Energy war under cover of worldwide crisis

The title sounds heavily, especialy when you look at latest European weather forecast and unusualy hot spring in Central Europe, but I did not find any better expression for latest development on energy field in and around Central Europe. With Czech EU presidency closing in shame and disgust, Poles are again rising their voice about energy security with fresh support from Finland. Finnish President Tarja Halonen refused to give at meeting with her Russian counterpart a blind cheque on Nord Stream pipeline project. Dmitry Medvedev also offered to G8, G20 and selected neighbour partners offer of new scheme of energy cooperation, which is - according to the first reports - going against European Energy charter, basic EU document which is kind of a counterweight of the interest of Russian Gazprom.
Russia has problems with its southern pipeline, South Stream, due to crisis there is lack of resources and also politicial support is waining in allied states (especialy resignation of Hungarian Prime Minister Ferenc Gyurcsany was blow to Russian plans). Meanwhile, there is stronger push with northern pipe. Gazprom and its German partner are seeking (after Netherlanders) French company GDF Suez to get involved in Nord Stream and bypass Central Europe and Ukraine completely.
The only obstacle (beside unclear financing of project, which is getting more expensive almost every minute) is study on environmental impact of Nord Stream in Baltic Sea. This is argument used by Swedes and Finns and it is pushing Russians to threats that they will abolish Nord Stream at all and they will build liquefaction plants for LNG.
Moscow knows very well how to play against internal divisons in the EU on energy field. Russian companies are even at times of crisis intensifying their efforts to get to downstream, as close to European customer as possible. Surgutneftegaz, company close to Kremlin, used fragile political situation in Hungary to get 21 % of Hungarian giant MOL. There are talks that Lukoil is searching for refinery capacities through acquiring shares in Polish PKN Orlen and here in Prague there is almost no week when we in media would not get invitation to concert or reception sponsored by any Russian energy company.
EU was able to answer only with deal signed with Ukraine to overhaul Ukrainian pipeline system. This deal angered Kremlin quite a lot, but it is not that kind of united response on energy field Brussels should produce. Let's see what will Eastern partnership summit and EU-Russia summit bring.
Simply, in words of one Czech top diplomat: "They are very professional, very well prepared and if EU would not unite on approach towards Russia, there are going to be very tough times in dealing with Russia on energy (and any other) issue."
We should not forget even at times of political turmoil (Czech case) or economic downturn (Hungaria, Baltics) in what kind of neighbourhood we are living.

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- fixed term contract
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Hungarian version of this advertisement see blog: http://tudtad.blog.hu
Thanks to Andras for translating for me Hungarian original, which I expanded for general Central European purposes after (a little bit unexpected) events in Prague.

Czech crisis explained with personal details

Some friends from Poland, Macedonia, Brussels and elswhere has asked me what will happen now in Czech Republic after government was voted out. To a big extent result of vote in parliament was surprise to everybody, therefore there is still not clear plan B. The most probable scenario is that government will govern in demission until the end of Czech EU presidency and meanwhile both biggest political parties, Topolanek's ODS and oposition social democrats (CSSD) will find any agreement on untimely elections. At least, this is wish of Mr. Paroubek, head of social democrats.
Many depends on what will president Klaus do and also what party ODS do, because due to constitution, there are three chances to form government, but without clear deadlines, therefore government in demission could govern many, many months.
For Topolanek and ODS would be better to have untimely elections this summer, popularity is rising due to EU presidency, seen in Czechia more less like success.
For Paroubek, autumn or spring next year are better and meanwhile there might be, according to his plan (supported most probably by president) some kind of weak ODS government or simple technical cabinet which will not be able to make any important decisions about privatisations or reforms in health care or anything like that.
Problem is that there is not clear majority in parliament, thereforem for solution there is necessary both big parties to agree on (to have early elections is very hard to agree technically). Tuesday's vote was result of rebellion of two Green party MPs (two ladies) and two ODS dissidents, one of them, Vlastimil Tlusty, was even minister in the first Topolanek government, but they disaggreed. Rumours say that present fiance and mother of his son, also MP from ODS, was previously fiance of Mr. Tlusty, then you can guess about real personal reasons behind that.
Other ODS dissident voice, Jan Schwippel, has decided after talk with President Klaus, who is opposing proEU stance of Mr. Topolanek and they also personaly disaggree on many things (and Mom of Mr. Schwippel, who was advising him, is head of ODS local bureau at region where Mr. Tlusty is from)
As result, you can see that failure of government is result of weak majority and rebellion inside government camp, not result of any consistent policy of leftist opposition.

Bruno in Latvia, or optimistic story from crisis

Optimistic news from the midst of crisis: his name is Bruno Medveckis, is about forty years old, has bold head and real azbuka tatoo on his left hand and is not smiling. He drives taxi in Riga and speaks in one words. "Ponjal," said in Russian beign said address. "Understand."
But he did not understand and went to other place. When we clarified where I want to go, he has switched off taxameter and he drove to right place, switching taxameter properly during drive at place where he should go if he understood properly earlier. He was driving like crazy, very quickly, so my appointment was not so late. Price was ok, therefore I was shocked comparing Bruno's service with his Prague's colleagues.
Latvia has new government, which will try to save country. Estonia's Prime Minister has announced that introduction of euro is possible next year and Lithuania's politicians are fighting againts rumours about devaluation. Three Baltic countries with three open and formerly skyrocketing economies are approaching crisis differently, because of policies of their elites during last twenty years.
It is kind of model for all Europe. Even we are in the EU, our problems are slightly different. We like to consider ourselves Central, not Eastern Europe. Latvia has 15th government since regaining independence in 1991. Cuts in budget will be very painful, people got used to high standards (and loans). The same with Estonians, but difference is that - even in Estonia governments are changing quite rapidly - there is wider "economical" consensus on what is right to do. This is why Estonia has special fund from better times and no prospect of bancruptcy, even also Estonian budget is cutting for ten percent.
Baltics are kind of experimental model for the rest of EU. Flat tax, quick growth, open economies, now deep fall. Different nations, different approaches. I would wish success to all of them, their countries are very nice, but political style and leadership is totally different - and also chances to succeed in times of crisis.
New prime minister Valdis Dombrovskis has told me just hard words about future cuts and that he is prepared to be very unpopular politician (see video here). Mood is gloomy among Latvians.
But hope survives even in Latvia, where now many people just shut their mouthes and they are counting (falling) salaries and (almost nonexistent) savings and they try to figure out how to survive crisis storm.
This is why: When I was leaving Riga to airport at very early in the morning, hotel receptionist ordered taxi. Guess who was waiting for me at 4,30 a.m.. Bruno. He did not smiled, just put my suitcase in car. I put a safety belt and I was regretting that I got up so early. Normal time to Riga's airport is about half an hour, Bruno made it in fifteen minutes. And for half price of what I had paid three days earlier coming to Riga during late night flight.
The trust, the most questioned economic virtue of this global crisis, the belive that Latvians's entrepeneurial spirits survives, has remained in my head as well as business card with Bruno's mobile number in my pocket. Next time going to Riga, I call Bruno in advance.

Aftercrisis EU and future of Mr. Klaus

Preparing for trip to Riga, where new government is forming to tackle the crisis, I was wondering about heated debate from last week about new border lines in Europe - who is what from which perspective. Recent crisis has shown that new, undrawn border is emerging as well as we can expect that European union after this crisis will be different.
Undrawn border has name the euro. Common currency seems to play a role of nongeopolitical buffer zone between West and East and as proof for that we can use for example plea of Hungarian Prime Minister to ease Maastricht criteria or promises of Latvian politicians to stick with lat pegged to euro with all unpleasant consequencies like higher taxes and lower salaries in state sector. For the first time since divison of Czechoslovakia Slovaks could feel better protected from outside storm than Czechs and for the first time Poland - with exception of Kaczynski twins - is really persuading itself that national currency is not sacred cow.
But what is emerging from all the mess is a necessity to change the approach from EU perspective. There is nice piece about euroscepticism and crisis times from Gideon Rachman in Financial Times (read here) to which I would only add that one of collateral results of nowadays crisis management could be new EU architecture: more united Europe.
Consequencies are unpredictable. I had pleasure to explain to group of Catalan journalists Czech debate which was quite uneasy: Spain benefited from EU membership enourmously, doubters are only among hardline nationalists in Basque country, therefore for them was not understandable why these Czechs are not so ethusiastic about EU project.
We are not all Vaclav Klaus, this is the first point. Second, for forty years we had been receiving orders from Moscow, before that from Berlin, before that twenty years of freedom and before that 300 years from Vienna. I hope that this could at least partialy explain why we are so suspicious to anybody who tryes to impose any directive upon us and why we are looking at Brussels very carefuly even with argument that "Brussels" includes also ourselves. We know ourselves, so it even more suspicious.
Czech are commited to EU project, but we do not like to show too much enthusiasm for that (Poles call this "dirty Czech pragmatism"). But new aftercrisis situation with possibly more centralised EU governance mechanisms, more tied eurozone will be new challenge not only for our eurorealism and pragmatism, but for the whole Europe. And, fortunately, Mr. Klaus does not have chance to be elected again our president - he is serving his second and last term under present constitution. But discussions about direct presidentical elections - and change of constitution - are emerging.
But what about to offer him some interesting EU post in the new European architecture? Special envoy for climate change or special lecturer on populist affairs?

Plea from Central Europe: We are not the East!

Forget about geography, important is who pays its bills in euro. These countries are more or less safe. For example, Slovakia, which intoduced euro two months ago and is even in larger scale exposed to downturn in automotive industry, has better treatment then Czechia.
So, forget about geographical meaning of the East and the West. At least this is a lesson of recent turmoil on Central European financial markets followed by latest development in politics and economics. There was raised - also due to articles in such prominent publications like The Economist and Financial Times - a question, if Western analysts are aware that Czech Republic has different debt structure than, say, Hungary and that problems of Latvia are not the same like problems of Czechia. "You cannot counter the argument that geographically, Czech Republic is in the region between Latvia and Hungary," was ironic response of one Western colleague to my question what is policy of his newspaper on which it divides Europe into West and East.
I know that Czechia is for many analyst and commentators still wild East (especially, if they ever had encounter with famous Prague's taxi drivers), but from economical and structural point of view, situation here is quite different than in Baltics or in Ukraine or Serbia. For example, we had already our banking crisis in late 90s and our Consolidation bank, which siphoned toxic assets, is quoted in recent days as one of the models for solving the problems elsewhere, especialy in the US.
We are now more part of the West than the East - politicaly (EU + NATO + possible US radar base), economicaly (look at export statistics), even socialy (English as lingua franca and all the "cultural" stuff in TV or travels). So it hurts when Western analysts put you in the same basket with Ukraine, Belarus or even Tajikistan. The work we have been doing in last twenty years is somehow dishonoured...
Euro has become new division line in the harsh times of economic crisis, as I understand from my talks with some economical analysits during last few days. From that point of view, Slovakia is even further on the West and Austria is with its indebtnes (its banks exposure in postcomm countries means that debt of Austrian banks equals its 80 % of GDP) more vulnerable then, say, Czechia. Simply, we are interconnected with the Western financial system as much as with Eastern gas and oil pipelines. We are in the middle, in the Central Europe which I would consider rather special entity than easy described part of West or East.
Czech national bank today has complained about misinformation in Financial Times and The Economist about state of Czech debt (read here). Westerners could in these turbulent times cause us real damage.
I think that part of the problem is in geography and in good old cold war divison between East and West which still prevails in heads of many Westerners (as well as in Kremlin). We can agree we have in common with others that we are postcommunist countries, but definitely we are not the East. And the question is what common economical problems has Czechia with, say, Azerbaydjan. We even have very, very different structure of mortgage debt in comparison with Poland and Hungary, where in both countries there are problems with lending in Swiss francs or in euro (1/3 of Hungarian debt is in foreign currencies). Foreign currency denominated debt in Czech market is - according to Czech natinal bank - around 0,1 percent.
Two weeks ago Czech foreing minister Karel Schwarzenberg had public quarrel with his Russian counterpart Sergej Lavrov about if we are "Central" or "Eastern" Europe. The New York Times today is on the same tone like Lavrov putting us on the East (read here).
On the other side, I can only quote Timothy Garton Ash who wrote in one of his books that there are about 16 definitons of Central Europe in which there is not included only Spain, Portugal and Norway.

Lost in realpolitics: the end of radar in Czechia

Hillary Clinton has said to Czech Foreing Minister Karel Schwarzenberg that issue of US antimissile defense program (and radar in Czechia) could be "reconsidered". Unofficially, Czech diplomats were told to be prepared for cancellation of plan for US base on Czech soil.
Next day Russian FM Sergej Lavrov has told to Schwarzenberg that Czechia and Poland (hosts of possible US missile defense facilities) are "Eastern Europe, not Central according to UN classification".
Being president of EU, it is not easy job for Czech diplomacy. Being message carrier between superpowers is even much worse (all the stuff is around Iran and cooperation between the US and Russia over Iranian nuclear program). But being nothing - in terms of international politics -, being only passive player waiting for decision of others, being shifted by decision of others, this is true tragedy.
Czech diplomats maybe had been playing wrong cards last year persuading themselves and journalists as well that question of US radar in Czechia is irreversible even after Democrat would win in the US. It looks like that Czechs overplayed (as many times during history) their willingness to attach themselves to any superpower: to France (and Europe in general) after 1918, to Soviet Union after 1945.
Now the US, last resort, is falling short of expectations of Czech ruling political elite. Disappointment hurts, especialy to those who invested heavily their political capital into the struggle over US base in Central Europe. There will be no special relations on link Washington-Prague or Washington-Warszaw. Only realpolitics.
Reapolitics. It was Henry Kissinger who said: "To be an enemy of America can be dangerous, but to be a friend is fatal." He was right, through radar (missile defense) issue Czech politicians, diplomats and journalists, who were last two years persuading Czech public that US base on Czech soil is huge gain, are given a lesson of realpolitics.
Maybe it is too early to write down another ally, Sarkozy's France is still much worse as well as Putin's Russia. But at times of global crises, of still weak Obama's administration is better to be prepared for worse and than be surprised pleasantly. Maybe, conservative ayatollahs will win June's Iranian elections so strongly and centrifuges in Natanz will work so perfectly that question of radar on Czech soil will get back sooner that we expect. But reapolitics is real.