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Will the USA and European Union Stand Together in Solidarity with Ukraine???

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Ukraine's Prime Minister Arseniy Yatsenyuk

Ukraine’s Dangerous Dependency on Russian Energy…and goodwill

UNITED NATIONS—A dangerous and deteriorating diplomatic showdown continues over Ukraine as the United States and European Union rhetorically push back  against Vladimir Putin’s power grab in the Crimea.  In an emergency Security Council meeting, Ukraine’s embattled Prime Minister Arseniy Yatsenyuk made an impassioned plea for his country’s sovereign right “to remain independent and free.”   

Ukraine’s fledgling government nonetheless, realizes both its vulnerability to neighboring Russia’s  political policies  as well as its energy supplies. 

Ukraine and Europe in general face a dangerous dependency on Russian energy; especially the free and unhindered flow of natural gas to heat its homes and power its factories.  Ukraine has already seen the chilling results of Moscow turning off the gas tap on two occasions in 2006 and 2009.  There’s nothing like a big freeze to concentrate thoughts.

Back in 1981 America’s new President Ronald Reagan, warned West Germany and the Europeans in general of the geopolitical dangers resulting from a trans-Siberian pipeline then being built to swish cheap Russian energy to Europe.  I recall being in Germany and hearing the pious rationalizations by both big business and politicians how the “Americans are overreacting” and how Soviet energy exports were “all business.” 

A generation later, and after the fall of the Soviet Union,  the political palaver in both Washington and the European Union about Putin’s resurgent Russia, seems to overlook the  glaring reality that Eastern and some West European states, are overly dependent not only on the Russian natural gas supply, but let’s add, the Kremlin’s callous use of energy as a political tool to effect change.

In 2006, the Bush Administration sharply criticized Russia for using energy supplies as a weapon to politically influence countries and urged the Europeans to diversify  energy supply sources.

Without question Ukraine, as an integral part of the former Soviet system and despite its sovereignty since 1991, is grafted into the Russian energy grid. While not surprising, this is a cause for concern given the current crisis. We may also add that the three Baltic states, Latvia, Estonia and Lithuania,  though now independent from Moscow and thankfully members of NATO and the European Union are 100 percent dependent on Russian energy.  Add Finland an Sweden  too, in the 100 percent club.

The Central European countries such as the Czech Republic, Hungary, Slovakia, and Poland while  free of Moscow’s formal embrace, and also NATO and EU members, are  highly dependent,  may we add with a wry smile, on Russian largesse?

                                                           

Now to Europe’s core countries.  Germany, without question Europe’s economic powerhouse, depends on Russia for one third of its oil and gas needs. This dependence has widened given Germany’s ongoing phase-out of nuclear power.

Importantly neither the United Kingdom nor the Netherlands have any significant Russian dependence given alternative sources from North Sea and Norway.

Much of the current latter day wisdom coming out of Washington points to growing natural gas production in the USA which can be sold and shipped to Europe. This is a prudent medium term plan which sounds reassuring on paper until you realize that building natural gas terminals to ship the energy are mostly on the drawing boards.  

Then there’s all the talk about new pipelines.

According to a Congressional Research Service  report, “Europe’s Energy Security,”

“As Europe’s natural gas production has declined in recent years, its dependence on imported natural gas has increased. This has left it more dependent as a whole on its primary supplier, Russia, which has shown some inclination to use its resources for political ends.”

The respected CRS adds, “All Russian natural gas exports are controlled by Gazprom. As a state-controlled firm, Gazprom has the closest possible links with top Russian leaders (Prime Minister Dimitri Mevedev served as president of Gazprom). The personal and political fortunes of Russia’s leaders are closely tied to Gazprom.”

 Approximately half of all  Russian government revenue comes from oil and gas.

The Kremlin is not going to shut off the lucrative tap to Western Europe. Yet, as we have already witnessed, any interruptions to Ukraine would cause supply problems downstream.  Remember many of the pipelines to Europe transit Ukraine.  

Germany and Poland have been particularly scornful of Moscow’s intimidation of Ukraine.  Yet as Poland’s Prime Minister Donald Tusk candidly told Reuters, “Germany’s reliance on Russian gas can effectively limit European sovereignty. “

Despite Europe’s distaste and unease with Moscow’s moves in Crimea, and possibly beyond, sadly Europe’s diplomatic freedom of action is compromised by its strong energy dependence on Russia.  This is hardly coincidental.

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The Crimean War

United Nations Meets on Ukraine Crisis


Less than a week after the spectacular closing ceremony of the Sochi Winter Olympics,  the Russians violated the sovereignty of neighboring Ukraine.  Taking advantage of Ukraine's civil and political unrest which had toppled the ruling pro-Russian regime in Kiev, allegedly causing anxiety among Russian ethnic minorities in parts of the vast land, President Vladimir Putin decided to settle the conflict the old fashioned way--with military intervention.

Russian forces, operating from pre- existing and legally sanctioned naval and air bases in Crimea, decided to expand their spheres of influence in the strategic southern peninsula. Crimea it is noted, has a majority ethnic Russian population.

A visibly shaken Ukrainian Ambassador to the UN briefed the Security Council and later correspondents to warn of the rapidly deteriorating situation in which he described illegal overflights of Ukrainian territory by Russian transport planes and attack helicopters as well as the seizure of Crimean airports by armed elements.  He decried Russian aggression.

Ambassador  Yuriy Sergeyev  warned that the Russians may be trying to break off Crimean from Ukrainian sovereignty as Moscow did in the Georgia War in 2008 in which two "Russian ethnic" enclaves were seized from Georgia and set up as "independent republics."  The Ambassador called for the international community to provide "moral and political support"to support the territorial integrity of Ukraine."

Ukraine which was part of the former Soviet Union, gained its independence in 1991 after the fall of the communist regime.  In late 2013, the Ukrainian majority rallied in favor of closer economic integration with the European Union; the ruling pro-Russian regime tilted closer to Moscow, thus setting off the initial crisis.

The United States as well as key European allies such as France, Germany and Poland have attempted to broker a peaceful solution to the crisis before the Russian military intervention.  The issue now becomes how to keep Moscow from advancing beyond the Crimea.

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Sochi Olympiad

Spectacular Winter Games

The Winter Games at Sochi Russia ended with a spectacular finale of fireworks, pomp and a celebration of Russian culture and heritage.   

The Olympiad which started under the shroud of serious security threats from terrorist groups,  soon were overshadowed by the clash of athletes and teams vying for sporting fame.

Over two weeks the world was treated to both the expected and spectacular.  Young names were etched into our consciousness  such as the American alpine skier Mikaela Shiffrin winning Gold, along with Ted Ligety in the Giant Slalom.  American ice dancers Meryl Davis and Charlie White very much earned and won Gold.  

All in all Team USA won 28 medals with 9 Gold,  and placed just behind the host country Russia with 33 medals of which 13 were Gold.  The Russian four-man bobsled team, got the Gold followed by Latvia and the USA. 

Canada placed fourth with  24 medals, 9 of which were Gold.  The Canadian Hockey Team was
top notch as always as were Canadian Curlers. 

Norway, a small Kingdom with a mere 5 million people, scored like a superpower; 26 medals of which 11 were Gold.  Simply amazing.  And the Netherlands too, came in fifth with 24 medals 8 of which were Gold.  The Dutch speed skaters were unbelievable.  

Germany came in sixth place with 19 medals, 8 of which were Gold, and Austria followed with 17 medals, four of which were Gold.  The Austrian downhill skiers are nearly in a class of their own.  Germany's longtime alpine legend Maria Hoefl-Riesch earned a Gold and a Silver but nonetheless fell short of expectations. 

France earned 15 medals (4 Gold), Czech Republic 8 medals (2 Gold), and Poland 6 medals of which 4 were Gold!  Both Slovakia and Ukraine each earned a Gold too. 

Congrats to the Host country Russia for a safe, hospitable and rewarding Olympic experience for the teams, media and families.  

To paraphrase the call of the International Olympic Committee, the youth of the world will come together to compete four years hence in the next Winter Games in Pyeongchong,
South Korea! 







   

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(Statue of French General  Comte Jean de Rochambeau, located in Lafayette Park across from the White House in Washington.  General Rochambeau was a hero of the American Revolution and friend of George Washington). 



Franco/American Ties

State Visit amid Awkward Moments for French President 

French President Francois Hollande made a high profile State Visit to Washington, amid his own sagging poll numbers and awkward personal situation.  Set amid the pomp and splendor of a White House reception and banquet,  the social side of the gatherings were overshadowed by the embarrassing public breakup between the French President and his "partner" just a month earlier.

For protocol purposes the French "first Lady" was absent from the ceremonies leaving an uncomfortable void for many of the functions.

Some 350 Diplomats and Politicians and luminaries dined on quail eggs and caviar at the first White House State Dinner since 2011.

The French daily Le Figaro headlined, "Magic, Friendship, Caviar and Beef," all in the celebration of America's oldest friendship.

 On the political side both Barack Obama and Hollande underscored strong Franco/American ties on a number of key issues such as Iran and Syria.

The political rift between former French President Jacques Chirac and George W. Bush a decade ago over Iraq now seems remote. Yet it should be recalled that while ties between Washington and Paris were deeply strained in 2003-2004, just a few years later the new French President Nicolas Sarkozy largely patched up the situation.  A visit by Sarkozy to the USA in 2007 saw greatly improved relations with the Bush Administration which have subsequently continued under Obama.

It's good to see a renewed, strong and vital Franco/American relationship.

Vive le France!  

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Happy Lunar New Year!!!

Year of the Blue Horse--every sixty years, and a sign of Prosperity!

The Transatlantic Echo Reaches across the Pacific to wish our Friends and readers in the Far East a Happy New Year!!  


Welcoming the Lunar New Year, New York's Bloomingdales Department Store
hosted a Chinese themed exhibit with music and entertainment.

Just blocks away at the annual New Year's Party at the Korea Society, one could listen to
a Korean jazz combo.

Or try to win some Korean themed gifts from the ever popular Raffle!

Gong Xi Fa Cai  !!!

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USA Slips Again Globally in Economic Freedoms Survey

There used to be an advertising slogan,   “ We’re number two but we try harder.”   Perhaps in the spirit of the times we should now revive the  phrase and proclaim, “We’re number twelve, but it’s somebody else’s fault.” 

Thus when viewing the world’s freest economies, the U.S. has slid from number six to twelve in the Index of Economic Freedoms.  And that’s since President Barack Obama assumed office in 2009.  So who’s to blame?  The rising BRICS’s, (Brazil, Russia, India, China, South Africa), George W. Bush,  or the ever elusive economic recovery?

The Index of Economic Freedoms jointly sponsored by Washington’s Heritage Foundation in partnership with the Wall Street Journal rates 178 countries worldwide.   In fairness since the survey started twenty years, ago, many more economies have been getting freer as the shackles of state socialism have fallen away in Eastern Europe and even much of the Third World.   So in one sense, other countries are doing better and good for them.  But sadly we in the United States have not been doing nearly as well as we once did; shame on us.

The Index rates countries using a comprehensive formula of  Rule of Law, Regulatory Efficiency,  Limited Government, and Open Markets.  The Index then focuses on issues of property rights, freedom from corruption, business freedom, labor freedom, financial freedom, regulation efficiency, limited government and open markets.   Each country is ranked through this exhaustive but serious template.

So let’s look at the Top Ten to which the USA used to belong to.  Hong Kong, Singapore and Australia are in the top three followed by Switzerland, New Zealand and Canada.   No surprises here.  Rounding off the top ten list we see Chile as number seven, then Mauritius, Ireland, and Denmark.

So some of the European states rates very well indeed. 

Estonia, a Baltic state, which was still part of the Soviet Union until 1991, is number eleven followed then by the United States.  

So what is pulling down America’s grades?   The Heritage survey states that

the slip is “primarily due to deteriorations in property rights, fiscal freedom, and business freedom.”    Describing the overall decline in economic freedom, the report adds there have been “particularly large losses in property rights, freedom from corruption, and control of government spending.”

Sadly,  the United States is the only country to have seen a loss of economic freedom for seven years in a row.

The report adds, “Substantial expansion in the size and scope of government, including through new and costly regulation in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom”.  Clearly, the American economy needs investment clarity and serious incentives so that the spirit of enterprise may thrive.  Today, Big government is indeed part of the problem, not the solution.

Canada, scoring sixth internationally, is viewed as the freest economy in North America.   The survey offers the accolade, “A transparent and stable business climate makes Canada one of the world’s most attractive investment destinations.”

Going back to the list, we see the UK at 14th, the Netherlands at 15th,  followed by Germany at 18,  and the Czech Republic 26th.  

France only scores 70th globally, a reflection of on increasingly state dominated economy under the current Socialist administration.

Yet some of the mega economies such as the BRIC’s mentioned at the onset don’t rate so well.  Take Brazil at 114, Russia at 140,  India 120 , or China at 137.   Here we see statistically high growth economies but places mired in corruption, cronyism and dismal  levels of transparency.  

Though South Africa’s economy rates at 75^th and Moderately free,” the other four above BRIC’s rate as “mostly unfree.”   Thus, despite high growth rates,  China’s economy is viewed as hampered by “The Communist Party’s  ultimate authority throughout the economic system undermines the rule of law, and institutionalized  cronyism remains pervasive.”

Not so unpredictably at the bottom of the list the Most “repressed” economies we find Zimbabwe, Cuba and North Korea.

The good news remains that more countries are now prospering economically; the sad news is that the USA can and should be doing so much better.