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Breaking news & commentary
Now for the Hard Part: From Iraq to Afghanistan
Stratfor Today »-->July 15, 2008
By George Friedman
The Bush administration let it be known last week that it is prepared to start reducing the number of troops in Iraq, indicating that three brigades out of 15 might be withdrawn before Inauguration Day in 2009. There are many dimensions to the announcements, some political and some strategic. But perhaps the single most important aspect of the development was the fairly casual way the report was greeted. It was neither praised nor derided. Instead, it was noted and ignored as the public focused on more immediate issues.
In the public mind, Iraq is clearly no longer an immediate issue. The troops remain there, still fighting and taking casualties, and there is deep division over the wisdom of the invasion in the first place. But the urgency of the issue has passed. This doesn’t mean the issue isn’t urgent. It simply means the American public — and indeed most of the world — have moved on to other obsessions, as is their eccentric wont. The shift nevertheless warrants careful consideration.
Obviously, there is a significant political dimension to the announcement. It occurred shortly after Sen. Barack Obama began to shift his position on Iraq from what appeared to be a demand for a rapid withdrawal to a more cautious, nuanced position. As we have pointed out on several occasions, while Obama’s public posture was for withdrawal with all due haste, his actual position as represented in his position papers was always more complex and ambiguous. He was for a withdrawal by the summer of 2010 unless circumstances dictated otherwise. Rhetorically, Obama aligned himself with the left wing of the Democratic Party, but his position on the record was actually much closer to Sen. John McCain’s than he would admit prior to his nomination. Therefore, his recent statements were not inconsistent with items written on his behalf before the nomination — they merely appeared s o.
The Bush administration was undoubtedly delighted to take advantage of Obama’s apparent shift by flanking him. Consideration of the troop withdrawal has been under way for some time, but the timing of the leak to The New York Times detailing it must have been driven by Obama’s shift. As Obama became more cautious, the administration became more optimistic and less intransigent. The intent was clearly to cause disruption in Obama’s base. If so, it failed precisely because the public took the administration’s announcement so casually. To the extent that the announcement was political, it failed because even the Democratic left is now less concerned about the war in Iraq. Politically speaking, the move was a maneuver into a vacuum.
But the announcement was still significant in other, more important ways. Politics aside, the administration is planning withdrawals because the time has come. First, the politico-military situation on the ground in Iraq has stabilized dramatically. The reason for this is the troop surge — although not in the way it is normally thought of. It was not the military consequences of an additional 30,000 troops that made the difference, although the addition and changes in tactics undoubtedly made an impact.
What was important about the surge is that it happened at all. In the fall of 2006, when the Democrats won both houses of Congress, it appeared a unilateral U.S. withdrawal from Iraq was inevitable. If Bush wouldn’t order it, Congress would force it. All of the factions in Iraq, as well as in neighboring states, calculated that the U.S. presence in Iraq would shortly start to decline and in due course disappear. Bush’s order to increase U.S. forces stunned all the regional players and forced a fundamental recalculation. The assumption had been that Bush’s hands were tied and that the United States was no longer a factor. What Bush did — and this was more important than numbers or tactics — was demonstrate that his hands were not tied and that the United States could not be discounted.
The realization that the Americans were not going anywhere caused the Sunnis, for example, to reconsider their position. Trapped between foreign jihadists and the Shia, the Americans suddenly appeared to be a stable and long-term ally. The Sunni leadership turned on the jihadists and aligned with the United States, breaking the jihadists’ backs. Suddenly facing a U.S.-Sunni-Kurdish alliance, the Shia lashed out, hoping to break the alliance. But they also split between their own factions, with some afraid of being trapped as Iranian satellites and others viewing the Iranians as the solution to their problem. The result was a civil war not between the Sunnis and Shia, but among the Shia themselves.
Tehran performed the most important recalculation. The Iranians’ expectation had been that the United States would withdraw from Iraq unilaterally, and that when it did, Iran would fill the vacuum it left. This would lead to the creation of an Iranian-dominated Iraqi Shiite government that would suppress the Sunnis and Kurds, allowing Iran to become the dominant power in the Persian Gulf region. It was a heady vision, and not an unreasonable one — if the United States had begun to withdraw in the winter of 2006-2007.
When the surge made it clear that the Americans weren’t leaving, the Iranians also recalculated. They understood that they were no longer going to be able to create a puppet government in Iraq, and the danger now was that the United States would somehow create a viable puppet government of its own. The Iranians understood that continued resistance, if it failed, might lead to this outcome. They lowered their sights from dominating Iraq to creating a neutral buffer state in which they had influence. As a result, Tehran acted to restrain the Shiite militias, focusing instead on maximizing its influence with the Shia participating in the Iraqi government, including Iraqi Prime Minister Nouri al-Maliki.
A space was created between the Americans and Iranians, and al-Maliki filled it. He is not simply a pawn of Iran — and he uses the Americans to prevent himself from being reduced to that — but neither is he a pawn of the Americans. Recent negotiations between the United States and the al-Maliki government on the status of U.S. forces have demonstrated this. In some sense, the United States has created what it said it wanted: a strong Iraqi government. But it has not achieved what it really wanted, which was a strong, pro-American Iraqi government. Like Iran, the United States has been forced to settle for less than it originally aimed for, but more than most expected it could achieve in 2006.
This still leaves the question of what exactly the invasion of Iraq achieved. When the Americans invaded, they occupied what was clearly the most strategic country in the Middle East, bordering Kuwait, Saudi Arabia, Jordan, Syria, Turkey and Iran. Without resistance, the occupation would have provided the United States with a geopolitical platform from which to pressure and influence the region. The fact that there was resistance absorbed the United States, therefore negating the advantage. The United States was so busy hanging on in Iraq that it had no opportunity to take advantage of the terrain.
That is why the critical question for the United States is how many troops it can retain in Iraq, for how long and in what locations. This is a complex issue. From the Sunni standpoint, a continued U.S. presence is essential to protect Sunnis from the Shia. From the Shiite standpoint, the U.S. presence is needed to prevent Iran from overwhelming the Shia. From the standpoint of the Kurds, a U.S. presence guarantees Kurdish safety from everyone else. It is an oddity of history that no major faction in Iraq now wants a precipitous U.S. withdrawal — and some don’t want a withdrawal at all.
For the United States, the historical moment for its geopolitical coup seems to have passed. Had there been no resistance after the fall of Baghdad in 2003, the U.S. occupation of Iraq would have made Washington a colossus astride the region. But after five years of fighting, the United States is exhausted and has little appetite for power projection in the region. For all its bravado against Iran, no one has ever suggested an invasion, only airstrikes. Therefore, the continued occupation of Iraq simply doesn’t have the same effect as it did in 2003.
But the United States can’t simply leave. The Iraqi government is not all that stable, and other regional powers, particularly the Saudis, don’t want to see a U.S. withdrawal. The reason is simple: If the United States withdraws before the Baghdad government is cohesive enough, strong enough and inclined enough to balance Iranian power, Iran could still fill the partial vacuum of Iraq, thereby posing a threat to Saudi Arabia. With oil at more than $140 a barrel, this is not something the Saudis want to see, nor something the United States wants to see.
Internal Iraqi factions want the Americans to stay, and regional powers want the Americans to stay. The Iranians and pro-Iranian Iraqis are resigned to an ongoing presence, but they ultimately want the Americans to leave, sooner rather than later. Thus, the Americans won’t leave. The question now under negotiation is simply how many U.S. troops will remain, how long they will stay, where they will be based and what their mission will be. Given where the United States was in 2006, this is a remarkable evolution. The Americans have pulled something from the jaws of defeat, but what that something is and what they plan to do with it is not altogether clear.
The United States obviously does not want to leave a massive force in Iraq. First, its more ambitious mission has evaporated; that moment is gone. Second, the U.S. Army and Marines are exhausted from five years of multidivisional warfare with a force not substantially increased from peacetime status. The Bush administration’s decision not to dramatically increase the Army was rooted in a fundamental error: namely, the administration did not think the insurgency would be so sustained and effective. They kept believing the United States would turn a corner. The result is that Washington simply can’t maintain the current force in Iraq under any circumstances, and to do so would be strategically dangerous. The United States has no strategic ground reserve at present, opening itself to dangers outside of Iraq. Therefore, if the United States is not going to get to play colossus of the Middle East, it needs to reduce its forces dramatically to recreate a strategic reserv e. Its interests, the interests of the al-Maliki government — and interestingly, Iran’s interests — are not wildly out of sync. Washington wants to rapidly trim down to a residual force of a few brigades, and the other two players want that as well.
The United States has another pressing reason to do this: It has another major war under way in Afghanistan, and it is not winning there. It remains unclear if the United States can win that war, with the Taliban operating widely in Afghanistan and controlling a great deal of the countryside. The Taliban are increasingly aggressive against a NATO force substantially smaller than the conceivable minimum needed to pacify Afghanistan. We know the Soviets couldn’t do it with nearly 120,000 troops. And we know the United States and NATO don’t have as many troops to deploy in Afghanistan as the Soviets did. It is also clear that, at the moment, there is no exit strategy. Forces in Iraq must be transferred to Afghanistan to stabilize the U.S. position while the new head of U.S. Central Command, Gen. David Petraeus — the architect of the political and military strategy in Iraq — f igures out what, if anything, is going to change.
Interestingly, the Iranians want the Americans in Afghanistan. They supported the invasion in 2001 for the simple reason that they do not want to see an Afghanistan united under the Taliban. The Iranians almost went to war with Afghanistan in 1998 and were delighted to see the United States force the Taliban from the cities. The specter of a Taliban victory in Afghanistan unnerves the Iranians. Rhetoric aside, a drawdown of U.S. forces in Iraq and a transfer to Afghanistan is what the Iranians would like to see.
To complicate matters, the Taliban situation is not simply an Afghan issue — it is also a Pakistani issue. The Taliban draw supplies, recruits and support from Pakistan, where Taliban support stretches into the army and the intelligence service, which helped create the group in the 1990s while working with the Americans. There is no conceivable solution to the Taliban problem without a willing and effective government in Pakistan participating in the war, and that sort of government simply is not there. Indeed, the economic and security situation in Pakistan continues to deteriorate.
Therefore, the Bush administration’s desire to withdraw troops from Iraq makes sense on every level. It is a necessary and logical step. But it does not address what should now become the burning issue: What exactly is the U.S. strategy in Afghanistan? As in Iraq before the surge, the current strategy appears to be to hang on and hope for the best. Petraeus’ job is to craft a new strategy. But in Iraq, for better or worse, the United States faced an apparently implacable enemy — Iran — which in fact pursued a shrewd, rational and manageable policy. In Afghanistan, the United States is facing a state that appears friendly — Pakistan — but is actually confused, divided and unmanageable by itself or others.
Petraeus’ success in Iraq had a great deal to do with Tehran’s calculations of its self-interest. In Pakistan, by contrast, it is unclear at the moment whether anyone is in a position to even define the national self-interest, let alone pursue it. And this means that every additional U.S. soldier sent to Afghanistan raises the stakes in Pakistan. It will be interesting to see how Afghanistan and Pakistan play out in the U.S. presidential election. This is not a theater of operations that lends itself to political soundbites.
Tell Stratfor What You Think
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Why the Peaceful Majority is Irrelevant
12 Tammuz 5768, 15 July 08 11:28by Paul E. Marek
(IsraelNN.com) I used to know a man whose family were German aristocracy prior to World War II. They owned a number of large industries and estates. I asked him how many German people were true Nazis, and the answer he gave has stuck with me and guided my attitude toward fanaticism ever since.
“Very few people were true Nazis,” he said, “but many enjoyed the return of German pride, and many more were too busy to care. I was one of those who just thought the Nazis were a bunch of fools. So, the majority just sat back and let it all happen. Then, before we knew it, they owned us, and we had lost control, and the end of the world had come. My family lost everything. I ended up in a concentration camp and the Allies destroyed my factories.”
We are told again and again by experts and talking heads that Islam is the religion of peace, and that the vast majority of Muslims just want to live in peace. Although this unquantified assertion may be true, it is entirely irrelevant. It is meaningless fluff, meant to make us feel better, and meant to somehow diminish the specter of fanatics rampaging across the globe in the name of Islam.
The fact is that the fanatics rule Islam at this moment in history. It is the fanatics who march. It is the fanatics who wage any one of 50 shooting wars world wide. It is the fanatics who systematically slaughter Christian or tribal groups throughout Africa and are gradually taking over the entire continent in an Islamic wave. It is the fanatics who bomb, behead, murder, or execute honor killings. It is the fanatics who take over mosque after mosque. It is the fanatics who zealously spread the stoning and hanging of rape victims and homosexuals. The hard, quantifiable fact is that the “peaceful majority” is the “silent majority,” and it is cowed and extraneous.
Communist Russia was comprised of Russians who just wanted to live in peace, yet the Russian Communists were responsible for the murder of about 20 million people. The peaceful majority were irrelevant. China’s huge population was peaceful as well, but Chinese Communists managed to kill a staggering 70 million people. The average Japanese individual prior to World War II was not a war-mongering sadist. Yet, Japan murdered and slaughtered its way across Southeast Asia in an orgy of killing that included the systematic murder of 12 million Chinese civilians - most killed by sword, shovel and bayonet. And who can forget Rwanda, which collapsed into butchery? Could it not be said that the majority of Rwandans were “peace loving”?
History lessons are often incredibly simple and blunt; yet, for all our powers of reason, we often miss the most basic and uncomplicated of points. Peace-loving Muslims have been made irrelevant by the fanatics. Peace-loving Muslims have been made irrelevant by their silence. Peace-loving Muslims will become our enemy if they don’t speak up, because, like my friend from Germany, they will awaken one day and find that the fanatics own them, and the end of their world will have begun.
Peace-loving Germans, Japanese, Chinese, Russians, Rwandans, Bosnians, Afghanis, Iraqis, Palestinians, Somalis, Nigerians, Algerians and many others, have died because the peaceful majority did not speak up until it was too late. As for us, watching it all unfold, we must pay attention to the only group that counts: the fanatics who threaten our way of life.
http://www.israelnationalnews.com/Articles/Article.aspx/6996
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Muslim Moles
By INVESTOR'S BUSINESS DAILY Posted Thursday, July 10, 2008 4:20 PM PT
Homeland Security: In a sign background checks are far too lax, an alarming number of Arabs and Muslims have landed sensitive government jobs only to be caught later spying for the enemy.
Read More: Global War On Terror
Guarding against penetration by terrorist agents and sympathizers should be a top concern of public agencies, but it's not. Guarding against charges of job discrimination is.
Multiculturalism and political correctness have made it easier for the terrorists to use Arabs and Muslims to infiltrate the government and steal security secrets.
In the latest example, a former city 911 operator faces multiple felony counts for allegedly searching the names of friends and relatives on the FBI's terrorist watch list.
Nadire P. Zenelaj, an ethnic Albanian, says she's being singled out because she is Muslim. "I feel they targeted me because of my religion," she said.
No, she was investigated for looking up classified information on her confederates. At least one of the 227 names she checked was on the terrorist watch list, according to Rochester, N.Y., police.
A D.C.-area cop recently was convicted of doing the same thing.
Federal prosecutors say Fairfax County Police Sgt. Weiss Rasool, an Afghan immigrant, tipped off a fellow mosque member that he was under FBI investigation. When agents went to arrest the terrorist target early one morning they found him and his family already dressed and destroying evidence. They knew they had a mole and worked back through the system to find Rasool.
Thanks to post-9/11 data-sharing, local police like Rasool — as well as first responders like Zenelaj — now have access to classified FBI files on terror suspects maintained with the NCIC, or National Crime Information Center system.
Prosecutors said Rasool's actions "damaged the integrity of the NCIC system and jeopardized at least one federal investigation."
That's not all. In May, the Energy Department had to revoke the security clearance of an Egyptian-born nuclear physicist because of "conflicting allegiances." The FBI questioned Moniem El-Ganayni, also a Muslim prison chaplain, for allegedly inciting inmates to carry out jihad against the U.S., charges he denies.
Still, such questioning should've taken place before El-Ganayni got acccess to nuclear secrets. It's likely his extracurricular activities would have been enough of a red flag to bar his employment.
Same goes for an EPA toxicologist who turned out to be an al-Qaida fundraiser.
Waheeda Tehseen would never have been hired at all if the feds hadn't cut corners on her background check. Not only did Tehseen's husband work for Pakistani intelligence, but she lied about her U.S. citizenship on her government application. EPA missed it.
Then there's the case of Hezbollah spy Nadia Prouty. The Lebanese immigrant also lied about her citizenship and was hired anyway by both the FBI and CIA.
The good news is, these moles were caught. But they should have been screened out before they could ever get in and do damage.
http://www.ibdeditorials.com/IBDArticles.aspx?secid=1501&status=article&id=300582768557820&secure=1&show=1&rss=1
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How Hostages, And Nations, Get Liberated
By Charles KrauthammerFriday, July 11, 2008; A17
On the day the Colombian military freed Ingrid Betancourt and 14 other long-held hostages, the Italian Parliament passed yet another resolution demanding her release. Europe had long ago adopted this French-Colombian politician as a cause celebre. France had made her an honorary citizen of Paris, passed numerous resolutions and held many vigils.
Unfortunately, karma does not easily cross the Atlantic. Betancourt languished for six years in cruel captivity until freed in a brilliant operation conducted by the Colombian military, intelligence agencies and special forces -- an operation so well executed that the captors were overpowered without a shot being fired.
This in foreign policy establishment circles is called "hard power." In the Bush years, hard power is terribly out of fashion, seen as a mere obsession of cowboys and neocons. Both in Europe and America, the sophisticates worship at the altar of "soft power" -- the use of diplomatic and moral resources to achieve one's ends.
Europe luxuriates in soft power, nowhere more than in l'affaire Betancourt in which Europe's repeated gestures of solidarity hovered somewhere between the fatuous and the destructive. Europe had been pressing the Colombian government to negotiate for the hostages. Venezuela's Hugo Chávez offered to mediate.
Of course, we know from documents captured in a daring Colombian army raid into Ecuador in March -- your standard hard-power operation duly denounced by that perfect repository of soft power, the Organization of American States -- that Chávez had been secretly funding and pulling the strings of the FARC. These negotiations would have been Chávez's opportunity to gain recognition and legitimacy for his terrorist client.
Colombia's President Álvaro Uribe, a conservative and close ally of President Bush, went instead for the hard stuff. He has for years. As a result, he has brought to its knees the longest-running and once-strongest guerrilla force on the continent by means of "an intense military campaign [that] weakened the FARC, killing seasoned commanders and prompting 1,500 fighters and urban operatives to desert" ( Washington Post). In the end, it was that campaign -- and its agent, the Colombian military -- that freed Betancourt.
She was, however, only one of the high-minded West's many causes. Solemn condemnations have been issued from every forum of soft-power fecklessness -- the European Union, the United Nations, the G-8 foreign ministers -- demanding that Robert Mugabe of Zimbabwe stop butchering his opponents and step down. Before that, the cause du jour was Burma, where a vicious dictatorship allowed thousands of cyclone victims to die by denying them independently delivered foreign aid lest it weaken the junta's grip on power.
And then there is Darfur, a perennial for which myriad diplomats and foreign policy experts have devoted uncountable hours at the finest five-star hotels to deplore the genocide and urgently urge relief.
What is done to free these people? Nothing. Everyone knows it will take the hardest of hard power to remove the oppressors in Zimbabwe, Burma, Sudan and other godforsaken places where the bad guys have the guns and use them. Indeed, as the Zimbabwean opposition leader suggested (before quickly retracting) from his hideout in the Dutch embassy -- Europe specializes in providing haven for those fleeing the evil that Europe does nothing about -- the only solution is foreign intervention.
And who's going to intervene? The only country that could is the country that in the past two decades led coalitions that liberated Kuwait, Bosnia, Kosovo and Afghanistan. Having sacrificed much blood and treasure in its latest endeavor -- the liberation of 25 million Iraqis from the most barbarous tyranny of all, and its replacement with what is beginning to emerge as the Arab world's first democracy -- and having earned near-universal condemnation for its pains, America has absolutely no appetite for such missions.
And so the innocent languish, as did Betancourt, until some local power, inexplicably under the sway of the Bush notion of hard power, gets it done -- often with the support of the American military. "Behind the rescue in a jungle clearing stood years of clandestine American work," explained The Post. "It included the deployment of elite U.S. Special Forces . . . a vast intelligence-gathering operation . . . and training programs for Colombian troops."
Upon her liberation, Betancourt offered profuse thanks to God and the Virgin Mary, to her supporters and the media, to France and Colombia and just about everybody else. As of this writing, none to the United States.
letters@charleskrauthammer.com
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/10/AR2008071002262_pf.html
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Geopolitical Diary: Russia Takes A Double Hit
Stratfor Today »-->July 9, 2008
Tuesday was not the best of days for the Russians. Not only did the Serbian parliament usher in a new government — the most stable and pro-Western alignment the country has had since World War I — but also the United States and the Czech Republic signed a deal to install an X-band radar on Czech soil as part of an American ballistic missile defense (BMD) system.
Serbia, as a Slavic state surrounded by foes, has been a bastion of Russian influence for years. All of Serbia’s neighbors are now EU members, applicants or protectorates. And the change in Belgrade makes it likely that Serbia will firmly fall into the West and Russia will lose its last willing ally in Europe.
Serbia is surrounded by Europe, so the only means Moscow can use to seriously draw the country back into the Russian fold is to use lots of cold hard cash. The Russians may not even be too concerned about Serbia’s new government. In fact, the political shift could translate into good business for Russian investors if, through a western-oriented Serbia, they have access to the European Union. But business is hardly a substitute for the geopolitical influence that Russia previously enjoyed.
The BMD issue is a double hit. While the immediate reason for the project is to deter against a potential Iranian nuclear missile, it also sets up a scenario in which a BMD could be expanded, deepened and reconfigured to hold off a Russian deterrent 20 years from now. The Czech Republic is also now included in a lineup of European countries that stretches from Iceland to Turkey that host American military facilities. Poland will also join that lineup once its domestic politics facilitates the signing of a deal to house a U.S. BMD installation.
While the Russians have (loudly) promised reprisals for the U.S. expansion into Central Europe — specifically Poland and Czech Republic — they have little influence over this development. There is nothing that Russia can do to deter the distrust of Central Europeans. Steps such as, for example, returning offensive ballistic missiles to Kaliningrad or retargeting portions of its nuclear arsenal at BMD sites, would only solidify the Europeans’ willingness to collaborate with the Americans on security issues.
While Russia does not really have any options that constitute an obvious retaliatory step, what it will do can be broken into two categories.
First, Russia is making the Europeans — and especially Central Europeans — pay a price for their geopolitical alignment. Since 2000, Russia has steadily jacked up the price of natural gas sold to Europe fourfold, with another 25 percent hike slated for the next 12 months. In addition, alternate energy shipment routes starting to come online (specifically for oil) have been expressly intended to bypass Central European transit states. In the case of Poland this will leave several Cold War-era refineries without a source of crude.
Second, Russia is hardening its outer shell. Russia has no clear geographic barriers separating it from most of its neighbors. This is one of the reasons why Russians tend to be so distrustful of outsiders. From Napoleon to Wilhelm II to Hitler, outsiders tend to invade Russia. Therefore, the Kremlin is using its energy income, energy supply routes, weapons sales and intelligence services to subtly (and not so subtly) reshape the Russian near abroad rather than merely rage against things it cannot change in Belgrade, Prague and Warsaw.
Ultimately, Russia’s vital interest lies is in its borderlands. In recent months the Russians have adjusted the expectations of Ukraine, Belarus, Kazakhstan, Turkmenistan Azerbaijan and Georgia, forcing them to see the world from a slightly more Russian point of view. This strategy is hardly foolproof. For every two steps it takes forward, Russia takes another step back. But what Russia really needs to feel secure are buffers. From the Russian point of view, it is better to tussle in the borderlands than on the home front. And while the U.S./Czech deal announced Tuesday and the move by Serbia to adopt a more pro-Western government do not advance Russia’s influence, the geopolitical giant is not without options.
http://www.stratfor.com/
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Back In the USSR?
By Leon AronMonday, July 14, 2008; A13
Vladimir Putin's appointment this spring as prime minister of the symbolic "union" of Russia and Belarus was yet another example of the troubling similarities between today's Russia and the other most stable and prosperous Russian regime of the past 80 years: Leonid Brezhnev's Soviet Union in the 1970s. That economy, too, was fueled by then-record oil prices. And while there are clear differences between the two Russias, if these tendencies go unchecked, the increasingly authoritarian and economically statist country may soon face crises of the kind that became apparent under Brezhnev and contributed to the Soviet Union's demise.
The most disturbing of these propensities include:
· The national alcoholic binge. In the 1970s, Soviets annually consumed eight liters of strong (40 to 80 percent proof) alcoholic beverages per person -- more than any other country. Between 1964 and 1980, male life expectancy fell from 67 to 62. Today, per capita consumption of vodka, which is four times cheaper in relation to the average salary than 30 years ago, has grown to 10 liters, according to official statistics (outside experts say it is higher). By contrast, the most recent data available from the World Health Organization show the corresponding U.S. figure is 2.57 liters. One in 10 Russian men is thought to be an alcoholic. Life expectancy for Russian men is less than 60.6 years, more than 15 years shorter than in the United States and European Union and below current levels in Pakistan or Bangladesh.
· Oil-for-food. This spring, Putin admitted that 70 percent of the food consumed in Russia's largest cities is imported, a situation he decried as "intolerable." This problem, too, first surfaced in the 1970s, when grain imports were so high that by the end of the decade they supplied the flour for every third loaf of bread. When oil prices collapsed, Russia was forced to spend gold reserves and seek loans -- and eventually found itself without grain or gold. After agricultural land was denationalized in the early 1990s, food became available almost immediately -- for the first time in almost 70 years it could be had without hours-long lines and rationing coupons. Russia started to export grain. Yet agricultural land was never legally privatized, and rules for long-term leasing have been left to local authorities.
Not surprisingly, such legal gray areas have given rise to corruption, increased production costs and hampered innovation. Provincial governors, who are no longer elected and answer only to the president, pressure successful entrepreneurs and farmers to "share" with local authorities. A leading industrialist told me that at least six local agencies conduct almost weekly "inspections" of his potato farm. State agriculture subsidies often go to the largest and best politically connected enterprises, not necessarily the most productive ones.
The ruble's steady appreciation because of huge petro-dollar inflows further depresses the domestic food industry. Should Russia allow the ruble to float, at least partially, to help curb inflation, it would become even more expensive, encouraging demand for better-quality and, often cheaper, imported food.
Putin's remedies have the same flavor as Brezhnev's: Throw billions in subsidized credits and grants at the problem instead of strengthening property rights and making it easier for independent producers to compete.
· One-party rule. With its opposition marginalized and demoralized, and election results rigged, United Russia has emerged as the "ruling party," the term that used be reserved for the Soviet Communist Party. "Today we are the party responsible for the government," a top United Russia functionary told a Russian newspaper this year, "since our leader [Putin, the party's chairman] is the chairman of the government." Those who argue, rightly, that United Russia membership is only a ticket for ambitious apparatchiks to punch should remember that there was precious little ideological fervor and much cynicism in the 1970s as well. Lack of sincerity then did nothing to ameliorate the absence of corrective societal feedback and, with it, the inability to reverse dead-end policies that led to the crisis.
· A new oligarchy. Brezhnev drew some of his loudest cheers in his six-hour "reports" to party congresses when he declared "respect for the cadres." Delivering his presidential valediction this spring, Putin's longest applause came when he cited "stability" as his crowning achievement.
With virtually every top Putin official and adviser retained, sent to the Security Council or made "presidential envoy" to some part of the country, a new nomenklatura has emerged -- insulated from media criticism, spared political competition and effectively immune from criminal prosecution. As in Soviet times, the members of this political master race are almost never fired, only retired with honors or reassigned. Since the Putin "Politburo" and "Central Committee" are a good 20 years younger than Brezhnev's, retirement is not an option.
The 1970s made clear what the belief in official infallibility and omnipotence, utter disregard for public opinion, ossification, and pandemic corruption could lead to. Most of all, the experience of Brezhnev's Russia confirms that authoritarian "stabilization" is a curious political commodity. Its benefits are instantly apparent but its price is revealed only gradually -- and may be devastatingly high. As he moves forward, President Dmitry Medvedev would do well to remember the lessons from Russia's other most stable regime.
Leon Aron is director of Russian studies and a resident scholar at the American Enterprise Institute. He is the author, most recently, of "Russia's Revolution: Essays 1989-2006".
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/13/AR2008071301721_pf.html
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Putin Calls on Authorities to Ease Up on Small Businesses
15 July 2008
The government spends nearly $7 billion per year investigating companies for procedural infractions, Prime Minister Vladimir Putin said Monday, calling on the government to change fundamentally its approach toward regulating business.More than 20 million investigations are carried out each year, Putin said at the weekly meeting of his Presidium, an inner body of the Cabinet. The figure, he said, does not include tax investigations."I haven't even mentioned the 'informal expenses' for businesspeople, which, of course, are considerably higher [than the government's expenses]," Putin said, Interfax reported.The comments came as Putin was discussing a package of bills aimed at protecting the rights of small and medium-sized businesses. The proposed legislation would simplify business registration, eliminate insurance on certain goods and limit government intrusion by criminalizing extra-procedural investigations conducted by police and Interior Ministry agents, the news agency said.Despite the current economic boom, small and medium-sized businesses have failed to develop apace. The problem is not so much finding labor or the high cost of real estate but the time and manpower wasted dealing with an unruly and corrupt bureaucracy, said Katya Malofeyeva, chief economist at Renaissance Capital.Police, health and fire services often conduct random inspections of businesses to elicit bribes. Large companies frequently employ workers whose primary function is to manage such bribes, but for smaller businesses, this is not an option."Any time of any day, any inspector can come and check for whatever they want," Malofeyeva said. "Legally prohibiting people from doing so is a move toward reducing barriers for small and medium business."The proposals, which also aim to clarify business ownership, could provide protection from the practice known as "raiding," whereby criminal elements wielding falsified documents forcefully seize businesses. Last year, the number of known illegal business and property seizures reached 512, an Interior Ministry official said in March.
http://www.moscowtimes.ru/article/1009/42/368938.htm
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NATO military exercise begins in Ukraine
14/07/2008 10:13 KIEV, July 14 (RIA Novosti) - Sea Breeze 2008, a NATO military exercise, will begin on Monday in Ukraine's Odessa region, the Crimea, and Black Sea coastal regions.
This year Ukraine and the United States along with 15 other countries are expected to take part in the exercise to be held until July 26. Fifteen Ukrainian ships, four aircraft, ten helicopters and 500 service personnel will take part in the military exercises.
Ukraine's parliament, the Supreme Rada, approved NATO participation in the exercises in April. Over 1,000 NATO troops, 15 ships, two submarines, and eight aircraft are expected to take part.
In May-June several Ukrainian left-wing politicians announced that they would organize mass protests and disrupt the drills. Last Thursday, some 20 opposition activists set up an encampment in western Crimea, intending to picket the exercise.
Two years ago, the Sea Breeze 2006 exercise in the Crimea was obstructed by protests, forcing the United States to redeploy the Advantage cargo ship to another location.
Ukraine's pro-Western leadership has been pursuing NATO membership since 2004, when President Viktor Yushchenko came to power. Ukraine failed to secure a place in the NATO Membership Action Plan, a key step toward joining the alliance, at a NATO summit in April, but was told the decision would be reviewed in December.
A poll conducted in April by the FOM-Ukraina pollster showed a majority of Ukrainians oppose NATO membership.
http://en.rian.ru/world/20080714/113885161.html
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EU Parliament president to boycott opening ceremony of Beijing Olympics
STRASBOURG, France (AP) -The president of the European Parliament will boycott the opening ceremony of the Beijing Olympics because of a lack of progress in negotiations between the Chinese authorities and representatives of the Dalai Lama over Tibet.
"Given that these talks have to date proved inconclusive, I have decided not to attend the opening ceremony of the Olympic Games,'' Hans-Gert Poettering said Wednesday.
The German's announcement came after French President Nicolas Sarkozy decided to attend the ceremony despite the lack of progress in the talks, a move harshly criticized in the European Parliament.
Co-chairman of the Greens in the EU assembly Daniel Cohn-Bendit called it "scandalous,'' while former Olympic 200-meter champion Pietro Mennea, a one-time member of the legislature from Italy, said Sarkozy "put aside all concerns regarding Tibet.''
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European court overturns Hungarian prohibition on "communist" star
By Hungary Around the Clock
Hungary's ban on the use of the red star a symbol of Communism is a violation of the right to freedom of expression, the European Court of Human Rights ruled on Tuesday.
The decision is the result of a challenge by Attila Vajnai, vice president of the Workers Party 2006, of his conviction by the Municipal Court in 2005 for committing a misdemeanour for use of the red star. Vajnai was handcuffed and fined for pinning the red star on his lapel during a demonstration in 2003.
The red star has been banned as a symbol of tyranny since 1994, along with the hammer and sickle and the Nazi swastika.
The Court ruling was unanimous. The judges declared that when freedom of expression is exercised as political speech, limitations are justified only if there is a "clear, pressing and specific social need".
The court acknowledged that the "well-known mass violations of human rights committed under Communism had discredited the red star and that the display of such a symbol might create uneasiness among past victims and their relatives".
However, the statement continued, Hungary has proved to be a stable democracy almost two decades since the transition to pluralism, and there is no evidence that a restoration of a Communist dictatorship is a realistic possibility. Uneasiness alone, however understandable, cannot restrict the freedom of opinion, the Court said.
http://www.politics.hu/20080709/european-court-overturns-hungarian-prohibition-on-communist-star
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Russian Oil Bypasses American Radar
// Deliveries to the Czech Republic down almost by half
Missile defense at the expense of oil
At the end of last week, Russia warned of one more action aimed at preventing an American missile defense system in Eastern Europe. Russian Foreign Minister Sergey Lavrov announced that the Iranian missile threat was “implausible,” and so there were no reasons to install antimissile radar in the Czech Republic and interceptor missiles in Poland. Simultaneously, and without explanation, Russia reduced its oil deliveries to the Czech Republic by almost half. The Czech Republic signed an agreement with the United States on the location of part of its missile defense system on its territory last week.
At the end of last week, the Russian Foreign Ministry responded to launches of Shahab 3 missiles during military exercises. The launches convinces Moscow that the missile defense system in Europe is premature, since the range of the Shahab 3 is no more than 2000 km., and that means the missile can reach Israel, but not Europe. “We are convinced of the implausibility of conversations about the Iranian missile threat as a motivation for the establishment of a third site [in the U.S. missile defense shield]. Everyone who is interested in normalizing the situation in the region has to sit down and come to an agreement,” Lavrov said.On the sale day, the Czech Republic announced that Russia has nearly halved deliveries of oil to the country. Czech media warned that such a step in Russia’s response to the signing of the agreement last Tuesday on the location of radar for the U.S. missile defense system in the country.Almost immediately after the signing of the agreement, the influential Czech economic weekly Euro stated that “Great nervousness is being felt in political and business circles.” In Prague, they were afraid of Russian retaliation. The Russian Foreign Ministry stated that Russia would respond to the location of the U.S. missile defense system neat its borders “not with diplomatic, but with military-technical, methods,” adding that Russia is forces “to take adequate measures to compensate of the potential threat being created to its national security.”Czech Minister of Industry and Trade Martin Riman stated Friday in the late evening that, in his opinion, it would be too childish for Russia to react in such a way to the Czech-American agreement on the radar. Moreover, he said, the segment of the Czech population that opposed the radar would hardly react favorably to the reduction in oil deliveries. The minister stated that the government was investigating the situation, through the Russian embassy in Prague, and other channels, and hoped to receive a concrete answer from Moscow on Monday. But the fact remained that the reduction in oil deliveries through the Druzhba (“Friendship”) pipeline began on Tuesday, the day the Czech Republic signed the agreement on the U.S. radar.There are two large oil refineries in the Czech Republic. The refinery in Kralupy has a capacity of 3 million tons per year, and the refinery in Litvinov has a capacity of 5 million tons. The refinery in Litvinov receives oil from the Druzhba pipeline, and Kralupy’s refinery is supplied with Mediterranean Sea oil. Ceska Refinerska AS owns both plants. It was not possible to receive timely comments from that company. But Unipetrol, which controls Ceska Refinerska and belongs to the Polish company PKN Orlen, confirmed the supply reduction Saturday on its website, adding that the shortage was being covered by oil from the Mediterranean that arrives through the TAL-IKL pipeline. Unipetrol general director Francois Vleugels told Reuters that the Russian side blamed technical causes for the delivery reduction. Czech authorities gave assurances that the reduction in Russian oil deliveries will not lead to a collapse of the Czech economy. First because the country has reserves to last 95 days, and second because it can increase deliveries through the Western Ingolstadt oil pipeline, which was built in the mid-1990s. The southern branch of the Druzhba pipeline, with a capacity of 20 million tons, leads to the Czech Republic (and other countries in Eastern and Southern Europe). According to Info-TEK, the real volume of oil exported through the Druzhba pipeline to the Czech Republic monthly between January and May of this year fluctuated between within the range of 377,900 tons in March and 484,300 tons in May. Unconfirmed data in the Czech press holds that the country was to receive about 500,000 tons of oil in July, but received only about 300,000 tons.Russian officials have yet to comment on the situation. No comments could be obtained from Transneft or the Ministry of Energy yesterday. Transneft was considering reducing deliveries through the southern branch of the Druzhba pipeline if Ukraine and Poland implemented a reverse transfer project and completed construction of the Odessa-Brody pipeline, which is now used only for backup. Since that project is only in initial stages, no decision has been made on it.Russia made have claims against the Czech Republic in addition to the missile defense system. Those could range from the failure of LUKOIL’s attempt to obtain refining capabilities in the country to the Czech Republic’s support of the Nabucco project – a natural gas pipeline that bypasses Russia and competes with South Steam for the same reserve base (Central Asia and Azerbaijan). On July 4, Czech Foreign Minister Karel Schwarzeberg urged European countries to participate in the project.After problems arose with the delivery of Russian oil to the Czech Republic, the Polish pipeline operator PERN hastened to announce that that country was not experiencing any reduction in deliveries through the Druzhba line. Poland, unlike the Czech Republic, has not signed an agreement with the U.S. yet on the location of interceptor missiles on its territory. Last week, Polish Defense Minister Bogdan Klich said last week that the agreement could be signed if the U.S. installs Patriot missiles to modernize the Polish air defense system. Speculation continues that Lithuania is being considered as an alternative host of the interceptors. Gazeta Polska newspaper cited a U.S. Defense Department source as saying that missile defense elements could be installed in the area of Palanga or Salcininkai districts of Lithuania. Lithuanian President Valdas Adamkus stated last week that he is opposed to the location of missile defense elements in his country. “I see no need for Lithuania to take on the responsibility,” he said. “Negotiations with Poland are not completed. Lithuania will not conduct negotiations with anyone until then.” If Lithuania suddenly decided to locate missile defense system objects on its territory, it would avoid the hardships that have now beset the Czech Republic. Oil deliveries to Lithuania through the Druzhba pipeline were turned off in July 2006, after the Lithuanian Mazeikiu oil refinery was sold to PKN Orlen. Vilnius has been insisting since then that the turning off of the pipeline was politically motivated. Russia stated in 2006 that Druzhba was turned off for technical reasons and repairs would take about a year. Deliveries to the Mazeikiu refinery have not been resumed.
Alexander Kuranov, Prague; Mikhail Zygar, Natalia Skorlygina
http://www.kommersant.com/p912196/Russian-Czech_relations_missile_defense/
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Peter the Great’s Ship Discovered in Baltic Sea
By Ali Nassor
Special to The St. Petersburg Times
Archaeologists have discovered the wreck of a Russian battleship designed by Peter the Great in Amsterdam and which played a key role in a 1719 victory over Sweden in a war on the Baltic Sea.
A team including professional archeologists, divers, a film-producer and a cameraman located the 54-gun “Portsmouth” battleship at a 12-meter depth in the waters off Kotlin Island near Kronshtadt last week during final stages of a three-month mission as part of the “Secrets of the Sunken Ships” project.
The team was back on dry land on Tuesday.
“We are currently lobbying for an immediate raising of the wrecks to serve both as a museum and as objects for research,” said Andrei Lukoshkov, head of the research team, adding that the discovery is unique because the ship, which was designed by Peter the Great, disappeared with another ship, the “London,” on the way back to the port of Kronshtadt.
However, pending further studies of the wrecks, the archaeologists are yet to establish if wreckage found near the “Portsmouth” also belongs to the “London.”
“We have so many collections that we need to establish a museum of marine archaeology and shipbuilding,” said Lukoshkov.
He said the Kronshtadt district administration has signaled support for the scheme but has yet to reveal the action plan.
Lukoshov said a total of 11 shipwrecks, including the remains of the “Oleg,” a cruiser built in St. Petersburg in 1901-1903 but sunk by an English torpedo on July 8, 1919, and those of an aircraft resembling Li-2 model belonging to the First Long Range Aviation Division Guard downed in 1944, have been found during the three-month mission.
Others include unidentified wreckage of a European mast ship, a German boat “Frida Horn” registered at Schlezwig, both tracked to the second half of the 19th century, and a well-preserved earlier version of a mainly iron battleship equipped with rifles.
Among the tasks carried out by the expedition team was the continuation of a study of the badly damaged 16th century 40-meter-long mast-ship discovered last year, belonging to the same class as the famous Swedish “Vasa” battleship also discovered last year. “Vasa” is believed to have sunk between 1580 and 1610 during Boris Gudunov’s reign when the Swedes had conquered the Northwestern part of Rus, the ancient state that predates Russia.
The recent breakthrough brings to a total of about 30 wrecks of warships discovered in the “Secrets of the Sunken Ships” project. Others include the “Hanhoot,” built in 1892, the “Jigit” and the “Haezdnik,” both built in 1856, making a total of about 50 wrecks including the merchant and passenger ships in the Gulf of Finland, River Volkhov and Lake Ladoga.
Meanwhile, at the behest of the museum of the Siege of Leningrad (Blockade Museum), the archaeologists also carried out a special expedition in the Neva River in search of a boat that went down during the Nazi blockade of the city. They have reportedly located an unspecified number of tanks and arms on the Neva riverbed.
http://www.baltic-sunken-ships.ru/
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Lithuania-EU may clash over nuclear plant
(UPI Top Stories Via Acquire Media NewsEdge) Lithuanian leaders say they aren't ready to close a nuclear power plant despite pressure from the European Commission. Closing the Ignalina nuclear plant by the end of 2009 was a condition of Lithuania's entry into the European Union but a majority of that nation's Parliament members recently called for a referendum on the issue, leading to a possible showdown, EUobserver.com said Tuesday. Any delay might result in reconsideration of Lithuania's entry into the EU.
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But Lithuanian leaders argue that closing of the aging Chernobyl-style nuclear plant before alternative sources of power are developed would be an unfair burden on the Baltic state. They seek to postpone the closure of Ignalina's remaining sections until 2012.Our motive is the difficult situation facing Lithuania, Lithuanian Economy Minister Vytas Navickas told EUobserver.com. The situation after a closing of Ignalina was likely to be catastrophic as electricity prices would rise fourfold."
http://www.tmcnet.com/scripts/print-page.aspx?PagePrint=http%3a%2f%2fwww.tmcnet.com%2fusubmit%2f2008%2f07%2f15%2f3548111.htm
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Lithuania plans referendum on keeping nuclear plant
Publish Date: Tuesday,15 July, 2008, at 08:35 AM Doha Time
VILNIUS: Lithuania’s parliament voted yesterday to hold a non-binding referendum on extending the life of its Soviet-era nuclear power plant, despite a promise to the European Union that it will be shut down in 2009.The parliamentary press service said 88 of 141 lawmakers had voted to hold the referendum on October 12, the same day as a general election. Five voted against and 11 abstained.The first reactor at the Ignalina plant - of the same design as Ukraine’s Chernobyl facility, site of the world’s worst nuclear disaster in 1986 - was shut down in late 2004. The remaining reactor is due to be closed at the end of next year, as agreed with the EU during Lithuania’s accession negotiations. Lithuania joined the 27-nation bloc in 2004.Analysts have warned that electricity prices could double after Ignalina’s shutdown, fuelling already double-digit inflation in Lithuania and slashing economic growth rates.The Baltic state is also concerned its energy dependence on Russia will increase, tying the ex-Soviet republic - now an EU and Nato member - even more tightly to its former master.Voters will be asked whether they would agree to extend Ignalina’s lifespan by “technically safe terms”, the press service said, without elaborating.“By technically safe terms we meant 2012, when the reactor’s fuel channels will have to be replaced,” said Birute Vesaite, head of the parliamentary economics committee.Lawmakers ignored warnings from parliament’s legal department that a unilateral change in the closure plan would breach the terms of Lithuania’s EU accession treaty, approved in a binding referendum in October 2003.European Commission spokesman Ferran Tarradellas Espuny repeated the EU executive’s line that Lithuania had agreed to close the plant during its accession negotiations and could only change this with the agreement of other EU states.“Of course it is Lithuania’s right to have a referendum but it is not going to change anything,” Tarradellas Espuny said.Rita Grumadaite, spokeswoman for Lithuanian President Valdas Adamkus, said Adamkus felt a referendum would be “misleading” for Lithuanians since it would not be binding, although the president had no powers to veto parliament’s decision.But she added that Adamkus thought it could be good to extend Ignalina’s lifespan until a new plant is built - “given the worrying energy situation” - if it were possible without violating the accession agreement.Lithuania has said it wants to build a nuclear plant of 3,200-3,400 megawatt capacity by 2015 in cooperation with neighbouring Latvia, Estonia and Poland, although many experts view that date as optimistic.Lithuanian Prime Minister Gediminas Kirkilas has said he would like to keep Ignalina open at least until 2012.“We should not remain silent and wait until the others take our electricity market share,” said Vesaite, of the Kirkilas-led Social Democrat Party.Asked about possible EU sanctions if Ignalina is not closed, Vesaite said: “I am not concerned about that because we are going to suffer similar losses due to increased energy prices.”A referendum would only be valid if at least 50% of voters turn out, and more than half of them approve the measure.Given turnout of 46.8% for the last parliamentary polls in 2004, that could mean a vote is hard to win even if most Lithuanians favour keeping Ignalina running, political analyst Algis Krupavicius said. He said parliament will be free to decide whatever the outcome of the referendum.Ignalina’s remaining 1,300 megawatt reactor meets some 70% of the Baltic state’s electricity needs at cheap rates. Without it, Lithuania, whose only power interconnection to the EU is via Finland, will have to import more Russian gas. – Reuters
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=230021&version=1&template_id=39&parent_id=21
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'Lithuania Pharmaceuticals and Healthcare Report Q2 2008' Reveals Forecasts for the Coming Five Years Annual Growth at Single-Digit Figures
July 14, 2008 1:33 PM EDT
DUBLIN, Ireland--(BUSINESS WIRE)--
Research and Markets (http://www.researchandmarkets.com/research/644948/lithuania_pharmace) has announced the addition of the "Lithuania Pharmaceuticals and Healthcare Report Q2 2008" report to their offering.
The Lithuania Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Lithuania's pharmaceuticals and healthcare industry.
While larger than its Baltic counterparts in terms of value, the Lithuanian pharmaceutical market remains one of the smallest in the Central and Eastern European (CEE) region. Despite strong recent growth - 14% year-on-year (y-o-y) for the three months February through to April 2007, according to distributor Tamro - funding pressures and out-of-pocket spending on drugs, limited by patient purchasing power leads BMI to forecasts for the coming five years annual growth at single-digit figures. Market growth is also contingent on the country's fractious parliament and current weak government managing to steward the fast-growing economy, or fresh elections yielding more workable arrangements before the next round of scheduled parliament polls in October 2008.
In the meantime, the country's creaking public services - in particular healthcare - require urgent attention, despite the attempts of successive governments to develop a modern primary sector, with doctors providing a gatekeeper function to specialists. While the President appears committed to reducing corruption, power struggles and appeals to populism are blamed for preventing movement on badly needed economic and social reforms. However, although the fractious political scene threatens to derail the much-needed reforms, the new multiparty governing coalition has put forward a platform based on investment in social services.
In the adjusted BMI's Business Environment Rankings for the 16 major CEE markets, Lithuania is once again ranked joint twelfth, alongside Croatia. While Lithuania's strong economic growth and surging levels of consumer spending are stimulating pharmaceutical market growth, economic and political risks remain a cause for concern. The fact that the country's drug-manufacturing sector is small and export-oriented illustrates limited long-term market potential for foreign-made products. Nevertheless, imports will continue to provide the bulk of patented medicines, the demand for which is rising with healthcare modernization and improvement of patient awareness.
In February 2008, police opened an investigation into the potential health hazards of a psychoactive herb - Salvia divinorum - sold on the internet in Lithuania. Law enforcement agencies are aiming to assess its sale through such channels, with a view to banning it. The usage of the herb, which originates in Mexico, is not regulated by EU authorities. The issue also highlights the problems facing cross-border trade in pharmaceuticals and herbal medicines in the face of expanding use of internet and other sales channels.
http://www.streetinsider.com/Press+Releases/Lithuania+Pharmaceuticals+and+Healthcare+Report+Q2+2008+Reveals+Forecasts+for+the+Coming+Five+Years+Annual+Growth+at+Single-Digit+Figures/3817120.html
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Baltic banks' outlook still positive
Jul 14, 2008By Mike Collier
OVERSEAS AID: Foreign ownership is a strength, says Federico Ghizzoni
RIGA - An in-depth survey of the banking sector across the whole Central and Eastern Europe (CEE) region has drawn the conclusion that Baltic banks are among those considered “still the right bet”. The banking market in the Central Eastern European countries is still dominated by foreign international players, who continue to profit from their investments in the region, says the "CEE Banking Study 2008" from the Austrian UniCredit Group. "Our study shows that foreign ownership is significant at the CEE level, accounting for 75% of banking assets in Central Europe, 83% in South East Europe and the Baltics and 19% in Broader Europe", said UniCredit's Federico Ghizzoni. Recent mergers and acquisitions efforts have been directed towards new markets or specialised segments, while in the current global context, growth strategies are now most likely to focus on organic growth and branch openings, the report adds. Economic activity in CEE remains lively, says the report, despite the repricing of risk at the international level. The economic dependence on capital inflows is the main risk, while inflation is particularly pressing in the Baltic countries, due to the weight of food and oil in the region's consumption basket. However, “real income convergence remains a driver of further realignment in living standards,” the generally upbeat report says. Fears about the continuing credit squeeze in the region are lessened by the widespread presence of international players in the market, UniCredit believes – which is good news for the Baltics with their proliferation of Scandinavian banks. "Securing sound funding remains a key priority for the local banking sector and for the local economies", said Debora Revoltella, CEE Chief Economist of UniCredit Group. “The Baltic countries... are already facing the challenges of a credit squeeze - with lower capital inflows resulting in lower lending growth and thus a slowdown in economic activity.” "Households' lending penetration gap is closing, but the growth potential remains related to the strong demand for a higher living standard", said Revoltella. "The main risks are related to households´ exposure to potential depreciation of the local currencies and some possible deterioration in credit quality. Households in the region are indeed not able to save so much anymore and are more and more depending on loans, while they have accumulated a large proportion of their debt in foreign currency, particularly in the area of mortgages," added Revoltella. On the corporate side, cyclical stabilisation is partially balanced by renewed corporate demand for bank loans. Banks increasingly compete in providing additional services like leasing, cash management and structured finance, which are the main growth drivers for corporate business in CEE.
http://www.baltictimes.com/news/articles/20837/
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Riga’s airport to take off
Jul 09, 2008Staff and wire reports
BRAVE NEW AIRPORT: Riga plans to outclass other terminals in the region.RIGA - Riga International Airport has announced its intention to go ahead with the next phase of its long term development plan, which when complete will increase its capacity to 12 million passengers a year. Airport board member Ervins Butkevics said construction of a new aircraft parking area and terminal building is ready to begin. Making up the so-called fifth and sixth phases of the overall plan, the announced design and construction is expected to cost about 200 million lats.
http://www.baltictimes.com/news/articles/20808/
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Cruise-liner Sewage Adds To Baltic Decline
ScienceDaily (July 15, 2008) — Most international cruise ship companies operating in the Baltic Sea have refused to co-operate with a plea from WWF to stop dumping their sewage straight into the water.
The Baltic, an inland sea, is one of the most polluted seas in the world, so much so that the countries on its northern European shores have recently joined together to form the Baltic Sea Action Plan in an attempt to reverse its decline.
WWF contacted ferry lines and cruise ship companies sailing there asking for a voluntary ban on waste-water discharge. So far most of the ferry lines have responded positively, but only three of the international cruising lines have signed up.
“We think it should be the responsibility of anyone operating a ship in the Baltic Sea to take care of their own wastes in a responsible manner and stop polluting the sea,” said Mats Abrahamsson, Program Director of the WWF Baltic Ecoregion Program. “If some companies can sign our agreement, why can’t the others?”
The Baltic Sea receives between 250 and 300 cruise ships each year and the waste-water produced is estimated to contain 113 tons of nitrogen and 38 tons of phosphorus, substances that add to the eutrophication of the sea.
Eutrophication is considered by many to be the main environmental problem of the Baltic Sea, causing both biological and economic damage to marine environment and coastal areas.
It is caused by an overload of nutrients, such as phosphorus and nitrogen, into the ecosystem. Eutrophication causes many problems, including unusually strong and frequent blooms of “blue-green” algae.
Some of these algae produce toxins harmful to both humans and animals, with people even advised not to go in the water in many parts of the Baltic.
Furthermore, when the algae die they sink to the bottom and consume large amounts of oxygen, causing “dead zones”. Seven of the largest dead zones in the world are at the bottom of the Baltic Sea. The lack of oxygen and sun-light - blocked out by the algae - also has an impact on plant life and on fish re-production.
In addition to excess nutrients, the waste water dumped by the boats also contains bacteria, viruses and other pathogens. “The most obvious thing they should do is install storage tanks large enough for them to carry the waste to the next port,” said Abrahamsson.
“Ships go into port quite often, so they can easily do that. They complain that the facilities in the ports are not efficient or large enough, but that is just a bad excuse.
“We concede that the facilities could be improved and we have told the companies we’re happy to work with them to influence the authorities to improve their capacity to receive this waste. But it’s already perfectly possible to do it.”
Dr. Anita Mäkinen, Head of Marine Programme for WWF Finland, said: “Some big cruise ships are treating their waste waters onboard, but only according to the Alaska regulations, which do not regulate nutrients but only bacteria and organic content of the waste water. They don’t seem to understand that this is not enough in the Baltic Sea.”
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