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 21 
 on: Today at 06:46 AM 
Started by Steve - Last post by Rad
Scotland Heads to the Polls for Independence Vote

By ALAN COWELL
SEPT. 18, 2014
IHT

EDINBURGH — After a passionate campaign that spanned two years of mounting intensity but reached back into centuries of history, Scottish voters headed for the polling booths on Thursday to choose whether to remain part of the United Kingdom or to secede.

If the “yes” campaign seeking independence for Scotland secures a majority, it will herald the most dramatic constitutional change in Britain since the two countries united in 1707. The repercussions would be momentous, creating the world’s newest state and ending a union that once oversaw an empire and triumphed in two world wars.

In Edinburgh, a steady stream of early voters filed into polling stations under murky skies and fog that swathed the ramparts of Edinburgh Castle. Others said they would vote later in the day, after working hours. Electoral officials have said they are expecting record numbers.

If “no” voters prevail, the outcome will leave Britain’s prime minister, David Cameron, facing challenges from his own Conservative Party over promises of greater autonomy for Scotland that he made in an effort to head off the pro-independence campaign led by the Scottish first minister, Alex Salmond.

Almost 4.3 million people — 97 percent of the electorate — have registered to vote, including 16- and 17-year-olds, enfranchised for the first time. Analysts have forecast a turnout in excess of 80 percent at about 2,600 polling places stretching from urban centers to remote and sparsely populated islands and far-flung settlements in the Scottish Highlands. Voting began at 7 a.m. and the polling stations were set to close at 10 p.m.

A full result is expected by breakfast time on Friday, when Scots will learn whether their land is to embark on a era of restored sovereignty that, only a matter of years ago, seemed unlikely. The English — who form the overwhelming majority of the 60-million-plus population of the United Kingdom — have no vote in the referendum, whose result could send political and economic shock waves across the nation, which also includes Wales and Northern Ireland.

Opinion polls before the vote left the result on a knife edge, too close to call. Despite the intensity of the debate, some key issues remain unresolved, such as the currency to be used by an independent Scotland if there is a “yes” vote.

Equally, Scottish secession could raise profound questions over Mr. Cameron’s political future. Mr. Salmond, Scotland’s highest-ranking official, has indicated that he will not step down if his side loses the referendum. One big issue if the “yes” campaign wins is the future of British nuclear submarines based in Scotland, which Mr. Salmond’s Scottish National Party wants to evict.

The question on the ballot is brief and simple: “Should Scotland be an independent country?” But the ramifications of a “yes” vote in particular are potentially far-reaching, raising questions about the international roles to be played by a diminished Britain and a newly independent Scotland. Opinion is closely divided and deeply felt.

Brian Cox, a Dundee-born actor who lives in New York and cannot vote in the referendum, returned to campaign for independence. He was impressed by the exercise of democracy here.
Photo
A supporter of the "Yes" campaign outside a polling station in Strichen, Scotland, on Thursday. Credit Dylan Martinez/Reuters

“This is democracy at work as you rarely see it,” he said. “No or yes, people are going out to vote for something they deeply believe in.” He stopped, then said, “It’s moving.”

The impetus for a referendum began when Mr. Salmond’s party — once on the political fringes and with little electoral clout — won a majority in the Scottish Parliament in 2011, leading to negotiations with Mr. Cameron in 2012. Those talks set the date and terms of the referendum taking place on Thursday. Initially, the British leader seemed confident of victory, with opinion surveys showing Scots overwhelmingly in favor of remaining in the United Kingdom. But as the vote approached, the gap narrowed to the smallest of margins.

The two sides have sought to enlist the support of celebrities to back their rival causes. The newest apparent social media coup came in the early hours of Thursday when a Twitter post attributed to the Scottish tennis star Andy Murray castigated the “no” campaign. “Huge day for Scotland today! no campaign negativity last few days totally swayed my view on it. excited to see the outcome. lets do this!” the message read.

Mr. Murray, 27, is not a Scottish resident and therefore cannot participate directly in the referendum.

As the ballot approached, both camps scrambled to lure hundreds of thousands of undecided voters whose ballots could swing the outcome.

At a rally in Perth late on Wednesday, Mr. Salmond told his followers that the vote is “our opportunity of a lifetime and we must seize it with both hands.

“There are men and women all over Scotland looking in the mirror knowing that the moment has come. It’s our choice and our opportunity and our time,” he said, reflecting the upbeat and optimistic tone that the"yes” campaign has sought to project, in the face of dire warnings from the “no” campaign of the economic and social consequences of independence.

In his own final public word on the vote, Gordon Brown, a former prime minister from the opposition Labour Party who has emerged as a leading spokesman of the anti-independence campaign, said in Glasgow on Wednesday that “the silent majority will be silent no more.”

“We will build the future together,” he said. “What we have built together, by sacrificing and sharing, let no narrow nationalism split asunder ever.”

The run-up to the vote has sharpened the lines between those who yearn for greater freedom from London’s control and those who believe that a break would create unacceptable uncertainty.

Ryan Johnstone, a 22-year-old student in Dundee, spoke to a reporter outside the polling office where he had cast his ballot for independence, he said, because “Scots keep on voting for Labour or the Liberal Democrats but getting Conservative governments.”

He was referring to the electoral arithmetic that enabled Mr. Cameron’s Conservatives to take office in coalition with the Liberal Democrats to govern all of Britain, even though his party won only one parliamentary seat in Scotland.

“It would be nice to have our own country,” Mr. Johnstone said.

But in the drizzle outside the polling station, Mani Raj, a retired medical practitioner, said he had voted against independence “because of the uncertainty about the economics of the whole situation.”

“Independence is for people who are enslaved — and we are not,” said Mr. Raj, 70, who was born in India and came to Britain in the 1970s. “India was colonized, they fought for independence and got it. But being a colony is totally different from being part of a union.”

 22 
 on: Today at 06:41 AM 
Started by Steve - Last post by Rad
 SPIEGEL ONLINE
09/18/2014 12:57 PM

Germany's Ailing Infrastructure: A Nation Slowly Crumbles

By SPIEGEL Staff

Germany has long had a reputation for excellent infrastructure. But in recent years, both public and private investment has dwindled dramatically, and officials are increasingly concerned about how to solve the problem. They have good reason to be worried.

Despite its shiny façade, the German economy is crumbling at its core. That, at least, is how Marcel Fratzscher sees it. With the country's infrastructure becoming obsolete and companies preferring to invest abroad, the government advisor argues that German prosperity is faltering.

When Fratzscher, the head of the German Institute for Economic Research, gives a talk these days, he likes to pose a question to his audience: "Which country is this?" He then describes a place that has seen less growth than the average among euro-zone countries since the turn of the millenium, where productivity has only increased slightly and where two out of three employees earn less today than they did in 2000.

Fratzscher usually doesn't have to wait long before people begin raising their hands. "Portugal," one person offers; "Italy," says another; "France," exclaims a third. The economist allows his audience to continue searching for the right answer, until, with a triumphant smile, he announces the answer. The country he is looking for, the one with the weak economic results, is Germany.

Perhaps it takes someone with Fratzscher's background to be so scathingly critical of own country. The Bonn economist worked as a government adviser in Jakarta in the mid-1990s during the Asian financial crisis. He conducted research at the renowned Peterson Institute in Washington when the dot-com bubble burst and wrote analyses for the European Central Bank in the darkest hours of the euro crisis. He has always observed developments in Germany "with a certain amount of distance," he says.

Fratzscher has headed the German Institute for Economic Research (DIW) for more than a year now, and it is clear that this newfound proximity has sharpened his view of the contradictions in the world's fourth-largest economy. German industry sells high-quality automobiles and machines around the world, but when the plaster begins to crumble in an elementary school, parents have to raise money to hire a painter. Companies and private households are sitting on trillions in assets, but half of all autobahn bridges are urgently in need of repair. Germany derives more benefits from Europe than most other countries, and yet its citizens feel taken advantage of by Brussels.

Grand Delusion

Fratzscher calls it "Die Deutschland Illusion" ("The Germany Illusion"), the title of his new book which German Economics Minister Sigmar Gabriel will introduce on Friday. Last year, he asked his staff at DIW, one of the most important think tanks in the country, to address the underpinnings of the German economy. Fratzscher has condensed the results into an unvarnished reckoning with the country's economic grand delusions.

Germans see their country as an engine of employment and model of reform for all of Europe, Fratzscher claims, and yet Germany has barely made up for its own economic slump triggered by the financial crisis. Fratzscher's Germany looks like a giant from a distance but gets smaller and smaller the closer you get. The country is "on a downward path," writes the DIW president, and it's living "from its reserves."

Strong labor market figures still conceal Germany's most dangerous weakness: Hardly any other industrialized nation is so negligent and tight-fisted about its future. While the government and the economy were investing 25 percent of total economic output in new roads, telephone lines, university buildings and factories in the early 1990s, the number declined to only 19.7 percent in 2013, according to recent figures from the Federal Statistical Office.

That is more than just a statistical triviality. The future of the country and the everyday lives of its citizens depend on how each euro is used today. If a euro is spent immediately, it has no use for the future. It can also be saved for future consumption. Or it can be invested in companies, education and infrastructure, so that it becomes the basis for future prosperity, technical progress and additional jobs.

The problem in Germany is that money is currently being used primarily for the first two purposes. According to DIW calculations, the investment shortfall between 1999 and 2012 amounted to about 3 percent of gross domestic product, the largest "investment gap" of any European country. If one looks only at the years from 2010 to 2012, the gap, at 3.7 percent, is even bigger. Just to maintain the status quo and achieve reasonable growth, the government and business world would have to spend €103 billion ($133 billion) more each year than they do today.

Growing Concern

This is Fratzscher's key diagnosis -- and now the onus is on him to find the treatment. Since Economics Minister Gabriel appointed him as his investment commissioner at the end of last month, he has been at the center of a spending reform debate potentially as important as the one over the Agenda 2010 reforms to the labor market and social welfare system.

The current economic downturn makes the problem all the more urgent. Now that industry has seen a decline in order volume and scaled back production, the government must decide whether to offset the decline with an investment program.

What was recently nothing more than a theoretical possibility could soon become a central sticking point for Chancellor Angela Merkel's coalition government. While Merkel and Finance Wolfgang Schäuble remain determined to adhere to their plans to present a balanced federal budget next year, Fratzscher advocates preparing for a worst-case scenario. "If the crisis worsens once again," he said in a conversation with SPIEGEL, "more spending will be needed to bolster the economy."

If that happens, Fratzscher's book could offer a blueprint for how to proceed. In his study, the DIW president meticulously lists Germany's biggest investment problems from companies to the transportation network, and from education to the Energiewende, the federal government's shift away from nuclear power and toward green energy. Supporting evidence for his theories can be found all over the country.

A vanishing loyalty to Germany

Rainer Hundsdörfer is about to make what is perhaps the most difficult decision of his professional life. His company plans to invest €50 million soon, but he is unsure if it's still worth spending that money in his homeland.

Hundsdörfer is the chief executive of fan manufacturer Ebm-Pabst. The industrial fans the company produces in the southern German town of Mulfingen are installed in supermarket refrigeration systems, hotel air-conditioners and computer servers worldwide. Overseas markets already account for about 70 percent of the company's sales.

Ebm-Pabst has long been producing some of its products in India and China, but thus far its objective when investing in foreign countries was simply to be closer to new customers. The company remained fiercely loyal to its native Franconia region in Germany. But that loyalty could evaporate with the next investment decision. "It would be the first time we decide against the German site," says Hundsdörfer.

The company wants to expand a plant in Mulfingen and build a new logistics center. This could create hundreds of jobs, but what is missing is "a decent road infrastructure to make our investment worthwhile," says Hundsdörfer. His trucks are forced to use Hollenbacher Steige, a crumbling road urgently in need of repaving. Often, trucks coming from opposite directions can't pass each other on the narrow road.

The road construction project would cost €3.48 million, but state and local governments have been hesitant to move forward for years, citing costs. For Hundsdörfer, the numbers simply don't add up. "We pay more in commercial tax each year than the road would cost to build." Now Hundsdörfer is considering the previously unthinkable: Why not build the logistics center abroad? Hundsdörfer wouldn't be alone in making that choice.

Decreased Industrial Investment

The German economy has shied away from investment for years. Companies have almost €500 billion stashed in savings, according to the DIW president's estimates, and yet the investment ratio in the German private economy fell from just under 21 percent in 2000 to a little more than 17 percent in 2013.

Many economists conclude that companies are anxious because they are worried not just about crumbling roads, but about the lack of qualified workers, the state of the euro zone and rising energy costs. And this fear, in turn, is stymying the planning for Germany's future.

The consequences are dramatic. When adjusted for inflation, many businesses have actually decreased their spending on machinery and computers in the last decades, according to the figures from the Federal Statistical Office. This is especially true of the chemical industry, but industrial infrastructure is also crumbling in, for example, the mechanical engineering and electronics sectors.

But companies haven't stopped investing altogether -- they are simply no longer investing in Germany. Bavarian carmaker BMW is currently spending $1 billion on turning its Spartanburg, South Carolina plant into its largest worldwide. Daimler now assembles the new C class for the American market in the town of Tuscaloosa, Alabama. And painting equipment manufacturer Dürr expanded its factory building in Shanghai last year so that it matches the size of its headquarters in Bietigheim-Bissingen, near Stuttgart.

Since the fracking boom has lowered energy prices, the United States in particular has blossomed as a preferred site for German companies. In May, BASF CEO Kurt Bock announced a new €1 billion investment, the largest in company history, on the American Gulf Coast. In explaining the decision, the executive noted that natural gas in the United States costs only a third of what it does in Germany. Technology giant Siemens even went a step further, announcing that it will run its entire business from offices in the United States in the future.

Infrastructure -- A Herculean Task
The Sauerland route between Dortmund and Giessen in western Germany, one of Germany's most beautiful highways, is deservedly nicknamed the "Queen of the Autobahns," traversing a picturesque landscape of hills and valleys. ut it is set to become one of Germany's most expensive autobahns in the coming years.

The stretch of the highway passing through the state of Hesse includes 22 large bridges that were built in the 1960s, and all but two of them will have to be refurbished in the next few years. The need has arisen "well ahead of the lifespan calculated at the time of construction," says Tarek Al-Wazir, transportation minister in Hesse.

Three weeks ago, he visited a major construction site at the Lützelbachtal bridge near Dillenburg. Wearing a helmet and a safety vest, he was suspended above the valley in a steel cage, which enabled him to see how the concrete is cracking, steel rods are rusting and seals are crumbling.

The bridge was not planned for current loads -- the maximum allowable weight of a truck used to be 24 tons, but today it's 44 tons. A single tractor-trailer now exerts as much stress on the material as 40,000 cars.

There is a lot to do in Hesse -- and much to pay for. The state and federal governments are spending €207 million to renovate bridges in 2014. The costs will continue to rise in the coming years, says Al-Wazir, who claims this will be nothing short of "a Herculean task" for his state.

Autobahn bridges are the most visible sign that a significant portion of Germany's infrastructure is ailing. Autobahns and federal highways, bridges and locks, railway networks and shipping routes -- much of this infrastructure has gotten old. In the last two decades, federal, state and local governments have neglected to properly maintain these kinds of structures, and their investments in maintenance and repairs have steadily declined since the early 1990s.

In 2008, Germany was ranked third on a list -- prepared annually by the Global Economic Forum in Davos -- of countries with the best infrastructure. But now Germany has slipped to seventh place. For decades, the world envied Germany for its network or roads and railways. Today this capital is crumbling.

The trend could be stopped, even reversed, but to do so, Germany would have to invest at least an additional €10 billion a year according to DIW calculations. That includes roughly €3.8 billion to preserve crumbling structures. Another €2.65 billion would be needed to undertake renovations that were neglected in the past. Some €3.5 billion is needed to expand the existing infrastructure. The federal government, however, only plans to spend €1.25 billion a year -- an eighth of what the economists believe is necessary.

Private-Sector Help?

But when public funds are insufficient, there is another way to pay for bridges and tunnels -- so-called public-private partnerships, known by the German acronym ÖPP. In these partnerships, an investor funds projects with private capital or borrowed money and, in return, receives a fee from users or from the government. A standard life-span of such deals is 30 years.

One example is that of the A1 autobahn extension between Bremen and Hamburg to a length of 73 kilometers (45 miles). A consortium including engineering and services group Bilfinger financed the construction and will receive a monthly payment from the government until 2038. Those payments come from truck tolls that have been collected since 2005 -- the exact amount the consortium receives depends on the volume of truck traffic along the stretch of highway.

It sounds logical enough. The argument in favor of ÖPP projects is that they make it faster and cheaper to preserve and improve infrastructure. Indeed, many such projects -- including the extension of the A1 autobahn, were finished ahead of schedule.

Few Other Options

But a study by the Federal Audit Office has found that costs may actually be higher for ÖPP project than they are for conventionally funded enterprises. The auditors examined seven large, privately financed road-construction projects. They found that five of them would have been cheaper had they been paid for in the usual manner -- that is, with taxpayer money. The total savings were estimated at €1.9 billion. In the A1 expansion project, the Transportation Ministry had assumed that the public-private partnership would be 40 percent cheaper than tax financing, but the final cost was a third higher.

ÖPP projects "did not achieve significant goals" and projects conducted to date have been "uneconomical," the auditors concluded.

The private consortiums are more expensive because they must pay an average of 6 percent interest on their loans, which is about four percentage points higher than the federal government pays in interest on long-term borrowing. In a sample calculation, Berlin infrastructure economist Thorsten Beckers concludes that the capital costs of such projects amount to almost 28 percent of construction costs. Therefore, Beckers argues, the supposed financial advantages of ÖPP autobahn expansion projects are "extremely implausible."

But lawmakers are not passing on the funding of public projects to private investors for business reasons, but because of a sheer lack of funds. As the German Schuldenbremse -- or "debt brake," a 2009 provision that limits the ability of German governments to run a deficit -- comes fully into effect in the next few years, it will prohibit unlimited borrowing.

The Federal Audit Office warns that this could provide additional incentive to turn over the construction of roads and building to private investors, even though the conventional approach would be more affordable. And given that investors are naturally most interested in projects that promise the greatest return -- which hardly includes bridge renovation in rural areas -- private financing collides with the government's mission to offer adequate public services to all citizens.

The Botched Energiewende

The new bituminous coal unit of the Rheinhafen power plant in the southwestern city of Karlsruhe is the most modern coal-fired power plant in Germany. It operates at a record efficiency level of more than 46 percent. The smokestack juts more than 200 meters (656 feet) into the sky and, on clear days, the 80-meter cooling tower next to it offers a view of the Vosges Mountains from its rim. The plant was built to fulfill an important task for the Energiewende: It's designed to operate whenever there is too little wind or not enough sun to offer a reliable supply of renewable energies..

The plant cost €1.3 billion to build, but it will probably never make any money. It was generating losses for its operator, EnBW, even before it was put into service this summer. The reason can be found in another, much larger investment. German electricity customers are paying more than €23 billion this year via an allocation charge for renewable energy.

There are consequences. Wholesale electricity prices are so low that the latest generation of conventional power plants is no longer economically viable. The Rheinhafen power plant, as modern as it is, has thus become a symbol of the botched Energiewende.

Fratzscher sees Germany's shift to renewables as "one of the biggest challenges of our generation" -- and also sees it as a hurdle for investment. If the Energiewende succeeds, it will create a new, nuclear-free infrastructure worth hundreds of billions of euros. But if the project ends in chaos, it could lead to losses on a similar scale.

Differing Approaches to Energy

The problem is aggravated by the fact that there is no consensus on the right approach to the Energiewende. Fratzscher, for example, advocates a radical departure from traditional fossil fuels. He wants the country to enter the wind and solar age as quickly as possible, as well as impose substantial energy conservation goals on companies and real estate owners.

Other experts recommend a softer transition to avoid putting too much strain on the economy. But as long as the direction of the Energiewende is unclear, it is difficult for investors to determine whether they have invested their money wisely.

Many investors already view the Energiewende as an example of waste and bad planning. Solar and wind farms were built at a cost of billions even though the necessary electricity grids are not available yet. New high-voltage lines are planned, but no one knows whether builders will prevail over citizens' objections. Conventional power plants are needed, but because of the Energiewende they are no longer profitable.

The phase-out of nuclear energy offers enormous opportunities and risks. If politicians do not manage the investment project properly, it could turn into a huge debacle. As Fratzscher concedes, the Energiewende is "an experiment," for which there are "no economic policy experiences."

Education: Outsmarting demographics

Meanwhile, a demographic crisis is rearing its head across Germany -- and it has attracted the attention of the world's largest chemical company, BASF. If the company had its way, it would see children go from daycare to school to the laboratory. As one of its slogans -- "From Little Ones to Einsteins" -- reflects, the company wants to children to interact with scientific phenomena at a very early age in order to increase their future interest in working in the industry.

As part of this aim, BASF and other companies established the "Knowledge Factory." Some 122 companies and foundations are now members of the association, which seeks to combat the shortage of skilled professionals with education in early childhood, thus outsmarting demographic changes and solving its own recruitment problems.

The industry is unwilling to rely on the government, which it argues lacks both the necessary funding and the political will. Germany spends only 5.3 percent of its economic output on daycare centers, schools and universities, compared with the OECD (Organization for Economic Co-operation and Development) average of 6.3 percent.

For Fratzscher, it is clear that Germany "lags significantly behind other countries." He believes that ensuring Germans' legal right to daycare services for all children one year or older -- which was enshrined by the German government in 2013 -- is a first step at best. The next step is to address quality and provide special, targeted training for skilled workers.

Everybody Loves Children

Even trade associations, traditionally dominated by gray-haired men, have now developed a concern for the welfare of young children. The Federal Society of German Employer Associations (BDA) recommends expanding all daycare centers into educational facilities and implementing nationwide quality standards. This is not entirely altruistic, because the more satisfied mothers are with their child's daycare, the more likely they are to work longer hours. In this sense, the billions being spent on daycare centers already pay off in the short term, because they bring many mothers back into the working world.

The research community is already convinced of the long-term benefits. According to Nobel laureate James Heckman, the earlier a society invests money in educating its young people, the more profitable it is. Children who are nurtured at an early age are less likely to drop out of school or university, and have a lower risk of poverty. If they are from immigrant families, they learn German more quickly and come into contact with knowledge at an earlier age and in a more playful manner.

Still, the level of early-childhood education in Germany is "in the poor-to-moderate range," says Yvonne Anders, a professor of early childhood education at the Free University of Berlin. But a daycare quality law that would establish minimum nationwide standards will not materialize in this legislative period -- Family Minister Manuela Schwesig was unable to prevail against the center-right Christian Democratic Union and the German state governments, which fear high costs. The economy is now looking to the EU for solutions. Brussels is developing a quality guideline that could also apply to kindergartens.

Searching for Solutions

When Sigmar Gabriel's investment advisory council met for the first time late last month, he told them there should be "no restrictions on free thought." That's something politicians like to say when they ask experts for advice.

But Gabriel's appeal was justified, and perhaps it was also directed at his chief adviser, Fratzscher. With his book, the DIW president offers a detailed picture of the plight of German investment, and illustrates the sectors with the most serious problems, but he provides very few solutions.

The government, for example, has hardly any room to make additional investments because most of its spending is earmarked for the long term. Companies are also difficult to mobilize -- their willingness to invest depends on hard-to-influence factors, like the overall economic situation, expected profits and interest rates.

Not surprisingly, Fratzscher's committee wants to place its emphasis elsewhere and is now searching for ways to convince Germans to invest their enormous combined personal assets in domestic infrastructure. Insurance giant Allianz, for example -- which is also a member of the advisory council -- prefers to invest its customers' money in the expansion of Belgian highways. As a result, the council is considering whether an agency, funded with private investment and managed by the government, should be established to address traffic infrastructure.

The country's capital streams are also to be guided into other segments of the infrastructure, such as energy grids and wind farms. But financial market rules prevent pension funds, for example, from investing unconditionally in these sectors.

Most of all, Gabriel hopes to convince major investors to invest private money in the construction of public roads, bridges and buildings in Germany. The funds are to be raised in the capital markets, from pension funds or insurance companies.

UK and Canada as Examples

The minister is preaching to the choir in one respect. Alexander Erdland, president of the German Insurance Association, recently said that his industry is ready. So far, the insurance sector has invested less than 1 percent of its total capital investments of close to €1.4 trillion in infrastructure and renewable energy. Companies would be only too pleased to become more involved, especially in an era of low interest rates and few alternatives.

In Great Britain and Canada, so-called project bonds are issued to finance infrastructure projects that are, to some extent, traded in capital markets. The European Commission also advocates this approach and has established the "Europe 2020 Project Bond" initiative.

Whatever the Commission ultimately proposes, it is already clear that its work is of critical importance to the country's economic future. Germany will only be able to maintain its position in the global economic competition if it once again focuses on its future. To do so, it needs to renovate its factories, transportation arteries and data networks, educate its young people more effectively and devise new ways to use the vast savings capital of its citizens in economically meaningful ways. As the DIW president puts it, "the key to Europe's long-term economic success lies in the strength of the German economy."

By Alexander Jung, Ann-Katrin Müller, Michael Sauga, Cornelia Schmergal, Gerald Traufetter and Kathrin Witsch

 23 
 on: Today at 06:40 AM 
Started by Steve - Last post by Rad

Cyprus leaders agree to speed up peace talks

Talks between Greek and Turkish Cypriot leaders will now be twice-monthly 'structured negotiations', UN envoy says

Reuters in Nicosia
theguardian.com, Wednesday 17 September 2014 14.36 BST

Rival leaders of ethnically-split Cyprus have agreed to try to speed up slow-moving peace talks to resolve outstanding issues in the decades-old conflict, a UN official has said.

Greek and Turkish Cypriot leaders launched a fresh round of peace talks in February to end more than 40 years of division but have multiple disagreements to resolve, from future governance to territory handovers.

Cyprus was split in a Turkish invasion in 1974 prompted by a brief Greek-inspired coup, but the seeds of division were sown a decade earlier when a power-sharing government crumbled amid violence.

The latest talks, which had until now focused on submitting proposals, would now move into "structured negotiations", United Nations envoy Espen Barth Eide said on Wednesday.

"They [the leaders] have instructed their negotiators to enter into active negotiations with a view to bridging the gap through real negotiation on unresolved core issues," said Eide, a former Norwegian foreign minister appointed UN special adviser for Cyprus last month.

The process would involve placing all unresolved differences on the table to be addressed in a "negotiating format", Eide told reporters after meeting the Greek Cypriot leader, Nicos Anastasiades, and the Turkish Cypriot leader, Dervis Eroglu, at a UN compound straddling a buffer zone in Nicosia, the island's capital.

The United Nations would be ready to assist in coming up with ideas to bridge any gaps. There were, Eide said, "clear differences of opinion" on some issues.

Turkish Cypriots run a breakaway administration in northern Cyprus, buffered by thousands of mainland Turkish troops, while the southern Greek Cypriot-populated area is run by an internationally-recognised government representing the whole island in the European Union.

Anastasiades and Eroglu agreed to increase the pace of meetings to at least twice a month, Eide said.

 24 
 on: Today at 06:38 AM 
Started by Steve - Last post by Rad

China refuses to explain whereabouts of envoy to Iceland

Ambassador Ma Jisheng reportedly taken away by Chinese state security amid spy claims

Tania Branigan in Beijing
The Guardian, Wednesday 17 September 2014 13.14 BST   

China's foreign ministry has refused to address the whereabouts of its ambassador to Iceland after reports he has been detained for giving secrets to Japan.

Ma Jisheng left Reykjavik for China in January this year but did not return in March as expected. A New York-based Chinese language site reported on Tuesday that he and his wife had been seized by state security on suspicion of espionage.

Ma served in China's embassy in Tokyo twice, finishing his last posting in 2008. The allegations are particularly sensitive given the marked deterioration in relations between China and Japan in recent years, and especially since the election of prime minister Shinzō Abe.

The two countries are locked in a long-running territorial dispute over uninhabited islands in the East China Sea, known as the Diaoyu to the Chinese and Senkakus to the Japanese, and China complains Japan has failed to fully atone for its brutality in the second world war.

Ma's lengthy absence from Reykjavik was first highlighted by an Icelandic newspaper this month. He has been ambassador only since December 2012 – meaning that if he is not returning his posting has been cut unusually short.

Mingjing News then reported the espionage claims, with Hong Kong's Ming Pao newspaper picking up the story. Some mainland Chinese news sites carried the reports but subsequently deleted them.

Asked whether the reports were true, Hong Lei, spokesman for the Chinese foreign ministry, said: "I have no information on this." He gave the same answer when asked for Ma's current whereabouts and to clarify who was the Chinese ambassador to Iceland.

A spokeswoman for Iceland's foreign ministry, Urdur Gunnarsdóttir, confirmed that Ma was to have returned in March. She said the Chinese embassy in Reykjavik had stated in May that he would not return to his post for personal reasons. There has been a caretaker ambassador since then, Gunnarsdóttir said.

Ma's CV has been deleted from the website of the Chinese embassy in Iceland and it has a blank where his name would normally appear in a welcoming address. The last reference to him in the news section dates from September last year. Older articles about him were still visible there and on the foreign ministry website.

Ma was a secretary at the Chinese embassy in Japan between 1991 and 1995, and a minister counsellor between 2004 and 2008. Prior to becoming ambassador to Iceland, he worked as deputy director of information in the foreign ministry. A Japanese government official told Reuters: "We are aware of the media report. But it's basically China's domestic issue and therefore the Japanese government would like to refrain from commenting."

In 2012 there were reports that a Chinese state security official, working as an aide to a vice-minister, had been arrested on suspicion of spying for the US.

The best-known spying scandal involved Yu Qiangsheng, a senior intelligence official who defected to the US in 1985 and told the Americans that a retired CIA analyst had been spying for China. The man he named killed himself days before he was due to be sentenced by a US court.

Yu's brother Yu Zhengsheng prospered politically despite the family connection and is now a member of the Politburo Standing Committee. It has not been possible to contact Ma.

 25 
 on: Today at 06:37 AM 
Started by Steve - Last post by Rad

Six arrested in France over female jihadi recruitment

Two minors among those arrested on suspicion of playing active role in recent recruitment of young women to fight in Syria

Kim Willsher in Paris
theguardian.com, Wednesday 17 September 2014 15.38 BST   

French police have arrested six people – including two minors – suspected of recruiting female jihadis to fight in Syria.

The arrests were made on Tuesday and Wednesday in a suburb of Lyon. During searches at the addresses raided by police, officers reportedly found various weapons including Kalashnikovs, and other equipment said to be gas masks, flashlights and ammunition.

Police said among those arrested at Meyzieu and Vaulx-en-Velin, on the outskirts of the city, two were minors, including a 13-year-old girl. Two others were a brother and sister suspected of being what officers described as "sergeant recruiters". One of the arrested suspects is linked to the Islamist group Forsane Alizza, or Knights of Pride, which has called for France to become an Islamic caliphate, which was banned in 2012.

The French interior minister, Bernard Cazeneuve, congratulated police on the operation and said the arrested suspects were believed to have "played a very active role in the recruitment and departure of several young women to Syria in recent months".

The French authorities are concerned about the growing number of French women and girls seeking to join Islamic State (Isis). Of the estimated 350 French nationals believed to be currently engaged with the Islamist group in Syria, at least 63 are believed to be female and six are minors.

Caseneuve reiterated the government's determination to carry on "a relentless fight against the jihadist networks".

He says around 930 French citizens, or foreign nationals living in France, are involved in the Islamic fundamentalist network. Several hundred are believed to be in Syria already, while hundreds more are thought to be either on their way to join Isis, preparing to go, or back in France having already been.

The number is the highest in any European country.

There are fears they may carry out terrorist attacks in their home countries or in Europe when they return. Frenchman Mehdi Nemmouche, who has been charged with killing four people in an attack on the Jewish Museum in Brussels in May, is believed to have fought with Isis in Syria.

On Tuesday, the Assemblée Nationale approved legislation aimed at preventing would-be jihadis leaving France. MPs voted for courts to be given powers to apply six-month bans, renewable for up to two years, on French nationals travelling abroad to "take part in terrorist activities, war crimes or crimes against humanity or in a theatre of operations of terrorist groups". Courts would have the power to seize suspects' passports and identity cards.

At the end of August, French police arrested a teenage girl who they believe was planning to join Islamic extremists fighting in Syria as she prepared to board a plane at Nice airport. Detectives also arrested a man who they described as a recruiter, who had paid the 16-year-old's airfare.

In the same month a 14-year-old French girl was investigated for allegedly planning to travel to Syria to fight, the third in a group of teenage girls caught before they departed.

 26 
 on: Today at 06:36 AM 
Started by Rose Marcus - Last post by Rad

Catholic church prepares for conflict on allowing holy communion for divorcees

Before next month's summit, conservative cardinals have collaborated on a book opposing liberalisation of current rules

Lizzy Davies in Rome
The Guardian, Wednesday 17 September 2014 16.31 BST      

The leadership of the Roman Catholic church is bracing itself for open conflict over its treatment of remarried divorcees as powerful conservatives mobilise before a highly anticipated summit called by Pope Francis for next month.

Ever since he announced the extraordinary session of the synod of bishops last year, the Argentinian pontiff has raised the hopes of many liberals that the church may ease its ban on divorced and remarried Catholics receiving holy communion – a move that could affect millions of people around the world.

In February, in an address setting the scene for the meeting due to start on 5 October, German cardinal Walter Kasper outlined the case for a loosening of the rules that would eventually allow some people access to the sacraments after a period of "penance".

But his views are by no means shared by all the so-called princes of the church, some of whom are taking a harder line and insisting that such a proposal would, in effect, violate the doctrine on the permanence of marriage.

It emerged on Wednesday that five leading conservative cardinals have collaborated on a book to be published simultaneously on 1 October in the United States, Italy, Spain, France and Germany in which they make clear their opposition to Kasper's vision.

"It [Kasper's proposal] is being talked about as a form of not recognising the second marriages of divorced and remarried Catholics, but simply looking past them, of tolerating them, and allowing those individuals who are Catholics under certain circumstances … to go to confession and subsequently to go to communion on a regular basis. We oppose that solution as a false form of mercy and we're united on that," editor Robert Dodaro told the Guardian. "It's false mercy in the sense that it ignores the status of the original marriage, which we believe to be indissoluble."

Dodaro, who is president of the patristic institute Augustinianum, said the timing of the book's publication, just five days before the two-week synod was due to begin, was not intentional. But there is little doubt the collection of essays – by scholars and cardinals including Gerhard Ludwig Müller, the prefect of the powerful Congregation for the Doctrine of the Faith – represents the drawing of battle lines.

Although Francis has not come down clearly on either side, his repeated calls for the church to become more inclusive and less ruled by casuistry – as well as the decision to ask Kasper to make his address in February – has led many to suspect his sympathies lie with those who want an easing of the ban, even if he has also spoken of the need for "clear doctrine" on the "indissolubility of Christian matrimony".

Kasper has long advocated allowing access to the sacraments to divorcees who remarry without an annulment; in the past his efforts have seen him clash with the hierarchy. Francis, however, praised the German's theology in his first angelus as pope.

Surveys have shown that the ban on holy communion for remarried divorcees is one of the most problematic for ordinary Catholics around the world. A poll commissioned by the US Spanish-language network Univision of more than 12,000 Catholics in 12 countries found that more than half (58%) disagreed with the church's stance.

Observers say a likely compromise is the streamlining of annulment cases, providing more people with the option of having a church court declare that the union was invalid and therefore not a real marriage.

• Remaining in the Truth of Christ: Marriage and Communion in the Catholic Church includes essays by Müller, his German colleague Walter Brandmüller and the American cardinal Raymond Burke, alongside Italians Carlo Caffarra and Velasio de Paolis.

 27 
 on: Today at 06:33 AM 
Started by Rad - Last post by Rad

Oligarch's arrest deepens fears over Russian economy

Vladimir Yevtushenkov under arrest and facing prospect of selling Sistema company in what critics call 'undisguised theft'

Shaun Walker in Moscow
The Guardian, Wednesday 17 September 2014 17.50 BST   

The arrest of one of Russia's richest men, whose empire spans oil production to the country's largest mobile phone network, could send further shockwaves through an economy already reeling from western sanctions.

Analysts said the moves against Vladimir Yevtushenkov this week looked like a raid on his business by Kremlin-connected forces, and were a sign of an intensifying battle for a "shrinking pie" of resources. Yevtushenkov, Russia's 15th richest businessman with a fortune of around £5.5bn according to Forbes magazine, has been placed under house arrest after allegations of money laundering.

A report in the Izvestiya newspaper said prison officials visited Yevtushenkov's mansion outside Moscow and fitted an electronic bracelet around his ankle. He is banned from leaving his home, speaking with anyone except his lawyers, and using the telephone or internet.

Yevtushenkov's holding company, Sistema, whose board directors include the Labour peer Lord Mandelson, saw its shares slump 38% by Wednesday afternoon. The allegations against the billionaire relate to the purchase of Bashneft, one of the few privately owned oil companies in Russia, in 2009. Sistema also controls MTS, a mobile network operating in Russia and many post-Soviet nations.

There were suggestions that Rosneft, the state-controlled oil company run by Igor Sechin, a close associate of President Vladimir Putin, wants to buy out Bashneft. The arrest brought accusations from the fallen oligarch Mikhail Khodorkovsky, released from prison by Putin last year, that the move was linked to Kremlin interest in Yevtushenkov's oil assets.

Khodorkovsky was arrested in 2003, spent years in jail, and his oil company Yukos was disbanded, much of it snapped up by Rosneft. The company dismissed Khodorkovsky's comments as absurd.

Sergei Aleksashenko, an economist and former deputy finance minister, said there was no political subtext to the decision, but framed it as a simple economic raid in order to snap up the company.

"This is not even a racket, this is simple, undisguised theft," he wrote in a blog post. "The item that the thieves are interested in is there for all to see. An oil company in Russia is too much of an attractive business for those close to power not to get interested in. Who are they in this case? We will soon find out, right at the moment when Bashneft changes its owner. This will happen, I have no doubt."

Aleksashenko said there were two choices for Yevtushenkov: sell up quickly and flee the country, in the mould of the former mobile phone magnate Yevgeny Chichvarkin who now runs a wine shop in London, or go down the path of Khodorkovsky and possibly end up in prison.

Chichvarkin said he believed powerful Kremlin figures were behind the move against Yevtushenkov and expected there would be more to follow.

"Maybe they first made him an offer of 10% of what it's worth and then when he said no they decided to escalate," he said, speaking from London. "It's absolutely clear that the ideal scenario for them is for him to flee and sell all his remaining companies. MTS would be a really juicy prize. He has the choice of fleeing and selling or something much worse."

Alexander Shokhin, the normally cautious head of Russia's largest business union, said the move "looked like Yukos 2.0" and would damage trust in the Russian business climate.

Anatoly Chubais, the head of Russian state-owned nanotechnology agency Rusnano and a major political figure during the 1990s, told Interfax that he did not understand the charges against Yevtushenkov. "What I can understand is that these actions will cause a very serious blow to the Russian business climate, at a time when the Russian economy is balancing on the edge of recession and stagnation," he said.

What will be particularly worrying for Russia's businessmen is that Yevtushenkov, unlike Khodorkovsky, was in no way a political figure. Khodorkovsky was widely regarded as challenging the unwritten rule that Putin imposed on the oligarchs when he took over: stay out of politics and you can keep your fortunes. The Yukos head began to finance opposition political parties and complained about official corruption at Kremlin meetings; his opponents in the Kremlin saw the chance to move against him.

Yevtushenkov worked for the Moscow city government during the collapse of the Soviet Union and in 1993 set up Sistema with a group of partners. Like many oligarchs early in their careers, the business began with the import of computers, as well as selling Russian oil abroad.

Yevtushenkov was known as an ally of Yuri Luzhkov, Moscow's long-standing mayor, who ran the Russian capital between 1992 and 2010, when he was deposed. However, the tycoon did not dabble in politics and was thought of as a purposefully neutral, apolitical figure.

Chichvarkin said it was the latest in a set of cases against businessmen in Russia, starting with Khodorkovsky, and showed that everyone still operating in the country was at risk.

"There have already been so many signals in the past years that it is difficult to think that new signals would work on Russian businessmen, but this certainly shows that however loyal you are, however far from politics you are, if they want to take your business they will, because they are greedy bandits."

In June, in an interview with Russian Forbes magazine, Yevtushenkov himself noted the huge risks involved in dealing with the post-Soviet markets. MTS was forced to write off huge losses in Uzbekistan after several local managers were accused of wrongdoing, in a case that Sistema always claimed was politically motivated. He said, however, there were no markets that could be seen as risk-free in the region.

"When you operate in strategic sectors, you should be certain that the state knows you, is loyal to you, and wants you to be there … because any state can always find a way to put you in your place, however strong you are internationally, and whatever businesses you run."

A spokesperson for Sistema declined to comment on the case.

 28 
 on: Today at 06:27 AM 
Started by Steve - Last post by Rad

Climate change is real. Want to live? It's up to people like you

Politicians don’t understand. They just smile and hold the hand of big business. And so we march. Because destroying the Earth is not a good idea. It really isn’t

Jarvis Cocker for Creative Time Reports
theguardian.com, Thursday 18 September 2014 12.45 BST   
     
Do I really have to march? It’s actually a serious question: I mean, marching’s rather ... military, isn’t it? Bit aggressive. Bit too much like what the baddies on the other side would do, don’t you think? Wouldn’t you rather saunter? Or stroll? Mince, even? A hop, a skip or a jump – anything but stern-faced, humorless marching. And let’s face it: we’re probably going to need a sense of humor.

Remember 15 February 2003? If you’re taking the trouble to read this, then you probably went to an anti-war march that day. Didn’t turn out so well, did it? Nothing really changed. The “largest protest event in human history”, as we remember it today, was effectively ignored. That left a nasty taste. It might even have put you off the idea of protesting forever. The marching boots were thrown to the back of the cupboard and you went into a major sulk. Maybe you even wrote a song about it. Yeah, that’ll tell ‘em. You wrote the words:

    If you don’t like it then leave

    or use your right to protest on the street.

    Yeah, use your right –

    but don’t imagine that it’s heard.

    No: not whilst c***ts are still running the world.

    – “Running the World” (2006)

And you thought: “Yes! Smash the system!” And then ... time passed. Until you got this email:

    On Sunday, Sept 21, a climate march through midtown Manhattan will kick off a week of high-profile climate events in the Big Apple. Promoted as an effort to bring unprecedented attention to climate change, the gathering comes just as international climate negotiations ramp up in a major push toward a new global accord. The People’s Climate March, being called the ‘largest climate march in history’ by organizers, will potentially draw over a hundred thousand people to walk through Manhattan and show a level of demand for action not seen since the era of Civil Rights marches and anti-Vietnam protests.

Can you be arsed? Do you risk being disappointed again? Or do you sit this one out? I mean, climate change is a bit old-hat now, isn’t it? And some people say it doesn’t even exist – people like ... Nigel Lawson. (A note for non-British readers: you may be more familiar with his daughter, the TV chef Nigella Lawson. The fact that he gave his daughter a “feminized” version of his own name tells you all you need to know about him, really.)

Back in 2008, I sailed the coast of Greenland on a vessel chartered by the organization Cape Farewell and saw the effects of global warming firsthand. It exists. On the way home, we spent a few hours in Reykjavík’s international airport waiting for a connecting flight back to the UK. I bought an ashtray made out of lava. When I got back home, I turned the TV on. It was the morning of the stock market crash and I learned that Iceland, the country I had been visiting not four hours previously, was effectively bankrupt.

That gave me a strange feeling because I hadn’t noticed. The sun had still been shining as I walked through the airport terminal. People had gone about their everyday business as usual, there had been air to breathe and nothing to betray the cataclysm that had befallen the entire country. How could that be? This was a financial crisis! The Big One! THE Economy was at risk! Why was the world still turning?

You whisper now, but could it be that there is a higher power than … The Economy? I know that sounds a bit sacrilegious, but could it be that THE Ecology is actually the biggie? That maybe having air to breathe, water to drink and land to inhabit could be more important than the fluctuations of the FTSE or the Dow Jones? It’s just a thought – a thought that most people instinctively understanding, but that the political classes have yet to grasp.

In the end it all comes down to a single letter – R – that has somehow gone astray over the years.

Exactly when did “government for the people” become “government of the people”? When did the function of government change from public service to crowd control? From protector to pimp?

The People’s Climate March this Sunday is important. Because governments won’t put the case for action on climate change too strongly – no, that might be interpreted as being “anti-business”. It might dissuade corporations from building factories in countries that sign on to climate agreements. It might be harmful to THE ECONOMY. So once again it will be left to ordinary people to point out the blindingly obvious fact that destroying the place you live in is not a good idea. It really isn’t. And the powers that be would do well to heed the cold, hard truth that there are more of us than them, that we are heartily sick and tired of being ignored.

That’s not a threat, you understand. I just thought I’d point it out.

Yep, it’s “once more unto the streets, dear friends” (you know you want to, really), and I would like to suggest that you dance your way along the route. Much more fun than marching.

 29 
 on: Today at 06:22 AM 
Started by Steve - Last post by Rad
Черная дыра Путина

Россия и Украина уже провалились. На наших глазах засасывает Европу. Мы вернулись в советские времена тотальной лжи

Михаил Шишкин
theguardian.com, Thursday 18 September 2014 11.05 BST  

Помню, как в детстве прочитал во взрослом научно-популярном журнале про черные дыры в космосе, и мне стало страшно. Мысль, что наша вселенная засасывается в эти прорывы в мироздании не давала покоя до тех пор, пока не осознал, что все это так далеко, что до нас не дотянется.

И вот черная дыра прорвала наш мир совсем рядом. И стала засасывать в себя дома, дороги, машины, авиалайнеры, людей, целые страны. В эту черную дыру уже провалились Россия и Украина. На наших глазах засасывает Европу.

Эта дыра в мироздании – душа одного очень одинокого, стареющего человека. Эта черная дыра – его страх.

Телекартинки, запечатлевшие конец Хусейна, Мубарака, Кадаффи были приветами, которые посылала ему судьба из экзотических стран. Протесты сотен тысяч людей в Москве, испортившие самозванцу радость инаугурации, стали сигналом приближающейся опасности. С позорным бегством Януковича включилась сирена тревоги: если украинцы смогли прогнать свою банду, то это пример для подражание братскому народу. Инстинкт самосохранения сработал незамедлительно. Рецепт спасения любой диктатуры универсален: нужно создать врагов. Нужна война. Состояние войны – жизненный эликсир режима. В патриотическом экстазе население сливается со своим «национал-лидером», а всех недовольных можно объявить «национал-предателями».

На глазах российское телевидение превратилось из средства развлечения и оболванивания в оружие массового поражения. Журналисты стали особым родом войск, может быть, самым важным, важнее ракет стратегического назначения. У зомбированной нации в пораженном мозгу сложилась заказанная картина мира: «укрофашисты», исполняющие волю Запада, ведут войну на уничтожение против «Русского мира».

«Российских солдат в Крыму нет», - заявлялось весной на весь мир с кривой ухмылочкой. На Западе не могли понять: как он может так нагло врать прямо в лицо своему народу? Но население не воспринимало это за ложь: мы-то среди своих всё понимаем, а вот обмануть врага, это не порок, а доблесть. C какой гордостью потом было признано: «Российские солдаты в Крыму были»!

Мы вернулись в советские времена тотальной лжи. Власть перезаключила с населением «Общественный договор», в котором мы жили десятилетиями: мы знаем, что мы лжем и что вы лжете, и продолжаем лгать, чтобы выжить. На этом Contract Social выросли поколения. Ту ложь даже нельзя назвать пороком - в ней была сконцентрирована сила витальности, мощь выживания. Необходимость выжить в тюрьме требует от человека определенных качеств, специфического устройства психики. Власть боялась своего народа и потому лгала. Население участвовало во лжи, потому что боялось власти. Ложь – способ существования общества, построенного на насилии и страхе.

Но только насилия и страха для такой всеохватывающей лжи мало.

Почему отец десантника, вернувшегося из Украины в Россию без ног, пишет в фейсбуке: «Мой сын - солдат, он выполнял приказ, поэтому что бы с ним ни случилось, он прав, и я горжусь им»? Человеческое сознание отгоняет мысль, что твой сын пошел убивать братский народ и стал калекой не защищая свое отечество от реальных врагов, а из-за панического страха серенького полковника потерять власть, из-за амбиций кучки воров, облепивших трон. Как признать, что это именно твоя страна, твоя родина – агрессор, что это твой сын – фашист? Родина ведь всегда на стороне добра. Поэтому когда Путин врет в глаза своей стране, все знают, что он врет и он сам знает, что все знают, но его электорат согласен с его враньем.

Когда Путин нагло врет в лицо западным политикам, он с живым интересом и не без удовольствия смотрит на их реакцию, наслаждается их растерянностью и беспомощностью. Он хочет, чтобы Киев, как блудный сын, вернулся на коленях в отеческие объятия империи. Он уверен, что Европа возмущенно покипит и успокоится, предоставив Украину братскому изнасилованию. Он предлагает Западу включиться в Общественный договор лжи. Всего-то нужно сказать: Путин –миротворец, и согласиться на все пункты его „миротворческого" плана.

Санкции западных стран против России – это робкая надежда на то, чтобы экономические трудности вызвали у русских недовольство своим режимом и подтолкнули их к активным протестам. Надежда, увы, напрасная. Есть известная русская поговорка: «Бей своих, чтобы чужие боялись». Невозможно представить себе, чтобы в Берлине или Париже вдруг издали бы указ, запрещающий в одночасье импорт продовольствия. Взрыв возмущения взорвал бы страну в тот же день. А в России подобный указ только повысил и так зашкаливающий рейтинг правителя. Путин знает разницу между своей властью и властью европейских демократий. Демократические правительства несут ответственность за людей и их будущее перед своими избирателями, а в диктатуре есть только ответственность за выполнение приказа. Каждый диктатор надеется на свое бессмертие, и раз это невозможно, то готов утащить с собой в черную дыру тех, кого он презирает. А презирает он всех, и своих, и чужих.

Путин знает, что ту красную черту, которую он давно оставил за собой, Запад переступить не сможет. Эта черта – готовность воевать. Для человеческой психики трудно перейти из послевоенного времени в довоенное. Средства массового информационного террора в России помогли русским сделать этот шаг. Более того, Россия уже в войне. В необъявленной войне против Запада. Гробы с убитыми русскими солдатами пошли из Украины в русские города. Европа психологически отстает, она еще нежится в расслабленном довоенном мире.

Европейцы не готовы к наступившей новой реальности. Оставьте нас в покое! Сделайте нам так, как было: рабочие места, газ, мир! Никаких поставок оружия Украине! Нельзя начинать военный конфликт в ядерный век из-за какого-то Мариуполя! Неужели мир должен погибнуть в катастрофе из-за того, что Украина хочет в Европу? Это американцы хотят поссорить нас с русскими! Во всем виноваты американские империалисты и европейские бюрократы! Зачем нужны санкции, если они ударяют и по нам? Вот, французы уже готовы выйти на улицы с протестом «против американского диктата, который принуждает Францию отказаться от поставки «Мистралей» в Россию.» Москва защищает на Украине свои интересы! И вообще, может, в Киеве действительно у власти фашисты? Может, Майдан и был в начале народным восстанием, но власть там захватила нацистская хунта. Тогда зачем нам их поддерживать и ссориться с Россией? Путин предлагает мир! Мы хотим мира!

Путинский расчет сходится: скорее западное население, испуганное экономическими неурядицами и возможностью войны, переизберет свои правительства и заменит врагов Путина на более сговорчивых политиков, чем русские выйдут протестовать из-за разрухи и роста цен на продукты.

Путин предложил Европе свой Contract Social. И с каждым новым человеком, готовым заключить его, черная дыра будет разрастаться.

Нужно понять: послевоенная Европа уже стала довоенной.

**************

Russia, Ukraine and Europe have been into Vladimir Putin's black hole of fear

The formula for saving any dictatorship is universal: create an enemy, start a war. We are back in Soviet times of total lies

Mikhail Shishkin  
theguardian.com, Thursday 18 September 2014 11.05 BST  
      
I remember that as a child I read about black holes in a popular science magazine about space and it scared me. The idea of our world being sucked into these breaks in the universe kept bothering me until I realised that it all was so far away that it would not reach us. But then a black hole tore our world very close to us. It started sucking in houses, roads, cars, planes, people and whole countries. Russia and Ukraine have already fallen into this black hole. And it is now sucking in Europe in front of our eyes.

This hole in the universe is the soul of one very lonely ageing man. The black hole is his fear.

TV images of the demise of Saddam Hussein, Hosni Mubarak and Muammar Gaddafi were messages that fate sent him from exotic countries. Protest rallies that gathered hundreds of thousands of people in Moscow ruined his inauguration and signalled approaching danger. The disgraceful flight of Ukraine's Viktor Yanukovych earlier this year set off alarm bells: if Ukrainians could oust their gang, it could serve as an example for the brotherly nation.

The instinct of self-preservation kicked in immediately. The formula for saving any dictatorship is universal: create an enemy, start a war. The state of war is the regime's elixir of life. A nation in patriotic ecstasy becomes one with its "national leader", while any dissenters can be declared "national traitors".

Before our eyes, Russian TV was turned from a tool of entertainment and misinformation into a weapon of mass destruction. Journalists became a special part of the arsenal, maybe the most important one, more important even than missiles. The desired world view formed in the infected minds of a zombified nation: Ukrainian fascists wage a war to annihilate the Russian world on orders from the west.

"There are no Russian soldiers in Crimea," Vladimir Putin claimed to the world with a wry grin in the spring. The west could not understand: how can he tell such blatant lies to his nation's face? But the nation did not take it as lies: we ourselves understand everything, but deceiving the enemy is not a sin, rather a virtue. The fact that "Russian soldiers were indeed in Crimea" was later admitted with such pride!

We are back to the Soviet times of total lies. The government renewed the social contract with the nation under which we had lived for decades: we know that we lie and you lie, and we continue to lie to survive. Generations have grown up under this social contract. These lies cannot even be called a sin: the power of vitality and survival is concentrated in them. The government was afraid of its nation, which is why it lied. The nation participated in the lies, because it was afraid of the government. The lies are a means of survival for a society built on violence and fear.

But just violence and fear cannot explain such an all-encompassing lie.

Why did the father of the Russian paratrooper who lost his legs in Ukraine write on Facebook, "My son is a soldier; he followed orders, which is why, whatever happened to him, he is right and I am proud of him"?

He keeps his mind off the idea that his son went to kill brotherly people and became disabled not defending his motherland from real enemies, but rather because of an insipid colonel's panic-stricken fear of losing his power, because of the ambitions of a clique of thieves swarming around the throne. How can he admit that his country, his motherland is the aggressor and that his son is the fascist? Motherland is always on the side of good. This is why when Putin lies in his nation's face, everyone knows that he is lying, and he knows that everyone knows, but the electorate agrees with his lies.

When Putin tells blatant lies in the face of western politicians, he then watches their reaction with vivid interest and not without pleasure, enjoying their confusion and helplessness. He wants Kiev to return on its knees, like a prodigal son, to the fatherly embrace of the empire. He is sure that Europe will boil with indignation, but eventually calm down, abandoning Ukraine to brotherly rape. He offers the west the chance to join the social contract of lies. All it has to do is say that Putin is a peacekeeper and agree to all the terms of his peacekeeping plan.

The sanctions imposed by western states against Russia represent a timid hope that economic hardship will make Russians resent the regime and nudge them towards active protests. Alas, it is an idle hope. Russians have a proverb: beat your own so the others fear you. It is hard to imagine officials in Berlin or Paris summarily banning food imports. The entire nations would burst in indignation that same day.

In contrast, in Russia such a move boosted the ruler's already sky-high rating. Putin knows the difference between the power he enjoys and the power of European democracies. Democratic governments are liable to their electorate for the people and their future, whereas under a dictatorship, one is only liable to follow orders. Every dictator hopes he is immortal, but since it is impossible, he is ready to drag everyone he despises into the black hole. And he despises everyone – both his own people and everybody else.

Putin knows that the west cannot cross the red line that he himself has long crossed and left behind. The red line is the willingness to go to war. It is hard for a human mind to switch from a postwar to a prewar time. The means of mass informational terror in Russia helped Russians to make the switch. Moreover, Russia is already in a state of war, an undeclared war against the west. Coffins with fallen Russian soldiers have started coming to Russian cities from Ukraine. Europe has fallen behind; it is still enjoying the relaxed prewar peace.

Europeans are not ready for the new reality that has set in. Leave us alone! Return everything to the way it was: jobs, gas, peace! No supplying weapons to Ukraine! One cannot start an armed conflict in the age of nuclear weapons because of some Mariupol! Should the world perish in a catastrophe because Ukraine was to be part of Europe? It is just because the Americans want to cause us to quarrel with Russians! It is all the fault of US imperialists and European bureaucrats! Why do we need sanctions that would hurt us too? The French are ready to take to the streets to protest at the American ruling that forces France to abandon the sale of Mistral warships to Russia. Moscow just protects its interest in Ukraine! And maybe fascists are indeed in power in Kiev? It may have started as a public uprising, but then a Nazi junta took over. Then why should we support them and fight with Russia? Putin offers peace! We want peace!

Putin's calculations are proving correct: it is more likely that citizens of western states, scared by economic woes and the possibility of war, would elect new governments, replacing Putin's enemies with more amenable politicians, than Russians would start to protest because of devastation and rising food prices.

Putin offered Europe his social contract. And with every new person willing to accept it, the black hole will grow and expand. One needs to realise: postwar Europe is already prewar Europe.

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Putin's aggression has left Europe in pre-war state, says top Russian writer

In an essay for the Guardian, Mikhail Shishkin describes president as an 'insipid colonel' terrified of losing power

Luke Harding  
theguardian.com, Thursday 18 September 2014 11.49 BST  

Russia's pre-eminent literary novelist today warns that Vladimir Putin's invasion of Ukraine amounts to a "black hole" that threatens to suck in the whole of Europe.

In an essay for the Guardian, Mikhail Shishkin says that Russia's aggression in Ukraine has left the unsuspecting European continent in a state of "pre-war". He says that unlike Russians – conditioned to expect violence by remorseless state propaganda – Europeans have not yet grasped "the new reality that has set in".

Shishkin is considered by many to be his country's greatest living author. He is the only contemporary writer to have won all three of Russia's most prestigious literary prizes, including the Russian Booker. Resident in Switzerland, he faced official vitriol after refusing to take part on a Kremlin-sponsored literary tour of the US last year. Shishkin said he didn't want to represent a country where "power has been seized by a corrupt criminal regime".

The son of a Ukrainian mother and Russian father, Shishkin describes Russia's president as a "one very lonely ageing man" and "an insipid colonel" terrified of losing power. He says the "demise of Hussein, Mubarak and Gaddafi" and the flight of Ukraine's leader Viktor Yanukovych spooked Putin, and prompted his seizure of Crimea in the spring and attack on eastern Ukraine.

"The instinct of self-preservation kicked in immediately. The formula for saving any dictatorship is universal: create an enemy; start a war. The state of war is the regime's elixir of life," the writer says.

Shishkin suggests that under Putin – who denied there were Russian troops in Crimea, only to later admit with a grin that they were there - Russia has gone "back to the Soviet times of total lies". The novelist says that ordinary Russians are complicit in this lying, with the survival instinct under which Soviet citizens "lived for decades" now emphatically back.

"When Putin tells blatant lies in the face of western politicians, he then watches their reaction with vivid interest and not without pleasure, enjoying their confusion and helplessness. He wants Kiev to return on its knees, like a prodigal son, to the fatherly embrace of the empire. He is sure that Europe will boil with indignation, but eventually calm down, abandoning Ukraine to brotherly rape," he writes.

The novelist – whose latest work The Light and the Dark appeared in English translation last year - is sceptical that western sanctions will have any effect in Moscow. Rather, he says, Russia is ready and psychologically prepared for further conflict. It is already in "an undeclared war against the west". His conclusion is bleak: "One needs to realise: post-war Europe has already become pre-war Europe."

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BBC journalists attacked and equipment smashed in Russia

Tara Conlan  
theguardian.com, Thursday 18 September 2014 10.48 BST      

The BBC has made a formal complaint to Russian authorities after journalists from its Moscow bureau were attacked and had their camera equipment smashed.

The incident happened after Steve Rosenberg, the BBC’s Moscow correspondent, and a newsgathering team had interviewed the sister of a Russian soldier who had been told he was killed in military exercises “on the border with Ukraine”.

According to the BBC, the cameraman involved is continuing to receive treatment for concussion and other injuries.

A statement released by the BBC said: “After filming in the city of Astrakhan, our team was assaulted by unidentified men in a co-ordinated attack. Our staff were badly beaten, their camera destroyed and then taken. After alerting the emergency services, the team was then taken to a police station for four hours of questioning after which they discovered that recording equipment – which was in their vehicle, at the police station – had been electronically wiped.

“The attack on our staff, and the destruction of their equipment and recordings, were clearly part of a co-ordinated attempt to stop accredited news journalists reporting a legitimate news story.”

The statement added: “We deplore this act of violence against our journalists and call on the Russian authorities to conduct a thorough investigation and to condemn the assault on our staff.”

According to Rosenberg the team had their identities checked and the boot of their car examined while investigating “persistent reports of Russian servicemen being sent to fight in Ukraine”.

After the interview with the dead soldier’s sister the team went to a cafe in Astrakhan – a city in southern Russia close to the Caspian Sea.

Rosenberg, who filed a report on the attack for Radio 4’s Today programme on Thursday morning, said: “When we left the cafe and approached our vehicle, we were confronted and attacked by at least three aggressive individuals.

“Our cameraman was knocked to the ground and beaten. The attackers grabbed the BBC camera, smashed it on the road and took it away in their getaway car. We spent more than four hours at the police station being questioned by investigators.”

Rosenberg added: “On the way to the airport we discovered that, while we had been at the police station, some of the recording equipment in the car had been tampered with. The hard drive of our main computer and several memory cards had been wiped clean. Fortunately we had uploaded the interview to London earlier in the day. But why would anyone set out to destroy our material and to silence the sister of a Russian soldier?”

According to Interfax, the head of the Astrakhan region interior ministry’s press office, Petr Rusanov, said “a criminal case” had been launched following reports of an attack on a cameraman who had been “beaten and robbed by unidentified persons”.

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Russia tightens control over Kyrgyzstan

As EU imposes new sanctions on state-owned companies, Gazprom and Rosneft invest heavily in Central Asian state

Stephanie Ott in Bishkek
theguardian.com, Thursday 18 September 2014 05.00 BST  

While Russia’s relationship with Ukraine has been grabbing the headlines, Moscow has been steadily strengthening its foothold in another of the post-Soviet states – Kyrgyzstan.

In the past few years Russia has written off half a billion dollars of the impoverished Central Asian country’s debt, pledged to supply the government with weapons and military equipment and taken over its gas network.

The state-run oil giants Rosneft and Gazprom, the subject of new EU sanctions announced last week, have both invested heavily in new energy projects in Kyrgyzstan over recent years.

Significantly, Russian influence resulted in the recent closure of the massive US air base Manas outside the capital Bishkek, marking the end of American military presence in the region.

“In essence, the closing of Manas marks Kyrgyzstan’s new era as a Russian client state,” said Central Asia specialist Alexander Cooley, professor of political science at Barnard College at Columbia University.

Manas was built in 2001 after the 9/11 attacks and served as a base for more than 5.3 million Nato troops serving in Afghanistan. It officially closed in July 2014.

“The Kyrgyz side faced significant pressure from Moscow to close the facility,” Cooley said.

Acting under a mix of pressure and economic incentives from Russia, the Kyrgyz government first tried to evict the US from Manas in 2009. The Americans agreed to raise the annual rent from $17.4m to $60m, and the base was allowed stay.

But Russia grew increasingly wary of foreign military presence in the region, and upped the ante.

“This time Moscow has effectively used a number of instruments of influence to assert itself as Kyrgyzstan’s primary foreign policy and security partner,” Cooley said.

In August, Russia pledged $500m in financial assistance to Kyrgyzstan to speed up Kyrgyzstan’s integration into the Moscow-led Eurasian Economic Union, an economic bloc that currently includes Belarus and Kazakhstan. Russia’s Foreign Minister Sergei Lavrov said the funds will ensure “maximum comfort” for Bishkek, but did not disclose details what the money will be spent on. Kyrgyz President Almazbek Atambayev said his country would join the Eurasian Economic Union by the end of the year.

Now that the foreign military presence is gone from Kyrgyzstan, “Russia will now assert itself as the country’s exclusive security patron,” Cooley said.

In 2012 Russia agreed to write off almost $500m of Kyrgyz debt in exchange for a 15-year extension of the lease for a Russian military air base.

Moscow operates four military installations in Kyrgyzstan, including the Kant Air Base near Bishkek where 600 Russian servicemen and a number of warplanes are based, and a naval test site at Lake Issyk Kul in the Tien Shan mountains.

Russia also pledged to supply weapons and other military equipment worth $1.1bn to Kyrgyzstan as part of a bilateral armed forces assistance programme, according to the Russian news agency RIA Novosti.

Experts say that with these measures Putin is trying to restore influence in the region that Russia lost when the Soviet Union disintegrated.

According to Alexei Malashenko, a Central Asia scholar and chair of the Carnegie Moscow Center, Russia exerts a lot of power over Kyrgyzstan. “To my mind, Kyrgyzstan is more controlled by Moscow than other Central Asian states,” he said. Kyrgyzstan’s current president Almazbeck Atambaev “sees no alternative to Russian economic and political presence,” he added.

Kyrgyzstan’s gas infrastructure was put entirely under Russian control this year. Russia’s Gazprom paid a symbolic $1 to take over the Kyrgyzgaz natural gas network in July, and vowed to invest 20bn roubles ($521m) to upgrade its infrastructure in the first five years. With this deal, the Russian gas giant also assumed Kyrgyzgaz’s debts of around $40m.

This month Bishkek announced that Gazprom would start exploration of gas fields in Kyrgyzstan by late September. Other recent deals include RusHydro, a Russian state-owned energy company, which began construction on a series of hydroelectric dams in Kyrgyzstan.

Rosneft, the Russian state-owned oil company, also signed a deal in February this year to invest up to $1bn for a stake of at least 51% in Manas International Airport.

Last week the EU announced new sanctions against Russia over the Ukraine crisis, including restrictions on the Rosneft and Gazprom, which will now be prevented from raising capital on EU markets.

Kyrgyzstan has many ethnic and cultural similarities with Russia. Almost one million Kyrgyz people are said to work abroad, most of them in Russia. Their remittances, according to the World Bank, make up 30% of Kyrgyzstan’s GDP.

Kyrgyzstan is the only multi-party parliamentary democracy in Central Asia, but the political system is under pressure. Two presidents have been deposed by violent revolts since 2005.

Mirsuljan Namazaaly, a political economist in Bishkek and the co-founder of the Central Asian Free Market Institute, said: “I wouldn’t say that Kyrgyzstan is politically independent from Russia, as many laws are just copying the laws from Russia, presidents and members of parliament always look at Russia and do what Russia can approve.” However he stressed that Kyrgyz people are generally not opposed to Russia’s influence, and that most favour the Russian presence and support in their country.

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Oligarch's arrest deepens fears over Russian economy

Vladimir Yevtushenkov under arrest and facing prospect of selling Sistema company in what critics call 'undisguised theft'

Shaun Walker in Moscow
The Guardian, Wednesday 17 September 2014 17.50 BST   

The arrest of one of Russia's richest men, whose empire spans oil production to the country's largest mobile phone network, could send further shockwaves through an economy already reeling from western sanctions.

Analysts said the moves against Vladimir Yevtushenkov this week looked like a raid on his business by Kremlin-connected forces, and were a sign of an intensifying battle for a "shrinking pie" of resources. Yevtushenkov, Russia's 15th richest businessman with a fortune of around £5.5bn according to Forbes magazine, has been placed under house arrest after allegations of money laundering.

A report in the Izvestiya newspaper said prison officials visited Yevtushenkov's mansion outside Moscow and fitted an electronic bracelet around his ankle. He is banned from leaving his home, speaking with anyone except his lawyers, and using the telephone or internet.

Yevtushenkov's holding company, Sistema, whose board directors include the Labour peer Lord Mandelson, saw its shares slump 38% by Wednesday afternoon. The allegations against the billionaire relate to the purchase of Bashneft, one of the few privately owned oil companies in Russia, in 2009. Sistema also controls MTS, a mobile network operating in Russia and many post-Soviet nations.

There were suggestions that Rosneft, the state-controlled oil company run by Igor Sechin, a close associate of President Vladimir Putin, wants to buy out Bashneft. The arrest brought accusations from the fallen oligarch Mikhail Khodorkovsky, released from prison by Putin last year, that the move was linked to Kremlin interest in Yevtushenkov's oil assets.

Khodorkovsky was arrested in 2003, spent years in jail, and his oil company Yukos was disbanded, much of it snapped up by Rosneft. The company dismissed Khodorkovsky's comments as absurd.

Sergei Aleksashenko, an economist and former deputy finance minister, said there was no political subtext to the decision, but framed it as a simple economic raid in order to snap up the company.

"This is not even a racket, this is simple, undisguised theft," he wrote in a blog post. "The item that the thieves are interested in is there for all to see. An oil company in Russia is too much of an attractive business for those close to power not to get interested in. Who are they in this case? We will soon find out, right at the moment when Bashneft changes its owner. This will happen, I have no doubt."

Aleksashenko said there were two choices for Yevtushenkov: sell up quickly and flee the country, in the mould of the former mobile phone magnate Yevgeny Chichvarkin who now runs a wine shop in London, or go down the path of Khodorkovsky and possibly end up in prison.

Chichvarkin said he believed powerful Kremlin figures were behind the move against Yevtushenkov and expected there would be more to follow.

"Maybe they first made him an offer of 10% of what it's worth and then when he said no they decided to escalate," he said, speaking from London. "It's absolutely clear that the ideal scenario for them is for him to flee and sell all his remaining companies. MTS would be a really juicy prize. He has the choice of fleeing and selling or something much worse."

Alexander Shokhin, the normally cautious head of Russia's largest business union, said the move "looked like Yukos 2.0" and would damage trust in the Russian business climate.

Anatoly Chubais, the head of Russian state-owned nanotechnology agency Rusnano and a major political figure during the 1990s, told Interfax that he did not understand the charges against Yevtushenkov. "What I can understand is that these actions will cause a very serious blow to the Russian business climate, at a time when the Russian economy is balancing on the edge of recession and stagnation," he said.

What will be particularly worrying for Russia's businessmen is that Yevtushenkov, unlike Khodorkovsky, was in no way a political figure. Khodorkovsky was widely regarded as challenging the unwritten rule that Putin imposed on the oligarchs when he took over: stay out of politics and you can keep your fortunes. The Yukos head began to finance opposition political parties and complained about official corruption at Kremlin meetings; his opponents in the Kremlin saw the chance to move against him.

Yevtushenkov worked for the Moscow city government during the collapse of the Soviet Union and in 1993 set up Sistema with a group of partners. Like many oligarchs early in their careers, the business began with the import of computers, as well as selling Russian oil abroad.

Yevtushenkov was known as an ally of Yuri Luzhkov, Moscow's long-standing mayor, who ran the Russian capital between 1992 and 2010, when he was deposed. However, the tycoon did not dabble in politics and was thought of as a purposefully neutral, apolitical figure.

Chichvarkin said it was the latest in a set of cases against businessmen in Russia, starting with Khodorkovsky, and showed that everyone still operating in the country was at risk.

"There have already been so many signals in the past years that it is difficult to think that new signals would work on Russian businessmen, but this certainly shows that however loyal you are, however far from politics you are, if they want to take your business they will, because they are greedy bandits."

In June, in an interview with Russian Forbes magazine, Yevtushenkov himself noted the huge risks involved in dealing with the post-Soviet markets. MTS was forced to write off huge losses in Uzbekistan after several local managers were accused of wrongdoing, in a case that Sistema always claimed was politically motivated. He said, however, there were no markets that could be seen as risk-free in the region.

"When you operate in strategic sectors, you should be certain that the state knows you, is loyal to you, and wants you to be there … because any state can always find a way to put you in your place, however strong you are internationally, and whatever businesses you run."

A spokesperson for Sistema declined to comment on the case.

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Russia 'Moves Troops in Crimea' ahead of Ukraine-U.S. Meet

by Naharnet Newsdesk
18 September 2014, 13:51

Kiev accused Moscow on Thursday of massing its troops in annexed Crimea on the Ukraine border, rattling nerves just as President Petro Poroshenko prepared to meet U.S. counterpart Barack Obama.

The apparent push north by about 4,000 troops in the Black Sea peninsula came despite Russia's declared backing of a peace overture by Kiev to try to end five months of conflict in the rebellious east.

"According to our information, almost all military units of the Russian Federation stationed in the north of occupied Crimea... were pushed to the administrative border with Ukraine along with all their equipment and ammunition," National Security and Defense Council spokesman Andriy Lysenko told reporters.

Poroshenko holds his first White House talks with Obama later Thursday, seeking to gain security guarantees from Washington as he steers the former Soviet state on a clear westwards path.

The meeting comes just two days after parliament in Kiev ratified a historic pact with the EU and adopted legislation offering self-rule to the east in votes crucial to the future shape of the nation.

Poroshenko's offer won Russia's support, although the pro-Moscow rebels have been more dismissive, saying it will not stop their fight for full independence.

- 'Step in right direction' -

The self-rule law and accompanying legislation granting amnesty to fighters were drawn up under a truce signed 13 days ago that has eased -- but not halted -- deadly violence around insurgent strongholds in eastern Ukraine.

The situation around the flashpoint city of Donetsk appeared to be calm Thursday after days of shelling that has left around 30 civilians and soldiers dead.

Moscow, echoing comments by Washington and Brussels, said Kiev's overture was a "step in the right direction" towards ending a conflict that has cost almost 2,900 lives and sent East-West tensions spiraling to post-Cold War highs.

The law was approved just moments before MPs also ratified a landmark political and economic pact with the EU that decisively pulls Ukraine away from Moscow's sphere of influence.

Poroshenko will cast Russia as a global menace when he meets Obama, in the hope of winning a "special status" guaranteeing his troubled nation's security and support for future membership of NATO.

While Obama does not want to be drawn into a military standoff with a nuclear-armed rival, Washington has joined the EU in imposing waves of punishing sanctions on Russia.

A report by the European Bank for Reconstruction and Development (EBRD) showed how sanctions were biting, forecasting Russia's economy will shrink 0.2 percent next year.

Russian President Vladimir Putin charged Thursday that the measures violated the principles of the World Trade Organization.

But the crisis is even more severe for Ukraine, with the EBRD projecting a massive nine percent contraction this year. The country is already relying on a huge IMF aid package to stay afloat.

Analysts say Ukraine's peace overture to the east is a high-stakes gamble that could definitively splinter the country by creating a Russian-speaking zone that would depend more on Moscow than Kiev.

Nationalist leaders have already accused Poroshenko of capitulating in the face of Russian "aggression" that suddenly turned the tide against Ukrainian forces last month.

The head of the OSCE security group that brokered the September 5 ceasefire said there had been "encouraging" signs, highlighting the self-rule law and a number of prisoner swaps.

"These were major steps that could pave the way towards a lasting solution of the crisis," OSCE chairman and Swiss President Didier Burkhalter said in a statement.

Russian Foreign Minister Sergei Lavrov also said Wednesday: "The ceasefire is holding".

- 'Child of war' -

However Ukrainian Prime Minister Arseniy Yatsenyuk -- who has accused Putin of seeking to eliminate Ukraine -- declared that the armed forces would remain on "full combat readiness".

Many residents of the war-battered region remain deeply pessimistic that any political deals will halt the bloodletting.

"I was born in 1941, a child of war, and now I will die during war. What's it all for?" said 73-year-old Tatiana Semenchenko after a rocket smashed into a building in a working class district of Donetsk on Wednesday.

The new legislation gives three years of limited self-rule to the regions of Donetsk and Lugansk, known collectively as Donbass, and calls for local polls in December.

It also allows Russian to be used in state institutions and for the regions to establish closer ties with local authorities across the border -- two clauses that won Moscow's particular approval.

Both the United States and Europe hailed the legislation as a sign of Kiev's commitment to peace but demanded that Moscow and the insurgents live up to their side of the bargain.

"This was the probably the best of a bad lot of options," said Oleksiy Garan, politics professor at the state-run Kyiv Mogyla Academy university.

"But I don't rule out that Russia could hijack the plan (by effectively swallowing up the east)."

Source: Agence France Presse

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