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New Europe Print Edition - Issue 960

New Europe Print Edition - Issue 960

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November 6 - 12, 2011
November 6 - 12, 2011

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Published by: New Europe Newspaper on Nov 07, 2011
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Gazprom makes major push into EU energy sector|Page 13
19thYear of Publication | Number 960 | November 6 - 12, 2011 | € 3.50
EU Policy 
Cyprus EU Presidency could helpoverhaul civil service|Page 9Eurozone crisis exposes lack of leadership, failures of Lisbon|Page 10
 The Other Horn of Africa|Page 11 Yemen: ambiguity breedscontempt|Page 15
Energy & Climate
Medvedev, Lee to co-operate onpipeline|Page 13Bulgaria approves Burgas-Alexandroupolis EIA study|Page 14
Country news
BNP Paribas to cut jobs as profitsdrop|Page 17Lenders agree on Latvia’s deficitprojections|Page22Plevneliev highlights the importanceof security|Page 24Erdogan, Merkel mark 50 yearsof Turks in Germany|Page 27Protesters against social cuts clash with Ukraine’s parliament|Page 28Medvedev highlights Russia’shousing problem|Page 31
Editorial & Opinion
Deutsche Bank AGrescued itself|Page 5Everyone has the right to beoffended|Page 7Europeanizing Europe|Page 8
A growing number of Greek parliamentariansbelonging to both major political formations,the ruling Pasok party and the major opposi-tion New Democracy, are now openly puttingpressure on their respective leaders, PMGeorge Papandreou and ND presidentAntonis Samaras, to jointly formulate a coali-tion government and abandon their personalpursuits. This new development is gaining momen-tum due to the fact that those two leadersdespite having accepted in “words” the neces-sity for a joint executive by their two majorparties, in practice they do not want to be seento share power and thus they undermine allefforts towards this. Papandreou, from his side,thinks that after Samaras said his party would vote in Parliament for the 26-27 OctoberBrussels Agreement to bailout Greece, there isno need for him to share power with ND.In an egotistic reading of the political situa-tion in Greece, the PM thinks that with theAgreement soon to be passed in Parliamentand the sixth soft loan tranche of €8 billioncoming, he can buy some more time in theoffice. From his side, Samaras sees that if hisparty backs a “cooperative” government withPapandreou, his ND party will be sharing thepolitical cost of yet more unpopular austerity measures soon to touch everybody in Greece, without actually having anything to gain...personally.In short the Greek political leaders, andmore so Papandreou in the top executive job,are obviously putting their own petty politicalinterests above the interest of their country. Inany case there is a growing dissatisfaction within the deputies of Pasok againstPapandreou and many well known socialistfigures are calling for him to step down and work wholeheartedly for a cooperative gov-ernment. They say this necessary if the country'sproblems are to be looked after effectively, without paying attention to the political costand also to try and fairly partition the hugereadjustment cost of the economy among thesocial partners. In any case the Greek obses-sion with political power has done, and stilldoes, a lot of damage to the country.
Political leadership consumed in personal pursuits
·Pages 2, 3, 4, 9, 23
 The Greek obsession
Greek Prime Minister George Papandreou talks with major opposition party New Democracy leader Antonis Samaras in parliament
René MagrittePage 16
 While accurate data is impossible to come by,educated guesswork indicates that NATOcaused a higher number of civilian deathsover the past six months than Gaddafi didover several decades
·Page 9
Moscow announced on 2 November that ithad reached a long-stalled agreement withGeorgia that will allow Russia to completethe World Trade Organization admissionprocess by mid-December
·Page 12
 The Nabucco pipeline group tells NE the“open season” process will not start untilthe consortium receives a firm commit-ment from Azerbaijan that it will supply the project with gas
·Page 14
Policymakers, legislators, and regulatorsquite rightly want to combat illegal on-lineactivities such as child pornography,infringement of intellectual property rights, and cybercrime
·Page 7
Page 2 | New Europe
November 6 - 12, 2011
Father. forgive me for I have sinned |
 The nine central European countries, which after the fall of the USSR and the melt down of the Warsaw Pact were emanci-pated from the Moscow patronage, all submitted applications to join NATO and of course the European Union. However theenlargement of the North Atlantic Treaty Organisation to those countries appeared easier than their integration in the EuropeanUnion. The two prospects together though became in a way inseparable, and all nine countries lined up first to join NATO andthen the EU. Obviously in the case of NATO the “leader”of the operation for the eastwards expansion was the US. Undoubtedly the NATO membership procedure was a kind of preparation for their final destination, which was the European Union.
 Athens has to apply the26 October agreement 
Referendum or not, Greece is obliged to continue enforcingthe second austerity package that the Athens parliament voted for on 20 October. But is this possible or is the coun-try bound rather sooner than later to go bankrupt the hard way? Let's see what answers can be given to those burningquestions after the G20 meeting in Cannes on the eveningof 2 November.It goes without saying that whatever government will beruling the country over the next few months, it has at leastto try applying some kind of tough austerity programme,otherwise Athens will default.Incidentally Greece has not yet received the €8 billion sixthloan tranche despite it being approved by the EU and theIMF. Obviously, the announcement of a referendum makesits release even more complicated and according to IMF head Christine Lagarde it will be paid after the situation inAthens is clarified. In December, Athens is also expectingthe seventh loan installment of €5 billion. If those EU-ECB-IMF soft loans are not released, Greece will go bank-rupt within hours. The release of both loan tranches hinges, however, onAthens applying the new austerity programme that its par-liament approved, irrespective of what the referendumresult might be or if the Papandreou government will liveup to it.Meanwhile, the country's long-term financial status is alsoin a dreadful stage. The target for a fiscal deficit of 7.8% of the GNP will be missed this year, with the gap likely toreach 9% or even more. Last year, the 2010 deficit was10.8% of GNP, while the new package agreed by the 17Eurozone leaders for Greece on 26 October demands that,after the 'haircut' of the country's sovereign debt by 50%,Greece must reach a sustainable level in its fiscal deficit of 2.9% of GNP by the end of 2014. To attain this, the European Commission estimates thatGreece has to come up with savings of 20% of GNP fromnow until the end of 2014, or a round sum of €45bn. Duringthis period the same Commission report states that Athensalso has to realise privatisations of €35bn and, along withthe returns of €15bn from the Helios solar-energy project,the country must come up with €100bn in savings and new receipts from now to the end of 2014.In any case, these are the main points of the overall agree-ment struck between Papandreou and the EU-ECB-IMF troika during the late hours of 26 October. The motto forthis agreement was, as Papandreou told them: “You takecare of the debt and I will take care of the deficits."EU leaders in Cannes made it clear that Greece has to apply the 26 October agreement by whichever government inAthens or Greece chooses to leave the Eurozone.At this point, it should be noted that after the Pasok Parliamentary group voted for the last package of measureson 20 October, a large number of deputies told the PM thatthe party had reached its limits. The decision for a referendum has increased the pressure onPasok deputies and and some of them are quiting the gov-erning parliamentary group. Twist it as one may, Greece has to come up with the €100bnin additional state receipts between now and the end of 2014. Such a project will entail more government-workerlay-offs and state-expenses cuts on top of those already being realised. Referendum or not this will not change. The Papandreou proposal to hold a plebiscite has sent the world's financial markets into turmoil. So, at Cannes,European leaders had to put a stop to this and presented theonly option for Greece to avoid catastrophe: The applica-tion of the 26 October agreement to the letter.
Dennis Kefalakosdkefalakos@neurope.eu
Kostis Geropoulos (Energy & Russian Affairs)kgeropoulos@neurope.eu Andy Carling (EU Affairs)acarling@neurope.euCillian 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.euLouise Kissa (Fashion)lkissa@neurope.eu
James Drew jdrew@neurope.eu
 Alexandros Koronakisakoronakis@neurope.eu
Panos Katsampanispkatsampanis@neurope.eu
Suman Haquesuman@neurope.eu
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© 2011
New Europe
all rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic or otherwise, without the permission of New Europe.
ISSN number: 1106-8299
By Dionyssis Kefalakos
New Europe |Page 3
November 6 - 12, 2011
 The G20, intended by the French Presidency as the grandopening of Sarkozy’s re-election campaign, was meant to ap-prove the results of the previous week’s Eurozone summit andboost market confidence. Instead it was thrown into chaos andnever recovered. The final communiqué sounded gloomy, “global recovery has weakened, particularly in advanced countries, leaving unem-ployment at unacceptable levels. In this context, tensions inthe financial markets have increased due mostly to sovereignrisks in Europe; there are also clear signs of a slowing ingrowth in the emerging markets. Commodity price swingshave put growth at risk. Global imbalances persist. “ The global leadersapproved, “the euro area's comprehensive planand urge rapid elaboration and implementation” and welcomedItaly’s monitoring by the IMF. They also noted, “Monetary poli-cies will maintain price stability over the medium term.” They also “made progress in reforming the international mon-etary system to make it more representative, stable and re-silient. We have agreed on actions and principles that will helpreap the benefits from financial integration and increase the re-silience against volatile capital flows.”On the Doha Development Agenda, they recognized “it isclear that we will not complete the DDA if we continue toconduct negotiations as we have in the past,” but promised “topursue in 2012 fresh, credible approaches to furthering nego-tiations.” They said that the G20 would continue as an informal groupbut decided to formalize the Troika. The communiqué finished by thanking the French for “host-ing the successful Cannes Summit.”
Little progress, great confusion at G20
Greece once more made a spectacleof herself for the world to watch. Whenever the country has to decideits future, there has to be a wilddebated, with its major politicalforces taking their rhetoric toextremes just to be seen doing this. It was like this during last week withPM Papandreou announcing he wanted a referendum to ask thepeople if they want to stay in the EUor not. And this despite the fact thatit is widely known that the absolutemajority of Greeks agree on thecountry's position within theEurozone.More that 75% of the citizens when asked in pools agree that they must not leave Eurozone under nocircumstances, including the Stalinistanti EU Communist Party. YetPapandreou found ways and meansto go around reality and create aglobal crisis, which shadowed theG20 meeting of world leaders inCannes, by announcing a referendumhe later on decided not to hold. OnFriday night Papandreou wasexpected to win a confidence vote inthe Athens Parliament, despite thefact that he made his country a badspectacle in the eyes of the entire world. On the other side of the fenceNew Democracy major oppositionparty, under its president AntonisSamaras, after eighteen months of  vehemently opposing all and every agreement between the governmentand the Eurozone to bail out thecountry, he agreed last week to votefor the 26-27 October BrusselsAgreement, to cut the Greek debt by 50% and support the country and itsbanking system with anotherpackage of soft loans of €130 bn.Both those leaders know that theircountry cannot survive until the end of the year and will go bankrupt the ugly  way, without this Brussels Agreement. Yet both choose to play around withthe very existence of Greece until the very last minute, in order to be seenthat they have it their own way.Papandreou by announcing areferendum and Samaras waiting untilthe very last moments to say that he will support the Agreement.As for their obviously infective“efforts” to form a “cooperative”government, again they both did whatever they could to block thisoption, despite it is widely supportedby the people and despite the fact that within both major parties there arelarge groups of deputies and party official who support the idea of acoalition government. Many Pasok deputies say they would supportPapandreou in the confidence vote onFriday night only if he promises toconcede for a “cooperative”government. In short the two majorGreek political leaders continueplaying the good old game of puttingtheir personal petty interest abovethose of the country. In the case of thePrime Minister however this was autterly dangerous and costly game.In reality the country is only a few  weeks away from a total financialcollapse, if the 26-27 October BrusselsAgreement is not approved by theAthens Parliament, so as the €8 bnsixth tranche of loans is released. Without it the liquidity of the Greek state will be completely dried uptowards the beginning of next monthand an uncontrolled default will betriggered. In view of this Papandreouand Samaras have taciturnly agreed toask their parties, Pasok and NDdeputies, to vote for the Agreement.
As for the Private SectorParticipation in the Greek sovereigndebt 50% haircut seemingly everythingis going well and the banks are set toagree to that. Sources in theInternational Institute of Finance,representing the private banks holdingthe Greek debt in the negotiations with Athens, say that the complexpolitical environment in the country does not impede the negotiations forthe haircut and the entire package canbe the in place towards March of 2012.
Now coming to last Thursday'sdecision by Mario Draghi, the new European Central Bank governor, tosurprise us all and pass in ECB'sgoverning council a decision to reducethe ban's main interest rate from 1.5%to 1.25%. Surely it was a generous steptowards more involvement of thecentral bank in the real economy, giventhat this decision cannot be explainedby a retreat of inflationary pressures inthe Eurozone. It is a direct support tobanks and real economy, supportinggrowth, given the problems what haveappeared on both those fronts. It is notonly the banks that need cheapermoney from the ECB in order toboost their recapitalisation effortsthrough increased profitability. Realeconomy in Eurozone also needscheaper money because there arealready infallible signs of a new era of lower or zero growth. Only Germany continues to predict noticeable rates of growth. In any case it seems thatMario Draghi wanted to give a new message to markets and of course theseventeen Eurozone governments thatthe ECB will not be as neutral in thefuture as far as the issue of growth inthe real economy is concerned.
Greece: 'No' to referendum. 'Maybe' to co-operativegovernment. 'Yes' to Brussels Agreement 
By Dionyssis Kefalakos
Some people in Ankara must be laughing at the EuropeanUnion’s crisis with Greece. There may be no two countries inEurope more often seen in terms of zero sum foreign policiesthan Turkey and Greece. The sense of irony in Ankara must beboth sweet and bitter.Greece is a fully fledged member of the EU and Eurozone, itseconomy in tatters, and its government in severe crisis. Athenscan only offer the EU more headaches as its social fabric fraysfurther and the country faces bankruptcy. By contrast, Turkey isa candidate in waiting, its economy booming, and its govern-ment at the peak of its power. Turkey has a GDP three timesthe size of Greece (in purchasing power parity terms).As the EU contemplates throwing Greece out of the Euro-zone, thereby risking a deepening of the already grave crisis of confidence in that currency and its economies, EU leaders arealso fuelling skepticism toward the very project of union.Should the EU now be re-evaluating its go-slow policies on Turkey’s accession to help stabilize the political project of union?My answer would be yes. The EU leaders should be reviewingall political options right now. This is not just a fiscal crisis. Con-tradictions abound. Turkey engineered a successful constitu-tional referendum to assert full civilian control of Turkey’s armedforces to meet EU accession criteria, but has been causing in-creasing angst in Europe over its media control policies. Any reasonable assessment would have to be that in the next decade, Turkey is unlikely to be able to meet nominal EU standards insome areas of human rights and freedom of expression. The ap-propriate response to this has to be of the realist persuasion. Onthe one hand, we should not hold Turkey to standards that arenot universally respected by some governments in existing EUmember states. On the other hand, a sober appreciation of theunavoidable socializing effect of EU membership, in terms of bringing Turkish society closer to a broad EU standard, shouldgive some foundation for a political judgment that Turkey hasundertaken enough reform or is on the path to reform. This judgment would include the view that for geopolitical reasons,it is now absolutely essential that the pace of Turkish accessionbe rapidly and unmistakably accelerated. The EU and the world are facing a severe fiscal crisis. The IMF in September2011 in its World Economic Outlook said that the global econ-omy had entered a dangerous new phase. But there should beno mistake. This is also a security crisis of immense propor-tions. The EU now faces its biggest security threat since the endof the Cold War. The elements of this threatening situation are numerous. In ad-dition to the high risk of a severe global economic shock andhigh youth unemployment in its own southern tier states, thethreats include massive social unrest and escalating violent con-flict in its vicinity, especially in Syria (Turkey’s southern neigh-bor), while tensions are escalating between Israel and Turkey,and between Iran and some Gulf states, especially Saudi Ara-bia. This deteriorating geopolitical picture has important effectson Europe’s external and internal security interests, not least be-cause of the potential economic impact of large scale disruptionsto EU oil imports and/or the global energy market. This crisismay well be the last opportunity for the EU to get its Turkey de-cision-making right. The choice as I see it is as follows. Look forward to a shrinking and delegitimized union, plagued by es-calating internal and external threats, and increasingly unable torespond to the accumulating global economic instability. Orlook forward to a re-energized union that is going to be en-riched economically, politically and culturally by the quicken-ing pace of Turkey’s accession.
EWI is a New Europe content partner 
Greece out, Turkey in?Saving the Union
By Dr. Greg Austin

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