INTL 6/7 EU/NATO/CIS/CSTO-SCO|EU elections/UK political situation/Russia et al

5/24 EU/NATO/CIS/CSTO-SCO|Russia: Medvedev Says Summit Going Well/UK Pol.situation
Housecarl

Georgian officials in US warn of Russian buildup
TheSearcher

Anti-Europe sentiment soars
Richard

Coming Soon: An English Revolution
rs657

NATO ,U.S., seek supply route in Iran to Afghanistan
truthseeker
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http://www.google.com/hostednews/ap/article/ALeqM5gw1f3atn-NQqB8NuV0OJH1EAMihgD98M43TG2

UK sends 1st right-extremist to EU parliament

30 minutes ago

LONDON (AP) — Britain has elected its first extreme-right politician to the European Parliament.

Results announced Sunday in voting for the European Parliament showed the British National Party has won a seat in northern England's Yorkshire and the Humber district.

The far-right party, which does not accept nonwhites as members, was expected to possibly win further seats when other results in Britain were announced.

Lawmakers with Britain's major political parties said the far right's advance was a reflection of anger over immigration issues and the recession that is causing unemployment to soar.

Britain, with 60.4 million people, has 72 seats in the 736-seat European parliment.

Copyright © 2009 The Associated Press. All rights reserved.
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http://online.wsj.com/article/SB124440214685092083.html

* EUROPE NEWS
* JUNE 8, 2009

Europeans Punish Ruling Parties
Extreme-Right and Rival Groups Gain in Parliamentary Elections Marked by Crisis, Low Turnout

* Article
* Comments (9)

By JOHN W. MILLER, CHARLES FORELLE IN BRUSSELS and MARCUS WALKER IN BERLIN

Governments from Germany to Ireland lost seats to rivals and extreme-right fringe parties in European Parliament elections, as voters punished ruling parties in many parts of the Continent on Sunday.

Political leaders and analysts described the vote, involving an electorate of 385 million across 27 nations, as a bellwether for the public's mood in the wake of a crisis that has cost hundreds of thousands of jobs.

Voters voiced their unease by sending record numbers of far-right candidates to Brussels -- or by staying home. Turnout fell for the seventh straight time, to a record low of 43.01%, according to preliminary estimates, despite a concerted effort by European Union civil servants to get out the vote through splashy ad campaigns.

There was no clear shift toward leftist parties, despite wide public blame of free-market policies for the financial crisis. The European People's Party, an umbrella group of center-right parties, appeared likely to maintain its status as the largest parliamentary group.

German Chancellor Angela Merkel's conservative Christian Democrats won a relatively strong result with only four months to go until national elections in September.

Early results and exit polls suggested the CDU would get 38% of the vote in the EU's most populous country, down from 44% in 2004. However, Ms. Merkel's main rivals and governing coalition partners, the left-leaning Social Democrats, did much worse. They were on course to get only about 21% of the vote -- the party's worst result in a German nationwide election, whether for the national parliament or for the European Parliament, since March 1933, shortly after Adolf Hitler became Chancellor.

The Social Democrats have been losing voter support since they cut back Germany's welfare state under Ms. Merkel's predecessor as chancellor, Gerhard Schröder, a policy that alienated much of the party's working-class base. "We were expecting to do better in Germany," said Tony Robinson, a spokesman for the European Parliament's Socialist members.

In France, the ruling UMP party of President Nicolas Sarkozy collected about 28% of the votes, according to an exit poll by French polling agency TNS Sofres. The Socialist Party, which garnered an estimated 17.5% of the vote, the Greens of Europe-Ecologie, with about 15%, and the center-right movement MoDem, with about 9%, appeared to offer little threat to Mr. Sarkozy's position.

In Ireland, voters gave an expected drubbing to the ruling Fianna Fáil party, which has been under pressure since the bursting property and credit bubble sent the Irish economy into a tailspin last year. Ireland has been among the hardest-hit countries in Europe. Unemployment is nearing 12%.

Fianna Fáil candidates were picked by 23% of Irish voters, down from 29.5% in the 2004 European elections, according to an exit poll conducted by Lansdowne Market Research for state broadcaster RTÉ and the Sunday Independent newspaper. The party was expected to lose at least one European Parliament seat. It fared little better in local elections, garnering just 24%. Opposition party Fine Gael won 34% in local elections, according to the exit poll.

The poll also showed a glimmer of hope for Declan Ganley, the organizer of Ireland's successful anti-Lisbon Treaty vote last year and chairman of a new euro-skeptic party, Libertas. Mr. Ganley was running for a seat in Ireland's North West constituency, and with 10% of the vote, according to the exit poll, he was in contention to win a seat. Success for Mr. Ganley could lift his campaign for a second "No" vote on the treaty, which is designed to strengthen the EU's institutions and give it a single president.

But the exit poll, consistent with other recent surveys, showed solid support for the Lisbon Treaty, 54% in favor and 28% opposed, with the balance undecided. Ireland has said it intends to rerun the treaty referendum by November.

Far-right parties from the Netherlands to Italy, espousing tighter rules on immigration and warning against Islamification of European societies, capitalized on voter anger and frustration at a souring economy.

In Austria, provisional results gave the Freedom Party 13.1%, up from 6.3% in the 2004 elections. Provisional results also gave a splinter group, Alliance for the Future of Austria, which broke from the Freedom Party in 2005, a further 4.7%. Support slipped for both of the two more-centrist Austrian parties currently governing in coalition, while support for the center-left Social Democrats slid more significantly, to 24% from 33% in 2004. The Social Democrats stand to lose three seats. The center-right Austrian People's Party lost three percentage points of the vote, but will keep all its seats.

In Bulgaria, the opposition Citizens for European Development of Bulgaria increased their percentage of the vote to 26% from 22%. Bulgaria holds national elections next month. A far-right party, Ataka, won 11% of the vote, down from 14%, as many supporters migrated to Lider, a liberal opposition party started by tycoon Hristo Kovachki.

When the EU's founders set up the first elections to the parliament in 1979, they hoped the institution would become a guarantor of popular support for the union. Instead, national governments have handcuffed the chamber, so that it can only hold up and occasionally tweak EU legislation. It can't propose laws of its own.

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Britain's Brown faces showdown with rebels

* AP foreign, Sunday June 7 2009

DAVID STRINGER

Associated Press Writer= LONDON (AP) — Britain's Prime Minister Gordon Brown heads into a key showdown Monday with rebel lawmakers after projections that his governing Labour Party has produced its worst-ever results in European and local elections.

Mutineers who seek Brown's ouster are likely to make a decision on whether to try to depose the struggling leader after he holds a meeting with lawmakers Monday.

According to predictions based on early results, Brown's Labour looked likely to be forced into fourth place in European election voting in Britain, while support for the party slumped to a record low in votes for town and city hall assemblies.

The results leave Labour, which has been in power since 1997 and won three successive national elections, mired in a wrenching debate over whether its best chance of survival lies with or without its current leader.

Brown tried to pre-empt the bad news with a hasty reshuffling of his Cabinet last week and a legislative program tightly focussed on reviving the economy and cleaning up Britain's tainted political system — but his future remains in doubt.

A total of ten ministers quit last week, undermining Brown's authority. He has been damaged by the election results and borne the brunt of criticism in a scandal over lawmakers' excessive expenses that has prompted widespread public anger.

If results announced in local and European elections were replicated at Britain's next national election, the country's main opposition Conservative Party would sweep to victory — winning back power for the first time since 1997.

Under British election law, Brown must call a national election until June 2010 and is considered almost certain to lose.

"I think we are moving moderately quickly toward the need for a change and that change may be a change in leadership," Charles Falconer, a House of Lords member and a Cabinet minister under Brown's predecessor Tony Blair, told the BBC.

Brown will meet scores of Labour lawmakers on Monday to discuss the party's election results. Immediately afterward, Caroline Flint, a minister who quit last week and attacked Brown's leadership, will hold a debate on Labour's future.

Nick Brown, Labour's chief whip, urged rebels to decide after the meeting with Brown whether to begin attempts to force him from office — or to pledge loyalty. Rebels need the backing of 71 of Labour's 350 lawmakers to trigger a leadership contest, which would likely take about three weeks.

Should Brown's critics force his ouster, any new leader — probably the affable Home Secretary Alan Johnson — would likely hold a national election by the summer, calculating that they would need a public mandate to have political credibility.

If plotters back down, Brown is likely to remain in post at least for another year — holding power until a June 2010 national election.

"If we don't take the right decision now that mood of unhappiness will continue. We will have a long lingering downward decline towards what I see at the moment as almost inevitable electoral defeat next year," said Nick Raynsford, a former minister and Brown critic.

The pressure on Brown has become increasingly evident in recent days — his voice was strained Friday as he announced details of his new Cabinet, while his fingernails were bitten down. He looked uncomfortable and pale Saturday at celebrations in France to mark the 65th anniversary of the World War Two D-Day landings.

Jon Cruddas, a leftist Labour lawmaker who last year refused a job in Brown's Cabinet, has offered an unlikely source of support. He said deposing Brown would amount to electoral suicide.

"We're now less than a year away from the election," Cruddas wrote in an op-ed for the Sunday Mirror newspaper. "We have no more chances left. We either pull ourselves together, stake out what we stand for, or we will be gone."

* guardian.co.uk © Guardian News and Media Limited 2009

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A tectonic shift could shake British politics

By Richard Reeves

Published: June 7 2009 18:57 | Last updated: June 7 2009 18:57

On Saturday, the world’s at*tention was on the beaches of Normandy, 65 years after the D-Day landings. But another anniversary passed un*marked. On June 6 1859, the Liberal party, which would dominate British politics for the next 60 years, was born. If nothing else, the date should have served as a reminder that great parties can rise – and that they can fall.

The coalition of disenchanted of the old Whig establishment, radicals and free-traders that gathered a century and a half ago in the Willis’ Rooms in London’s St James buried their differences in order to bury the minority Conservative government led by Lord Derby. Addressing the Liberal throng, Lord John Russell, architect of the Great Reform Act of 1832, declared the Conservative administration to be “unconstitutional and dangerous”. By the end of the month, Derby was gone and Britain’s first Liberal government was in power.

Led by some of the biggest political beasts of the 19th and 20th centuries – Gladstone, Asquith, Churchill and Lloyd George – the Liberal party cemented Britain’s status as a free-trading nation, introduced universal suffrage, humbled the House of Lords and established the modern welfare state. After the first world war, however, the Liberals lost their way. Labour pushed them into third place in the political pecking order – where they have remained ever since.

One of the great imponderables of British political history is whether, under different circumstances, the animating energy of the labour movement could have been encompassed within a liberal political framework. David Marquand, a leading political analyst, has described the split between the liberal and labour movements as the “progressive dilemma” of British politics.

For a brief moment in the 1980s, it looked as though the dilemma might be resolved. The Liberal-Social Democratic party alliance polled 23 per cent of the vote in the 1983 general election, close behind Labour’s dismal 28 per cent. But Labour recognised the danger from the “yellow peril” – and ditched both its unpopular leader, Michael Foot, and unpopular policies such as unilateral disarmament and wholesale nationalisation of industry.

In last week’s local elections, it was Labour polling in third place on 23 per cent. In the European poll, in which the anti-European Union UK Independence party posed an additional threat, the results were equally disastrous . Gordon Brown, the prime minister, clings on, but only by his fingernails. He spent a good deal of his diminishing stock of political capital at the end of last week putting pressure on key cabinet ministers such as David Miliband, Andy Burnham and Tessa Jowell to declare their support for him instead of following James Purnell, the former work and pensions secretary, out of the government.

Seven of the 33 ministers attending cabinet meetings following the reshuffle are from the House of Lords – a sign that the prime minister is fishing in a shallow talent pool. Bob Ainsworth (don’t feel bad, none of us had heard of him) is defence secretary. He is the fourth in four years during a period when our armed forces have been engaged in two ground wars. The smashing up of the Department for Innovation, Universities and Skills after just two years is simply depressing. Even some of Mr Brown’s staunchest supporters are privately contemptuous of his granting of a peerage and government role as “enterprise tsar” to reality television star Sir Alan Sugar.

Mr Brown’s premiership is in its death throes. The danger for Labour is that, if he remains at the helm, the party itself could be imperilled. Its local government base lies in ruins. Donors are defecting. He has no distinct political offering. The intellectual resources of the left are depleted.

At prime minister’s questions in the House of Commons last week, Nick Clegg, leader of the Liberal Democrats, the party that emerged from the old alliance with the SDP, said Labour was “finished” and that the only choice now was “between the Conservatives and Liberal Democrats”. The Labour benches erupted in laughter. Indeed, the front bench looked happier than it has for months. Labour’s senior politicians see Mr Clegg as a joke figure, and his party as a bunch of wets.

Mr Brown declared that “the Liberals” had said the same thing at every election he could remember. But his memory is not long enough. He assumes, with most of his party, that British politics is fixed for good in a binary Tory-Labour struggle. The idea that Labour in its current form could be eclipsed by a resurgent, remodelled Liberal party, or a new political force drawn from within its own ranks, strikes him and his inner circle as even more laughable than Mr Clegg.

Of course, this kind of tectonic shift in politics does not happen overnight. But this week, of all weeks, Labour should attend a little more to history, and take a little less for granted.

The writer is the director of Demos

Copyright The Financial Times Limited 2009

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http://www.timesonline.co.uk/tol/comment/columnists/martin_ivens/article6446327.ece

From The Sunday Times
June 7, 2009
With friends like Gordon Brown...
Martin Ivens

Gordon Brown wanted to amaze us all with his cabinet reshuffle. Be careful what you wish for, prime minister. Scarcely has there been a more cack-handed operation in British political history. The scale of failure even dwarfs the ineptitude of the year-long attempted coup against him. But the chaos, the resignations and the threat of civil war have resolved nothing, at least this weekend. The fate of this administration is now hanging by a thread but Brown still leads it. “We are locked into a prolonged dance of death,” ruefully admits one of the prime minister’s chief critics.

This government is neither dead nor alive: like Count Dracula it is undead. It exists for no other purpose than Brown’s survival. It would be comical if only the condition of the country were not so serious. The recession may have done its worst but the state’s debt crisis is just beginning. Only a strong government can take the unpopular measures required to curb public spending.

You might be forgiven for forgetting we are fighting a war, too. Are they cowering in the caves of Af-Pak at the elevation of anonymous Bob Ainsworth to defence secretary, the sixth bearer of that title under Labour? Never mind - we have Alan Sugar as the new enterprise champion to sweeten the pill. Had someone proposed such a crass way to relaunch a business on his show, Sugar would have barked: “Prime Minister, you’re fired.”

This is “the creation of a new government”, claims Lord Mandelson, tongue boring a hole through his cheek. If the appointment of Glenys Kinnock to the Europe ministry is “fresh”, then expect the appointment to office any day soon of Ida, the 65m-year-old “missing link”.

It is hard to be “a good butcher” of ministers. Even powerful prime ministers like Margaret Thatcher botched reshuffles. But Brown’s first successful attempt last year - bringing back, as it did, Lord Mandelson - had led us to expect better.

When this newspaper revealed last Sunday that Brown firmly intended to put Ed Balls into No 11 Downing Street, the prime minister really ought to have acted fast to attain his objective or given up the idea on the spot - and not reprised that nonelection he hummed and hawed over two years ago. But Brown had neglected to inform his old friend and ally, the chancellor, Alistair Darling, that he was for the chop.

That said, it is worth following No 10’s logic. The elevation of Balls would indeed have been a coup de théâtre. Darling had been weakened by the expenses scandal, his moral authority as guardian of the nation’s finances undermined by the flipping of his residences. He is also a partial obstacle to the prime minister’s strategy to go for broke and fight the election on the hoary theme of Tory cuts versus Labour “investment”, as Brown calls public spending.

The chancellor had fended the prime minister off when he requested a second fiscal stimulus in April. This earned Darling the plaudits of the Financial Times-reading classes, who like a chancellor to stand up to a profligate No 10, but won him Brown’s enmity.

The chancellor’s civilised demeanour can easily be taken for weakness. By contrast, the schools secretary translated to No 11 would be a ferocious fighter – looking for dividing lines with the opposition by making expensive commitments that he would dare the Tories to reject and so appear to be heartless skinflints. No quarter would be offered and - knowing what David Cameron thinks of the man he calls in Wodehou-sian lingo “blinky Balls” - none taken.

Darling believed he was serving in his last job in government but wasn’t prepared to offer his throat to the knife yet. He summoned up the courage to say, back me or sack me. Jeremy Thorpe said of an earlier prime minister, Harold Macmillan, after a disastrous cabinet cull, the so-called Night of the Long Knives: “Greater love hath no man than this, that he lay down his friends for his life.” When James Purnell, the welfare secretary, quit on Thursday night, Brown gave up the fight and gave up Ed.

It was just too risky. Many Labour ministers and MPs are fond of Darling - he was the only Brownite Tony Blair could ever stomach - and dislike Balls, not only for his own sake but as a lightning conductor for his patron. He is being tarred for the venomous briefing that drove Hazel Blears to premature resignation and alienated women ministers. Friends of Balls furiously insist he has never been responsible for black propaganda operations. Nor had he discussed the No 11 job with Brown for “at least nine months”. That will cheer up Alistair.

Neither Brown nor Balls had reckoned on Purnell’s principled resignation. The now former welfare secretary has always been an unrepentant moderniser and advocate of radical public service reform. A staunch pro-European and liberal interventionist in foreign policy, he believes the radical centre is where a successful Labour future lies. It is no accident that he was raised in the south of England - where Brown’s inability to connect with middle-class voters is likely to be fatal. He voiced the doubts that many Labour MPs share: the prime minister has no vision.

Unlike the scandal-tainted Blears - who disastrously jumped ship on the eve of the local and European elections in what came across as a betrayal of the Labour party she loves - Purnell resigned at the appropriate moment, after the polls had closed. His resignation statement was a model of timing, clarity and hostile intent.

However, he had not coordinated his move with his allies. John Hutton, his fellow Blairite, had predicted that “Brown would be a f****** awful prime minister” from the start. Yet when Hutton resigned from his job as defence secretary on Friday, he failed to blame the PM for his departure. He would have turned on Brown, say friends, only if a challenger had made himself available.

Miliband might once have been that man, but he was content to retain his great office of state. Just as he had ducked his leadership challenge a year before, so he sat tight on Friday, wearing a rictus grin of feigned loyalty. Alan Johnson, the amiable former postman favoured by many Labour MPs as Brown’s successor, failed to deliver yet again. The cockney dauphin gave no signal that he would welcome a rebellion and accepted the home secretary’s job instead. Once that decision was made, Brown’s life support machine was back on.

Labour backbenchers will have another chance to vent their anger tomorrow after the European election results show the scale of the government’s unpopularity, but many are betting we are back to where we were last year when dissident MPs called on the prime minister to go but failed to find a challenger.

The real winner amid this chaos is Mandelson, now first secretary, or de facto deputy prime minister. He plays the part of balancer in this government, urging Blairite allies not to quit government but advising the prime minister not to force the issue of Balls’s appointment - though he had originally consented to it. As the good ship Titanic sinks below the waves, Peter has grabbed the baton and is happily conducting the orchestra.

It was said of John Major that he was in office but not in power. But consider Brown’s plight. He cannot dominate his cabinet for fear of more resignations. He cannot replace his chancellor although their relations are strained to breaking point. He cannot sack his disloyal foreign secretary. He cannot win an election, although he can hang on.

Friday’s prime ministerial press conference reached a new low. While promising to be candid, Brown denied outright ever having tried to shift his chancellor. Shoulders sagged; friends as well as critics were palpably dismayed. There is not a shred of dignity in this slow political death.

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http://www.realclearworld.com/articles/2009/06/germanys_drift_from_europe.html

June 07, 2009
Germany’s Drift from Europe
By Joschka Fischer

BERLIN – “What’s the matter with Germany?,” people on both sides of the Atlantic are asking with increasing frequency. In Berlin, however, nobody seems to understand the question.

Doubts about Germany’s role have much to do with the current economic and financial crisis, and also with the weakness of the European Union and its institutions. Ever since the referendum failures of both the European constitution and the Lisbon treaty, the EU has been flying on autopilot, run by its bureaucrats. With 27 members and no reform of its institutions and procedures, EU processes have become harrowingly inefficient.

Crises are also always moments of truth, because they relentlessly expose both the strengths and weaknesses of all the players involved. For that reason, Europe now requires leadership not from a weak EU Commission or from any other European institutions, but from the capitals of its major member countries.

As always, when serious economic and financial matters are at stake, people look to Germany, the EU’s largest economy. But what they see confounds them, because Germany is openly refusing to lead.

True, Germany has been hit hard – very hard – by the economic crisis. But its economy is nonetheless stronger than ever after the challenges of reunification and the necessary reform of the country’s labor market and welfare systems.

What amazes our neighbors and partners – and increasingly causes distrust – is that ever since the beginning of the global meltdown last September, the German government has focused almost exclusively on national crisis management, rebuffing any and all attempts at a European approach. Add to this the palpable tensions in Franco-German relations, the blocking of a common EU gas market, close strategic cooperation with Vladimir Putin’s Russia, etc., and the worries about Germany multiply.

It’s not just that there is fear in Berlin that any European solution would be much more expensive for Germany and take a lot longer; this new form of German euroskepticism also shows a fundamental change of attitude amongst the overwhelming majority of Germany’s political and economic elite.

The change is evident by asking a single question: would it still be possible today to give up the D-Mark and introduce the euro as a common currency? The answer is a resounding no. Regardless of whether it’s Chancellor Angela Merkel or Foreign Minister Frank Steinmeier, this answer reverberates across the political spectrum, and it is held irrespective of which parties or people form the government.

Following the changing of the guard after the end of Germany’s red/green coalition, a fundamental shift in attitude has gradually taken place. Europe today is no longer seen as the key project in German politics in which people are willing to invest an essential part of their political capital – and thus of their own future. Rather, 20 years after the fall of the Berlin wall, the reunited Germany is beginning to realize that it can also act alone. The problem, of course, is that this is a huge misapprehension.

Germany’s relationship with Europe is seen as a functional one by nearly all the democratic parties. But, while Europe no doubt remains important for asserting both common and national interests, it is no longer a project of the future. The German perspective is thus shifting in the direction of that of France and the United Kingdom: the EU is increasingly seen as a framework and precondition for asserting national interests, rather than as an aim in itself.

The reasons for this profound change are obvious: the reunification and the historical resolution of the hitherto open “German question”; the failure of the EU constitution and thus of the European vision; the institutional weakness of an expanded 27-member EU; and the increasing inefficiency and slowness of EU institutions.

So will Germany revert to nationalism? All political players in Berlin reject this charge with great indignation. Indeed, there is no strategy or master plan whatsoever for a return to nationalism. The fundamental change in Germany’s European policy is simply happening – the result of a process that could almost be termed “organic.” As such, this does not makes the drift in German policy – which manifests itself, for example, in a refusal to lead in the present crisis – any better.

It is a strategic illusion of the large member states that they can defend their own status without this stolid entity called Europe. After all, can Germany really afford to let the EU’s enlargement into Eastern Europe fail? Can it afford a life-threatening crisis of the euro, a common market endangered by growing protectionism, or Russia pushing into the EU’s Eastern neighborhood? Can it really conduct an independent national policy in the Middle East and Africa, or play an effective role in resolving global issues, from addressing climate change to building a new financial order?

To ask these questions – and many more – is to answer them: only a strong, substantially more integrated EU can manage all this. But this EU will have a future only if its member governments and peoples are willing to invest a substantial part of their political success and their national interests. And this applies above all, as it did in the past, to Germany, in the heart of the continent, with the EU’s largest population and economy, and, last but not least, with its difficult past.

Joschka Fischer, a leading member of Germany's Green Party for almost 20 years, was Germany's foreign minister and vice chancellor from 1998 until 2005.
© Project Syndicate, 2009

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http://www.realclearworld.com/blog/2009/06/russia_news.html

June 07, 2009
Russia Scaling Back at Economic Forum

The global crisis continues to affect Russia, including its premier economic forums, long held as indicators of the country's economic health. The mood is very different this year at the St. Petersburg Economic Forum, the main economic and investment event in the Russian Federation, which draws the top commercial and political elites from all over Russia and the world. The Forum's budget is scaled back significantly, and even the entertainment for the rich and influential will be different - last year's "Pink Floyd" concert will now be replaced by the music group "Duran Duran." The guest number has been cut from 2,500 to just 1,500, and each will be fed by traditional Russian cuisine at 100 Euros per person. Last year, participants arrived on private yachts that barely fit on the embankment of the Neva River. Now, according to the St. Petersburg Governor Valentina Matvienko, everything should be done "modestly, but with dignity." This year, instead of sailing to town on their yachts and private ships, the businessmen will arrive on their personal aircraft - St. Petersburg "Pulkovo" airport is prepared to accept 150 private planes.

At the opening of the Forum, Anatoly Chubais - former MP and Chairman of Russian Nanotechnologies State Agency - signed an agreement to create the largest production of solar cells in Russia, and commented on major economic issues and trends: "No one can say what will happen to the economies of China and the United States. It is now clear that Russia is fully dependent on them." Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs, joked: "If we all stand on our knees and pray for the U.S. economy to revive, our country will also bounce back from the crisis."

Elvira Nabiullina, Minister of Economic Development, confirmed that the risk of the "second wave" of the crisis still exists, but in her opinion, Russia has all means to weather the troubles. According to Sergei Polonsky, chairman of one of the largest real estate companies, "this autumn in Russia, there will be a sharp increase in property prices - real estate will cost more than before the crisis."

Russian business was presented in the former imperial capital by the country's commercial elite, since the absence at the forum can be regarded as a sign that one's company is in trouble. Politicians and economists have also sought to reassure investors and businessmen - the Head of Russian Savings Bank German Gref said that the fall in GDP in Russia is slowing down every day: "In the second half of the year, we will see stabilization, after which the country will begin the economic revival."

At the forum, Minister Nabiullina met with Catherine Ashton, European Commissioner for Trade. Both discussed the possibility of Russia's entry into the World Trade Organziation. Nabiullina noted that this year Russia marks the sad date - 16 years of country's attempts to join the WTO. At the end of negotiations, it was stated that Russia may join WTO before the end of the year.

Belorussian President Lukashenko spoke to the Russian media about his country's relationship with the Russian Federation, noting that his republics's strategic support for Moscow is "priceless." With that backdrop, he noted that Russian economic assistance to Minsk during current global crisis is "inadequate." Speaking of the external threats to Russia (in particular, on the part of NATO), he said that "no tanks ever had an easy path through Belarus towards Moscow, and this will remain for the time being." The President urged Moscow to pay closer relationship to the strategic importance of Belarus to Russia: "You think that ten million people who are now a shield for Moscow - is that free? Is Belarus unimportant to you? Important. Who now performs an important function? Belarus - Air Defense, Army and so on. You that think that all of this should be pro bono?"

In the autumn 2008, Russia has agreed to grant Belarus a two billion dollar stabilization loan, but so far, Minsk has received only $500 million from this amount. Some observers believe that further financial support depends on the consent of the republic to recognize Abkhazia and South Ossetia, which was long sought from Belarus by the Russians.

In an interview, Lukashenko did hint that money was offered for the the recognition of the two break-away Georgian republics: "I said to the Russian leadership that we can solve this problem. But nonetheless, they said that if we recognize Ossetia and Abkhazia, there will be $500 million dollars." During the interview, Lukashenko gave no definitive answer whether his country will recognzie the provinces.

Ongoing opposition protests in Georgian capital Tbilisi are becoming more dangerous to the participants - on June 3rd, unknown individulas kidnapped two female activists of the youth wing of "Democratic Movement - United Georgia," headed by Nino Burjanadze, former Speaker of the Parliament. The criminal investigation has been launched into the event, but the Ministry of Internal Affairs has not officially commented about the incident. The victims reported that the kidnappers pushed them into the jeep, took to the outskirts of Tbilisi, and stopped near the cemetery. The young women were asked questions about their political party, and one of them was beaten. Both activists were released about six hours after the abduction.

Posted by Yevgeny Bendersky at 2:41 AM

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Moscow Struggling to Transform CSTO into a "Russian NATO"
Publication: Eurasia Daily Monitor Volume: 6 Issue: 107
June 4, 2009 10:01 AM Age: 3 days
Category: Eurasia Daily Monitor, Home Page, Russia, Military/Security, Featured
By: Pavel Felgenhauer

After the war with Georgia last August, Moscow has attempted to transform the Russian-dominated seven-member Collective Security Treaty Organization (CSTO) - a loose alliance that has served mostly as a forum for security consultations - into a military organization that might counterbalance NATO. During the Russian invasion of Georgia, no CSTO ally provided any assistance, or recognized the independence of the Georgian separatist regions of Abkhazia and South Ossetia. In February at a summit in Moscow, the presidents of Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan announced the creation of a new CSTO rapid-reaction force. President Dmitry Medvedev declared the force will be "adequate in size, effective, armed with the most modern weapons and must be on par with NATO forces" (EDM, February 5). It is well understood in Moscow that even a symbolic military contribution is important politically. It is always better to be heading a coalition of the willing, than to be a lone aggressor.

It was announced that a legally binding agreement to create the Collective Operational Reaction Force or CORF will be signed at the next CSTO summit in Moscow on June 14. Before that, a series of meetings of other senior officials (defense ministers, secretaries of the national security councils and foreign ministers) will finalize the draft documents, prepared by the CSTO Secretariat. According to Russian officials, establishing the CORF as well as further plans to create a large permanent allied armed force in Central Asia will transform the CSTO "into a NATO-like structure." The Russian foreign ministry suggested that the permanent allied armed force in Central Asia will defend the region from "outside aggression" and among other components will include a fleet in the Caspian Sea (Kommersant, May 29).

This week the CSTO defense ministers' meeting in Moscow ended in failure - there was no agreement on the CORF. The CSTO Secretary-General Nikolai Bordyuzha told journalists that Armenia and Uzbekistan had blocked progress, "with Armenia demanding a more concrete date for when the CORF will become operational." Bordyuzha hoped that "by June 14, just before the summit, everything will be ready for signing by the presidents" (Interfax, June 3).

The Uzbek president Islam Karimov signed the initial CORF agreement in February with reservations, avoiding committing Uzbek forces to a permanent structure, instead participating on a case-by-case basis (Interfax, February 4). Apparently, Tashkent has continued to be skeptical of the potential of the new force. Armenia also sees a genuine external threat with an unresolved conflict with Azerbaijan since the 1990's over Karabakh, and an uneasy relationship with Turkey. Armenia clearly wants a strong commitment of military aid in a possible crisis - not an open-ended promise to intervene in theory. The Central Asian CSTO countries including Uzbekistan, see internal threats from Islamists and political opponents, but no genuine external threat, at least while the U.S. and NATO remain committed to Afghanistan and the Taliban does not move in force to the borders of former Soviet Central Asia -as occurred in 2000.

The Russian defense ministry announced it is ready to commit the bulk of the CORF troops - the 98th airborne division and the 31st air-assault brigade. There are plans in Moscow to create joint Special Forces within the CORF framework for antiterrorist operations. The CSTO defense ministers were shown Russian-made uniforms and weapons, which the defense ministry hopes they will purchase for their CORF troops - standardizing their appearance and at least promoting a display of interoperability (ITAR-TASS, June 3). Russian officials also hope that Belarus, Kazakhstan and Tajikistan will each commit a brigade together with special units. Kyrgyzstan will be asked to provide a battalion. The Armenian and Uzbek commitment remains unclear (Nezavisimaya Gazeta, June 3).

The Belarusian constitution does not allow the commitment of its troops for combat abroad. In February Minsk angrily rebuffed Moscow, and announced it does not plan to change its law, insisting that its CORF contingent might only be used on Belarusian territory (Kommersant, February 10). Recently, relations between Moscow and Minsk have become more strained (EDM, June 2). Medvedev has described recent critical remarks by Belarusian President Aleksandr Lukashenka as "unacceptable" (Interfax, June 3). Uzbekistan is in a simmering conflict with its CSTO neighbor Tajikistan, and has accused Kyrgyzstan of harboring Islamist terrorists, and closed its border (EDM, May 28).

There are of course constant differences amongst NATO members, but it is hardly the model which Medvedev had in mind, when he first announced plans to create a Russian version of the Atlantic Alliance. There are well-established procedures within NATO to settle differences, but Moscow bureaucrats do not appear to have grasped the notion of patient consensus building.

According to leaks from the CSTO secretariat in Moscow, the grand plans of building the CORF have already been watered down. The CORF troops will remain on national territory and under national jurisdiction. There will be no CORF permanent joint staff or command. The force will be assembled, a commander appointed and a staff created whenever missions are approved by an emergency summit of the CSTO presidents. In the latest example of Moscow-style bureaucracy, it was proposed that the CORF commander will be appointed from the nation on whose territory any operation is conducted (Nezavisimaya Gazeta, June 3). The CORF appears at present to be stillborn -or perhaps Moscow wants any plausible legal framework for possible future intervention in neighboring states placed under the CSTO flag.

Things that make you say "Hummm..."...
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Chinese Mystery On The Russian Border

June 7, 2009: China completed a large, phased array, radar station near its western border with Russia, four years ago. The Chinese won't say what the radar is for, but the location indicates that a radar that size could be used to detect incoming ballistic missiles, or simply to observe Russian missile tests that take place in eastern Russia or Central Asia (where Russia still has access to some Soviet era test sites.) The radar might also be part of an anti-satellite weapons system. To destroy satellites, you have to know where they are, and the radars, telescopes and computers that do this can be just about anywhere (although you need radars and telescopes all over the planet to cover all possible orbits).

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Merkel, Sarkozy Triumph in EU Setback for Socialists (Update2)

By James G. Neuger

June 8 (Bloomberg) -- German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi led pro-business parties over socialists in European Parliament elections, lessening the pressure for more stimulus measures to fight the recession.

Amid signs the worst economic slump since World War II is bottoming out, the continent’s top three leaders escaped the drubbing in European Union-wide elections that was handed to U.K. Prime Minister Gordon Brown and socialists in Spain, Austria, Portugal, Hungary, Bulgaria and Slovenia.

“I expect a more pro-business Parliament,” said Grace Annan, an analyst at IHS Global Insight in London. “With the center-right having won, it will be more in tune with industry.”

Overall, the center-right group known as the European People’s Party remained the strongest in the Parliament, with 267 to 271 out of the total 736 seats, according to a projection. The Socialists won 157 to 161 seats and the Liberal Democrats 80 to 82.

Merkel’s Christian Democrats and allied Christian Social Union racked up 37.9 percent of the German vote, beating the Social Democrats with 20.8 percent, according to preliminary results yesterday. Sarkozy’s Union for a Popular Movement scored 28 percent, beating the Socialists with 16.8 percent.

Berlusconi Triumphs

Berlusconi’s allies shared in the center-right’s gains, winning 35.6 percent to the opposition’s 26.3 percent, according to projections by state broadcaster RAI SpA.

The center-right’s victory boosts the odds that Jose Barroso will win a second term at the helm of the European Commission, the bloc’s executive arm. EU leaders may reappoint Barroso at a June 18-19 summit in Brussels, a step that requires the Parliament’s approval.

“It is a very sad night for Social Democrats in Europe, we’re very disappointed, we had hoped for better results,” Martin Schulz of Germany, the Socialists’ floor leader, said. “It’s a very bitter evening.”

In Britain, voters were set to deal a rebuke to Brown, battling to hang on to power after the resignation of six cabinet ministers in a week. Brown’s Labour Party had 14.4 percent, down 6.9 percent from 2004, with results from 49 of Britain’s 69 EU districts reporting at 1:30 a.m. in London. That was third, behind the Conservatives at 29.1 percent and the U.K. Independence Party at 17.1 percent.

Fringe Parties

Protest voters made their voices heard in smaller countries, with anti-immigrant parties picking up 17 percent in the Netherlands, 13 percent in Austria and 10 percent in Finland.

The fringe parties represented a mixture of interests, from opposition to immigration or capitalism to a Swedish party that promotes unrestricted Internet downloading and file-sharing.

“They remain a pretty small minority in the context of the European Union as a whole,” said Michael Marsh, a political scientist at Trinity College Dublin.

About 9,000 candidates ran for seats in the Parliament, which passes EU-wide laws on everything from consumer safety to financial services, approves the bloc’s 116 billion-euro ($165 billion) budget and vets top appointments.

First elected by popular ballot in 1979, the Parliament has gained authority over a widening area of regulation. Still, its lack of powers over taxes, spending and foreign policy render it invisible to most voters.

Turnout Falls Again

EU-wide turnout fell to 43 percent, the lowest ever, from 45.5 percent in 2004, according to a first official estimate. Turnout has dropped in every EU election from the peak of 62 percent in 1979.

In Germany, a repeat of yesterday’s voting in the national election on Sept. 27 may enable Merkel to stay in power, forming a coalition with the pro-business Free Democrats instead of the Social Democrats, her party’s historic rival with whom she currently rules.

Merkel resisted President Barack Obama’s pleas for additional pump-priming measures, criticized the European Central Bank for buying assets, and was the first to reflect publicly on rolling back the stimulus.

“It’s a very successful election for Merkel,” said Jan Techau, an analyst at the Berlin-based German Council on Foreign Relations. “Maybe it’s a sign that pressure will ease regarding demands for more social spending to counter the economic crisis.”

Economic Stimulus

Stimulus measures in 2009 amount to 1.6 percent of gross domestic product in Germany, 1.4 percent in Britain, 0.7 percent in France and 0.2 percent in Italy -- all short of a target of 2 percent, the International Monetary Fund said in April.

Data such as a rise in retail sales for the second month in April and a jump in business and consumer confidence to a six- month high in May have fuelled optimism that the economy is starting to pull out of the slump.

Still, EU-wide unemployment reached 9.2 percent in April, the highest in almost a decade, and the commission predicts the economy will shrink 4 percent in 2009 and another 0.1 percent in 2010.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net
Last Updated: June 7, 2009 20:32 EDT

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Russia's Sphere of Coercion
The bear was only hibernating.
by Cathy Young
06/15/2009, Volume 014, Issue 37


Bucharest, Romania
Until last month, I had never heard of the Economic Forum, a Polish-run venture whose annual conference in the resort town of Krynica has been described in the European press as the gathering place for the political elites of Central and Eastern Europe. Then in late May, I found myself in attendance (as a panelist, unpaid except for travel reimbursement) at one of the group's smaller meetings: the fifth annual Europe-Russia Forum, held in Romania's capital. I was not quite sure what to expect from the event, whose Russian participants were mostly of the official or semi-official kind. What I got was a fascinating glimpse into Russia's continuing struggle to define its post-Communist identity and its prickly relationship with its former satellites.

The conference venue added a touch of eerie symbolism. Bucharest is still haunted by the legacy of Nicolae Ceausescu, whose barbaric rule made Romania a hellhole even by the low standards of the Soviet bloc. The Europe-Russia Forum met in the building that is the most conspicuous legacy of his rule: the Palace of the Parliament, formerly the House of the People. Ceausescu had it built in his final years as both personal residence and seat of government, razing much of the city's historic district to make room for the gargantuan edifice. After his overthrow and execution, some wanted to dynamite it. Yet it still stands, a monument to megalomania and to the dark age from which this part of the world only recently emerged. Has a different kind of dark age descended on Russia? Most Russian speakers pooh-poohed the idea. At the opening session, Konstantin Simonov, president of the Russian Center for Current Politics--a think tank with strong Kremlin ties--introduced his report on Russia in 2008, which, he claimed, avoided the pitfalls of either a too-bleak or too-rosy picture. His grounds for optimism included the fact that the war in Georgia had not led to a reimposition of the Iron Curtain or to wholesale militarization. (I was reminded of the old Soviet joke in which the pessimist says, "Things can't possibly get worse," while the optimist retorts, "Oh yes, they can!") In a deft balancing act, Simonov asserted that President Dmitry Medvedev was more "Western-oriented" than his predecessor (puppet master?) Vladimir Putin but also decried the "'good Medvedev, bad Putin' stereotype."

Members of Russia's political establishment are acutely conscious of their country's image as the bad guy in last year's war in the Caucasus and the 2009 "gas wars." The Russia-Georgia conflict was frequently and defensively brought up. The Russian speakers' claims amounted to this: Despite biased coverage by the Western media, it is now clear that Georgia's Mikheil Saakashvili was to blame; Russia did the only thing it could have done; and the unilateral recognition of Abkhazia and South Ossetia's independence was either the right and proper thing to do or the unfortunate but natural consequence of the Kosovo precedent.

"Today, many people in Eastern Europe see us as an authoritarian system, an analogue of the Soviet Union," declared Duma member Adalbi Shkhagoshev of the ruling United Russia party, participating in a panel on the prospects for partnership between Russia and the European Union. "This is not true. We want dialogue and are ready for it." He did acknowledge that Russia needs to be "more careful" abroad and listen respectfully to neighbors.

Alas, many other statements from the Russian speakers did little to dispel their country's reputation as an authoritarian bully. One telling moment occurred on a coffee break when I joined a conversation between Sergei Semyonov, director of a government-affiliated Russian institute of public administration, and a female Estonian parliament member whom Semyonov introduced as a delegate from "another part of post-Soviet space."

"Excuse me," the Estonian MP said firmly, "a full-fledged member of the European Union." "No, no," Semyonov replied with a smirk, "whatever you say, it's post-Soviet space." Moments later, he asserted with a straight face that Russia's initial reports of 1,500 South Ossetians slaughtered by Georgian invaders had never been disproved and that the current official estimate of about 150 dead refers only to Russian military casualties.

At the forum's opening session, Valery Fedorov, director of the state-run Russian Public Opinion Research Center, maintained with an equally straight face that Russia had successfully met the challenge of presidential transition. Medvedev's "election," he argued, was legitimate since most Russians genuinely embraced him as a successor to Putin, the man who had rebuilt not only the economy but the self-respect of a people traumatized by "the disintegration of our great country." Besides, Fedorov explained, competitive elections mattered little to Russians since nothing good had come of them in the past.

The next day, Fedorov reappeared at the Russia-EU partnership session to offer some stock phrases about the twilight of the American empire along with a gloomy prognosis: The differences in values between Russia and the EU were far too great to achieve partnership. "Everyone" in Russia, he said, shared a basic " 'don't tell us how to run our country' " outlook, which inevitably conflicted with the European paradigm of integration and "the primacy of the secular state and the individual"; at best, one could hope for "reasonably amicable coexistence."

My own panel, on democracy and the media, gave further cause for pessimism. Moderator Igor Pavlovsky, deputy editor of Russia's leading wire service, Regnum, delivered this gem: "I'm always annoyed by all these international ratings and indexes of freedom of the press. For some reason we're supposed to accept them as a universal standard. Why not an index of spirituality in the press?"

A few semi-dissenting Russian voices came from delegates from the "Right Cause," a liberal party launched recently with the Kremlin's blessing. One of its leaders, Vladimir Nikitin, deplored the Russian tendency to see liberal democratic values as "a cynical cover for naked self-interest" and even suggested that Russia's foreign policy was often driven by neurotic overcompensation. Yet the loyal opposition had little in the way of a positive program to offer beyond generalities about cooperation on global problems and the hypothetical prospects for Russia's eventual integration into Europe.

On the EU side, the frustration was palpable. Even the more accommodating representatives of "Old Europe" lamented Russia's tendency to see any EU attempt to build ties with former Soviet republics as "anti-Russian." Speakers from "post-Soviet space" and Eastern Europe--who included some notable figures, among them Poland's former president Alexander Kwasniewski and legendary anti-Communist resistance leader Lech Walesa--were more openly wary. They wondered aloud what visions of future European integration had to do with Russian policy today and on what principles pragmatic collaboration with Russia could be built. Romanian president Traian Basescu, who hosted the forum, complained about Russia's attitude toward "the common neighborhood" and its insistence on a right to a "sphere of influence"; what was needed instead, he said, was to build "spheres of trust."

This remark led to one of the forum's moments of unintentional humor near the end of its second day. A Russian discussant attempted to quote, approvingly, Basescu's comment; unfortunately, "sfery doveriya"--spheres of trust--came out as "sfery davleniya," "spheres of coercion."

"That," said the discussant, quickly correcting himself, "is quite a slip." Somewhere, the ghost of Freud was smiling.

Cathy Young is a contributing editor to Reason magazine.

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Jun 9, 2009
West and Russia spar, China wins
By M K Bhadrakumar

When the Kremlin proposed Khabarovsk as a possible venue for the European Union-Russia summit meeting of May 21-22, Vaclav Klaus, Czech president who holds the revolving EU presidency, reportedly warmed up to the idea.

Khabarovsk has nothing to match the architectural ensemble in Prague. But the frontier town in the Russian Far East, nine time zones from Brussels, can be a delightful watering hole of boulevards named after Vladimir Lenin, Karl Marx and Alexander Pushkin, where a lapdance is hard to steer clear of, especially after a shot of fiery Siebierka vodka. It seems Klaus sold the splendid idea to Jose Manuel Barroso, European Commission president, and Javier Solana, EU foreign policy chief.

But it was a cultural misstep of the first order that could have leaped out of E M Forster's classic novel Passage to India. The Kremlin was making a strategic point in the harsh world of Eurasian politics. Nothing symbolizes Russia's complex ties with China better than the old Cossack settlement of Khabarovsk.

Khabarovsk is at the confluence of the Amur and Ussuri rivers, hardly 30 kilometers from the Chinese border. Five-and-a-half days after the Trans-Siberian left Moscow, you could sit in the dining car for a late breakfast and almost peep into snow-clad China as the train hugged the border and stealthily approached Khabarovsk.

Russia plays "China card" By proposing Khabarovsk, as the Moscow publication RBC Daily noted, "Russia was reminding Europe about Asia". The Kremlin was surely hoping that the EU's "Troika" could see "China is just across the border ... Russia's patience is not limitless. Europe is by no means the only potential consumer of Russian gas; and if Brussels continues to ignore Russia's interests, exports may be redirected elsewhere."

However, the post-summit press conference in Khabarovsk showed that the "Troika" either didn't see or impetuously decided not to take cognizance of what it actually saw. The press conference turned out to be a spectacle of recriminations. Clearly, EU-Russia strategic partnership is in tatters. Russia sees the EU's Eastern Partnership, launched in early May, as an affront to its legitimate interests in the post-Soviet space, while Brussels maintains Moscow has nothing to worry as Eastern Partnership is only a benign attempt at sharing influence in Eurasia.

The Khabarovsk summit followed a series of energy conferences that EU convened recently in pursuit of its search of diversifying energy supplies by creating a "Southern Corridor" from the Caspian and Central Asia to Europe that bypasses Russia. Moscow sees the venture as essentially geopolitical and detects Washington's hand in it.

After surveying the debris of the Khabarovsk summit, Moscow issued its strictest warning so far to the EU last Friday that it was close to playing the "China card". It came at the level of the powerful Kremlin boss, Deputy Prime Minister Igor Sechin. He said, "Whatever amounts they [China] ask for, we have the gas." He revealed that Moscow would put forward its proposals during Chinese President Hu Jintao's visit to Russia to attend the 2009 summit of the Shanghai Cooperation Organisation in the Urals city of Yekaterinburg next Monday.

Indeed, Russia has already wrapped up a massive US$25 billion loan-for-oil deal with China in April. China has agreed to lend $10 billion to the Russian oil pipeline monopoly, Transneft, and another $15 billion to the state-run oil major, Rosneft, at a discounted rate of 6% in exchange for assured supply of 15 million tonnes of Russian oil annually for the next 20 years also at a discounted price. The Russian supply is equivalent to about 4% of China's daily fuel consumption.

China commenced the construction of a crude oil pipeline on its side of the border in Mohe in Northwest China's Heilongjiang province on May 19. Vice-Premier Wang Qishan who was present at the ceremony acknowledged, "Energy cooperation plays a vital role in Sino-Russian strategic cooperative partnership". He stressed the pipeline will go into full operation by the end of 2010. The construction of the Russian section of the pipeline with a total length of 64 kilometers started on April 27. The Chinese section runs for 965 kilometers.

There is a proposal to boost the pipeline capacity to 20 million tons. Under the agreement, China and Russia will jointly build and operate the pipeline from the Siberian city of Skovorodno to China's northeastern city of Daqing via the Chinese border town of Mohe.

The vice-president of PetroChina Co, China's largest oil and gas producer, described the project as a win-win deal for the two countries "as it helped diversify China's oil import as well as Russia's oil sales". The government newspaper China Daily commented, "China's push to gain resources as the credit freeze, the collapse of the [Russian] rouble and the depressed global commodity prices prompts countries such as Russia to sell energy assets ... cash-rich Chinese oil firms are eager to secure a steady supply of oil to power the country's growth in anticipation of an economic recovery".

The newspaper revealed that PetroChina gained approval at its annual shareholders' meeting to raise as much as 100 billion yuan (US$14.6 billion) this year to finance key projects including exploration, refining, oil and gas pipeline networks and overseas operation.

China accesses Yolotan-Osman
Thus, Beijing watched the Khabarovsk summit with intense curiosity and took note that the differences between Russia and the EU do not lend to easy resolution. Needless to say, that opens a window of opportunity for Chinese energy diplomacy in the Caspian.

For one thing, Russia will now be more inclined than ever before to pay attention to China's burgeoning market for gas. Russia at present has virtually no gas exports to China, whereas Beijing is hugely expanding the share of gas in the country's total use of energy. In fact, the intake of gas is being doubled this year. China can, therefore, absorb all the gas that Russia can supply. So far, in its craze for the European gas market, Moscow has shied away from the Chinese market. But that fixation now promises to change.

More important, China visualizes that a stalemate is prevailing in the Caspian sweepstakes. It may not last long, but a power vacuum of sorts has lately developed, as Russia's hold is under sustained Western assault. The EU and the US one side and Russia on the other are locked in a zero-sum game, while the Central Asian producers are eager for customers. China knows nature abhors vacuums. It has done the sensible thing under the circumstances by putting forth its own bid on terms that neither the EU nor Russia can possibly match at the moment.

Beijing has made a beeline for the main theatre of EU-Russia rivalry - Turkmenistan - and simply waded into one of the greatest gas fields known to exist, South Yolotan-Osman. The Turkmen government on Saturday announced Beijing's offer to lend $3 billion to develop the vast gas field. President Gurbanguli Berdymukhamedov stated in Ashgabat on Friday: "The deposits at South Yolotan alone, if it produces 50 bcm [billion cubic meters] of gas annually, could produce enough gas to supply any state for 100 years."

Last October, the well-known British petroleum consulting firm Gaffney, Cline and Associates (GCA), which was contracted by Ashgabat, reported that its low estimate for Turkmenistan's Yolotan-Osman gas field could be 140 trillion cubic feet (tcf) while the high estimate was touching 500 tcf. If the gas field has even 210 tcf, that will make South Yolotan-Osman one of the five largest gas fields on earth. (In comparison, Daulatabad, which is currently Turkmenistan's largest gas field, has an estimated 50 tcf Russia's giant Shtokman holds 140 tcf.)

The big question for the near term has been: who will get the best access to South Yolotan-Osman gas? Will it be Europe or Russia? We now have the answer - China.

The Chinese diplomacy proceeded hand-in-hand with the work on the 7,000-kilometer pipeline from Turkmenistan to China with a whopping capacity to deliver 52 billion cubic yards of gas annually, which will be completed by the end of the year.

Ironically, Ashgabat announced the Chinese offer when the Turkmen Foreign Minister Rashid Meredov was holding consultations in Brussels. The spin-doctors in Brussels happily interpreted Meredov's visit as "a sign of Ashgabat's growing frustration with Russia". True, strains have appeared lately in the Russian-Turkmen energy equations. Simply put, Moscow is unable to lift the agreed annual volume of 50 bcm Turkmen gas at the contracted price of $340 per bcm. The sharp drop in gas prices on the one hand - global market price is heading toward $200 per bcm - and Europe's reduced imports due to the economic recession on the other make nonsense of the Russian-Turkmen gas transactions. Ashgabat is peeved.

The West hopes to exacerbate the strains. A sustained Western campaign to woo Berdymukhamedov has been apparent. The US commentators were certain that the "psy-war" was making headway when Ashgabat recently granted German company RWE the prospecting rights off its shores in the Caspian Sea. Ashgabat's move was promptly interpreted as the manifestation of a "new hue" in the EU-Turkmen ties to the detriment of Russia.

At the root of the "Great Game" is the stark reality that if the "South Corridor" projects are to see the light of the day, Ashgabat must commit to sell its gas directly to the European companies without Russian middlemen. In other words, Washington and Brussels must kick Russia out of the Turkmen energy market. It is a tall order, as Moscow too has immense reserve leverage in Ashgabat. More important, Ashgabat will forever remain wary of the West's hidden agenda on human-rights issues and "color revolutions", no matter Washington's current soft-pedaling on such issues.

Ashgabat is no doubt having a whale of a time playing the EU and the US against Russia, and then playing the whole lot of them "occidentals" against China. The Turkmen grasp of the bazaar is a legion. We do not know the terms and conditions of the Chinese loan for Yolotan-Osman but they are bound to be incredibly soft, which cash-strapped West or Russia cannot match in the present hard times.

China in South Pars
China is proceeding according to a set agenda. Beijing steers clear of the shrill rhetoric of the Caspian Great Game that we constantly hear from the US, EU and Russian capitals. Nor has Beijing any use of the extravaganza of "energy summits" that the EU specializes in. Certainly, Chinese diplomacy in the Caspian never brags about its success stories. It is secretive, result-oriented and purposive. The most fascinating part is that Beijing is not indulging in one-upmanship - at least, openly. It knows Central Asians respect discretion. It doesn't speak disparagingly of either the Russians or the Europeans and the Americans.

In particular, it takes care not to ruffle Russian sensitivities. Its measure of success lies insofar as it is poised to advance its energy cooperation with both Russia and Central Asian countries. Arguably, it suits Moscow as well that it is China rather than the EU which is succeeding in the Caspian. So long as Europe's energy dependence on Russia remains at its current level, Moscow remains content.

Equally, China's latest foray into the Iranian gas scene will be welcomed by Moscow. On Wednesday, China National Petroleum Corporation [CNPC] and the National Iranian Oil Company signed a $4.7 billion deal to develop upstream phase 11 of the South Pars field with an estimated reserve of 14 trillion cubic meters, which is enough to supply Europe's gas needs for a quarter century.

France's Total had originally signed a memorandum of understanding in 2000 to execute the project but retracted under US pressure. As Iran moves slowly into the gas export market, Moscow will be pleased with more Chinese deals (and with the proposed $7.5 billion Iran-Pakistan-India gas pipeline from South Pars). Moscow's preference is that Iran shapes up as a regional gas exporter in the huge Asian market.

Beijing will step up its energy diplomacy in Iran in the coming period. Its focus will be to pre-empt the Western oil majors. It will try to optimally exploit the window of opportunity that is fast closing. Beijing will anticipate that by the year end there is a strong likelihood of the US-Iran engagement accelerating. US President Barack Obama said in a BBC interview on Tuesday that "Although I don't want to put artificial timetables in that [US-Iran] process, we do want to make sure that by the end of this year we've actually seen a serious process move forward. And I think that we can measure whether or not the Iranians are serious."

Unless Washington's engagement of Tehran breaks down, which seems highly unlikely given the high stakes for both sides, the Iranian energy scene is destined to become a turf of intense international competition within the coming six months to one year. China's objective, therefore, will be to gain access to as much of the Iranian reserves as possible and work out the evacuation of supplies either via the Turkmen-China gas pipeline (which can have a loop connecting Iran) or through the Iran-Pakistan gas pipeline on which the formal agreement is likely to be signed in Ankara on June 14.

As in the Caspian, the race for Iranian gas pits China against the European countries rather than against Russia. The Kremlin made a big point in organizing its summit meeting with the EU in Khabarovsk.

M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).

Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved.

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Medvedev Promotes Intellectual Economy and Putin Resorts to Soviet Methods
Publication: Eurasia Daily Monitor Volume: 6 Issue: 109
June 8, 2009 12:36 PM Age: 9 hrs
Category: Eurasia Daily Monitor, Home Page, Russia, Economics, Domestic/Social, Featured

By: Pavel K. Baev

On June 6-7 the Economic Forum in St. Petersburg had a far more somber atmosphere and a greatly reduced entertainment program than last year, when Russia was still portrayed as an "island of stability" in the sea of troubles. The central event was again the keynote speech by President Dmitry Medvedev, who refrained from any optimistic predictions concerning a rapid recovery and described the crisis as "a long-running and very resistant ailment" (www.expert.ru, June 5). His modest hope that Russia might overcome problems faster than current forecasts indicate was disproved by Finance Minister Aleksei Kudrin, who argued again about the inevitable "second wave" of the crisis (www.newsru.com, June 5). There was a usual dose of anti-Americanism issued with the familiar coating of condemning the "artificially maintained unipolar system," but perhaps more interestingly the emphasis was on warning against relying too heavily on regulation since that would "inevitably end up substantially slowing down economic growth."

Instead, Medvedev tried to elaborate his favorite theme of innovations and offered a new guideline: "Our goal now is to form an intelligent, ‘smart' economy and a corresponding intelligent and smart society." The audience at the forum was certainly ready to regard itself as "smart society," but a high-resonance conflict in the small town of Pikalevo, Leningrad oblast, proved that Russian socio-economic reality remains rather different. Three plants that employed most of the local population had stopped their production lines since early spring, and the unpaid workers - brought to desperation by the switch-off of hot water - blocked a federal highway and demanded that Prime Minister Vladimir Putin come and sort out the mess.

Putin is generally extremely reluctant to yield to such pressure, but on this occasion he visited and forced the owners to sign an agreement on resuming work (www.polit.ru, June 4). He was demonstratively rude to the oligarch Oleg Deripaska, who one year ago was one of the richest men in the world and now begs for the restructuring of his debts, which might lessen disgruntled public opinion -it was less appealing for nervous investors. This "hands-on" management style demonstrates that most mechanisms of administrative regulation in the sinking economy have ceased functioning, so for hundreds of other "mono-cities" Putin's interference - prompted by radicalized demonstrations - is the only hope (Moscow Echo, June 5).

This relapse into the Soviet-style methods of enforcing political solutions on economic problems proves that the real value of Medvedev's pledges to uphold the market environment is rather limited. He most likely realizes that his instructions ring increasingly hollow, consequently he deplores the economy that "is infested with corruption and is ruled by an ineffective bureaucracy." In a recent interview he also promised to continue reshuffling the elites and dismissing regional governors and all decision-makers who fail to adapt to the new situation (Kommersant, June 4). This readiness to sacrifice a loyal cadre stands in sharp contrast with Putin's preference not to fire incompetent underlings, which he expressed in an unusual didactic essay (Russkii pioner, May 28). Putin maintains that replacing one bureaucrat with another makes little difference, while the boss instead of asserting his power risks becoming a victim to political intrigues (www.gazeta.ru, June 1).

This peculiar discrepancy of views on disciplining the frustrated nomenklatura extends into the perceptions of the role of the oil rent in supporting the overgrown bureaucratic machine. Medvedev argues with growing ardor that the excessive dependency on energy exports has made the economy unstable and vulnerable to price volatility, which has to be overcome through state-sponsored investments within the high-tech industries. This implicit attempt to put the blame for the unfolding disaster on Gazprom, Rosnfet and other energy majors is in fact, less convincing than it might appear -since it is machine-building and other relatively advanced industries that are experiencing the sharpest decline, while worldwide the "petro-states" are suffering far less than other post-industrial economies (www.newsru.com, June 5). At the St. Petersburg Forum, Putin's "lieutenants" such as Deputy Prime Minister Igor Sechin, argued that oil prices were climbing back to the "fair" level of $75 per barrel, while Gazprom's CEO Aleksei Miller expressed confidence that the market expectations for 2010 have shifted to $100 per barrel (Kommersant, June 6).

The bottom-line in these forecasts is that the recovering oil-and-gas revenues will very soon pull the Russian economy out of the hole, easing the pseudo-portentous crisis. Putin is not pressing this theme, but he certainly draws a very aggressive line in his "gas diplomacy." After the scandal-ridden meeting with Belarusian President Aleksandr Lukashenka, he paid a visit to Finland, where issues with the planned Nord Stream pipeline remained unresolved (Vremya Novostei, June 4). The main target, however, was Ukraine, as Putin sent a series of warnings to European partners about a looming interruption of the gas flow caused by non-payments from Ukrainian Naftogaz, which Miller called "Europe's major headache" (www.lenta.ru, June 5). On June 5 however, Kyiv managed to pay $475 million for gas imported in May, subsequently Putin will have to replay his grave warnings next month.

The importance of Ukraine goes far beyond the contentious matters of gas transit, as Moscow follows the development of the ever-escalating political crisis in Kyiv -expecting that an ugly squabble for presiding over the bankrupt state will have a sobering effect on the resentful Russian political class. While Kudrin ponders on sequestrations in the federal budget, the situation in many regions is already desperate, as confirmed by Bashkortostan's president Murtaza Rakhimov in an explosive interview in which he claimed that centralization is now worse than in Soviet times -and that the Duma is a shameful parliamentary fake (Moskovsky Komsomolets, June 5). Medvedev now has to show that he means business, promising to fire corrupt and under-performing officials of which Rakhimov is certainly a prime example. His "get-smarter" discourse however, remains abstract to the rank-and-file within the bureaucratic pyramid, and to the general population who still expect Putin to descend on every Pikalevo and deliver salvation from the undeserved economic punishment.

Posted for fair use.....
http://www.economist.com/world/europe/displaystory.cfm?story_id=13805596&fsrc=rss

European election results

Battered and bruised
Jun 8th 2009
From Economist.com


A mauling for the left across much of Europe, and especially in Britain

IT WAS a terrible night for European socialists, but also a worrying night for those who believe in a Europe of open borders. As elections for a new European Parliament ended on Sunday June 7th, after four days of voting in 27 countries, it became clear that not only Britain’s Labour Party had received a pasting. In the words of the socialists’ leader in the Euro-parliament, the centre left suffered a “very bitter evening”, confirming their failure to take advantage of a financial crisis that might have been tailor-made for critics of free market excesses.

At the same time, the vote for mainstream conservative parties in several countries only held steady or even slightly fell, against a backdrop of the lowest ever turnout for a Euro-election, with just 43% bothering to vote. In many countries, large protest votes went to populist, fringe and hard-right politicians vowing to close borders, repatriate immigrants or even dismantle the European Union in its current form.

Britain elected two members of the avowedly racist British National Party and in the Netherlands, a populist party which vows to ban the Koran and close the European Parliament, picked up four seats with 17% of the vote, coming second only to the ruling conservative Christian Democrats. Far-right and anti-immigrant parties picked up seats in Austria, Denmark, Slovakia and Hungary. The hard-left picked up an extra seat in Denmark, but failed to make breakthroughs predicted in France and Germany.

Gloom for Britain’s Labour government became outright humiliation when the party was pushed into third place by the United Kingdom Independence Party (UKIP), which advocates withdrawal from the European Union. UKIP was a big beneficiary of British voter rage at an expenses scandal that has left the British Parliament reeling. This is ironic, given that of the 12 UKIP members of the European Parliament elected in 2004, one was later jailed for fraud and a second is now facing trial for money laundering and false accounting. UKIP now has 13 seats, one ahead of Labour, and well behind the opposition Conservatives, who picked up 24 seats with nearly 29% of the vote.

The appalling results for Labour came after a week in which Gordon Brown, the prime minister, had to fight off calls for his resignation, including from members of his own cabinet. Oddly, Mr Brown’s mauling last week may save him now: his survival thus far seems to show that his own party has no appetite for his immediate removal.

Using provisional figures as final votes were tallied, in Germany, the Social Democratic Party (SPD) suffered its worst ever result, with just 21% of the vote. The SPD has suffered badly from being locked in an uneasy coalition with the conservative Christian Democrats (CDU) of Angela Merkel. Mrs Merkel will be relieved to take first place, but the CDU vote still fell compared with the Euro-elections in 2004. The big winners of the night in Germany were the pro-business liberals of the Free Democratic Party, whose vote almost doubled to 11%, perhaps gaining from free-market minded Christian Democrats worried by Mrs Merkel’s recent shifts leftwards.

In France, the Socialist Party only just escaped being pushed into third place by Greens led by a former student firebrand of the May 1968 movement, Daniel Cohn-Bendit. The ruling Socialists in Spain lost painfully to the centre-right opposition, while in Poland, the left was simply crushed, with 75% of the vote going to conservative parties.

The pattern of misery for the left was powerful enough to trump the adage that deep recessions punish governments in office. In France, the governing UMP party of President Nicolas Sarkozy was left jubilant after coming first, with 28% of the vote. The result seemed to endorse Mr Sarkozy’s jackdaw-like approach to the Euro-campaign, in which he has played to the right with stern talk about cracking down on crime and opposing Turkey’s entry to the EU, while appealing to the left with attacks on financial “speculators” and promises to construct a “social market economy” which “protects” workers from unfair foreign competition.

In Italy, a similar focus on controlling illegal immigration and protecting workers was enough to hand victory to Silvio Berlusconi and his conservative Party of Freedom. As in France, Mr Berlusconi was helped by disarray among his opponents on the left. However, the Italian prime minister did not emerge unscathed from an ongoing press furore about his private life: his 35% of the vote was down from his general election showing last year, and less than the 45% he had predicted.

Overall, the European Parliament will look a different place after these elections. The socialists remain the second largest group, but they are a reduced force and will have to seek alliances more of the time with Greens and others. The largest centre-right grouping will also be transformed by the departure of Britain’s Conservatives, who say they will form a new anti-federalist alliance in the Euro-parliament with other right-wing parties, mostly from eastern Europe.

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http://www.dw-world.de/dw/article/0,,4311872,00.html

NATO | 08.06.2009
NATO plans to reduce KFOR troops in Kosovo


The NATO military alliance plans to scale down its force in Kosovo. According to a senior US official the troops are to be reduced to 10,000 by January 2010. Currently, Nato’s KFOR troops number 15,000 soldiers.

"KFOR is looking to shift to the next phase of operations - to a deterrent presence," the official told at a news briefing on Monday.

He added that a review of the current mission had led to a reassessment of the security situation, which found that the time was right for a reduction of troops.

"This move is the next legal step in devolving responsibility to the local forces, but (we want) to do so in a way that maintains stability."

The official said the military recommendation had been considered by NATO ambassadors and was to be decided at a NATO defence ministers meeting in Brussels this week.

The Kosovo Force (KFOR) was established after a 1999 NATO bombing campaign ended fighting between Serbian forces and fighters from the ethnic-Albanian majority in Kosovo.

Germany, with 2,300 troops in Kosovo, has the largest contingent of any of the 38 countries that contribute soldiers to KFOR. Last month, the German parliament approved a 12-month extension of the Bundeswehr troop presence in Kosovo, saying that the situation in the region had improved but was still too fragile to warrant a pull-out.

In February 2008 Kosovo declared independence from Serbia and has been recognized by around 80 countries, including the US and most European Union nations.

Serbia and Russia continue to oppose Kosovo's independence.

Most of Kosovo's two million people are ethnic Albanians but the landlocked Balkan country continues to be rocked by ethnic tensions between Serbs and Albanians.

ai/Reuters/AFP/dpa
Editor: Chuck Penfold

Posted for fair use....
http://www.slate.com/id/2220010/

Why Is the Right Doing So Well in Europe?
For a start, they don't spend like drunken sailors.
By Anne Applebaum
Posted Monday, June 8, 2009, at 8:06 PM ET

We've been waiting and waiting, but the widely predicted European backlash—against capitalism, free markets, and the right—has never come. There are no demands for Marxist revolution, no calls for nationalization of industry, not even a European campaign for what the Obama administration calls "stimulus"—a policy more colloquially known as "massive government spending."

On the contrary, in last weekend's European parliamentary elections, capitalism triumphed, at least in its mushy European form. Admittedly, these European polls are a peculiar species of election. Far fewer people vote in them than vote in national elections, and those who do vote are far vaguer about what their Euro deputies actually do once they are elected to the European legislature. The European parliament's gradual accumulation of real power seems to have had no effect whatsoever on its popular image, which is still that of a do-nothing institution composed of clapped-out politicians who cost everybody a fortune in airplane tickets. As a result, fringe parties, including the so-called far right, always attract protest voters and do unusually well.

Nevertheless, European parliamentary elections also provide the only cross-continental simultaneous political snapshot currently available. Although national elections take place at different times and according to different national rules, these most recent, largest-ever European elections took place over a four-day period, according to the same rules, in 27 countries. This time around, with some exceptions, they told an unusually consistent story.

In France, Germany, Italy, and Poland—four of Europe's six largest countries—center-right governments got unexpectedly enthusiastic endorsements. In the two other large countries, Britain and Spain, left-wing ruling parties got hammered, as did socialists in Hungary, Austria, Estonia, and elsewhere. In some places the results were stark indeed: In London this weekend, I could hardly walk down the street without being assaulted by angry, screaming newspaper headlines, all declaring the Labor government of Prime Minister Gordon Brown weak, corrupt, tired, arrogant, and, yes, very unpopular. In some constituencies, European candidates of the ruling Labor Party finished behind fringe parties that normally don't get noticed at all. So rapidly are British ministers resigning from the Cabinet that it's hard to keep track of them (four in the last week—I think).

But how is it possible that the European right is doing so well—and so much better than their U.S. counterparts—during what is widely described as a crisis of global capitalism? At least in part, the Europeans are winning because their leaders have the courage of their economic convictions. While it is true that the continental European welfare states have kicked into high gear over the last six months, there are few equivalents of either George W. Bush's budget deficits or Barack Obama's spending binge. And where there have been—in Britain, for example—the high spending has hardly bought popularity. The theoretical version of this Euro-American policy gap is the recent public spat between economic historian Niall Ferguson and economist Paul Krugman, both of whom are at least as well known for their newspaper polemics as for their academic writing. Very crudely, Ferguson and the German government think massive deficits and government borrowing will lead to inflation and ultimately the collapse of the currency. Equally crudely, Krugman and the U.S. administration think he's wrong.

For the record, Ferguson is, at least by origin, a British Tory. For the record, there aren't any U.S. Republican polemicists making the same arguments in quite as public a way. With a few exceptions, the American center-right's loudest and most articulate voices have been focused almost exclusively on national security for the better part of the last decade. Lip service was paid to "small government" and "reduced spending" while successive Republican Congresses, hand in hand with a Republican White House, enlarged government and spent like crazy. How can they now criticize Obama's possibly lethal budget deficits when their own were so vast, so recently?

None of this is to say that any of Europe's conservatives would necessarily go down well in the United States. (Picture Silvio Berlusconi, paparazzi and alleged teenage mistresses in tow, campaigning in Mississippi.) It's also true that they don't necessarily have much in common: Allegedly, German Chancellor Angela Merkel and French President Nicolas Sarkozy can hardly stand to be in the same room at the same time. But if nothing else, the success of the European center-right during the current crisis proves that there is something to their political formula. They are fiscally conservative. They are, if not socially liberal, then at least socially centrist. They haven't been swayed by the fashion for big spending. They are trying to keep some semblance of budget sanity. And, at least at the moment, they win elections.

Anne Applebaum is a Washington Post and Slate columnist. Her most recent book is Gulag: A History.