You’ve heard about the latest EU member-state to get in line for bailout assistance, right? It’s small, but it’s financial needs are anything but. It’s Cyprus. But it’s also a beggar with a difference, namely a rather too-close relationship to Russia.

Schuldenland: Zyperns Trickserei mit Russen bringt EU in Rage http://t.co/xZO5vzNJ

July 9, 2012 3:31 am via SocialFlowReplyRetweetFavorite

@weltonline

Welt Online

Germany’s Die Welt has a great run-down of the situation on that Mediterranean isle, so far-flung that it might as well be considered Middle Eastern. But no, as of 1 May 2004 Cyprus has been an EU member-state, as of 1 January 2008 in the Eurozone. And as of a week ago last Sunday it is EU Council president! This despite all the international intrigue swirling around it, as sketched in this Die Welt piece, which reads like something out of a spy novel. (more…)

A brief review here of an important European energy project: Nord Stream. That’s the natural gas pipeline currently being built under the Baltic Sea, connecting the Russian coastal town of Vyborg (Выборг, north of St. Petersburg, on the Finnish border) with a western terminal near the East German coastal town of Greifswald. But as the Nord Stream homepage explains, “[This] is more than just a pipeline. It is a new channel for Russian natural gas exports, and a major infrastructure project which sets a new benchmark in EU-Russia cooperation.”

All true, in a way. But the crucial fact that the website is in no hurry to mention is that this pipeline will deliver Russian natural gas to Germany while by-passing the countries through which a cheaper, overland pipeline would normally go, in particular Poland. To be sure, pipelines to Europe through Poland (and the Ukraine) already exist. But Russian relations with those countries are usually rather prickly; with the completion of Nord Stream, the Russian authorities will have the option within a few years to cut them out of natural gas transmission completely – literally to leave them out in the cold, with no gas, as has already happened this past decade during a number of winter-time confrontations with Ukraine. (more…)

It now looks like an agreement is in place to let Russian natural gas shipments to the West resume with independent monitors from the European Union in place, but those have been blocked completely since Thursday (8 January) and it will take about a further three days to resume full service. In the meantime, unfortunately, the continent has suffered under a bitter cold spell, so that the political pressure from freezing constituents has already reached the breaking-point – I wouldn’t really call it the “boiling-point” – in Slovakia. As a number of press outlets report, among which Berlin’s Der Tagesspiegel, Slovak premier Robert Fico announced at a Saturday evening televised press conference that his country would bring back on-line the atomic reactor at Jaslovské Bohunice that it had just shut down before the end of 2008.

Gee, why did the Slovaks go and close that reactor in the first place a few weeks ago? Namely because doing so, and doing so permanently by the end of 2008, was a provision in the accession agreement by which the country became a EU member-state back in 2004 in the first place. With the Jaslovské Bohunice reactor we’re talking in fact about the very first nuclear reactor in the former Czechoslovakia, whose construction began back in 1958 although it first went into operation only in 1972. Naturally, then, it’s a reactor built in the Soviet style, which in the light of such incidents as Chernobyl raised safety concerns to such a degree that the EU insisted that Slovakia eventually shut it down. (more…)

The Reuters/Jefferies CRB Index is “the most widely recognized measure of global commodities markets” (if they do say so themselves on their Jefferies website) and last 2 July its measurement of the price of a bundle of 19 different raw-material commodities reached its all-time high. Since then, though, it has fallen by 10%, reports Christian Losson writing for the French newspaper Libération. (Raw Materials Deflate… A Little. Losson calls it the “Jefferie Reuters CRB,” FWIW.) Specifically: natural gas down 31%, corn down 19%, nickel down 18%, soya down 13%, gasoline down 11%. Even palm oil is affected (don’t laugh, it’s apparently important in the production of bio-lubricants), Malaysia is now finding it hard even to give the stuff away.

What’s happening here? Is it an up-and-down see-saw? The working-out of some cycle? A commodities crash? That CRB index hasn’t lost this much ground since 1980, when super-high interest rates drove America and then much of the rest of the world into recession. Losson tries his best to get some expert guidance, but the experts aren’t saying much. Maybe you can turn the causality around: if commodity prices are acting this way, that must mean that in effect America (and maybe much of the rest of the world) is in a recession now.

Then again, maybe not, because even more striking is the sheer volatility of commodities prices. The last week, he reports, both mineral and agricultural products (but he does not include oil/gasoline) have headed back up again in price. Beyond that, as one French professor he quotes reminds us, the potential for these prices to go higher – all it takes is some geopolitical or climate shock somewhere – is much larger than it is for them to continue to sink.