January 7 2007 by The Systemic Analyst.

The following article was written by Prof. Dr. Dieter Spethmann and originally published in The Walsingham Papers by The Walsingham Institute.

The EU Commission is “expected to call for a break-up of integrated energy companies, where the supply of energy and the distribution networks are managed by the same company” in a January 10th report. All in a bid to boost competition, lower energy prices, reduce reliance on imported energy and push EU countries into developing renewable energy sources.

Yet is forcing the break-up of successful European energy suppliers really the best direction for an “industrial revolution” in the energy sector? What sort of impact will this have on the already burdened economies of surplus producing EU countries in the long run - such as Germany which already commands the highest level of competitive capacity of all EU member countries despite allegations of collusion.

Perhaps Mr. Barroso, the current president of the EU Commission should consider other action plans that might be more effective. For example why not turn attentions from Germany and France to the Mediterranean? Cost efficient energy in the form of LNG (liquefied natural gas) is increasingly available in the region from an ever-growing number of facilities throughout the Gulf States, Libya and Algeria. Why not encourage these countries in their process of industrialization through the development and sale of cheap gas? Adding another low-cost energy option to the European market would surely drive energy prices down across Middle and Northern Europe (not to mention strengthen European security, since stable economies in the Mediterranean basin lead to stable societies.)

Such a plan would also offer the Mediterranean EU countries a means to surmount their notoriously high foreign trade deficits – possibly allowing for equalization of trade balances. Turning towards the Maghreb Countries for LNG would invariably require establishment of receiving terminals in the EU Mediterranean region. This role would boost these struggling economies too. In turn, the ‘EURO surplus countries’ would be relieved of the burden to subsidize deficit producing countries – leaving surplus producing countries to spend their surpluses on their own development, subsequently improving the Terms of Trade for the entire EU.

Indeed, strengthening the competitive capacity of the current ‘deficit countries’ in the short term will prove essential down the road. As exporters of gas, oil, coal and uranium increasingly move away from the US Dollar or Euros as their currency of choice for energy transactions, (instead opting for others such as the Russian Ruble, the Gulf Dinar and the Australian Dollar) deficit economies will find themselves in an impossible situation. Unable to allocate funds from already constrained budgets for the purchase of energy – continued (and possibly increased) subsidies from surplus producing countries might become the proverbial straw that broke the camel’s back. Ultimately, leading to the break-up of the EU. It will be interesting to see how the anticipated January 10th report will answer such forecasted problems.

Pressuring European energy companies to break-up just might lead to dissolution of a wider sort. Alternatives must be sought.

For more information please visit www.eurospethmann.de or www.hankelspethmann.de

Posted in Economic Issues | No Comments »

January 7 2007 by The Systemic Analyst.

Originally published in The Walsingham Papersby The Walsingham Institute.

It would appear that with the changing of another year comes a change of a different sort –specifically a shift of focus from terrorism to the environment. Although it is wonderful that the very real and serious changes our planet is undergoing are being acknowledged, it is curious that the topic of climate change would be given so much attention by key decision makers almost over night.

In fact it is unfortunate that it took this long to turn such concentrated attention towards the changes in our environment. Granted, climate change has been covered in the media over the last decade, however, usually in a very different manner. The focus to date has been widely on the debate over whether or not (and if so to what degree) human induced greenhouse gases have caused these changes in our environment. And yet suddenly climate change has managed to steal the spotlight – not just from the debate over global warming, but also from the enduring international focus on terrorism.

This is even more peculiar considering that the European heat wave that killed thousands in 2003 didn’t manage to redirect focus from fighting terrorists to the changes in the environment. Nor have melting glaciers the world over or the unfortunate situation in Tuvalu been able to garner such attention. It seems highly unlikely that an unusually balmy winter was all it took to change the focus to climate change for this year.Could it be that changes are happening at such an unexpected rate that the self-centered arguments of mankind’s responsibility are now trivial? If so, what can we expect in the coming years? Is this finally enough to cause humans to rethink the way they consume energy? Are the decision makers who only recently continued to engage in the global warming debate prepared for a situation they seemed eager to ignore? What should our roadmaps in the face of these changes look like?

Certainly, 2007 is shaping up to be an interesting year, full of change at least in one arena.

Posted in Environment | No Comments »