 The Czech Republic relies on the Druzhba pipeline for most of its oil but can also be supplied via the Ingoldstadt pipeline which runs through Germany. The country has around three months supplies of oil in stock. |
Moscow
Russia's pipeline monopoly on Monday denied a cut in oil supplies to the Czech Republic was retaliation for that country's decision to host a US missile-defence system, Interfax news agency reported.
The cut in Russian oil supplies was the result of a decision by two Russian companies to refine more oil at home instead of exporting it, the deputy head of state-owned Russian pipeline monopoly Transneft was quoted as saying.
"This has no relation to politics. It was purely commercial," Mikhail Barkov was quoted as saying by the news agency. He said the shortfall was likely to be made up by another Russian company "before long."
Russian oil supplies fell by between a third and half this month, the Czech foreign ministry said last week, adding that the reason was probably technical.
The cut was announced shortly after Prague agreed to host a US anti-missile radar system that Russia claims is aimed at undermining its nuclear deterrent.
In Prague, the industry ministry said the Russians had told the government that the problems were technical and not political.
"The Russian side said that they had encountered technical problems and assured us that there was nothing political about this," Matyas Vitik, of the Czech industry ministry's press department told AFP in Prague.
The Czech Republic should get an indication of how soon supplies will be restored when delivery schedules for August are published on Tuesday, industry ministry spokesman Tomas Bartovsky told AFP.
So far, oil deliveries from Russia are 15 percent down on their normal level since the start of the month, he added.
The Czech Republic relies on the Druzhba pipeline for most of its oil but can also be supplied via the Ingoldstadt pipeline which runs through Germany. The country has around three months supplies of oil in stock.
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Moscow
The discussion among highly placed Russian generals in early July of creating a Joint Commonwealth of Independent States Air-Defense System is good news. However, it would be more appropriate to assess the state of Russia's air defenses and to choose an optimal system with up-to-date weapons.
In late June Lt. Gen. Anatoly Boyarintsev, commander of the Russian air force's radio engineering troops, announced air-defense radars had started scanning an additional 185,000 square miles of airspace in northeastern Russia during the implementation of a federal target program called "Streamlining the Federal Air Space Reconnaissance and Control System in 2007-2010."
That sounds optimistic, but some questions remain. Does Boyarintsev's statement mean such control had been lost or was lacking? Are 185,000 square miles enough inside Russia's 6,000-mile perimeter? And are there any other gaping holes that the Air-Defense Force does not control?
Most importantly, we must choose the best system for shielding this country from enemy airstrikes and other attacks.
The 1999 U.S.-led North Atlantic Treaty Organization bombing of Yugoslavia showed that classic air-defense systems were history. The use of high-precision weapons made it possible to quickly neutralize Yugoslavia's Soviet-era anti-aircraft systems. Several U.S. spy satellites hovering over Europe prior to the airstrikes tracked down all operational Yugoslav radars and the country's radio engineering units, and smart missiles swooped in for the kill as soon as hostilities commenced.
In 2003 the U.S. Air Force and spy satellites were used against Iraq with similar devastating effect.
Washington is currently working on the Prompt Global Strike initiative, a plan to provide the United States with the capability to strike virtually anywhere in the world within 60 minutes. Under the concept, a reusable orbiter would launch hypersonic high-precision and non-nuclear missiles with a range of more than 6,000 miles.
Russian leaders obviously realize the need to establish a comprehensive aerospace-defense system. In 2006 Russian President Vladimir Putin set the goal of creating an effective system under a special program until 2016.
But it turns out Russia's military leaders are still unable to overcome interdepartmental differences. The Russian air force, which oversees all air-defense issues, also wants control of the future aerospace-defense system.
However, the Russian armed forces still cannot find a place for the missile-space defense system, the main and inalienable part of the aerospace-defense system. In fact, the missile-space defense system was part of the Soviet-era National Air-Defense System.
In the early 1990s Russian Defense Minister Igor Sergeyev, who previously had served with the Strategic Missile Force, subordinated missile-space defense to his old service in order to uphold its reputation.
The missile-space defense system was taken away from the Strategic Missile Force during the 2001 army reform. By that time, Moscow had abolished the National Air-Defense System, re-subordinating all anti-aircraft units of other armed services and branches to the Russian air force.
The missile-space defense system eventually became part of Russia's Space Force. But it is unclear whether Russian generals can agree on the overall missile-defense concept. The Russian General Staff would be responsible for the missile-space defense system if it were classed as a one-time military operation. But a permanent system would require a joint command center. The system's affiliation depends on the solution of this problem.
This pointless discussion should have been conducted 20 years ago. Combat operations on the Balkan Peninsula, in Afghanistan and Iraq, as well as modern rearmament programs, imply that all industrial powers have adopted military-space defense doctrines.
The reinstatement of the aerospace-defense system as an integral branch is the best course today. This would make it possible to launch production of up-to-date weapons. It is becoming obvious that the air force is unable to influence their production. The defense industry so far has failed to master production of the high-precision S-400 surface-to-air missile system, the only Russian weapon that could effectively repel aerospace attacks. Unfortunately, the Russian army has very few of these unique systems today.
It will be impossible to shield Russian territory unless Moscow policymakers promptly settle organizational issues as regards the aerospace-defense system's creation and unless the Russian government starts mass-producing the required weapons.
(Andrei Kislyakov is a political commentator for RIA Novosti. This article is reprinted by permission of RIA Novosti. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.)
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
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Paris
France's political elites and its public will be enjoying the parades, fly-pasts and parties that celebrate Monday's Bastille Day, anniversary of the 1789 French Revolution. But a lot of their attention will be on the grim news from world markets.
The French CAC stock market is at its lowest in three years, and the word of crisis in the Fannie Mae and Freddie Mac U.S. mortgage giants has sent deep tremors across Europe, where it is seen as heralding a somber new act in the unfolding drama in world finance.
It can help to put matters in perspective. Even as it fell below 11,000, the Dow Jones Index is still almost twice as high as it was when Federal Reserve Chairman Alan Greenspan first warned of "irrational exuberance in the markets" more than a decade ago.
The U.S. economy is more than 40 percent larger now than it was then, and there are more than 500 million new consumers on the world market in China, India, Russia, Brazil, Eastern Europe, the Middle East and elsewhere. Naturally, that means rising demand, which helps to fuel price increases for energy and food and raw materials, and that is putting more pressure on the strained mature economies of Europe and North America.
The problem is there is no coordinated international policy to respond to the crisis. Worse still, the U.S. and the European central banks are trying two divergent and even contradictory strategies.
In Washington, facing a financial market crisis and looming recession, Federal Reserve Chairman Ben Bernanke is trying to stop things from getting worse by flooding the economy with liquidity and low interest rates to help the banks, consumers and businesses. Despite the risk of more inflation, Bernanke reckons the immediate problem of keeping the economy at least chugging along is the more urgent.
That is not how his European counterpart, Jean-Claude Trichet, sees it. Trichet, president of the European Central Bank, who unlike Bernanke is not a trained economist, sees inflation as the more profound threat. Trichet's last move was to increase euro interest rates by 0.25 percent on July 3, making them more than twice as high as the lower U.S. rates, where Bernanke is in effect offering free money. American interest rates are lower than the rate of inflation.
So the euro economy is being tightened while the dollar economy is being loosened. The two great pillars of the global economy are at odds.
This is serious, because worried academic economists as well as the markets are starting to feel some odd echoes of the awful decade of the 1930s. The Wall Street crash of 1929 was made worse by bad policies that included raising tariffs on trade, trying to balance budgets, squeezing out the bad loans and tightening the economy, just as Trichet is doing today.
We all know the result, at least in those countries like the United States that followed orthodox economics until FDR launched his 1933 New Deal. Countries like Roosevelt's United States and Hitler's Germany, which loosened their economies and stoked credit, began to haul themselves out of depression, and in Germany's case spectacularly so.
Obviously, the global economy is very different now. But reasonable economists have been able to disagree over whether Bernanke or Trichet is following the right course because so many of the signs of rising inflation were deeply worrying, and the fear was of a return to 1970s-style stagnation.
But that has changed. Until this year the world had been seeing a steady expansion of the money supply as banks and mortgage houses eagerly extended credit. There was money to burn. Last year the growth of credit to private, non-financial corporations in the United Kingdom was running at 16 percent. Now it's in minus territory.
"Real money growth is virtually nil," notes Professor Tim Congdon of the London School of Economics. "The British economy is taking a thrashing, and it is going to get worse. Corporate money balances have contracted 3 percent over the last three months, which is double digits on an annualized basis. This is a serious squeeze for companies."
It is just as bad in the United States, which is now seeing "the worst credit conditions since the 1930s," according to the Lombard Street Research team. Economists at Northern Trust now suggest that American banks cut their lending at a rate of almost 10 percent in the second quarter, which means "the money supply is crumbling in the U.S."
This spells recession, which is why Bernanke is printing money, preferring to keep the show on the road while risking serious inflation in the future. But that future inflation will have to be tackled eventually, probably by the kind of recessionary tight money regime that Fed Chairman Paul Volcker imposed in 1980. And that's why Trichet raised interest rates. But can the global economy function with such divergent strategies in the United States and Europe? We don't know.
What we do know is there are signs of hope. The U.S. exporting manufacturers are booming, according to the latest Commerce Department trade figures. Frank Vargo of the National Association of Manufacturers says exports are up 12 percent this year, "a sizzling pace."
"Coupled with a slower 4 percent rise in imports, the export performance has resulted in a further reduction in the manufactured goods trade deficit which, through May, is 11 percent smaller than last year," said Vargo. "There is no question that the value of the dollar, which has returned to roughly equilibrium rates, is playing an important role in this export growth as well."
"Exports are keeping U.S. manufacturing afloat this year as domestic demand is very soft," said Vargo. "We need to do everything possible to continue our export expansion, which is why the NAM is pressing so hard to get barriers against U.S. exports eliminated in Colombia, Panama and South Korea by congressional passage of trade agreements with those countries."
All this is true, but the weak dollar boosts the oil import bill and keeps the trade deficit high, squeezing domestic consumption. And it is also squeezing other countries, whose appetite for continued U.S. manufactured exports looks set to shrink. There is no easy way out of this.
The only consolation, in Shanghai and Mumbai as well as in Europe and the United States, is that at least on this Bastille Day, no one is fool enough to echo that memorable response of French Queen Marie Antoinette to the bread shortage that sparked the 1789 Revolution: "Let them eat cake."
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New Delhi
India is "gravely concerned" over reports suggesting the use of military force against Iran and is strongly against any such action, the foreign ministry said on Monday.
There has been concern an attack against Iran could be imminent after it emerged Israel had practised a strike against Iranian nuclear facilities.
"India is gravely concerned at these statements threatening the use of military force against Iran," the foreign ministry said in a statement.
"India is against any such military attack, which constitutes unacceptable international behaviour. There is no military solution to the issues that are being discussed between Iran and the international community."
India's comments come after Iran intensified international tensions on the nuclear issue by conducting two days of tests, which included the firing of a missile that it says can reach Israel.
The United States and its regional ally Israel have never ruled out a military attack to end Iran's controversial nuclear work, which the West fears could be used to make weapons -- a charge vehemently denied by Tehran.
Energy-hungry India, which enjoys warm relations with Iran, expects to finalise a deal on a 7.5-billion-dollar pipeline that will transport gas from the Middle East to here via Pakistan.
New Delhi says Tehran has the right to peaceful use of nuclear energy but has asked it to cooperate with the United Nations nuclear watchdog.
India has previously rejected pressure from Washington not to do business with Iran, viewed in the US as a state sponsor of terrorism and seen as bent on acquiring nuclear weapons.
Earlier this year, New Delhi told the US not to interfere in its dealings with Iran after a State Department spokesman said Washington would like India to put pressure on Tehran over its nuclear programme.
"India calls upon all concerned Governments to exercise restraint and choose the peaceful path of persuasion and negotiations," the foreign ministry said.
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Washington
US Secretary of State Condoleezza Rice and her Armenian counterpart Edward Nalbandian signed a deal Monday to fight the smuggling of nuclear and radioactive materials, the State Department said.
The deal significantly boosts joint US-Armenian "efforts to combat the threat that nuclear or highly radioactive materials could be acquired by terrorists or others who would use them to harm us," it said in a statement.
The agreement spells out the US-Armenian intention to cooperate to boost Armenia's capabilities "to prevent, detect, and respond effectively to attempts to smuggle nuclear or radioactive materials," the department added.
"It specifies twenty-eight agreed steps that the two governments intend to be taken for this purpose."
The statement said Armenia will be able to take some of the steps on its own, but would receive either US or international assistance in implementing other measures, it said.
"This assistance would complement and be carefully coordinated with the aid the Republic of Armenia is already receiving from various US and international assistance programs," it added.
The State Department said the agreement is the fifth of its kind concluded by the US government's Nuclear Smuggling Outreach Initiative, with previous ones completed with Ukraine, Kazakhstan, Georgia, and the Kyrgyz Republic.
"The US government intends to conclude similar agreements with approximately twenty additional countries where the risk of nuclear smuggling is of particular concern."
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Moscow
Russia's military is ready to "neutralise" any threat to its nuclear deterrent from US missile defence sites in Europe, Deputy Foreign Minister Sergei Kislyak said Monday, according to Interfax news agency.
"If we see the development of systems that could reduce our deterrent potential, our military will have to take steps to neutralise the threat," Kislyak was quoted as saying at a briefing in Moscow.
He did not specify the steps that would be taken, saying "this will be decided by military specialists."
"We would prefer not to have to do this," he added.
Kislyak said US proposals to ease Russian concerns about the missile shield, which Washington claims is aimed at countering possible threats from states such as Iran, remained in doubt.
US Defence Secretary Robert Gates and Secretary of State Condoleezza Rice visited Moscow in March and offered Russia the opportunity to monitor the sites, which they plan to install in the Czech Republic and Poland, but Czech and Polish officials later cast doubt on that offer.
"There are misunderstandings between what the US foreign and defence ministers said here (in Moscow) and what their Czech and Polish partners say. So this still remains in question," Kislyak said.
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