DTN News - UKRAINE CRISIS: Europe Has Little Reason To Fear Russian Gas Cut-Off
Source: DTN News - - This article compiled by K. V. Seth from reliable sources DW(NSI News Source Info) TORONTO, Canada - March 8, 2014: More than one third of Europe's gas needs are covered by Russian gas. The crisis in Ukraine has kindled fears that Russia could stop the flow.
The crisis in Ukraine is not only about politics, it's also about natural gas. Russia, a key gas producer, supplies Europe with about a third of the gas it needs - and Ukraine is an important transit state.
Almost 40 percent of the gas used in Germany comes from Russia. The Baltic States' dependency is even greater: Russia supplies them with almost 100 percent of the gas they need. Ukraine, too. The crisis in Ukraine, which also depends on Russian gas, has unleashed increasing concern about Europe's energy supplies. Moscow has been known to employ energy giant Gazprom to serve political ends.
Twice since 2006, Russia cut gas flows to Ukraine because of disagreements over transit conditions and prices. Russia also suspected Ukraine of siphoning gas from Russian pipelines passing through the country. Gazprom announced this week it would cancel a 30 percent discount on natural gas for Ukraine, and demanded the country settle its debts - a harsh blow for a country teetering on the brink of bankruptcy.
What if the dispute escalates and Moscow stops the flow of gas? Experts have said Western Europe would probably not be that badly affected.
"That wouldn't affect the EU very much," said Jonas Grätz of the Center for Security Studies (CSS) in Zurich, adding a cut would hit eastern nations like Hungary and Bulgaria more than states in Western Europe, where the gas reservoirs are still filled to about 60 percent - enough for up to four months.
"There's a glut on the international gas markets," said Claudia Kemfert, an energy expert with the Berlin-based German Institute for Economic Research (DIW). But Kemfert said in the long run, Europe is insufficiently prepared to purchase a third of the gas it needs elsewhere. "That is true in particular for countries in Southeast Europe that buy large amounts of gas in Russia."
Russia has many ways to transport natural gas -it could easily cut off UkraineIf transit via Ukraine were blocked, Russian gas could instead flow through the Nord Stream Pipeline that takes natural gas from Russia to Germany under the Baltic Sea. Then, there's the Yamal-Europe natural gas pipeline which runs across Belarus and Poland to Germany.
Should Russia halt all shipments, tankers could bring liquid natural gas to Europe from the Middle East. But Germany, for one, doesn't have a terminal to unload such tankers. In case of a longer disruption, gas buyers could also turn to Algeria and Norway.
Russia's biggest customer
Both the EU Commission and the German government maintain that the Crimea crisis does not endanger gas supplies to the European Union. Germany Economy Minister Sigmar Gabriel pointed out that Russia has always honored its contracts with Western Europe.
"There's no reason to be concerned at the moment," EU Energy Commissioner Günther Oettinger said, adding that the gas reserves are actually higher than they were last year due to Europe's mild winter temperatures.
Russia is not likely to cut gas supplies to Europe. "Russia heavily depends on energy deliveries to Europe," Kemfert said. "Some 60 percent of Russia's state income is due to oil, gas and coal sales - and a large part of that goes to Europe."
Halting all gas exports to Europe would hurt Russia's economy
Grätz added that "a different approach was needed to be taken to Russia's dependence on the European market." One possibility, he said, would be the strict implementation of European market rules on all dealings with Gazprom. Russian President Vladimir Putin has often used the energy giant to serve his own geopolitical goals. If European countries cut imports of Russian energy, it would negatively impact Gazprom as 60 percent of its revenue comes from the European market.
"When Gazprom has problems then Putin will also have problems because he needs the company in order to achieve projects in Russia, such as Sochi, and the supply of gas to rural regions as well as using the company as a means to conduct foreign policy," Grätz said.
Pressure on Ukraine
Russia is currently the European Union's third largest trading partner. In 2012, Russia exported 215 billion euros ($300 billion) worth of goods to the EU and imported 123.4 billion euros from the 28-member bloc. Germany currently represents Russia's third largest trading partner, exporting mainly cars, machines and chemical products. Russia, however, is Germany's 11th most important trade partner, just behind Poland.
The situation in Ukraine, however, is very different, and the EU is concerned about the country's energy supply. After meeting this week with EU energy ministers, Oettinger said the bloc was considering helping Kyiv pay its energy bill. It is also considering sending gas to Ukraine in pipelines that run through Slovakia.
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DTN News - UKRAINE CRISIS: Putin Rebuffs Obama As Ukraine Crisis Escalates*Obama urges Putin to pursue diplomacy*Ukraine standoff intensifies, Russia says sanctions will 'boomerang'
Source: DTN News - - This article compiled by K. V. Seth from reliable sources Reuters(NSI News Source Info) TORONTO, Canada - March 7, 2014: (SIMFEROPOL,Ukraine) President Vladimir Putin rebuffed a warning from U.S. President Barack Obama over Moscow's military intervention in Crimea, saying on Friday that Russia could not ignore calls for help from Russian speakers in Ukraine.
After an hour-long telephone call, Putin said in a statement that Moscow and Washington were still far apart on the situation in the former Soviet republic, where he said the new authorities had taken "absolutely illegitimate decisions on the eastern, southeastern and Crimea regions.
"Russia cannot ignore calls for help and it acts accordingly, in full compliance with international law," Putin said.
Ukraine's border guards said Moscow had poured troops into the southern peninsula where Russian forces have seized control.
Serhiy Astakhov, an aide to the border guards' commander, said there were now 30,000 Russian soldiers in Crimea, compared to the 11,000 permanently based with the Russian Black Sea fleet in the port of Sevastopol before the crisis.
Putin denies that the forces with no national insignia that are surrounding Ukrainian troops in their bases are under Moscow's command, although their vehicles have Russian military plates. The West has ridiculed his assertion.
The most serious east-west confrontation since the end of the Cold War - resulting from the overthrow last month of President Viktor Yanukovich after violent protests in Kiev - escalated on Thursday when Crimea's parliament, dominated by ethnic Russians, voted to join Russia. The region's government set a referendum for March 16 - in just nine days' time.
European Union leaders and Obama denounced the referendum as illegitimate, saying it would violate Ukraine's constitution.
The head of Russia's upper house of parliament said after meeting visiting Crimean lawmakers on Friday that Crimea had a right to self-determination, and ruled out any risk of war between "the two brotherly nations".
Obama announced the first sanctions against Russia on Thursday since the start of the crisis, ordering visa bans and asset freezes against so far unidentified people deemed responsible for threatening Ukraine's sovereignty. Russia warned that it would retaliate against any sanctions.
Japan endorsed the Western position that the actions of Russia, whose forces have seized control of the Crimean peninsula, constitute "a threat to international peace and security", after Obama spoke to Prime Minister Shinzo Abe.
China, often a Russian ally in blocking Western moves in the U.N. Security Council, was more cautious, saying that economic sanctions were not the best way to solve the crisis and avoiding comment on the legality of a Crimean referendum on secession.
GUERRILLA WAR?
The EU, Russia's biggest economic partner and energy customer, adopted a three-stage plan to try to force a negotiated solution but stopped short of immediate sanctions.
The Russian Foreign Ministry responded angrily on Friday, calling the EU decision to freeze talks on visa-free travel and on a broad new pact governing Russia-EU ties "extremely unconstructive".
Senior Ukrainian opposition politician Yulia Tymoshenko, freed from prison after Yanukovich's ouster, met German Chancellor Angela Merkel in Dublin and appealed for immediate EU sanctions against Russia, warning that Crimea might otherwise slide into a guerrilla war.
Brussels and Washington rushed to strengthen the new authorities in economically shattered Ukraine, announcing both political and financial assistance. The regional director of the International Monetary Fund said talks with Kiev on a loan agreement were going well and praised the new government's openness to economic reform and transparency.
The European Commission has said Ukraine could receive up to 11 billion euros ($15 billion) in the next couple of years provided it reaches agreement with the IMF, which requires painful economic reforms like ending gas subsidies.
Promises of billions of dollars in Western aid for the Kiev government, and the perception that Russian troops are not likely to go beyond Crimea into other parts of Ukraine, have helped reverse a rout in the local hryvnia currency.
In the past two days it has traded above 9.0 to the dollar for the first time since the Crimea crisis began last week. Local dealers said emergency currency restrictions imposed last week were also supporting the hryvnia.
Russian gas monopoly Gazprom said Ukraine had not paid its $440 million gas bill for February, bringing its arrears to $1.89 billion and hinted it could turn off the taps as it did in 2009, when a halt in Russian deliveries to Ukraine reduced supplies to Europe during a cold snap.In Moscow, a huge crowd gathered near the Kremlin at a government-sanctioned rally and concert billed as being "in support of the Crimean people".
Pop stars took to the stage and demonstrators held signs with slogans such as "Crimea is Russian land", "We don't trade our people for money" and "We believe in Putin".
IMPORTANT DIFFERENCES
Ukrainian Prime Minister Arseny Yatseniuk said no one in the civilized world would recognize the result of the "so-called referendum" in Crimea.
He repeated Kiev's willingness to negotiate with Russia if Moscow pulls its additional troops out of Crimea and said he had requested a telephone call with Russian Prime Minister Dmitry Medvedev.
But Putin's spokesman Dmitry Peskov ridiculed calls for Russia to join an international "contact group" with Ukraine proposed by the West to negotiate an end to the crisis, saying they "make us smile", Russian news agencies reported.
Despite the Kremlin's tough words, demonstrators who have remained encamped in Kiev's central Independence Square to defend the revolution that ousted Yanukovich said they did not believe Crimea would be allowed to secede.
Alexander Zaporozhets, 40, from central Ukraine's Kirovograd region, put his faith in international pressure.
"I don't think the Russians will be allowed to take Crimea from us: you can't behave like that to an independent state. We have the support of the whole world. But I think we are losing time. While the Russians are preparing, we are just talking."
Unarmed military observers from the pan-European Organisation for Security and Cooperation in Europe were blocked from entering Crimea for a second day in a row on Friday, the OSCE said on Twitter.
A U.N. special envoy who traveled to the regional capital Simferopol was surrounded by pro-Russian protesters and forced to leave on Wednesday. The United Nations said it had sent its assistant secretary-general for human rights, Ivan Simonovic, to Kiev to conduct a preliminary humans rights assessment.
Ukrainian television was switched off in Crimea on Thursday and replaced with Russian state channels. The streets largely belong to people who support Moscow's rule, some of whom have become increasingly aggressive in the past week, harassing journalists and occasional pro-Kiev protesters.
Part of the Crimea's 2 million population opposes Moscow's rule, including members of the region's ethnic Russian majority. The last time Crimeans were asked, in 1991, they voted narrowly for independence along with the rest of Ukraine.
"This announcement that we are already part of Russia provokes nothing but tears," said Tatyana, 41, an ethnic Russian. "With all these soldiers here, it is like we are living in a zoo. Everyone fully understands this is an occupation."
(Additional reporting by Steve Gutterman in Moscow, Luke Baker and Martin Santa in Brussels, Steve Holland and Jeff Mason in Washington, Lina Kushch in Donetsk and Pavel Polityuk in Kiev; Writing by Paul Taylor; Editing by Giles Elgood and Philippa Fletcher)
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DTN News - DEFENSE NEWS: U.S. Waived Laws To Keep F-35 on Track With China-Made Parts
Source: DTN News - - This article compiled by K. V. Seth from reliable sources Reuters(NSI News Source Info) TORONTO, Canada - January 4, 2014: The Pentagon repeatedly waived laws banning Chinese-built components on U.S. weapons in order to keep the $392 billion Lockheed Martin Corp F-35 fighter program on track in 2012 and 2013, even as U.S. officials were voicing concern about China's espionage and military buildup.
According to Pentagon documents reviewed by Reuters, chief U.S. arms buyer Frank Kendall allowed two F-35 suppliers, Northrop Grumman Corp and Honeywell International Inc, to use Chinese magnets for the new warplane's radar system, landing gears and other hardware. Without the waivers, both companies could have faced sanctions for violating federal law and the F-35 program could have faced further delays.
"It was a pretty big deal and an unusual situation because there's a prohibition on doing defense work in China, even if it's inadvertent," said Frank Kenlon, who recently retired as a senior Pentagon procurement official and now teaches at American University. "I'd never seen this happen before."
The Government Accountability Office, the investigative arm of Congress, is examining three such cases involving the F-35, the U.S. military's next generation fighter, the documents show.
The GAO report, due March 1, was ordered by U.S. lawmakers, who say they are concerned that Americans firms are being shut out of the specialty metals market, and that a U.S. weapon system may become dependent on parts made by a potential future adversary.
The waivers apply to inexpensive parts, including $2 magnets, installed on 115 F-35 test, training and production aircraft, the last of which are due to be delivered in May 2014. Lawmakers noted that several U.S. companies make similar magnets.
Kendall said the waivers were needed to keep production, testing and training of the Pentagon's newest warplane on track; avert millions of dollars in retrofit costs; and prevent delays in the Marine Corps' plan to start using the jets in combat from mid-2015, according to the documents. In one case, it would cost $10.8 million and take about 25,000 man-hours to remove the Chinese-made magnets and replace them with American ones, the documents indicate.
Lockheed is developing the F-35, the Pentagon's costliest arms program, for the United States and eight countries that helped fund its development: Britain, Canada, Australia, Italy, Norway, Turkey, Denmark and the Netherlands. Israel and Japan have also placed orders for the jet.
The program is already years behind schedule and 70 percent over initial cost estimates. At the time Kendall was granting the waivers, officials were acutely worried that further delays and cost increases would erode the foreign orders needed to drive down the future cost of each warplane.
In the documents, Kendall underscored the importance of the F-35 program to ensure continued U.S. military superiority and counter potential emerging threats from nations developing their own stealth fighter jets, including Russia and China.
He said additional delays would force the United States and its allies to keep its legacy fighters flying longer, which would result in higher maintenance costs. It would also leave them with older jets, which Kendall said "cannot match the offensive and defensive capabilities provided by F-35."
The Pentagon first disclosed problems with non-U.S. magnets in a little-noticed written statement to Congress in the spring of 2013. But the statement did not name companies involved and did not disclose that some of the parts came from China.
Officials at Northrop, Honeywell and Lockheed declined to comment on the issue, referring queries to the Pentagon.
Joe DellaVedova, spokesman for the F-35 Joint Program Office (JPO) at the Pentagon, said the office was committed to ensuring that federal defense acquisition laws were strictly followed.
"There was never any risk of technology transfer or other security breach associated with these manufacturing compliance issues," he said. "The JPO is working with industry to put in place long-term solutions to avoid the need for future waivers."
In his statement to Congress, Kendall said he took the matter "extremely seriously" and said Lockheed was told to take aggressive steps to identify any further cases, and correct its compliance process.
Bill Greenwalt, a former senior defense official and now an analyst with the American Enterprise Institute think tank, said the risk to national security appeared low since the magnets in question had no programmable hardware.
However, he added: "This is an area that will need considerable due diligence in the future to ensure that components for more high-risk applications are safe from potential tampering and foreign mischief."
SPECIALTY METALS
Since 1973, U.S. laws have banned the procurement of specialty metals produced outside the United States for use on U.S. weapons. A separate 2006 law also bans the purchase of end-use items and components that include such specialty metals.
The documents reviewed by Reuters show that Northrop first discovered the use of non-compliant Japanese magnets on the Active Electronically Scanned Array (AESA) radar it builds for the F-35 in August 2012, alerting the prime contractor, Lockheed, which then told the Pentagon.
A subsequent investigation of all parts on the F-35 turned up two more cases in which non-U.S. specialty metals were used on the F-35's radar, and on target assemblies built by Honeywell that are used for positioning doors and landing gear.
Northrop's radar was also found to contain $2 magnets made by Chengdu Magnetic Material Science & Technology Co, in China's Sichuan region, according to the documents.
The magnets used on the Honeywell target assemblies were acquired through Illinois-based Dexter Magnetic Technologies Inc.
Dexter and Chengdu Magnetic did not immediately respond to requests for comment.
KNOWING AND WILLFUL?
In June, the House Armed Services Committee asked the GAO to determine whether the companies involved "knowingly and willfully" supplied non-compliant magnets, and how the Pentagon investigated that question. The committee also asked GAO for recommendations on potential changes, such as fines or penalties for non-compliance to deter future problems, as well as suggestions for beefing up Pentagon supply chain management procedures.
In a document approving use of Chinese magnets on the batch of 32 F-35 fighter planes now being built, Kendall said neither Lockheed nor Northrop knowingly allowed the parts to be used.
In his waiver, Kendall wrote that Northrop's initial mistake, involving magnets built in Japan, was an "administrative oversight" and noted the firm quickly reported the matter when it was discovered in August 2012. It led to the comprehensive review that found two additional issues involving Chinese-built magnets.
It is not clear from the waiver documents whether Kendall determined that Honeywell's use of Chinese-built magnets involved a similar mistake.
(Editing by Michael Williams, Tiffany Wu and Grant McCool)
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DTN News - NEW YEAR 2014 CELEBRATIONS: New Zealand Celebrates New Year 2014
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(NSI News Source Info) TORONTO, Canada - December 31, 2013: Fireworks explode over the heads of tourists and locals as the clock hits midnight to celebrate the New Year on the waterfront in the New Zealand town of Queenstown, on January 1, 2014 (AFP, Marty Melville)
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