South Stream pipeline and the EU double standards

Naftogaz, Ukraine’s gas company, owes its Russian-owned counterpart, Gazprom, an estimated $4.46 billion for previous deliveries of gas. Gazprom demands prepayment for future supplies to Ukraine now and files an arbitration claim in Stockholm. On June 16, Naftogaz missed a deadline to pay part of that debt (about $2 billion), which entails three consequences. First, even though the new president was elected, Ukraine has yet rendered to be an unreliable client who fails to pay bills and thereby prompts another cut-off. Second, Ukraine has repeatedly proved to be unable to provide a reliable transit for Russian gas to Europe. Third, the need for diversification of gas supplies has become even more obvious and relevant.

No wonder, Russia has become even more bullish about South Stream, a pipe-line project designed to pipe 63 billion cubic metres of gas per year from Russia to Central and South Europe bypassing Ukraine. The pipeline will go across the Black Sea bottom from Russia to Southern Europe. Its length will be 900 km. The project is being implemented by South Stream Transport, of which Gazprom owns 50%, Italian ENI 20%, French EDF and German Wintershall 15% each. To build the land part of the pipeline, Russia has stricken agreements with the governments of Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia, and Austria.
Thus, the project will cement Russia’s hold on the European gas market and diversify the gas supplies. However, the European Union seeks to diversify the gas suppliers (in other words, to give other gas suppliers access to the pipeline), not the methods of its supply. As a result, the European Commission postpones the final approval of the pipeline and applies pressure on the key-members of the South Stream chain. With solely a political purpose – to punish Russia.

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On the one hand, Brussels sharing its part responsibility for the ongoing events in Ukraine (namely, the so called Euro-Maidan was inspired by hopes to join the Economic Association with Europe), cannot let the situation be taken over by Russia. Once the situation is under Russia’s control, Ukraine (who is physically unable to pay the debt back, because its economy is gruesomely broke) is no longer the gas-transit country, Ukraine is no longer Russia’s client at all. Russia will build a new gas pipeline bypassing Ukraine, and leave the country in oblivion. That being said, why does not the EU bail out Ukraine and helps it redeem the debt to Russia? Once the debt issue is settled, there is a chance for a new round of talks regarding further cooperation in gas supplies between Ukraine and Russia, between Putin and Poroshenko, who have numerously demonstrated their eagerness to diplomatically solve the conflict.

The European Union is not so much interested in bailing out Ukraine and even less so in its admission to the Union. It would entail further subsidies, humanitarian and financial aid, all that burden that the German taxpayers have already been pissed off by dragging Greece, Spain, and Portugal out of their debts. The problem is that there are actually two Europes: the European Union as a huge bureaucratic machine, and Europe as a conglomerate of nations. Those two Europes appear to be different. What’s more, those two Europes appear to be pursuing different interests and goals, if not conflicting goals. The European Commission is acting from a position of a universal judge who seeks to pursue justice and punish the hot-headed game-breakers. The European Commission is a “stronghold” of morality that cannot allow its members to do business with someone who violates international norms and neglects other country’s sovereignty. Fair enough. Such an approach is quite understandable from the rule of law and the world-system perspective. But the reality is more complex. The reality is that Europe is still (whether it likes it or not) highly dependent on import of hydrocarbons. The price it pays for these imports matters too – now even more than ever, given the stagnation in the eurozone. Thus, the cheapest and the most reliable gas supplier to Europe is still Russia. In fact, Russia has never let Europe down since the 1960s in terms of the energy supplies. Again, 2006 and 2009 were the transit zone blackouts. The Middle East could potentially be accounted too, but at the moment it’s major client is Asia and it’s undergoing another wave of terrorist coups and civil war turmoils. EU countries get about 30% of their gas from Gazprom, and half of that is piped through Ukraine. If Europe had alternative energy suppliers such as LNG from Qatar, Algeria, and the U.S available right now (by “available” I mean ready-installed refineries, de-liquification facilities, special storages, the money, after all, to pay for the gas shipments across the Atlantic), or if Europe had alternative energy resources (wind, solar power, water energy, etc) that could easily replace natural gas, the Brussels talks would make more sense. Sadly, the fact of the matter is that Europe does not have those alternatives handy as of yet. Nor is it going to have them available in the next two-three years. Thus, no matter how unlawful and rogue Russia’s bahavior is, Europe is nowhere near ready to wean itself from Gazprom. To sum it up, Brussels acts from its supranational, hyper-idealistic perspective and makes decisions based on the same premises that drives the EU committees to set cucumber shape regulations or obligations to put a sticker on non-GMO food-items. Meanwhile, individual European states, being guided by sheer energy security interests, have to think pragmatically and act individualistically. They need to make sure that the gas supplies are guaranteed and there is no such a situation when their citizens have to burn woods to keep their homes warm on cold winter days (as it used to be the case in 2009).

Thus, Italy’s Saipem, for instance, signed a contract worth 2 billion euros with Gazprom regarding the construction of the first submarine section of South Stream and is now ready to start the work. Right at the rise of the Ukrainian crisis, in April, Austria and its biggest energy firm OMV enthusiastically supported the South Stream project. Hungary, another land route of South Stream, is also teaming up with Russian state companies for a €10 billion deal involving the construction of two nuclear reactors.
Serbia finds itself caught between its ambitions to join the EU, with which it has started accession talks, and historical ties with Russia. Nevertheless, Ivica Dacic, Serbian Foreign minister confirmed that the South Stream project is in their best national interests. After all, whether Serbia shifts to the EU or not, does not really matter. Serbia is not the key player in the project. What does matter though is Bulgaria. The gas pipeline goes through its territory, thus its approval of the project and commitment to it are crucial for the entire venture. The European Commission figured it really quickly and started pressing Bulgaria. In the very beginning, since 2010 (long before the Ukrainian crisis, by the way) the Bulgarian part of the South Stream has been criticized by the European Commission. The latter was skeptical about the transparency of the tender. Meanwhile, the tender was won by the Bulgarian Gasproject Yug and Gennady Timchenko’s Stroytransgas. Timchenko is already on the sanctions list after Russia took over Crimea in February 2014.
In April and May, the situation in Ukraine deteriorated which only strengthened Brussels’ stiff position against Russia and elevated its desire to punish it. The Bulgarian socialist government (very loyal to Russia) was holding a staunch resentment against the EU threats – until the EU reminded Bulgaria of the 15 billion euro it promised in subsidies for the Bulgarian agricultural sector and infrastructure. On June 8, Bulgarian Prime Minister Plamen Oresharski announced the suspension of the project till matters with the EU clears up. The Bulgarian head of government made his decision shortly after meeting a US troika delegation – John McCain, Ron Johnson and Christopher Murphy. The meeting came after a public statement on the 6th of June by American Ambassador in Sofia Marcie Ries, warning that Bulgarian companies participating in South Stream maybe part of US sanctions against them due to their collaboration with the Russian Stroytransgaz. This caused the Bulgarian government to split into pro- and anti-Russian factions, and they announced early elections scheduled for September this year. Boiko Borisov, who leads the centre-right Citizens for European Development of Bulgaria (GERB) party, is the most likely prime minister to be, given that his party scored the largest number of seats (representing Bulgaria) in the European Parliament elections in May.

It is fair to say that Russia tries to manipulate Ukraine and tells it what to do. It is also fair to say that Russia wants Europe play by its rules and buy its oil and gas the way Russia offers them. Paradoxically, criticizing and punishing such misdeeds, the European Union acts by exactly same token. It disregards national interests of its individuals members and uses threats and blackmails to force them to do what the EU deems appropriate. Abusing the weak points of other states (such as bad economies or chances for future membership in the EU), Brussels is actually playing by the same rules it’s been fiercely opposing.

Soviet trade system

[This is a rough translation of some soviet reminiscences by my favorite Russian author Tatyana Tolstaya. Following the main text are the comments to the original post in Russian by the readers, who also happened to live the Soviet regime].

All goods in Soviet Russia were either socialist or capitalist. The capitalist goods were unavailable to the ordinary Soviet folk – they were sold only at “Berezkas” (“Birches” stores) to the nomenklatura people or to secret dealers. Those who had money, had contacts – so they had access to capitalist goods as well. However, the latter were very very expensive.
Imagine a family with five grown-up children. They all need clothes, so do I. In 1974, I am going to get married. I need a pair of nice wedding shoes. In shoe-stores you will find nothing. No wedding shoes, no sandals. You can only chose between boots “goodbye youth” and felt flip-flops “no step back”. The only shoes, that were on the shelf, were horrible – they were made in Romania and had a poopy-brown color, with laces. Our family was friends with a Frenchman who ultimately went with me to the Berezka store and we got a decent pair of wedding shoes “Gabor”. My wedding dress was made of rough silk and patterned with large yellow flowers, short and tailored. My tailor Valentina would steal fabric all the time.
However, you can’t wear Gabor pumps for a hike or to go sunbathing at a sea-resort. You need a pair of sandals. There was no way to get sandals in 1974. I was asking around my friends if they knew some old ladies who would remember the 1919 and how to weave sandals out of ropes. Once I had found one, another problem popped up – in 1974, no ropes were sold in the stores. I can’t remember now how I made it through, but I clearly recall a woman in our hiking group – she was wearing a summer coat. A summer coat when it was 85 F out! So I asked her privately – why? And she whispered – “I have no dress”.
We also had a special dealer, although mother disapproved of dealers – she believed that dealing was unfair. My sister and I didn’t take mother’s principles seriously, so we just let her have her own opinion. Meanwhile, we bought two identical puff coats (made in Finland, with click-buttons!) from the dealer, and then our sister-in-law bought one for herself too. So we all three were dressed in identical puffers, and thought that we were very very cool.
What was also cool was to wear a mohair scarf. Men would wear them. Once I happened to be at our dealer’s home. All her shelves and cupboards were stuffed with crystal wares. A double bed was covered with a huge mohair plaid with Scottish checkers. It was 2×3 meters in size. That was unbelievable! Had one happened to see it, the dealer would have ended badly.
Socialist goods could be found and purchased in special shops in Moscow. “Vanda” was selling polish eye-shades, whereas neighboring “Sofia” had some terrible rose butter that caused splitting headaches. There was “Leipzieg” in the middle of nowhere and “Yadran” in the combes.
I went to “Yadran” once. Some roll-sweaters called “banlons” and blouses were given out. But “given out” did not simply mean “sold out”, no-no, nothing was simple back then. Blouses were wrapped in plastic and it was prohibited to unwrap the package and try the thing on. Don’t ask why. Because. You first buy and then try on! They were made in Yugoslavia so the cut was different from the  normal Russian one, thus it was impossible to guess which size was right. So, what women would do was first, they would stand in line for hours – the closer you are to the counter the tighter you are getting squeezed by the others behind you – also willing to grab a blouse. Finally, you get a couple of blouses of the size you guess will probably fit you (normally, two blouses because if one doesn’t fit, the other will). Yet, it’s not the end of the story. After you grab the blouses, sweaty and blowzy, you step out of the crowd onto the street, or, rather, in the combes. And there, on the unpaved road, you open the package and try the blouse on. You are not the only one doing that – many other women are doing absolutely the same, with no shame or fear for men around them (who are equally hunting for mens clothes).
If the blouse doesn’t fit you, patiently wrap it pack in plastic and sell to another woman, who the blouse will more likely fit. At times, there is a police officer walking around and arresting women for illegal trade (“speculation”). I happened to be approached by police once and was threatened with a detain. In my defense, I said that “speculation” is something when you buy a thing at one price and sell it at another price, so that you benefit from the deal. In my situation, I was selling the unfit blouse by the exact same price I had bought it at the store. “If you arrest me and bring to the police station, you’ll simply waste both your and my time”, I said to the officer. He looked at me in surprise and then walked away.

Comments by people:

“A cold winter night… and a line in 3-4 circles to a store. People are lining for a Rubic’s cube.”
“In “Passage” (a department store), there was a multiple meter long line to get Japanese umbrellas.”
“Sometimes you see a queue and and just join it, with no idea what people are standing for. You just stay in this line because everything you could think of was in short, while you need everything.”

“In bridal salons, one could buy good shoes and clothes. For this, one should have a special checking book from the Vital Register with coupons valid for everything in the bridal salon – varying from underwear to kitchen utensils. Many people would send their fake applications for marriage licenses several times – for the sake of obtaining the bridal salon checking book.”

“When toilet paper was available (“was trown out”), people would buy it amass, string it up on a rope and carry such a “necklace” home.”

“When I was five I remember standing in line for 2-3 hours to get an ice-cream. We lived in a small military town, where the ice-cream truck would come only twice a year.”

“People from Tver’ would travel 3 hours to and 3 hours back from Moscow to buy groceries.”

“My mother was lucky to get a beautiful crimson coat in a small provincial town in exchange for two sacks of pumpkin seeds. When she arrived at a place to get the coat, she was pointed out that the seeds “were not fanned”. So, my mother and my uncle started fanning the seeds in the street shuffling them from one sack into another back and forth… ”

“When Russians traveled to Lithuania in 1987 and saw 5 types of bread in the supermarket there, they couldn’t believe their eyes and thought it was a miracle. And then they came back to Russia and told their friends, and the friends couldn’t believe.”

In the 70s, a soviet citizen was supposed to get 200 gr butter, 0,5 kilo sausage, 0,5 kilo meat, 1 kilo rice and a lill bit of something more per MONTH! The money my parents-academicians earned went all on food from the market. Once a month my dad and his professor friend would travel to Moscow and bring meat, butter, chocolates, whiskey, cognac and Finnish cheese “viola”with them back home.

“When I was a high-school student it was impossible to get a lipstick. You could only buy it from gypsies at the railway station, and it costed 10 rubles. However, I didn’t dare to ask my mother for money (for two reasons: first, it was embarrassing, second, parents would usually say that it’s a bad manner to color leaps with a lipstick and unhealthy, because lipsticks are poisonous). So I had to color my leaps with a red pencil and then put a layer of petroleum ointment… I also remember the only type of mascara available in stores. It was a box of black dry and solid paste in it with a small brush, you spit in the paste and smoosh the paste with the brush and then but that mixture on the eyelashes.”

Anti GMO-hysteria

The world’s population is growing by 1 billion people every 12 years, and by 2050 it is expected to reach the 9 billion mark. The increase in population drives food demand up, so that by the middle of the century food consumption is expected to double. Much of the demographic growth takes place in Asia and Africa. In Africa, one third of the population is dependent on rice. 3.5 billion people, half of mankind, depend on rice as a staple crop. Roughly 20% of all human calories come from rice. However, rice is a vulnerable crop. It requires two to three times as much water as other cereals, yet fresh water is generally scarce. If there is a shortage of water, the entire field dies. Over 90 percent of the world’s rice is produced and consumed in the Asia-Pacific Region. The intensifying urbanization of Asia, and especially in China, triggers the problem: fertile rice-growing lands are increasingly being converted into industrial zones, buildings, and roads. Climate change poses another threat – sea-levels are rising, thereby jeopardizing rice crops with floods and salinity. Droughts, damaging storms, dry winters and very hot days in summer are taking toll on crop yields. With climate change, the weather has become less and less predictable, which only decreases chances for stable yields. In the meantime, the food production cannot keep up with rising demand.
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In this situation, science is of great help, if not the savior. Geneticists and plant breeders are now working on rice modification that will bring about flood-resistant rice, or rice that better tolerates drought, salinity and extreme heat. Mid-century demand for rice is estimated to exceed 555 million tons. Rice that is better adapted to sudden changes of climate and weather, could double yields, which would boost global output of rice by 1.2 – 1.5% per year. Growth of rice yield at such a pace should be sufficient to feed the growing population and keep prices affordable even to the middle of the century.

As progressive and dynamic as modern science is, so brutal and intense is the mass protest against it. Out of sheer dialectical nature of things, once there is a force there is always a counter-force. Science has had particularly long to deal with such dialectics. If in the Middle Ages, it was revolutionary to say that the Earth is not the center of the universe, that it is not even the center of our galaxy, so is it revolutionary today to apply modern genetics and modify species – be it food, animals, or a human DNA. In fact, the criticism of genetic engineering with regard to food has turned into a massive hysteria. Take a look at daily headlines in newspapers and magazines: “Ben and Jerry’s says goodbye to GMOs”, “Lake Champlain Chocolates nixing GMOs”, “Oregon hopes to be first state to map GMO fields”, “Every State Counts: Support GMO Labeling in Oregon and Colorado”, “GMO companies are dousing Hawaiian island with toxic pesticides”, “France wins greater control over GMOs,” “World needs UN GMO watchdog – Russia”.
What is particularly worrisome is that the anti-GMO propaganda is based on a fundamental misunderstanding of some key things about the way in which the world works. It refers to the statement that “bloody” scientists take one piece of DNA, crop it and insert into another DNA. For example, they take a dandelion DNA, that produces Beta-carotene, and breed it into rice. According to the anti-GMO activists, such an alteration is toxic and will ultimately either kill or turn us into mutants. Environmental groups, food safety watchdogs, and others instill this myth into hundreds of thousands of people. Organizations such as GMO Free USA, Institute of Responsible Technology, Organic Consumers Association, Center for Food Safety, etc. create outrageous myths about genetically engineered products saying that the DNA, which people consume with the food, is changing their own DNA and causes mutations.

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The existence and viability of the anti-GMO propaganda would not be so astonishing were we to live in the medieval Europe or in the Soviet Union under Lysenko’s propaganda and massive stalinist repressions against genetical scientists.

Meanwhile, “the scientific research conducted so far has not detected any significant hazards directly connected with the use of genetically engineered crops,” concludes a team of Italian scientists, who thoroughly studied and evaluated over 1,700 research papers published between 2002 and 2012. The researchers found little to no evidence that genetically modified crops pose a health risk to people and animals. To the opposite, their study reveals that non-GM crops tend to significantly reduce biodiversity. In reality, genetic modification of crops is just an accelerated evolution. The core meaning of evolution is when one gene gets broken, another doubled, or being altered by a natural insertion of one gene into it. What geneticists do today, to put it simply, is they insert a foreign gene derived from, say, bacteria into corn, and give the plant a trait it wouldn’t otherwise possess.

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Thus, the anti-GMO propaganda is nothing but a conscious and deliberate misinformation. Sadly, it proves to be quite viable: it has been widely supported by prominent scientists and well-reputed news magazines (such as Huffington Post), students groups and talk-show celebrities: Oprah Winfrey, Dr. Oz and Bill Maher – they all warn against consuming food made with genetically modified ingredients. Even more sadly, the propaganda works, it attracts thousands if people, who after such a brainwashing go out in protest marches with “”Say no to GMO!” placards, calling the GM-products “cancer food” and “cancer water.” Why does the propaganda work? Because for an average citizen it is much easier to understand a short and simple statement “GMO is bad, GMO kills”, “GMO = pesticides and chemicals” rather than read some serious scientific studies with an abundant evidence that biotechnology and genetic engineering implies no harm. Such myths are dangerous and destructive. They replace science and fundamental facts about life with a fake science through a psychological manipulation. In other words, people consciously wage campaigns against scientifically proved facts, thereby legitimizing pseudoscience.

How do these eco-concerned media and environmental activists benefit from their fear-mongering propaganda? Well, easily. They build their status and fame through telling people that they are being fooled and poisoned by “evil scientists”, whereas the anti-GMO organizations are there to save them. That is scary. The uneducated, intimidated and angry mass of people is scary. Why would the anti-GM organizations be interested in waging war against science? They seek to paralyze people’s ability to critically and logically think, to make them manipulable. The result is a massive support for some completely nonsensical yet destructive ideas. From the larger perspective, the mechanism of psychological manipulation and appealing to human emotions rather than to cognitive abilities help many politicians and religious groups to secure a massive support for their simple yet very tantalizing ideas – who is to blame in income inequality, for instance? The richest 1%, of course. Who is to blame in terror attacks? Western society for provoking peaceful Muslims. Why is Africa so poor? Because of neocolonialism.

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A Major Misconception About China

Many well-known China experts have expressed the notion that the Chinese middle class, having experienced years of steady economic growth, will suddenly demand rights, freedom, and democracy, resulting in a revolution and toppling of the Communist Party. It is also widely believed that people will care less about official statistics (which in many cases appear fictional) and more about the quality of their lives and the type of government they have. Such a prognostication has been circulating for 20 years now, at least with respect to China. Meanwhile, the Chinese middle class (which can alternatively be called bourgeoisie) remains quiet, barely showing any visible intention to demand political reforms from below. No doubt, it would be great if the ruling party sooner or later realized the need for political reforms and started to incrementally introduce them. However, for the most part, the Chinese middle class has opted for wait-and-see tactics in anticipation of political reforms from above.

Here is why. The Chinese bourgeoisie encompasses well-educated and fairly well-off people (annual per capita GDP in Shanghai, for instance, was around $20,000 as of last year). They tend to carefully observe world trends and have witnessed examples of how so-called “democracies” work – both in neighboring countries such as Thailand, and in older “traditional” democracies such as the United States. To be more precise, in Thailand a “democratically elected” prime minister has finally been overthrown by the military. In Venezuela, the local middle class is also protesting against their “democratically elected” leaders. People are fed up with democracies that in reality bring populists like  Shinawatra and Maduro into power. As a result, the middle class goes out in the streets with the demand to undo a democratic voting system that benefits a parasitizing majority and exploits a working minority. The Chinese bourgeoisie looks at the United States and sees political leaders like Kilpatrick in Detroit, DeBlasio in New York, Baraka in Newark, who, although not as extreme as Shinawatra or Maduro, are quite populist. Essentially, America, a traditional democratic state, appears to be moving in the same populist direction, discrediting the idea of democracy in Chinese eyes..

In other words, the Chinese middle class can clearly observe what happens to democracies, populists systematically win elections, and thus they project potentially similar results for their country. With equality and “social justice” on their campaign banners, populist politicians promise to extract more money from the rich (who, by and large, earn the money) and then hand it out to the poor. As a result, those who work and earn money constitute a minority nowadays, whereas those who don’t work (including such categories as the unemployed, students, and retirees) have now become a majority. This majority, in turn, votes for more wealth expropriation and ever more generous handouts, demanding their “fair share,” often as reparations for prior oppression and exploitation. From the perspective of its domestic affairs, China itself is far from being perfectly calm and peaceful. Chinese peasants continue rioting against forceful confiscation of their lands by private and state actors. Chinese peasants revolt and demand higher wages too. Meanwhile, the Chinese bourgeoisie, however, does not seem to share their revolutionary sentiments, so far.

Hence the question – why would Chinese people fight for democracy as it is currently practiced (not merely as a theoretical construct)? Why would we expect that democracy in China will be any different from the aforementioned examples of both old and young democratic states? True, the ruling Communist party is obsolete and inefficient; true, the bureaucratic machine is cumbersome and hard to deal with; true, the regime overall is corrupt. Nevertheless, the Сhinese middle class believes that, for all its flaws, the current regime is stable; it is better to be ruled by the Chinese aristocracy, in the form of the Communist Party, than it is to be ruled by a crowd of hungry and illiterate peasants. Moreover, President Xi Jinping has made it clear that the country’s new administration is serious about leading China towards the market economy and has already taken notable steps in that direction. The bottom line of this story is clear: if you want to wreck 36 years of economic progress for rich and poor alike, let China’s 500 million peasants vote for another Mao.