{"id":1424,"date":"2005-08-11T13:00:53","date_gmt":"2005-08-11T09:00:53","guid":{"rendered":"http:\/\/geoeconomics.ge\/en\/?p=1424"},"modified":"2013-03-11T13:01:18","modified_gmt":"2013-03-11T09:01:18","slug":"new-outlines-of-the-world-economy-and-georgia-ukraine-sensation","status":"publish","type":"post","link":"https:\/\/geoeconomics.ge\/en\/?p=1424","title":{"rendered":"New outlines of the world economy and Georgia-ukrainE Sensation"},"content":{"rendered":"

Emzar Jgerenaia <\/strong><\/p>\n

Now the world economy is concerned with three issues:
\n – oil prices and deficit of energy resources
\n – dollar\u2019s exchange rate and fluctuations of the financial market
\n – drop in production in Europe
\n – economic growth in China
\n – economic confrontation between becomes more intensive, and for the time being Europe is losing it . <\/p>\n

In spite of the fact that Euro became seriously cheaper against US dollar to 1.1869 in July, and European export did not increase all the same and the economic growth dropped to 1.6%. Now you cannot blame Euro\u2019s high exchange rate for that, it has already approached the level of 1999 and this means that Europe has other serious problems besides the exchange of its currency.
\n Among these problems they name the political ones when the approval of the common constitution was suspended, but the main problems remain to be economic ones. Particularly \u2013 the budget deficit and decreasing of economic growth\u2019s rates.
\n According to the all-European agreement, all EU\u2019s countries were to provide the deficit within 3% in relation to the total GDP. Gut this agreement is being broken by many countries. For example Italy\u2019s budget deficit makes up 4.3%, Portugal\u2019s \u2013 6.2%. The indicator of economic growth in Italy \u2013 0%, in Portugal \u2013 0.5%. And correspondingly the indicator of economic growth in Europe has dropped to 1.4%.
\n Last month the countries of cooperation and development union published a critical report on European economy, and pointed out the catastrophic situation that is in store for the European economy if it does not implement a packet of economic reforms from the viewpoint of liberalization of economy and workforce. As well as it should increase the expenses for the fight against terrorism, since the explosions in the UK inflicted a serious damage to the economic growth.
\n Europe\u2019s main problem is that because of Euro\u2019s exchange rate European goods have gone up in price. It has lost not only foreign markets but its own ones as well. Added to this, doing business in Europe is expensive because of expensiveness of workforce, tax burden, and serious difficulties in the regulation of the economy. Reasoning from the above-mentioned, work places are being transferred from Europe to Asia. All this takes place in conditions of high oil and natural gas prices which have the tendency of remaining so in the future. It is the main problem for Europe. On the contrary, in the US economy a serious growth can be observed, in spite of high oil prices and prolonged military operations in Iraq. Last month the \u201csorcerer\u201d of the world bank system Alan Grinspen gave a report in the US Congress on the results of the six months and the prospects of the US economy till the end of the year. The leitmotif of the report was hardness of the US dollar, stable oil prices, and the indicators of economic growth in the US. Hard Euro and cheap dollar promoted the growth of American export. The 4 fold increase of the Federal Reserve System\u2019s rate contributed to the growth of investments in the US, and eventually, in spite of high oil prices, which, according to Grinspen, will remain in future, the indicator of GDP\u2019s growth makes up 4%.
\n \u201cThe growth of prices for European goods gave American producers an opportunity, in view of high prices for energy resources, to shift additional expenses to the customers and dictate them their terms, and finally increase production,\u201d \u2013 Mr. Grinspen stated in the Congress. In spite of it the inflation indicators are disturbing here as well. According to Grinspen\u2019s forecasts, till the end of the year the rate will continue to grow and it will be able to stabilize the inflation rate. The harder Euro is the better American economy is growing, and European economy faces recession. It is noteworthy that the demand for oil is first of all growing because of China\u2019s economic requirements. China is a big headache and problem for the West. Before China carried out revaluation of yuan, China and Asian countries in order to preserve low exchange rates of their currencies had implemented serious interventions on the currency market and purchased dollars in large quantities. Then they purchased American bonds (60% of the securities are in these countries), and for America it was a somewhat positive factor, when it had an increased budget deficit and unprecedented balance of trade deficit, as well as military expenditures increased to 500 billion USD. That is why the profitability of American public bonds has lately increased from 0.06% to 4.22%. But this was followed by the influx of Chinese to Europe and America. Cheap Asian goods have created problems for western business, and a positive trade balance for China. In the first six months the indicator of Chinese economy\u2019s growth made up 9.5%, which is the world record (against 2004). The export has increased by 32.7% reaching 342 billion, and positive trade balance has made up 39.6 billion (in spite of the fact that it works on expensive foreign oil products). Those firms that transferred their business from Europe to China have played a big part in it. Along with that internal consumption has increased as well. Retail trade has increased by 13%, oil import \u2013 by 37.4%, car import \u2013 by 10%. This is one of considerable factors of oil prices increasing, and if China will maintain the growth rates it will increase the oil prices still more and inhibit production growth in Europe and America. In the last 6 months, the investments in key assets in China has increased by 25%. It is stipulated by the fact that in China there are a lot of large state owned enterprises to which the national bank gives cheap credits for investments, and maintains yuan\u2019s low exchange rate in order to implement its aggressive export policy. In view of all these factors China was subjected to strong criticism on part of the western governments, and it had to carry out 10% revaluation of its currency, though no one knows when it will take another step, and its economy continues to grow at the expense of the West. Besides it must be said that China does not observe the recommendations of the International Monetary Fund in banking and tax spheres and continues its protectionist policy towards the investors and its own country.
\n The economy of China is growing at the expense of the West because for the following reasons:
\n 1 \u2013 the state implements serious economic policy;
\n 2 \u2013 it has cheap, skilled and disciplined workforce;
\n 3 \u2013 business, suffering from senseless European regulation, is being transferred to Asia;
\n 4 \u2013 business that is concerned with social obligations high salaries is being shifted to Asia;
\n 5 \u2013 business gravitates towards the growing market and liberal economy.
\n What is good for China is bad for America. One thing is clear \u2013 China is a recalcitrant country but it is necessary. That is why they will not stop either its growth policy or its protectionist policy. They are doing what is acceptable for their country at this stage, at the same time closely cooperating with the west. That is why there begins a rapid search of new oil and natural gas deposits, as well as development of unprofitable minerals, and they start thinking of the resources of those countries that, according to Alan Grinspen\u2019s statement, neither invest in search of oil themselves nor give others an opportunity of doing it.
\n Here recalcitrant countries are meant, for example Iran, which possesses 16% of the world\u2019s natural gas reserves. Reasoning from this, it is clear that this country does not need nuclear power station for solving its energy problems, and is needed solely for military and political purposes.
\n Its problem is to sell natural gas. Solving of this problem means the growth of its military and financial strength, which, naturally, in conditions of the government existing in Iran, does not suit the US. Everybody knows this and there is nothing new about it.
\n Rissia is losing its monopoly for natural gas, Ukraine is trying to rearrange the world economy
\n Russia and its \u201cGazprom\u201d is a monopolist in delivering Central Asian natural gas to Europe. It has purchased all Turkmen contracts till 2027, and Uzbek ones \u2013 till 2012. Now \u201cGazprom\u201d buys natural gas from Turkmenia at the price of 40 USD for 1000m3, and sells it to Germany at 160 USD. It also delivers natural gas to Poland, Romania and Hungary. All of this flow goes through Ukraine as transit.
\n In 2004 Russia delivered through Ukraine to Europe 138 billion m3 of natural gas, and in 2005 it is planning to deliver 128 billion m3. It pays for the transit with gas.
\n Ukraine takes 1.09375 USD for transportation of 1000 m3 of natural gas per 100 km. If we will transfer it into volume it will make up 30 billion m3 annually. For example for a similar transit Russia pays Poland 2.7 USD, but in spite of it Russia constantly reproaches Ukraine and Georgia, Putin repeats that he gives us natural gas at 50 USD and not at 160 USD as in the case with Europe.
\n Georgia is also a transit country for delivering natural gas to Armenia, and it pays a privileged transit tax. Besides it pays for transportation of cargoes not in money but in natural gas, which is not transparent at all. The problem is that there are a lot of so called \u201ctechnical losses\u201d, calculation of gas volume first takes place on Russian territory and then in Alaverdi (Armenia), which allegedly gives large losses.
\n When Ukraine began to regulate a similar issue and offered Russia to buy gas at 80 USD and pay 1.7 USD for the transit it in money, a real \u201cwar\u201d started \u2013 Russia accused Ukraine of stealing 9 billion m3 of natural gas and demanded urgent compensation of losses, and then promised to increase the tariff to 160 USD, which meant suspension of work of Ukrainian enterprises and ruin of the country\u2019s economy.
\n As a result Ukraine decided to find an alternative and did it. This is a real sensation \u2013 transportation of Iranian natural gas to Europe by the following rout Iran (Kars deposit) \u2013 Armenia \u2013 Georgia \u2013 Ukraine \u2013 Europe.
\n Firstly this project will eradicate \u201cGazprom\u2019s\u201d monopoly in Europe, secondly it will make the \u201cBlue Flow\u201d gas pipeline project through Turkey non effective and unprofitable. To this is added Baku \u2013 Tbilisi \u2013 Erserum gas pipeline and new Iranian gas pipeline in Turkey. Russia is in a difficult situation \u2013 the empire is really disintegrating. Besides Turkmenbashi demanded that \u201cGazprom\u201d should pay 44 USD for gas in money, that is price increase from 2007, which makes \u201cGazprom\u2019s\u201d work less attractive. Last month Ukrainian and Iranian Ministries of Fuel and Energy signed a memorandum on work at this new project, according to which in September a meeting of all participants of this project will take place, and agreement on launching of the project will be reached. According to the statement of Ukrainian Deputy Fuel and Energy Minister \u2013 Sergei Titenko, the rout will go through Georgian port Supsa to Feodosia \u2013 550 km on the bottom of the sea, and it will deliver 60 billion m3 of Iranian natural gas through Ukraine to Europe. From this volume Ukraine will get 16 billion m3.
\n It is noteworthy that now Iran produces 56 billion m3, and in 2010 the volume of production will reach 290 billion m3. That is why it is preparing the draft project Iran \u2013 Pakistan \u2013 India.
\n In 1970 \u201cIGAT\u201d gas pipeline was constructed which anally delivered 10 billion m3 of gas to Azerbaijan and Armenia. In 1979 \u201cIGAT 2\u201d gas pipeline was constructed with capacity of 27 million m3. Both gas pipelines are in perfect condition. According to Iranian Petroleum Industry Minister, two variants of the rout are being considered: the first one Iran \u2013 Armenia \u2013 Georgia \u2013 Russia \u2013 Ukraine \u2013 Europe, and the second one Iran \u2013 Armenia \u2013 Georgia \u2013 Ukraine \u2013 Europe.
\n Five parts will be present at the meeting in September, and Russia will be invited as the fifth part. Europe needs this project like air in order to be more independent from Russian \u201cGazprom\u201d. The main point now is the attitude of the US towards the project.
\n It cannot be ruled that Iran demanded supporting of this project in exchange for freezing of its nuclear program. One thing is clear \u2013 the project of the century is being launched, and it will bring Georgia not only satisfaction of its requirements in energy sector and increase the state\u2019s profits, but will also provide international security for the country. The project is ready yet, it was drawn up in one of Kiev\u2019s research institutes. It is difficult to imagine that Azerbaijan should be pleased by the fact that the pipeline will be laid through Armenian territory, while in September the first flow of Baku \u2013 Jeikhan oil pipeline will approach Georgia, and the construction of gas pipeline to Erzerum will be completed soon. Russia\u2019s positions on the world energy market are weakening, even more so China and Central Asian countries got down to the project of construction of a direct pipeline. The disintegration of the Soviet Union was a formal act. Now Russian empire is really breaking down, and their agony and hysterics are stipulated by this process. In the recent past we were selling trans Caucasian pipeline to Russia, and in this case Russia could have a good trump for this century project to be implemented with its participation. We saved ourselves, though Russian agents, not in a bad sense of the word, that is Russian political lobbyists will create serious problems for Georgian international interests, and will try to leave the country under Russian influence. This is not rumors. This is a wish of some influential circles.<\/p>\n","protected":false},"excerpt":{"rendered":"

Emzar Jgerenaia Now the world economy is concerned with three issues: – oil prices and deficit of energy resources –<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[32],"tags":[],"yoast_head":"\nNew outlines of the world economy and Georgia-ukrainE Sensation - Geoeconomics<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/geoeconomics.ge\/en\/?p=1424\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"New outlines of the world economy and Georgia-ukrainE Sensation - Geoeconomics\" \/>\n<meta name=\"twitter:description\" content=\"Emzar Jgerenaia Now the world economy is concerned with three issues: – oil prices and deficit of energy resources –\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\">\n\t<meta name=\"twitter:data1\" content=\"9 minutes\">\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/geoeconomics.ge\/en\/#website\",\"url\":\"https:\/\/geoeconomics.ge\/en\/\",\"name\":\"Geoeconomics\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":\"https:\/\/geoeconomics.ge\/en\/?s={search_term_string}\",\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/geoeconomics.ge\/en\/?p=1424#webpage\",\"url\":\"https:\/\/geoeconomics.ge\/en\/?p=1424\",\"name\":\"New outlines of the world economy and Georgia-ukrainE Sensation - Geoeconomics\",\"isPartOf\":{\"@id\":\"https:\/\/geoeconomics.ge\/en\/#website\"},\"datePublished\":\"2005-08-11T09:00:53+00:00\",\"dateModified\":\"2013-03-11T09:01:18+00:00\",\"author\":{\"@id\":\"https:\/\/geoeconomics.ge\/en\/#\/schema\/person\/c8498c0ae03a66c87b59761fbd19b04c\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/geoeconomics.ge\/en\/?p=1424\"]}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/geoeconomics.ge\/en\/#\/schema\/person\/c8498c0ae03a66c87b59761fbd19b04c\",\"name\":\"Admin\",\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/geoeconomics.ge\/en\/#personlogo\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/bf2d8703d729f003d8905b57fcab5078?s=96&d=mm&r=g\",\"caption\":\"Admin\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","_links":{"self":[{"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/posts\/1424"}],"collection":[{"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1424"}],"version-history":[{"count":1,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/posts\/1424\/revisions"}],"predecessor-version":[{"id":1425,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=\/wp\/v2\/posts\/1424\/revisions\/1425"}],"wp:attachment":[{"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/geoeconomics.ge\/en\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}