Global Economic News
BP to Start Deep-Sea Drilling off the Coast of Egypt
July 26 (EIRNS)BP, along with its German partner, is set to begin deep-sea drilling off the coast of Egypt, after revisions to their agreement with the Egyptian Oil Ministry were announced, last week. Under the revised agreement announced on July 19, BP and RWE Dea, the oil and gas unit of German utility RWE AG, will pay royalties to the Egyptian government, instead of the government investing in developing the offshore gas fields. The first gas from the Egyptian fields is expected in 2014. BP says that Egypt has the third-largest gas reserves in Africa, with 77.3 trillion cubic feet, behind Algeria and Nigeria.
A few days ago, it was announced that BP is also to start deep-sea drilling off the coast of Libya, this time for oil.
Schroders Bank Official Elaborates on Euro Collapse
July 28 (EIRNS)Alan Brown, group chief investment officer at Schroders Bank in London, writes in the Austrian online journal Börse Express that, "looking at developments in the euro-zone, one has the image of a train wreck in slow motion. The developments have a kind of predestination," which Brown says has to do with the insane German government's "mathematical" approach of massive austerity to save the euro system.
The Germans say that all of southern Europe should be put on the penalty bench for a decade or even longer, to "adjust" their economies, which, in the case of Greece, would drive the debt to 150% GDP, a level which it could keep only if it had an 8% surplus GDP annuallyan impossible scenario for the Greeks. "Under these circumstances it would not surprise if Greece came to the conclusion that a restructuringmeaning a defaulttogether with the exit from the euro-zone were the lesser evil. Then, Brown asks the question: 'How about a new d-markeven if that sounds populistic? Nearly everything is possible, beginning with the exit of an individual country, through the creation of one or several currency zones, to the return to all national currencies that did exist before.'"
Alan Greenspan also joined the chorus of the euro-doom singers: Speaking to CNBC earlier this month, he said, "I don't know where the end-game is. Something has got give here. One possibility is there are fewer members of the European Monetary Union."
French Nuclear Energy Under Sneak Attack
July 27 (EIRNS)Nobuo Tanaka, the head of the Paris-based International Energy Agency (IEA), a forum of the OECD that advises the 28 industrialized member-nations on energy matters [not to be confused with the IAEAed.], called for France to deregulate its electricity prices. The unspoken objective, is to increase the cost of nuclear-produced electricity to make BP's and Goldman Sachs' wind and solar power projects more "competitive." Tanaka made his remarks at a news conference yesterday.
Officially, the IEA wants France to speed up reforms of its power industry by pushing the country's former electricity monopoly to charge prices closer to market levels. So far, the price of French electricity is around one-third cheaper than the European average, thanks to France's reliance on nuclear reactors, which have turned a profit, over more than 30 years of use. European rivals of the utility Electricité de France (EDF), which runs the country's 58 nuclear reactors, say it has a competitive advantage.
"It is questionable whether the current tariff structure is sustainable," as cheap power prices threaten the investments needed to maintain and extend the operating life of its nuclear reactors, the IEA report stated, in a report on France.
The French market has already been liberalized since July 2007, in line with European Union directives. In June, French lawmakers passed a bill that would force EDF to sell a quarter of its nuclear output to private rivals such as Poweo and GDF Suez, but the bill has yet to be approved by the Senate.
Eurocrats Campaign for IMF Approach to Euro-Crisis
July 27 (EIRNS)The European Central Bank's Italian directorate member, Lorenzo Bini Smaghi, was deployed to calm the critics in Germany (whose number is increasing), of the euro bailout system, in a commentary in the Frankfurter Allgemeine Zeitung July 27. Under the headline, "A Rational View of the Greek Crisis," Bini Smaghi first claims that the euro, 11 years after its introduction, is stronger than the deutschmark ever was.
He then presents a set of scenarios of what would happen, if Greece were to default instead of being bailed out: The Greek financial system would collapse; Greek citizens would storm the banks and empty their accounts; the Greek government would be forced to impose draconian measures like capital controls; the entire country would fall into chaos. Even the fact that within Europe, the Greek economy is a very small one, would not protect the rest of the euro-zone against new shocks; for example, speculators, who would make huge gains because they speculated on a Greek default, would be encouraged to speculate also on the default of other countries like Portugal, Ireland, or Spain, Bini Smaghi argues. As for those who call for the replacement of the euro by the national currencies, he warns that a big devaluation of savings, notably in Germany, would result from a dissolution of the euro system.
By contrast, the IMF approach offers a positive future for Greece, Bini Smaghi lies, citing the 1995 IMF loan to Mexico, and the 2001 loan to Brazil, claiming that the harsh austerity programs carried out then, helped both countries to get back on their feet. If Greece does that and pays back its debt, the euro-zone will come out stronger from this crisis than ever before, he claims.
In the same spirit, Jean-Claude Juncker, Luxembourg's Prime Minister and chairman of the Eurogroup of euro-zone countries, used a visit to Slovenia, this past weekend, to call for a new round of austerity policies. He urged European states to reduce public deficit and debt: "Consolidation of the European public finances is not an option, it is a necessity. If deficits and public debts remain high, there will be no growth in Europe."