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| Mission |
We tell
the world about the world
Our mission is to further the promotion of liberal democracy and the safeguarding
of the environment by the actions of accountable governments. To advance this
cause we report, without fear or favour, the affairs of nations that are in
transition, their politics, economics, business, finance and human rights -
and we tell it how it is, consistently, calmly, and objectively.
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| Countries: Serbia |
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Posted on Wednesday, November 05, 2008 - 02:14 PM |
Rift with Russia?
The Serbs are anxious that the global credit crunch does not dry up foreign finance to them entirely. They feel very much out in the cold, alone and bereft of friends, even Russia, which has enough troubles on its plate to be hard put to help Serbia.
There has been something of a rift, anyway, between Russia and Serbia over the August war in Georgia and the Russian recognition of the independence of South Ossetia and Abkhazia. The parallel with Western recognition of the independence of Kosovo is too close for comfort. The Russian decision has in effect finally ditched the mirage that Kosovo could ever again belong to Serbia.
For the message that the Kremlin is sending the Serbs and the world generally here is that it is as well to acknowledge realities, even if they run counter to the strict canons of international law. Kosovo has been de facto independent since the coalition won the Kosovo war in mid-1999 nine years ago. The Kosovar Albanians want no part of Serbia, any more than the Abkhazians or South Ossetians want to be part of Georgia - period
One consolation for pro-West and pro-EU Serbians is that it got its vital parliamentary election out of the way earlier this year before the financial crisis, which could have helped the radical nationalists. President Boris Tadic, who is very much of this pro-Western persuasion, was relieved that the nationalists, especially the Serbian Radical Party, were eclipsed at the polls by the centrist parties.
The final vote count in Serbia's divisive parliamentary election, held on May 11, confirmed on May 21 that pro-European parties had won the most seats in the future legislature, but not quite enough to govern alone. President Boris Tadic's reformist group, ‘For a European Serbia’, won 102 seats in the 250-member parliament. The far-right Radical Party won 78 seats, and nationalist Prime Minister Vojislav Kostunica's Popular Coalition won 30, the results showed.
New government forms
The reformers and pro-Europeans have basically engineered a deft 'divide and rule' maneouvre over the hard-line nationalists by bringing the rump of Milosevic's old Socialists on board. The pro-European bloc behind President Tadic's Democratic Party (DS), the late strongman Slobodan Milosevic's Socialists and four representatives of the Hungarian minority combined to make up 126 seats, the minimum majority in the assembly of 250, by July after nearly two months of negotiations.
After a marathon session on July 4th, the Serbian parliament passed a law paving the way for a new cabinet headed by economist Mirko Cvetkovic, firmly in the pro-EU, reformist camp.
Parliament, in a sitting filibustered by the opposition, also passed a law on 24 ministries. The two laws were necessary for the parliament to start debating the new government.
The size of Cvetkovic's government, the largest in the region with its 24 ministries and three deputy premiers, reflects the fierce haggling which produced the ruling coalition and its slim majority since the election. The DS and the Socialists signed a coalition agreement earlier on July 5th, which states the principles and goals of the new Serbian government.
Map of the opposition
The ultra-nationalist Serbian Radical Party leads the opposition now after four years in government with the increasingly nationalistic Democratic Party of Serbia of outgoing Prime Minister Kostunica.
The government may well have the support of the Liberal Democratic Party (LDP), with 13 votes, when it tables laws which would accelerate Serbia's stalled progress toward European Union membership. The Liberals alone have been consistent about joining the EU, even when that was politically against the current in Serbia.
There are also three minority representatives -- two Muslim and one Albanian -- in the parliament.
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| Countries: Croatia |
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Posted on Wednesday, November 05, 2008 - 02:07 PM |
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The Croats are not the luckiest of nations in Europe. They must be ruling the days of communism, imposed on them by the Serbs, albeit under the half Croat, half Slovene Tito - but also the nearly ten wasted years of Franjo Tudjman, president of the country from independence in 1991 until his timely death in December 1999.
But at least they have seen progress since then. They are as apprehensive as the rest of us about what next, in their case with their application to join the EU? They are widely regarded as the next in line for when the EU resumes accepting nations into membership. They probably feel that the world’s economic shocks have not helped that cause.
We are not going to know until next year, if then. In the interim let us take stock and see how far Croatia has come.
Croatian credentials
The Croats are a people with a very long history. Actually so have every people - but in their case with exceptionally interesting antecedents.
Modern Croatia was geographically the core of Illyrium in Roman times, the very heart of the Roman Empire on the fault-line between the eastern and western halves of the Empire. It gave it several of its most outstanding emperors, notably the two responsible for the resurgence and transformation of the empire at the turn of the third and fourth centuries, Diocletian, who famously divided it in two and persecuted the Christians, and Constantine, who switched the capital from Rome to Constantinople (modern Istanbul) and converted the empire to Christianity, creating Christendom, than which it is difficult to think of a more decisive event in history.
That division of the Roman empire also saw a massive Roman government-inspired movement into the Balkans from northern Europe of a numerous group of slavic tribes, whom the Romans hoped would act as a buffer against wilder barbarians, still pressing on the frontiers of empire. But although ethnically Balkans slavs are much the same, those in Serbia were under the rule of the eastern empire, thus Greek Orthodox Constantinople, and those in Croatia, the western empire, thus Roman Catholics. The religious divide has acted as an emblematic division, even though the languages are the same.
Serbia also, with much of the Balkans was occupied for centuries by the Ottomans; Croatia was not, being a frontier province of the Austro-Hungarian empire and a bastion against the Ottoman turks.
The next Croatian of world historical significance is Tito. The parallel with Constantine is rather apt, once it is accepted that the Yugoslav was operating in a far smaller sphere than the Roman Emperor. If Constantine was a practical man attracted to an otherworldly religion, to which he converted his worldly polity, Tito was a revolutionary visionary converted to Marxism, a secular recrudescence of Christianity, to which he converted his fractured Balkan nation.
This was a highly contradictory thing to do. But then even Tito had a contradictory ancestry, half Croat, half Slovene. Yugoslavia itself was a bundle of contradictions, which is why it fell apart a while after he died.
It was not a rigidly communist state at all, but the only one of them to allow its people to travel freely, to indulge in market activities and to prosper. Tito was genuinely popular, a hero from WWII against fascism and the only communist leader who was definitely not a fanatic - a Western-leaning pragmatist, aided to power by Winston Churchill no less.
His legacy has been mixed, benign and yet malign, from whatever perspective you take on it.
He gave Yugoslavia freedom from fractious wars for decades, yet never resolved the ancient animosities between its constituent peoples - as who possibly could?
He opened up his country to the wider world, as no other communist leader dared to do.
Let history judge him.
But Croatians now in an extraordinarily uncertain world would dearly like such certainties that go along with membership of the European Union, which their successive governments have worked towards, since the departure of Tudjman.
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| Countries: Bosnia Herzegovina |
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Posted on Wednesday, November 05, 2008 - 02:01 PM |
The Karadzic affair rivets Bosnians
The apprehension and arrest of Radovan Karadzic in July has riveted Bosnians of every kind. His trail in the Hague will be a major event, hopefully a cathartic one for the vast majority.
Alas there are still Bosnian Serbs, and Serbian ones too, who are still rooting for the former Bosnian Serb president, accused of crimes against humanity in the Bosnian war of 1992-95. Even the Serbian Academy of Science in Belgrade has Karadzic supporters, as a recent publication – We must not abandon Radovan Karadzic – indicates.
Former Speaker of the Bosnian Serb parliament calls on Karadzic as key witness
The former speaker of the Bosnian Serb parliament has called on U.N. judges to let him call Karadzic as a witness in his war crimes appeal, according to a motion released on September 16.
Momcilo Krajisnik is appealing his convictions and 27-year-sentence for persecution, extermination and the murder of Muslims and Croats during the 1992-1995 Bosnian War.
Testimony by Karadzic, the Bosnian Serb leader during the war, would be crucial because of his obvious and paramount significance to the case of the appellant, said the motion submitted to the appeals chamber of the Yugoslav war crimes tribunal.
At a hearing in August, Krajisnik's U.S. attorney Alan Dershowitz told judges Karadzic would provide very significant exculpatory evidence.
Krajisnik was convicted in September 2006 of conspiring, along with Karadzic and other Bosnian Serb leaders, to ethnically cleanse large areas of Bosnia of non-Serbs by unleashing a campaign of murder, rape, torture and forced expulsions aimed at Muslims and Croats.
At the time of Krajisnik's trial, Karadzic was still on the run. He was captured in Serbia in July and extradited to the tribunal to face genocide charges for allegedly masterminding atrocities throughout the Bosnian war including the siege of Sarajevo and the 1995 Srebrenica massacre.
Had Karadzic been available during Krajisnik's trial, his evidence could have had an impact on the verdict, the motion said.
The two men are now being held in the same cell block in the U.N. detention unit.
Krajisnik's legal team interviewed Karadzic for three hours last Friday, and has applied for permission to interview him again to discuss his possible testimony.
Karadzic was due in court on September 17 for a hearing to discuss progress in his case.
On the trail of Karadzic
Without the mountains of Slovenia and Bosnia or the stunning coastline of Croatia or Montenegro, Serbian travel agencies have to live on their wits. One agency now offers tourists the chance to follow in the footsteps of Karadzic, who was arrested in Belgrade in July, 13 years after he was indicted for war crimes by the U.N. tribunal in the Hague.
Karadzic was for years rumoured to be living in remote monasteries in the mountains of Bosnia, but the truth was as bizarre as it was humdrum. He had simply reinvented himself to become an alternative health guru selling cures for impotence -- right in Belgrade. The man who presided over the brutal 3˝ year siege of the Bosnian capital Sarajevo disguised himself by growing a long white beard, wearing glasses the size of saucers and tying his long hair in a topknot.
He held lectures on spirituality, wrote for a magazine, travelled, acquired a girlfriend and lived a life that was a world away from what one would expect from a man who was a wanted fugitive.
Into the EU
Whether catharsis will ensue from trials in the Hague is one thing. What is certain is that most Bosnians want to join the European Union and put their fratricidal past behind them. But there are difficulties in the way, any number of them.
Bosnia has no collective nationalism to speak of. Its people are split three ways, and the Serbs are especially recalcitrant to Bosnian national aspirations.
This is what is bedevilling a vital set of negotiations under way over police reform. The Serbs do not want to surrender the autonomy of their own police in a common pool, because deep down they still harbor ambitions to go independent, as Montenegro did two years ago. Actually, as we shall see, there is another, less noble, motive at work.
The EU insists on police reform
The EU’s foreign policy chief has told leaders of Bosnia that failure to agree on crucial police reforms will mean a long delay for Bosnia`s integration into the EU.
Javier Solana has been saying as much for more than a year.
The real issue
The real issue is that the Serb Republic is the most corrupt part of the Bosnian Confederation; itself rated joint 84th for corruption by Transparency International in its latest Corruption Perception Index in September. This is to be among the Africans, whom it is in no way racist to point out are tribal in social character, a fertile ground for corruption, because it presupposes trust.
Bosnian Serbs are more or less tribal in affiliation themselves. There is a nexus between the police force, largely corrupt, and the business community, which operates in a shadow economy, hardly paying taxes. The scale of corruption is gargantuan. It was aggravated by an immense inflow of Western aid and loans since 1995. The scope for malfeasance was colossal in their distribution.
The Bosnian Serb police were and are up to their eyeballs in this affair. They were bribed to look the other way by fellow Bosnian Serbs, whom they were as often as not on friendly relations anyway. In such a small community everybody knows everybody else. It is this nice, cosy network that is under threat in police reform.
Of course the EU knows this, but cannot out of politeness mention it in negotiation, except in veiled form.
Reneging on CEFTA
Yet another economic issue is perhaps partly related to the same problem. Corruption takes many forms in the Balkans.
Bosnia is coming under renewed pressure from the EU after its parliament ignored Sarajevo’s obligations under CEFTA – the Central European Free Trade Agreement - and imposed unilateral customs duties. Exemptions on these are an obvious breeding ground of corruption.
The move, an EU official warned, could result in the loss of huge benefits and lead Bosnia to economic isolation. “That would have a devastating effect on the country's exports while it would remain heavily dependent on imports,” the EU spokesman in Bosnia, Frane Maroevic, told Balkan Insight.
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It would be a mistake to suppose that the Serbs cause all the problems in Bosnia. There is considerable apprehension about the prevalence of Wahhabist zealots amongst the Bosnian Muslims, belonging to the very sect that began Osama bin Laden, et al, and which has dominated in Saudi Arabia for centuries.
The following are excerpts from a sober and objective assessment of the problem by an expert on the subject:-
Wahhabism in Bosnia-Herzegovina
Author: Juan Carlos Antúnez 16 September, 2008
Second part of the study of Wahhabism in B-H published previously by the Bosnian Institute
6. Conclusions
It has been repeatedly stated that although Wahhabism has taken root in B-H for the last fifteen years, the number of its followers is not as important as some media try to show.
The B-H example has often been quoted as a role-model for the concept of a ‘European Islam’; moderate, peaceful and flexible, an incarnation of the ideas of Islamic reformism reconciling traditional Islam with modern statehood. The following features of Islam in B-H support this assessment:
- The unbroken tradition of a central spiritual authority with a well-organized Ulama of Islamic scholars;
- The possible influence of extremist outsiders on the Islamic community in B-H is lower than in other countries due to two main reasons:
- Personal reasons: Despite the fact that his position on Wahhabism is considered as ambiguous, Rais Ul Ulama Mustafa Ćerić, the Bosnian Muslim clreic, is a strong leader who keeps the Islamic community together;
- Structural arrangements: to be eligible, future Imams must have studied first at one of the six Madrasas (Secondary Islamic Schools) and then at the Islamic Faculty in Sarajevo.
Wahhabism in B-H is an alien and small movement within B-H. Despite this, it is particularly successful in recruiting young ‘converts’ from within the B-H moderate Muslim tradition and it identifies mainstream Bosnian Muslims as false Muslims and even as enemies. It has some potential to result in growing, and even violent, confrontation in B-H with moderate Muslims and non-Muslims alike. This could have serious ramifications for B-H in its efforts to maintain a pluralist society, as well as complicate the International war on terrorism by providing a safer environment for transient terrorists, bound for Western destinations.
In time, unless the Wahhabi growth is effectively stopped and reversed by the indigenous Muslim structures, the challenge of Wahhabism in B-H might have implications for the rest of Europe.
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| Countries: Ukraine |
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Posted on Wednesday, November 05, 2008 - 12:16 PM |
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The Beauty and the Beast bicker
The Ukrainian political situation has been tense for months. And now the global financial crisis has put the economy on the brink. Before it had broken, President Viktor Yushchyenko called for new elections to parliament in December, the third in less than three years. He is nicknamed the Beast after his disfigurement in September, 2004 (when he most unwisely forgot the saying that, when dining with the devil, the KGB in his case, one should have a very long spoon, or rather refuse the invitation outright), he received a near fatal dose of poison.
He has pulled his party out of the coalition government, led by Yuliya Tymoshenko, his partner in the Orange Revolution four years ago, nicknamed the Beauty. He has called the elections manifestly to oust her from the premiership ahead of crucial presidential elections next year, in which they will be the rival candidates. He does not want her to have the aura of incumbency at that vital time. At present 24% support Tymoshenko, but his own standing is in single figures.
The financial crisis has led Yushchenko to agree to delay the elections to parliament by a week until December 14. It may backfire on him badly, as voters feel now is not the time to rock the boat. Tymoshenko is, moreover, a billionaire businesswoman, with comparative youth and beauty, and massive character on her side. A bit of a crook no doubt, like all Ukrainian oligarchs it seems, but with a sure hand. It is difficult seeing her making such a mistake as dining with the devil; she is on Russia's wanted list. She is certainly a feisty lady, who describes herself as the only one with real balls in the Orange camp (hardly a remark to endear her to Yushchenko). Her daughter has married a British rock star, accused of beating up his previous wife. "That's exactly what we want," said she. "A real man."
Yushchenko clearly hates her guts. He has accused her of placing "personal interests over national ones" and said that the Orange alliance was destroyed by her "hunger for power."
This is rather a matter of ‘the pot calling the kettle black’. As the Vice-Premier, Hryhoriy Nemyria, a key aide to Tymoshenko, says: "The desire to get rid of Yuliya is so strong that it is basically top of the president's agenda and it doesn't matter what will happen to Ukraine....This is a classic case when personal survival and political future demean all rational behaviour."
The economy on the brink; IMF to the rescue
Ukraine has borne the full brunt of the roller-coaster that the world economy is on. First it has had to bear the massive rise in oil prices, remorselessly pressed upon it by Russia, its main supplier. A resulting vast current account deficit is hardly likely to be offset by inflows of FDI at such a time.
The IMF is negotiating a loan of up to $14bn to support the banking system and prevent a run on the currency, the hyrvnia. The central bank has already placed restrictions on Ukrainians making withdrawals from deposit accounts.
Ukraine's reserves of $37.5bn are enough to cover less than four months of imports! Look here for future developments. That is how states become ‘failed states’!
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| Countries: Uzbekistan |
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Posted on Wednesday, November 05, 2008 - 12:14 PM |
Statism and autarchy have some advantages
The Uzbek regime will likely weather the economic storm afflicting the world economy better than most. This is because it is to a large degree insulated from it by its etatiste and autarchic policies.
It is not always remembered that the Soviet Union, for all its grave faults, did not experience the 1930s global crisis adversely on its economic growth. It rather engaged in a massive boom and industrialisation, precisely from following the same policies.
But of course these policies have their drawbacks – or they would not have been so universally abandoned. Uzbekistan is still suffering from the downside in abundance.
What about the disadvantages?
There are paupers galore in Uzbekistan. There are few opportunities for self-advancement in a tightly buttoned-up state.
One has to kowtow to the authorities in this caricature of a totalitarian state or one ends up in prison, where the most grisly methods are practised.
Need for a new leadership
Uzbekistan needs a new dispensation. It needs a new leader. Its present one, is a sinister man, Islam Karimov, responsible for atrocities galore under the old and the new regime. He is reputed to be at death's door. But this could just be wishful thinking.
Nevertheless, one can only hope this is true. This may seem callous; but a lot is at stake.
The death of a nasty dictator, indeed a crackpot one, in Saparmurat Niyazov of Turkmenistan in December, 2006, has transformed his country for the better in the last two years, leading to a milder regime and its burgeoning integration with the wider world. Uzbekistan sorely needs something similar.
The most central of the 'stans'
Uzbekistan has one great advantage, its central location in its region, Central Asia. It is also the most populous of the five FSU 'stans' and neighbouring them all.
This may not be so evident a boon right now with an awful, endless war on next door in Afghanistan. But an Obama victory in the US could see some new thinking. It was the Democrats after all who settled the Bosnian conflict in 1995, with Richard Holbrooke crafting the Dayton Agreement. It is speculated that he might be Secretary of State in a Obama administration, but even if not, his appointment as roving ambassador again would be a shrewd move, supposing Obama wins.
Peace in Afghanistan would give a big boost to Uzbekistan too, re-activating trade and investment across the border. The new regime in Turkmenistan has proved already positive for Uzbekistan, as commercial ties grow.
The Kazakh-Uzbek axis
But the big one is Kazakhstan among its neighbours. The huge long boom there has been beneficial for the Uzbeks, who are cooperating on many new projects with the Kazakhs. There are no reproofs about human rights abuses between the two Central Asian behemoths.
Presidents Nazarbayev and Karimov rub along all right. They are the only two Central Asian leaders left, who were the communist bosses of their nations in late Soviet times.
The global credit crunch may slow down cooperation somewhat. But the multiplier effects of the Kazakh economic dynamism are still likely to be felt strongly in Uzbekistan.
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| Countries: Turkmenistan |
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Posted on Wednesday, November 05, 2008 - 12:11 PM |
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Coming in from the cold
Turkmenistan used to have two claims to fame, actually one due more to infamy in the shape of a ghastly dictator, in President Saparmurat Niyazov. He died in his sleep in December, 2006, not greatly missed.
He has been succeeded by his doctor, some say dentist, a big improvement, who is slowly opening up the country to the outer world.
The real claim to fame is that the country has immense gas reserves, a fact that has been recently confirmed.
Gas reserves really are huge
A long-awaited study of a vast natural gas field confirms that it is the fifth largest in the world. For the first time the country's status as a gas giant is officially ratified.
Gaffney Cline & Associates, an oil advisory firm, said that the South Yolotan Osman field in the south-east of the country has gas reserves of between 4 trillion and 14 trillion metres in place. The upper figure is three times annual EU consumption. The field could eventually yield 70bn cu m per year, roughly doubling annual gas output, and putting Turkmenistan on the global energy map in a big way.
Actually, Turkmenistan has long been on the radar screens of the oil majors and gas consumers. But Niyazov's fickle and unpredictable ways infuriated them. In effect he pursued an isolationist course, shunning investors, and tying his country into a subaltern position to Russia as its only export route.
There were always fears that reserves were being overestimated and contracts were being signed with all and sundry, that overcommitted its gas. Niyazov always refused a full, independent audit of Turkmen energy reserves. His successor, Kurbanguly Berdymuklhamedov, made it one of his first acts to commission an audit by Gaffney Cline, only now delivered.
The news could hardly be better. Previous assessments have severely underestimated gas deposits. The BP Statistical Review of World Energy, an industry bible, estimates the whole country's reserves at 2.67 trillion cu m, less than the lower figure for South Yolotan alone. Turkmen gas reserves could be between two and a half to six times that figure. The country is a gas giant!
The new dispensation
The findings suggest that Turkmenistan will be able to honour contracts and mightily boost its exports of gas. At the moment it sells nearly all to Russia, about 50 bn cu m per year, most of which is sold on to Ukraine. After all Russia, with one third of world gas reserves, at over 50 tr cu m, is not short of the fuel.
Turkmenistan can now be confident that it can diversify its exports to China, Turkey and the EU. China is currently building a pipeline from there which should transport 30bn cu m per annum; Ashghabad has agreed to sell 10bn cu m per year to Europe for a start. The EU is hopeful of a gas pipeline across the Caspian Sea to Azerbaijan, which would enable Russia to be by-passed. India and Pakistan have been looking at a scheme for many years to bring Turkmen gas across Afghanistan and that country’s government is pro-active to enable it to earn transit fees.
Many observers were doubtful about these ambitious plans of expansion. No longer. The gas is there; it just needs the extra infrastructure, above all the new pipelines, which in turn need the finance and the political will. And everyone is delighted that they are no longer dealing with a nutter.
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| Countries: Kazakstan |
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Posted on Wednesday, November 05, 2008 - 12:08 PM |
Is the Kazak boom over?
The Kazakh economy has been doing spectacularly well in this decade from rising oil prices since 1999. Its growth rates of GDP have been in the order of magnitude of 10% per annum for a decade.
With the price of oil plunging from $147 per barrel at a high point in July to a half that, $73 per barrel in mid-October, oil revenues are naturally shrinking. Does this portend the end of the boom?
The answer is probably not, but that a slowdown in the expansion can be expected - not necessarily a bad thing either.
The perils of hyper-activity
Hectic growth can bring its pitfalls, notably grandiose projects and a culture of excess and of corruption, notable in Kazakhstan's case earlier in the decade.
The switch of the capital to Astana in mid-Kazakhstan from Alma-Ata in the extreme south-east of the country under the Altai mountain range had a logic behind it in unifying the vast country and anyway was decided upon before the boom began in the 1990s. But it has been accompanied by frenzied building projects in Astana that have siphoned off much of the oil wealth from the rest of the country, where most of the people live.
The hyper-boom generated infinite opportunities for corruption, which temptations the regime's cronies and hangers-on were not disposed to withstand. Their motto could well be Oscar Wilde's: "I can resist anything but temptation."
They are not likely to have to pay his penal penalty for it.
Indeed, crony capitalism becomes soon enough liberal kleptocracy.
In opposition - abroad!
Actually, a qualification is called for here. One has to remain a crony of the top figures in the regime, particularly the president, or things can get sticky. Open criticism is not tolerated.
This is something that has been realised by the former intelligence chief of the country, Alnur Mussayev, now living in Vienna. But even there he is not safe. Armed men attempted to abduct him and his interpreter on a Viennese street in mid-September. The Austrian authorities discreetly referred to 'a foreign country' as responsible; it is not difficult to guess which one.
Mr. Mussayev fled Kazakhstan last year along with his onetime deputy, Rakhat Aliyev, who is also the former son-in-law of Kazakhstan President Nazarbayev. Both Mr. Mussayev and Mr. Aliyev have publicly accused the Kazakh government of widespread corruption and of the receipt of payment of millions of dollars in bribes by Western oil companies to Mr. Nazarbayev.
The release of this information is not hard to credit, but is embarrassing not just the regime, but all those in the West doing business there.
The IMF lowers forecasts
The global credit crisis has squeezed Kazakhstan's financial system since last year, causing economic activity to slow and forcing the government to introduce a $6 billion buyout fund to prop up the sector.
Tim Callen, head of the IMF mission to Kazakhstan, has revealed that the IMF had cut its growth forecast for Kazakhstan for 2008 to 4.5 percent from 5.0 percent, and to 5.3 percent from 6.0 percent for 2009. 'What's likely to happen is that the recovery previously expected in the middle of next year will be pushed towards the end of the year,' he said. 'All in all, we anticipate certainly not an easy year coming up but medium term prospects are still fundamentally very good .'
The government has slashed its own 2008 forecast to 5.3 percent, after years of averaging 10 percent growth due to booming oil and commodity prices.
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| Countries: Georgia |
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Posted on Wednesday, November 05, 2008 - 11:28 AM |
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Saakashvili the miscreant and fool
Mikhail Saakashvili did a very foolish thing in early August. He in effect invaded Russia.
He assaulted South Ossetia, formally part of Georgia, but not de facto since the early 1990s. He did something that nobody had dared do since Hitler in 1941, engage Russia in hot warfare. Why?
There is no end of animosity between Russia and Georgia. The Russians resent the new-found freedom of the Georgians deeply. They should be eternally subject to Moscow - that is the Russian view!
The Georgians take another view, naturally enough. But Saakashvili made a fundamental mistake in August.
He should have been appreciative of the fact that the Russians have been incredibly forbearing, allowing the jewel in their former empire to secede.
He should have allowed them South Ossetia - and Abkhazia also- for their inhabitants are pro-Russian (they have no interest in being Georgian). He should have consolidated proper on Georgia - an excellent place, shorn of its extras.
The status quo
Thousands of Russian troops and hundreds of tanks entered Georgia after its August 7 military intervention, who had no real problem in vanquishing the greatly inferior Georgian forces, in what Moscow said was an exercise to prevent the slaughter of Ossetian citizens. 80% of them hold Russian citizenship and regard Russia as their natural protector.
Dozens of Ossetians did indeed die in the conflict. But the Russsian advance went well beyond the conflict area into Georgia proper. This caused Georgian deaths and considerable economic damage. At this juncture the West began to react against Russia, but only verbally. There was never the slightest chance of a military reaction. Was Saakashvili given a most misguided encouragement? The State Department is on record as telling him not to do it, before he did. We do wonder about the US military advisors who have been there for nearly three years. Where there any ‘gung-ho’ colonels taking a different position? Georgia was specifically kept out of NATO at its last meeting in Bucharest, precisely to rule out any such adventurism.
Saakashvili is calling for a return to the status quo ante. He is unlikely to get it. He had better accept that he made a colossal blunder; and, if he wants to keep his job, that he is in the Caucasus, next to Russia, not in North America next to his beloved US, where he was educated at Harvard.
Europe to help economically
The EU is to grant reconstruction aid, to be specified at a donor conference soon. Saakashvili has requested the EU to continue giving clear signals to foreign investors that Georgia is on the way to integration with itself, via trade and visa agreements, as well as financial aid. His government is pledged to lower business taxes and further deregulate the economy – despite the global crunch – to attract FDI.
The US has also promised $1bn. Tbilisi has asked the IMF for a $750m emergency stand-by loan.
They still hope for NATO membership which Vice president Cheney (who else) has encouraged, not unconnected with the fact that the US media has had one of those lapses, associated with the facts surrounding the US invasion of IRAQ, where they crudely describe the above events as the “Russian invasion of Georgia”.
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Posted on Wednesday, November 05, 2008 - 09:56 AM |
Aliyev wins presidential election
In what is no surprise, President Ilham Aliyev was resoundingly re-elected on October 15, in an election that was condemned by the opposition as a complete charade.
Azerbaijan is of course a dictatorship, run by the Aliyev clan, who hail from Nakichevan, the Azeri enclave between Iran and Armenia. They are intensely nepotistic.
There was not the slightest chance of an upset. The opposition point rightly to a panoply of restrictions on media freedom that make a mockery of democracy. The cult of personality of Haidar Aliyev, Ilham's father and predecessor, makes dissent dangerous.
The official figures are obviously suspect, giving Aliyev a landslide. But even n on- governmental organisations (NGOs) gave Aliyev above 80%, while turn-out was reckoned to be between 68% and 73%, a very respectable performance by Western standards.
Genuinely popular?
The government insists that Aliyev is genuinely popular.
The galling thing for the opposition is that they may well be right. The economy has been booming on the back of an oil boom, with oil prices in the ascendant (though no longer), and GDP soaring at over 30% growth rates per year, unprecedented in history. Government h and-outs have risen accordingly, if not proportionally!
The cream naturally goes to the family, the clan, and the extensive elite, who are skilled at corruption, export of capital and financial chicanery of every kind. It is not a question of trickle - down applying in Azerbaijan, but trickle-out of the country altogether.
The crisis in Georgia
There is no doubt that the war in Georgia helped Aliyev look statesmanlike, by comparison with President Mikhail Saakashvili of that nation. The latter really put his foot in it by launching his war in early August in South Ossetia, bringing down on his head a massive Russian response.
Saakashvili is clearly a hothead, who completely misread the situation; Aliyev is not. He is deftly feeling his way away from Russian dominance, but discreetly without fanfare or high profile posturing, let alone violence.
Western oil companies are being invited into jv’s to exploit the Caspian energy riches. A gas pipeline from Turkmenistan across the sea to Baku is now more probable in the light of the confirmation of a huge new find there recently (see 'Turkmenistan'), if that stands up.
Altogether things are going Aliyev's way. Even the fallback in global oil prices is not so bad, coming from the world credit crunch. Anything going wrong can now be blamed on that.
A rather good time to be the King of the Caucasus, the Bonaparte of Baku!
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| Countries: Russia |
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Posted on Wednesday, November 05, 2008 - 09:50 AM |
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Preview
Much is happening in Russia and its part of the world right now, justifying extensive coverage.
There is the August war and its aftermath in Georgia. There is trouble brewing on the Western border with Poland and its neighbour, the Czech Republic.
There are massive implications for the global energy industry in these events. Gazprom's hand has been greatly strengthened.
Moreover, Russia, Iran and Qatar have announced their intention to set up a gas OPEC, a rump version of what we, New Nations have been predicting for years as a core objective of Vladimir Putin - OGEC, an Organisation of Gas-Exporting Countries. Since these three are responsible for 60% of global gas reserves, such a move is a mighty step towards it.
Last, but not least, there has been a meltdown of the Russian Stock Exchange of over 60%, a less welcome figure than the above. Does the financial crash portend a depression of the real economy, such as happened exactly ten years ago in 1998?
Turmoil and tumult
When President Mikhail Saakashvili of Georgia ordered his troops into South Ossetia on August 7, he started something much bigger than he realised. A strong reaction by the Kremlin was inevitable. Did he act on prompting from certain people in the upper echelons of some Western security organisation, or some gung-ho military advisor? Certainly he acted as though he expected the US cavalry to appear over the horizon when his invasion went wrong? The best he got out of it was that public opinion in the US but probably nowhere else, due to a concerted whitewash by both politicians and much of the US media, will always refer to it as “Russia’s invasion of Georgia.”
'A new cold war' is an exaggeration to describe the situation; but a distinctly cooler climate now prevails in Russia's relations with the West, especially the US.
NATO denies responsibility for war in Georgia
Was he put up to it by the Americans, or rather some unidentified figure in the Western alliance, promising support? It would have been a major miscalculation if he did believe it. The Caucasus is not the remit of the West, but traditionally Russia's.
NATO has denied provoking August's five-day conflict between Russia and Georgia, a spokesman for the alliance said on September 18, after Russian President Dmitry Medvedev accused it of sparking the conflict. Medvedev had said NATO "provoked the conflict" between Russia and Georgia, adding that Russia was "being pushed... behind an Iron Curtain. I would like to underline again that this is not our path. There is no sense for us in returning to the past."
NATO Secretary General Jaap de Hoop Scheffer meanwhile pledged "full solidarity" with the ex-Soviet republic of Georgia, following an informal meeting with the 26-nation bloc's defence ministers in London. De Hoop Scheffer told reporters at a press conference in London that "NATO is in full solidarity ... with the Georgian people and with the Georgian government. We have an intensive partnership, an intensive dialogue, an intensive high-level political engagement with Georgia," he added.
Asked for his response to Medvedev's accusations earlier, NATO spokesman James Appathurai told AFP: "There is nothing provocative about supporting Georgia's democratic development, nor anything provocative in helping them meet their aspirations to come closer to the Euro-Atlantic community."
Georgian efforts to become part of NATO have infuriated Russia, which objects to the prospect of its old Cold War foe extending to its borders.
OSCE banned by Russia
Attempts to have military monitors of the Organisation for Secureity and Cooperation in Europe (OSCE) placed inside South Ossetia failed on September 18, when Moscow flatly said 'No'.
The EU under the leadership of President Nicolas Sarkozy of France has negotiated the dispatch of 200 EU monitors. They will be stationed in the Russian defined 'buffer zone' outside the two breakaway regions, Abkhazia and South Ossetia, which 8,000 Russian troops are garrisoning.
The Kremlin infinitely prefers dealing with continental Western Europeans to the US or the UK. When Condoleezza Rice says Russia is facing pariah status, she is wrong as regards the EU. She is speaking for the US State Department, but not for much longer. Any US president with an ounce of sense is going to forge a new relationship with Russia next year.
The Czech and Polish missile defence shield
In a separate development likely to anger Moscow, US Defence Secretary Robert Gates and his Czech counterpart signed an agreement clearing the way for stationing US forces to operate missile defence radar in the Czech Republic. This is planned to be in tandem with a defence system in Poland.
The Kremlin threatens to station nuclear weapons against the two states, its former allies in the Warsaw Pact.
It would be obviously highly appropriate for the next US president to address the issue urgently. Obama can hardly see this particular legacy of the ultra-aggressive Bush Administration as a wise one. The whole project is as demented as can be imagined and should be dropped forthwith after January 20.
Gazprom to the fore
One of the main winners in the Russian- Georgian war in South Ossetia was Gazprom - and not only in economic terms, but also in geopolitical terms. That does not mean that Russia's biggest state company was involved in unleashing the war or, indeed, took part in it in any way. They had nothing to do with it. But the fact is that the war was a severe blow against Gazprom's competitors, or more specifically, the rival infrastructure projects for delivering gas to Europe.
It is through Georgia that the so- called "fourth corridor" runs, by which hydrocarbons and especially natural gas reach the EU countries. The first is from Russia, the second is from Norway, and the third is from Algeria.
The biggest gas pipeline runs through Georgia: Baku-Tbilisi- Erzurum (Turkey), from where the gas continues towards southern Europe. With the growth in the volume of extraction in Azerbaijan, the pipeline's capacity could rise from today's 6 billion cubic meters a year to 20 billion by 2014. Even if it did not stop deliveries, the war, first of all, pushed gas prices up, and second, it was bound to influence plans for the expansion of the "fourth corridor." Clearly there is a problem there that needs to be addressed.
True, the conclusions from the war could be twofold. The BBC claims that the Russian-Georgian war could be interpreted by the gas and oil extracting countries as a show of strong pressure by Moscow, pressure that could also be turned against them, which might make them abandon plans to support non-Russian - essentially, anti- Russian - projects for the delivery of hydrocarbons to Europe.
But exactly the opposite conclusion is also possible. For the EU, the main value of the Baku-Tbilisi-Erzurum pipeline is that it has nothing to do with Russia, and therefore Gazprom. There could be a boom in non-Russian projects with the support of the Europeans. Germany, for instance, has already sounded out the subject of pipelines as one of the priorities in postwar talks. Berlin is threatening Moscow that "without the help of the EU it will be difficult for Russia to modernize the gas infrastructure." The same arguments also apply to the Georgian transit oil pipelines, such as Baku-Tbilisi-Ceyhan, for instance.
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The big one – a gas OPEC as a step towards OGEC
There has been an anomaly in the world energy industry for decades. The oil-producing countries forged an Organisation of Petroleum-Exporting Countries (OPEC) in the early 1970s as the first oil price hike was being prepared. Form a monopoly, curb production in tandem at a time of acute shortage and hoist the price range. This is a classic formula – justifying Adam Smith's statement:
“Whenever businessmen foregather to debate their common interests, it invariably involves a conspiracy against the public.”
It might have seemed logical for the gas-exporting countries to have followed suit. But oil supplies are far more flexible than gas supplies. The former can be transported to market in different ways, by pipeline, by carrier or ship, by barrel or truck; the latter only by pipeline.
Actually this is not quite true – there is after all liquefied natural gas (LNG), as transportable in various ways as oil. But it is more expensive than natural gas. There is an overwhelming economic advantage in most cases for the crude product – it is economical!
This is doubtless why the world gas industry has been characterised by long-term gas export contracts on a two-way track via pipelines. The consumer is not exactly king, but has a decided advantage in bargaining – he can divide and rule, playing off the actual provider against potential ones. Its technical name is monopsony.
There is, however, a rival ploy which could predominate over monopsony – let us call it, meta-monopoly!
The actual and potential suppliers get together and forge a monopoly threatening, not actual, but potential, supplies - combine and rule thereafter. That is what Russia, Iran and Qatar are now up to for a venture, indeed an adventure.
It was actually by peradventure. The Georgian crisis has its own logic to it, as does the global credit crunch. They both made the Russian authorities realise that in critical times you need friends or at least allies, especially as the latter has induced a halving of oil prices and a downward pressure on gas prices. Hence the idea to forge a gas OPEC, aired by Premier Chernomyrdin a decade ago and then by Putin, was dusted down again.
Alexey Miller, chairman of Gazprom, said that the three countries were forming a “big gas troika” and that the epoch of cheap hydrocarbons had come to an end. “we are united by the world's largest gas reserves, common strategic interests and, which is of great importance, high cooperation potential in tripartite projects. We have agreed to hold regular – three to four times a year – meetings of the G3 to discuss the crucial issues of mutual interest.”
Miller's comments came after a meeting in Tehran with Gholamhossein Nozari, Iran's petroleum minister, and another with Abdullah bin Hamad al-Attiyah, Qatar's deputy prime minister and oil and energy minister. Miller said that the cartel was establishing a technical committee of specialists and experts to discuss the implementation of joint projects embracing the entire value chain from geological exploration to marketing.
The Russians avoided the sensitive word, 'cartel,' but the Iranians spelled it out. There is a demand to form this ‘gas OPEC’ and there is a consensus to set up a ‘gas OPEC’.”
An actual OPEC meeting took place on October 24, and a meeting of Abdullah al Badri, OPEC's secretary-general, with energy chiefs in Moscow on October 22, when it was agreed to coordinate Russian energy policy more closely than hitherto with the oil cartel. With this in mind, Miller said that fossil fuels are henceforward going to cost more. We share the opinion that oil price fluctuations don't put in question the fundamental thesis that the era of cheap hydrocarbons has come to an end.”
It is just a first step, but one which alarms the West, particularly the EU states so dependent on Russian energy supplies. The logic would appear to bring in Algeria and perhaps even Norway, a non-member of the EU, eventually.
It certainly is unlikely that Turkmenistan with their new gas windfall, or Libya who have recently improved relations with Russia, and similarly Venezuela, will be disinterested.
For all the Western complaints that the move towards a cartel is contravening the need for competition, it has to be admitted that higher hydrocarbon prices has an ecological rationale. It puts pressure on the West to accelerate developments in wind, wave and other renewable energy alternatives. The Shetland Islands off Scotland in the North sea given the political will and the appropriately large investment, might alone provide 10% of all Europe's energy requirements from wind and wave power, so stormy is their climate. Those who assess the climate change threat as the premier challenge that the human race faces, should welcome the G3 as a step to sanity. The market, albeit a cartelised one, could force change that endless talks by politicians have not.
Wider effects on the economy
Russia's financial markets already forfeited foreign confidence earlier this year over disagreements between BP executives and Russian executives on how to invest profits from the jointly owned TNK-BP oil company. Just after the Russia-Georgia crisis, the London Telegraph reported that the unexpected costs of the war had an instant effect on Russian markets not least capital flight, that Russia's economy suffers from chronic inflation, and that falling crude prices are threatening a major trade deficit. If Russia decides to embrace isolation in this kind of insecure global environment, its leaders must understand that it is the general population that will face economic and social hardship as a result.
The drop by 37% in world oil prices from a high of $147 per barrel has been the prime reason for economic slowdown and a massive fall in the Russian markets by 57% in early October and more subsequently. The government has poured liquidity into them to try and correct the situation. It has $500 bn in reserves to play with. But the impact of the August war has not helped to restore investor confidence, any more than BP's and Shell's earlier difficulties with their Russian jvs, which George Soros (who burned his fingers investing earlier in Russia), characterised as due to the absence of the rule of law in that country, which judgement seems particularly apt to us and a matter that only the Russian government can correct.
But if investors don't return and oil prices fall further in the wake of the global financial crisis, the Russian boom of this decade may begin to look like a short-lived miracle.
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