Spcial Edition / News round-up, June 7, 2023


What a world we live in… Natural gas and water, as element of war…

The occurrence of the global recession can be attributed to four fundamental causes. The first related to the origins of SARC-2 are currently under investigation and subject to speculation. The precise aetiology of the virus is yet to be determined. However, there is a prevailing belief that it could have originated from a laboratory mishap in the biotechnology sector, culminating in a worldwide outbreak (1). The second factor contributing to Russia's aggression towards Ukraine is historical support for Russian imperialism (2). The third factor necessitates a prudent approach towards discussing failure, as it is imperative to recognize that certain European politicians may have committed errors in their decision-making process, knowingly or unknowingly, by aligning themselves with a sole fuel provider whose history remains intricate and obscure. In the current era, characterized by the growing prevalence of autocratic tendencies, it is crucial to maintain objectivity and afford politicians a reputation for integrity and the presumption of innocence (3). The four is the destructions at Nord Stream ,is a condemnable and detrimental incident, regardless of the perpetrator (4). And finalle the situation regarding the blast of the Nova Kakhovka dam is quite concerning and may have severe consequences shortly, e.i. further escalating the war and causing a further increase in grain prices (5).

The confluence of these factors has resulted in substantial worldwide upheaval in the realms of geopolitics and economics.

In light of the present circumstances, it is imperative to implement rigorous security protocols and establish a comprehensive legal framework at the international level. This statement is particularly relevant to Norway, as it stands out as the only European neighbour with which Moscow has never engaged in military hostilities. Despite its smaller population compared to St. Petersburg, Norway occupies a significant position in Europe's energy supply chain owing to its status as the largest natural gas supplier and its abundant crude oil and wind power reserves. Its play in meeting the region's energy demands is of utmost importance. Protecting the vast network of natural gas pipelines, which covers over 9,000 kilometres, along with power and communication cables, is of utmost significance.



Most Read…

Dam sabotage creates Ukraine’s worst environmental disaster ‘since Chernobyl’

Destruction of the Nova Kakhovka dam threatens tens of thousands of people, the country’s energy grid and the environment.

POLITICO EU BY GABRIEL GAVIN AND VERONIKA MELKOZEROVA, JUNE 6, 2023 

Norway and Russia Face Off in the Far North

Russian trawlers appear to be angling for more than fish, sailors are taking an interest in bridges and spies are being uncovered: In the far north of Europe, the Kremlin appears to be increasing its activity, and Norway is paying close attention.

SPIEGEL By Walter Mayr in Kirkenes, Norway, June 6, 2023
 

The AES Corporation President Andrés Gluski, Dominican Republic Minister of Industry and Commerce Victor Bisonó, and Rolando González-Bunster, CEO of InterEnergy Group, spoke at the Latin American Cities Conferences panel on "Facilitating Sustainable Investment in Strategic Sectors" on April 12 in Santo Domingo, Dominican Republic.

How can strategic investment achieve both economic growth and social progress?… What is the role of renewable energy and battery storage in achieving the goals of the low-carbon economy?…

 

Image: Germán & Co

Cooperate with objective and ethical thinking…

 

Image credit: POLITICO EU Editing by Germán & Co

Dam sabotage creates Ukraine’s worst environmental disaster ‘since Chernobyl’

Destruction of the Nova Kakhovka dam threatens tens of thousands of people, the country’s energy grid and the environment.

POLITICO EU BY GABRIEL GAVIN AND VERONIKA MELKOZEROVA, JUNE 6, 2023 

KYIV — Worries about a massive environmental disaster in Ukraine have long focused on the Russian-occupied Zaporizhzhia Nuclear Power Plant. But people were looking in the wrong place.

The catastrophe happened early Tuesday when explosions tore through the colossal Nova Kakhovka hydroelectric dam in southern Ukraine — draining one of the Continent's largest artificial reservoirs. It forced the evacuation of thousands of people downstream, polluted land, destroyed a large electricity generator and will cause future problems with water supplies.

Kyiv blames Russia, which seized control of the dam on February 24, 2022, the first day of its full-scale invasion of Ukraine. The Kremlin pointed the finger at Ukraine, but supplied no evidence.

Ukraine has long warned of the danger. In October, President Volodymyr Zelenskyy called on the West to pressure Russia not to blow up the dam, which he said had been rigged with explosives. "Destroying the dam would mean a large-scale disaster," he said.

But while international observers are present at Zaporizhzhia, Europe's largest nuclear power plant, that wasn't the case with Nova Kakhovka. The dam has seen months of fighting as Ukraine pushed Russian troops back over the Dnipro River last year and it now lies on the front line between the two armies.

A human disaster

The immediate impact is on people living downstream; the western shore of the Dnipro is under Ukrainian control, while the east is still held by Russia.

The Ukrainian head of the Kherson region, Oleksandr Prokudin, said as many as 16,000 people in Ukrainian-controlled territory are in danger and many would have to leave their homes.

Vitaly Bogdanov, a lawmaker on the Kherson city council who lives nearby, went to see the scale of the damage on Tuesday morning. "There is no panic, rescue services are working, the police and military are everywhere," he told POLITICO, adding: "Many people are being evacuated."

Bogdanov said he was not planning to leave his home as he has to look after elderly relatives.

Those living in Russian-occupied territory have been left uncertain of what to do next.

Sergii Zeinalov, a film director living in Kyiv, called his grandmother in Oleshki, a town about 70 kilometers downstream from the dam, on Tuesday morning. "At that time there was no water in the town. As far as I know there is no electricity or communication in Oleshki now. As a result information is coming slowly. Meanwhile, water is approaching the houses there."

Environmental impact

Ukraine's Deputy Foreign Minister Andrij Melnyk called the Nova Kakhovka dam breach "the worst environmental disaster in Europe since Chernobyl."

The range of impacts is vast — from displacing people to drowning animals and polluting the environment.

"Now we know that potentially 600 or maybe even 800 tons of oil have been released into the water," Ukrainian Environment Minister Ruslan Strilets said in Brussels. "This oil spill will drift into the Dnipro River, and I'm sure that it will be in Black Sea."

In his overnight address posted early Wednesday, Zelenskyy called the attack "ecocide," saying: "An oil slick of at least 150 tons formed and was taken by the current to the Black Sea. We cannot yet predict how much of the chemicals, fertilizers and oil products stored in the flooded areas will end up in the rivers and sea."

According to Olexi Pasyuk, a campaigner with environmental group CEE Bankwatch, the flood's "temporary impacts" could last up to a week.

"However, later on the bigger impact will be caused by lack of water as Kakhovka reservoir is a source of water for the watering system of south Kherson region," he added. "We can expect significant problems for agriculture and for local people who live off it."

Draining the reservoir could also have a dramatic impact on the illegally occupied Crimean Peninsula. It relies on water from mainland Ukraine; one of the first actions of invading Russian troops last year was to reopen a water channel linked to the reservoir that had been closed by Ukraine after the 2014 annexation.

“It’s going to be a social-economic disaster. Farmers won't be able to grow crops," said Wim Zwijnenburg with PAX, a Dutch NGO, and a contributor to the Bellingcat investigative network. "Ukraine had already [blocked] the river to Crimea prior to the conflict to stop the water flow, which already led to some desertification in the area. It's hard to predict anything — most of the effects will probably play out in two to three years' time.”

Iiulia Markhel, coordinator of Let's Do It Ukraine SOS, the country's largest environmental NGO, called the burst dam a "catastrophe."

"Animals, species, will be destroyed," she said. "It will change the climate of the whole region. Ukrainian agrarian lands have likely been destroyed. The area will be flooded. The places the water will leave will turn into deserts; the places the water will stay will become swamps."

It adds to the vast cost of the war's environmental impact, which has reached 2 trillion hryvnia (€53 billion), said Ukraine's environment ministry.

Power struggles

The destruction of the dam won't have an immediate effect on Ukraine's national electricity grid, said Vitaliy Mukhin, a strategic adviser to Kyiv’s state-owned hydropower company Ukrhydroenergo. Nova Kakhovka, built in the 1950s, has a capacity of 357 megawatts but it hasn't contributed much power since it came under Russian occupation.

It won't be back online anytime soon. Ukrhydroenergo said “as a result of blasts in the machine hall, the Kakhovka hydroelectric power station is completely destroyed. It is not recoverable.”

The hydropower station would have been a key source of clean energy and an important part of Ukraine's post-war energy mix, said Olena Pavlenko, president of Kyiv's DiXi group energy think tank.

Ihor Syrota, the head of Ukrhydroenergo, said Kyiv will build a new plant on the same site once it liberates the territory.

Blowing the Nova Kakhovka dam has a potential impact on the battle-scarred Zaporizhzhia Nuclear Power Plant, also occupied by Russian troops. The plant relies on the reservoir's water to cool its six reactors, but they are now in so-called cold shutdown, and the plant's cooling pool is full so only needs a “few liters per second," said Leon Cizelj, president of the European Nuclear Society.

The International Atomic Energy Agency said there is enough cooling water at the plant to last for about six months.

"The facility has back-up options available and there is no short-term risk to nuclear safety and security," said Director General Rafael Mariano Grossi.

"The conflict keeps pushing new boundaries," said Doug Weir, research and policy director at the Conflict and Environment Observatory. "A lot of people have been worried about these dams but at the same time never really expected them to be breached. The events just keep unfolding, building layers of environmental damage and harm in Ukraine.” 


 
Norwegian border guards at the Pasvikelva River, which marks the border with Russia Photo: Patrick Junker & Jonathan Terlinden/Editing by Germán & Co

Norway and Russia Face Off in the Far North

Russian trawlers appear to be angling for more than fish, sailors are taking an interest in bridges and spies are being uncovered: In the far north of Europe, the Kremlin appears to be increasing its activity, and Norway is paying close attention.

SPIEGEL By Walter Mayr in Kirkenes, Norway, June 6, 2023

Norway’s best-known scout is standing in a boat and staring through binoculars to the east. The forested coastline of the Kola Peninsula in northwestern Russia is gliding past, the place where Vladimir Putin’s fleet of nuclear-armed submarines is based.

Not much is known about the Kremlin’s deadly squadron. It was once Frodo Berg’s job to try to learn more, but the now-retired border guard was captured in 2017 during his final mission to Russia. For almost two years, he was held in Moscow’s notorious Lefortovo Prison, subsisting largely on a diet of water and buckwheat porridge.

Berg was released early as part of a spy swap. Still today, the Norwegian insists that he innocently became trapped between the fronts of this new Cold War between NATO and Russia.

On this particular morning, the exposed agent has agreed to make a visit to the border with DER SPIEGEL. Our destination, the very northeastern edge of NATO territory.

We head along the demarcation line in a hovercraft, passing by the still-frozen Pasvikelva River. The factory chimneys of the Russian border locality of Nikel can be seen in the distance.

Norway is the only European neighbor against which Moscow has never waged war.

Lately, though, a growing number of reports have been making the rounds of suspicious Russian shipping activity off the coast of Norway, of strange drones and of an increased number of Russian long-range bombers at the Olenya airbase not far from the border. Disquiet is growing at the northernmost boundary line between Putin’s vast empire and the Western military alliance.

United States Secretary of State Antony Blinken emphasized that fact last Thursday at the NATO foreign minister summit at Oslo City Hall. The partnership with Norway in response to the "Russian aggression," the top American diplomat said, "is quite simply invaluable."

Berg says that he used to make frequent trips to Russia as part of his job. He says he would meet with his counterparts from the Russian domestic intelligence agency FSB for talks, followed by a visit to a sauna and vodka – the standard program at the beginning of the millennium.

"I never thought that the dreaded Russian army would run into such difficulties in a conventional war against Ukraine," Berg says. "But I think it is quite possible that Putin will begin focusing even more intently on hybrid warfare."

Which means that critical Western infrastructure is in the sights of Kremlin strategists. The entire country of Norway may only be home to as many people as the Russian city of St. Petersburg, but it is Europe’s largest supplier of natural gas and it is also rich in crude oil and wind power. Natural gas pipelines stretching out over 9,000 kilometers (5,592 miles) must be protected, in addition to power and communication cables – a need underlined by the as yet unexplained attack on the Nord Stream pipelines last fall.

Those able to disrupt the main channels of energy and communication can gain firm control over the central nervous system of the Western economy. On just a single day, trillions of dollars worth of financial transactions run through undersea cables. And almost the entirety of global communication takes place through deep sea cables.

The End of Peaceful Cooperation

In March, NATO Secretary General Jens Stoltenberg, the former prime minister of Norway, made a symbolic appearance with European Commission President Ursula von der Leyen on the world’s largest natural gas platform, a facility known as Troll A off the cost of Norway. It was Stoltenberg’s father who helped found the Barents Euro-Arctic Council, a body that established cooperation with post-Soviet Russia. His son was then instrumental in 2010 in negotiating the seminal treaty over the border between the two countries in the Barents Sea, complete with the division of fishing grounds and oil and natural gas deposits.

But the era of peaceful cooperation has come to an end. Now, Jens Stoltenberg, speaking on behalf of NATO, is more likely to warn of a fundamentally altered security situation as a result of Russia’s brutal invasion of Ukraine.

Norway’s army has been at a heightened state of alert since November. "It was unimaginable for us that Russia might invade another country," says Lieutenant Colonel Michael Rozmara.

Rozmara commands NATO’s northernmost position, held by the assault battalion in Sør-Varanger, stationed right where the Pasvikelva River divides the two countries. "We first had to come to terms with questions of what might be facing us in the future. For us as a battalion, positioned right on the border with Russia, it’s quite a challenge."

Rozmara commands just over 800 men and women, most of them conscripts.

The battalion’s coat-of-arms includes a wolf. In winter, they head out on skis and snowmobiles to patrol the 198-kilometer-long border with Russia. A visit to the shooting range finds a tightly organized unit, with the young rangers wearing 40-kilogram backpacks and stylish sunglasses as they arrive to practice their marksmanship with HK416 assault rifles.

In the unit’s headquarters on Jarfjorden, there are life-sized puppets wearing original Russian border-guard uniforms so that the soldiers know what their adversaries look like. In March, Norwegian King Harald V. came for a visit. Commander Rozmara says he saw the visit of the commander-in-chief as a sign of respect, and as a clear indication of the tense security situation.

In April, Oslo expelled 15 Russian diplomats for alleged espionage activities. In addition, rules governing Russian trawlers were tightened, though they are still allowed to enter three ports in Norway, a founding member of NATO, despite increased concerns of Russian spying and sabotage.

Those concerns have been fueled in party by journalists from the Norwegian broadcaster NRK. Together with reporters from Sweden, Denmark and Finland, they filmed a three-part series called "Shadow War," which sketched out how Putin’s troops are developing the far north and the waters from the Baltic Sea to the icy waters near Spitzbergen into an operational focus.

"Complete Reversal"

"The people north of the Artic Circle have always had a far different perspective regarding the proximity of Russia than Norwegians far away in the southern part of the country," says Håvard Gulldahl, speaking in the NRK studios located in the port city of Tromsø. He and his fellow reporter Inghild Eriksen meticulously traced the activities of the Kremlin in the region.

Particularly in the waters of the Barents Sea, near where Norway meets Russia, the place where Stalin’s army once freed the population from Nazi rule, there is a deep sense of foreboding about their neighbors. "What is currently taking place is a complete reversal in the relationship to Russia."

Using software he developed himself, Gulldahl – as the team’s tech nerd – followed the movements of more than four dozen suspicious Russian ships, all of them allegedly civilian vessels. Even routes taken 10 years ago can be traced using AIS, which stands for automatic identification system – provided the captains hadn't just switched off their AIS transponders to leave no trace.

The team of NRK reporters sought to examine incidents in which a cable under the Barents Sea was damaged to see which trawlers might have been in the area at the time. They found that Russian ships frequently sailed close to wind parks and military sites – especially when NATO exercises were being performed, such as those that take place in and around the testing grounds on the island of Andøya. Or when, as took place last December, the multibillion-dollar nuclear submarine USS South Dakota sailed into the port of Tromsø – shadowed by the Taurus, a Russian ship officially registered as a trawler.

The Russian trawlers can be seen on a walk along the quays in the Norwegian city of Balsfjord, population 80,000. Ships such as the Sapphire 2, an 821-ton vessel from Murmansk, are tied up here on this afternoon. They come here to unload their catch, refuel, perform maintenance or obtain repairs – in one of three Norwegian ports that are the only places in all of Europe that Russian ships are still allowed.

New Flanks

NATO MEMBER IN BLUE

Tromsø, of course, plays a particularly outsized role in public perceptions of Russian activity in the region. It is here where Mikhail Mikushin was arrested last fall, an allegedly active Russian agent who was working as a researcher at the local university under an assumed name. Norwegian prosecutors accuse Mikushin, who has since been arrested, of gathering intelligence linked to state secrets and saying that he posed a danger to "the country’s fundamental interests."

"Fifth Column"

Mikushin, who is thought to be a member of the Russian military intelligence agency GRU, has denied the accusations against him.

Until his arrest, he conducted research at the Center for Peace Studies, precisely in the department – referred to internally as the "gray zone" – that focuses on the dangers presented by hybrid warfare. The academics working there failed to realize for quite some time that they themselves were actually the focus of his observations. The Center for Peace Studies now says that Mikushin, who began working at the institute under a falsified Brazilian passport, was apparently seeking to establish a secret network that could, should the need arise, carry out orders from Putin as a kind of "fifth column."

Other Russians in Tromsø have also been the focus of suspicions. Andrei Yakunin, son of close Putin confidant Vladimir Yakunin, had to appear in court for flying a drone over the Arctic archipelago of Spitzbergen. The younger Yakunin, who has both British and Russian citizenship and is thought to be worth a quarter-billion euros, spent six weeks in pre-trial detention before he was ultimately acquitted and released.

The fact that Spitzbergen is home to the largest satellite ground station in the world with over 100 antenna, the sensitive data of which is transferred around the world through two fiber-optic cables, may in fact have escaped Yakunin Jr.’s attention. Perhaps the jetsetter also missed the increasing self-confidence with which the Kremlin is behaving on the northern archipelago as he filmed with a drone.

Spitzbergen is a demilitarized, international territory under Norwegian administration. Because of its strategic location and proximity to possible raw materials deposits, it is assumed that in the event of a conflict, it would be contested ground.

The fronts have become particularly hardened in the town of Barentsburg, a 400-person municipality on Spitzbergen and a place where Russia mines coal. The town hosted a Russian parade on May 9 to mark the country’s World War II victory, complete with a Lenin statue and snowmobiles flying the Russian flag. It was led by the Russian general consul, who, according to the Dossier Center run by the Russian opposition, is also linked to the GRU military intelligence service – though he denies the allegation.

Frosty Climate

Spitzbergen is like a thermometer that takes the temperature of relationship between Russia and NATO. The group of islands, according to an analysis from the Norwegian foreign intelligence agency, is of "military-strategic importance" for the Kremlin. The report noted that the Russian presence is likely to increase throughout 2023. The Norwegian governor on Spitzbergen, who regularly meets with the leading Russian representative there, admits that the climate between the two of them has grown frosty.

Contributing to that deterioration is the fact that one of the archipelago's two undersea cables was damaged on January 7, 2022. According to reporters from the broadcaster NRK, the trawler Melkart-5, registered in the Russian port city of Murmansk, had crisscrossed the site of the incident west of Spitzbergen more than 100 times.

Was the ship merely pursuing unorthodox fishing methods or was it intentional sabotage? The incident has never been satisfactorily resolved. The seabed is essentially invisible, which makes it a perfect target for hybrid warfare.

"Kirkenes and the entire Finnmark region could be something like a laboratory where the Russians try out various tools for hybrid warfare."

Police Chief Ellen Katrine Hætta

After the Melkart-5 also made appearances close to natural gas pipelines and fiber-optic cables north of the Norwegian mainland, and also popped up not far from the NATO winter exercise Cold Response, the trawler was documented by the authorities in the Norwegian city of Kirkenes on the Barents Sea as entering the port on July 17, 2022. What then ensued was rather unexpected: Part of the ship’s Russian crew left the ship in a smaller boat and headed across Langfjorden toward the strategically important Strømmen Bridge, the only connection between the isolated port city of Kirkenes with the rest of Norway.

When stopped and fined by local authorities for violating shore leave regulations in the sensitive area, the Russians insisted they had done nothing wrong. A few days later, they left Norwegian waters on board the Melkart-5 and headed home.

"Kirkenes and the entire Finnmark region (of northern Norway) could be something like a laboratory where the Russians try out various tools for hybrid warfare," says Ellen Katrine Hætta.

The energetic police chief, a member of the Sámi people, wears two stars on her epaulettes, the equivalent of being a high-ranking officer in the military. Hætta has 450 men and women under her command – and a significant share of the essentially pro-Russian population against her, animosity that stems from her habit of expressing her concerns openly.

Moscow, she says, is using "pinpricks" to "see how Norway reacts."

There was the incident involving Russian seamen walking through the Kirkenes city center in camouflage. There are the Russian trawlers Ester and Lira that attracted police attention in port because of the Soviet-era radio equipment they were carrying behind locked doors. And there are the regular jamming signals sent out from the Kola Peninsula across the water, causing significant difficulties for the pilots of Norwegian civilian aircraft.

The pilot flying the turboprop plane on the way to Kirkenes on this particular morning gets out during a stopover to check on the propellers herself. She seems relatively relaxed. For many years, the rule of thumb in the region has been "high north, low tension," essentially meaning that an effort was always made in these parts to avoid upsetting the powerful eastern neighbor.

Still Dancing

Is that still the case in Kirkenes? The engraving at the entrance to City Hall would seem to indicate that nothing has changed: It shows the Norwegian lion still dancing hand-in-hand with the Russian bear.

Diagonally across the street, behind the barred windows of the Russian Consulate, nobody believes the relationship will return to normal anytime soon. During the last appearance by the general consul on the anniversary of liberation at the hands of the Red Army, half of the audience turned their back on the speaker in protest.

Kirkenes is Norway’s northeastern outpost, situated 400 kilometers north of the Arctic Circle, home to 3,500 people who live just a 15-minute drive from the Russian border. The ice-free port serves as the gateway to the Barents Sea, with its vast natural gas deposits – and, as a result of climate change, as a possible starting and ending point of a Northeast Passage to Asia, navigable year-round.

It is a place where the presence of Russia is more palpable than anywhere else in the European Union. It is impossible to miss the Russian seamen at the docks and in the city, the huge Russian trawlers tied up in the port, the Cyrillic writing that can be seen here and there in town, and the fresh wreaths recently laid at the monument honoring the Soviet liberators.

Just 100 kilometers away as the crow flies is the Kola Peninsula, home to one of the densest populations in the world of nuclear weapons and nuclear waste depots. Tons of radioactive garbage is dumped in Andreev Bay, while nuclear-powered submarines are based in Gadzhiyevo. The Main Directorate of Deep See Research (GUGI), an elite department specializing in deep-sea reconnaissance and related activities, also has a base on the peninsula.

The concept of "little green men," which saw irregular fighters under the control of the Kremlin infiltrate the Crimean Peninsula in Ukraine to pave the way for a Russian takeover, could be repeated in Northern Europe, says Thomas Nilsen of the Independent Barents Observer. No matter whether it is conventional or hybrid warfare, he says: "We in Kirkenes are far away from Ukraine, but here as there, the same Russia is right across the border. All of the bridges we have built over the last 30 years have essentially been washed away. The Cold War is back."

A New Security System

According to a May 3 report from the Norwegian Defense Commission, it is imperative that the country now arm itself. A fine idea, says the port director of Kirkenes – since an effective army here in the north would also require an effective port, and for that, Oslo must provide the money.

Until recently, the residents of Kirkenes reaped significant benefits from the Russians, with tourists boosting the retail sector and the trawlers bringing money to the port. Should no more Russian ships be allowed to moor there, the port would lose a third of its revenues.

It used to be that fin whales would attract more attention in these parts than submarines, but that has now changed. On this particular afternoon, the Norwegian minesweeper Hinnøy, a NATO warship, is escorting the Russian trawler Proekt I all the way to the quay. The port director says there is "a handful" of usual suspects. He is planning on making it more difficult for wandering sailors in the future, with a fence and electronic security system to be installed around the port in June.

There has been no shortage of suspicious activities involving Russian citizens, says the official in charge of border surveillance at Kirkenes police headquarters, where agents from the domestic intelligence agency PST are also stationed. So far, though, those activities haven’t coalesced into a clear picture. "For now, all we can do is collect puzzle pieces. Others will have to put it together. It’s quite possible that we were too naïve for too long."

A researcher at the local branch of the University of Tromsø refers to the mood in Kirkenes as a "hangover."

The annual conference of the Arctic Economic Council is taking place right now without an official Russian delegation. They have been replaced by the remote presence of Russian opposition activists, who provide "voices from the other side of the Iron Curtain," as the organizers refer to it – as though the Soviet Union had come back to life.

For the 75th anniversary of liberation at the hands of the Red Army, celebrated in 2019, Russian Foreign Minister Sergei Lavrov even made the trip to Kirkenes in person. These days, though, in a new strategy paper, the Foreign Ministry in Moscow warns of "the policy of enemy states" that are "aiming at a militarization of the region." Norway is paying close attention to such rhetoric. The "threshold for a nuclear escalation" is threatening to shrink, according to a threat analysis performed by the country’s foreign intelligence agency in 2023.

Professor Tom Røseth of the Norwegian Defense University says his government must urgently learn the lessons from Ukraine’s fate – namely that the country needs to arm itself and boost deterrence. A former intelligence agent, Røseth teaches intelligence studies at the university, located in the medieval fortress of Akershus.

For our meeting, Røseth chose a city center café where an urbane clientele sips expensive drinks as they work away on their laptops. From prosperous Oslo, the problems near the Russian border seem a world away. "Still today, Norway has hardly any air defenses, very few warships, and the tanks we ordered from Germany must still be delivered," Røseth laments.

And what about the intelligence battle? Has Norway learned its lessons from the case of the exposed agent Frode Berg? Misguided chess moves in the border region are extremely dangerous, Røseth says, but at the same time, his country urgently must "deliver intelligence to NATO." Otherwise, he says, "the U.S. or Britain will do it for us, and that would only ratchet up the tensions with Russia."

 

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Ukraine Declares State of Emergency After Nova Kakhovka Dam Attack. Here’s What We Know So Far

The collapse of a huge dam in a Russian-occupied region of southern Ukraine has triggered flooding, with both Russia and Ukraine blaming each other for its strategic destruction.

TIME BY ARMANI SYED, JUNE 6, 2023

The Nova Kakhovka dam, built in 1956 on the Dnieper River—30 km east of the city of Kherson—was breached as the result of an explosion Tuesday morning. Ukraine accuses Russian forces of blowing up the dam, which could also impact the nearby Zaporizhzhia nuclear power plant, while Russian officials say Ukrainian military strikes in the contested region caused the damage, according to the Associated Press.

The Russian-installed mayor of Kherson, Vladimir Leontyev, called the explosion a “terrorist act.” Russia relies on the reservoir to supply water to Crimea, which Russia illegally annexed in 2014. At present, it is unclear which nation is responsible or what either side would serve to gain from damaging the dam, which is said to have already been in a state of disrepair.

The dam is 30 meters (98 ft.) in height and 3.2km (2 mi.) in width, containing a reservoir of around 18 cubic kilometers (4.3 cubic mi.) of water. As such, there are growing concerns that the sheer volume of water will severely damage nearby homes and low lying areas.

Additionally, Ukraine’s nuclear operator Energoatom said via a Telegram statement that the damage “could have negative consequences” for the Zaporizhzhia Plant, which is Europe’s biggest by way of generating capacity and relies on water to cool its facilities. For now, he wrote, the situation is “controllable.”

Residents in 10 nearby villages and parts of Kherson have been advised by the Ukrainian Interior Ministry to gather essential items and evacuate the area. Polluted water supplies and wider environmental consequences are anticipated as a result of the incident. Water levels were expected to reach a critical level within 5 hours of the collapse.


Global economy struggles amid inflation, pandemic aftershocks and war

World Bank report predicts sharp slowdown on the horizon…

The Washington Post By David J. Lynch, June 6, 2023 

A pair of central bank decisions next week will shape the outlook for a wobbly global economy that the World Bank warns in a downbeat new assessment is battling stubbornly high inflation amid the pandemic’s aftermath and the war in Ukraine.

The gloomy forecast arrives days after one threat to global growth was eliminated when President Biden signed legislation Friday to raise the U.S. debt ceiling and avert a potentially catastrophic government default.

But other risks remain: China’s reopening after the end of its “zero covid” policy is starting to flag, while the German economy has shrunk for two consecutive quarters, meeting one definition of a recession. Even in the United States, where growth remains resilient, most analysts anticipate that activity will ebb in the coming months.

The World Bank is scheduled to release a report Tuesday warning that the global economy is slowing dramatically as higher interest rates take a toll on both advanced and developing economies. Overall, global growth is projected to slump to an anemic 2.1 percent annual rate this year, down from 3.1 percent in 2022, and will remain “frail” through next year, according to the bank’s latest forecast.

Investors now are focused on how much more work the Federal Reserve and European Central Bank must do to stem inflation, which has declined from last year’s highs but remains elevated.

Fed officials have signaled they may pause at next week’s meeting after lifting their benchmark lending rate over the past 14 months at the fastest pace in four decades. European policymakers are expected to increase the euro zone’s key rate by a quarter percentage point when they meet next week.

“The risks for both of them are high, and they always were in this inflationary environment. There is a chance they overdo it,” said Kathy Bostjancic, chief economist for Nationwide.

If U.S. defaults on debts, this company has two months of payroll saved up

If central bankers raise rates too much, the United States or Europe could be driven into recession. But if they fail to raise them enough, inflation will keep eroding living standards.

Striking the right balance is difficult. In the United States, Fed officials warn that the full effects of the rate increases already enacted have not yet been felt. As the Fed considers whether more increases are needed, it must also take into account other forces that are expected to slow the economy, such as tighter lending conditions in the wake of recent bank turmoil and government spending cuts under the debt ceiling deal.

In Europe, meanwhile, annual inflation dipped in May to 6.1 percent from 7 percent in April. Energy costs are falling, after a spike last year at the outset of Russia’s invasion of Ukraine. But food, alcohol and tobacco prices are soaring at a double-digit annual pace, according to the European statistical agency.

“How quickly will inflation come down? How much higher do rates have to go up? We’re obviously focused on that,” said Neil Shearing, chief economist for Capital Economics in London.

Higher interest rates represent a challenge that ripples from big economies to small ones, according to the World Bank.

When the Fed raises borrowing costs, it slows the U.S. economy by making it more expensive for consumers and businesses to obtain loans. That reduces demand for goods produced overseas, hurting growth there. Higher U.S. interest rates also encourage investment in the United States rather than elsewhere. The inflow of capital pushes up the value of the dollar, which makes it more expensive for foreign governments and businesses to repay their dollar-denominated loans.

Spillovers from Fed policy could lead to a financial crisis in the most vulnerable developing nations, which borrowed heavily over the past three years to deal with the pandemic’s health and economic consequences, the bank warned. The danger of renewed weakness in the banking industry could further constrict credit, aggravating those effects.

“The global economy remains in a precarious state,” the bank’s latest assessment concluded.

China’s performance, after ending its stringent zero-covid stance in December, has been mixed. The Chinese economy grew by 4.5 percent in the first quarter but appears to be hitting a soft patch.

China’s official purchasing managers index for May showed the manufacturing sector falling into contraction. The index for services also declined from April’s level but remained in expansion territory. Youth unemployment tops 20 percent, and the heavily indebted property sector remains a worry.

“The post-zero-covid recovery is peaking, and growth is going to slow over the second half of the year,” Shearing said.

Apple told investors last month that its China revenue fell by more than 5 percent for the six months ending April 1. Auto parts maker BorgWarner, which sells 70 percent of its made-in-China output to Chinese auto companies, said its production there has been weaker than anticipated.

So far, the U.S. economy has defied repeated recession forecasts. The Federal Reserve Bank of Atlanta’s real-time forecast says output is growing at a 2 percent annual rate, an acceleration from the first quarter’s 1.3 percent.

The labor market, likewise, remains robust. In May, employers created 339,000 jobs, while government statisticians revised higher the April and March figures by a combined 93,000 jobs, according to the Bureau of Labor Statistics.

In Europe, meanwhile, inflation is higher and growth lower, and countries face twin-barreled strategic challenges. They must replace Russian energy with more reliable supplies while “de-risking” the trade relationship with China, said Carsten Brzeski, global head of macro for ING Research in Frankfurt.

“It’s very easy to see these transitions in the next one to two years will weigh on growth, putting pressure on European industry’s business model and household wealth,” he said. “It’s not like a financial-crisis-style recession. But it’s anemic growth for a couple of years.”

Both the Fed and its European counterpart are determined to quash inflation, which means interest rates will continue going up until it is clear that prices are under control.

The strong U.S. job market makes it likely that the Fed’s expected pause in June will be temporary. Since March of last year, the central bank has lifted rates from near zero to a range of 5 percent to 5.25 percent. Several Fed governors favor taking stock of the effects of tighter credit before resuming rate hikes as soon as the Fed’s end-of-July meeting.

“History shows that monetary policy works with long and variable lags, and that a year is not a long enough period for demand to feel the full effect of higher interest rates,” Philip Jefferson, a member of the Fed Board of governors, said in a recent speech.

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But some economists disagree. Jason Furman of Harvard University said consumer credit markets reacted quickly to the Fed’s change of policy, meaning there is little reason to expect lagging impacts.

The average 30-year fixed-rate mortgage cost increased from 3.8 percent as the Fed began raising rates to 6.8 percent at the end of September. But there has been little change since then, even as the Fed raised rates five more times, Furman noted.

“The full monetary tightening happened 12 months ago and worked its way through the system,” said Furman, who was President Barack Obama’s top economic adviser.

Indeed, overall financial conditions grew tighter even before the Fed’s first rate hike, as investors reacted to public comments by Fed Chair Jerome H. Powell suggesting an imminent move, according to an index maintained by the Federal Reserve Bank of Chicago, which tracks 105 financial-market and banking-sector data points.

One wild card is the potential for lingering fallout from the regional bank turmoil of recent months. In May, the nation’s banks reported tighter standards and weaker demand for commercial and industrial loans, according to the Fed’s most recent senior loan officer survey.

A second unknown is the impact of the Treasury Department’s efforts to refill its general account, which was nearly exhausted during the debt ceiling showdown. To replenish government coffers, Treasury will auction an unusually large amount of short-term debt in the coming months. Those sales of government securities will effectively drain funds from the banking sector, further chilling credit availability.


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