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25 May 2013

Press review 25-05-2013

This week the main focus is on the politics in Europe, the road ahead slowly narrowing.
China Daily
France's Hollande urges euro zone government

PARIS - French President Francois Hollande called on Thursday for an economic government for the euro zone with its own budget, the right to borrow, a harmonised tax system and a full-time president. [...]

Rebutting criticism that France has lost its leadership role in Europe because of its dwindling economic competitiveness, Hollande said he wanted to create a fully-fledged political European Union within two years.

"It is my responsibility as the leader of a founder member of the European Union... to pull Europe out of this torpor that has gripped it, and to reduce people's disenchantment with it," Hollande said.

"If Europe stays in the state it is now, it could be the end of the project." [...]

Hollande said a future euro zone economic government would debate the main political and economic decisions to be taken by member states, harmonise national fiscal and welfare policies, and launch a battle against tax fraud.

He proposed bringing forward planned EU spending to combat record youth unemployment, pushing for an EU-wide transition to renewable energy sources, and envisaged "a budget capacity that would be granted to the euro zone along with the gradual possibility of raising debt".
François Hollande's vision might well be the only way ahead at this stage. Austerity has run its course and has left economy after economy in shatters. Now that the same logic is extending its grip to France there is a general realisation that these policies are leading to a dead end. Budgetary discipline at large can only borne its fruit if properly completed by a Federal development and reform policy, otherwise member states will simply spiral into recession and social disintegration; such has been the fate of Greece and Portugal, with Spain and Ireland closely following. Naturally, Hollande is not alone.
Italian minister backs Hollande's call for economic government

Italy said French President François Hollande's call for a joint European economic government should be considered, Foreign Minister Emma Bonino said on Friday (17 May).

"We take note with satisfaction the French position," Bonino told a news conference. She added Hollande's proposal "must be taken into consideration and must be explored."
It is the cold realisation that Austerity and the Neo-Liberal ideology on which it is based can only lead to the social and economic ravaging of Europe and the full roll back of the European construction process. As I noted before, pretty much everyone understands this, it is either a Federation or nothing, the disagreement is on the time table. Everyone is waiting for the federal election in Germany next Fall, and the likely ousting of the FDP, the Neo-Liberal bastion in German politics. But this impasse is being extremely damaging, perhaps not the least economically.
The Local
Did Merkel's politics hurt Germany at Eurovision?

Eurovision Song Contest favourite Denmark won the competition on Saturday night, while Germany plunged to 21st place – the worst showing in five years – amidst speculation that it was payback for Angela Merkel’s hated policies.

The German commentator for the show said the country’s weak showing might not be the fault of its entry Cascada.

“We are in a difficult situation,” said Thomas Schreiber from the ARD TV network. “There is surely a political situation.” He said he didn’t want to say that Germany’s poor showing was a slap in the face for Angela Merkel, but “you also have to see that it wasn’t just Cascada, but Germany on stage.”
Between this coming Fall and the Summer of 2014 the political configuration of Europe will certainly change considerably. Rest to know on which direction.

Veering now the political lenses a bit further east there is this quiet piece of news with a faction of the so called rebel army in Syria openly declaring alliance to Al-Qaeda. This is the main reason why this deadly conflict has been so difficult to quell: while in the west politicians and media alike are happy to glorify the Sunni fighters, local powers understand that a Sunni ruled Syria will be a disaster just as the Taliban ruled Afghanistan. And this time with serious spill over effects.
Al Jazeera
Jabhat al-Nusra's rising stock in Syria
Stephanie d'Arc Taylor, 19-05-2013

Beirut, Lebanon - Last month, the leader of Syrian rebel group Jabhat al-Nusra - which has been steadily winning battles and gaining popular support since its inception in January 2012 - was forced to publicly clarify his group's relationship with al-Qaeda.

In a YouTube video posted on April 10, Abu Mohammed al-Jawlani stated: "The sons of Al-Nusra Front pledge allegiance to Sheikh Ayman al-Zawahiri," the former right-hand man of Osama bin Laden and the acting head of al-Qaeda.

With this declaration, Jawlani ratcheted up suspicions in the West that significant elements of the Syrian opposition are ideologically and tactically aligned with al-Qaeda. Nusra is now officially considered a "terrorist" organisation by the US State Department.
After a few weeks without mentioning it, gas is back to this review. The Financial Times ran a piece showing that the gas supply situation in the UK this past winter was more serious than most would like to admit. What appeared to be a good dose of hype from the popular press was actually quite close of becoming reality: physical shortages. The only certain thing at this moment is more price spike events ahead. And this extended winter in Northern Europe is promising to put even more stress on storage all across the continent.
Finantial Times
UK gas supply six hours from running out in March
Gill Plimmer and Guy Chazan, 23-05-2013

Britain came within six hours of running out of natural gas in March, according to a senior energy official, highlighting the risk of supply shortages amid declining domestic production and a growing reliance on imports.

“We really only had six hours’ worth of gas left in storage as a buffer,” said Rob Hastings, director of energy and infrastructure at the Crown Estate, the property portfolio managed on behalf of the Queen. “If it had run any lower it would have meant . . . interruptions to supply.”

The price spike triggered fears that household energy bills could rise this year. SSE, one of the big six power suppliers, warned on Wednesday that consumers should brace themselves for higher bills “unless there is a sustained reduction in prices in wholesale gas and electricity markets”.

Mr Hastings backed that view: “We are likely to find gas prices rise by a lot in a year.”
To close is an extended piece by EurActiv on the "Drill Baby Drill" report issued by the Post Carbon Institute some months ago. While there is some disagreement on the extension of the US shale "boom" every one seems to concur that the same won't happen here. Investors take care.
The current shale gas boom which has bathed the US economy in cheap energy will soon go bust, a former gas industry geologist has told EurActiv.

The future of shale gas in Europe was high on the agenda at an EU summit in Brussels yesterday (22 May), with leaders stressing the “crucial” role that such indigenous energy resources could play in reviving industry.

But according to David Hughes, a geoscientist and former team leader on unconventional gas for the Canadian Potential Gas Committee, the US boom on which many base their expectations is founded on shifting sands.

“The cheap price bubble [in the US] will burst within two-to-four years,” Hughes said. “At a high enough price, the supply bubble will burst perhaps 10-to-15 years later, when drilling locations become sparse.”

“Supply can be maintained for many years,” he added, “but only at much higher prices with ever-escalating environmental impacts due to the accelerating number of wells that must be drilled.”
And that's it for this week. As we get closer to Summer the weather gets colder instead of warmer; there are interesting things ahead for sure.

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