Prague Property

[This special guest columnist is a long-time colleague of mine writing under the pen name Dee Prince. He is a Nigerian-born international petroleum consultant who works out of offices in Beijing, Lagos, Toronto and London. He is an Associate Professor of China's leading post-graduate School of Business and Economics, and his current professional focus is on Chinese energy requirements and strategies, and how these impact Africa, Europe and Russia in particular. Read his previous articles on this blog here, here, and here. - Robert Amsterdam]

CHINA, MORGAN STANLEY AND INTRIGUING CAPITAL FLOWS

By Dee Prince

You couldn’t make it up if you tried.

My last class in the just-concluded Corporate Training course on Banking Risk and Basel II Accord for Chinese Banking examiners fell on the same day that Morgan Stanley announced its China-related mega-deal.

You know the one I’m referring to - China’s China Investment Corporation – which is sometimes cutely referred to as the nation’s “Sovereign Wealth Fund – and its $5 billion capital injection into Wall Street’s venerable institution and also the second largest US investment bank.

Giles Whittell at the Times says “Dmitri Medvedev is no stooge, as everyone seems to think.”

Is that really what everyone thinks? Not from what I have been reading. I’ve always had the impression that Medvedev has a very positive, well guarded, and expertly crafted public reputation, even among the normally hostile Western press. I don’t think that anyone reading all the positive news coverage following his political debut, as it were, way back when during the World Economic Forum at Davos, would ever think him to be just a “stooge.” Take a look at Medvedev’s terrific English skills, which most certainly aren’t shown on Russian TV.

The most typical descriptions I recall reading in the popular press include words like “soft-spoken”, “intelligent”, “polite”, “deferential”, “modest” - and plenty of other disarming qualities that seem sure to please even the coldest critics. But perhaps Giles Whittell is just putting forth this false negative as a rhetorical device to deliver one of the better lines I’ve seen during this dead news week: “Dmitri Medvedev looks like someone who might sell you a flat-screen TV in John Lewis.”

That’s about the most interesting contribution from the article…

From Lionel Beehner, a journalist formerly with the Council on Foreign Relations, in the Huffington Post: Why do we suddenly care so much about Russia? Its economy is still smaller than Portugal’s, its nuclear stockpile is no match for our own (not to mention its Soviet-era early warning radars barely work), and its foreign ambitions, as George Kennan predicted generations ago, have been mostly contained. Plus, given its current demographic trends, some analysts predict Russia’s population could sink below 100 million by 2050, making it smaller than Mexico.

Yet for some reason, Washington has worked itself into a lather worrying about Russia. It shouldn’t.

Read the rest about why Russia is not a nuclear Wal-Mart, and why their growing relations with China and Iran may not be as worrying as some may think.

Europe.view

Eastern Europe in 2008
Dec 28th 2007
From Economist.com

Hoping for good news in the coming year

THE most urgent thing to hope for is a soft landing for economies grown complacent amid perpetual sunshine and friendly faces. Large imbalances and a global credit crunch are an alarming mixture. Lars Christensen, a hawkish analyst of the region at Danske Bank in Copenhagen, notes that twitchy investors in the Baltic states and Bulgaria are already sending money market rates higher, and have driven down the value of the Romanian lei.

Some early signs indicate that Santa will be kind. Credit growth is slowing. Estonia’s growth rate and property prices have dropped sharply: bad news for construction companies, but good for everyone else (and its current growth rate of 6% is still mouth-wateringly good by West European standards). But inflation remains far too high, sharply up on the year-end figure for 2006 in every country except Hungary. Higher prices for food and natural gas will make that worse, stoking the pressure on competitiveness.

Second on the hope list is better treatment from rich neighbours. The extension of the Schengen passport-free travel zone to the new members of the European Union risks being the high-water mark of integration between “old” and “new” parts of the continent.

It is a fine thing to be able to drive from the north of Finland to Gibraltar without showing your passport. But the danger of leaving the western Balkans stranded in a no-man’s land is growing. Slovenia’s historic presidency of the EU, which starts on January 2nd, will be a huge success if it can get membership talks started with Macedonia and unfreeze talks with Serbia, particularly on visas.

The European Court’s recent decision in favour of a Latvian building company driven out of business by Swedish labour protectionism was a good start. But it is high time to end remaining labour-market restrictions and restart negotiations on free trade in services.

Third would be some glimmers of hope from Russia, both in its treatment of opposition activists at home, and its neighbours. Given the Kremlin’s overwhelming domestic support and the ease with which it gets what it wants from the outside world, it is tempting to hope that it might start taking things a bit easier.

Two new troubling tactics against troublemakers are the abuse of psychiatric incarceration—most recently against an opposition leader in Mari El; and the use of the draft against men of conscription age. Reports that Oleg Kozlovsky, a leader of Oborona, the main anti-Kremlin youth movement, has been conscripted despite his exempt status, are shocking given the hellishly brutal mistreatment that even apolitical conscripts can expect.

Things look a little more hopeful on foreign policy: Dmitry Medvedev, at the time of writing the president-designate, seems to have no great chip on his shoulder about the West. If the Kremlin wants to show its cuddly and respectable face, then it ought to refrain from any political shenanigans in Georgia next month, and treat the Baltic states as fully fledged members of the EU rather than rebel provinces.

Fourth would be new faces. It is hardly surprising that voters across the region feel jaded: the tired collection of squabbling, self-interested and ideas-free politicians are a poor advert for democracy. The growth of an economically independent and well-travelled middle class that sees the need for better government all too clearly should provide fertile soil for a new generation of competent, interesting leaders.

For now, the new Polish government stands out in the political beauty contest, less because of its own charms than because the competitors are so unimpressive: sometimes weak, sometimes slippery, often both. On that note, happy new year.

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Although my days of science study are long, long over but I do try to keep abreast of scientific developments. It was with great pleasure to see today’s Independent and a discussion of some more bizarre scientific developments. However, it is unlikely that any of these will be up for an Ig Nobel:

Kangaroo farts

Research carried out in Queensland for the past four years has determined that kangaroos are able to produce environmentally friendly farts: bacteria in the stomach lining of kangaroos that means they do not contain methane. The team, led by Dr Athol Klieve, believes that unlocking this secret could lead to the creation of more climate-friendly cattle. Between them, the flatulent farm animals produce so much methane that they account for 14 per cent of greenhouse gas emissions in Australia, second only to power stations. But if the kangaroo bacteria were added to cattle feed, the researchers hope they could create herds with much lower carbon footprints. Kangaroo stomachs are more than just green. Instead of methane, they produce a chemical that improves digestion. Feed laced with kangaroo bacteria could give rise to livestock that is not only greener, but also faster-growing and me fertile.

Methane-busting feed supplements could be available commercially in as little as three years.

Robo-snot

As well as being a tasty and nutritious snack olfactory mucus actually enhances our sense of smell. It separates the chemical compounds that make up the smell of, say, frying onions. These compounds travel through the mucus at different speeds, hitting our scent receptors at different times. By dissecting and separating smells in this way, mucus allows our brains to identify scents more quickly and accurately.

In April, Professor Julian Gardner of the University of Warwick started to improve his electronic noses, which have been used (without mucus) for years, in everything from the production of artificial fragrances to quality control in crisp factories. “We built a polymer that replicates the function of snot,” says Gardner. “It’s not green but it has the same consistency as human snot and, applied to our sensors, means our artificial noses are at least five times better than those without snot.”

And who says science can’t be fun!

What follows is an exclusive translation of a short article from the German publication “FOCUS,” which reports on Vladimir Putin’s ordering of additional security to protect Dmitri Medvedev - a sign of the heightened concerns among competing factions within the Kremlin as the elections approach. According to sources consulted by this journalist, Putin is attempting to completely sideline Igor Sechin.

FOCUS, 31 December 2007

Boris Reitschuster

Cabal in the Kremlin: Putin increases protection for crown prince Medvedev

Behind the scenes there seem to be power struggles over Vladimir Putin succession plans: Due to security concerns related to his “crown prince” Dimitri Medvedev, the current head of state – according to information from Kremlin insiders – has assigned his own personal body guards (assigned by the KGB successor FSB). Now the president’s security service is responsible for Medvedev’s protection – even though he is not entitled to these protections as vice prime minister.

Obviously Putin distrusts FSB head Nikolai Patruschev. He is associated with the “Siloviki”, a powerful security service clan within the Kremlin. The former KGB agents resent Putin’s decision to nominate their antagonist Medvedev as his successor.

In fear of sabotage, Putin obviously put his previous confidant and head of the secretary Igor Sechin, a powerful decision maker of the “Siloviki”, on leave and banned him de facto from Moscow. It is said that Sechin however tried to undermine Putin’s decision and to position prime minister Viktor Zubkov as candidate for president against Putin’s will. This “attempted coup” failed.

Piquant: In his side job the hardliner Sechin is head of the board of directors of the oil company Rosneft and a personal adversary of Medvedev. Medvedev namely is the chairman of the board of the Rosneft competitor Gazprom, and is associated with the moderate wing within the Kremlin.

Dmitri Medvedev “looks like someone who might sell you a flat-screen TV in John Lewis” according to one UK reporter, who nonetheless predicts that Medvedev’s presidency will herald “a new Russia”. The Swedish Foreign Minister says that Russia cannot continue its recent “authoritarian” trend if it is to develop a modern society and economy. Russian artist Alexander Rodchenko’s work is to appear in Britain at an exhibition funded by Roman Abramovich. Russian pet shops are reporting a shortage of domestic rats, as shoppers are buying them in preparation for the Chinese New Year - the Year of the Rat.

PHOTO: A woman walks past the print “2007″ during an open museum night in the Winzavod art centre in Moscow May 18, 2007. (REUTERS/Denis Sinyakov)

The chairman of the Russia-Vietnam Business Council says that Russian private firms have begun looking at investment opportunities in Vietnam. Russia’s investment banks are launching online brokerages to encourage investment. “Although Russia in the aggregate may not appear as the cheapest market in global emerging markets because of energy, valuations in most other sectors are very attractive,” said one analyst, supporting the increasingly popular view that the Russian market will remain strong for 2008. Business According to the Economics Ministry, foreign investment in car production in Russia will exceed $1.8 billion in 2007.

PHOTO: Fireworks explode above Federation Tower in the city’s business district as Moscow celebrates New Year’s Day January 1, 2008. REUTERS/Thomas Peter (RUSSIA)

Gazprom has offered to purchase state-owned Petroleum Industry of Serbia, having reportedly offered the Serb government €400 million for a 51% stake.

Russia is reportedly looking to cooperate with Uruguay on nuclear energy.

Gazprom has announced that Russia’s natural gas will be supplied to Belarus in the first quarter of 2008 at the price of $119 per 1,000 cubic meters.