Blogging about Europe

Investing in property in Europe were slow at the beginning of the year

Investments in real estate in Europe have slowed significantly in the first quarter of 2012. The volume of deals for the period was 17.7 billion against 20 billion in the first three months of the last year and 26 billion in the fourth quarter of 2011. Overall, however, recent quarters have high activity of investors as buyers and sellers seek to reach agreement before the end of the year.

According to CBRE data the volume of transactions in Europe dropped by 18% in the first quarter compared to the same period last year and 31% from the fourth quarter of 2011. The trend is only the Scandinavian region, where volumes increased by 50% compared with the first three months of last year.

Markets in the region are favorable for a stable financial situation and better prospects for economic growth, experts explain the company.

Sweden continues to be a key objective for many investors, and increasing interest of foreign investors in other Scandinavian countries.

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Gasoline prices in Europe

Eastern Europe is catching their Western counterparts in prices of motor fuels, finds study of the British website Drive Alive.
The reduction of the difference, however, is just beginning, and so far the largest amounts of gas stations left Norwegians – per 1.86 euros per liter for unleaded A95, although their country is one of the world’s largest oil exporters. Quite a bit cheaper to fill in Italy: € 1.83 per liter. Third costliness ranks Denmark with 1.77 euros per liter. From the Western Europe, gasoline is cheaper in Spain: € 1.38 per liter.

Eastern Europe, however, is quickly reducing the gap with its Western neighbors. In Poland, people already pay 1.47 euros per liter, while in Latvia and the Czech Republic – per 1.48 euros. In Slovenia, prices rose by 12% over the past two months, to 1.53 euros per liter.

In Bulgaria, a liter of gas A95 is around 2.69 lev (€ 1.35) and the prestigious A 98 – by 2.85 lev / l (1.43 euros). According to the Bulgarian Petroleum and Gas Association, if it be found to the Iranian crisis in oil supply, we can expect prices to jump 3 lev per liter.

Putin offered Energy Union to Europe

Russian Prime Minister Vladimir Putin proposes to EU to create a single energy complex – Russia and cancel the Third Energy Package.

“We need to think about deeper cooperation in the energy field – or even create a single European energy complex” says the Prime Minister in an article in which the topic of cooperation with Europe is seen only after a detailed description of the development prospects of relations between Russia and the Asia – Pacific region.

The first steps in the proposed area were made ​​in the gas sector, said the head of the Russian government. “Nord Stream under the Baltic Sea and South Stream across the Black Sea are supported by the governments of many countries, they contribute at the major European energy companies. After full commissioning Europe will receive reliable and flexible system for gas, not depend on anyone’s political whims. This will not formally, but actually strengthen the energy security of the continent” said Putin.

Putin calls to repeal the third energy package, whose requirements prohibit providers of energy inputs to control the transport infrastructure, stating that it complicates relations between Russia and the EU in the energy sphere.

“Gazprom” promised lower prices for Europe in 2012

Russian gas monopolist “Gazprom” predicts a slight decrease in the price of natural gas to European consumers in the first quarter of 2012, said the company’s chief Alexei Miller, During a visit to the Serbian town of Pancevo, for opening of gas storage, together with “Srbijagas” he conceded to reporters slightly lower prices, without stating a specific figure.

“In 2012 the export of “Gazprom “in the European markets will be higher than this year, Miller predicted by stating that this will happen at the expense of the quantities passing through already placed in service pipeline “Nord Stream”.

In November, European consumers were paying 446 dollars per 1,000 cubic meters of gas and exported by the company amounts to the European market amounted to 152 billion cubic meters. Earlier this month the management of the company forecast that the growth will be 8 percent to 164 billion cubic meters.

Serbian state gas company and “Gazprom” discovered underground gas storage within the future gas pipeline “South Stream”. Repository in the northern city of Banat yard has a capacity of 450 million cubic meters of gas. It will be managed by a joint venture established in 2009, of which “Gazprom” holds 51%, and “Srbijagas” 49%.

It is expected that the project “South Stream” to be completed by 2015. By it Russian gas will pass from Russia under the Black Sea to Bulgaria, Serbia and Hungary and Western Europe.

IMF chief for Europe resigned “for personal reasons”

The director of the European Department in IMF, Antonio Borges, resigned in a difficult period for the region when EU leaders are struggling with debt crisis in the euro area.

Ronaldo Borges, who held a managerial position in the IMF only a year, explained his leaving as “personal reasons”. Borges previously held the position of Chairman of the Board of Directors of “Goldman Sachs” in London. Last month, Borges was forced to renounce his words, that the IMF can redeem the debts of Spain and Italy to help countries get out of the crisis.

“Antonio Borges led the unit of the IMF in an extremely complex for the eurozone members period,” commented the leaving of Borges, the head of IMF Christine Lagarde. She added that Borges has helped “tremendously the suffering from the crisis euro zone.”

In his place comes the current director of strategies, policies and assessments in the IMF Reza Moghadam.

“This means that the IMF intends to play a more important role in Europe”commented the change in the leadership of the European Department the fundthe former representative in IMF Esvar Prasad, who is now in Bruking Institute in the USA. “Reza Mogadam is the person who may hold a more aggressive policy”, he said.

IMF plays a key role in resolving the crisis in the eurozone together with the European Commission and European Central Bank. The volume of financial assistance provided to countries in the EU depends on these three organizations.

EBRD: Eastern Europe must be prepared for another crisis

For the second time in three years the European Bank for Reconstruction and Development (EBRD), talks with bankers and politicians from across Europe in an attempt to prevent the drying up of capital flows to subsidiaries of Western banks in Eastern Europe, writes Bloomberg.

The decision will be different from the Vienna Initiative – a commitment in 2008 of the largest European banks to support Eastern European subsidiaries after the collapse of Lehman Brothers, said Piroska Nagy, Advisor to the EBRD. Agreement can be reached within a few weeks, she said.

“What is needed in the current situation is strengthened coordination,” said Nagy. “Otherwise we will witness the negative effects of unilateral narrow decisions of individual governments,” she said.

A month ago, European leaders agreed that by the end of June 2012 European banks need to raise their capital adequacy ratio to 9%. Since about three quarters of the banking sector in Eastern Europe is in the hands of Western banks, including UniCredit and Erste Group Bank, the financing of local Eastern European subsidiaries of these banks is likely to be frozen, warns EBRD.

According to the European banking regulator (EBA) European banks need 106 billion of fresh capital. Italian UniCredit, the largest bank in Eastern Europe, has to raise 7.38 billion. Erste, which owns the second largest banking group in the region needs 750 million euros.

Debt crisis may limit demand for Eastern European exports and lower capital flows to the region, in 2008, says the annual report published today by the EBRD.

“Unfortunately, the region should prepare for another crisis,” said the chief economist of EBRD Erik Berglof. “If the crisis gets out of hand, financial integration model between Western and Eastern Europe could be threatened.”

Economies in Eastern Europe are in better shape than in 2008 and are less dependent on external financing. Eastern banks balance sheets are generally in better condition. However, due to high levels of bad loans that have not yet reached its peak, additional capital will probably be needed.

Shocks in Western Europe pose a serious risk of worsening the already not very optimistic outlook for Eastern Europe, said the EBRD. Most vulnerable to the looming credit crunch are Hungary, Slovakia and Bulgaria, followed by Croatia, Slovenia, Romania and Poland, the bank warned.

Moody’s Investors Service, which today lowered its forecast for the Polish banking sector to negative, expected “over the next 12-18 months the pressure on the sector to gradually intensified, adversely affect the asset quality, liquidity and profitability.”

Western banks may withdraw from Eastern Europe about 13 billion euros, Peter Attard Montalto calculated, economist at Nomura International Plc in London.

Now there is a choice: naked scanner or search

Passengers at European airports will be checked using “naked” scanners once the European Commission approved today rules under which it works. Naked scanners allow you to see non-metallic objects. Their introduction began after the discovery of explosives in the heel of the shoe on one flank and another passenger turned to the United States.

Naked scanners are advanced metal detector technology used today, but since working with X-rays and show three-dimensional parts of the body under examination, were previously blocked in the European Union as hazardous to health and violating the privacy of passengers.

After almost two years of negotiations with the European Parliament, which refused the introduction of new scanners, the Commission now agree to the terms of use, allowing even from the middle of December to be mounted on any European airport.

Image quality, which is like a medical devices allows to clearly see details of the audited body, including anatomical details.

To ensure privacy and dignity of passengers, the main requirement is that the people who will watch the images to be in a separate room from the border inspection post. Furthermore, the image records will be kept only until the passenger is at the scanner, says the guidelines will be published in “Official Journal” of the EU next week.

So far, the intention of full passenger’s anonymity is hardly feasible, since only one producer of scanners own such technology. Because of this the European Commission recommended that the authorities in the Member States to show the faces of the passengers blurred.

People who have health, religious and other reasons and are not willing to undergo three-dimensional scanner, may request another inspection. The European Commission announced that it will be a personal search by a member of airport staff. Because of the health risks of ionizing radiation on people with pacemakers, prostheses, insulin and diabetic pregnant women, the examination will be done by touching.

According to a report of the police in Hamburg, however, the new machines make too many mistakes. The images are blurry and at the slightest movement and the scanner gets confused by zippers, metal buttons and spikes.

As part of its campaign against the negative image of the new airport scanner, Brussels, even changes his name and instead of “naked” in the future it will be called “security scanner”. Such machines are currently used in London and the airport in Amsterdam, but they have been tested in Germany, France, Finland and Belgium.

Their supporters claim that besides that they are safer, they will significantly reduce queues at airports. Passengers will continue to remove shoes and belts, to take out coins and to be returned several times. The safety of the flight, will significantly improve, they say.

Merkel: Our generation must create a political union in Europe

Step by step, Europe needs to move towards political union, said German Chancellor Angela Merkel. She define the debt crisis in the euro area as “the most serious challenge for the region after World War II.”

With its one-hour speach infront thousands of delegates of the Christian Democratic Union, Merkel did not offer new ideas to solve the crisis, which forced Greece, Ireland and Portugal to seek international financial assistance and pose existential concern for monetary union as a whole.

Merkel, however, clearly pointed out that Germany will have to make additional sacrifices. Party congress in Leipzig runs under the motto “For Europe – for Germany.”

“The challenge of our generation is to finish what we started in Europe, and namely the step by step to create a political union,” she said infront of the party congress in Leipzig. “Europe is experiencing one of its worst crises, perhaps the worst since the Second World War,” she said.

The focus on the two-day party meeting had to be the German education system. Instead, the talks were dominated by issues of European debt crisis, which continued to grow even after the election of a new expert governments in Greece and Italy.

If Germany does not have early parliamentary elections, the mandate of Merkel, who came to power in 2005, will expire in 2013. The German Chancellor seems aware that she can easily become another victim of a political crisis if she fails to play her cards cleverly enough.

In 1999, exactly the Christian Democratic Union, led by then-Chancellor Helmut Kohl united Germany to the Pact for the euro.
Almost 13 years later, many German conservatives are worried about the funded with taxpayers’ money aid for troubled eurozone countries. Conservatives are extremely sensitive to the fiscal irresponsibility of the countries of the periphery of the euro area and the danger to the crisis to compromise the independence of the European Central Bank (ECB).

Some fractions of the party of Merkel even agree that the whole project with the European single currency was a mistake that must now be corrected.

Merkel, however, highlighted that Germany has a responsibility to their partners and that it is vulnerable if other eurozone countries are overtaken by the crisis. Chancellor reminded her colleagues that 60% of German exports go to the European Union (EU).

“Irish problems are Slovakian problems, Greek problems are Dutch problems, the Spanish problems are our problems,” said Merkel. “Our responsibility does not end at the German border,” she said.

Meanwhile, Merkel emphasizes that there are “red lines” that Germany is not ready to cross, rejecting once again the idea of ​​issuing common Eurobonds and other hasty decisions that in Berlin would not encourage European governments to adhere to responsible fiscal policy.

The problem is that the crisis was not created overnight, but it is result of decades of mistakes. Therefore we can not resolve it by waving a magic wand, says Merkel. “We are facing a long and difficult road,” she added.

If the crisis deepened in the euro zone before the next elections in Germany in which one or more countries are forced to leave the union – an event with serious economic consequences for the region as a whole, even the most skillful political maneuvering would not save Chancellery chair.

Last hours of Berlusconi as prime minister

Italian Lower Chamber of Parliament adopted a plan for economic reform and thus pave the way for the resignation of Prime Minister Silvio Berlusconi.

Financial Stability Act already passed by the Senate, and Berlusconi, who failed to secure a majority in a key vote last week promised to step down from power after it is approved by parliament.

The law includes a package of austerity measures, which urged the EU and aimed to restore market confidence in public finances in Italy.

Members of the lower chamber today supported the law with 380 votes “for”, reports BBC.

Berlusconi is expected to hand his resignation to President Giorgio Napolitano later today. This night he convened last cabinet meeting before his expected resignation.

Meanwhile, crowds gathered in front of the Italian Parliament, shouting “Resign” and “Bye Berlusconi”.

China wants to save Europe again

New request from China to help Europe was made the day on which European leaders gathered for the second three days meeting, which had to be sought the debt crisis and problems in Greece.

Emerging market economies and China in particular are reluctant to participate in the European Support Fund through the International Monetary Fund (IMF). It said an unnamed source “close to decision makers in Europe,” quoted in “China Daily”.

According to this source, “the consent of the emerging market economies may be included in the final document of the summit of European leaders’ forum in Brussels if they decided to open up that fund for the participation of foreign investors – both private and public. Formal confirmation of this information was not received.

The capacity of the European Financial Stability Fund is now 440 billion dollars. It is believed that in terms of markets that this is not enough for the Fund to cope with the situation, if the crisis infect a large economy such as Italy. Recently emerged ideas fund be increased to 1 trillion euros. Its fate would have been a major subject of discussion at a meeting of leaders of the eurozone.

Reuters said before the meeting of leaders of the euro area, the chances to reach an agreement on measures against the debt crisis appear slim. EU expressed its readiness to support banks, but does not indicate a specific figure for their recapitalization, said in the draft of the meeting, told Reuters. “New York Times” also predicts failure of the meeting.

Discussions to reach a deal on the euro become complicated, including significant restructuring of the Greek debt, pouring new capital in European banks and increasing the rescue fund so as to prevent financial panic in Italy and also in Greece and Portugal, the publication notes. Meanwhile, shortly before the summit, the German Parliament Chancellor Angela Merkel supported the project. Lawmakers of the Bundestag have received a secret report which says that the future of Greece is a bleak.

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