him the ideal candidate to lead such an unprecedented mission.Speaking in Kiev, Fule said, “I am very happy to be in Kyiv in the company of Commissioner Lewan-dowski but also a number of the high-ranking European Commis-sion officials to set a more forward looking agenda and also to help you to create some good and positive stories. We need positive stories in our lives and I think the one we have  worked on today is indeed a good story for all Ukrainians and all citi-zens of the European Union.”
Ukrainian Prime Minister Arseniy Yatsenyuk (L) shakes hands with EU Enlargement Commissioner Stefan Fuele (C) and European Commissionner for Budget Janusz Lewandowski (R) prior to their meeting in Kiev on March 26, 2014.
 I󰁮󰁴󰁥󰁲󰁶󰁩󰁥󰁷 󰁷󰁩󰁴󰁨 A󰁭󰁢󰁡󰁳󰁳󰁡󰁤󰁯󰁲 Y󰁡󰁮󰁧 Y󰁡󰁮󰁹󰁩 
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 Africa is changing 
 While problems remain, Africa is also home to growing economies and innovative tech-nology. Germany’s Special Envoy for Africa, Gunter Nooke, speaks to New Europe about how we should change our perspectives of a continent.
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OLAF vs Oligarchs
(Continued on Page 03)
'Historic' visit of Chinese President to Brussels
The visit marks the increasing importance of EU China relations and the start of the sec-ond decade of the strategic partnership. It’s also hoped that it will lead to greater under-standing, not only between the two sides, but  between peoples. Both sides are also looking to deepen their trading relationship, Europe looking for progress on investment regula-tions and China hoping to begin the long pro-cess of a free trade agreement. One change has been the increasing openness and engage-ment of the Chinese Mission to the EU and their new head, Ambassador Yang Yanyi, has taken diplomacy beyond the embassy gates and is making regular appearances in meet-ings, conferences and other events in Brussels.
EU wants to slow Russia gas spigot
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Tunisia is on a democratic  path
 R. G
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EU sends heavyweight delegation to clean Kiev 
This week in
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interviews with
30 March - 5 April, 2014
 Aventis takeover?
Novartis,aSwisspharmaceuticalcompa-ny,wasbelievedtobeconsideringabidfor Aventisthatwouldhavea15percentpre-mium,valuingtheFranco-Germanphar-maceuticalcompanyat58.5billionEuro.
EU names security Czar,anti-terror measures
Expensive Euro exports jobs
There is no doubt that the European Union owes its well-being to external trade. TheUnion holds a leading position in worldtrade accounting for 20 percent of globalimports and exports. Free trade among its members underpinned the successfullaunch of the EU nearly 50 years ago. The European Commission said the EU is “aleading player in efforts to liberalise worldtrade for the mutual benefit of rich and poor countries alike.”  It is not by accident that Eurozone externaltrade surplus with the rest of the world was1.2 billion Euro last January, against a deficit of 1.5 billion in January 2003. The December 2003 balance was +6.1 billion,compared with +6.9 billion in December  2002. In January exports increased 0.3 per-cent compared to the previous month, whileimports fell 1.1 percent. The first estimate by Eurostat for January 2004 extra-EU15 trade was a 9.5 billion Euro deficit compared with -9.3 billion in January 2003. Throughout 2003 Eurozone trade recorded a surplus of Euro 72.7 billion compared with +98.9 billion in 2002. The energy deficit increased last year to 118.1 billion Euro versus -112.3 billion in 2002, while the surplus for machinery and vehicles decreased to 87.0 billion Euro compared to+95.3 billion in 2002.  But all these surpluses are in danger if the parity of the Euro continues to be in the region of 1.2-1.3 with the US dollar and130-135 with the Japanese yen. The presi- dent of European Union employer’s associ- ation last week said the industry is now working with a drawback: the expensive Euro. The fast rise of its external value may help consumers within the Union, keep energy prices under control and help con-tain inflationary pressures to low levels. Onthe other hand, the expensive Euro is a net exporter of jobs to the Union’s trade part- ners.
uropeanUnionleaderslastThursdayrushedthroughananti-terrorpackage,namingaformerDutchministertothenewlycreatedpostofsecurityczarandpledgingtheuseofmilitaryforcetodefendthebloc.“Wehavereaf-firmedourunityofpurposeinfightingterrorism,saidIrishPrimeMinisterBertieAhern,whosecountrycurrentlyholdstherotatingEuropeanUnionpresidency.Leadersweremeetingintheafter-mathoftheMarch11Madridbomb-ingswhichkilled190peopleandinjuredabout1,800-Europe’sworstterroristattacksincethe1988Locker-bie,ScotlandPanAmjetlinerbombing. AmidfearsofattacksinotherEUcities,leaderscreatedanewpositionof counter-terrorismsecuritychieftocoordinatepolicyandappointedfor-merDutchDeputyInteriorMinisterGijsdeVriestothepost.AstheEU’sfirst-ever“CounterTerrorismCoordi-nator,”deVriesischargedwithkeep-ingtrackandsharpeningthebloc’santi-terrorpolicies.TurningtotheEU’slong-soughtconstitution,leaderssetaJunedead-lineforclinchingagreementonanewconstitutionforthesoon-to-be25-nationbloc.Negotiationswouldbeconcluded“nolaterthantheJuneEuropeanUnioncouncil,”Aherntoldreporters.TheEUwillholditsnextcouncilsummitonJune17-18.ProspectsforagreeingthetreatyimprovedsuddenlyearlierinMarchafterSpain’sincomingPrimeMinister,JoseLuisRodriguezZapatero,pro-misedtodropMadrid’searlierhardlinestanceagainstanyrevisionofnational votingrights.
 Year, Number566
New Europe
Oil pricesurge
Oilpriceshit13-yearhighsin recent days and mayexceedUSD40perbarrel,aleadingenergyanalysthaspredicted, citing politicalturmoilintheMiddleEastandprofiteeringasreasonsforthesurge.OPECministersappeartoagreethatforcesoutofthecartel’shandsaredrivingthesurgeinprices.Minis-tersfromtheOrganisationofthePetroleumExportingCountries (OPEC) willmeetthisweekinabidtostemanupwardpricespiral.OPEC has long publicly worriedthatadropinglob-alfueldemandafterthenorthernhemispherewinterandarecoveryinIraqtopre-warcrudeexportvol-umeswouldbringoil’sfive- year price bonanza to ascreechinghalt.OPECoilministershavegiven mixed signals on whetherthegroupwillsticktoitsmid-FebruarydecisionandsliceproductionquotasbyfourpercentfromApril1.Theplannedproductioncutnowlooksonesteptoofarinthegroup’scampaignofsupplyrestrictionsthatofficiallyisdesignedtokeepprices in a USD 22-28range.
 EuropeanParliamentPresidentPatCox(sitting left)sharesa lightmomentwith ItalianPrimeMinisterSilvioBerlusconi (R)asIrishPrimeMinisterandCoun- cilPresidentBertieAhern(L)lookson
 Leaders set deadline for clinching elusive treaty dea
Commission cracks down on Microsoft
nanefforttostopMicrosoft’sabuseofadominantmar-ketposition,theEuropeanCommissionlastweek slappedarecordfineof497millionEuroontheUSsoft- waregiant.Thefine-thehighesteverslappedonacompa-nybyEuropeanUnionregulators-wasnotimposedlightly,EUCompetitionCommissionerMarioMontitoldjournal-ists.“Thiswasnotadecisionthatwastakeneasilyorhasti-ly,”Montiinsisted,addingthatachangeinMicrosoft’sbusinesspracticesasbeingorderedbytheCommission wouldboostconsumerchoiceinEuropeandstimulateinnovationinthesector.“Dominantcompanieshaveaspecialresponsibilitytoensurethatthewaytheydobusinessdoesn’tpreventcom-petitionanddoesnotharmconsumersandinnovation,Montisaid. Thecompanyhasbeengiven120daystodis-closecompleteandaccurateinterfacedocumentationtoallowrivalserverstoachievefullinteroperabilitywithWin-dowsprogrammes.Microsofthasalsobeengivenadeadlineof90daystooffercomputermanufacturersaversionofitsWindow operatingsystemwithoutWindowsMediaPlayer.ItisappealingtheCommissiondecision.
 The Shooting Gallery
Look who’s back
 After the Madrid bombings, anti-terror legislation  was passed and a new anti-terror Czar appointed. In this spirit of hyperactivity, Bertie Ahern, who  was holding the presidency, said that the new trea-ty would be concluded by min-June.Oil was rocketing up, with some analysts predict-ing to $40 a barrel and the Commission levied a €497 fine on Microsoft and the Euro was doing so  well, jobs were being exported because of the high exchange rate and labour shortages were begin-ning to occur, leading to an easing of work permit restrictions on the ten new members.Russia was accusing the EU of ethnic cleansing in Kosovo and were airlifting supplies to the Serbs.
 N E  1 0  Y E A  R  S  A GO
Once again, we are being called upon to reflect on a question posed several months ago about the European Union’s final goal of political union. It is a question that has gained increasing relevance in the run up to the next Euro-pean Parliament elections. This question has also gained even greater urgency today in the shadow of Ukraine’s crisis and the new “Cold War” that is pitting the United States and the European Union, against Russia. EU leaders have threatened Russia with sanctions to counter President  Vladimir Putin’s plans for Crimea and the rest of eastern Ukraine. But here’s another problem. The EU just can’t seem to agree on the kind of sanctions or how harsh these sanctions should be. This is mainly due to the  varying degrees of dependence on Russia’s oil and gas. Not all EU member states depend on Russian gas. For instance, while Ger-many gets about a third of its natural gas and crude oil from Russia, Poland has its own resources to exploit - something that wasn’t allowed because of the EU’s policy towards Russian gas.  What is more, it appears that only Hungary has reached a final agreement on Russia – Hungary will not interfere in the conflict. This neutral stance is likely linked to Hungarian Prime Minister Viktor Orbán’s recent visit to Moscow during which Putin agreed to finance the expansion of Hungary’s only nuclear plant.
Energy matters
Energy is a matter that is studied and considered by each national govern-ment differently. This is one of reason for the growing divide over a common EU position on Ukraine. Trade between each EU country and Moscow is another issue that needs to be considered. Many Baltic States have been punished for their deep anti-Russian sentiments and for steering a course towards other markets. Germany’s industrialists, however, are now also concerned about the recent escalation of the crisis. Despite the fact that Russia is not considered a big deal as regards German exports, there is always a question about money. Polish exports, for instance, have been affected by the financial developments in Russia. The devalua-tion of Russia’s Ruble has reduced dramatically the export potential of Polish products to Russia. In a similar vein, Slovakia’s exports are being affected by EU-Ukraine relations if Ukrainian products become more competitive than Slovakia’s products. Meanwhile, there is also another lingering question troubling the region. Not every country feels the same toward Russia. Some EU countries have a strong sentiment of a Russian threat possibly because past wounds have  yet to heal, like in Poland, or because of the presence of a huge Russian mi-nority within their territory as in the Baltic States. It is easy to understand  why both Poland and the Baltic states favour a tough position against Russia. This, however, cannot be said about many countries in the European Union. The Finns, for example, do not feel threatened by Russia and they are against the membership of their country in NATO and also against a common EU defence policy. Greece and Cyprus are another example. On the one hand, they have a tradition of pro-Russian sentiments, but on the other hand they see a double standard. Greece and Cyprus feel the EU has not shown an equal amount of concern over another similar problem: Turkey’s occupa-tion of the northern part of Cyprus. Overall, each country has a different answer to the question about what sanctions if any the EU should impose on Russia. But the big question is not whether EU sanctions will be imposed or wheth-er they will be effective. Quite possibly the biggest question today is whether the EU countries will continue to view the growing crisis through a narrow prism of national interests or if they will unite in their EU membership. Under such conditions, the goal of the political union of Europe seems to be the only path to follow as soon as possible.
Does the EU’s ‘defenceless’ policy require a political union?
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30 March - 5 April, 2014
 After meeting Prime Minister  Arseniy Yatsenyuk, who has cut an impressive figure in Brussels, Fule said, “We talked about two principles throughout the two days: inclusivity and unity. For the application of the Asso-ciation Agreement the outreach to all parts of Ukraine is important, as it is the continued dialogue with the  Verkhovna Rada and civil society,  both of whom play a significant role in advancing reforms.”He continued, “We have been to-day focusing on the set of economic, political reform and stabilisation needed in Ukraine and how best we can support it.”He concluded by saying, “I hope rather soon, a transparent public document, available not only to the government and other important stakeholders and to the European Union, but available to all Ukrainians to make us accountable for the prom-ises we are making.”The mission demonstrates that the EU, often considered slow to act, has found a way to bring the nation towards Europe, using soft power and one asset that Putin and the oligarchs can’t offer; honest government.The European Union is taking a huge gamble on not only Ukraine,  but its own future, by sending an unprecedented delegation to Kiev. It is without doubt a brave move, but some effects are already being felt.There has been an air of despera-tion inside the EU institutions and numbers of highly experienced staff have been making discrete enquiries about early retirement after years of crisis and a lack of leadership.There are real signs that the Ukraine crisis has galvanised many into action and there is the sense that there is a window of opportunity, not only for Ukraine, but also for the EU to regain its sense of purpose.The Ukraine plan is simple, to reform the country, to make it more open and honest, improving the lives of ordinary people. This will not only make the EU attractive to its current neighbours, but will also act as an en-gine for reform, the central mission of the next commission.The challenge is to persuade the oligarchs that they will be better off  being businessmen not gangsters, that facing Europe is better than fac-ing Moscow. Another challenge is Yulia Ty-moshenko’s desire to run for the presidency. While Brussels was aghast at her imprisonment on dubi-ous charges and worse trial, there is a  widespread view that she is too divi-sive a candidate and there is greater concern over her financial dealings. Although she was welcomed to the EPP summit in Dublin, there  were many sharp intakes of breath on hearing the news. There is a feel-ing, (or is it hope?) that she will not stand, citing medical grounds.This will be a tough task, but suc-cess will revitalise Ukraine and the EU. Failure will have an equally high price.
OLAF vs Oligarchs
EU sends heavyweight delegation to clean Kiev 
EDPS: Gaps in EU policies regarding the evolution of big data
By Samy Klein
Personal information, which are a source of market power, has become a form of currency to pay for so-called ‘free’ online services and is a valu-able intangible asset for an increasing number of companies doing business in the EU. According to Peter Hustinx (Eu-ropean Data Protection Supervisor), this situation requires closer inter-action between different regulators  because “the evolution of big data has exposed gaps in EU competition, consumer protection and data pro-tection policies that do not seem to have kept up with this development. Knowing that privacy and data protection are fundamental rights in the EU, the interaction “will support growth and innovation and minimise the potential harm to consumers.”The EDPS notes that there is a lot in common with the EU rules in these policy areas: each aims to pro-mote growth and innovation and to promote the welfare of individual consumers.However the weak point lies in the fact that there is currently little dialogue between policy makers and experts in these fields.It is essential that synergies in the enforcement of rules controlling anti-competitive practices, merg-ers, the marketing of so-called ‘free’ on-line services and the legitimacy of data processing are explored. This  will help to enforce competition and consumer rules more effectively and also stimulate the market for privacy-enhancing services.The role of EDPS will be to facili-tate discussions among experts and practitioners from the EU and the US, including a workshop in Brussels on 2 June 2014.Two other points are noted by the EDPS, the need for a fuller under-standing of the massive growth in ser- vices that are marketed as free but in effect require payment in the form of the personal information of their cus-tomers; and the need for a definition of consumer harm in the enforce-ment of competition rules.
[3/28/14 6:00:33 PM] Andy Carling: Giovanni Kessler, General Director of the European Anti-fraud Office (OLAF) is heading up anti-corruption reform in Ukraine
 [3/28/14 6:00:44 PM] Andy Carling: EPA/WOLFGANG KUMM
Resolution mechanism, a major step but not the end of the story 
By Christos Kissas, Phd
“Today’s political agreement on the single resolution mechanism completes our banking union,” 
 declared the Eu-ropean Commission’s President, José Manuel Barroso. So, is the banking union complete? Not quite, but a step has been taken󲀔even though, it took lengthy negotiations among the main European member states, and finally a political compromise to reach an agreement.But let’s take things from the start. The so-called “banking union” is an idea that was born out of the euro-zone crisis in 2012, and aimed at creating a centralized system for su-pervising EU’s too-big-to-fail banks. Its ultimate purpose is to prevent soverign debt crises from evolving into banking crises and vice versa. This system has three key compo-nents: a monitoring mechanism, a resolution mechanism, and a bank deposits guarantee scheme. After intense debate, the monitoring was assigned to the European Central Bank (ECB), but󲀔at Germany’s in-sistence󲀔only for “systemic” banks, thus excluding all the Landesbanken,  which Germans wouldn’t want to see audited by an external authority. Un-der this arrangement, smaller banks, that aren’t a threat to the euro system,  will continue to be supervised by the local central banks of the member states. Finally, the Single Supervisory Mechanism or SSM (in pure bureau-cratic language) was created.The second component is the the resolution authority, or Single Reso-lution Mechanism (SRM). The idea  behind a Europe-wide authority is to avoid situations such the one that prevailed in Spain, where the local central bank long covered the bank-ing system’s bad debts in order to avoid taking resolution decisions. Here again, Germany started by be-ing opposed to the idea, claiming that a single authority would be impos-sible under current EU treaties, and proposed the creation of national resolution funds, each using its own funds for bank resolution and restruc-turing instead. Another thorny issue  was that of decision-taking inside the authority; how would a member state  be protected from an external deci-sion to spend money from its budget in order to restructure one of its  banks? A pure veto option, supported  by several member states, would have undermined the very concept of the single resolution authority. Other solutions, such as giving the affected state’s vote more weight, or exercising some form of control on the author-ity’s board, were deemed unsatis-factory. Finally, a compromise was reached whereby ‘recommendationson whether to close down a bankrupt  bank and how to share costs of such closing will be presented by a single resolution board, while the European Commission will have the final say-ing. In some limited cases, the mem- ber state concerned will be able to oppose the decision.The resolution authority will be  backed by a common fund of 55 bil-lion euro that will be built up over eight years. The common fund will replace the national resolution funds,  which will ultimately merge. This fund will have permission to tap the markets, but (at Germany’s request)  will not get any government guaran-tees, neither will it be authorized to seek financing from the European Sta- bility Mechanism (ESM)󲀔another emergency fund set up to finance euro-zone governments in distress. All in all, the adoption of the single resolution mechanism is a positive step towards common banking super- vision. However, being a multilateral compromise, this system has several limitations that might render it inop-erative. The scope of the mechanism is only limited to ‘systemic’ and ‘cross- border’ banks and does not apply to all banks operating within the EU, as the Commission and the Parliament had initially planned. The common resolution fund is too small to face a major bank restructuring (remember, Dexia cost around double the fund’s assets), and the time frame for its creation is too long󲀔eight years, al-though European Commission nego-ciators consider this a success against the initially planned ten year period). Finally, the decision mechanisms are too complicated, and full of tightrope  walking; nobody can tell if all this is going to work in practice, or if it’ll end in deadlocks. Apart from the supervision and reso-lutiom mechanisms, there is a third key component for the banking un-ion to be complete: the common deposit guarantee scheme. Without such an EU-wide deposits insurance program, the whole supervision pro- ject cannot work. Let’s not forget, the ambitions are quite high󲀔to avoid new bank bailouts with the taxpay-ers’ money. We’re not quite there yet. 
Christo Kissas, PhD www.christoskissas.com(Continued from Page 01)

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