Saturday, September 6, 2008

Canada reacts as EU moves to ban seal products

Brussels, July 28 - The European Commission, the executive arm of the European Union last week floated proposals for EU wide ban on seal products from countries that fail to meet high animal welfare standards. Calling for a ban on all seal products obtained through “cruel hunting methods,” European Environment Commissioner Stavros Dimas labelled them as “repugnant.”

In the EU, sealhunting is practised in Sweden, Finland, the Danish territory of Greenland and in the UK while in Canada it is the biggest hunt in the world with thousands killed annually off its east coast. Commenting on the EU proposed regulations to ban seal products, Loyola Hearn, Canadian Minister of Fisheries and Oceans, reiterated in a statement, “Once again, we would like to caution European decision-makers: adopting broad regulations to ban products from a responsible, sustainable and well-regulated hunt is a slippery slope. To bow to misinformation and emotional rhetoric in restricting the trade of humanely harvested animals would set a dangerous precedent for all wild hunts.”

While announcing the total allowable catch (TAC) and other management measure for the 2008 Atlantic seal hunt, Hearn said in early March, “The seal hunt is an economic mainstay for numerous rural communities in Atlantic Canada, Quebec and the North.” The minister had stressed, “The government has taken further steps to ensure the hunt continues to be conducted in a humane manner, adopting recommendations of the Independent Veterinarians Working Group.”

The European Commission explained that it is just addressing concerns expressed by the European Parliament and the general public, “that seals are being killed and skinned using practices that unnecessarily inflict pain and suffering.” Neil Parish, Conservative MEP and President of the European Parliament’s Animal Welfare intergroup had earlier this year urged the Commission to take action: “As the culling season gets underway, the time has come for the Commission to take action. The slaughter of seals in Canada, including seals that are just a few weeks old, is barbaric and the EU should not condone it.”

The Commission also cited the European Food Safety Authority (EFSA) scientific opinion as saying, “that seals can be killed rapidly and effectively by a number of methods without causing avoidable pain, distress and suffering, but evidence shows that effective killing does not always happen in practice.”

Clarifying this EFSA point, one reliable Canadian government source familiar with the hunt told New Europe, “Canada’s seal hunt is humane, sustainable and responsible. The recommendations made in the recent report by the European Food Safety Authority (published in December 2007) uphold the legitimacy and humaneness of the hunting practices and techniques that are used, regulated and enforced in Canada’s annual commercial seal hunt. Canada has also supplied information to the authors of a study commissioned by the European Commission on the socio-economic and animal welfare aspects of seal hunting.”

Warning that the Canadian government will “continue to stand up for sealers to protect the Canadian sealing industry and our markets,” the Canadian minister said, “While we are encouraged that the hard work of the Prime Minister, Fisheries Conservation Ambassador Sullivan, and the international team from the provinces and territories has led us to successfully secure exemptions from the proposed ban, our position remains that any ban on a humanely conducted hunt, such as Canada’s, is without cause.” “In the weeks and months ahead, the federal government - along with our provincial and territorial governments and sealing industry leaders - will be reviewing how the proposed regulations and any exemptions would apply to Canada. Canada expects the EU to quickly begin discussions on the conditions for exemption from the draft regulations so that any trade restriction would have no impact on market access for products from Canada’s humane, regulated and responsible hunt,” Hearn added.

Canada’s annual culling of seals attracts the ire of international environmental campaigners and animal protection groups. With Belgium and the Netherlands already banning the import of seal-derived products while Germany and Austria are considering closing their markets too, the industry pundits predict that proposed EU wide ban will devastate the seal product industry as one-third of the products head for the EU. The EU proposals still need to be debated and cleared by the European parliament and then Council of Ministers made of 27 Member States.

Politicians step in as ECB fights inflation

Brussels, July 21 - Inflation took central stage on the European Continent with European lawmakers joining the fray with calls to the European Central Bank to reconsider its fiscal policies. In a non-binding parliamentary report, Member of European Parliament suggested the ECB should reconsider its inflation ceiling, upping political pressure on the ECB while it struggles to damp rising inflation amid signs of slowing economic growth.

The ECB, which makes monetary policy for the 15 countries that share the Euro currency, has fixed the target to keep Eurozone inflation just under two percent. The draft report by Werner Langen, a German member of the EP, and Pervenche Beres, head of the EP’s Economic and Monetary Affairs Committee urged the ECB saying that level “should be examined in the context of a new age of globalization characterised by rising energy and food prices.”

Reiterating the European Parliament’s “strong commitment to the independence of the ECB,” the report supported, “the de m a - n d for a stronger public debate on the fut ure common monetary and currency policies.’’ The draft report also recommended that the ECB’s six-member Executive Board be enlarged to nine saying, “...(its) important that a variety of backgrounds be represented among executive board members.”

With no official EP jurisdiction over the ECB, the final report — which will be put to a parliamentary vote in October — will be nonbinding but the financial pundits commented that the timing of the report is sensitive as the ECB raised its key interest rate to a seven-year high of 4.25 percent earlier this month. There has been political pressure also from several Eurozone politicians suggesting that the bank’s inflation focus jeopardises economic growth.

Earlier on the eve of Eurozone finance ministers’ meeting, German Finance Minister Peer Steinbrueck said inflation is a matter of ‘deep concern’, adding a joint effort beyond the scope of the European Union is needed to safeguard citizens’ waning purchasing power.

Luxembourg Prime Minister Jean- Claude Juncker, head the Eurozone echoed the German sentiments saying, “Inflation is a serious concern, both for the ECB and Euro governments.’’ With the present Eurozone inflation rate hovering around four percent which is double the target rate, there are signs that the Eurozone economy is also slowing amid global market turmoil.

Commenting on the subject, European Monetary Affairs Commissioner Joaquin Almunia said, “The future (of inflation) depends solely on what happens on the global markets. It is anyhow possible that next year inflation could be close to the ECB target level.”

Quoted in the Finnish daily Kauppalehti last Friday, Almunia said, “Although there is a risk of stagflation and I am worried about it, I hope we can avoid the difficult situation,” adding that economic growth in the EU had weakened in the second quarter and that inflation and market uncertainty had an impact on growth.

Although the ECB did not issue official comment on the EP report, ECB President Jean-Claude Trichet said policy makers must prevent the commodity-price shock from pushing up other prices, telling Germany’s Frankfurter Allgemeine Zeitung that, “the latest rise in unit labour costs is a piece of data that we need to take into account.”

Moreover, the policy makers were not ready to yield to political pressure became evident as ECB Governing Council member Nout Wellink was cited in the Dutch weekly magazine Elsevier last Thursday as saying that slowing growth may not damp inflation. Wellink added, “if you fail to halt inflation before it increases further ... you will have high inflation at a time of low growth.”

Across the Atlantic also the inflation got the focus with the stark warning from the US Central Bank chief Ben Bernanke last week. Addressing the US Congress, Bernanke minced no words declaring that inflation could continue to threaten the economy and rocketing petrol prices gave impetus to his words as the US inflation in June hit the largest year-over-year increase since 1991. There is, however, a marked difference as the US Federal Reserve aims to promote growth and control inflation while the ECB’s single mandate is keeping prices steady.

Credit Rating agencies look for credit in the EU

Brussels, July 14 - The European Union is set to take off the credit cloak of credit agencies with a mandatory registration procedure and dress them in a code to be monitored by a pan-European watchdog, according to conclusion reached by the EU finance ministers in Brussels. “There is an agreement on rating agencies,” French Finance Minister Christine Lagarde, whose country holds the EU rotating presidency, told journalists after chairing a meeting with her EU counterparts. “There is an agreement in principle on registering rating agencies and there is an agreement on monitoring credit rating agencies,” she added.

The announcement was music to the ears of EU Internal Market Commissioner Charlie McCreevy, who has been an ardent advocate of such measures much on the lines practiced in the US where credit ratings agencies have to register with the Securities and Exchange Commission (SEC.)

He has been quoted as saying that a voluntary code for agencies is a “toothless wonder” that failed to “sniff out the rot” in the US mortgage-backed structured products that lost all the shine even with high credit ratings intact. With the Commissioner set to launch proposals later this year and the European ministers already giving the go-ahead, there was another factor represented by the European Parliament, the only-directly elected European institution, which, through one of the members gave an encouraging input last month.

MEP Pervenche Beres of France, chairwoman of the Parliament’s Economics Committee, endorsed the idea, saying that credit agencies should have to register as they do in the United States and come under accountable financial supervision. Beres was quoted in a media report as saying: “The best solution would be that the Committee of European Securities Regulators (CESR,) made up of national market watchdogs from the 27 EU states, is the place where the rating agencies should be registered. “Supervision should be under CESR. If you have national supervisors doing their own supervision without doing any coordinated approach, you will be creating a non-level playing field,” Beres added.

Controversy was kick started last year when a crisis in the US market for poorlysecured mortgages pushed global financial institutions, including banks and building societies, to the verge of collapse. The accusing finger pointed to credit agencies like Standard & Poor’s, Moody’s, and Fitch who failed to warn of such disasters even though their credibility depends on analysing and churning out creditworthiness reports of countries represented by their respective governments and financial institutions.

With the EU ministers agreeing to give a go-head, McCreevy said that the European Commission would make a legal proposal in October on how to deal with rating agencies in the future. “We have now come to the conclusion that a regulatory response is necessary,” he concluded.

EU shows unity, Thaci gets another dole of billions for Kosovo

Brussels, July 14 - The European Union maintained its facade of unity towards Kosovo at a donor’s conference held in Brussels on July 11 as the seven EU countries, which have not recognised Kosovo, also participated in the conference. Speaking to journalists on the conditions of anonymity, their representatives said that they must maintain silence and observer status.

Confirming to journalists, Pierre Mirrel, Director for the Western Balkans in the enlargement section of the European Commission said that none of those countries pledged any financial assistance, adding he expected “the pledges from those countries in coming period.” Trying to allay concerns raised by journalists, Mirrel said, “The Member States (which) even have not recognised, have agreed with other 20 Member States, with the EU willingness, to support economic and financial development of Kosovo.” “Kosovo has a European perspective,” he stressed. Out of a total pledge of 1.2 billion Euro to Kosovo’s socioeconomic development, 508 million Euro came from the EU.

Addressing the audience, EU enlargement Commissioner Olli Rehn said, “I am proud that by pledging half a billion Euro, the EU today clearly demonstrates its commitment to Kosovo and to the stability of the Western Balkans.” “I am also thankful to our international partners for their contribution and engagement. The 1.2 billion Euro pledged today will help to bring about a better future for all living in Kosovo,” added Rehn.

Thaci happy

A visibly happy Kosovo Prime Minister Hashim Thaci said: “This is a great success for my country and its citizens. The conference marks a new chapter for the economic development of Kosovo.” On the question of rampant corruption, staggering unemployment figures and earlier embezzlement episodes, Thaci told the audience, “We will start and implement the projects in shortest possible time - by providing good governance we will succeed in implementing this investment.” “This kind of support would not have come if donors were not convinced that good governance had been established,” he added.

On the subject of democratic reforms in the country and state of minorities, Thaci was upbeat saying he was proud to lead a multiethnic, European and democratic state. “We are well aware of our responsibilities,” said Thaci. “We will never disappoint you,” he added. Thanking the European Union, the US and other donor countries, Thaci said, “Kosovo’s vision is very clear: Integration into EU and NATO.”

Watching the money flow

Replying to a question on the financial mechanisms to alleviate concerns about the absorption capacity and corruption, Mirrel listed three delivery modes:

- Through agreed budget support but does not mean funds are sent to the government, there are conditions attached

- A trust fund which was launched by the World Bank last week and welcomed by donors and pledged to be used

- Classical Project Support: Pre-accession programmes

Part of the dole (1.1 billion Euro) will be used for investing in the infrastructure to connect Kosovo with the rest of the region, improving the conditions for education of Kosovo’s extremely young population, and developing Kosovo’s institutions to consolidate democracy and rule of law in a multi-ethnic society. Another “100 million that have been pledged will be used to build up a contingency reserve,” explained Mirrel. To the question of debt obligations, he said this reserve may be used to service those.

Uncertain future

Moreover, Kosovo under UN administration since 1999, when NATO bombing ended Serbian ethnic-cleansing in the region, is now at a crossroads. The EU is in a dilemma as it now aims to take on a leading role in helping rebuild its administration and judiciary through its EULEX mission which has run into legality problems. Kosovo, with a predominantly ethnic-Albanian population of two million, declared unilateral independence from Serbia in February and adopted a new constitution in June.

Serbia, along with its strong allies like Russia, is not letting Kosovo take baby steps toward nation-building as the tiny nation struggles to survive on dole-outs and prop-ups from the US and fractured EU. According to International Monetary Fund data, there was a meagre economic growth of three percent between 2003 and 2007 and the IMF found it much below the average for the region.

Wahhabism on the rise

With unemployment running at around 50 percent and rampant corruption coupled with organised crime networks mushrooming all over, the region is one of the poorest and most dangerous to live in Europe. As reported earlier in New Europe Issue 749 ( 8326.php), the grip of Wahhabism, a fundamentalist form of Islam being exported out of Saudi Arabia and alleged booster of terrorism is tightening its vicious grip on Kosovo population at an alarming rate as money is allegedly being offered to families depending on the way the women use veils to cover in orthodox Islamic traditions.

Thaci did not have time to comment on the subject, his spokesman told New Europe at the end of the press conference. The donors’ conference was called at the behest of the European Commission which explained that it was responding to the European Council statement of December 2007 when it called for EU’s readiness to assist Kosovo on the road towards sustainable stability.

Among the participants were representatives from all EU Member States, members of the European Parliament, international donors such as the US, Switzerland, Norway, Japan, Canada, Israel, Kuwait, Korea, Turkey, Saudi Arabia, as well as international financial institutions, UN agencies and regional organisations such as OSCE, NATO, and the OECD.

Europe’s future safe with cohesion policy

Hubner wants regional approach to local demands

Brussels, July 7 - There is hope stemming from the ongoing experience of a strong economic growth in the poorer European regions than the rest of the European Union as cohesion policy gets implemented, top EU official told a distinguished audience last week.

Addressing an EPC (European Policy Centre, a Brussels based think-tank) Breakfast Briefing on the EU Regional Policy Post-2013: More of the Same or a New Beginning?, European Commissioner for Regional Policy Danuta Hubner, said that the Commission’s “Fifth Progress Report on Economic and Social Cohesion” showed that structural change, and strong growth in knowledge- intensive, high-tech manufacturing sectors, had reduced the difference between the rich “old” EU Member States and the poorer “convergence” regions over the last five years.

“Per capita GDP growth was 50 percent faster in the convergence regions than in the rest of the EU, and unemployment there has dropped by three percent,” she added. “In order to shape future cohesion policy, we need to understand the reasons for the current social, economic and territorial inequalities,” argued the Commissioner, adding, “research suggests that EU integration and globalisation are producing different concentrations of winners and losers.”

Citing some scholars as saying that is the “price to pay” for high economic growth at the macro-economic level, Hubner sided with “more with scholars who argue that uneven regional growth stems from endogenous factors, such as the lack of natural resources, inadequate skills, poor accessibility, or poor capacity to innovate or to assimilate innovation.”

Recalling that she used to say that not even “a square kilometre,” should be wasted, the Commissioner said, “Realising how small Europe’s landmass is in global terms, we can not waste even a square centimetre.” “The aim of a modern cohesion policy is to provide ‘public goods’ aimed at improving skills, innovation capacity, entrepreneurship, sustainability, employment and accessibility, to enable all European territories to realise their full potential.

“The new policy for 2007- 2013 is designed to meet these challenges, and emphasises a place-based approach to growth and jobs, using local knowledge and responding to local demands.” “The new budget provides three times more funding for research and innovation than the previous allocation,” said the Commissioner.

“There are now 450 programmes that use socio-economic and territorial aspects to develop local and regional capacities: 30 percent are geared to environmental projects, 25 percent to innovation and 14 percent to human-capital related activities. All include a strong focus on developing a knowledge-based economy,” the Polish-born Commissioner said.

Saying, “Globalisation is not an abstract process, but has concrete impacts on European territories,” Hubner pointed out that it generated “pressures which have an asymmetrical impact on regions, especially those dominated by particular sectoral activities. “We need both continuity and change,” she said, so the new policies emphasise partnership and multi-level governance, since - ironically, in an increasingly globalised world - regional and local levels are best placed to take advantage of global processes,” she concluded.

Giving the example of a successful network of cities in Bavaria where there is ongoing work on science based activities, Hubner said, “Europe needs more ‘place-based’ responses that not only involve big cities with industrial activities and universities, but also small communities and businesses.” Reflecting on future cohesion policy, the Commissioner said that stakeholder responses to the Fourth Cohesion Report showed strong support for an ambitious and strong cohesion policy and gave an emphatic “No” to re-nationalising it. “Instead, stakeholders supported a coordinated policy for all EU regions, with a strong focus on the poorest areas, and a shift towards focusing on the Lisbon Strategy’s objectives of innovation, skills and education, sustainable development and developing Europe-wide structures.”

A Green Paper on Territorial Cohesion will also be adopted in early October 2008 which will launch the public consultation on solving interregional and intra-regional disparities, and an Orientation Paper will be published in Spring 2009 to synthesise the results of the debate.

EU officials lambast Sarkozy’s “ignorance”

Brussels, July 7 - Starting the French Presidency of the European Union at loggerheads with European officials, French President Nicolas Sarkozy got all mixed up when quoting trade figures in international negotiations. Rejecting Sarkozy’s figures on the bloc’s trade negotiations as “utterly incorrect,” Commission spokesman Michael Mann told journalists in Brussels, “This figure of 20 percent (reduction in EU farming output as a result of World Trade Organization talks) that is being talked about in the public domain is utterly incorrect. “It is based on the assumption that we are adopting hook, line and sinker the proposals put on the table by the G20 group of countries, which is not the case and will never be the case,” he said.

During the regular mid-day press briefing, Mann’s views were echoed by Peter Power, spokesman for Trade Commissioner Peter Mandelson. Power told journalists: “We have not agreed to these, we will never agree to the full demands of the G20. We are in discussion, we can agree to some.” If developed and developing countries agree to a compromise on trade - an outcome which is by no means assured - the commission believes that it could lead to a fall of some 1.1 percent in EU agricultural production and 2.5 percent in jobs in the farming sector by the end of 2014, Power said. “(Sarkozy) is basing the figures he has put into the public domain on a false assumption,” he said.

Sarkozy, on the eve of taking over the rotating presidency of the EU, in a televised speech lambasted the EU’s trade policies saying the present policies would result in a 20 percent drop in EU farm output and 100,000 job losses. Sarkozy slammed both Mandelson and the WTO’s French head, Pascal Lamy, for trying to impose such an agreement on Europe, and vowed, “I will not let that happen.”

Commission officials retorted that that would only be the case if the EU caved in to all the demands of the G20 group of developing countries such as China, India, Brazil and South Africa. Moreover, Sarkozy also got flak back from Mandelson, who told the BBC network, “I am being undermined and Europe’s negotiating position in the world trade talks is being weakened and I regret that,” stressing that the mandate on which he was negotiating in the trade talks “had been agreed by all the (EU) member states (Council decision).”

Later, Mandelson was conspicuous by his absence at the gala dinner hosted by the French to inaugurate the rotating EU presidency. Asked to comment on the missing Commissioner, in the presence of the European Commission President Jose Manuel Barroso, Sarkozy told journalists, “It is not forbidden to have differences of opinion in Europe.”

World Bank Chief Economist talks of solutions

Brussels, July 7 - Pradeep Mitra, the World Bank’s chief economist for the Europe and Central Asia Region (ECA) spoke in a candid interview to Tejinder Singh about his experience and vision for European and Central Asian countries. Mitra was in Brussels to launch a World Bank study with the title, Innovation, Inclusion and Integration: From Transition to Convergence in Eastern Europe and the Former Soviet Union, on July 2. Starting on a positive note, “Countries of Eastern Europe and the former Soviet Union have put the crisis of the 1990s behind them and a lot of progress has happened,” Mitra said, “But they are now facing new challenges as they integrate into global economy.”

“Central and Eastern European countries are already plugging into global networks like automobiles and Information Technology whereas part of the trade that the Commonwealth of Independent States (CIS) does, especially ‘low income countries’ are in natural resources and items that use predominately unskilled labour force.” It was more traumatic for CIS countries during the Russian crisis and that had sent tremours through these countries but there has been a turnaround and they are improving although there is a differential rate.”

There is a marked difference in the pattern of integration between the way the Central and Eastern European states and CIS states.” The anchor of prospective EU accession worked in harmony with the domestic and external factors helping the new member states of the European Union to lock in the reforms of policies and institutions necessary for rapid productivity growth and deeper integration into the world economy.”

Pointing out that, “The CIS countries do not have this EU membership prospect,” Mitra said, “so the extent to which countries without European prospects can use outside mechanisms – such as the European Neighborhood Policy, WTO accession, sub-regional agreements – to lock in the institutions conducive to a favorable business environment is an open question.” “These things may act like anchor and they do have a role to play but they are not nearly as powerful as the concept of EU accession,” added Mitra. “The convergence is more pronounced in the new European Union member states. The countries in the CIS are followers, though some distance behind,” Mitra noted.

Demographic factors

The report noted that many countries in Eastern Europe and the former Soviet Union now face another headache an aging populations. Demographic projections suggest that by 2025 the average Slovene will be 47 years old, giving the country one of the oldest populations in the world. One in five Bulgarians will be over 65. Ukraine’s population will shrink by a fifth, and Russia’s by more than a tenth.

Aging will lead to the share of the working age population (15-64 years) in total population declining rapidly after 2015 – less than a decade from now – in the EU 8, Southeastern Europe, and middle income CIS countries (“middleincome” CIS countries include Belarus, Kazakhstan, Russia, and Ukraine). This is similar to the change projected for the EU 15, deeper than in the United States, shallower than in Japan. EU- 8 countries, including Eastern Europe’s largest economies Poland and the Czech Republic, joined the EU in 2004. Romania and Bulgaria entered the bloc in 2007.

Asked to comment on this threatening phenomena and the ways to face it, the chief economist of the World Bank said, “All of Europe is aging but Eastern Europe is aging more rapidly. Add to that migration problems as for example, people from Poland went to England and people from Romania to Italy and Spain thus generating labour market shortages in those countries.

“The challenge posed to economic growth by rapidly-aging populations in a large swath of transition countries in Central and Southeastern Europe, as well as Russia, Ukraine, and Belarus, is serious and systemic. Offsetting it requires, first, getting the most out of the existing capital stock and labour force – through all the reforms of the business environment needed for productivity growth.

“Second, it calls for using all and not just part of a country’s human resources by raising and equalising the retirement ages for men and women and, where the fiscal situation allows, reducing taxes on labor that make hiring labor expensive.

“Third, it requires reform of pensions and health care systems, so that fiscal pressures do not crowd out desirable spending on infrastructure and social safety nets and the private investment for productivity growth.

“Finally,” Mitra added, “international circular migration of labour that is coordinated between sending and receiving countries and respects migrants’ rights can supplement such a policy package. Migration involves complex political, economic, and social factors, and it is for this reason that policy experiments might be needed to improve the frameworks that regulate it.”

Business Models

On the question of the development of the business models in these countries, Mitra said, “Their business and financial sectors are maturing as well, relying less on family and informal sources to fund fixed investments,” adding, “When it comes to the importance of competition for restructuring activities in firms, the transition economies are following in the footsteps of developed market economies.”

According to the report, productivity growth – the only viable route to lasting prosperity – depends on there being a supportive business environment, specifically one that delivers competition, a deep financial sector, good governance, and superior skills and infrastructure. 

“Productivity growth,” said Mitra, “is higher in firms when they face stronger pressure from domestic competitors to develop new products and markets; when they are in industries that rely more on external finance in countries with more developed financial sectors; when rules and regulations are more predictable and there is greater confidence in the legal system; when they offer more on-thejob training to their workers; and when the availability of mainline telephone services is higher and the incidence of power outages is lower.”

According to Mitra, “Boosting productivity requires firms either to innovate, developing knowledge new to the world, or to absorb knowledge, integrating and commercialising knowledge new to the firm but not to the world. “Stronger competition,” said Mitra, “which would facilitate convergence in the CIS countries, would also accelerate downsizing in state-owned and privatised firms. Severance payments, retraining programs, and social safety nets for the displaced workers can facilitate convergence by reducing its social costs.

“While nearly one in five people – or 85 million – lived in poverty around 1998/99, only one in 12 – or 35 million – did so around 2005/06,” said Mitra. “Income poverty can fall further provided the business environment continues to be reformed even if employment prospects and labor force participation do not improve. But those excluded from employment report being more dissatisfied with their lives, so building inclusive societies by addressing the constraints to job creation should be a priority.”

Energy & Food Prices

The global ripple effects of meteoric rise in energy and food prices has not left these countries unaffected as the report noted that this has put enormous financial pressure on the poorest citizens of these countries. “Some calculations that we’ve done suggest that a five percent increase in food prices increases poverty rates by two to three percentage points in some of the low-income CIS countries,” Mitra said. The World Bank labels low-income CIS countries to include Armenia, Azerbaijan, Georgia, Kyrgyzstan, Moldova, Tajikistan, and Uzbekistan.

“Two to three percentage points is not a small number. This is a kind of ECA-specific phenomenon. A lot of the poor in low-income CIS countries are pretty close to the poverty line. So a little change in prices can tip them in the wrong direction.” Replying to a question on the ways to protect these vulnerable citizens, he urged: “Given what we know about the impact of food price increase on poverty, it is important that countries ‘top up’ their targeted social assistance schemes.

“A number of countries in our region have fairly well-functioning social assistance schemes – it’s important that they ‘top up’ whatever assistance is necessary in order to help the poor.” With regard confronting rising energy prices, Mitra lamented that the region’s energy efficiency has traditionally been very low, adding that it will be wise to implement wide scale energy-saving measures wherever possible.

Eurozone Aspirants

With Slovakia standing at the doorstep of the Eurozone (15 EU Member States who use Euro as a common currency,) there are many more economies in Eastern Europe wanting to join the Eurozone as quickly as possible, despite their public skepticism about the process, Mitra noted. The Czech Republic, Hungary and Poland, all have delayed plans to start using the Euro in 2010 but will be watching how Slovakia’s economy performs when it starts using the Euro in January, said Mitra.

According to European Union rules, the country aspiring to join the Eurozone, must spend two years in the European Exchange Rate Mechanism, which stabilises its currency against the Euro. Although all countries acceding to the EU are obliged to join the Eurozone at some point of time, only Estonia, Lithuania, Latvia and Denmark have started using the exchange-rate mechanism while Poland and other countries are yet to take this step.

Commenting on the significance of joining the elite club of Eurozone, Mitra said, “Joining the Euro is a signal that the country has arrived. It follows the macro-economic policies which are comparable to advanced Western countries so it is a signally mechanism to the markets.”

Inflation: Global Macroeconomic Problem

On the global rise of biting inflation, Mitra agreed, “Yes, Inflation is back. It was something that countries thought they had put behind them, but not only is it back, it’s back in double digits. Often for reasons that the countries themselves – certainly the oil importers – are not in a position to control.

“Inflation is a worldwide problem and it should be tackled as a macro-economic problem with tightening of fiscal policies and not trying to do price control which will not solve this inflation problem.”

Concluding, Mitra urged the regions’ central banks to “stay focused on inflation management” and especially refrain from imposing controls on trade, which could work against the food supply in the longer term.

World Bank Report

Innovation, Inclusion, and Integration: From Transition to Convergence in Eastern Europe and the Former Soviet Union. Countries of Eastern Europe and the former Soviet Union have put the crisis of the 1990s behind them, but they need to innovate, include all their citizens in the development of their countries, and integrate with the broader global economy if they want to sustain growth, said a new World Bank report. Launched on July 2 in Brussels, the study, concluded that:

Productivity growth – the only viable route to lasting prosperity – depends on there being a supportive business environment, specifically one that delivers competition, a deep financial sector, good governance, and superior skills and infrastructure.

Key aspects of the business environment, such as competition and finance, that shape the behaviour of firms are maturing and converging towards those in the developed market economies of Western Europe. This convergence is more pronounced in the new member states of the European Union. The Commonwealth of Independent States (CIS) are followers, though some distance behind.

Employment growth has been sluggish almost everywhere, and has reflected the interplay between (i) job growth in new private firms that were able to occupy market niches nonexistent under central planning; and (ii) downsizing in state-owned and privatised firms.

Productivity growth and public transfers fed by rising fiscal revenue have moved 50 million people – out of 400 million – out of absolute poverty (those with an income of less than USD 2.15 a day in purchasing power parities) between 1998-99 and 2005-06. While nearly one in five people – or 85 million – lived in poverty around 1998/99, only one in 12 – or 35 million – did so around 2005/06.

Countries in Eastern Europe and the former Soviet Union now face a third transition – aging populations, which will slow economic growth unless more of the population is brought into the labour force, resources are used more efficiently, and pensions and health care systems are reformed to avoid them becoming sources of acute fiscal pressure.


EU aims to become a bastion of equality

Patients could travel abroad for treatment

Brussels, July 7 - Patients will be able to seek healthcare abroad and get reimbursed up to the level their governments normally would have paid in their own country, the European Commission announced. As part of the overall Renewed Social Agenda for the benefit of EU citizens, the Commission reiterated what the European Court of Justice in its several rulings over a period of time has confirmed - that the EU Treaty gives individual patients the right to seek healthcare in other Member States and be reimbursed at home. Announcing the proposals, Androulla Vassiliou, European Health Commissioner told journalists: “Patients will be able to receive treatment in any member state, which will be reimbursed at home up to the level of the same or similar treatment in their health system,” adding, “There will be a fair and quick reimbursement.”

Saying, “They will not need prior authorisation,” the Commissioner added, “Patients from any country will enjoy equal treatment with the nationals of the country in which they are being treated and cannot be discriminated against.” The Commissioner stressed that the directive was aimed at the patients in small cities or towns on border areas and also in specified specialised cases. To calm the doubts raised by the Member States, the Commissioner said, “However, if unpredictable cross-border healthcare becomes a problem, the system could put into place a system of prior authorisation to safeguard the system.” She added: “It will allow excessive demand from one country to be met by excessive capacity in another country.

This is the essence of the co-operation,” but it was also clarified that in countries with long waiting lists, patients from abroad will have to join the queue. Moreover, the new measures will allow the Member States to require that the citizens get prior authorisation for hospital treatment abroad and the Member States will have to deal with them on a case by case basis with provisions for “right to review” and explanations to justify any denial of such requests. On the part of the host Member State, the quality and safety standards of the treatment will be their responsibility while the new directive is set to facilitate European cooperation on healthcare.

The Commissioner said, “All Member States should define standards and those should be made public and ensured that they are effectively implemented.” Around one percent of treatment is currently provided abroad in Europe and the number is very low, the Commission said. Today, the European Health Insurance Card (EHIC) provides only emergency care across the European Union in case a traveling EU citizen falls ill while abroad but has health insurance in the home country. “This is about patient’s rights. Patients should be entitled to treatment in another EU member state if necessary, with no worry about costs, safety and quality.

Whereas today complex rules and legal uncertainty can be a barrier for people without many resources, this directive will ensure equal access for all patients to cross border health services,” said Jules Maaten, a Member of the European Parliament from the Netherlands. Covering other broad range of subjects like old age, sexual orientation, religious beliefs and disability the overall legal proposals promised all equal treatment. Launching the Renewed Social Agenda, Vladimir Spidla, European Commissioner for Equal Opportunities told journalists, “There is an inequality in (EU) legislation because people are protected from discrimination outside the workplace only on grounds of gender and race or ethnic origin.

We must ensure equal treatment for all grounds.” Aiming to ensure equality in all fields and sectors, the Commission said in a statement that the proposal should “ensure equal treatment in the areas of social protection, including social security and health care; education; and access to and supply of goods and services which are commercially available to the public, including housing.” Clarifying doubts raised by journalists, the Commission officials said under the new rules, for example, a hotel will not be able to refuse a room to a gay couple because of their sexuality or other facilities like restaurants which refused to provide adequate access for wheelchair-bound customers will have to do so under the new legislation.

There will, however be no imposition in cases of sensitive subjects like teaching about homosexuality in the school curricula or the ban on religious symbols. As a result, the intolerant behaviour of countries like France, which since 2004 banned the open showing of religious symbols such as Christian crosses, Muslim headscarves or Sikh turbans in state schools on the grounds of state secularism, could not be forced to change their laws. The proposals under this new directive must now be examined by the European Parliament and the Council of Ministers before becoming EU law.

Fresh EU proposals on asylum get wide support

Brussels, June 23 - There was general acceptance for the new European Commission proposals to streamline the process of treating asylum seekers in different EU member states. Struggling to formulate a common asylum policy for more than a decade, today this process varies across 27 Member States with Sweden on the most welcoming side of the asylum granting spectrum while Greece falls at the other end.

Highlighting the publication of the Policy Plan on Asylum, an integrated approach to protection in Europe, before World Refugee Day, celebrated around the world on June 20, Bjarte Vandvik, Secretary General of the European Council on Refugees and Exiles (ECRE) said in a statement: “The political momentum to develop high asylum standards obviously exists and ECRE is ready to continue cooperating with the European Commission and other stakeholders to achieve a meaningful European asylum system.”

Launching the Common European Asylum System (CEAS), Jacques Barrot, the European Commissioner for freedom, security and justice, said, “With this Policy Plan the Commission launches the second phase of the Common European Asylum System, whose overarching objectives are to uphold and reinforce the Union’s humanitarian and protection tradition and to achieve a true level playing field for protection across the EU. “This means that we will have to improve the common legislative standards, increasing the quality of decision making by supporting practical cooperation between national asylum administrations and fostering more solidarity between the Member States and between the EU and third countries in receiving refugee flows.”

The first phase of the CEAS (1999-2004) had given established “common minimum standards in areas such as reception conditions for asylum seekers, asylum procedures and the requirements to qualify as a person needing international protection, as well as rules for the determination of the Member State responsible for an asylum application (the so-called Dublin system,)” according to Commission documents. Moreover, with the French Presidency taking over in a few weeks on July 1, there are better hopes that there will be action on the proposals which include the creation of a European Support Office on Asylum, an EUwide resettlement scheme and measures to help member states and third countries that host a high number of refugees.

The proposals will be put to the European Council on October 15 2008 during French presidency and will, in the course of 2009, feed into a new five-year Programme in the Justice, Freedom and Security area. Commenting on the proposals, Jose Manuel Barroso, President of the European Commission, said: “The Migration Package adopted today shows that we need to take a new approach to dealing with Immigration and Asylum.” Stressing, “Europe needs a common policy vision which builds on past achievements and aims at providing a more coherent and integrated framework for future action by the Member States and the European Union, Barroso said he hoped that, “If we work together on the ten principles to better manage immigration and reinforce the standards for protection of asylum seekers we will make tangible improvements in these crucial areas.”

According to a report published by the UNHCR in March 2008, Asylum levels and trends in industrialised countries 2007, the number of individuals requesting refugee or asylum status in Europe and non-European industrialised countries increased by 10 percent in 2007 in comparison to 2006. This is the first increase in five years and follows a 20-year low observed in 2006. Despite this increase, the 2007 level is only half the level witnessed in 2001. The rise in 2007 can by and large be attributed to the sharp rise in Iraqi asylum-seekers. If Iraqi asylum seekers were to be excluded from the analysis, the increase in 2007 would only have been two percent.

Ahmadiyyas community observes a century

Brussels, June 16 - The clash of civilisations and talk of jihad are not non-existent in the worldwide Ahmadiyya Muslim community, but used to condemn all forms of terrorism and highlight that Islam’s true teaching is of love and compassion for all of God’s Creation. On May 27, 2008, the Ahmadiyya Muslim Jama’at, observed in different parts of the world completion of a period of more than 100 years since the foundation of the holy community by Mirza Ghulam Ahmad Sahib Qadiani. Addressing the community on the occasion, Mirza Masroor Ahmad said, “Today the history of Ahmadiyyat bears witness to the fact—and the whole world knows it—that no one remembers the erstwhile opponents of Ahmadiyyat. Yet by the blessing of Khilafat, Ahmadiyyat is flourishing in the world and millions of people devotedly profess Ahmadiyyat, or the true Islam.”

Naseer Ahmed Shahid, missionary of Ahmadiyya Muslim Community in Belgium told New Europe, “The Ahmadiyya Community is trying to carry the message of love and brotherhood of Islam through inter-faith conferences and trying their best to explain teachings of Islam through gatherings.”

Going down the memory lane, Naseer said, “The Ahmadiyya Community was established in 1889 by Hadrat Mirza Ghulam Ahmad (1835-1908) in a small and remote village, Qadian, in the Punjab, India. The Ahmadiyya Muslim Community is a religious organisation, international in its scope, with branches in over 189 countries in Africa, North America, South America, Asia, Australasia, and Europe. It represents the most dynamic denomination of Islam in modern history, with worldwide membership of tens of millions.”

Irish “No” hits EU with a political impasse

Brussels, June 16 - The corridors of power in the European Commission, the Brussels- based executive of the European Union, were abuzz with rare activity June 13 with a mixture of shock and disbelief as the news of the “no” vote in the Irish referendum on the EU’s Lisbon Treaty filtered in. 

Refusing to concede defeat on behalf of the European Commission, Jose Manuel Barroso, the Commission President, told journalists, “Of course it’s a disappointment, we wanted a different outcome,” adding, “(but) the result is important and we must respect it.” 

Declaring “the remaining ratification processes should maintain their course,” Barroso told a hurriedly conveyed press conference, “The Lisbon Treaty was signed by all 27 states. I believe that the treaty is alive and that we should go on. Ireland remains committed to building a strong Europe and playing a full and active part in the EU.” 

With 18 national parliaments already endorsing the Treaty, the Irish No has cast serious doubts over its future while eight national parliaments, including the United Kingdom, Italy and the Netherlands still need to ratify it. 

The Netherlands, along with France, had rejected the earlier version in the form of the European Constitution. Reiterating that it is a “joint responsibility,” the Commission President said: “The EU institutions will continue to work for the EU citizens. The Lisbon Treaty (was) intended to solve some specific problems and the (Irish) No has not solved the problems that the treaty was designed to resolve.” 

Speaking to New Europe, Andrew Duff, British Liberal MEP said, “It’s a tragedy for Europe. The worst scenario will be a period of reflection. We have six days of intense reflection period and then (the European Council) should come up with a solution.” As Barroso threw the ball back in the court of Irish Taoiseach (Prime Minister) Brian Cowen to explain the causes to other EU Member States, MEP Duff told journalists, “If Cowen comes up with a magic proposal then the Council can go ahead. Otherwise, we pause for five years and begin again.”

NATO contemplates future with Russia and the EU

Brussels, June 16 - The European Union and NATO can pool their resources together to face the present-day global challenges, NATO Secretary General Jaap de Hoop Scheffer, recently told a conference in Brussels, titled “NATO in the Next Decade.”

Citing cooperation in fields like transportation, cooperation on research and development, and harmonising force structures and training methods, De Hoop Scheffer warned both organisations will suffer “if we cannot bring them closer together.” Highlighting threats like climate change and energy shortages to the global security in modern times, De Hoop Scheffer insisted the alliance must look to a new “strategic horizon” to face the newer realities and challenges. Addressing the conference, the NATO Secretary General said, “Climate change could confront us with a whole range of unpleasant developments – developments which no single nation state has the power to contain.

“It will sharpen the competition over resources, notably water. It will increase the risks to coastal regions. It will provoke disputes over territory and farming land. It will spur migration and it will make fragile states even more fragile. The scarcity of fossil fuels is already leading to a renaissance of civilian nuclear energy – and this poses its very own proliferation problems. The next decade will see continuously rising energy prices and a scramble for energy resources,” he said.

“This will put a premium on energy security. And it will also put a premium on the political stability of the world’s major oil and gas producing countries.” Calling for more often contact between the North Atlantic Council and the EU’s Political Security Committee to brainstorm on the global flash points, the Secretary General welcomed ongoing instances of cooperation among the Western powers like pooling resources to fund a C-17 for strategic airlift which can be also done for the A400M.

He also cited the UKFrench initiative to upgrade helicopters and train pilots as a good example of common funding, negating the longstanding method of financing, which says “costs lie where they fall.”

The Cold War seems never to have gone completely cold as was evident when NATO Secretary General admitted that there were issues where NATO and Russia did not “see eye to eye,” such as Kosovo and Russia’s decision to suspend its participation in the Conventional Forces in Europe Treaty. Calling Russia’s decision to send soldiers into Abkhazia in Georgia as “not helpful,” he stressed that it was important to engage with Russia because “I cannot see how NATO can do without Russia or how Russia can do without NATO.”

On the other hand, Dmitry Rogozin, Russia’s ambassador to NATO lambasted the Western Military Alliance for misleading information on missile defence. Rogozin told the audience, “We are told that we should not fear plans to install missile defences in Poland and the Czech Republic as it is directed at the bad guys in Iran.”

“If NATO considers the threats are coming from the south, why are you enlarging to the east? Do you have a problem with the compass? We can install our missile defences in Cuba or Venezuela to protect our territory against the bad guys from Jamaica,” the Russian ambassador asked.

On the positive side, Rogozin agreed that cooperation between Russia and NATO works better at the military level than at the political or diplomatic level, and hinted at strengthening military cooperation in Afghanistan. Moreover, in the light of political agreement reached between Russia and the EU in April, Rogozin pointed to the Russian offer of helicopters for the EU’s ongoing peacekeeping mission in Chad.

Ministers labour late on EU labour laws

Brussels, June 10 - The European Commission last Tuesday welcomed the deal hammered out by European Union ministers on how many hours workers should work per week and how temporary staff should be treated. Welcoming the compromise on common rules to grant temporary agency workers more rights and allow a working week of over 48 hours, reached by the Employment ministers, the Commission called it a "significant breakthrough" after four years of deadlock. VladimĂ­r SPIDLA, EU Commissioner for Employment, Social Affairs and Equal Opportunities said in a statement, "This is a major step forward for European workers and it strengthens social dialogue. It shows once again that flexicurity can be put into practice: We have created more security and better conditions for workers and temporary agency workers while maintaining the flexibility that industry needs and workers want when reconciling family life and working life. I congratulate the Slovenian Presidency on its success and thank them for all the hard work that led to it."

Addressing journalist in the early hours of the morning, Slovenian Minister of Labour & Social Affairs Marjeta Cotman, who chaired the Council meeting, said, "The proposals provides the necessary guarantees and protection for workers, while at the same time provides flexibility in organising the working time." The presidency said the accords would provide the basis on which temporary agency workers will be entitled to the same pay and basic entitlements as ordinary workers.

The late night agreement by employment ministers follows years of bitter wrangling between member states over how much protection workers should have and how much flexibility employers need. The agreement sets the normal limit employees in the EU can work per week at 48 hours, but allows them to boost that limit to 60 hours if they choose to sign a so-called "opt-out." To protect the employee from abuse, the deal also says that they can only sign up to the extra hours once they have been in the job for a month, and that they cannot be sanctioned at work for refusing to sign the opt-out or for withdrawing from it.

The compromise also takes in the rights of temporary workers, insisting that they be given the same rights regarding pay, leave and maternity leave as full-time employees, and that they be informed about permanent job opportunities within the company. Individual member states can, however, follow different rules both on the 60-hour limit and on agency workers if unions and employers agree to it. According to the EU passage rules for proposals, the draft directives must now go before the European Parliament. Warning the hurdles ahead, Commissioner Spidla said, "The ball is now in the court of the European Parliament and I sincerely hope that this solid agreement will find a majority in the plenary."

Echoing these fears, Liberal Democrat European Employment and Social Affairs spokesperson Liz Lynne MEP in the European Parliament said, "The Governments hard won deal now runs the danger of being ripped apart by Socialist MEPs who have for years been waiting for these controversial dossiers to return to the European Parliament."

On regulation of Temporary Agency Workers Lynne said, "Onesize- fits-all legislation at a EU level in this area is unnecessary as it fails to recognise the wide range of different practices across the EU, from Greece, which only made temporary worker agencies legal in the past few years, to the UK and Netherlands where it has long been established practice."

Welcoming the agreement, German Conservative MEP Anja Weisgerber (EPP) was more optimistic saying, "It provides the flexibility needed on the ground, and it is consistent with the standards of the European Court of Justice. I hope that Parliament and the Council will reach agreement on a final version by the end of the year."

The labour laws have been a bone of contention within the EU since they were proposed in 2004. The proposals have been criticised by business groups that feel that small to medium sized enterprises will struggle to pay for the new entitlements for agency staff.
Britain's small businesses represented by the Federation of Small Businesses (UK) welcomed the UK's continued opt-out from the 48-hour maximum working week but added that the price for securing the opt-out was far too high. Tina Sommer, Chairman, EU and International Affairs, Federation of Small Businesses, said, "Retention of the UK's Working Time Directive opt-out is welcome, but the price was far too high for employees and employers alike. Why should we be forced to choose between the two?

"The back-room manner in which this deal was negotiated by big business and Trade Unions should be of great concern to all those who will suffer the consequences," Sommer added. On the other hand, EuroCommerce Secretary General Xavier Durieu said, "Finding a political agreement on such important and sensitive issues is indeed a plus for the commerce sector." "It is clear that Europe needs rules on working time which will provide legal certainty on this delicate issue. As far as the agreement on temporary agency workers is concerned, it is a welcome practical implementation of the flexicurity approach," Durieu concluded.

Europe to get more gas

Commission to support Norwegian commitments

The European Commission will nod the government subsidies in the Norwegian case for the development of Carbon capture and storage (CCS) as a means to curb emissions from coal power plants by burying carbon dioxide (CO2) deep underground, according to European energy commissioner Andris Piebalgs.

Outlining the Norway’s efforts, Norwegian Energy Minister Marie Haga Aslaug told journalists, “We have three concrete projects in Carbon capture and storage in the pipeline and it has been very useful to us to have a close cooperation with the Commission on these projects. Also in order to create an understanding that for the time being government funding is required in order to make these projects work out.”

Aiming to make the technology commercially viable, the Norwegian minister urged “some countries are willing to put governmental funding in a substantial way,” adding, “I am looking forward to the day when we have the technological breakthrough where we can have co2 not only from gas powered power plants but also coal powered power plants.”

“I’m optimistic that we’ll get a yes for a notification which is made for the test centre,” she said. Commenting on the subject at the joint press conference with Norwegian minister, Piebalgs told journalists, “I believe that state aid is eligible if it’s scrutinised according to the rules. It (may be) given as much as necessary if it corresponds to the conditions.” “We need this technology not only for the EU but also globally and Norwegian efforts are very much appreciated,” he said.

Commending the “high ambitions of the colleagues on the Continent,” about renewable energy sources, the Norwegian minister spoke of windmills saying, “We have decided to establish more formal cooperation in this field. The potential is huge but it’s still some years ahead of us.”

“Floating windmills which could be placed on any continental shelf and we see a great potential from floating windmills. As of now, we do not have the technology, it has to be developed and there are major issues that have to be resolved in terms of grid so we are speaking of the future. But I think it’s very important to develop all possibilities in the renewable fields,” added Norwegian minister.

Replying to a question “on gas export,” she said, “In the years to come we will have a decline in oil production but we will have an increase in gas production over the next decade and obviously the market on the Continent, first and foremost will receive that gas.”

Negating the possibility of building new gas pipelines to the European continent, the Norwegian minister emphatically told journalists, “Pipeline capacity will never stop our supply.” Norway is the second biggest gas supplier to the EU with 18 percent, compared to Russia with 23 percent.

Depending on developments with Russia, Piebalgs hoped that with projected deliveries of up to 125 to 140 billion cubic metres of gas by 2018-2020, “that could mean that, by that time, Norway could be the biggest supplier of gas for the European Union.”