Putin had previously brought up the proposal to switch to euros as prime minister in October 1999, at a meeting of EU leaders in Helsinki. Then, in an attempt to forge a new bloc to counterbalance the United States, he made the proposal alongside calling for closer cooperation between Russia and the EU, including on security issues. Since then, however, Russia's ties with the United States have warmed considerably -- and it is unclear whether Putin would risk damaging that relationship by going ahead with the euro move, analysts said. "Putin is very much interested in changing the structure of OPEC and he cannot do that without the United States," said Alexander Rahr, an expert on Russia at the German Council on Foreign Relations. "He can only get a foothold for Russia in the Middle East with [U.S. help]. And, he wants to get contracts for the Russian oil industry in Iraq -- for this, too, he needs the United States."
Some analysts said that the statement appeared to be aimed at boosting Russia's global clout on the world stage. "Putin is trying to create a position for Russia as an independent player. But his aim is not to undermine relations [with the United States]. He just wants to boost Russia's position up from being a junior partner," said Dmitry Trenin, geopolitical analyst at the Carnegie Moscow Center. Yevgeny Gavrilenkov, chief economist at Troika Dialog and an earlier architect of the Putin government's first economic plan, said debate is growing on a move to the euro as Russia mulls siding with the EU. "Such an idea is really possible," he said. "Why not? More than half of Russia's oil trade is with Europe. But there will be great opposition to this from the United States." He said that while a switch would have no direct impact on the Russian economy, it would give a great boost to the euro zone.
Lukoil vice president Leonid Fedun said Thursday that he saw no problem in the euro switch and that payments for such transactions would be minimal, at just 0.08 percent. "There is no problem ... If the state decides to do this, then we will support this initiative. From the point of view of the economy, there's no difference," Interfax quoted him as saying. But even Fedun could not help putting a political price tag on the move. "We are ready to move to the euro if the country will be included in a visa-free regime with Europe," he said. Rahr agreed that the timing of the statement seemed calculated to extract political concessions from the EU. "It's a bargaining chip," he said. Gavrilenkov suggested Putin was also angling for EU concessions on other issues discussed in Yekaterinburg, such as terms for Russia's WTO accession
More Information on the US Trade and Budget Deficits, and the Fall of the Dollar
http://www.globalpolicy.org/socecon/crisis/index.htm
From an E-mail I just received::
The threat to oil being linked to the Euro (that the Iraq war stymied) and the resulting total crash of the dollar is illustrated by this article. We went to war to prevent a global change in currency, which would have impoverished the USA in a matter of a couple of years if not just months.
MOSCOW, May 14 (RIA Novosti) - The share of the euro in the Russian gold and foreign currency reserves can be increased to 50%, said Pavel Teplukhin, president of the Troika Dialogue managing company.
"The country's international reserves must be maximally adjusted to the balance of payment structure," he thinks. "And the balance of payments consists of two parts, the trade balance and the capital account."
Russia's main trade partners are EU countries, with whom settlements are made in the euro, Teplukhin said.
On the other hand, debts (to the International Monetary Fund and the Paris Club) are assessed in the dollar, but their servicing will cost less owing to their early repayment. The company president views this as one more argument in favor of transition to the euro.
"The euro/dollar ratio in the country's international reserves should be close to 50:50," he thinks. "Until 2007, I would add to the reserves 10% of other currencies which are involved in the international currency relations, in one way or another." One of these currencies should be the Japanese yen, which is a global reserve currency.
"There are also special drawing rights (SDR), a synthetic currency used for IMF settlements that is a basket of currencies of IMF member states," Teplukhin said.
"Russia is becoming an active member of the IMF, not a borrower but a net creditor of the countries that are the recipients of the World Bank and IMF assistance. In this situation, the voice of the Central Bank in currency interventions should become louder," the company president thinks.
In his opinion, the Central Bank should not only tackle the domestic foreign policy but also influence the international dynamics of the exchange rate. To be able to do this, Russia should adopt "a creative attitude to the balance of the dollar, the euro and the yen in its international reserves."
"The Central Bank can play this part now because it is one of the world's largest holders of international reserves," argues Pavel Teplukhin.
The Russian gold and foreign currency reserves top $144 billion and may grow to $170-180 billion by the end of the year, according to the Central Bank's forecast.
The Central Bank can use this factor to influence the price of currencies on different markets, the expert thinks. "Russia has never had such a role" but can play it now. "We have the requisite specialists in Vneshekonombank and Vneshtorgbank. They can play the part of an active member of a group that determines the value of international currencies," he concluded.
Putin is playing a big card.... Europe is crumbling also.. Stay tuned ....
Events in Ukraine, Georgia, Kyrgyzstan and Uzbekistan could have change this calculus.
The Euro will collapse long before oil can be priced in Euros... the expense in changing the global market to price it in a different currency will be immense and is no trivial task. Neither will it be a trivial task to save Europe from the coming economic catastrophe wrought by Continental socialism.
how much a gallon is USA gas, in mexican peso's
How many Euro's should we charge the Russians and other Eurotrash for a bushell of wheat or corn? If they don't like our price, let them eat oil.
By EU projections, it will take the EU 25 years to catch the US economy on some factors and 40 years on others. If I get a chance I'll post the links.
Price oil in currency... whether it be EUros or US Dollars.... It seems to me that dirty Saudi (Arab) money was pulled from the US Stock Market to the tune of around 120B during the previous Schroder/Chiraq election cycle and dumped in the German/French markets, coupled with a deal for France/Germany to buy oil with EUros at a time when the Euro traded at 105-US Dollar. Now the dollar trades at 128-Euro - stop to think that as the price of oil went from $32-34 to $50-55 a barrel, the Euro actually discounted oil by 25 percent!!! Euro has not been hammered by oil price increases in the same way as the US. Yet the EU has failed to continue to match US Economic output. Even with oil prices costing Americans more than 25% more than Europe (40 Euros buy the same oil at $52 dollars), the actual price increase for the US was, well, $23 at $55 a barrel, while the EU pays only 40 Euros vs. 33 Euros at the time of the Dirty Arab/German-French-EUro deal. American paid a doulbe price when our EUropean allies screwed us. It is now time for Bush to wack Chiraq and Schroeder by pulling the economic props out from under their socialist economies and forcing their countrymen to elect a more center right government in their place.
11.03.2005 - 17:43 CET| By Richard Carter
EUOBSERVER / BRUSSELS - The US economy is 20 years ahead of that of the EU and it will take decades for Europe to catch up, according to an explosive new study published on Friday (11 March).
The survey, unveiled by pan-EU small business organisation Eurochambres, is intended as a sharp "wake-up call" for EU leaders as they gather on 22 March for a summit on how to boost growth and jobs in the EU economy.
The EU's current performance in terms of employment was achieved in the US in 1978 and it will take until 2023 for Europe to catch up, the report shows.
The situation is scarcely better when it comes to income per person. The US attained the current EU performance in 1985 and Europe is expected to close the gap in 2072.
But the bleakest picture comes when comparing the two economic blocs in terms of research and development. Europe is expected to catch up with the US in 2123 and then only if the EU outstrips America by 0.5 percent per year in terms of RΔinvestment.
Presenting the survey, Arnaldo Abruzzi, the Secretary-General of Eurochambres, said, "the current EU levels in GDP, RΔinvestment, productivity and employment were already reached by the US in the late 70s/early 80s".
"Even the most optimistic assumptions show it will take the EU decades to catch up and then only if there is considerable EU improvement", he concluded.
Furthermore, the survey points out that enlargement will make the EU's mountain even harder to climb.
"Data clearly suggest that including the 10 new member countries in the comparison would further deteriorate Europe's position compared to the US for all four major indicators", says the report.
The survey was conducted using a method called the "time distance measure", pioneered by Professor Pavle Sicherl at Ljubljana University.
Eurochambres called for EU leaders to focus on concrete actions to revive the EU's economy and for a communications strategy to lay out the economic challenges facing the EU.
The group represents 18 million enterprises across Europe.
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This was posted here (http://www.euobserver.com/?sid=9&aid=18646), but it now requires a fee to access.
Apr 29th 2005
From The Economist Global Agenda
In a new report, six think-tanks have slashed their forecast for German economic growth in 2005, citing high oil prices and an unfavourable exchange rate. If Germanys export-driven economy cannot recover when the world economy is racing along, how will it fare during a slowdown?
IN THEORY, Germany should be booming by now. Sizzling global economic growth in 2004, and more of the same expected for 2005, has raised demand for its exports, a boon to its large manufacturing sector. The European Central Bank (ECB) has kept interest rates in the euro area at an easy 2% for 22 months, and looks set to keep doing so well into 2005. Fiscal policy is also expansionary: the governments budget deficit has breached the Maastricht treatys 3%-of-GDP limit for three years running, and by all accounts will do so again this year. Yet for all this, for the past four years Germany has struggled to produce GDP growth of even 1% a year.
The future looks little better than the past. This week a consortium of German think-tanks released its semi-annual report, slashing its forecast for German growth this year from a lacklustre 1.5% to an almost pulseless 0.7%. The German government then altered its own forecast to 1.0%, down from its previous one of 1.6%, made in January. More worryingly, the think-tanks' report argues that the German economy is not stuck in a particularly vicious cyclical slowdown. Rather, its structural problems, particularly the highly regulated labour market, have reduced trend growth (the average growth rate of the economy) to a meagre 1.1%, in contrast to roughly 2% for the rest of the euro area, and about 3% for the United States. Unless these trends reverse, Europes largest economy could eventually wind up as its economic backwater.
The most stagnant pool is undoubtedly the labour market. Germanys unemployment rate fell to 11.8% in April from the record 12% it hit in March, pushing the number of jobless back below 5m for the first time in months. However, this may have more to do with changes in benefits for the unemployed, and a cold spell in March that made that month's figures unusually low, than any improvement in hiring conditions. On Tuesday April 26th Bert Rürup, head of Chancellor Gerhard Schröders panel of economic advisers, said that the country will not begin adding significant numbers of jobs until annual economic growth hits 1.5-2%. High unemployment has helped keep consumer spending depressed, leaving the economy dependent on exports to drive recovery. But global economic growth, which the International Monetary Funds World Economic Outlook puts at 5.1% in 2004, is forecast to slow a bit, to 4.3%, in 2005. If 5.1% wasnt enough to pull Germany out of its doldrums, what will?
To be fair, Germany knows that it has a problem. Mr Rürup acknowledged on Tuesday that the economy could add jobs at lower growth rates if its labour market was more flexible. Since 2003, the government has made serious efforts at structural reform, loosening some of the labour-market restrictions that have made Germany such an unattractive place to create new jobs, and announcing a cut in corporate income tax. Critics, however, complain that the latter will make little difference to most companies, while the former does not go nearly far enough. Germanys labour laws are still much friendlier towards workers than employers, and its labour costs, at the equivalent of around $33 per hour, are among the highest in the world. And fears that poorer new European Union members will force Germany into a race to the bottom have driven the government to consider imposing a minimum wage, which can only make the economy less flexible.
The rock meets the hard place
The trouble for the government is that it has to try to kickstart the economy while struggling to hold on to power. In February, Mr Schröders Social Democrats (SPD) were pushed into second place by the opposition CDU in a state election in Schleswig-Holstein; exit polls suggested that high unemployment and the budget deficit were decisive issues. Now all eyes are on the election to be held on May 22nd in North-Rhine Westphalia, Germanys most populous state. A loss there could doom the governments chances of winning the 2006 general election.
Fear of the impending election seems to be pushing the SPD further to the left, at least rhetorically. Besides the flirtation with a minimum wage, the partys chairman, Franz Müntefering, began railing this month against the growing power of capital. According to Mr Müntefering, profit-seeking by international firms not only endangers Germanys generous welfare state, but also its democracy. Such statements may reassure voters, but they are unlikely to make Germany a more appealing place to do business, particularly with investor-friendly central European countries beckoning firms to relocate.
From the point of view of a German politician, alas, all policy choices must look bad. Membership in the euro area leaves the country monetarily at the mercy of the ECB, which seems determined to maintain a hard line on inflation, and thus to resist calls for an interest-rate cut. Germanys already-large budget deficits cannot be sustained indefinitely at such low rates of economic growth, much less increased. And deeper structural reforms will not be popular with the voters who lose benefits or job protectionparticularly since such reforms may well make unemployment worse in the short term, as firms shed the workers they previously found it difficult to fire.
Yet from an economists point of view, doing nothing looks worse. This weeks think-tank report forecasts growth to pick up next year, but only to 1.5%, hardly cause for celebration. Moreover, the forecast assumes that the impact of high oil prices and an appreciating euro will fade, even though there is a real possibility that one or both will rise instead of fall. There is also a risk that Americas unsustainable current-account deficit, which has been supporting world growth, will precipitate a crisis, which would hurt demand for Germanys exports. With the economy this vulnerable to external effects, even radical reform may be less risky than the status quo.
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This came from the Economist on April 29. If not now, when? Germany is the EU powerhouse. I'm not going to lay awake nights worrying about the Euro.
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Price per Barrel in US Dollars x # of euros per dollar.
So if oil is $50 per barrel and there are 0.80 Euros per dollar, then the price of oil is 40 euros per barrel.
Changing the quoted price into Euros really is going to do much to our economy... Because when we bought oil, even if we paid in Euros, those saudis or whomever would probably want some dollars. so they'd convert those euros back into dollars. Right now, they get dollars, and they probably convert some into Euros, some into Swiss Francs, etc...