Russia Makes New Threats Over Ukraine’s Pro-europe Policy

Azerbaijan Signs New Gas Deals With Europe, Snubs Russia

Germany is Europe’s biggest economy, a manufacturing and export powerhouse. Its 2.7 trillion euro GDP accounts for nearly 30% of euro zone output. And the country has gained influence because of its role as the biggest financial contributor to Europe’s bailouts. Merkel may be a hated figure to some Europeans for her insistence on austerity in return for aid, but most Germans approve of her handling of the crisis. Who is likely to win? Until recently, Merkel and her coalition allies had a clear lead in opinion polls, but support for her party and the FDP has fallen. If the FDP drops below the 5% threshold needed to win seats in parliament, Merkel will lose her preferred coalition partner. Analysts say a repeat of the 2005-2009 coalition with the Social Democrats is now the most likely outcome of Sunday’s vote, particularly if the new anti-euro party AfD makes a breakthrough. Related: Could euroskeptics spoil Angela Merkel’s election party What’s at stake in Europe? With the recession over and markets calmer, the pace of EU policy making has eased. But big challenges remain for a region still facing slow growth, record unemployment , an aging population and rising debt . Greece needs more help and Portugal might need a second bailout. What’s more, progress on repairing the European banking system, which is critical to unfreezing credit markets and restoring long-term economic health, has slowed.

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SOCAR said on Thursday that buyers of Azeri gas from its Shah Deniz II project are Shell, Bulgargas, Gas Natural Fenosa, Greek DEPA, Germany’s E.ON, French GDF Suez, Italian regional utility Hera Trading, Swiss AXPO and Italian Enel. Groundbreaking move It is a groundbreaking contract as it secures supplies to Europe from a new supply region for decades at conditions reflecting European gas markets, Christopher Delbruck, the newly appointed CEO of E.ON Global Commodities SE, said in a statement. He added that E.ON’s contract with SOCAR spans 25 years during which the company will get 40 billion cubic meters (bcm) of gas. European buyers have struggled to find alternatives to Russia’s gas producer Gazprom, whose contracts link prices to oil, generally making it expensive compared to the spot market. Gazprom covers a quarter of Europe’s gas needs with over 150 bcm of its exports a year. In response to Europe’s quest for Caspian supply, Gazprom proposed its $39 billion South Stream project which would pipe gas to northeast Italy through the Black Sea starting from the end of 2015 Italy to get lions share Shah Deniz is expected from around 2019 to feed 16 bcm of gas per year to Europe, with 10 bcm earmarked for Europe and six bcm for Turkey. Half of the gas is destined for Italy, a SOCAR official said. Around eight billion cubic meters of gas will be shipped to the Italian market, where European buyers will be getting it for their facilities in the country [Italy], Elshad Nasirov, SOCAR’s vice president, told reporters. Two years ago, the consortium expected around 40 bcm per year of demand for its gas, but more realistic buyer demands had reduced the figure, BP’s Vice President of Shah Deniz Development, Al Cook, told Reuters in March. SOCAR will act as an operator of sales from Shah Deniz II. Statoil is a sale operator from Shah Deniz I.

Officials from Ukraine and its old Soviet master Russia clashed at an international gathering in the Black Sea resort of Yalta over Kiev’s plans to sign landmark agreements in November with the European Union on political association and free trade. Moody’s Investor Service cut Ukraine’s sovereign credit rating on Friday, partly on concern over relations with Russia. Russia says it fears its market could be flooded by competitive EU goods entering Ukraine free of import duties and being re-exported across the long border with Russia. But Prime Minister Mykola Azarov, in a speech to the conference, dismissed the threat of illegal transit of EU goods into Russia as a “hypothetical” one that would not happen in practice. “We are convinced that the signing (of the agreements with the EU) does not hold any risks (for Russia),” he said, adding that he would give personal assurances of this to Russia and its trade allies in the Moscow-led Customs Union. He also expressed frustration at Russia’s refusal to cut the price of the gas it sells to Ukraine and said Kiev may have to reduce further the volume of its gas imports. Ukraine’s pro-Europe drive has already drawn threats of counter-measures from Russian President Vladimir Putin, as well as pressure on Kiev to join the Customs Union. Speaking after Azarov on Saturday, Sergei Glazyev, an aide to Putin, returned to the attack, saying that Russia might be obliged to impose duties on any goods arriving from Ukrainian territory, at a huge financial cost to Ukraine. Saying 40 percent of Ukrainians had doubts over the agreements with the EU, Glazyev, who has made hawkish comments before about Ukraine’s pro-Europe policy, urged the Kiev government to ballot its people. “Let us … ask the Ukrainian people what choice they prefer,” he said. TYMOSHENKO RELEASE Azarov had sharp words for Russia over its refusal to cut the price of its gas, which hangs heavy on Ukraine’s cash-strapped economy. Ukraine pays what it sees as an exorbitant $400 per thousand cubic meters under a 2009 contract, which Russia has refused to redraw. In a bid to break away from reliance on Russia, Ukraine hopes to find alternative energy sources through shale gas exploration and imports from other sources.

Europe fractures even as it shakes off recession

This “psychological conflict of north versus south and vice versa, this needs to be tackled.” Trichet echoed the concerns, telling Quest such a split was “absolutely unacceptable.” “If we had, in the past, fully implemented the rules including the stability and growth pact, and what was badly needed — control and monitoring of competitiveness — we wouldn’t have two class Europe,” he said. Almunia, meanwhile, said his fear was that “after the crisis those who were, at the beginning of this crisis, at the bottom, would continue to be at the bottom.” Is there an alternative for Germany? However, he added, that would not happen if the countries in recession “do what they have started to do and ….continue to do [it].” Can Italy improve competitiveness? Germany’s emergence as power player Spain’s export bonanza Germany emerged as an economic force after labor reforms were implemented under its then-chancellor Gerhard Schroder. Now, its export-led economy drives the 17-nation eurozone, with Chancellor Angela Merkel — battling for third term in this weekend’s federal elections — a central figure during Europe’s crisis. Merkel’s popularity remains high in Germany, and her party, the Christian Democratic Union, is expected to gain the most votes. Merkel’s leadership during the crisis saw her named as the world’s most powerful woman by Forbes three years in a row. Efforts to combat the crisis included the implementation of bailout funds, closer fiscal cooperation and austerity measures. When asked if Germany is taking over Europe, Monti replied that the continent’s largest economy would have more dominance if it had retained the deutsche mark “because they would then become the only relevant monetary policy power in Europe.” Countries that went too far too rapidly, had bubbles Jean-Claude Trichet As it is, Germany remains shackled to the weaker countries in the euro, many of which continue to struggle with spiralling unemployment, high national debts and growing political instability. Greece, Portugal, Cyprus and Ireland have received over 400 billion euros ($534 billion) in bailout packages from the euro-area’s rescue funds. Last year European finance ministers approved a 39.5 billion euro ($51.6 billion) lifeline for Spain’s banks, struggling after the property bubble went bust. Yet Spain and Greece still have unemployment above 27%.