Wednesday 26 November 2014

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With the EU growing at the speed of global population while resources melt away, the Union’s interest is increasingly defined on a global scale. Will its Diplomatic Service be able to safeguard these interests? And what future for Europe’s relations across the Atlantic and to the emerging great powers in Asia?

 

Addressing the investor-state dispute settlement (ISDS) nightmare

Posted by on 25/11/14
By Sorin MOISA MEP The importance of ISDS is blown out of proportion by its supporters, some of whom may suffer from a degree of strategic blindness. It is simply not going to be the end of the world if these clauses are remodelled or even eliminated.

EU und USA und Putin

Posted by on 23/11/14

Je stärker Putin zu rhetorischen Mitteln greift, umso mehr treffen die Sanktionen seine russische Heimat. Wobei die eigentliche Wirkung darin besteht, dass durch Fracking und Opec-Zurückhaltung das Erdöl im Jahr 2014 im Grunde zu billig ist. Doch hinter dem Dumpingpreis steckt ein Machtkalkül: Weil der Gas- an den Ölpreis gekoppelt ist, fehlen Russland wichtige Einnahmen. Zugleich wird durch die Sanktionen der Ex- und Import behindert. Und das alles zusammen verschärft das Verhältnis zwischen West und Ost. EU und USA wollen dieses Kräftemessen um jeden Preis gewinnen. Nach einer vernünftigen Außenpolitik klingt das nicht.

The EU on the Margins in Asia

Posted by on 23/11/14

For a few days in November Beijing almost seemed like the centre of the world. The Asia-Pacific Economic Cooperation (APEC) summit in Beijing brought together a diverse group of 21 countries from the Asia-Pacific which includes those as far flung as Australia, New Zealand, Chile, China, the US, Russia, Japan, South Korea and several from southeast Asia. For once, the results of a summit exceeded the billing. Much was written in the Western media about who shook whose hand, who smiled at whom and who stood next to whom. Some of these meetings and greetings were undoubtedly important, especially in the case of China’s President Xi Jinping and Japan’s Prime Minister Shinzo Abe, which has perhaps unlocked an improvement in one of the most important relationships in Asia, but there was much more to the summit than this.

The summit produced an APEC  declaration on fighting corruption, one element of which is to establish a regional network on to coordinate anti-corruption activities, apparently set up at the request of the Chinese government. The summit declaration also gave support to the Free Trade Area of the Asia-Pacific (FTAAP), which is backed by China. The other main outcomes of the summit were several declarations concerning issues such as trade and investment, economic development, reform and growth, regional connectivity and infrastructure. China was also eager to promote its vision of regional vision of regional integration through infrastructure construction.

However, it was the bilateral show between China and the US which caught many of the headlines. There were agreements between China and the US on several issues. The main headline grabber was the declaration signed by presidents Xi Jinping and Barak Obama on climate change. There was an additional bilateral agreement on expansion of the WTO Information Technology Agreement (ITA), which reduces trade tarrifs on IT products. Less widely publicized were two sets of rules agreed by China and the US which are intended to avoid military confrontations. The two also signed an agreement easing of visa restrictions,

Other bilateral agreements emerged at the summit, for instance one signed between China and Russian on energy supplies. China and Vietnam also came to an agreement on settlement of maritime disputes. In addition, China and Japan had come to an accord prior to the summit that sought to take the heat out of their disputes and which enabled the Xi-Abe handshake to take place.

It would be wrong to think that the Asia-Pacific has suddenly resolved itself into harmony. Conflicts were on clear view, not least between Russia’s President Putin and several of the other leaders present. China and its neighbours are far from resolving their differences. Despite their agreements, the US and China had obvious divergences, notably between the US and its Trans Pacific Partnership (TPP) and China which is promoting the FTAAP. The US, just to emphasize this divergence, held a meeting in its Beijing embassy to discuss the TPP, although it led to no real progress in the negotiations. Many of the underlying regional problems remain. But for once, the leaders attending the summit could say it had not been a complete waste. The two key countries, China and the US, could both claim to have achieved real successes, both bilaterally and regionally.

Where was the EU in all this? The obvious answer is nowhere, since the EU is not part of APEC. However, this in itself raises a more fundamental issue. What does the EU do in Asia? The APEC summit brought together widely disparate countries of the Asia-Pacific, and produced some real results. There is no equivalent of this for the EU and Asia. True, the EU has its own forum for interaction with Asia, the Asia Europe Meeting (ASEM). But this runs a poor second in terms of status and outcomes. The ASEM bills itself as a “dialogue facilitator”. At best it produces many dialogues, but which, while they may be very worthy, produce few significant outcomes. In the area of trade, the EU has its own efforts at policy in Asia, but their ambitions and achievements are limited, and certainly do not match the goals of the US (whether the US efforts to create TPP will actually achieve anything is another matter). A Free Trade Agreement (FTA) here or there and a scattering of Partnership and Cooperation Agreements (PCA) is the best to be hoped for from the EU. With China the EU has its Strategic Comprehensive Partnership, but at the moment the EU’s level of ambition is limited to negotiating a Bilateral Investment Treaty (BIT).

Of course, the EU does not have the same strategic commitment to Asia as the US. Yet, even leaving this aside, the influence of the EU in Asia remains weak. True, following the APEC summit, the EU was present at the G20 meeting in Australia, a meeting that by coincidence happened on the margins of the Asia-Pacific region. Perhaps there the EU could claim some influence by being partly responsible for forcing climate change onto the agenda over the resistance of the Australian Prime Minister Tony Abbott. A victory in alliance with the US among others over the Australian prime minister can hardly count as a great achievement, and the real momentum had in any case largely been created by the Xi-Obama climate declaration a few days previously. But, in reality the meeting only served to illustrate the weakness of the EU. The main outcome of the G20 was agreement on growth, which supposedly committed the members to adopting policies intended to achieve an additional 2% annual GDP growth over current trends. This merely serves to highlight the EU’s abysmal recent economic record and prospects, in contrast to most of East Asia and even the US.

The EU may see itself as having soft or normative power, and it does do much that is positive in Asia, but it has limited impact in the region.  The fact that China chose to sign a climate change agreement with the US, rather than the EU, which portrays itself a climate change leader, tells us which President Xi regards as most important. The same can be said for the agreement on the ITA between China and the US. These are not just bilateral in importance. The first gives some hope for a global climate change agreement, and the second gives a flickering of vital signs to the comatose global multilateral trade process.  For all the contradictory nature of the US relationship with Asia and with China it remains important, despite signs of its declining power and much that is questionable about the intentions and results of President Obama’s rebalancing to Asia. The EU as a group is marginal to Asia, and disengaged. Will this change with the EU’s new leadership? There are many good excuses for why it will not. First among them is the huge effort required from the EU to rectify its own domestic failings. Externally, problems closer to home, the Ukraine crisis and the disaster that stretches across most of North Africa and the Middle East, will occupy much time. But Asia, and especially China, even if it is far away, requires engagement. Europe has a choice either to accept its marginal position in Asia or do something to change it.

 

Join Us at the One Europe Convention in Verona

Posted by on 18/11/14

In my first post here on BlogActiv, I am very pleased to welcome you to our annual One Europe Convention with attendants from 70 countries. The convention will take place in Verona on November 21-23, 2014. For 10 years running, the annual European convention, hosted by Kabbalah.info, a non-profit organization, has established itself as one of the world’s most culturally diverse gatherings for spiritual growth—a 3-day celebration of human unity and deeply transforming personal experiences.

At this historic event where participants will come from 70 different countries, all the lessons and activities throughout the event such as workshops, meals, and cultural evenings, will focus on the central theme of achieving harmony and sustainability throughout Europe. The purpose of these gatherings is to create exceptional human bonding experiences that leverage the collective powers of any group of people. The force of this connection increases awareness of the importance of benefiting others and creating sustainable environments that allow us to accomplish more collectively.

A new, global world is taking shape before our eyes, a reality in which humanity and nature are all interdependent. We need to study the global laws of our world in order to find our way in it. Kabbalah is a 4,000 year old wisdom with the sole purpose of teaching humanity how to achieve balance and complete harmony amongst ourselves and all of nature in a global world. Come join us to set the path for a better future for Europe and for the entire world. People from around the globe are invited to embark on this groundbreaking journey as we strive to build a European spiritual union, based on love and friendship – a model for the entire world to follow.

The convention is open to anyone with a desire to change him or herself and the world we live in. Students currently studying with Kabbalah.info, or anyone who wants to take a proactive approach to uniting Europe is welcome to register.

I will be giving six lessons throughout the congress. The lessons will be given in Russian, with simultaneous interpretation into English, German, Hebrew, French, Spanish, and Italian.

To register for the event please visit http://eurocongress.info

 

 

EU als Handelspartner

Posted by on 18/11/14

Während die EU nichts tut, hat Putin Zeit, sich nach neuen Handelspartnern zum Beispiel in China umzusehen, während die Wirtschaftssanktionen auch in der EU Firmen schädigen. Und der Winter steht vor der Tür. Ein Vorteil für den Energielieferanten Russland, denn mit der Drohung, den Gashahn zuzudrehen, kann Putin gerade jetzt auch EU-Mitgliedsstaaten beeindrucken.

Wem geht also zuerst die Puste aus? Eine Frage, die noch ungeklärt ist. Doch eines ist schon jetzt klar: Es verstreicht wertvolle Zeit, das Problem bleibt ungelöst. Und so dürfte sich der Konflikt am Ende tatsächlich noch lange hinziehen.

Half Full or Half Empty? What an APEC Summit Reveals about the EU

Posted by on 16/11/14

Food for thought in China-Europe relations is again as abundant as ever. ‘Hang on’, one might be inclined to intervene, ‘it’s been the APEC-summit this week – since when is Europe either Asian or close to the Pacific?’ Moreover, the Asian style dress code (aka “silly shirts”) for the APEC family picture gives room for interpretation of the symbolic end of European/Western cultural dominance in the world – despite the fact that it was actually Bill Clinton who started it in 1993, when he dressed the leaders in leather bombardier jackets.

This year, however, the Chinese APEC-shirt designer implicitly seems to predict the return of Western dominance – or at least of Hollywood. After all, the resemblance of Xi, Obama, Putin and the other leaders with the well-known Star Trek characters was undeniable. Jean-Claude Juncker, Federica Mogherini and their colleagues must have been relieved not to be forced to dress up as Captain Kirk or Commander Spock look-alikes.

On a more serious note, the APEC summit still is an excellent opportunity to compare two very different regional integration efforts:

  • To start with, there are commonalities: both the EU and APEC promote free trade. But they are also eager to improve standards of living, education, and foster shared interest
  • On the other hand, there are significant differences: the EU is in a much better position to actually achieve something. APEC, which calls itself an ‘economic forum’ is a purely intergovernmental organisation in the classical sense. There is only one really meaningful meeting of Heads of State and Government at APEC in the course of a year, officially called the ‘Economic Leaders Meeting’. Meanwhile, EU leaders constantly meet; the EU has its own ‘government’ (the Commission), a Parliament and even a Court of Justice whereas APEC has merely established a Secretariat in Singapore and some theme-based committees without real decision-making power.
  • Although security talks do play a role during side meetings and chats over coffee (or tea) at the annual summit, APEC focuses on the economy only: Trade & Investment Liberalisation, Business Facilitation, Economic & Technical Cooperation are on the agenda. Here the EU is much more ‘advanced’, such as with an own Common Foreign and Security Policy.
  • It should nonetheless not be forgotten that APEC’s choice to keep a low profile on politics is in itself a highly political decision: APEC prefers speaking of ‘member economies’ rather than ‘member states’ – after all, APEC also includes Taiwan, pardon, ‘Chinese Taipei’ and Hong Kong.
  • APEC was founded in 1989 in reaction to increasing regionalisation trends on the globe. Its history is thus much shorter than that of the EU. It also does not have a fundamental reason of being like the will for sustainable peace that set the EU on track in the first place.
  • True, just like European integration was considered a means to both contain and integrate Western Germany after WWII (and avoid German dominance after reunification), APEC also had as a purpose to contain economic dominance of Japan.
  • Currently at 21 members, APEC represents 40% of the world’s population. With its 28 member states the EU exceeds APEC in terms of members, but today only represents 7% of the world’s population. Nonetheless, as the world’s biggest trading bloc, it is an ‘economic giant’.
  • When it comes to its geographic scope, APEC encounters similar problems as the EU (which is struggling with the unclear definition of ‘Europe’). India for instance would like to join APEC but since it does not border to the Pacific, APEC so far refused Indian membership. Taking a closer look, APEC (mis-)uses seemingly objective criteria like geography to disguise more political motivations.

This brief comparison shows that the differences between APEC and the EU clearly outweigh the commonalities. It also mitigates the endless criticism of the EU’s alleged incapacity of being a proper actor in global politics that, famously, ‘does not speak with one voice’. The look from outside tells a different story. As China’s Global Times writes, for instance:

‘[T]he EU and APEC differ because the first endeavours to be an active political actor in the international arena while the second remains an initiative of economic regionalism with an impressive geographical reach. The EU has a clear political identity, a contrast to APEC which is barely interested in dealing with security issues. In spite of problems of cohesion within the EU, its main ambition is to speak with one voice on the global stage and become a reliable international power. APEC has been never keen on serving such a goal.’

So as always, it’s a question of the glass being half-full or half-empty. Or as French master diplomat Talleyrand puts it: ‘When I examine myself, I am worried. When I compare myself, I am reassured.’

So long / 祝好,

Frauke

Les Fonds asile, migration et sécurité intérieure

Posted by on 16/11/14

Le 10 novembre 2014, la représentante de la Commission, Mme, Cygan, directeur à la DG Home, a présenté, aux députés de LIBE, les programmes de l’Union européenne pour les instruments de financement annuel du 2014: les Fonds ‘Asile, migration et intégration’ et les Fonds pour la sécurité intérieure ‘frontières extérieures et visas’, ainsi que la ‘coopération policière’. En général, les modifications introduites visent à alléger les procédures et les dispositifs d’accès ainsi qu’à atteindre des résultats concrets réels, tout en se concentrant sur la valeur ajoutée qu’apporte l’Union Européenne.

La Commission a rappelé qu’il y a deux dispositifs principaux: d’une part, le transfert de fonds aux États membres, responsables de leur gestion au niveau national; d’autre part, la gestion centralisée du montant qui relève exclusivement de la compétence de la Commission.

D’ailleurs, même s’il s’agit de programmes de travail annuels, ils doivent s’inscrire dans le cadre financier pluriannuel, 2014-2020. Il y a, donc, une continuité et une cohérence qui doit toujours être respectée. Cependant, il faut noter que son adoption pour l’année 2014 a pris du retard, mais la Commission se justifie : ‘l’année a été une année très difficile.’

Plus en détail, en ce qui concerne les fonds élargis aux États membres, il y a eu une innovation très importante : pour la première fois des dialogues politiques ont été entamés afin de discuter de la stratégie à venir pour bien comprendre quelles priorités il convient de donner aux projets futurs, en fonction des besoins réels, constatés.

Lors des discussions, ont été soulignés les points suivants :les critères pris en compte par la Commission lors de l’évaluation des projets qui lui sont soumis, tout en tenant compte du facteur d’urgence, c’est à dire:

-. La valeur ajoutée européenne, mesurée sur la base de la dimension transnationale forte des actions qui doivent prendre une dimension à l’échelle européenne.

-. La co-efficacité, définie par la coopération pratique entre les agences de manière que la complémentarité de leurs actions soit garantie ; cela, grâce aussi à des mécanismes d’information efficaces, incluant les états tiers.

-. La conformité, à travers la complémentarité entre l’action externe et l’action interne, notamment du point de vue des instruments financiers.

-.La qualité du projet proposé.

Afin de donner une idée concrète des projets qui respectent l’ensemble de ces critères, le directeur de la DG Home, a présenté différents exemples des programmes financés, dans les domaines de l’asile, de la migration et de la sécurité intérieure.

En ce qui concerne le Fond d’asile, environ 37.400.000 € ont été alloués, dont 25 million comme fonds d’urgence. En guise d’exemple, la Commission a promu des projets visant à faire ressortir les meilleures pratiques afin de répondre aux besoins spécifiques des femmes et des enfants. D’autres actions ont été entreprises pour garantir un meilleur accès aux procédures et aux services juridiques gratuits pour les personnes ayant droit à la protection internationale. En outre, un projet pilote a été lancé pour une campagne d’information destinée à prévenir les risques d’immigrations illégales.

Reprenant l’importance réservée à la cohérence entre dimension interne et externe des projets, la représentante de la DG Home a souligné que l’Union agit aussi en collaboration avec d’autres organisations internationales, tel que l’OIM et l’UNHCR (comme au Niger, en Ethiopie et au Soudan, dans le cadre de la lutte contre la traite des êtres humains).

Tout en respectant le critère de cohérence entre les instruments financiers, la Commission, souligne qu’elle va au-delà des fonds d’asile et migration, grâce au dispositif des Fonds confondus, permettant ainsi d’agir de façon rapide et simple, afin de faciliter la mobilité et les partenariats.

Ensuite, en ce qui concerne les Fonds frontières et visa, ils s’élèvent à 8 millions d’euros, dont 6 millions d’urgence. Dans ce montant, une partie a été investie dans la coopération entre les pays membres pour améliorer la détection des petites embarcations; d’autres fonds ont été consacrés à la coopération régionale avec les pays tiers, au renforcement des échanges d’informations et aux programmes de formation des experts.

Enfin, 50 millions d’euros, environ, ont été donnés aux Fonds pour la sécurité interne, dans le domaine de la coopération policière, mais sans enveloppe de prévue pour l’aide d’urgence dans ce secteur. Ils ont été distribués dans des projets promouvant la lutte contre la corruption, ou encore au soutien des réseaux comme ATLAS, qui coordonne les forces de police antiterroriste. D’autres exemples ont été donnés par Mme Cygan, comme l’Eurobaromètre pour le cybercrime, adopté début août, et les accords des délégations.

‘Tous ces choses sont sur les rails’, conclue-t-elle, ‘à des stades différents, mais nous ferons le possible pour atteindre pleinement nos résultats.’

Par la suite, elle a présenté le travail des fonds d’urgence, soulignant les nouveautés introduites par rapport aux mécanismes antérieurs. Des simplifications sont intervenues, notamment au profit des utilisateurs qui doivent réagir dans l’urgence, face aux menaces à la sécurité ; celles internes et externes, comme les flux massifs d’immigrants. Grâce aux modifications qui sont intervenues, on peut arriver à 100% d’utilisation des fonds éligibles ; en même temps, les procédures ont été facilitées : une fois que le projet rentre dans le programme annuel, il ne doit pas être modifié dans les cas d’urgence.

D’autres améliorations ont été faites par rapport au champ d’application, qui a été élargi à plus de situations externes, ce qui sera effectivement possible à partir du 2015. En outre, la période de mise en œuvre est passée de 6 mois à 12, comme maintenant, tous les projets sont inscrits dans le programme annuel.

En conclusion, ‘Pourquoi ce montant?’, demande Mme Cygan interprétant la voix de la commission LIBE. Et elle explique : ‘Il est lié à l’analyse des besoins et de l’expérience des années précédentes’. Les chiffres parlent clairement : 6,8 million, de fonds frontières d’urgences, ont fait objet des demandes de l’Italie, de la Grèce et de Chypre, cette dernière en cours d’évaluation. En plus, 25 millions d’euros sont prévus pour le fond d’asile, alors qu’actuellement  les demandes représentent déjà 23,1 millions d’euros, sans tenir compte de celles qui s’ajouteront à l’avenir.

‘Toutes ces données seront très utiles afin de préparer les travaux pour l’année suivante, annonce Mme. Cygan.

La présentation de la direction des affaires intérieures soulève, toutefois, des doutes parmi certains députés, notamment par rapport à l’utilité et à l’efficacité des programmes implémentés.

Birgit Sippel (S&D) souhaite avoir des définitions claires des termes utilisés dans la lutte contre les passeurs ; en effet, elle se méfie de l’utilité des actions mises en place : si on ne sait pas exactement qui sont les destinataires concernés.

D’ailleurs, Marie-Christine Vergiat (GUE), rappelle que, lors de l’adoption du cadre financier pluriannuel la commission LIBE avait insisté sur le respect de l’équilibre entre asile, intégration et sécurisation des frontières. Ce qui, au contraire, ne semble pas avoir été le cas, d’après les déclarations de la Commission sur les travaux annuels, relève Mme. Vergiat.

En outre, les programmes de financement aux partenariats avec les pays tiers, comme les campagnes d’information sur les risques d’immigration illégale, risquent d’être assez aléatoires et contestables. L’observation de la députée GUE repose sur les graves violations des droits de l’homme par les mêmes autorités qui bénéficient des fonds. Les programmes contre la traite des êtres humains en Albanie, Ukraine et Maroc, représentent un deuxième exemple de cette contradiction. ‘Quelle place’, demande-t-elle à Mme Cygan, ‘la direction des affaires intérieures réserve au respect des droits de l’homme? Quel est le suivi réel, tout en intégrant cette dimension?’

L’utilité des programmes présentés par la Commission est remise en discussion, par Mme Vergiat, aussi lorsqu’il s’agit de la détection des petites embarcations : ‘Comme constate le Haut-Commissariat pour les Réfugiés,’ reporte-t-elle, ‘la plupart des morts en mer sont des demandeurs d’asile potentiels. Quelle est l’action de la DG Home, afin de garantir l’accès à l’asile?’

Enfin, la députée GUE relance le projet pilote pour un observatoire européen des frontières extérieures, qui avait été proposé par la commission LIBE précédemment. Cependant, à cause du manque d’études documentées et d’informations stables nécessaires, la Commission avait prévu son intégration dans le cadre de travaux pour l’année 2015. Partant, Mme Vergiat demande des renseignements quant à l’état d’avancement .

Ensuite, Bodil Ceballos, des Verts, invite la Commission à se concentrer davantage sur la prévention des catastrophes, comme l’afflux massif des migrants, à travers des actions en amont. En effet, d’après elle, il faut ne faut donner des financements aux états membres, mais aux pays où ces catastrophes ont lieu, pour éviter que les gens soient obligées à prendre la fuite et quitter leur pays.

En conclusion, la question posée par Laura Ferrara (EFD) résume les préoccupations des députées intervenues : ‘Est-ce qu’il y a des contrôles pour vérifier que les résultats des projets correspondent aux objectifs ?’

Face aux inquiétudes des députés LIBE la directrices de la direction affaires intérieures remarque : ‘Il ne faut pas lire ces programmes de façon isolée mais globale.’ En plus, elle souligne qu’il est nécessaire de les combiner avec les programmes nationaux appliqués dans l’horizon de sept ans. D’ailleurs la partie gérée uniquement par la Commission permet de compléter ce qui est fait par les États membres.

Néanmoins les programmes et les actions ainsi que les montants appliqués qui ont été présentés lors de la réunion LIBE devront être conçus comme un avant-goût d’une stratégie plus ample et plus cohérente. De surcroît, les cas d’urgence ne remplacent pas le processus de long terme qui permet d’améliorer la situation dans les pays tiers. Certains programmes, comme celui de l’information, sont une nouveauté, il faudra, donc, les suivre attentivement et voir quels résultats seront obtenus, en tirant, par la suite, les conséquences.

En conclusion, la directrice de la DG Home lance un message fort : ‘Il faut faire confiance, nous suivons et nous contrôlons, modifiant nos objectifs en fonction de cela et évitant tout déséquilibre.’

Elena Sbarai

 

En savoir plus

      -.Site official de la Commission Européenne. Asylum, Migration and Integration Fund (AMIF) http://ec.europa.eu/dgs/home-affairs/financing

      -.Site official de la Commission Européenne. Security, Borders, Police http://ec.europa.eu/dgs/home-affairs/financing

      -.EU-Logos, Le Conseil des ministres de l’UE approuve le Fonds « asile et migrations » et le Fonds « sécurité intérieure », NEA say… n° 145, 28 avril 2014 http://europe-liberte-securite-justice.org

      -EU-Logos, Financement Européen dans les domaines des Affaires Intérieures: les Fonds «Asile et Migration» et les Fonds «Sécurité Intérieure», NEA say… n° 141, 10 janvier 2014 http://europe-liberte-securite-justice.org


Classé dans:Conditions d'accueil des réfugiés, IMMIGRATION, Lutte contre l'immigration illégale, Politique d'intégration, Protection temporaire en cas d'afflux massif de personnes déplacées

As the Ukrainian ceasefire falters what next on sanctions?

Posted by on 16/11/14
UK PM Cameron warns Russia of sanctions ahead of G20
Over the past few days we have seen the situation in Ukraine begin to escalate once again. Both NATO and the Organisation of Security and Co-operation in Europe (OSCE) have said that they have witnessed significant military movements in Eastern Ukraine, most likely from Russian troops. By almost all accounts the ceasefire only continues to exist on paper (although we have pointed out before why both sides might be willing to continue to pretend it is more than that).

Why has the situation suddenly escalated?
In all honesty, it’s not entirely clear how significantly the situation has escalated on the ground in Ukraine, given that there have been continuous reports of fighting since the ceasefire was struck. It could be more a case of attention shifting back to Ukraine ahead of the G20 and EU meetings. That said, Russia continues to push the boundaries with military exercises. Furthermore, the elections (both in Ukraine and the separatist regions) have increased tensions, while Russia is reportedly keen to help further establish the newly elected separatist leaders.

As might be expected, these reports have once again triggered the discussion on whether the US and EU should increase sanctions on Russia. As we reported in our press summary today, numerous leaders have come out warning of the potential increase in sanctions – surprisingly this also includes representatives of Hungary and Slovakia, though both countries remain a bit divided on sanctions.

While there is lots of talk of further sanctions we would not get ahead of ourselves. Crucially, German Chancellor Angela Merkel has already played down the chance of this in the near future as we reported in our press summary earlier in the week. EU officials have also suggested any agreement is unlikely at Monday’s meeting of EU foreign ministers, although a discussion will be had at the meeting of EU leaders in mid-December.

What could be on the table if sanctions are escalated?

We’ve discussed many times before the options for sanctions but below are a reminder of the potential options if they wanted to take the next step up from the current sanctions.
Expanding list of individuals subject to asset freezes and travel bans: This is a virtual certainty and should be agreed at Monday’s meeting. Specifically the newly elected officials for the pro-Russian separatists will be targeted. More broadly, those involved with the elections in the region could be targeted. It’s not yet clear if there will be a broader discussion about adding further people or oligarchs close to Russian President Vladimir Putin to the list (we have pointed out the potential legal concerns on these sorts of sanctions here).
There are a few other options which the EU could consider (many of which we have discussed before):
  • Ban purchases of new Russian sovereign debt – this was reportedly toyed with before but considered too harsh a step. As we noted before, this would probably be manageable for Russia given its fairly low government debt level but it would add another difficulty at a time when the economy and state budget is coming under severe pressure.
  • Broaden scope of technological sanctions – this would involve expanding the list of banned tech exports to Russia, currently very focused on oil exploration. It could also include expanding the ban of services which European firms can provide to Russia, which again is currently focused on oil exploration.
  • Extend financial sanctions – similar to the above, this would involve broadening the existing financial sanctions from just state owned firms to Russian firms more generally, most likely still only in specific sectors such as financial and defence. This would be legally difficult since the ties to the state would become even more indirect and justification would need to be watertight.
  • Broaden scope of financial sanctions – related to the above, rather than expanding the number or type of firms subject to the sanctions, the EU could broaden the scope of the sanctions. This could, for example, mean cutting off all euro funding from certain state owned firms, no matter what the maturity or the type of loan (there are probably a few incremental steps or variations between this and where we are now).
  • Remove Russia from the SWIFT system – This remains very unlikely and for some very practical reasons. SWIFT is independent and private. Removing Russian financial firms from this system would mean having heavy direct sanctions on them which forces SWIFT (in acts of compliance) to shut them off from the system. This is one of the key reasons it has never really been discussed at the top level as a realistic option so far.
For his part Putin continues to demand a removal of sanctions but if they were ramped up it is likely he would be willing to retaliate with his own sanctions, some of which we looked at here.

In terms of the broader picture it’s clear that sanctions, combined with the falling oil price, are hurting the Russian economy. However, they do not yet look to have impacted Putin’s approach or course of action. As we warned before, the lack of a clear goal or strategy for the sanctions as well as in terms of what Europe actually wants in terms of a future relationship with Ukraine and Russia could well hamper the approach. The EU would do well to discuss this, not least because the continuing downward spiral of the Ukrainian economy will likely (as we warned some months ago) lead to further bailout requests.

The counterproductive policies of the Israeli right and the Swedish green-left

Posted by on 11/11/14

The peace process in the Israeli-Palestinian conflict is suspended until further notice because both sides are obstructing it. The Israeli government, pressed by the settlement lobby, is continuing announcing new construction in the West Bank and east Jerusalem. The Palestinian authority, afraid of its own extremists, refuses to continue the peace talks until a mutual acceptable agreement has been reached.

No wonder that the outside word becomes exasperated by the deadlock in the conflict and thinks that it can promote the restart of the peace process by recognizing the state of Palestine. It started with the new Swedish government, a minority coalition made up by the social democratic party and the green environment party, that recently recognized Palestine in the hope that it would send a signal to the moderate forces among the Palestinians and level the playing field in future negotiations.

The Swedish government also hoped that its recognition of Palestine would be followed by other EU member states but until now no other states have followed in its steps, not even other Scandinavian countries. The British parliament has adopted a non-binding resolution in favor of recognition. As EurActiv reported last week, the socialist group in the French parliament has drafted its own non-binding proposal for recognition.

This hardly indicates any momentum in Europe for the recognition of Palestine. After all the official EU position is that recognition today of Palestine would be premature. The European Council has often declared that EU will only recognize those borders that have been agreed by the parties to the conflict as the result of direct peace negotiations. To recognize Palestine today would mean to recognize an entity that doesn’t control its territory and part of which still is bent on war.

The Swedish government has been claiming that already more than 130 countries around the world have recognized Palestine, among them some EU member states. It forgot however to mention that many of these countries haven’t recognized Israel, including several of the 56 members of the Organization of Islamic Cooperation. The EU member states that have recognized Palestine did it before they joined EU and before there was any common EU foreign policy.

There is nothing in international law that prohibits the Palestinian authority to unilaterally declare independence but to the outside world it’s a political issue that needs careful consideration. There are so many issues that remain unresolved. The future state’s borders, security arrangements, the status of Jerusalem, water – all are difficult questions that require mutually acceptable and agreed solutions.

Fortunately, there are already good ideas on how these issues could be solved, for example, in the so-called Geneva Accords of 2003. The parties have also already come quite far in previous negotiations and been close to a peace settlement.

However, there is one remaining stumbling block and this is the Palestinian refugee problem. It would be unreasonable and dangerous to recognize a Palestinian state that would not end the conflict but continue to pursue the issue of the refugees’ right to return to Israel. A premature and unconditional recognition of Palestine could therefore have an adverse impact on the prospects for a lasting settlement of the conflict.

While I can understand the rational for the Swedish recognition of Palestine, I’m also afraid that it has been influenced by domestic political concerns. Sweden has a tradition of carefully examining new political initiatives but in this case the new government decided to act at once on its own. The recognition issue also diverted the attention from burning problems in Swedish society and the need to achieve consensus in riksdagen (the Swedish parliament) on the new state budget.

I was also concerned when the new Swedish foreign minister entered into a “word war” with her Israeli counterpart as to whether achieving a peace agreement is as easy as assembling pieces of IKEA furniture. No, it isn’t. Solving the conflict is complicated – if it weren’t we would already have peace. Assembling IKEA furniture doesn’t require ”partners” but can be done by a single person who can read the instructions.

Premature recognition of Palestine might make the Palestinian government believe that it can achieve statehood without having to negotiate with Israel. In his speech some time ago in the UN general assembly, Palestinian president Mahmud Abbas seems to have lost all faith in bilateral peace talks with Israel. While he during the first days of the Gaza war seemed to criticize Hamas for inflicting civilian casualties, he now accused Israel for war crimes and even genocide in Gaza.

The current Israeli government, on the other hand, seems to do everything to play into the hands of the Palestinians and to antagonize the outside world with its pro-settlement policy. Naftali Bennet, the minister of economy, recently wrote an article where he argued that the two-state solution isn’t feasible (INYT, 6 November). We already knew that this was his position but the article enables us to understand the flaws.

He makes an issue of that previous Israeli withdrawals from occupied territories haven’t resulted in peace but in terror attacks against Israel. Maybe it was because they were unilateral without any agreement with the other side?

He also outlines a plan for a “bottom-up approach” with focus on economic cooperation. It makes some sense. Economic cooperation is necessary and will serve as “bridges of peace” – as is the case in the EU. But it’s more than naïve to believe that the Palestinians would accept unilateral Israeli annexation of a big part of the West Bank – without even any land swaps – as Bennet proposes in his article.

The risk is that it may become a self-fulfilling prophesy if construction in the West Bank is allowed. It will not only obstruct the restart of the peace process but might also result in more people settling in the West Bank and voting for Bennet’s party and other pro-settlement parties who don’t care that the status quo is unsustainable. In such a situation the whole of Israel would be held hostage by a minority of its inhabitants and their vested interests groups.

To conclude: Both the Swedish and Israeli policies as described above are counterproductive. Unfortunately they also have a tendency to nourish each-other.

¥uan and Waterloo of Petro$ (Part 2/2)

Posted by on 11/11/14

yuan logoU.S. sanctions due the conflict in Ukraine launched Russia’s counter-offensive with bypassing the U.S. dollar system as its spear-head. My previous article ¥uan and Waterloo of Petro$(Part ½) describes this monetary war. The gas contract, signed between Russia and China in May 2014, and a new wave of the EU sanctions in September 2014 are paving the road towards the revival of traditional (neo)realist balance of power.

Besides monetary war the emergencing cooperation on different pro-Russian fields and energy policy are linked to ongoing geopolitical turmoil.The wider picture includes the Sino-Russian cooperation, the BRICS, the SCO, the EEU, the energy war and other bilateral operations.

 

The Sino-Russian cooperation

The Russia-China strategic partnership will keep evolving very fast – with Beijing in symbiosis with Moscow’s immense natural and military-technological resources. Not to mention the strategic benefits. Faced with an increasingly hostile West, Russia is visibly turning East. In particular, China and Russia have become closer, signing a historic gas deal, conducting joint naval exercises, and increasing trade.

Gazprom signed a thirty-year gas contract worth $400 billion. The deal’s importance can be compared with a similar accord concluded in the 1960s that brought Russian gas to West Germany for the first time. Moscow and Beijing vow to more than double their bilateral trade to $200 billion by 2020, that is, roughly half of their current turnover with the EU.

It is clear that Moscow seeks an acceleration of its business ties with China. On Nov. 09, 2014 President Vladimir Putin and Chinese leader Xi Jinping signed a memorandum of understanding on the so-called “western” gas supplies route to China. Russia’s so-called “western” or “Altay” route would supply 30 billion cubic meters (bcm) of gas a year to China. The new supply line comes in addition to the “eastern” route, through the “Power of Siberia” pipeline, which will annually deliver 38 bcm of gas to China. Work on that pipeline route has already begun after a $400 billion deal was clinched in May. Among the business issues discussed by Putin and Xi at their fifth meeting this year was the possibility of payment in Chinese yuan, including for defense deals military, Russian presidential spokesman Dmitry Peskov was cited as saying by RIA Novosti. (Source: RT )

China-Russia gas deal

In addition China and Russia have agreed to jointly build a seaport on the coast of the sea of Japan, which are projected to become one of the largest on the coast in North-East Asia. The facility will be located in our territory and will serve up to 60 million tons of cargo per year.

Also, China has decided to invest 400 billion rubles in the construction of high-speed highway Moscow-Kazan, which is part of transport corridor Moscow-Beijing.

Russia and China are determined to reduce U.S. and North Atlantic Treaty Organization (NATO) presence in Central Asia to what it was before the 2001 invasion of Afghanistan. The SCO has consistently rebuffed U.S. requests for observer status, and has pressured countries in the region to end U.S. basing rights. The United States was forced out of Karshi-Khanabad in Uzbekistan in 2005, and from Manas in Kyrgyzstan in 2014.

“At present, the SCO has started to counterbalance NATO’s role in Asia,” says Aleksey Maslov, chair of the Department of Asian Studies of the Higher School of Economics in Moscow. And the new members, he says, want in to safeguard their interests. (Source: VoR)

China overtook Germany as Russia’s largest trading partner in 2011, Last year, China acquired 12.5 percent of Russia’s Uralkali (URKA:RM), the biggest producer of potash in the world, and China National Petroleum agreed to prepay Rosneft (ROSN:RM), run by Putin associate Igor Sechin, about $70 billion as part of a $270 billion, 25-year supply deal. That was followed by Rosneft’s $85 billion, 10-year accord with China Sinopec and China National Petroleum’s purchase of 20 percent of an Arctic gas project from Novatek for an undisclosed sum. (Source: Bloomberg Businessweek )

The BRICS

The BRICS met 2013 in Durban, South Africa, to, among other steps, create their own credit rating agency, sidelining the “biased agendas” of the Moody’s/Standard & Poor’s variety. They endorsed plans to create a joint foreign exchange reserves pool. Initially it will include US$100 billion. It’s called a self-managed contingent reserve arrangement (CRA). brics cra

During the July (2014) BRICS Summit in Brazil the five members agreed to directly confront the West’s institutional economic dominance. The BRICS agreed to establish the New Development Bank (NDB) based in Shanghai , pushed especially by India and Brazil, a concrete alternative to the Western-dominated World Bank and the Bretton Woods system. With initial authorized capital of $100 billion, including $50 billion of equally shared initial subscribed capital, it will become one of the largest multilateral financial development institutions. Importantly, it will be open for other countries to join.

In addition creation of the Contingent Reserve Arrangement, or currency reserve pool, initially sized at $100 billion, will help protect the BRICS countries against short-term liquidity pressures and international financial shocks. Together with the NDB these new instruments will contribute to further co-operation on macroeconomic policies. According Conn Hallinan – in his article Move Over, NATO and IMF: Eurasia Is Coming – The BRICS’ construction of a Contingent Reserve Arrangement will give its members emergency access to foreign currency, which might eventually dethrone the dollar as the world’s reserve currency. The creation of a development bank will make it possible to bypass the IMF for balance-of-payment loans, thus avoiding the organization’s onerous austerity requirements.

Also it was agreed MoU’s among BRICS Export Credit and Guarantees Agencies, as well as the Cooperation Agreement on Innovation within the BRICS Interbank Cooperation Mechanism, which will offer new channels of support for trade and financial ties between the five countries.

So in near future BRICS will be trading in their own currencies, including a globally convertible yuan, further away from the US dollar and the petrodollar. All these actions are strenghtening financial stability of BRICS – a some kind of safety net precaution, an extra line of defense.

Emerging economic powers such as China, India and Brazil have long been demanding greater share of votes in multilateral development institutions like the World Bank, International Monetary Fund and the Asian Development Bank (ADP) to reflect their recent phenomenal growth. China’s economy is expected to grow to $10 trillion this year, yet its share of votes in the Bretton Woods institutions is only 3.72 percent, compared with 17.4 percent for the United States. The signing ceremony of the Memorandum of Understanding on Establishing Asian Infrastructure Investment Bank (AIIB) took place in Beijing, Oct. 24, 2014 According to ADB, in the 10 years up to 2020, the region requires investments of $8 trillion in terms of national infrastructure, or $800 billion a year. The ADB currently lends out only about 1.5 percent of this amount. The AIIB is expected to have an initial capital base of $100 billion. The AIIB, to begin with, will serve at least five objectives for China. First, it could help China invest part of its foreign exchange reserves of $3.9 trillion on commercial terms. Second, it will play a vital role in the internationalization of the yuan. And fifth, the AIIB will boost China’s global influence and enhance its soft power.

BRICS could be expanded to include the MINT countries (MINT is an acronym referring to the economies of Mexico, Indonesia, Nigeria, and Turkey.), thus furthering the organization’s scope and creating opportunities for a long-term strategic ‘flip’ of those states from their largely Western orientations.

Being in the same organization does not automatically translate into having the same politics on international questions. The BRICS and the recent Gaza conflict are a good example. China called for negotiations; Russia was generally neutral, but slightly friendly toward Israel; India was silent (Israel is New Delhi’s number-one source of arms); South Africa was critical of Israel, and Brazil withdrew its ambassador.

As Russia is taking over the position of the BRICS Chair, the next summit will be held in the city of Ufa in the Republic of Bashkortostan, in July 2015.

The SCO

The Shanghai Cooperation Organization (SCO) is the cradle in which the Russian-Chinese strategic partnership (RCSP) was born and raised. Originally founded as the Shanghai Five in 1996, it was reformed as the SCO in 2001 with the inclusion of Uzbekistan. Less than a month after the BRICS’ declaration of independence from the current strictures of world finance, the SCO—which includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan—approved India, Pakistan, Iran, and Mongolia for membership in the organization. Also SCO has received applications for the status of observers from Armenia, Azerbaijan, Bangladesh, Belarus, Nepal and Sri Lanka.

SCO map

It was the single largest expansion of the economic cooperation and security-minded group in its history, and it could end up diluting the impact of sanctions currently plaguing Moscow over the Ukraine crisis and Tehran over its nuclear program. These countries directly fall into the immediate sphere of the RCSP, where either Russia or China can exert some degree or another of important influence to varying degrees. Also, the SCO sets out the foundations of the RCSP, listing the fight against “terrorism, separatism, and extremism in all their manifestations” (thus including Color Revolutions) as their foremost foe. It just so happens that the U.S. engages in all of these activities in its Eurasian-wide campaign of chaos and control, thereby placing it at existential odds with Russia and China, as well as the other official members. Even before the recent additions, SCO represented three-fifths of Eurasia and 25 percent of the world’s population.

For Iran, SCO membership may serve as a way to bypass the sanctions currently pounding the Iranian economy. Russia and Iran signed a memorandum in August (2014) to exchange Russian energy technology and food for Iranian oil, a move that would violate U.S. sanctions. One particular constraint is Russia’s important relationship with Israel, which Moscow will not give up unless Jerusalem drops its neutral stance and joins the U.S.-led condemnation of Russia.

Chinese President Xi Jinping has also promoted new regional security initiatives. In addition to the already existing Shanghai Cooperation Organization, a Chinese-led security institution that includes Russia and four Central Asian states, Xi wants to build a new Asia-Pacific security structure that would exclude the United States.

As for India and Pakistan energy is a major concern the membership in the oil- and gas-rich SCO is quite reasonable. Whether that will lead to a reduction of tensions between New Delhi and Islamabad over Kashmir remains to see, but at least the two traditional enemies will be in same organization to talk about economic cooperation and regional security on a regular basis.

As joint forum the SCO can ease tensions in Central Asia e.g. between SCO members Uzbekistan and Kyrgyzstan over borders, and both countries, plus Tajikistan, over water rights. Most SCO members are concerned about security, particularly given the imminent departure of the United States and NATO from Afghanistan. That country might well descend into civil war, one that could have a destabilizing effect on its neighbors. From August 24 -29, SCO members China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan took part in “Peace Mission 2014,” an anti-terrorist exercise to “subdue” a hypothetical Central Asian city that had become a center for terrorist activity.

The BRICS and the SCO are the two largest independent international organizations to develop over the past decade. There is also other developments to reduce old U.S. global dominance. The newly minted Union of South American Nations (USAN) includes every country in South America, including Cuba, and has largely replaced the Organization of American States (OAS), a Cold War relic that excluded Havana. While the United States and Canada are part of the OAS, they were not invited to join USAN.

Eurasian Economic Union (EEU)

Eurasian integration has moved to a higher level, to replace the EurAsEC came a new form of closer Association of the Eurasian Economic Union (EEU) also known as the Eurasian Union (EAU). To him by the old member States (Russia, Kazakhstan, Belarus) was joined by Armenia, the next candidate in the list on the accession of Kyrgyzstan, and later, his desire to join the EAEC expressed and Vietnam. Also the accession of Turkey and Syria are on the way.

EEU mapMoscow began building a Russian-led community in Eurasia that would give Russia certain economic benefits and, no less important, better bargaining positions with regard to the country’s big continental neighbors—the EU to the west and China to the east.

Moldova, Ukraine and Georgia have been offered by both the European Union and the Eurasian Economic Union to join their integration unions. All three countries opted for the European Union by signing association agreements on March 21, 2014. However break-away regions of Moldova (Transnistria), Ukraine (Republic of Donetsk) and Georgia (South Ossetia and Abkhazia) have expressed a desire to join the Eurasian Customs Union and integrate into the Eurasian Economic Union.

Putin is scheduled to visit Japan later in 2014 in an effort to keep Russia’s technology and investment channel to the country open. And Moscow is expected to reinvigorate ties with India, particularly in the defense technology sphere, under the leadership of newly elected Prime Minister Narendra Modi.

The Eurasian union may become an add-on to, or even an extension of, China’s Silk Road project – a common space for economic and humanitarian cooperation stretching all the way from the Atlantic to the Pacific Ocean

 

Treaties and development stages of Eurasian Economic Union/Structural evolution

1991 1996 2000 1995- 2007 2007 & 2011 2014
Eurasian Economic Union (EEU)
Eurasian Economic Space
Eurasian Customs Union (ECU)
Eurasian Economic Community (EurAsEC)
Increased Integration in the Economic and Humanitarian Fields
Commonwealth of Independent States (CIS)

Other bilateral development

Russia is in the process of politically and economically integrating with Kazakhstan and soon Kyrgyzstan under the auspices of the Eurasian Union, and it has mutual security commitments with Kazakhstan, Kyrgyzstan, and Tajikistan under the Collective Security Treaty Organization (CSTO). China, on the other hand, is more of a soft leader in Central Asia, having established lucrative business contacts in recent years and struck extremely strategic energy deals with most of the region’s members, first and foremost Turkmenistan.

A Russian-Iranian strategic partnership would extend beyond Caspian and nuclear energy issues and see implicit cooperation between the two in the Mideast, especially in Syria, Iraq, and Yemen. It can even carry over into Afghanistan after the NATO drawdown by year’s end. This can help to build an alternative non-Western-centric trade network that can bolster Russia’s complex economic interdependence with other states. This would give it the opportunity to expand mutual relations beyond the economic sphere and perhaps eventually associate these states into the multilateral webs of BRICS and the SCO.

Russia is also pursuing bilateral relations with Iran with fewer constraints. This refers to nuclear energy, oil and gas, and arms deals, all based on pragmatic considerations: a Russo-Persian alliance is unlikely in view of many differences between Moscow and Tehran and thick layers of mutual suspicion. For Iran, SCO membership may serve as a way to bypass the sanctions currently pounding the Iranian economy. Russia and Iran signed a memorandum in August (2014) to exchange Russian energy technology and food for Iranian oil, a move that would violate U.S. sanctions.

At the recent summit of the SCO in Dushanbe (11-12 Sep. 2014 )the cooperation with SCO-applicant Iran went wider. Some of the projects were following:

  • The well-known “Uralvagonzavod”, began talks with Iran on the supply of freight cars 40 billion annually.
  • Interestingly, Iran is not on the camera, discussing terms of oil supplies in exchange for electricity, in which Russia plans to build in Iran, the network of hydro – and thermal power plants.
  • Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions. In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.

(Source: EN.XPPX.org )

One particular constraint is Russia’s important relationship with Israel, which Moscow will not give up unless Jerusalem drops its neutral stance and joins the U.S.-led condemnation of Russia.

Putin is scheduled to visit Japan later in 2014 in an effort to keep Russia’s technology and investment channel to the country open. Russia is interested in restarting talks to build a natural gas pipeline between its Sakhalin Island and Japan’s far northern island of Hokkaido, Russia already supplies 9.8 percent of Japan’s LNG imports. The proposed pipeline would deliver 20 billion cubic meters of natural gas every year, which at full capacity would supply 17 percent of Japan’s total natural gas imports. As an additional bonus, using a pipeline does not require the building of expensive regasification plants and natural gas from Russia would probably still be relatively cheap. This is also part of Moscow’s attempt to balance its interests and expand its energy influence eastward.

Also Moscow is expected to reinvigorate ties with India, particularly in the defense technology sphere, under the leadership of newly elected Prime Minister Narendra Modi.

South stream serbiaRussia also hopes that Russian-Serbian trade will reach 2 billion dollars this year. He said that a free trade regime existing between the two countries was contributing to steady development of Russian-Serbian economic ties. “Our reciprocal trade turnover grew by 15% to reach 1.97 billion dollars in 2013. It grew by another 16.5% to reach 1.2 billion dollars in the first half of 2014. We hope to reach the figure of 2 billion dollars this year” Putin stressed. Positive dynamics can be seen in the sphere of investments. The total volume of Russian capital investments in Serbia has exceeded 3 billion dollars, the bulk of which was channeled into the strategically important energy sector.

While Russia is consolidating its influence over the former Soviet sphere with states which it already has cultivated deep relations with, China is moving in due its strategic interest in Central Asia. For China a top priority is to be able to diversify its natural resource import routes in order to avoid the U.S. dominated Straits of Malacca.

The growing influence of China in Southeast and East Asia and the Indian Ocean is explained with “string of pearls” concept (strategic points such as Hainan Island, the Woody Islands/close to Vietnam, Chittagong/Bangladesh, Sittue and the Coco Islands/Myanmar, Hambantota/Sri Lanka etc.). The “string of pearls” strategy is aimed at protecting China’s oil flows, affirming the country as a global naval power with diverse interests throughout the world, and overcoming attempts by the USA to cut off access to or from China via the world’s oceans. Furthermore, an important task lay in minimizing potential threats in the most complex and vulnerable choke point at the junction of two oceans, named the “Malacca Dilemma”. (Source and more in Second Wind for China’s String of Pearls Strategy by Nina Lebedeva ).

Tehran is reaching out to Beijing as well. Iran and China have negotiated a deal to trade Iran’s oil for China’s manufactured goods. Beijing is currently Iran’s number-one customer for oil. In late September, two Chinese warships paid a first-ever visit to Iran, and the two countries’ navies carried out joint anti-piracy and rescue maneuvers.

Importing more gas from Russia helps Beijing to gradually escape its Malacca and Hormuz dilemma and industrialize the immense, highly populated and heavily dependent on agriculture interior provinces.

The Northern East-West Freight Corridor (Eurasian Landbridge) is an idea to link the Far East and Europe by rail takes its origin with the construction of the Trans Siberian railway linking Moscow to Vladivostok, completed in 1916. With a length of 9,200 km it is the longest rail segment in the world. It was initially used solely as an inland rail link, but in the 1960s the Soviet Union started offering a landbridge service from Vladivostok using the Trans Siberian to reach Western Europe.

east-west freight corridor

Energy war

U.S. ally inside OPEC, the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC, with Iran following suit and panic selling short in oil futures markets. The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. When combined with the financial losses of Russian state natural gas sales to Ukraine and prospects of a US-instigated cutoff of the transit of Russian gas to the huge EU market this winter as EU stockpiles become low, the pressure on oil prices hits Moscow doubly. More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of U.S. globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. In fact the oil weapon is accelerating recent Russian moves to focus its economic power on national interests and lessen dependence on the Dollar system. If the dollar ceases being the currency of world trade, especially oil trade, the US Treasury faces financial catastrophe.

The shale gas revolution and a greater availability of LNG technologies, EU regulatory initiatives and implementation of the Third Energy Package provisions play a key role in transformations of gas markets.

ME pipelinesNow there might be a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other.

In July 2011, the governments of Syria, Iran and Iraq signed an historic gas pipeline energy agreement which went largely unnoticed in the midst of the NATO-Saudi-Qatari war to remove Assad. The pipeline, envisioned to cost $10 billion and take three years to complete, would run from the Iranian Port Assalouyeh near the South Pars gas field in the Persian Gulf, to Damascus in Syria via Iraq territory. The agreement would make Syria the center of assembly and production in conjunction with the reserves of Lebanon. This is a geopolitically strategic space that geographically opens for the first time, extending from Iran to Iraq, Syria and Lebanon. As Asia Times correspondent Pepe Escobar put it, “The Iran-Iraq-Syria pipeline – if it’s ever built – would solidify a predominantly Shi’ite axis through an economic, steel umbilical cord.”

In ongoing oil war the U.S. shale oil producers will suffer most. According to experts’ estimates, the cost of production is around 80-90 dollars a barrel, 4-5 times more than the traditional oil. It means that the current price – 85 dollars a barrel as of October 17 – makes the companies operate in the red. Some producers will have to suspend operations facing mass bankruptcy in case the oil price falls lower than 80 dollars as shareholders start getting rid of zero profit bonds. The shale oil «soap bubble» will blow like the housing construction industry «bubble» blew in 2008. Of course, as time goes by oil prices will go up but it’ll be a different world with some US oil producers non-existent anymore…

Russia insists the South Stream project should be exempt from the effect of the Third Energy Package because it signed bilateral inter-governmental agreements with the EU countries participating in the construction of the gas pipeline on their territory before the EU’s new energy legislation came into force. Therefore, Russia says that the European Commission’s requirement to adapt these documents to the Third Energy Package contradicts the basic law principle that legislation cannot have retroactive force. The Third Energy Package requires, in particular, that a half of the capacities of the pipeline built with Russian money must be reserved for independent suppliers, i.e. for cheap and free transit of Caspian gas to Europe independently from Russia. Therefore, Russia does not recognize the legitimacy of applying the Third Energy Package to the South Stream gas pipeline project.

Bottom line

Russia has accelerated its building of the Eurasian Bridge: Russia has the geostrategic opportunity of being an air, land, and sea bridge between Europe and East Asia. In line with China’s Silk Road and New Eurasian Land Bridge projects, the concept of the Northern Sea Route, and international air routes traversing Siberia, Russia can use its geographic position to reap the resultant dividends of East-West trade and thereby increasing its middleman importance.

The geopolitical situation is now transforming from traditional Sino-U.S. relations to U.S.-China-Russia triangle in which China, rather than the United States, will be the central player.

In addition the EU is worried that Russia will turn east and Europe will lose much of its Russian market share. At a time when the euro area threatens to collapse, where an acute economic crisis has led the U.S. into a debt of up to 14 940 billion, and where their influence is dwindling in the face of the emerging BRICS powers, it becomes clear that the key to economic success and political domination lies mainly in the control of the energy source of the century: gas.

With China signing the natural gas deal with Russia and the president of China publicly stating that it’s time to create a new security model for the Asian nations that includes Russia and Iran, it’s clear China has chosen Russia over the U.S. Today the US-backed wars in Ukraine and in Syria are but two fronts in the same strategic war to cripple Russia and China and to rupture any Eurasian counter-pole to a U.S.-controlled regions. In each, control of energy pipelines, this time primarily of natural gas pipelines—from Russia to the EU via Ukraine and from Iran and Syria to the EU via Syria—is the strategic goal.

So far U.S. has bullied its way around smaller nations for too long now. It seems to me that finally there is coming to be a coalition of new axis with Eurasia and China. Russia and China are leading of developing a network of “parallel structures” to existing international organizations and institutions. The end goal is create an alternative reality for international engagement, so that China can expand its own influence while escaping the restrictions of the current U.S.-dominated system.

eurasia revolution

Pondering Russia

Posted by on 11/11/14

I do not know what to think about Russia. I have been writing this entry for four months, revising it again and again in my head. So, if you came here looking for answers and policy suggestions, then you have come in vain. I am going to explain why I cannot figure out this situation. I cannot even figure out where the problem lies or with whom fault lies for precipitating the conflict. Firstly, because the whole situation has striking similarities to the film adaptation of the Tom Clancy novel The Sum of All Fears, which certainly casts Putin’s actions in a more favourable light. Secondly, the situation in Ukraine extended to view all of Russia’s military actions against neighbours in the 21st century does seem an awful lot like salami tactics: a frequent communist approach to political expansion in the 20th century. The second hypothesis portrays Russian foreign policy as Machiavellian empire building by directly attacking western interests. Both scenarios have legitimate scholarly underpinning and a degree of truth.

The first scenario is about nationalist elements within Russia empowered by the post-Soviet dissatisfaction with their fall from “superpower” status. It is a story about a Russia that was trying to fit into the liberal democratic order, but grew frustrated with the West insisting that Russia were somehow still “the enemy”. Furthermore, Russia feels that NATO broke its promise of not expanding into the former Warsaw countries in the wake of the collapse of communism. Taking into account Ukrainians having “irreversibly supported Ukraine’s course towards Europe” and of course Russia feels paranoid. Russia, a former professor used to remind me, has always sought Eastern Europe as a buffer to keep warmongering Western Europeans (like Sweden and Germany) off sacred soil, the heart of Kievan Rus. This threat to the motherland could be the source of nationalist sentiments in the Russian Federation. Nationalist sentiments that Putin has expertly harnessed in developing his cult of personality. This raises the question, if Putin disappointed the nationalists under him, if they would they retract their support of him? If the strongman falters and revealed to be mortal, would those Russians continue to worship at the alter of Vlad? If we assume hypothetically that should the strong man show weakness that his support would destabilise– a big assumption– then Russian aggression in Ukraine becomes an act of self preservation by a man trying to keep more radical members of his government and public in line. Now I don’t believe Putin is a Nemerov. I can’t believe that all of his policy decisions are just tempered to court populist support. I do believe that it is likely that domestic support is playing a role in the events. One doesn’t court popular support, if popular support is irrelevant. If it were, the resources would be better used elsewhere.

The second scenario is that Russia is using various events to give legitimacy to their attacks against their neighbours with stronger Western times to expose Western weakness and re-establish a Russian empire around their ideology of conservative, authoritative and illiberal democracy. It knows that NATO is slow to act and pain adverse. Using these features to portray us as ineffectual, ineffective and effeminate (a term I use only to highlight the machismo with which Putin markets himself with), Putin’s Russia is discrediting us internationally. They are achieving this best by engaging in small scale military campaigns against pro-western neighbours. For the uninformed, this approach is refereed to as salami tactics; in which you pursue your objectives one slice at a time until you have the entire “salami”. This could be said to be exactly what Russia doing to achieve its foreign policy goals while keeping the West reluctant to commit armed forces to combat roles. This fear is based on the potential, at most, of starting World War III or, at least and the much more likely outcome, of devastating a potential ally by turning their country into a conventional war zone. Even if the NATO did commit military forces and achieved a short, decisive victory over Russia, a question still remains; if Putin was destabilised, who would replace him? It would be unlikely to be a liberal democrat. Putin didn’t come to power in spite of society. Those social forces keeping him in power could be reorganised under a more radical populist nationalist. Defeats do not have the tendency to make countries feel less marginalised.

I have a personal mantra that helps remind me of something I need to keep in mind when thinking about this situation: Russians are not dumb. Putin could be using the second scenario masquerading at the first or vice versa, depending on which audience he’s playing to. The truth rarely lies in extremes however, and more likely is that the reality is a blend of both ideas. This is why I don’t know what to think about Russia. We’re staring across the board at a famously clever adversary who is renowned for their long game and there are far too many pieces in play.

Discovering China

Posted by on 11/11/14

Being an avid book reader, I found the truth in this proverb only during my visit to China. China is exactly as you would imagine it after you read numerous travel guides and yet it is completely different, surpassing expectations and surprising travellers.

Europa Media is a partner in the LinkTADs project and I travelled to Shanghai in October to represent the company at two project events – the first progress meeting and the workshop on Vaccine and Diagnostic Technology Development on Transboundary Animal Diseases and Zoonoses.

My first impression of the city, which lingered throughout the whole trip, is the absolute need to line up for everything: catching a taxi at the airport (40 min), checking in at the hotel (50 min), buying a ticket at the train station (45 min), and checking out of the hotel (40 min). As the agenda for the project meetings was extremely busy and I was working hard (delivering 3 presentations, consulting partners on project management and planning issues, taking notes and writing reports), I would have much rather discovered more of Shanghai instead of wasting that time on queuing.

–> Tip#1 for busy China visitors: be sure to have your destination written in Chinese, when trying to get a taxi as most taxi drivers hardly speak any English and are afraid to stop and pick up foreigners. Even though Chinese partners were surprised to hear this, but 20 taxis passed by us without stopping.

Regardless of my intensive schedule, I made sure to see famous sights of Shanghai (time management skills are very useful in such cases). I realized that Shanghai is an eclectic, modern and rather crowded city with ancient history and traditions, breathtaking night-time skyscraper views, wide, busy boulevards with thousands of honking cars, a large selection of interestingly shaped street food, fancy shopping areas and narrow old streets with handmade goods, endless selection of souvenirs, beautiful temples alongside poor neighbourhoods, puzzling subway networks and many other things that are so different for people coming from Europe.

Street food in China (Photo by Daniel Beltran-Alcrudo, FAO)

 

–> Tip#2: Do not use outdated travel guides. Otherwise, you might, for example, end up standing in front of two skyscrapers, when looking for the Old Spice Market.

Coming back to the professional routine, there are several things that should be pointed out. Firstly, even though I was prepared to have Google Search, Google Maps, Gmail, Facebook, and Twitter blocked, it was still difficult to check a number of websites quickly. Many pages took too long to load and some emails could not be sent out or were sent twice. Thus, it was quite challenging to search for relevant information. Secondly, an annoying case of jet lag (I was wide awake until 4 a.m.) actually saved me a lot of time as I used the opportunity to write reports.

Participants of the 1st LinkTADs Progress Meeting

–> Tip#3: Check the list of websites allowed through the Great Firewall of China before you leave and be prepared to use your work email address or national email accounts for correspondence. High speed Internet in China does not necessarily mean the same as in Europe. Most importantly, learn how to google without Google :)

–> Tip#4 for those who have one day in Shanghai and would like to spend it in an unconventional way. It might be not the best idea to take the 45 minute taxi ride all the way to the airport in order to catch the fast train (which, by the way, reaches 300 km/h) to the little town of Suzhou to see the Classical Gardens (they are included in the UNESCO World Heritage list) but it’s definitely adventurous. Even though we followed tip#1 for the way back, we still ended up at the wrong train station and had to kindly ask ticket controllers to let us in with the tickets for another train (which was luckily headed for the same destination:)

 

Suzhou Gardens (Photo by Daniel Beltran-Alcrudo, FAO)

Apart from taking photos with the Bund skyline (go there there in the evening when the skyscraper lights are on) and a visit to the City God’s Temple, I recommend walking around the Sculpture Park (an example of modern urban planning hosting many contemporary sculptures). Finally, make sure to take home Chinese tea. The importance of this Chinese drink may be seen in the meeting agenda’s “tea breaks” instead of the “coffee breaks” we are used to in Europe.

View from the Bund (Photo by Daniel Beltran-Alcrudo, FAO)

Flüchtlinge

Posted by on 04/11/14

Europa kann nicht all die Millionen aufnehmen, die sich das wünschen. Das treibt das Flüchtlingsproblem auf die Spitze. Können wir einfach wegschauen, wenn wir wissen, dass zu jeder Zeit Menschen im Mittelmeer ertrinken? Will man die Reduzierung der Rettungsmaßnahmen rechtfertigten, muss das Ergebnis sein, dass weniger einen so gefährlichen Fluchtweg wählen. Wenn aber die Zahl der Opfer weiter steigt, muss die Europäische Union – Norwegen inbegriffen – ihre Entscheidung überdenken. Ungeachtet dessen müssen wir zur Verbesserung der humanitären Lage in den betreffenden Ländern beitragen, so dass eine Flucht nicht als einzige Option gesehen wird.

TTIP – NEMA/Orgalime joint position – one small step for man, one giant leap for TTIP

Posted by on 03/11/14

Following our first visit to discuss TTIP issues in September 2013 with our US counterparts, US regulators, standardisers and certifiers, on 21-24 October, Orgalime organised once again a mission to Washington DC with representatives of our member associations from different countries and different branches of the industry we represent – electrical, electronic, mechanical engineering and metalworking.

The reasons for our visit were multiple – to formally adopt our joint NEMA – Orgalime position paper on TTIP and to discuss further steps to take, to meet again a number of the regulators we had met the previous year (Department of Commerce, OSHA and USTR), to participate in the OSHA NRTL stakeholder meeting and finally to meet other contacts such as AEM, AMT and ANSI.

If last year, our main purpose in coming to Washington DC had been to gain a better understanding of the core issues which are on the table and the views of our counterparts at the outset of the TTIP process, since then we have aimed at bridging the differences in approach between our organisations, while knowing that there is significant commonality in the outcomes we seek; this is hardly surprising given the considerable overlap in membership of our companies, many of which are moreover global players.

Over the last year, we have worked hard to raise awareness on the considerable weight of trade in engineering products between the EU and the USA: on the EU side, as is shown by the recently published negotiating mandate given to the European Commission (somewhat akin to the US TPA), this was necessary. Notwithstanding the fact that the trade in engineering products is a major part of trade between the EU and the US, there was no mention of engineering.

It is true that the diversity of products, processes and systems covered by our industry is vast, which therefore makes it difficult for trade negotiators to handle, in particular as the main barriers are in the area of regulation, conformity assessment procedures and standards, but this is where we believe the real gains are to be made for our companies. And as the competitiveness of the US and the EU as manufacturing sites is permanently under pressure from economies enjoying cheaper labour or other inputs, so the focus on technology to stay ahead of the game and on reducing unnecessary barriers and costs towards creating a larger ‘home market’ base become all the more important.

What we therefore wanted first of all to ensure is that our regulators and industry partners understand each other’s’ systems and talk about the same issues in the same terms: building collaboration on the basis of hearsay or limited knowledge is something of a challenge. A year after our first visit, we believe we are on the way to achieving this but must go on.

This is one of the reasons why three of our members were pleased to speak at OSHA’s NRTL hearing and more participated in the hearing after which we also had the privilege of having further discussions with OSHA.  We must thank NEMA for facilitating this and for helping us through this to allow US regulators to gain a better understanding of our system and us of the US system. Now on our return we are talking to EU regulators to update them and to entice them to go on building the bridges that are needed to achieve a worthwhile outcome for TTIP.

A further issue for us over the past months has been to try to reinforce our voice as the representative of our industry and its views: at the request of the European Commission we therefore published a rather lengthy and detailed position paper where, besides covering horizontal issues such as customs procedures, tariffs, dual use goods, etc., we went into much more detail on areas specific to our industry. After comparing US and EU approaches, we gave our view on how progress could be made in reducing unnecessary barriers to trade and therefore costs in areas such as machinery safety, electrical safety, pressure equipment and equipment used in explosive atmospheres. We wanted to do this as we believe such proposals should come from manufacturing industry representatives. Indeed, we have been struck by how much still needs to be done to make sure that the voice of industry is heard above that of other interested parties who tend to speak for our industry, while, we feel, sometimes focusing rather too much on their own interest.

Now what next? We were interested during our first visit to discuss with NEMA of the agreement reached between MITA and COCIR. Other engineering industry sectors have also done the same, for example AEM (US agricultural machinery and construction equipment industry), CECE (EU construction equipment) and CEMA (EU agricultural machinery).

Now we have gone the same way by agreeing a common position between NEMA and Orgalime which is wider, more horizontal in its approach and covers the whole area of regulatory coherence as well as the area of standardisation.  Our aim is now to see how many others we can bring on board our joint Orgalime – NEMA position to paper to reinforce the messages of our industry that, besides the low hanging fruit which should be fairly easy to include in a TTIP agreement, we are ready to work on building bridges in the area of regulatory objectives, standardisation and conformity assessment. We count on NEMA to ensure that US regulators clearly hear the voice of our industry on these issues.

We know that agreement between regulators on both sides of the Atlantic will not be easy: we are talking of two of the world’s largest economies, with complex and mature regulatory frameworks; so, there are inevitably differences in approach which are born from history. But fundamentally we share the same values and we both aspire to high standards, just as you might expect. We therefore remain convinced that tackling regulatory divergences between the EU and the US will equally benefit businesses of all sizes and increase transatlantic trade flows. It will also help us both on world markets to achieve our common objective for global market access on the basis of ‘one standard, one test, accepted everywhere’.

 

ABC of the power segment – part 2

Posted by on 03/11/14

Although the share of renewable energy sources is growing, fossil fuels, supplying more than 80% of global primary energy demand, play the dominant role. In 2011, fossil fuels, which include crude oil, coal and natural gas, met respectively 32%, 27% and 22% of global energy demand. In the power sector, proportions are different, with coal accounting for 41% and natural gas for 22% of electricity generation, and a meagre 5% attributable to crude oil, which has been effectively eliminated as a means of producing electrical energy in the wake of the oil crises of the 1970s and 1980s. Crude oil has a lower share in electricity generation than nuclear power (9%), hydropower (6%) and other renewable energy sources (16%). Until the inception of the revolutionary (unconventional) technology allowing natural gas to be extracted directly from source rock, fossil fuel production did not attract much interest. Today, these unconventional technologies are successfully applied in crude oil extraction as well. We have no reason to believe that coal, whose natural deposits could supply the energy sector for a few thousand years, will escape the technological revolution. However, before the coal revolution unfolds, let us have a look at how hard coal is extracted around the world. Are lignite and hard coal mined differently? How is natural gas produced? What technology is used to extract the gas trapped in unconventional deposits?

How is hard coal produced around the world?

70% of coal is mined underground, while 30% is extracted in open-pit mines.

Open-pit mining is less expensive, with the average production cost (translated into the złoty) in the region of PLN 20–24 per tonne, compared to as much as PLN 680 per tonne for underground mining. The open-pit method is suitable for exploiting coal strata located at relatively shallow depths. Since the disadvantage of surface mining is its highly destructive environmental impact, once environmental costs and site reclamation expenses are taken into account, the cost of production goes up significantly.

The advantage of underground coal mines is that they can carry out extraction activities even in highly urbanised areas, as they do not occupy a lot of space on the surface. Naturally, mining in urban areas gives rise to various problems, mining damage being the most serious. The necessity to protect urban areas from mining damage entails choosing more expensive extraction methods, which adds to production costs. Sometimes a mine has to refrain from exploiting a deposit and leave it as a special protective pillar ensuring the safety of surface structures.

Underground mines can reach deposits located as deep as over one kilometre below the surface.

High hopes are currently pinned on technologies for tapping the energy from coal without extracting the material to the surface (deep borehole mining), which allow reaching deposits located at the depth of several kilometres subsurface.

Are lignite and hard coal mined differently?

No, they are not. In both cases, the production process is similar, except that lignite is produced predominantly in open-pit mines (some 97%) rather than underground mines (about 3%).

Gas

Natural gas is extracted through wells drilled in subsurface rock formations. This method, known as borehole mining, dates back to the mid-19th century. Although we have seen consistent technological progress since then, natural gas is still extracted using the same method (Canada’s oil sands are an exception). Natural gas occurs in reservoir rock, which have different physical and chemical characteristics. According to a recent typology, crude oil and gas can accumulate in formations characterised by good reservoir quality (conventional reservoirs), medium reservoir quality (tight oil and gas) or poor reservoir quality (shale). The last two categories are known as unconventional reservoirs. Shale is also a reservoir rock, which means that it contains organic matter and is able to generate and expel, as well as accumulate, large amounts of hydrocarbons. As such, shale is a hydrocarbon generator and collector at the same time.

What technology is used to extract the gas trapped in unconventional deposits?

There are three stages involved in the production of natural gas: exploration – geological surveying and drilling; appraisal – appraisal well drilling; and development – production wells are drilled and surface infrastructure for producing, processing, storing and transporting natural gas is erected.

Finding ‘sweet spots’

Critical to any shale gas production project’s profitability is the accurate identification of ‘sweet spots’ – areas where the concentration of hydrocarbons guarantees profitable production. American and Canadian operators, engaged in unconventional hydrocarbon production, have the most extensive experience in this respect. However, given that significant differences exist between Polish and North American shale, this expertise cannot be easily transferred onto the Polish ground. Among Polish companies, it is licence operators, such as ORLEN Upstream, that have access to the best know-how.

Some facts about wells:

vertical drilling

  • Vertical drilling is used in unconventional projects in the same way it is traditionally used to produce crude oil and natural gas from conventional deposits.
  • In the central part of the drilling rig, there is a drill string (lengths of coiled steel tubing) with a mobile drilling bit attached at the end. During the drilling operation, special drilling fluid is fed into the drill string and bit nozzles to accelerate the drilling process, cool the drill bit, stabilise the well, maintain appropriate pressure, and carry out drill cuttings. Drilling fluid is a mixture of water and additional substances (which may, for example, increase fluid weight and density).
  • As drilling progresses, steel casing is inserted into the space between the drill pipe and the rock wall, and then cemented to provide stability and strengthen the well, as well as to seal the borehole off from aquifers and other rock formations. Well casing and cement also prevent the contamination of water intakes with the drilling fluid and, at the later stage, with the fracturing fluid.
  • The latest technologies enable vertical wells to be drilled to depths ranging from a few thousand to more than a dozen thousand metres in extreme cases. Shale deposits in Poland can be found at depths from about 2,000 metres in the east of the country, to above 5,000 in the west.

horizontal drilling

  • Once the vertical well has reached its target depth, a directional well (which may be horizontal or slanted) is drilled into the gas-bearing shale formation, whose thickness typically ranges from several to several dozen metres. With the available technology, the maximum length of directional boreholes permitting economically viable production can be in excess of 3,000 metres.
  • Given their substantially larger contact with the field, horizontal wells enable more efficient production from unconventional gas deposits than vertical wells. Approximately 8 directional/horizontal wells branching off from a single drill site are enough to access a field which would normally require several dozen vertical wells to begin production. Horizontal wells have been drilled in Poland since the 1980s, and the longest horizontal sections, dating back to the 1990s and reaching in excess of 2,400 metres, were also used to stimulate wells (through fracturing). The work was carried out by Polish engineers aided by a few specialist foreign companies.

well cementing and perforation

  • Once the horizontal sections have been drilled, casing is again inserted and cemented to ensure well impermeability, which is verified through pressure testing.
  • Subsequent well sections are then perforated to enable hydraulic fracturing treatment.

hydraulic fracturing

  • During the hydraulic fracturing procedure, fracturing fluid (mostly a mixture of water and sand) is injected into the wellbore under pressures often exceeding 600 bar (more than 300 times that in a car tyre). When a sufficient number of fractures appear in the treatment zone, a mixture of appropriately-grained sand and water is introduced into the cracks, keeping them open and enabling gas flow into the well. There exist many variants of the hydraulic fracturing technology. To ensure that the procedure is successful, the fracturing fluid is mixed with small amounts (0.5–1%) of chemical additives, which are able to regulate certain fluid parameters, including its viscosity, water content and specific weight. Other proppants may be used instead of sand, such as ceramic materials or polymer fluids, which create networks of interlacing fibres.

 

 

 

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