Archive for the ‘European Union’ Category

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Shale Oil leading to real jobs and real investment in the US

July 1, 2013

“Artificial” jobs created by subsidies and government inspired market distortions are never sustainable. As is being evidenced by the boom and bust of solar energy and wind turbines riding the wave of subsidies. But the advent of shale oil (and shale gas) is a game changer in many many ways. Fossil fuels are now no longer all “bad” (though some of this sentiment is leading to another inane “War on Coal”), and the fundamental truth that true sustainability – of necessity – requires being commercially sound and not just subsidised is taking hold again.

The US is at least 3 years ahead of Europe in exploiting shale gas and shale oil – even though the deposits in Europe are quite considerable. But Europe is still stuck in the self-righteous and self-delusional “green” policy regimes which have raised energy prices unnecessarily, helped to sustain economic stagnation and have prevented some 15 million jobs from being created. Without a paradigm shift in energy policies and a whole-hearted pursuit of shale gas and nuclear power, Europe’s return to sustainable growth is difficult to define.

Reuters: 

Thanks to the U.S. shale energy boom, the once-quiet niche of U.S.-flagged oil tankers is in unprecedented flux.

A half-dozen vessels that typically carried gasoline to Florida are now rushing crude oil along the Texas coast. Major investment at the port of Corpus Christi, which now exports more than half of all Eagle Ford shale oil, suggests more to come even as new pipeline projects promise further market shifts.

The shale oil revolution, now in its third year, has already scrambled the inland U.S. crude market, forcing pipelines to reverse direction and fuelling a revival in railway oil trade. ….. 

(more…)

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Croatia joins the EU: “Muslim nations need not apply”

July 1, 2013

Croatia joined the EU today as the 28th member state.

(But I can’t help concluding that both Croatia and the EU are consequently disadvantaged. At least Croatia is not joining the Euro which it can ill afford to do).

After Slovenia it is the second of the former Yugoslavia countries to enter. In the meantime the “negotiations” for Turkey’s membership are proceeding at a glacial pace. Any possible excuse is used to slow down progress whenever possible. The opposition to Turkey’s membership is not restricted to Germany, Austria and France where it is particularly obvious.

Considering the other states deriving from Yugoslavia, Bosnia applied for membership in 2003 but has not yet been officially accepted as a candidate nation. Macedonia applied in 2005 and is accepted as a candidate country. Serbia applied for EU membership in 2009 and is accepted as a candidate nation. Negotiations with Montenegro started in 2012. Kosovo has not yet been allowed to apply.

While EU membership is ostensibly judged on economic and civil rights criteria there is an unspoken undercurrent which is undoubtedly connected to religion and perceptions of religious groups. (more…)

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Posted in Behaviour, Europe, European Union, Politics, Religion | 1 Comment »

Erdogan blows Turkey’s prospects of joining the EU

June 19, 2013

It is not the protests in Turkey but Erdogan’s hard-handed approach to quelling the protests which may have blown Turkeys chances of joining the EU.

It is his response which provides a “politically correct” cloak under which many of those opposed to Turkey’s membership of the EU can hide. Their opposition is primarily because Turkey is an Islamist nation, but the police actions in Turkey come in very handy to hide behind. They can now use Erdogan’s “undemocratic” behaviour as their visible justification for their opposition. Angela Merkel and Germany have long been opposed to Turkey’s membership but have had to walk the tightrope of opposing while not seeming to be giving in to the neo-Nazis and their anti-Turkish campaigns within Germany. I caught Angela Merkel on TV two days ago and she was “apalled, utterly apalled” at the hard response of Erdogan’s police.

Hurriyet: Chancellor Angela Merkel’s conservatives have rejected Turkish membership in the European Union in their German election programme, saying the country would “overburden” the bloc because of its size and economy.

The Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), have long opposed Turkey joining the 27-nation bloc, but haven’t stood in the way of EU accession talks that were launched shortly before Merkel took office.

The German line has hardened in recent weeks however because of Ankara’s tough response to three weeks of protests against Prime Minister Tayyip Erdoğan.

On June 17, Merkel said she was “appalled” at Turkey’s handling of the protests, which have turned into fierce clashes between police firing teargas and water cannon, and masked demonstrators throwing bottles and other missiles.

Turkey’s application to accede to the EU was first made 26 years ago in 1987.

 Turkey has been an associate member of the European Union (EU) and its predecessors since 1963. After the ten founding members, Turkey was one of the first countries to become a member of the Council of Europe in 1949, and was also a founding member of the Organisation for Economic Co-operation and Development (OECD) in 1961 and the Organization for Security and Co-operation in Europe (OSCE) in 1973. The country has also been an associate member of the Western European Union since 1992, and is a part of the “Western Europe” branch of the Western European and Others Group (WEOG) at the United Nations. Turkey signed a Customs Union agreement with the EU in 1995 and was officially recognised as a candidate for full membership on 12 December 1999, at the Helsinki summit of the European Council.

All things going well with the negotiations, membership would be on track for 2015. But there is fundamental opposition to an Islamist country of over 70 million becoming a full member. Sarkozy and the right in France were ( and still are) implacably opposed. For many Austrians, Turkey becoming a member would be close to sacrilege. The Spanish remember El Cid (Rodrigo Diaz de Vivar). Brussels (Barroso) has stated that full membership could – at the earliest – come by 2021. Turkey has implied that 2023 – when modern Turkey is 100 years old – may be a deadline.

In December 2011, a poll showed that as much as 71% of the participants surveyed in Austria, the Czech Republic, France, Germany, Italy, Poland, Spain and the UK were opposed to Turkey’s membership in the European Union.

Erdogan’s response to the protests could well provide the cover for the anti-Islamist forces in Europe to prevent Turkey’s accession to the EU for the foreseeable future.

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Posted in Behaviour, European Union, Politics, Turkey | 2 Comments »

Any referendum on continued EU membership only makes sense after invoking Article 50

May 13, 2013

My opinion on whether the UK should remain within the EU or leave has no locus standi and, in that sense, is irrelevant. But I find the sham promises of an EU referendum by politicians is behaviour which is interesting.  Anything which curbs the growth of the EU bureaucracy and the European Parliament is – I think – a good thing. I certainly think that the UK – and Sweden – should continue to stay well clear of the Euro where I think the experiment is failing.

The current noise in the UK around a future referendum about staying in or leaving the EU seems very contrived to me. Prime Minister Cameron promises an EU referendum after the next election only to try and gain the anti-EU support for the purposes of the election. He has no real intention of allowing any referendum to come to a decision to leave and everybody knows it. Any cosmetic re-negotiation of terms of membership will be known by all parties to be cosmetic and will have little focus.

The only way that I can see that any such referendum would be meaningful – in any member state –  is if it is held after the member state invokes Article 50 to leave the EU. The subsequent negotiations for an Agreement to Leave would then have a 2 year time limit and would have no option but to be sharp and focused. There would be no difficulty in withdrawing the invocation of Article 50 provided the referendum was held within the two year dead-line and decided that membership would continue.

Any member state which really wishes to have meaningful negotiations about EU membership must first invoke Article 50. Both options would then be truly open. Without this any referendum would be without teeth and any result “to leave” would be a hollow one.  By far the best negotiating position for a member state would be with an invocation of Article 50 to be followed by immediate negotiations and a referendum about 20 months later.

A parliamentary vote to invoke Article 50, then negotiations culminating in a referendum towards the end of the 2-year period would be the proper way to go.

Lisbon Treaty: Article 50

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

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EU begins “repatriation of climate policy”?

April 16, 2013

It is probably the best thing that has happened for German electricity consumers for some time as German power prices fell by 3% as a reaction to the vote in the European Parliament. Even the EU Parliament – which has long been known as a “politically correct” follower of global warming orthodoxy – today balked at the  prospect of “backloading” and postponing the introduction of 900 million “carbon allowances”. This had been proposed by the climate fanatics in an effort to increase the declining price of these allowances and the possible collapse of the entire carbon trading market.

It is to be hoped that it really is the “beginning of the “repatriation of EU climate policy” which has been so wrong and so stubborn and so stupid for so long. But the religious environmentalism is still pretty fanatic and they will not give up their cherished dogma and their entrenched positions and their carbon scams so easily.

The Parliament:

Controversial ‘backloading’ proposal rejected by MEPs

The European parliament has rejected proposals for ‘backloading’ to postpone the auctioning of 900 million carbon allowances for 2013-2015, in a bid to help boost the price of ‘polluters permits’.

The proposals have been much debated, with some believing that any interference in the EU’s carbon market – the biggest in the world – could undermine confidence in the emissions trading scheme (ETS).

However, others feel that the temporary backloading solution would give the ETS, which is considered to be a flagship policy in the EU’s climate change agenda, a much needed boost, increasing carbon prices and in turn stimulating investment and innovation.

On Tuesday, parliament rejected the proposals by a narrow margin, 334 MEPs voted in favour, 315 against, and 63 abstained. Carbon prices immediately fell by 44 per cent to a record low of €2.63 following the vote.

Matthias Groote, parliament’s rapporteur on the timing of auctions, said “I deeply regret today’s vote. It is the beginning of the repatriation of climate policy.”

Reuters reports: 

Traders took the lack of political support as a signal to sell, driving the market down to its lowest yet. Immediately after the vote, carbon prices dropped by around 40 percent to 2.63 euros a tonne. They were trading at 3.15 euros, down 33.4 percent, by 1423 GMT.

“The carbon market is now in a coma, until a clear intervention takes place,” an emissions trader said. 

The Commission’s backloading proposal was meant to be a quick fix that could be agreed by the end of last year.

But it exposed deep divisions, with interest groups intensively lobbying members of the European Parliament.

Hedegaard, together with analysts and some in the energy sector have warned that failure to agree on EU steps would spur fragmentation in environmental policy as member nations move to safeguard their own green targets. Britain, for instance, already has a carbon price floor.

Of course the “loony left” were appalled:

“This kind of politics plays into the hands of climate sceptics. The rejection of the backloading proposal weakens the EU emissions trading system and puts our climate goals at risk.”

S&D deputy Linda McAvan said that the UK Tory party played an instrumental part in rejecting support for the EU’s carbon market. 
She said, “In a tight vote in the full session of the parliament in Strasbourg, most Tory MEPs chose to side with climate sceptics once again and undermine their own government’s climate strategy.” 
She continued, “They put their fanatic euro-scepticism ahead of British jobs and our environment,” adding, “This vote is a catastrophe for the environment.”
Greens MEP Keith Taylor also condemned the UK’s Tory party, as well as UKIP, saying, “Some MEPs want to leave the EU carbon market to sort itself out, but this simply won’t work.
“The ETS is flawed and leaving it alone won’t get us anywhere towards improving it. By opposing necessary steps to fix these problems Tory and UKIP MEPs are effectively signalling their desire to destroy the EU’s flagship climate change policy.”
Climate action commissioner Connie Hedegaard also expressed “regret” about the decision by parliament, and said that the proposal will now go back to the environment committee for “further consideration”. 
She added, “The commission remains convinced that backloading would help restore confidence in the EU ETS in the short term until we decide on more structural measures.
“We will now reflect on the next steps to ensure that Europe has a strong EU ETS.”
Josche Muth, secretary general of the European renewable energy council, said that the decision “renders the ETS impotent as a tool for shifting investments into less polluting generation technologies”.

But at least some sanity is returning

However, it wasn’t just the 315 MEPs who voted against the proposals that disagree with the proposals. 
BusinessEurope also welcomed the decision, with the director general Markus J. Beyrer saying that, “The European parliament expressed its support for a market-based instrument and rejected political interference. 
“It is time to move past the divisive and unhelpful debate around backloading and focus on the real priorities for the EU: how to secure a cost-competitive, secure and climate-friendly energy policy for 2030.”

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Cyprus could be the straw that breaks the Euro’s back

March 26, 2013

The wunderkind of the EU have just established a two-currency Europe and have undermined the trust any depositor can have in a Eurozone bank. The Cyprus solution has effectively created a Cypriot Euro which is – in practice – worth a lot less than a normal Euro. And every depositor holding more than €100,000 will be taking a very large risk if he puts his money in a weak Eurozone bank or in a weak Eurozone country. The depositor will need to demand a risk premium to cover the risk that his money could be stolen by the bank or by the State.

A Cypriot Euro (Κ€) is now worth less than a “normal” Euro (€). What that value is is a little difficult to judge but it lies somewhere between 60% and 90% of a normal Euro. All K€ which are outside of the deposit guarantee are now only worth 80% of a normal €. Moreover currency restrictions apply which are not so different to exchange control regulations for movement outside the country but which apply – in addition – to movement of money within Cyprus. A K€ still has the same buying power as a normal Euro but, on the other hand, it will no longer be possible to get any “outside Euros” to move into Cyprus and risk confiscation!

Jeroen Dijsselbloem, the Dutch chairman of the Eurozone announced (rather idiotically) yesterday that the Cyprus solution was the template to be used in the future.  Cyprus itself does not have an economy large enought to be so significant. But effectively  he was confirming that “Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe’s single currency by propping up failing banks”. But the resulting, ostensibly “single currency” will , de facto, have to distinguish between the currency held in different countries and just calling it a “single” currency will not hide the reality.  Mr. Dijsselbloem later tried to back-pedal on his statement but the truth was out by then. No amount of denials will change the fact that the Cyprus solution now sets the precedent and every weak bank will now be required to try and protect its shareholders by attacking its depositors.

I think the damage has been done and it is already too late for the EU to try and soften the message. I heard today that financial advisers in India and China were already suggesting to clients with Euro holdings to make sure it was in a strong country. This eliminates Greece, Italy, Spain, Ireland and even Hollande’s France. This only leaves Germany. The Russians are probably already shifting their legitimate Euro funds to Germany or the Netherlands and their not-so-legitimate money to the Bahamas or Mauritius or the Seychelles. In the short term Germany is the main beneficiary. Not only are their exports being helped by a weak Euro (kept weak because of the weak countries persisting within the Euro) but their banks are likely to see Euro deposits from the weak countries moving their way. But in the long term a flight from the Euro will not help anyone in Europe. The ideological – and almost dogmatic – attachment to the single Euro is now damaging all of Europe and delaying the recovery. Every single one of the bailed-out countries would recover faster if only they had a currency which could have been devalued.

The Cyprus solution is also a more general attack on Europe’s middle class (admittedly the richer part of the middle class). The population of the EU is about 500 million. With an average of about 2.5 individuals per household this represents about 200 million households. Probably 15-20 million households have a net worth exceeding  €200,000 which implies financial assets (as opposed to property and other non-liquid assets) of about €100,000. So an attack on European deposits of greater than €100,000 could affect some 40 – 50 million individuals.

Cyprus could be the straw that breaks the Euro’s back.

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Stealing by the state from depositors in Cyprus is a dangerous precedent for all weak banks in the Euro zone

March 23, 2013

A one off tax is not a regular tax but just confiscation. When done by a State it is Grand Theft. It is some kind of nationalisation where some selected private assets are appropriated. Whatever it is called, it is just plain stealing from bank depositors. When banks are weak or badly managed it is the owners of the bank who should be held both responsible and accountable. But to blatantly and arbitrarily just “confiscate” a part of some of the depositors holdings  is a dangerous precedent.

If this is what happens in Cyprus and seemingly with the acquiescence –  if not the encouragement – of the Euro zone then it bodes ill for all depositors in weak Euro zone banks or banks in weak Euro zone countries. Cyprus can set a precedent of what is acceptable behaviour in the Euro zone. Certainly the banks and the owners will like this. After all it shifts risk from the bank’s equity to the bank’s depositors. And for profligate countries it provides a cover for stealing the money of large depositors.

For depositors having more than €100,000 in Cyprus it is already too late. Robbery by the State has been sanctioned by the European Union including Germany. Rationalising such a move by saying it is to get at black Russian money is disingenuous. If this is acceptable in Cyprus today then it may well be acceptable for banks – and not just the State – to confiscate their customer’s savings whenever an “emergency” arises.

For those with substantial deposits  – and not just over €100,000 – in Greece or Spain or Italy or Ireland it is probably high time to get out.

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Posted in Behaviour, Business, European Union, Politics | 1 Comment »

European Court of Auditors finds misuse of €5 billion subsidies for energy efficiency

January 14, 2013

Hot on the heels of  the criticism in the UK by the Public Accounts Committee of the over-generous licencing of wind-farms comes this criticism by the European Court of Auditors of the €5 billion wasted in the EU ostensibly on energy efficiency projects. (pdf report here).

Subsidies encourage cheating and corruption and green subsidies rarely achieve their objectives and are proving to be an utter waste.

European Court of Auditors:

“The Member States were essentially using this money to refurbish public buildings while energy efficiency was, at best, a secondary concern,” said ECA Member Harald Wögerbauer (AT). Since 2000, the European Union, through its Cohesion Policy funds, spent almost €5 billion for co-financing energy efficiency measures in the Member States. The Court found that the projects selected by Member State authorities for financing did not have rational objectives in terms of cost-effectiveness, i.e. cost per unit of energy saved. The planned payback period for the investments was 50 years on average, and up to 150 years in certain cases.

BBC:  The projects examined by the Court of Auditors were in the Czech Republic, Italy and Lithuania. Those countries received the most EU funding for such projects in 2007-2013.

National authorities used the funds to refurbish buildings, but the spending would not be recouped for 50 years on average, the report said. ….  The auditors looked at a sample of 24 energy efficiency projects co-financed by the Cohesion Fund and European Regional Development Fund. Under co-financing, the national governments contribute a percentage of the investment themselves.

The auditors say the European Commission, which allocates EU budget funds, should ensure that such projects undergo a thorough needs assessment first, and that proper monitoring for cost-effectiveness is done.

The report complained of a lack of necessary data, because energy audits are not mandatory in Italy and Lithuania. In the Czech Republic, where they are required, the recommended investment options were far too costly.

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European Parliament defeats alarmist scare-mongering that shale gas will “destroy the future of mankind”

November 22, 2012

Rational thinking still can prevail over alarmist hyperbole.

It is heartening to see that the European Parliament – which is not my favourite institution – has rejected a moratorium on the exploitation of shale gas and has approved the right of each member state to decide for itself on shale gas exploitation. It has been “green” fanaticism and the environmentalists propensity for myopic adhesion to ideology which has caused Europe to forget the simple reality that “the lower the cost of energy the greater the growth”.

On 20th November the EU Parliament debated reports

(more…)

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Thessaloniki: One Greek city running a budget surplus and showing how it can be done

November 17, 2012
Thessaloniki Map

Thessaloniki

If anything proves that he Greek crisis is essentially due to past profligacy it is the current improvement in the status of the finances of the city of Thessaloniki. And I have no doubt that it it was the entry into the European Union and the mirage which the EU creates of getting something for nothing which lay behind much of the public employees “jobs for life” attitude and the spendthrift behaviour that any self-respecting household would have eschewed. But of course the Greek crisis has been caused by just a small minority of Greeks. I suppose the analogy would be of a household where the husband was spending the family jewels on drink and a good time while his wife and family made do with whatever that was left. But what Thessaloniki is apparently showing is how to get out of the pit. And if Greece could have devalued their drachma and did not have the high value of the Euro as a millstone around their necks, the return of tourists and an escape from the depths would probably be faster.

Reuters reports:

With his craggy face, diamond earring and tattooed wrist, Thessaloniki mayor Yannis Boutaris looks an unlikely candidate to turn around the finances of Greece’s second biggest city.

But the 70-year old, who stands apart from the political mainstream, is pulling off reforms that have so far evaded the national government in a three-year-old debt crisis that has sucked in some 150 billion euros of international aid.

In contrast to the rest of Greece, this sea-front city of one million is shrinking debt, cutting business taxes to help firms and paying city employees and contractors on time.

(more…)

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