Atlantic Update 06/07/11


Obama receives German Chancellor Angela Merkel at the White House today whereas Germany’s energy policy is left in a mess after its 2022 nuclear phase-out decision. Greece struggles to tackle its debt crisis and Europe’s youth continues to protest unemployment. On the other hand, are the stronger Euro areas in the EU like the Netherlands, France, etc. really that financially stable to continue providing emergency loans to to future EU countries in crisis?


Obama Cites Value of U.S.-German Alliance (American Forces Press Service)

President Barack Obama welcomed German Chancellor Angela Merkel to the White House today, calling Germany one of the United States’ strongest friends in a transatlantic alliance that’s the cornerstone of efforts to promote peace and prosperity around the world. Speaking on the South Lawn of the White House, Obama said the generations-long U.S. relationship with Germany remains critical today. Speaking on the South Lawn of the White House, Obama said the generations-long U.S. relationship with Germany remains critical today.

“At a time when some have asked whether the rise of new global powers means the decline of others, this visit reaffirms an enduring truth,” he said. “Our alliances with nations like Germany are more important than ever. Indeed, they’re indispensible to global security and prosperity.” Recognizing NATO, to which both nations belong, as “the most successful alliance in human history,” the president called its commitment to its members’ common defense a pillar of global security. This extends, he said, “from completing our mission in Afghanistan to preventing terrorist attacks to achieving our vision of a world without nuclear weapons.”

Serbia Unfreezes Mladic’s Military Pension’ (Radio Free Europe)

Serbian authorities unfroze the military pension of Bosnian Serb war crimes indictee Ratko Mladic after he was handed over to The Hague war crimes tribunal last week, RFE/RL’s Balkan Service reports. Following Mladic’s arrest on May 26 in a small town near Belgrade, officials paid about 50,000 euros ($70,000) to Mladic’s family in pension arrears that had accrued since late 2005, when the government decided to increase pressure on the then-fugitive general. Mladic is accused of mass killings, forceful deportations, and other crimes against non-Serbs during Bosnia’s 1992-95 war.

Mladic was transferred on May 31 to the International Criminal Tribunal for the former Yugoslavia (ICTY) at The Hague, where he will face trial while his family will collect his roughly 800 euro (about $1,100) pension every month. A career officer in the Yugoslav army, Mladic was one of thousands of ethnic Serbian officers who stayed in Bosnia-Herzegovina after it declared independence in 1992 and joined the separatist Bosnian Serb army. Belgrade continued to pay their salaries and health and social insurance contributions through the so-called 30 Personnel Center of the Yugoslav army.

EU calls for €150m in aid for farmers hit by E. coli scare (EUobserver) 

EU farm chief Dacian Ciolos has proposed a €150 million aid package for European vegetable producers, hit by plummeting sales as a result the region’s ongoing E. coli outbreak. The proposal will be discussed by EU agriculture ministers meeting in Luxembourg on Tuesday afternoon (7 June), with a final deal expected in principle.

"We propose €150 million. We will obviously see what we get," Ciolos told journalists ahead of the meeting, reports the Associated Press. Ministers are expected to haggle over the details, with a spokesman for Ciolos a day earlier insisting that many producers across Europe had been hit by falling sales, not just Spanish cucumber producers who were initially labelled by German authorities as the most likely source of the deadly bacteria. 

EU and Russia see eye-to-eye on Hamas (EUobserver)

Russia and the EU are framing a joint position on relations with the Palestinian unity government, as divisions on the subject with the US and Israel deepen, a senior Russian diplomat has said. Russia’s ambassador to the EU, Vladimir Chizhov, told press in Brussels on Tuesday (7 June) that EU foreign relations chief Catherine Ashton and Russian foreign minister Sergei Lavrov are aiming to put out a joint communique on the subject at the EU-Russia summit on Thursday and Friday.
The details of the text are being kept under wraps. But Chizhov said: "The Russian position is closer to the EU position than the US position … We’ve expressed the need to foster Palestinian unity, because without that no progress whatsoever is possible." 

British government to detail fresh measures to combat home-grown extremism (The Washington Post)

Britain’s Conservative-led government outlined a revised strategy Tuesday to tackle homegrown terrorism, saying that tens of millions of pounds (dollars) spent on anti-extremism projects have failed to steer young Muslims away from violence. Home Secretary Theresa May pledged the government will spend more time on actively identifying extremist threats — naming prisons, universities and the health care system as possible areas of focus — to target individuals and areas most at risk of radicalization. “The last government strategy was flawed and it is necessary to make changes,” May told lawmakers.

The new approach comes after a lengthy review of Britain’s anti-extremism policy, dubbed Prevent, which was launched following the July 7, 2005 terrorist attacks on London’s transport networks. Prevent aimed to provide alternatives to militant Islamism by supporting mainstream groups through lecture tours by moderate clerics and by funding for outreach work by reformed extremists, but drew criticism from all sides — some Muslims said it involved spying on young people, while taxpayer groups questioned the merit of funding adventure holidays, rap lessons or team-building exercises.

Greek Privatization Plan Faces Massive Domestic Resistance (Der Spiegel)

Greece is scrimping and saving, but still failing to get its debt crisis under control. The government plans to raise 50 billion euros through a privatization program, but faces massive resistance from Greeks worried about selling off the nation’s assets. Experts also doubt whether the strategy will work. Good news still sometimes emerges in Greece these days. Take Hellenic Petroleum (Helpe), which owns a number of refineries and some 1,200 gas stations in the country and made a net profit of €150 million last year. It earned €43 million in the first quarter of 2011 despite of the crisis. Helpe is "an example of efficiency and stable management," company chairman Anastasios Giannitsis said. "We’re constantly trying to increase productivity." The model company, barricaded behind mirrored windows in its futuristic Athens headquarters, is among the few economic pearls of the crisis-ridden country. But paradoxically, Hellenic Petroleum is also a prominent example of the Greek disease — excessive generosity to the few, at the expense of the many. 

A European Generation Takes to the Streets (Der Spiegel)

For weeks, hundreds of young people have been camping out in central Madrid. And others across Europe have now begun following their example. Protests in Lisbon, Paris, Athens and elsewhere show that Europe’s lost generation has finally found its voice. Any real revolution in Paris has to include the storming of the Bastille. Which explains why 200 young demonstrators are sitting in the shade of the trees at Place de la Bastille on this Thursday evening, wondering how to go about staging such a revolution.

Their numbers had already swelled to more than 2,000 by the Sunday before, when they had occupied the entrance to the Bastille Opera and half the square. But then the police arrived with teargas and, since then, have kept strict watch over this symbolic site. The protestors are trying to create a movement to rival the protests in Madrid and Lisbon. They want tens of thousands of young people to march in the streets of Paris, calling for "démocratie réelle," or real democracy. They believe that there is also potential for such large-scale protest in France, with youth unemployment at more than 20 percent, precarious working conditions and what feels like a constant state of crisis. "Until now, our problems were always seen as individual problems," says Julien, a 22-year-old physics student who has joined a group called Actions. "You were told that if you couldn’t find a job, it was your own fault. Perhaps we are now experiencing a change taking place, and that we are joining forces to form a pan-European movement against this system." 

A Nuclear Phase-Out leaves German Energy Policy in a Muddle (The Economist)

Everyone was horrified by the earthquake and tsunami that killed 24,000 Japanese and caused three nuclear meltdowns. But in Germany the feeling was laced with terror. Suspicion of nuclear power became mass revulsion. At a recent race in Berlin sponsored by Vattenfall, which generates nuclear power, many runners carried no-nuke flags.

The response of Chancellor Angela Merkel has been called the swiftest change of political course since unification. Only last year her government overturned a decade-old decision to phase out nuclear power by 2022. After Japan she suspended that policy and yanked seven of Germany’s 17 reactors off the electricity grid. On May 30th she completed her U-turn. The plan to keep nuclear plants operating for 12 more years was scrapped; the seven reactors will be shut for good. Germany will be “the first big industrial country to shift to highly efficient and renewable energy, with all the opportunities that offers,” Mrs Merkel promised. Industry is less thrilled about losing nuclear, which provides 23% of Germany’s electricity reliably and cheaply. It “fills me with worry,” said Hans-Peter Keitel, president of the Federation of German Industries.
The “energy transformation” is neither as revolutionary as Mrs Merkel suggests nor as hazardous as industry fears. Germany is returning to its policy of seven months ago. It has surplus generating capacity and low prices that are unlikely to rise much in the next few years, notes Mark Lewis of Deutsche Bank. Mrs Merkel’s shift was already under way. In 2000 30% of electricity came from nuclear. Since then, renewables like solar and wind have expanded their share from 6.6% to 16.5%. 


How strong are the strong euro area member states? (EUobserver)

Greece, Portugal and Ireland are – so far – the euro area member states that have not defaulted just because the strong euro area member states have provided them with emergency funding. Those strong members of the monetary union will continue to provide emergency loans for some time to come. Until 2013 this will happen in an ad hoc fashion and, starting from 2013, within the framework of the European permanent mechanism to save the euro. Nice plan (kind of), but is it viable? Forget the long run, the question is whether it is even viable in the medium term? Everyone, from politicians to analysts and economists to the media have gotten used to talking about the weak and strong euro area members. But how strong is strong really? Germany, Finland, France, Belgium, Austria and the Netherlands for example are only perceived strong because they get compared with the likes of Greece and Portugal. If that is the yardstick, then numerous African countries are strong as well.

It is far too early to throw in the towel? (The Economist)

As so often, perseverance is the key. It is far too early to throw in the towel. Anybody who thought a year ago that Greece would already be back on its feet by now was deluding themselves. It was always going to be a long hard slog—it is plain that Greece is not out of the woods yet and still has a mountain to climb. Capitulating now and creating a big sovereign default would squander the considerable efforts undertaken over the past year and risks taking the wind out of the sails of the indispensable reform and austerity drive. So what is the way forward for the IMF, ECB and EU?


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