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Greek bank deposit outflows hit €1bn in February


27.03.2017  by: Mehreen Khan

Greece’s beleaguered banking system has taken a fresh hit from the country’s shaky bailout talks

this year, registering its worst deposit outflows since the height of its debt crisis in the summer of


Latest figures from the European Central Bank showed households and businesses pulled €1.1bn from the

country’s lenders last month, moderating from the €1.7bn withdrawn at the start of the year but

marking the worst two ­monthly outflow since the country was bought to the brink of a eurozone

exit nearly two years ago.

Cash has begun leaking out of the banking system amid fresh delays in Athens’ bailout talks with

its creditors in the EU and International Monetary Fund. Greece is still waiting on the approval

of its second bailout review to unlock around €6bn in rescue cash the government needs to pay

off its bills and avoid default this summer.

But officials in the EU and IMF have been at loggerheads over the budget targets, debt relief and

reform measures baked into the three­ year bailout worth €86bn agreed in the summer of 2015.

The IMF is demanding Europe ease up on its budget deficit targets for the country after the end

of the rescue programme in 2018, while also pushing for bolder tax hikes and pension cuts from

the Syriza government.

Without these reassurances, the Fund could stay on the sidelines of the rescue programme –

withholding its financial support. Its full involvement had been a key plank in approving Greece’s

bailout deal through the German, Dutch and Finnish parliaments nearly two years ago.

The uncertainty has already begun to hit the economy which fell back into reverse in the fourth

quarter – contracting by 1.2 per cent.

Greek banks – which were forced to impose capital controls in 2015 – are particularly exposed to

weak economic growth which heaps further pressure on the financial systems’ bad loans and has

seen deposit levels plummet since its first bailout in 2010.

Banking sector reform is also a major part of demands from creditors, who have asked for

revamped governance among the country’s main lenders.

Amid the standoff, the Bank of Greece has asked to raise the ceiling on emergency funds its

receives from the European Central Bank for its domestic lenders by €400m – the first time it

has put in such a request since the country signed its third bailout in July 2015.

The move reflected “developments in the liquidity situation of Greek banks, taking into account

private sector deposits flows”, said the central bank.

On Monday, a spokesman for the EU Commission said “significant progress was made on key

issues” after talks between Athens and its bailout officials in Brussels last week.

Finance ministers will gather to discuss progress on the deal at their next Eurogroup meeting on

April 7, where officials are optimistic of bridging the differences between the IMF and European


“Ideally, we should be in a position to present a staff level agreement [in April]” said the


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British MPs say Turkish president using attempted coup to suppress human rights


Commons foreign affairs select committee says relationship with Recep Tayyip Erdoğan could damage UK’s

international reputation

Saturday 25 March 2017 

The Commons foreign affairs select committee has accused the Turkish president, Recep Tayyip

Erdoğan, of using an attempted military coup last summer to purge opponents and suppress

human rights as the foreign secretary, Boris Johnson, embarks on the first full day of a goodwill

visit to the country.

The committee’s report, published on Saturday, says the government is right to engage but warns

that the UK’s approach to Erdoğan could damage its international reputation and weaken

declining human rights in Turkey.

It said Ankara’s response to the attempted coup was neither necessary or proportionate, arguing

that the scale of the systematic abuse of human rights and lack of a free press in the country made

it difficult to see how a referendum next month to extend Erdoğan’s presidential powers could be

seen as credible.

The report comes as Johnson and the foreign office minister Sir Alan Duncan visit Turkey in an

attempt to cement UK trade and strategic ties with a country increasingly at odds with other

European leaders.

The UK has been the EU state most sympathetic to the Turkish government since the coup

attempt and also backed Erdoğan’s claims that the coup was masterminded by a network of

supporters of the exiled cleric Fethullah Gülen.

In contrast to Dutch and German hostility towards Turkish ministers seeking to hold pro-Erdoğan

rallies on their soil, Johnson has said he would welcome them to the UK.

But given the unexpectedly critical tone of the report, Johnson will have to work to reassure

Ankara about the broadness of British support.

In potentially its most damaging finding the report challenges the validity of the referendum,

saying: “It is difficult to foresee a fair, free and credible referendum when media, opposition MPs

and civic organisations critical of the government have been closed down or silenced.”

It condemns Erdoğan’s response to the coup attempt, which has seen tens of thousands of

teachers and civil servants sacked as well as military personnel jailed, and says the government

has sought to clamp down on dissent.

“There is a fundamental intolerance of alternative narratives in Turkey, with the government

broadly suppressing, discrediting or punishing those who contradict its authorised accounts of

sensitive events,” the MPs said.

“The powers afforded by the state of emergency – combined with a vaguely framed definition of

terrorism, a pliant media, and a politicised judiciary – have allowed the government to silence a

broad spectrum of critics by labelling them as ‘Gülenists’ or ‘terrorists’ on the basis of light

evidence or broad interpretations.”

The report said it had not found the Turkish government’s account of a Gülenist plot to be

“substantiated by hard, publicly available evidence” yet noted the Foreign Office “seems willing

to accept [it] broadly at face value”.

“Nine months after the coup attempt, neither the UK nor Turkish governments can point us to

one person who has been found guilty by a court of involvement in the coup attempt, let alone

anyone being found guilty with evidence of involvement with Gülenist motives.”

It warned that the UK risked “de-prioritising its concern for human rights in its drive to establish a

strategic relationship with Turkey” and said the country should be added to the Foreign Office list

of countries deemed as a human rights concern.

In a sweeping condemnation, the committee said civilian suffering in the resurgent conflict

between the Turkish state and Kurdish militants, freedom of expression and assembly, judicial

independence and restrictions on civil society organisations had all worsened since the coup


“Once held up as an example to the region, Turkey’s democracy and democratic culture are under

severe pressure,” the report concluded. It said it was not the UK’s role to tell the Turkish people

how to vote, but while the “wrong choices have the potential to deliver catastrophe well beyond

Turkey’s borders ... The right choices would cement Turkey’s position as a liberal, democratic

state which provides a philosophical and ideological bridge between west and east.”

In defence of Turkey, the committee point out the EU has not kept its part of the deal on slowing

migration from Turkey, and says the UK is right to seek wider post-Brexit deals.

It also suggests some of the UK government motivation is to secure a major arms deal between

BAE systems and Turkish Aerospace – the TF-X a new generation combat aircraft for the Turkish


The Foreign Office said that the report overall praised the government’s engagement with Turkey,

adding: “We recognise the challenges that Turkey faces and we condemned last July’s coup

attempt, which was a shocking attack on Turkish democracy.

“We have always said that the Turkish government’s response to the coup attempt must be

measured. The UK consistently raises human rights issues with our Turkish counterparts.”

Hard Brexit?


The prime minister will trigger article 50 this week — with no

trade agreement on the table. Would ‘no deal’ be a ‘bad deal’ for

British firms?

Tommy Stubbington

March 26 2017, 12:01am, The Sunday Times

James Cooper has his eye on the farm next door. The cluster of

warehouses at Immingham docks on the south side of the

Humber estuary are surrounded by open fields. Cooper, the

chief executive of Associated British Ports (ABP), will probably

need to buy out his neighbours to sustain the flow of trade

through the vast import terminal.

Once Britain leaves the European Union, a larger proportion of

the 55m tons of goods pouring into Immingham each year is

likely to be subject to customs checks, slowing its passage

through the port. Cooper is preparing to build extra facilities for

additional inspection areas, and the backlog of goods that is


“We have the capacity to deal with it and we are ready,” Cooper

said. “Will we see lower volumes? We might, but we might be

able to do more storage. Most North Sea-facing ports have got

plenty of land. In spite of a challenge, I see an opportunity.”

ABP and other businesses up and down the country are

preparing for the possibility of a “hard” Brexit — a departure

from the EU, with little or no continuing free trade deal with 27

of our closest partners. With Theresa May set to invoke article

50 on Wednesday, beginning the two-year exit process, the

possibility of departing without an agreement on trade has

become an increasingly ominous prospect.

“No deal is better than a bad deal,” May said in January. Ever

since, “no deal” has been the base-case assumption, for

planning purposes, of many British businesses.

Not everyone is as optimistic as Cooper. While many companies

feel they could cope with new tariffs on exports to the EU, they

are more nervous about less obvious, “behind the border”

barriers that could spring up if Britain quits the EU without a

trade deal. The result, some experts say, would be a sharp drop

in the flow of goods and services across the channel.

Foreign secretary Boris Johnson, meanwhile, has declared that

Britain would be “perfectly OK” if we are forced to fall back on

World Trade Organisation (WTO) rules.

The WTO regime already governs the majority of world trade,

including nearly half of Britain’s business dealings outside the

EU. Trade at Southampton, another big ABP port, is booming.

British-made Land Rovers, Minis and Hondas line the quays

destined for America, the Middle East, or beyond. “90% of what

Southampton does is not with the EU: it’s a WTO port to all

intents and purposes,” said Cooper.

The WTO’s rulebook means the EU could not hit the UK with

punitive tariffs. If it did, it would have to apply the same

penalties uniformly to every other WTO country it deals with.

The average tariż imposed by the EU on imports from beyond

its borders is just 2.7%, according to think tank Policy Exchange

— much less than the 10% figure (which relates to cars) that has

stuck in the public consciousness.

For British exporters, the hit to their competitiveness would be

more than ożset by the 11% fall in the pound against the euro

since June’s EU referendum.

On the surface, that makes much of the hand-wringing by big

businesses look odd. The CBI has long since abandoned hope of

retaining membership of the single market, yet is now firing oż

warnings of the dangers of losing preferential access to EU

consumers. Earlier this month it warned that hard Brexit would

open a “Pandora’s Box of economic consequences”. There is a

reason, however, why businesses are still so desperate to avoid a

hard Brexit: not because the end point is so calamitous, but

because the starting point is so appealing to them.

It’s hard to see how it could be positive.

You’re looking at a big reduction in overall

trade, and a long period of adapting to the

new arrangements

Monique Ebell, National Institute of Economic and Social Research

For all its failings, the EU single market has gone much further

in harmonising regulations and tearing down barriers than

other bilateral trade agreements across the globe. The less

friction, the quicker the wheels of international trade can whirr.

For example, cosmetics manufactured in the UK are

automatically certified for sale across the Continent. And

international banks that have set up shop in London can freely

sell their services to customers anywhere in the EU. A recent

survey by the Institute of Directors showed that 62% of firms

believe a new agreement with the EU should be the priority in

trade negotiations. Just 13% said seeking new deals around the

world is more pressing.

The desire for a quick and wide-ranging agreement with the EU

underlines an important truth in international commerce:

distance matters. Every one of the world’s top 10 economies

benefits from trade agreements with its regional neighbours.

Without an EU deal in place, Britain would be the odd one out.

“Hard Brexit will be disastrous for business,” said Baroness

Wheatcroft, a Conservative peer who has sought to put the

brakes on Brexit in the Lords. “I struggle to see a best-case

scenario for Brexit other than full access to the single market.”

AS BRITAIN’S divorce negotiations get under way, Jan Ward

isn’t waiting to see which way the wind is blowing. The boss of

Corrotherm International, a Southampton company that makes

industrial pipes and valves, is preparing to move some of its

manufacturing to a new factory near Carcassonne, France. “I

can’t be paralysed until we know how things are going to turn

out, I have to act now,” Ward said.

She isn’t worried about tariffs on Corrotherm’s products. Most

are tariff-free under the EU’s schedules with the WTO —

detailed lists of the duties levied on thousands of different

categories of imports. But the nickel alloys the company

imports from the EU would attract tariffs of 5%-8%, eating into


“Some of our European customers are reluctant to buy from

outside the EU. Coupled with the extra costs, this could make us


2.7% the average EU import tariż under WTO rules, according to

Policy Exchange

59% estimated reduction in UK-EU trade under hard Brexit,

according to NIESR uncompetitive,” Ward said. “It might force us to move.” Ward’s

fears ożer just one example of how hard Brexit could disrupt

supply chains. For many firms, like Corrotherm, that is not a

matter of life and death. It does, however, underline that any

loss of competitiveness is likely to chip away at UK-EU trade.

Some industries are even more tightly interwoven into

European supply chains. Birmingham-based Brandauer imports

rolls of precious metals such as gold and silver from Europe and

runs them through precision presses to make electrical

connectors that end up in power-steering units in Fiats and

Volkswagens. The cars then roll oż the production lines in

Germany and Italy, and some of those vehicles are sold back

into the UK market.

Where materials are imported and re-exported, companies can

generally claim back duties. However, doing so means keeping

track of exactly where all components come from — meaning a

mountain of paperwork.

“It would create a whole set of red tape for us to understand

and work our way through,” said Brandauer boss Rowan

Crozier. “That’s a challenge that a smaller company like us could

do without.”

There are further traps lurking for exporters in a post-Brexit

world. For example, European car makers that sell to Korea

under its free-trade agreement with the EU are obliged to use no

more than 45% of components made outside the EU or South

Korea. British components would become part of that total,

which could make the European car industry less inclined to use

parts manufactured in the UK. Forecasting the impact of all this

on UK-EU trade is difficult, but most economists reckon it would


European Commission president Jean-Claude Juncker said last week that Britain will not face a

‘punishment’ for feaving the EU is Monique Ebell, a trade expert at the National Institute of

Economic and Social Research (NIESR), estimates that

membership of the EU more than doubles a country’s trade with

the rest of the bloc. However, she stresses that the impact of

leaving is highly uncertain, given no economy of a reasonable

size has ever left the EU before. (The economy of Greenland,

which quit in 1985, is almost entirely based on fishing, and is

not considered a good model for the UK.) Even so, she estimates

that Britain’s trade with the EU would tumble by 59% under a

hard Brexit.

“It’s hard to see how it could be positive for the economy,” Ebell

said. “You’re looking at a big reduction in overall trade, and a

long period of adapting to the new arrangements.”

SHOULD we trust the much-maligned “experts” who said the

economy would grind to a halt after a Brexit vote and have so

far been proved spectacularly wrong? Gerard Lyons, former

economic adviser to Boris Johnson and a prominent pro-Brexit

WTO rules are a ‘strong foundation’ for

Britain’s future relationship with the EU

and beyond account of how our business model will change,” said Lyons,

chief economic adviser at Policy Exchange. “The EU was set up

to protect French agriculture and the German car industry —

that’s why tariffs in those areas are so high.”

Any lost trade in Europe, Lyons argues, will eventually be

replaced farther afield — particularly as Brexit frees up Britain

to strike new trade deals. Trade minister Liam Fox has already

mooted agreements with the US, China, Australia and New


In the meantime, WTO rules are a “strong foundation” for

Britain’s future relationship with the EU and beyond, Lyons


The EU is a protectionist bloc that has prevented Britain

enjoying the fruits of unfettered trade, according to economist

Patrick Minford, who campaigned for Brexit and has now

shifted his focus to global free trade. Minford argues that

outside the EU’s external tariff, Britons would see benefits such

as cheaper food, while increased competition from Asia for our

manufacturers would be ożset by the decline in sterling.

Some firms are certainly relishing the prospect of life outside

the walled garden of the EU customs union. At Tate & Lyle

Sugars’ refinery in Silvertown, east London, shipments of raw

sugar cane arriving from former colonies are subject to EU

tariżs designed to protect European sugar beet producers. The

company says these tariżs cost it £34m in 2015 alone and

threaten the survival of the only refining facility in Britain.

Nevertheless, such companies probably remain a minority. A

recent survey of 600 large companies in Europe by investment

bank UBS showed that 31% plan to remove a “large” part of their

operations from the UK. The research, by NIESR, suggests

benefits of new trade deals will be much smaller than the losses

from a hard Brexit.

According to Ebell, trade deals with the US, Australia, New

Zealand and Canada would lead to just a 12% increase in trade.

That is partly because trade in goods with these countries is

already remarkably easy — as the cheerleaders for WTO rules

point out — so there is relatively little to gain.

More importantly, even enhanced free-trade deals — such as the

EU-Korea deal — have so far done little to boost services trade.

Services are generally even more susceptible to behind-the-
border barriers: if two governments cannot agree on the

qualifications a lawyer, accountant or architect needs, it is hard

to sell these services into each other’s markets.

Of course, Britain could break new ground by negotiating free-
trade agreements with deeper provisions for services. Those

deals, however, are likely to take years to complete, as various

vested interests on both sides are placated.

In the meantime, the containers will be piling up in a field by

the Humber.

Who has most to lose?


The prospect of a hard Brexit has created a big headache for the

City’s investment banks. Their chief concern is the potential

loss of the “passporting” rights that enable them to sell

financial products across the European Union from their bases

in London.

The City’s hopes rest on an EU legal concept called

“equivalence”, which would potentially maintain access to the

single market provided that Britain’s regulatory standards do

not diverge from Europe’s. However, it is not certain that

London and Brussels can thrash out an equivalence deal by

2019. For this reason, Goldman Sachs and Morgan Stanley last

week stated they would soon begin moving jobs to other EU

financial centres from London.


Insurers that sell products across Europe are in a similar

predicament; they may need to set up operations in the EU,

potentially reducing their UK workforces. Lloyd’s of London has

already announced it will set up a hub in the EU.


For British drugs giants such as Astra Zeneca and Glaxo Smith

Kline, a hard Brexit could significantly increase the cost of

getting new treatments approved by regulators. Currently,

developers can sell drugs across the single market after getting

the go-ahead from the European Medicines Agency. Unless a

common drug-approval system is agreed, Britain will have to set

up its own watchdog, meaning more red tape for the sector.

Science funding is one of the few areas where Britain is a net

beneficiary of EU membership. Between 2007 and 2013, the UK

contributed €5.4bn to the bloc’s research and development

budget, yet received €8.8bn from Brussels, according to the

Royal Society.


Britain’s tech entrepreneurs have two chief concerns over a

hard Brexit. First, hi-tech companies rely more than most

industries on attracting the brightest and best talent from

across the world. A hard Brexit that makes it more difficult to

bring in highly skilled workers from the EU would be a blow.

Second, tech start-ups receive much of their early stage funding

from venture capital firms. A key source of the VCs’ cash is the

European Investment Fund

– which is backed by the UK and other EU governments.


Telecoms companies want to be able to continue transferring

data freely between their server farms across Europe. A new set

of EU-mandated rules – called the General Data Protection

Regulation – comes into force next year, which should enshrine

this freedom in UK law. But Britain’s internet privacy rules

would have to remain in lockstep with Europe if data transfer

rights are to be preserved. Data transfers are crucial for many

other businesses, including insurers.

Making a drama is becoming a crisis

TV and film producers could among the big losers if Britain

leaves the European Union without a free trade deal.

Dramas such as War and Peace can cost £1m an hour to shoot, making deals with overseas

stations more important

The impact would reverberate far beyond the creative sphere.

Overseas sales of movies and TV shows, along with other

creative work, brought in £13.9bn in 2015, accounting for 9% of

non-financial services exports that year.

A large chunk of that income would be cast into doubt by a hard

Brexit. Under the current system, European broadcasters are

obliged to buy 50% of their programmes from EU-based


This quota regime has created a hugely vibrant TV industry on

these shores, as the BBC, ITV and a host of independent

production houses have been able to sell their formats and

programmes across the single market.

“The quota system has been very valuable to Britain’s TV

production industry,” said Alice Enders at Enders Analysis.

“Exports are becoming more important due to pressures on the

licence fee and the budgets of commercial free-to-air


Outside the EU, British producers would have to scrap with

rivals from America and elsewhere for the portion of airtime

that can be filled with non-EU shows. That would make it

harder for the BBC and other broadcasters to find backers for

high-end dramas, such as War and Peace, above, which can cost

more than £1m an hour to shoot. They rely on pre-production

deals with stations overseas before giving the green light to

glossy hit shows.

British producers hope that their position will be protected in a

future free trade deal between the UK and the EU. However, TV

and film have been excluded from all but a handful of trade

agreements struck by the EU; member states, notably France,

have fought hard to protect their native film industries.

EU migrants keep benefits after Brexit


Another Tory manifesto pledge at risk

Tim Shipman, Political Editor

March 26 2017, 12:01am, The Sunday Times

Ministers face an explosive row over migrant benefits amid claims that they are poised to violate another manifesto pledge

as Theresa May fires the starting gun on Brexit this week. EU migrants who have come to Britain will continue to be paid

child benefit after Brexit to send to their families back home, under plans sent to ministers last week. A paper submitted by

the Department for Exiting the European Union (Dexeu) to the cabinet’s Brexit committee recommended that the 3m EU

migrants in the UK when the prime minister takes the historic step of triggering article 50 should keep their rights to state

handouts even after Britain leaves the EU.

Those who arrive after Wednesday will not get the benefits. But cabinet ministers have been warned that any attempt to

withdraw child benefit from those already here would undermine the health and pension rights of British pensioners

in Spain and Britons living elsewhere in the EU when two years of talks start.

What the EU really thinks about Brexit

The move is likely to lead to unease from some Eurosceptics since it violates two pledges made by David Cameron in the last

Conservative election manifesto. The controversy comes less than two weeks after the chancellor, Philip Hammond, was

forced to abandon the centrepiece of his budget, a rise in national insurance rates for the self employed, because it broke

a promise in the manifesto.

A deal on the rights of British expats and EU migrants will be one of the first issues discussed after Theresa May triggers

article 50 on Wednesday, starting two years of talks which will take Britain out of the EU in the spring of 2019.

The prime minister will send a letter, thought to be seven or eight pages long, to Donald Tusk, president of the European

Council, and give a speech outlining her approach at a trade summit in Birmingham.

On Thursday she will publish a white paper detailing how the government’s Great Repeal Bill will take back parliamentary

control of all laws.

The bill, which will feature in the Queen’s speech in May, will repeal the 1972 European Communities Act and transfer EU law

into British legislation.

The child benefit issue was due to be discussed at the cabinet’s Brexit committee last week but the meeting broke up with no

resolution after the terrorist attack on Westminster. However, a senior government source said: “The recommendation from

Dexeu is that as a priority we need to secure rights for UK citizens in the EU.

“The recommendation is that for what they call ‘the stock’ of people, the EU migrants who are already here, that they should

continue to have their rights, which includes being able to export child benefit. That paper was put in front of ministers

last week.”

The discussion paper “did not acknowledge” that the migrant plan could be seen as a breach of the manifesto but insiders said

it clearly does so.

The manifesto said migrants would be able to claim benefits only when they have been in Britain for four years. It also

added: “If an EU migrant’s child is living abroad, then they should receive no child benefit or child tax credit, no matter

how long they have worked in the UK and no matter how much tax they have paid.”

A senior Tory said: “The plan we’ve got is clearly not compliant with that.”

Offcials in Dexeu and Downing Street stressed that “nothing has been resolved” on the child benefit issue and instead

emphasised the historic nature of May’s announcements this week.

A government source said the “week will mark a defining moment in this country’s history, when the prime minister

invokes article 50 and opens the way for formal negotiations to leave the European Union and build a truly global Britain. But a

strong, sovereign country needs control of its own laws.

“That, more than anything else, was what drove the referendum result: a desire for the country to be in control of its own

destiny. So we will get on with the job and set out the steps we will take to ensure control of our laws lies in London,

Edinburgh, Cardiff and Belfast.”

The white paper will hand ministers extraordinary “correcting powers” dating from the days of Henry VIII to tweak “several

hundred” laws and regulations which would otherwise cease to function properly after Brexit, without using primary

legislation. These include laws which make reference to rulings by EU regulatory bodies or require councils to publish procurement

documents in publications in Brussels.

A leaked government document warned of the potential cost and chaos, even in the event of a free trade agreement

The powers will be time limited after Brexit in order to quell claims that this is a permanent power grab by the executive. In

a move designed to ensure that saving the union is at the heart of Brexit negotiations, the senior civil servant given the task of

defending the United Kingdom will move into the Brexit department.

Philip Rycroft, who heads up the “UK governance group”, will scrutinise every Brexit decision to make sure that it does not

undermine the union.

The move comes as a leaked government document warned of the potential cost and chaos, even in the event of a free trade

agreement, if Britain leaves the European customs area. The paper, marked “sensitive” and written by Bill Williamson,

the director of customs at HM Revenue & Customs, and Alex Pienaar, customs’ head of EU issues, says: “The UK would face a

full regime of customs controls when importing and exporting goods between the UK and EU.”

It warns that bureaucracy and delays “can increase transaction costs by an estimated 2% to 24% of the value of traded goods”.

The situation would be particularly onerous for those exporting food and other agricultural products into the EU with delays of

up to a week for meat tested at official laboratories.

The leaked document emerged as a coalition of leading trade bodies issued a joint statement to four cabinet ministers urging

them to secure a soft Brexit with preferential access to EU markets in order to secure the food supply chain.

The British Retail Consortium, the National Farmers’ Union of England and Wales and the Food and Drink Federation

demanded “frictionless trade in goods between the UK and the EU, avoiding costly and disruptive customs checks, processes

and procedures”.

However, a public desire to get on with Brexit negotiations will be fuelled by new figures which reveal that Britain has handed

over more than half a trillion pounds to the EU since joining what was then the European Economic Community in 1973.

Figures collated by the House of Commons library for the pressure group Leave Means Leave show that the total gross sum of UK contributions to the European budget since 1973 is £502bn. After taking into account rebate, refunds and public

sector receipts, the total British net contribution stands at £184bn in today’s money.


Scheming bosses force Greeks to hand back wages



Anthee Carassava, Athens

March 24 2017,  The Times

Union bosses have labelled the ATM raiding practise “mafia-style tactics”


Thousands of Greek workers are being escorted to cash machines every month to return up to a third of their pay to

employers who have lost out during the government’s crackdown on tax evasion.

The practice first surfaced in December when a government decree forced local companies to pay all employees’ salaries via

bank transfer, a move designed to tackle widespread tax evasion and undeclared labour in the country.

However, companies faced with increased taxes and social security contributions, have resorted to claiming cash back

from workers after it has been paid. The technique has quickly spread across the country.

The claim, made by the General Confederation of Greek Workers (GSEE), Greece’s largest umbrella trade union, comes

after the unemployment rate climbed to 29.2 per cent at the end of last year. More than 1.2 million Greeks have found

themselves out of work as international creditors insist on new austerity measures.

The union, which represents about 1.8 million private sector employees, calls the practice “mafia-style tactics”. It claims that

private security guards have been paid to escort employees to cash dispensers, forcing them to withdraw as much as a third of

their monthly minimum pay of €600. 

“It’s part of a dodgy, under-the-table transaction that employees have agreed to for the sake of securing a job,” Dimitris

Kalogeropoulos, secretary of the GSEE, said.

In many cases, though, employees are caught by surprise. One worker, a middle-aged man who declined to divulge his name

for fear of reprisals, said: “Around the first pay day, the company told us that we would all go to the bank. A man then

emerged to accompany us to the cash dispenser . . . and once there, he told me in broken Greek to hand over €150 from the

€600 of my deposited pay. The practice hasn’t stopped. It has been going on for three months now. And every time, I feel like I

am being robbed. There must be something that can happen.” Mr Kalogeropoulos told The Times: “We have had hundreds of

complaints, from across the country. They are increasing at an exponential rate.”

Other illegal labour practices include companies paying employees in kind for overtime, mainly in the form of shopping

coupons for supermarkets. Greek labour laws require companies to pay employees their entire pay in euros.

Despite mounting complaints, no oᲿ�cial investigation has been ordered into the labour practices. Neither have companies been

publicly named for using such illegal practices. Instead, labour experts and the GSEE revealed that thousands of complaints

documented in recent months have involved companies in telecommunications, security and cleaning operating across the


“Such practices help companies to avoid social contributions, but the burden for the economy is huge,” said Panos Tsakloglou,

a professor at Athens University of Economics and Business. The black market in Greece accounts for as much as a quarter of

the country’s economy. 

Demostenes Floros: Stable Quotes
In February, oil hovered firmly around $55/ barrel with both OPEC and non-OPEC countries moving forward with their production cuts despite Libya and Nigeria, exempt from the agreement, increasing their local extraction level

 In February, oil prices were steady at around $55/b because, both OPEC, and non-OPEC countries have been carrying on their reduction programme in full compliance, despite the fact that Libya and Nigeria, which are exempt from cuts, have increased their extractions. Precisely, according to the International Energy Agency, the oil producers linked to the 2016 November agreement cut 1.04 million barrels out of 1.16 million barrels promised.

From a geopolitical point of view, it is interesting to put into light that the OPEC countries, which indirectly fought the war in Syria and lost it, such as Saudi Arabia and Qatar, have slashed their output more than they had to do. Among the non-OPEC producers that won that war, the Russian Federation has been respecting its cut plan in full compliance too.
In February, Brent Crude North Sea opened at $56.57/b and closed at $56.53/b, while West Texas Intermediate opened at $53.62/b and closed at $54.41/b. Both qualities reached their minimum on Feruary 7th respectivelly, pricing $54.69/b and $52.39/b. Similar to the previous month, these oil prices lowest are related to the hedge funds that, after having amassed net-long speculative positions equivalent to 885 million barrels on January 31st, increasing the long-short ratio at 9:1, started to cash their revenues.
Moreover, during the third week of February, the net long speculative positions rised to 951 million barrels with the long-short ratio reaching 10.3:1, but prices did not decreased as at the beginning of the month when the same bets decreased by 6.4% during the last week of February. Taking into account that we cannot exclude the possibility that finance might spark a temporary and light downturn in prices, how can this trend be explained?
On one side, this means that – for now – there is enough liquidity for investors to speculate in paper barrels. However, on the other side, the excess in oil supply has been slowly ending, even though the oil stock amount is still high.
According to the Oil Market Report, inventories at the end of December were below 3 billion barrels for the first time since December 2015 but, based on EIA data, the amount of U.S. oil stocks reached the maximun of 518 million barrel the week ending on February 10th.
Actually, the inventories level is not the real problem as pointed out by Richard Gorry of JBC Energy Asia who said that those hoping for higher oil prices on the deal were misguided from the start. "I don’t think that [OPEC’s] goal was to push the oil price up to $70 or something in that range. They were really trying to protect the oil price on the downside…I think they knew that the market wouldn’t be rebalanced, but they were making sure that the producers were protected on the downside", Gory said on CNBC. "Don’t expect $70 oil because that was not the objective".
At the time of writing (on March 7th), the European and Asian benchmark was quoting at $56.57/b, while the American reference was trading at $53.73/b.
With regard to currencies, the Russian ruble continues its upward surge, trading at 57.1 rubles/$ on February 16th for the first time since July 2015 despite the fact that the Central Bank of Russia has been purchasing dollars to replenish reserves. However, the Institute announced in February its "capability to cut its key rate [10 percent per annum] in the first half of 2017 has diminished." In December 2016, we wrote that according to, "Russia gold buying accelerated in October with the Russian Central Bank buying a very large 48 metric tonnes. This is the largest addition of gold to the Russian monetary reserves since 1998." In January 2017, Russia carried on this policy. Based on finance commentator Jim Rickards, "the smartest central banker in the world just bought another 28 metric tonnes of gold." If a new debt crisis sparks, involving the dollar too, gold might be the insurance of the international monetary system.


Latest data and estimates on oil & gas


According to the data published by the Oil Market Report on February 10th, global oil supply decreased by 1.5 million b/d in January 2017, reaching 96.4 million b/d – 730 thousand b/d less than a year ago – because of the OPEC & non-OPEC agreement. In particular, OPEC output dropped by 1.04 million b/d to 32.06 million b/d in compliance of approximately 90% with the November agreement.
In 2016, OPEC crude extractions rose by 0.97 million b/d from 31.65 million b/d in 2015 to 32.62 million b/d, while non-OPEC oil output fell by 0.86 million b/d, from 58.45 million b/d to 57.59 million b/d.
Moreover, the Report put into light that the international oil demand is forecast to grow by 1.6 million b/d in 2016 and 1.4 million b/d in 2017. Based on the figures published by the Energy Information Administration on February 13th, the American unconventional output is expected to increase by 80 thousand b/d in March 2017 to 4.873 million b/d. The U.S. crude production, after the peak of 9.7 million b/d in April 2015, decreased to its lowest of 8.428 million b/d on July 1st 2016. It then started increasing to 9.032 million b/d, which was reached on February 24th 2017. In fact, according to the data provided by Baker Hughes, the total current number of U.S. rigs – 754 of which, 602 (79.8%) of oil rigs and 151 (20%) of gas rigs, plus 1 miscellaneous on February 24th – have been carrying on to rise again thanks to the increase in oil prices. IEA expects that the US tight oil will increase by 175 thousand b/d in the current year, bringing its December 2017 production 520 b/d thousand higher y-o-y. As pointed out in our previous monthly report, the U.S. frackers may face two kinds of problems with regard to the tight oil output. The first has to do with the increasing in cost extractions estimated by the Wall Street Journal at around 10/20% since the beginning of the present winter. The second is related to the yield trend gap between energy bonds and U.S 10-year Treasury Bonds that has been narrowing. While it is too early to understand the sustainability of the costs because they are directly linked to the relation between the future barrel price trend with the productivity of each well, a further reduction of the yield trend gap is possible because a rate hike "is on the table for serious consideration" at the FED’s March meeting. In December 2016, the U.S. crude oil imports stood at 7.860 million b/d. The American average crude oil imports was 7.877 million b/d during 2016, on the rise if compared with the 7.344 million b/d imported in 2014 and 7.363 million b/d in 2015. This data has to be compared with the U.S. oil exports trend, which reached the record high of 1.2 million b/d during the last week of February.

 Geopolitics of Natural Gas

 On December 5th, during a working meeting in the presence of Alexey Miller, Chairman of the Gazprom Management Committee, and Claudio Descalzi, Chief Executive Officer of ENI, held in St. Petersburg, the parties examined the possible infrastructure solutions for supplying Russian gas to Europe, particularly to Italy, via a southern route.

According to SNAM, in 2016 the Italian natural gas consumptions reached 68.8 Gmc3 (calorific power equal to 39 MJ/mc), increasing by 3.4 Gmc3 in comparison with 2015 (+5.2%). As pointed out by, this data strengthened the positive recovery reported the previous year, but it is still far from the 2008 levels, before crisis (-13.8 Gmc3, -16.7%). In particular, the thermoelectric sector consumed 22.7 Gmc3, registering the highest increase y-o-y (+2.5 Gmc3, +12.1%), while the residential consumption trend was stable, using 30.8 Gmc3 (+0.1 Gmc3, +0.4%). Lastly, the industrial sector consumed 13.1 Gmc3, on the rise in comparison with 2015 (+0.6 Gmc3, +4.9%), but lower than the 2008 consumption levels of 14.2 Gmc3 (-1.2 Gmc3, -8.1%), pointing out that the country has not overcome its economic crisis yet. On February 16th, during the 5thRussian-Italian Seminar that took place in Milan, Sergey Komlev, Head of Contract Structuring and Price Formation Directorate Gazprom Export, analysed the Russia-Italy relationship in natural gas, pointing out the following issues:

-The Russian Federation is the major supplier of natural gas to Italy with a share estimated in 2016 at approximately 38% in terms of imports, which more than doubled since 2010.
-Other major suppliers of Italy are respectively, Algeria, Norway, Netherlands and LNG producers.
-Italy is the third largest buyer of Russian gas and the second in the European Union.
-From 2010, Gazprom’s export to Italy has been growing by 14.1% CAGR (annual average rate of growth) in volume terms.
-A comparison between suppliers with different gas prices, shows that Russian price is in the low-range of the Italian import prices.

On February 7th, the Russian President, Vladimir Putin, ratified the agreement with Ankara for the realization of the Turkish Stream project.

On February the 20, South Stream Transport B.V. and Allseas Group signed, in Amsterdam, a contract to build the second string of the gas pipeline’s offshore section, which will deliver gas to southern and southeastern Europe. Through which infrastructures? Poseidon pipeline is one of the options (connecting Turkish Stream) to European consumers after the Memorandum of Understanding reached by Gazprom, DEPA and Edison on February 16th 2016.

However, it seems that there is a second option for the Russian gas. In fact, Gazprom has declared for the first time that it may be interested in using the Trans-Adriatic Pipeline as a way of delivering Russian gas to Italy:

"In order to bring this gas to Europe we need additional infrastructure, which we are working on with our European partners – Nord Stream 2 and Turkish Stream. This capacity will not be sufficient to bring all this to Europe. So this is why we are talking to use available capacity on the Poseidon project that will be ready soon, or maybe TAP," said Alexander Medvedev, addressing the European Gas Conference in Vienna on January 24th.

With the injection of the Russian gas into TAP, Southern Europe will overcome the crucial issue related with the Azeri gas that is "the real sufficient output capacity [Saha Deniz II gas field] linked to the infrastructure [TAP]" as has pointed out by the Italian Political Observatory since 2013. According to Enerdata scenarios, natural gas consumption may even increase under favourable conditions including low prices and technological improvements. Thus, natural gas may retain its role as economically sound and reliable energy source and Russia will provide no less than one third of the Italian natural gas imports by 2030. To conclude, the data emphasize the tight and increasing relationship between the Russian Federation and Italy in the gas sector, also giving to the latter the possibility to play a stronger key role inside the Mediterranean.


Tillerson defends White House proposal to cut State budget

Author Laura Rozen 

WASHINGTON — Secretary of State Rex Tillerson, speaking March 16 in Japan in one of his first press availabilities since becoming America’s top diplomat, offered support for a Trump administration proposal to slash the State Department’s budget by almost 30%.

The White House proposal to cut the core State Department and US Agency for International Development (USAID) budget from $36.7 billion in 2017 to $25.6 billion in fiscal year 2018 reflects the Trump administration’s expectation that the United States will be involved in fewer military conflicts overseas and that other countries will be contributing more for foreign assistance, Tillerson said.

“I think clearly, the level of spending that the State Department has been undertaking in the past — and particularly in this past year — is simply not sustainable,” Tillerson told journalists at a press availability with Japanese Foreign Minister Fumio Kishida in Tokyo on March 16.

“So on a go-forward basis, what the president is asking the State Department to do is … reflective of a couple of expectations. One is that as time goes by, there will be fewer military conflicts that the US will be directly engaged in,” Tillerson said. “And second, that as we become more effective in our aid programs, that we will also be attracting resources from other countries, allies, and other sources as well to contribute in our development aid and our disaster assistance.”

Tillerson, the former chairman of ExxonMobil, expressed confidence that US diplomats could do more with less. “I’m confident that with the input of the men and women of the State Department, we are going to construct a way forward that allows us to be much more effective, much more efficient and be able to do a lot with fewer dollars,” he said.

But Tillerson’s trip to Asia — his first as secretary and one focused on the threat posed by North Korea’s nuclear and ballistic missile program — reflects the stark challenges confronting US foreign policy and a world in which the threat of conflict does not look to be quickly receding.

Tillerson is also conducting shoestring diplomacy notably short-staffed, with no nominations to date from the White House for his deputy secretary of state, undersecretaries of state or any assistant secretary of state.

Those nominations have not been forthcoming since the White House rejected Tillerson’s pick of Elliot Abrams to be his deputy secretary of state early last month. The White House this week similarly rejected Secretary of Defense Jim Mattis’ pick of veteran diplomat Anne Patterson, a former US ambassador to Egypt and Pakistan, to be his undersecretary of defense for policy, the No. 3 job at the Pentagon. Patterson was reportedly perceived by some in the Trump White House to have been associated with the policy of trying to work with Egyptian President Mohammed Morsi — an Islamist who was deposed in 2013 after being elected in 2012 — when she was ambassador in Cairo. (The Trump White House had initially mulled designating the Muslim Brotherhood — of which Morsi was a member — as a terrorist group, though that idea appears to have been shelved for now.)

But the stalemate over senior appointments between the White House and Cabinet chiefs appeared to break March 16, at least for the Pentagon. The White House announced nominations of a half dozen senior Pentagon posts, including Patrick M. Shanahan to be deputy secretary of defense; David Joel Trachtenberg to be principal deputy undersecretary of defense for policy; David L. Norquist to be undersecretary of defense, comptroller; and Kenneth P. Rapuano to be assistant secretary of defense, homeland defense and global security.

The Pentagon spokesman made clear Mattis had recommended those nominated for their posts.

"These are all highly qualified individuals who were personally recommended by Secretary Mattis to the president for nomination,” Pentagon Spokesman Capt. Jeff Davis said in a statement March 16.

New National Security Adviser H.R. McMaster also seemed to be winning his battle for choosing his team with the announcement March 16 that Dina Powell, a well-regarded former Bush administration official and Goldman Sachs alum, would serve as deputy national security adviser for strategy. McMaster also reportedly asked Nadia Schadlow to join his staff as a deputy assistant to the president for national security strategy.

The situation may similarly soon resolve at the State Department, but word of mouth from former diplomats is there is a surprising lack of names circulating for top appointments.

“I haven't heard any names circulating,” former US Ambassador to Yemen and former Principal Deputy Assistant Secretary of State for Near East Policy Gerald Feierstein told Al-Monitor. 

Feierstein, now a senior fellow at the Middle East Institute, wondered, “Have we considered the possibility that the Trump [White House] doesn't want anyone in confirmed positions answerable to Congress?” Feierstein also said, “I understand that they've got people in place at State, DoD [Department of Defense] and elsewhere in unconfirmed positions where they never have to expose themselves to any oversight, answer questions or do anything except the White House bidding. It seems to me that we've yet to see any real interest on the part of the White House to actually start filling Senate-confirmed positions.” 

He said, “In the meantime, they're nominating ambassadors, which should be a much lower priority than staffing the department.” Trump has reportedly tapped former US Ambassador to China Jon Huntsman to be US ambassador to Russia, and Richard Grenell, the former spokesman for the US ambassador to the UN, to be US ambassador to NATO.

Another former senior State Department official said his impression was that Trump was not inclined to intervene to break the stalemate between Cabinet chiefs and White House office of personnel officials over their picks.

“My theory is not that they don’t want people in the jobs,” a former Obama State Department political appointee, speaking not for attribution, told Al-Monitor. “I think that fundamentally what we are looking at is, Trump told his Cabinet chiefs, you can pick your own team. … And then the White House folks kill everything. And Trump is not making a decision.”

“He is making a decision by not making a decision,” the former Obama political appointee continued. “He won’t break ties. He won’t engage, negotiate, to get some kind of agreement. … The end result is this … stalemate.”

The slowness of appointments, particularly at the State Department, may also reflect a desire to “starve the system,” the former State Department official said. So the Trump administration, suspicious of career diplomats, may be thinking, “We hate the State Department, and pick ambassadors who will report directly to the White House,” he said.

Currently, in the State Department's Near East bureau, Stuart Jones is serving as acting assistant secretary; Larry Schwartz, acting principal deputy assistant secretary and deputy assistant secretary for press and public diplomacy; Richard Albright, deputy assistant secretary for assistance coordination; Chris Backemeyer, deputy assistant secretary for Iran; John Desrocher, deputy assistant secretary for Egypt and the Maghreb; Timothy Lenderking, deputy assistant secretary for the Arabian Peninsula; Joseph Pennington, deputy assistant secretary for Iraq; and Michael Ratney, deputy assistant secretary for the Levant and Israel and Palestinian Authority, a State Department official told Al-Monitor. Ratney is also dual hatted as the US envoy on Syria.

Then again, the Trump White House’s appreciation for the State Department, and the expensive conflicts US diplomats try to help avoid, could grow over time.

While the Trump/Tillerson State Department has generally decided to have fewer “special envoy” positions, the Trump White House’s special representative for international negotiations, Jason Greenblatt, has been conducting a trip to Israel, the West Bank and Jordan this week, meeting with Israeli, Palestinian and Jordanian officials and citizens to try to formulate a US policy to advance Israeli-Palestinian peace. Greenblatt, who has been documenting his Mideast trip with interesting photos and postings on Twitter, made a point of thanking the State Department, the US Embassy in Tel Aviv, the US Consulate in Jerusalem and the US Embassy in Jordan as he wrapped up his visit March 16.

“Thank you @StateDept @usembassyta @USCGJerusalem @USEmbassyJordan & #NSC for your help in coordinating my extremely positive trip this week,” Greenblatt posted on Twitter on March 16.

Eliot Engel, the ranking Democrat on the House Foreign Affairs Committee, said he had made a similar point to Tillerson when they spoke by phone last week and Engel voiced his objections to the administration's proposal to cut the State Department budget. Diplomacy can be a lot cheaper than war's cost in blood and treasure.

“The world can be a dangerous place,” Engel said in testimony at a House Appropriations Subcommittee on State, Foreign Operations and Related Agencies meeting March 16. “The men and women who wear our uniform put their lives on the line to protect our country. So we owe it to them to exhaust every possible option before we send them into harm’s way.”

Sen. Bob Corker, R-Tenn., the chairman of the Senate Foreign Relations Committee and an ally of both Trump and Tillerson, also expressed mild skepticism about the proposed steep cuts in the US diplomatic budget.

"I believe we can strike an appropriate balance that recognizes the critical role of diplomacy in keeping our military out of harm’s way and appropriately advancing our nation’s interests while ensuring taxpayer dollars are used in the most efficient and effective manner," Corker said in a statement March 16. 

Read more:

IMF under pressure in Washington over Greek bailout


Conservatives in US Congress say Europeans should solve the crisis on their own

Conservatives in Congress are pushing Donald Trump to block the International Monetary Fund

from participating in a European ­led bailout of Greece, as his administration signalled it would take a tougher line with

global institutions.

In what was labelled an “America First” budget revealed on Thursday, the president proposed a $650m cut in US funding

over the next three years for multilateral development banks including the World Bank. He also

this week nominated two conservative economists with a history of criticising the IMF and the

Bank for the two top international posts at the US Treasury.

Those two moves came as Steven Mnuchin, Mr Trump’s treasury secretary, travelled to Germany

to meet his G20 counterparts. They also signal that Mr Trump, who railed against “globalists”

throughout his run for president, is likely to deliver on campaign pledges to take a fundamentally

different approach towards international organisations and the global economy.

But conservative Republicans in Congress are eager for him to go a step further. They want him

to assert US power over such bodies by taking a hard line and opposing further IMF involvement

in Greece, which is sliding towards another crisis this summer unless its European creditors

agree to cover billions more in debt payments.

A bill  introduced on Thursday by Bill Huizenga, a Michigan conservative who was first elected to Congress with Tea

party backing in 2011, calls for the Trump administration to oppose any further IMF

participation in a Greek bailout. Should the US fail to achieve that aim, the bill would also require

the US to oppose any broader IMF quota reforms until Greece had repaid all of its debts to the


“The IMF is supposed to be a lender of last resort, not a fig leaf of first resort for Eurozone

members,” Mr Huizenga said.

Such a step would complicate even further an already sensitive situation regarding Greece, which

has been dependent on financial help from fellow Eurozone members and the IMF since 2010.

Germany, which faces national elections later this year,

and other eurozone countries facing potential populist

revolts are eager for the IMF to begin contributing

financially and provide them political cover. But the

Fund has been taking a hard line. It is refusing to do so

unless the government in Athens delivers on further

reforms and, crucially, European creditors agree to

further debt relief for Greece, whose debts the IMF now

calls “unsustainable”.

Mr Huizenga, who has been a vocal critic of the IMF’s

involvement in Greece for years, said the IMF was being

used a political tool by its European members at the cost

of its own credibility.

“The IMF isn’t a fund to rescue political parties in

creditor nations, nor should it be a junior partner to

outside organisations that lack the commitment to do

their work,” he said. “For seven years now, the IMF has been used to shield eurozone officials

from their voters, which has tarnished the Fund’s reputation, prolonged Greece’s misery, and put

off hard choices about Europe's future that must be made regardless.”

The IMF has sent staff back to Athens to negotiate with the government alongside European

creditors. But it has also been taking a hard line in discussions in recent weeks and refused to

commit any financial resources in what some analysts see as a reflection of the influence of the

new US administration.

Just how the new administration will approach the Greek crisis remains unclear as it has said

little about it. But in an interview with the Wall Street Journal last month Mr Mnuchin called

Greece “primarily a European issue” in what many interpreted as a sign that he would take less

interest than his predecessor.

Robert Kahn, a former IMF and US Treasury official now at the Council on Foreign Relations,

said it was clear that the US was backing the IMF’s tough line on the Greece negotiations and

ready to see the Fund pull out if necessary.

“For the US government in particular, this represents a sharp break from the Barack Obama

administration, which pushed for continued IMF involvement,” he wrote in a blog post.

“It is unclear at this point whether the change reflects the views of the [Trump] administration,

but I would not be surprised if, once the new team is fully in place, the US takes a tougher stance

against large but weak IMF programs. If the IMF is serious in its new firm line on Greece, it may

find a strong ally in the Trump administration.”

Azerbaijan: Ties with Pakistan Focusing on Arms and Energy
Injecting Russian Gas Into TAP: Downgrading Importance of Southern Gas Corridor
you're reading...

1l-Tap route.jpgFor the first time ever, Gazprom officially expressed interest in using the Trans-Adriatic Pipeline (TAP) to deliver Russian gas to Europe (Trend, January 24). During the European Gas Conference in Vienna, on January 24, Gazprom deputy CEO Alexander Medvedev said that Russia’s upstream capacity is sufficient to export more than 100 billion cubic meters (bcm) per year of extra gas to Europe, but it faces an infrastructure problem. Since planned capacities of Nord Stream 2 and Turkish Stream will not be large enough to deliver all this to Europe, the company is discussing the possibility of using capacity in the Poseidon pipeline or TAP, Medvedev stated (Natural Gas World, January 24). TAP initially envisages transporting 10 bcm per year of Azerbaijani gas, pumped from the offshore Shah Deniz field, to Europe through Greece, Albania and the Adriatic Sea to Italy.

Commenting on Medvedev’s statement, Lisa Givert, the head of communications for the TAP consortium, said that TAP’s commitment to transporting Shah Deniz II gas was underpinned by a 25-year-long gas transportation agreement. The pipeline was designed with the option to expand capacity to 20 bcm per year, when extra gas volumes come on stream with the construction of additional compressor stations along the route. Moreover, in line with the consortium’s regulatory obligations, the pipeline can offer its expanded capacity to third parties based on an “open season.” According to Spain’s Enagas (a TAP shareholder), if any third-party gas-shipper requests transportation capacity in TAP during the “open season” and complies with the regulatory framework, TAP can provide capacity to it. Italy’s Snam (another TAP shareholder) said that “Gazprom’s joining TAP will double its capacity. TAP’s capacity can be increased up to 20 bcm with a small investment, which will be cheaper than [rival pipeline] Poseidon’s expansion” (Natural Gas World, January 26;, January 25; Trend, January 2526February 2).

Gulmira Rzayeva, a principal research fellow at the Baku-based Center for Strategic Studies, commented that it would be technically possible for Gazprom to pump Russian natural gas through the planned Turkish Stream pipeline and connect to TAP on the Turkish-Greek border. This route would then allow Gazprom to transport its gas to Greece and other southern European markets while bypassing the transit route across Ukraine. When the capacity of the pipeline is increased from 10 bcm to 20 bcm per annum, any company wishing to transport its gas through TAP (whether Gazprom or another company) can book certain volumes in the pipeline via an “open season” formula, according to European legislation, argued Rzayeva (, January 25). According to Agnia Grigas, a non-resident senior fellow at the Atlantic Council, in Washington, DC, Russia’s desire to use TAP contradicts the original purpose of the project, which is to diversify sources of Europe’s natural gas away from Russia. “There were hopes that TAP would be filled not only with Azerbaijani gas, but also with Turkmen gas in the future. Moscow seeks to be the one that fills TAP’s capacity,” Grigas argued (Trend, January 31).

Theoretically, if Russia were to pump natural gas to the Turkish-Greek border via the proposed Turkish Stream pipeline, and from there, deliver this gas to European markets via TAP, such an arrangement would not breach the European Union’s Third Energy package rules. The EU Commission’s regulation explicitly mandates that 50 percent of TAP’s total/final capacity be open for third party access (TPA) after expanding the pipeline. When TAP’s capacity is doubled to 20 bcm per year, Russia, in accordance with this EU regulation, could, therefore, request that the TAP Consortium construct additional entry/exit points for compressors in Greece. Gazprom could then reserve space in the pipeline by requesting TPA to transport its gas via TAP (, January 10). Moreover, in 2016, BP signed a Memorandum of Understanding (MoU) with Rosneft to purchase of 7–20 bcm per year of Russian gas. The volume is more/less equal to potential Azerbaijani gas supplies (10–20 bcm annually) to Europe as of 2020, within the Shah Deniz Project, in which BP is the development operator (, January 26).

However, the Shah Deniz Consortium has already secured 100 percent of TAP’s initial capacity of 10 bcm per year for Azerbaijani gas with a 25-year contract and with a TPA exemption from the EU for the first stage of gas delivery. This means that Russian gas cannot be transported via TAP for at least the next 25 years, unless there are either significant market or geopolitical changes, or sufficient gas demand/shortage to drive expansion up. The Shah Deniz Consortium’s long-term contracts, together with the relevant EU legislations, make this option unlikely, however. Moreover, TAP’s expansion would enable Gazprom to deliver a maximum of 10 bcm per year through the pipeline, while Turkish Stream’s planned second string is designed to pump 15.75 bcm annually (, January 10).

Russian gas flow through TAP would be a strong blow to the United States’ political investments in the Southern Gas Corridor (SGC), which is supposed to lessen Europe’s gas dependence on Moscow. Amos Hochstein, the US special envoy for energy affairs, recently reiterated Washington’s full support for the SGC’s successful implementation, despite the political changes in Europe and the US. The “SGC is important not only for Azerbaijan, but also critical for energy and political security of Europe” as a means to overcome the threat of energy monopolies on the continent, said Hochstein (Trend, December 15, 2016). And at the 2017 Athens Energy Forum, US Ambassador Geoffrey Pyatt stated that it was necessary to protect “[SGC-related] projects against other proposed schemes which threaten the future of Europe’s energy security” and those that “would exacerbate European dependency on Russian gas” (, February 1).

Russia’s decision to benefit from TAP means perspectives for the Interconnector Turkey–Greece–Italy (ITGI)/Poseidon, which was previously planned as an extension of Turkish Stream, is still under question, and other options seem unlikely to succeed (see EDM, August 2, 2016). However, the injection of Russian gas into TAP could create a rivalry between Russian and Azerbaijani gas in terms of volume and market share. Given the possible expansion of both TAP (from 10 to 20 bcm per year) and the SGC link Trans-Anatolian Pipeline (TANAP—from 16 to 23/31 bcm annually), Russian gas could block the perspective for additional volumes from Azerbaijan’s expected gas fields (including alternative sources from Turkmenistan, Iran, Iraq or the Mediterranean). With its current gas potential, Russian Gazprom would be in a position to be the first to supply additional gas TAP once it expands its capacity. Such an outcome would downgrade the importance of the SGC in the context of the EU’s energy diversification plans.

Ilgar Gurbanov

The article was originally published by the EDM, The Jamestown Foundation: Injecting Russian Gas Into TAP: Downgrading Importance of Southern Gas Corridor

The EU May Bend to Keep From Breaking
 MARCH 8, 2017  

The European Commission is taking a clear-eyed look at Europe's future. On March 1, the institution presented a report proposing five different visions for what the European Union might look like in 2025. The report will doubtless take center stage at the EU summit in Brussels on Thursday and Friday between discussions of such issues as migration, security, defense and the economy. Along with suggesting that member states could integrate at different speeds, the white paper raises the possibility that EU member countries may regain control of some prerogatives currently under Brussels' authority.

This idea represents a marked departure for EU leaders. Since the bloc's inception six decades ago, its goal has always been to progressively delegate national policy decisions to supranational authorities. Every institutional reform since the 1950s has furthered this goal, giving Brussels more responsibilities. Though EU officials have said they oppose weakening the supranational institutions, the white paper nonetheless speaks volumes about how things have changed in Europe.

However unusual the report may seem, Europe has already tried many of the ideas outlined in it. Integration in the Continental bloc, for instance, has been moving at multiple speeds for decades. Some members use the euro as their currency, while others don't. Some are members of the Schengen Agreement allowing passport-free movement, while others aren't. And some countries are exempted from participating in EU structures on domestic affairs and security cooperation. But prior to the white paper's publication, the bloc's central expectation was that all EU members would converge one day, if only in the distant future.

The change in tone suggests that the European Union has now formally accepted that the convergence may never happen. Just a year ago, former British Prime Minister David Cameron said in negotiations with Brussels that he wanted the United Kingdom to be excluded from its goal of an "ever closer union." In the wake of the Brexit referendum, EU leaders seem to be admitting that the principle may be unrealistic. The European Union has often faced accusations that it is inflexible and hasn't adapted to the changing social, political and economic environment. The white paper is an attempt at pragmatism. It could even mark the start of the bloc's first concerted effort to manage — rather than deny — its fragmentation. Doing so, however, will be no easy feat.

Reactions to the European Commission's proposals have been mixed. Countries with large economies in the eurozone's core, including Germany, France and Italy, expressed support for a "multispeed Europe" in which some members can move ahead with deeper integration even if others opt out. Countries in Central and Eastern Europe, on the other hand, warned against the danger of separating the European Union's core from its periphery. These states will have difficult choices to make going forward. Countries such as Poland and Hungary, for all their criticism, still see the European Union as a vital source of funding and protection. And although they have faulted the European Union and demanded that Brussels return decision-making power to national legislatures, they are troubled by the idea that the EU core could increase integration without them. The possibility that Germany or France could coordinate their policies toward Russia, for instance, without consulting the rest of the bloc is particularly disconcerting for former East bloc countries such as Poland or Romania.

The European Union's core members have their own concerns about a two-speed Europe, despite their emphatic support for the model. Forging agreements for deeper integration would likely be easier said than done for Germany, France and Italy. The process of EU integration has already come so far that the next step would entail giving up sovereignty on delicate issues. To turn the eurozone from a simple currency union into a fiscal union, for example, Berlin, Paris and Rome would have to reconcile their divergent views on inflation, fiscal policy and the role of the European Central Bank. And matters such as the banking union or the issuance of debt backed by the entire eurozone are as controversial as ever in Northern Europe.

Over the past decade, events outside the bloc — such as the international financial crisis and the immigration crisis — have exposed the European Union's internal shortcomings. The rise of nationalist and Euroskeptic sentiments across the Continent, meanwhile, have forced EU members and institutions to come to grips with the fact that the dream of a federal Europe may never come true. Even countries such as Germany, which see EU integration as a centerpiece of their foreign policy, seem to have accepted that the bloc will have to bend to keep from breaking. The idea of protecting the European Union by making it more flexible appears to be a reasonable choice under the current circumstances. Depending on the kinds of reform that the bloc's members decide to introduce, however, amending the European Union's governing treaties may be required. And considering the divisions among the bloc's regions — and especially between Northern and Southern European countries — adjusting the treaties seems out of the question. Consequently, EU members may have no choice but to temper their expectations and focus on changing the bloc within the confines of its existing institutional framework. After all, just because EU members can move at different speeds doesn't necessarily mean they'll move in the same direction.

Financial Times: Guaranteeing the rights of EU citizens in Britain The Lords are correct to demand immediate protection for European expats


FT View

Ever since Theresa May started leading Britain down the road to Brexit, she has wanted to

do so at speed, and without the slightest detour. Britain’s House of Lords has put up an

obstacle in her path, by voting overwhelmingly to amend the Article 50 bill which enables the prime minister to

set EU divorce proceedings in motion. The amendment, which now passes back to the

House of Commons, immediately and unilaterally guarantees the residency rights of EU

citizens already living in the UK.

Understandably, Mrs May and her government would prefer to see the EU reciprocate by

simultaneously guaranteeing the rights of the 1.5m Britons living in Europe. Indeed, other

EU states would do well to offer guarantees before the talks.

Even if this is impossible, however, the prime minister should not turn EU nationals in the

UK into bargaining chips. There are three reasons why this poses a problem.

The first is moral. The 3.2m EU nationals in Britain built lives in the country in good faith when the free movement of

people applied. Failure to honour that good faith, after the UK took a unilateral decision to

leave the EU, would be regrettable.

The second reason is economic. The UK is — and will remain — more dependent on its

ability to attract and retain high­ quality European workers than vice versa (this is true in

part because the remaining EU states will retain access to each other’s labour supplies).

It is important that UK ­based employers in areas like construction, farming and hospitality

know they will be able to retain employees who play a vital role that is not easily or quickly

replicated by UK citizens. David Davis, the Brexit secretary, agrees on this point. Evidence

suggests that thousands of EU nationals working in the National Health Service are already

considering leaving as a result of uncertainty. The onus is on the UK to convince talented

foreigners — and not just those from the EU — that they should commit themselves to

living and working in the country. Making the choice easier for EU citizens already here is a

good way to start.

The third factor is diplomacy. The government faces a gruelling negotiation with the EU, in

which the cards are stacked heavily against the UK. There is more to be gained by taking

this vexed issue off the table, and restoring some of the goodwill destroyed by intemperate

statements directed at Brussels, than by using EU residents in the UK as leverage.

The government will nevertheless push the Commons to override the Lords amendment,

arguing that a “one­ sided guarantee” would remove any urgency in resolving the status of

British citizens living in the EU.

If the opposition is unable to rally enough Tory rebels to win the day in the Commons, then

the matter will unfortunately have to be dropped. Given that there has been a referendum,

and given that the bill was passed without amendments by the elected Commons, any

attempts at further stalling by the Lords would raise questions about their democratic

legitimacy. It might also damage the chances of an arguably more important amendment

that is up for debate next week: ensuring that parliament will have a meaningful vote on the

final Brexit deal.

The Lords have nonetheless acted with wisdom. They do not have the authority of an elected house. But

they are conducting the debate on Article 50 with dignity and a searching examination of

the issues. Mrs May is likely to win this battle. But the Lords were right to make the

Commons think again.

GREXIT ALERT: Government warns Greece's instability could hit BRITISH businesses


THE British Government is warning that eight years of recession in Greece, along with growing public debt and fears of a Grexit could hit UK businesses.

The country is struggling under a mountain of public debt that sits at 180 per cent of GDP, according to UK officials.

Greek politicians have warned that the country could be set to default once again on loans it owes to Euro area governments, the European Central Bank (ECB), the European Stability Mechanism and the International Monetary Fund.

Now after deposit holders made substantial draw downs of £2.1billion of their cash deposits in the first 45 days of the year, the country's unemployment rate of an average of 23.4 per cent in 2016 is lending to the crisis.

Trump EU ambassador candidate: Strong reason for Grexit Greece bracing for 'rupture'

as politicians plot £74bn Grexit plan withdraw £2.1bn from banks in 45 DAYS

As a result of the temporary capital controls introduced by Greece, it is possible that you may experience delays in receiving payments

A new Government report which looks at Greece's debt says the banking system is "fragile" and

highlights the political uncertainty as prime minister Alexis Tsipras faces new backlashes from the


And it is warning businesses to be careful of trading as the country continues to struggle with its crisis.

The report reads: "As a result of the temporary capital controls introduced by Greece, it is possible that

you may experience delays in receiving payments originating from Greece.

There is major trouble in Greece

"Greek companies may experience problems making payments and deliveries.

"The main impacts you may experience relate to contracts and the transfer of money (cash flow)".

The Foreign and Commonwealth office is warning that the British tourists should be careful as protests over the administration continue in the streets.

It has also warned that grenade attacks as well as incidents involving "explosives and automatic weapons against Greek institutions, shopping malls, media interests, diplomatic targets and the police" have been occurring.

The business risk report says: "Greece’s banking sector remains fragile, they currently depend on the ECB’s Emergency Liquidity Assistance mechanism to provide liquidity.

"Despite a series of recapitalisations in recent years, drawn out negotiations between Greece and its creditors during the first half of 2015 led to a loss of confidence by depositors and fears of Greece exiting the Eurozone.

Tsipras is on his way out and Merkel will not save him as Greece revolts

"As a result, capital controls were imposed in June 2015 to halt deposit flight; and although restrictions have gradually been relaxed, they continue to remain in place today."

The Government added that the country's fiscal situation is leaving it in a precarious position.

However Theresa May is committed to trying to secure a trade deal with the country after Brexit.

Greece's largest trade partner is Europe but highlighted the strong trade potential with Black Sea countries and the Eastern bloc.

The report added: "Greece remains an important market for British goods and services, despite a decline in exports of UK products over the last 5 years caused by the economic crisis.

"Greece was the UK’s 33rd largest export market for goods and services in 2016. UK exports to Greece in 2016 were worth £2.163bn (0.42% of total; £932m goods; £1.231 bn services) while imports of goods from Greece were worth £1.07bn (4.2% of total Greek exports)."

Greek bank flight accelerates; deposits slump to lowest since 2001


 by: Mehreen Khan

Oh no. The Greek bank deposit flight chart is back.

Mounting concern over the state of Greece’s bailout programme is hurting the country’s

beleaguered banking system, which suffered its second consecutive month of deposit

outflows in January.

Greek businesses and households pulled €1.53bn of deposits from banks in January

compared to December, pushing the financial system’s total deposits to the lowest since

2001 at €119.75bn, according to figures from the Bank of Greece.

It follows on from €3.4bn in desposit flight in December, making the two monthly drop the

worst since the height of the country’s bailout woes in July 2015.

The resumption of cash withdrawals reverses a fragile stabilisation in deposits seen after

Athens agreed a new three­year bailout programme that bought it back from the brink of

3/1/2017 Greek bank flight accelerates; deposits slump to lowest since 2001

default in the summer in 2015.

But conflict between Greece’s creditors in the EU and IMF have marred a tentative

economic recovery, with the jitters also being felt in the banking system.

Greece’s economy contracted by 0.4 per cent in the last three months of 2016 – a period

which coincided with a setback in its rescue programme after prime minister Alexis Tsipras

made a series of unannounced government spending plans that irked creditors led by


As it stands, Athens is waiting for creditors to sign off on its bailout progress in order to

unlock its latest round of bailout cash, estimated at around €6bn. The country will need the

cash to make a series of debt repayments due in July.

Bailout monitors from the EU and IMF have returned to the country this week to begin

their assessment of the reforms demanded as part of the €86bn programme 

But the major divisions are between the Brussels and the IMF rather than with the left ­wing

Syriza government. The Washington­based Fund wants EU creditors to grant Greece bolder

3/1/2017 Greek bank flight accelerates; deposits slump to lowest since 2001

debt relief in order to facilitate its return to the international bond markets after its bailout

ends in 2018.

Greece’s banking system still labours under the capital controls the government was forced

to impose in the summer of 2015 to staunch cash flows from banks. The banking system is

also crippled by the worst bad loan pile in the eurozone at over 70 per cent of total assets.

In the absence of a major deadline until July at the latest, Ruben Segura ­Cayuela, Europe

economist at Bank of America, thinks the standoff between the EU and IMF could

eventually be resolved with “a new programme with no or minimal IMF involvement”.

Delays in agreeing a compromise are also holding the economy back from participation in

the European Central Bank’s stimulus measures which have been in place for two years.

The ECB has said it will not consider Greek bonds under its purchase programme until

creditors have resolved their differences over the country’s debt sustainability and Athens

passes its second bailout review.

As it stands, the ECB is on course to taper its bond buying by €20bn a month from April

and wind down the programme altogether in December.

Oil Prices Will Be Mostly Bullish in 2017

RCEM: Views on Energy News

Despite a 91% compliance by OPEC members with the production cuts implemented in January 2017 and the removal of more than 1 million barrels a day (mbd) from the global oil market, the oil price has seen a lot of volatility ranging between $53 and $57 a barrel.

And although US oil inventories have declined for the last five months consecutively according to the International Energy Agency (IEA), their levels are still close to record high. This could be due to two factors: one is rising Shale oil production and second, the glut in the global oil market might have been bigger than what was previously estimated.

If oil prices continue to rise, US shale oil producers will ramp up output, in effect capping the oil price. This may not happen as swiftly as some think. After all, there are suspicions that to coax Wall Street investment, shale producers have exaggerated their ability to produce low-cost oil.

A recent Columbia University report estimates that US shale oil could see an increase in output of 300,000 to 900,000 barrels a day (b/d) in the next few years from the current US production of 8.77 mbd to 9-10 mbd if oil prices rise above $60/barrel. This raises the prospects of a new trading zone for crude oil within a narrow band of OPEC’s price floor of $50/barrel and US shale price ceiling of $60/barrel (see Chart 1).

Chart 1

Chart 1

However, the shale band is not an ironclad theory by any means, nor is it permanent. There are plenty of factors that could trash the credibility of this theory, namely, poor OPEC compliance, weak oil demand, higher-than-expected shale production, and stubbornly high crude oil inventories, which could all work together to push prices lower.

Likewise high OPEC compliance, strong demand, a faster drawdown in stockpiles and disappointing figures from US shale could spark a rally above $60 per barrel. Time will tell.

Oil prices have seen a lot of volatility following reports that OPEC could extend its production cuts and might even apply deeper cuts if global crude oil inventories fail to drop to a targeted level.

But OPEC and non-OPEC producers have said from the start that they will review cuts six months after their implementation to assess what impact the production cuts have had on oil prices and the oil glut.

If by next June they found there is a balance between global supply and demand, they may decide to extend the production cuts for six more months to enable them to absorb the glut in the market completely and to give the oil price more time to consolidate its recent gains. If, however, the judgment in six months-time was that global demand is moving ahead of supply, then they may decide not to renew the agreement.

And despite the hesitant rise of the oil price since the implementation of the OPEC cuts in the first of January 2017, there are at least five short-term and long-term pointers indicating that the oil price will break through the $60 level during the first half of this year and could be projected to reach $70 a barrel before the end of this year.

The first pointer is that global oil demand is projected to increase this year by 1.5% or 1.4 mbd according to IEA.

The second is that the International Monetary Fund (IMF) is expecting the global economy to grow this year by 3.5% from 3.2% in 2016.

The third is that China’s oil demand in 2017 is projected to exceed 12 mbd meaning that net oil imports would rise by 5.3% to 8 mbd in 2017.

The fourth is that the US Commodity Futures Trading Commission (CFTC) announced on Friday that new data showed that confidence in the recovery of the oil price was booming and that the global oil market is on the road to rebalancing. Immediately after, Reuters reported that money managers raised their long positions on oil to the highest on record. The OPEC and non-OPEC cuts in production has boosted investor confidence. Many are optimistic that the price will rebalance this year.

And the fifth pointer is that the world gross domestic product (GDP) is projected to double in the next 15 years from $76 trillion in 2015 to almost $150 trillion, accelerating demand for energy. Non-OECD nations, particularly China and India, will experience the most economic growth, driven by urbanization.

And to add long-term support for the oil price, Exxon Mobil’s recently released 2017 “Outlook for Energy: A View to 2040” is projecting that the global energy mix will not look much different for oil in 2040.  Accordingly, oil is expected to remain the world’s primary energy source, driven by demand for transport which is projected to grow by 20% between 2015 and 2040 (see Chart 2 & 3).
Chart 2
Chart 2
Source: Courtesy of Exxon Mobil 2017 Outlook for Energy

Chart 3

Chart 3

Source: Courtesy of Exxon Mobil 2017 Outlook for Energy

And while the oil price might dip every now and then, its trend is upward and mostly bullish in 2017.

Useful links:

ESCP Europe Business School
MSc in Energy Management
Executive Master in Energy Management

*Dr Mamdouh G. Salameh is an international oil economist. He is one of the world’s leading experts on Middle East oil. He is also a visiting professor of energy economics at the ESCP Europe Business School in London.