2013 June 20 « Dr Alf's Blog

Location of the Eastern Mediterranean (Photo credit: Wikipedia)

This story is a RECOMMENDED READ from the Israeli newspaper Haaretz. Check it out!

Cyprus looks to Israel to back East Med LNG terminal plan – Business – Israel News | Haaretz Daily Newspaper.

The Eastern Mediterranean is one of the most important areas in the World at the moment. Because of the crisis in Syria, many see the East Med as fault line. Less widely reported is the offshore gas and oil being developed by Cyprus and Israel. Both Cyprus and Israel have turned to Noble, the US offshore specialist for the first stage of the program but other multi-national companies like French energy giant Total are also in the game. For the moment, the Russian giant GasProm seems to be playing a waiting game.

Personally, I am an optimist and believe that the development of offshore gas and oil in the Eastern Med will transform the economies of countries like Cyprus and Israel.

Things are really tough for Cyprus right now because Cyprus had to take an onerous financial bailout from the troika of the European Commission, the European Central Bank and the International Monetary Fund. Because of the draconian terms, which the Cyprus President is now trying to renegotiate, Cyprus will probably suffer austerity as severe as in Greece, if not worse. However, Cyprus has offshore gas and oil which has, so far, not been recognized by the troika.

Over the next twelve months, Cyprus must secure billions of dollars of finance to construct its gas processing plant. With enough offshore gas to cater for forty percent of Europe’s requirements, the Eastern Med will continue to be a geopolitical hot-spot. Sadly, the European Commission seems to be pursuing its own narrow agenda at the moment and is not effectively focused on strategic developments in Europe. I suspect that many multi-nationals and European governments are following developments closely; there will be rich economic pickings but there will be political strings too.

Any thoughts?

EU Economic and Monetary Affairs Commissioner (Photo credit: Wikipedia)

Being a UK citizen, with strong political views, and living in Cyprus, I never thought that I would be in agreement with both Francois Hollande and Angela Merkel, respectively presidents of France and Germany! However, I agree that it is time for Olli Rehn to go. Olli Rehn is a Finnish politician, currently serving as European Commissioner for Economic and Monetary Affairs and the Euro and vice president of the European Commission. Of course, the joint press release of Francois Hollande and Angela Merkel was coded; it proposed replacing Olli Rehn’s job with a permanent role.

I have been quietly following the Twitter feed on Olli Rehn for a number of months and it has not been flattering, in my view.

When I saw the publication of the following keynote speech from Olli Rehn at the Brussels Economic Forum, I was was pleased to be able to have some hard evidence on which to measure the effectiveness of Olli Rehn’s performance. The following speech is a RECOMMENDED READ, in my view. Check it out!

via EUROPA – PRESS RELEASES – Press Release – Speech: Keynote speech by Olli Rehn at the Brussels Economic Forum.

Did you manage to read the whole speech or did you give up? Or were you struggling to understanding what Olli Rehn was talking about?

For me, the speech was rambling, disjointed, short on evidence, and uninspiring. More fundamentally, I believe that Mr. Rehn is personally responsible for millions and millions of people being unemployed unnecessarily across Europe. Most respectable economists and belatedly the IMF agree that austerity measures in Europe have been too severe; they argue that short-term, fiscal stimulation should be deployed to reflate economies, leaving fiscal adjustment to the medium term – they argue in favor of massive public investment in infrastructure, especially in Southern Europe.

Clearly, Olli Rehn has become the austerian bogyman. This year, austerian economics has been totally discredited, indeed trashed, by mainstream economists and the IMF. So why does Mr. Rehn cling to a discredited argument?

If you have been able to read the speech fully, you will have noted that Mr. Rehn favors the increase of the Brussels bureaucracy as his central mission. For me, there is ample evidence that the Brussels bureaucracy has destroyed effective competition and free trade. More importantly Mr. Rehn and his Brussels bureaucrats are a road-block to effective recovery in Europe. Let me quote directly from the speech:

In other words, the first-best world of economic science is not always at our disposal in the second-best world of political reality. That said, there is no need to fall back into the third-best world of intergovernmentalism.

Personally, I think that Olli Rehn and his Brussels bureaucrats are spending too much time with the fairies. It’s time for hard-headed national leaders to bash some sense in the Brussels bureaucracy. Most importantly, Olli Rehn needs to go. Mr. Rehn’s successor needs to have a passion for:

Re-energizing Europe
Getting Europe back to work
Increasing Europe’s competitiveness
Increasing Europe’s skill-base, especially languages for BRICS countries
Promoting quality infrastructure, like the Cypriot offshore gas and oil industry which could supply a third of Europe gas needs
Cutting out waste and bureaucracy across Europe

Any thoughts?