Dateline: BUCHAREST

[Catch-22: no-win situation or a double bind of any type. Source: Wikipedia]

Today, two different pieces of news caught my attention. First, a report recently released by FAO that makes pretty somber predictions regarding the future evolution of prices for basic foodstuffs. According to the report, food prices are going to rise by a whopping 80% during the next ten years or so.

The second piece of news was an Economist article saying that Japan quadrupled its aid to Africa, in an effort to get a solid political footing on the Continent and harvest Africa’s rich resources.

There is a third story, but that is not really news: energy prices, which stubbornly stay above $ 130/barrel, in spite of recent demand concerns.

So there we have it: three pieces of the same puzzle. Allow me to elaborate. First, food prices. According to the FAO report, there are two main causes for the increase. First, climate changes affecting food-producing regions and thus negatively impacting supply. Second, the increasing shift from crops for human consumption toward bio fuels. Continue Reading »

David Brunnstrom writes in today’s Guardian of the EU - Russia negotiations regarding a new all-encompassing pact wit the Big Eastern Neighbor. The deal would cover energy, trade, and politics. This pact is an opportunity for the EU to pursue a more assertive stance for Russia, and it is high time the 27 did that.

As Brunnstrom points out, it will be tough to get an agreement on the terms of the Treaty at the EU level - it may take years, if it ever happens. Yet the EU Member States should be aware, regardless of their reliance on Russian natural gas, that the only way to deal with Moscow now is by playing [sensible] hard ball. Of course, say, Germany, might have problems with that argument, yet its significance remains paramount over the long run.

Even the EU states that are highly dependent on Russian resources must have realized by now that, with oil prices reaching a whopping 130 USD/barrel, current consumption patterns are not sustainable. Yes, Russia has natural gas, but, over the long run, neither oil nor natural gas is the answer. The answer, in my humble opinion, lies in diversifying energy suppliers and shifting increasingly toward green forms of energy.

This is where a common approach toward Russia comes in handy. By taking a tougher line in its negotiations toward Moscow, Europe will surely incur some costs over the short term - possibly in the form of higher energy prices, possibly in yet oher forms. But to minimize these costs, and to stand a change of getting a better deal from the Russians, the EU must speak with one voice. If we consider the EU as a singular actor with a common interest, which i think should be the case, cooperating in their relationship with Russia would lead to a pareto-optimal result, maximizing the overall benefit for all Member States. It would allow the Union to get a better deal than any of the Member States alone could ever obtain.

And then there’s the politics. The message that needs to be driven home to Putin [or Medvedev, for that matter] is that it is not ok to infringe on human rights and reconstitute a neo-Tsarist crony regime controlled by the secret services. Russia should probably try harder to look like a democracy. And the EU should give it an incentive to do just that.

A third and final reason why the EU should act with one voice in its dealing with Mosow is because of the countries in Russia’s near-abroad. These states should retain a realistic prospect of one day joining the EU. And the EU should thus retain a powerful direct leverage on these countries’ reform path [as it ultimately did, even with the worst reformers, i.e. Romania and Bulgaria]. For an example of what I have in mind, see the initiative by Poland and Sweden, among others, for an Eastern Partnership.