About that coal in Kosovo

In comments to the post on Kosovo, Alex Harrowell asked the following reasonable question:

“How can you have something that’s both a “mineral resource grab” and an “economic black hole”?”

The short answer: you can, because it’s Kosovo.

Here’s why. There has been no serious investment in those mines since the Yugoslav economy hit the skids in 1986.

A modern coal mine is not a hole in the ground full of guys with picks. It’s a major industrial installation. You have huge drills, borers, grinders, driers, fans, pumps, you name it. A big coal mine uses as much power as a good-sized town. A big modern coal mine uses cutting-edge, state-of-the-art materials technology and software. It’s not guys digging coal any more. It’s guys operating and maintaining big, complicated machines that dig coal. In the United States, the majority of coal miners have four-year college degrees, and need them.
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Glowing Georgians and Radioactive Russians

No, this is not a Litvinenko post…or at least not primarily. Recently, the Georgian ex-KGB said it had caught a Russian smuggling highly-enriched uranium into Georgia, who was nailed in a sting operation where Georgian agents posed as representatives of an Islamist terrorist group that wanted to buy fissile material. He handed over a sample, claiming to have several kilos back at home in Vladikavkaz, and they put the handcuffs on him. Good work, fellas, you might say, and you’d be right – both the US National Nuclear Security Administration and the Russian Atomic Energy Authority analysed the stuff, and it turned out to be 90 per cent enriched.

On the downside, it turns out that this happened in November, 2005, and he’s been sentenced to eight years in a secret trial. One wonders what kind of a trial, and also why the Georgians took so long to mention it. Being a small state next to Russia with ambitions of NATO and EU membership, and an existing counter-terrorist alliance with the US, you’d think they’d trumpet it from the rooftops. They claim it was in order not to compromise continuing inquiries, which may be true or may not.

Siberian Andy asks, in the light of this, if Russia has lost control of its nuclear weapons. He thinks it’s plausible. I disagree, slightly. Russia is clearly far more stable than it was in the Yeltsin years, what with the restoration of the FSB security state, and nuclear custodianship, command, and control is obviously a priority. Perhaps more importantly, surging oil and commodity prices have made a big difference to the state budget – Putin is in a position to hold a dramatically bigger share of the market for corruption than Yeltsin ever could, and it would make sense to direct it at the academic/industrial nuclear community and the roketchiki who actually look after the things.

But there’s obviously a problem.
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One goes up, one goes down

An unacknowledged fact of world economics is the role of command or planning mechanisms in what is held to be a global market economy. J.K. Galbraith raised the point that large companies are in a sense planned economies within their walls, with technical and commercial decisions made by management, wage and pricing structures determined either managerially or by negotiation with trade unions, and the whole enforced through targeting and budgeting exercises.

Hence, China announces a cut in petrol prices, presumably passing-on some of the $20 drop in the oil price since the summer of 2006, or perhaps trying to supply-manage inflation. Sometimes, though, decisions driven by nonmarket procedures can be just as quick as market ones..

Iran, Venezuela and other oil exporters are lobbying for an OPEC production cut. I think Jerome of Eurotrib suggested that the Saudis were targeting US stock levels. Here is, perhaps, another interesting indicator.

European Energy Efficiency Plan

Sargasso, Dutch weblog and co-nominee in the recent BOB’s has a very interesting post on European energy policy, which prompted me to address the issue here as well. The point of my own post here on AFOE is not to elaborate extensively on European energy policy, I simply do not have the time right now, but simply to draw your attention to the fact that there is a European policy, the Energy Efficiency Action Plan, not to be confused with its US namesake (pdf), and to start a discussion.

The ambitious aim of the European EEAP is to have a 20% reduction in wasteful energy consumption by 2020. From the official press release:

“Europeans need to save energy. Europe wastes at least 20% of the energy it uses. By saving energy, Europe will help address climate change, as well as its rising consumption, and its dependence on fossil fuels imported from outside the Union’s borders.” said Energy Commissioner Piebalgs. “Energy efficiency is crucial for Europe: If we take action now, the direct cost of our energy consumption could be reduced by more than €100 billion annually by 2020; around 780 millions tonnes of CO2 will also be avoided yearly” he pointed out.

In another press-release on the same subject we can read the following:

At the same time saving energy is the easiest, most rapid and most effective way to answer the challenge of our energy dependence and reduce damage to the environment.

So, the objectives are clear: save money, help the environment and reduce our dependence on fossil fuel imports. How? The EEAP outlines these focal points (I have added a few informational links here and there):

1) Promote energy-efficient household appliances through labelling and performance requirements
2) Promote low-energy housing (pdf)
3) Render power generation and distribution more efficient
4) Further reduce CO2 emissions from cars
5) Facilitate financing of energy efficiency investments for enterprises
6) Stimulate energy efficiency in the new member states
7) Use tax tools in a carrot-and-stick fashion
8) Raise awareness and share information, both within the EU and worldwide

The big problem, as always, is mentioned at the end of the proposed plan:

Nonetheless, before any of these objectives can be achieved, political will and engagement at national, regional and local level are necessary. The European Council, European Parliament, as well as national and regional policy makers will need to renew their full commitment and establish a clear and unambiguous mandate to facilitate the implementation of the Action Plan by endorsing it and agreeing on the proposals set forth.

Nevertheless, I’d like to take a positive approach and welcome the proposed policy set forth by the European Commission while awaiting new developments in the area of alternative energy as well.

For those who are interested, please go and read the details of the EEAP in full and share your thoughts and insights with us.

Breaking Up The Power Giants?

Battle may be about to be joined. EU competition commissioner Neelie Kroes is back in the news. She made a speech yesterday, and in that speech she suggested that the golden days of the EUs unreformed energy giants may be numbered, as the European Commission is considering launching an onslaught on monopolistic energy utilities and the politicians who protect them (and here). According to The Economist Angela Merkel has recently gone for a policy of “underpromise and overdeliver”, so I do hope she has taken a leaf out of Merkel’s book, and that this won’t be yet another example of ‘overpromise and underdeliver’. The stakes, as I was suggesting yesterday, are really quite high.

Kroes principle objective seems to be those companies that control both the supply and distribution of energy, and in so doing effectively block their rivals from entering the market. But in taking on these companies she will also need to take on the political networks that support them. As Euractiv (which incidentally has a useful dossier on the energy topic) puts it “The EU considers common energy policy amid national sovereignty concerns”. My question is, just who is it who has so much vested interest in this national sovereignty idea? Can it be simply a coincidence that Kroes hails from the Netherlands, one of the smaller EU member states? Oh well, one more time onwards and upwards to the coalition of the willing.

EU Energy Policy II

Well the new EU energy plan has been released (and here, and you can also find the actual Commission statement here). The final product is pretty much as the leaks suggested.

As was indicated yesterday, Russia related concerns are central. The FT comments:

Russia supplies a quarter of Europe’s gas needs and the Union’s dependence on the country for energy was illustrated in January when a dispute between Moscow and Kiev disrupted gas deliveries to the EU.

All of this was I think anticipated on this blog back in January when the Gazprom/Ukraine dispute first really broke into the public arena. What wasn’t anticipated was this, and especially the gas related dimension of the Suez/Gaz de France merger.

The major changes taking shape in Europe’s energy sector at present undercut the arguments of those who have long been predicting a gradual break-up of monopolies and the disappearance of the industry’s biggest players. The planned merger of Suez and Gaz de France to counter an offensive by Enel and Veolia and the fight between Gas Natural and E.On for the hand of Endesa make it abundantly clear that concentration remains very much a watchword in the branch and that even powerful old public monopolies like Electricite de France could be forced into marriages with others in future.

None of the reasons trotted out to justify the merger between Suez and Gaz de France, to cite but that operation, dwelled on the future role of Russia in Europe’s energy landscape. True, the Russians aren’t directly involved in any of the operations underway in Western Europe. On further examination, however, Gazprom’s moves in recent months could be seen as justification for the consolidation.

The future Suez/Gaz de France grouping will become the leading buyer and the top supplier of gas in Europe. As such, it will rank as one of Gazprom’s prime customers in the world. That, however, isn’t necessarily good news for Gazprom. In its dealings with such a powerful client the Russian monopoly won’t be able to exert as much pressure upon it as upon a smaller entity, let alone bully it.

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Oh We Are The Champions

Yes we are really, aren’t we. Especially if we are called Arcelor, or Danone, or Endesa, or Eni, or Enel, or Banca Antonveneta or Pekao. And what these champions have in common, and it is this which sets them so much apart from their footballing equivalents, is not the ability to win anything, but rather their capacity to lose, especially in a take-over battle from a foreign pretender. And just for this very reason it is, it seems, ok for you to include the referee in your line-up. Indeed such is the sporting prowess of these ‘champions’ that it is deemed that what they are most in need of is not the cold harsh wind of competition, but rather protection, and indeed protectionism, anything rather than face outright competition from would-be global rivals. A rare breed of champions these.

I think before I go further, I would like to draw attention to one idea which holds us all together here at Afoe:

Purity of race does not exist. Europe is a continent of energetic mongrels. – H.A.L. Fisher
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The Moldova Issue Rumbles On

Little known Moldova has been in the news at Afoe recently (here, and here), and today the story continues:

Russia’s use of energy as a political tool was in the spotlight again on Wednesday as the European Union expressed concern about Moscow’s dispute with Moldova over gas prices…….On Wednesday the European Commission urged Russia and Moldova to return totalks over their gas price dispute.

“Like in the case of Ukraine and Russia, we very strongly encourage the sides to sit down again at the table to continue discussions and to reach an agreement,” said Commission official Hilde Hardeman.

Her remarks followed concerns this week from the Austrian presidency of the EU over the continuing interruption in supplies to Moldova, which has left it dependent on gas imports from neighbouring Ukraine. The EU stepped up its involvement in Moscow’s former domain last year when it signed a deal to help oversee a border between Ukraine and Moldova’s break- away region of Transdnestria…

The continuing interruption in supplies to Moldova is likely to add to concern in Brussels and EU member states over Europe’s growing dependence on Russian energy supplies.

The gas issue is far from over, it looks like all roads lead to the March summit, and it also seems that EU political debate is about to get a good shot of political realism:

Energy commissioner Andris Piebalgs said energy supply has begun to play a key role in EU foreign policy in the past nine months, responding to criticisms of inaction from Polish MEP Bronislaw Geremek on Wednesday (11 January).

“Now, in exeternal relations, energy has moved up the agenda”, he said. “We clearly understand that energy is a priority, it’s always been a priority, but now it’s never missing off the agenda.”

Unfit To Lead The G8?

The question as to whether or not Russia ” truly belongs in the prestigious Group of Eight (G-8) advanced liberal democratic market economies”, and even more to the point, whether it is in a fitting condition to take the helm in that organisation is a question which was asked by Taras Kuzio (Visiting Professor at the Elliott School of International Affairs, George Washington University) in yesterday’s issue of Eurasia daily monitor, – a publication which is rapidly becoming a ‘must read’ for those of us who want to follow what is happening along the EU’s eastern frontier.
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Towards a European strategy for the security of energy supply

Here’s the link to the EU Energy green paper I mentioned yesterday. As is to be expected, the report is ‘fair and balanced’. The section on nuclear energy focuses mainly on the sovereign decision making process as to its adoption and emphasises the role of Brussels in ensuring environmental safety. It does, however, contain this intriguing paragraph:
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